Exhibit 10.7


 


AIRNET SYSTEMS, INC.


DIRECTOR DEFERRED COMPENSATION PLAN


(Reflects amendments through March 17, 2004)


 


Section 1.  PURPOSE - The
Company desires and intends to recognize the value to the Company and its
Affiliates of the past and present services of the Directors of the Company and
its Affiliates, to encourage their continued service to the Company and its
Affiliates and to be able to attract and retain superior Directors by adopting
and implementing this Plan to provide such Directors an opportunity to defer
compensation otherwise payable to them from the Company and/or Affiliate.


 


Section 2.  CERTAIN
DEFINITIONS - The following terms will have the meanings provided
below.


 


“Additions” means the credits applied to Deferred
Compensation Accounts as provided in Section 4 hereof.


 


“Adjustment Date” means the last business day of
each calendar quarter.


 


“Affiliate” means any organization or entity which,
together with the Company, is a member of a controlled group of corporations or
of a commonly controlled group of trades or businesses [as defined in Sections
414(b) and (c) of the Code], or of an affiliated service group [as defined in
Code Section 414(m)] or other organization described in Code Section 414(o).


 


“Annual Retainer” means, with respect to any
calendar year or other period, the fixed retainer which, absent an election to
defer hereunder, would be payable to a Participant during those pay periods
beginning in the given calendar year or other period.


 


“Beneficiary” means the person or persons
designated in writing as such and filed with the Plan Administrator at any time
by a Participant.  Any such designation
may be withdrawn or changed in writing (without the consent of the
Beneficiary), but only the last designation on file with the Plan Administrator
shall be effective.


 


“Board” means the Board of Directors of the
Company.


 


“Code” means the Internal Revenue Code of 1986, as
may be amended from time to time.


 


“Common Shares” means the common shares of the
Company.


 


“Company” means AirNet Systems, Inc. and any
successor entity.


 


“Deferred Compensation Account” means the separate
Deferred Compensation Account established for each Participant pursuant to
Section 4 of the Plan.


 


“Director” means any director of the Company and
any director of an Affiliate of the Company.


 


“Effective Date” means May 27, 1998.


 


“Eligible Compensation” means, to the extent
applicable to any given Participant, the Annual Retainer and all Meeting
Fees.  The extent to which a given
Participant may defer a given component of Eligible Compensation shall be based
upon such Participant’s eligibility to receive the given component of Eligible
Compensation (as determined under applicable agreements and pay practices of
the Company or applicable Affiliate) and the provisions and limitations
applicable to the given component as provided under this Plan.


 


“Fair Market Value” of the Common Shares means the
most recent closing price of the Common Shares on any securities exchange on
which the Common Shares are then listed.


 


“Meeting Fees” means, with respect to any calendar
year or other period, the fees for attendance at meetings of the Board of
Directors of the Company or applicable Affiliate or any committees thereof
(exclusive of expenses) which, absent an election to defer hereunder, would be
payable to a Participant during those pay periods beginning in the given
calendar year or other period.


 


“Participant” has the meaning specified in Section
3 of the Plan.


 


“Plan” means the AirNet Systems, Inc. Director
Deferred Compensation Plan, as reflected in this document, as the same may be
amended from time to time after the Effective Date.


 

















 


“Plan Administrator” means the Company.


 


“Plan Year” means the calendar year.


 


Section 3.  PARTICIPANTS


 


Each Director as of the Effective Date shall be
eligible for participation in the Plan as of such date.  Each Director who first becomes a Director
after the Effective Date shall be eligible for participation in the Plan as of
the date on which he becomes a Director. 
A Director who is eligible for participation in the Plan and who elects
to make deferral contributions pursuant to Section 4 shall be designated a
“Participant” in the Plan.  A
Participant shall continue to participate in the Plan until his status as a
Participant is terminated by either a complete distribution of his Deferred
Compensation Account pursuant to the terms of the Plan or by written directive
of the Company.


 


Section 4.  DEFERRED
COMPENSATION ACCOUNTS


 


A.            Establishment of
Deferred Compensation Accounts.  The Plan
Administrator will establish a Deferred Compensation Account for each
Participant.  A Participant’s Deferred
Compensation Account shall have two subaccounts— a Cash Account to record
amounts allocated under Section 4.D.(ii) and a Stock Account to record amounts
allocated under Section 4.D.(iii).  Such
Deferred Compensation Account shall be a bookkeeping account only, maintained
as part of the books and records of the Company or applicable Affiliate.


 


B.            Election of
Participant.  With respect to each Plan Year,
a Participant may elect to have a percentage or a flat dollar amount of his
Eligible Compensation which is to be paid to him by the Company or applicable
Affiliate for the Plan Year in question allocated to his Deferred Compensation
Account and paid on a deferred basis pursuant to the terms of the Plan.  To exercise such an election for any Plan
Year, within thirty (30) days prior to the commencement of the Plan Year, the
Participant must advise the Plan Administrator of his election, in writing, on
a form prescribed by the Plan Administrator (each, a “Deferral Notice”).  Notwithstanding the preceding sentence, in
the first year of the Plan, or in the case of a Director who first becomes
eligible to participate in the Plan after the Effective Date, a Participant may
complete a Deferral Notice at any time within thirty (30) days following the
date on which he is first eligible to participate in the Plan.  Such Deferral Notice shall apply only to
Eligible Compensation payable to, or earned by, the Participant after the date
on which the Deferral Notice is received by the Plan Administrator.  To the extent that a Participant completes a
Deferral Notice in accordance with the provisions of this paragraph, such
Deferral Notice shall remain in effect for future Plan Years until changed or
revoked by the Participant.


 


C.            Company
Contributions.  Each time a Deferral Notice is
submitted to the Plan Administrator in accordance with Section 4.B. above,
during the next Plan Year (or, if applicable, the remaining Plan Year), the
Company or applicable Affiliate will allocate to the Participant’s Deferred
Compensation Account the percentage or dollar amount of Eligible Compensation
specified in the Deferral Notice.  Any
amounts allocated by the Company or Affiliate under this Section 4.C. are
called “Company Contributions.”


 


D.            Adjustment of
Account Balances.


 


(i)            Participant
Election.  At the time that a Participant
submits a Deferral Notice, he shall elect the percentage of his deferred
amounts to be allocated to his Cash Account (to be adjusted pursuant to
Paragraph (ii) of this Section 4.D.) and his Stock Account (to be adjusted
pursuant to Paragraph (iii) of this Section 4.D.).  Any election made pursuant to this Paragraph (i) shall be
irrevocable with respect to the affected amounts.


 


(ii)           As of each Adjustment Date, the Plan
Administrator shall credit the balance in the Participant’s Cash Account with
Additions which shall mirror a specific interest rate.  For this purpose, the interest rate to be used
shall be equal to the rate of return on      
[designate investment (e.g. 3-year Treasury Bill)] as of the applicable
Adjustment Date.  The crediting of
Additions shall be determined by multiplying the Participant’s Cash Account
balance as of the previous Adjustment Date by the applicable rate of interest
determined under the preceding sentence. 
The crediting of Additions shall occur so long as there is a balance in
the Participant’s Cash Account regardless of whether the Participant has
terminated service as a Director or has died. 
The Plan Administrator may prescribe any reasonable method or procedure
for the accounting of Additions.


 


(iii)          As of each Adjustment Date, the amount
credited to the Stock Account of each Participant shall be divided by the then
Fair Market Value of the Common Shares. 
Upon completion of this calculation, each Stock Account shall be
credited with the resulting number of whole Common Shares; and any remaining
amounts shall continue to be credited to the Stock Account until converted to
whole Common Shares at a future Adjustment Date.  The Stock Account of each Participant shall be credited with cash
dividends on the Common Shares on and after the date credited to the Stock
Account.


 


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At the following Adjustment
Date, the amount of cash dividends credited to each Stock Account (and any
other amounts then credited to such account) shall be divided by the then Fair
Market Value of the Common Shares; and the Stock Account of each Participant
shall be credited with the resulting number of whole Common Shares and any
remaining amounts shall continue to be credited to the Stock Account until
converted to whole Common Shares at a future Adjustment Date.  The Plan Administrator may prescribe any
reasonable method or procedure for the accounting of Additions.


 


E.             Stock Adjustments.  The number of Common Shares in the Stock
Account of each Participant shall be adjusted from time to time to reflect
stock splits, stock dividends or other changes in the Common Shares resulting
from a change in the Company’s capital structure.


 


F.             Participant’s
Rights in Accounts.  A Participant’s only right
with respect to his Deferred Compensation Account (and amounts allocated
thereto) will be to receive payments in accordance with the provisions of
Section 5 of the Plan.


 


Section 5.  PAYMENT
OF DEFERRED BENEFITS


 


A.            Time of Payment.  Distribution of a Participant’s Deferred
Compensation Account shall commence within thirty (30) days of the earlier of
(i) the date specified by the Participant in the Deferral Notice delivered
to the Plan Administrator at the time the deferral election is made; or
(ii) the date of the Participant’s termination of service as a Director
due to resignation, retirement, death or otherwise.


 


B.            Method of
Distribution.  A Participant’s Deferred
Compensation Account shall be distributed to the Participant either in a single
lump sum payment or in equal annual installments over a period of not more than
ten (10) years.  To the extent that a
Deferred Compensation Account is distributed in installment payments, the
undisbursed portions of such account shall continue to be credited with
Additions in accordance with the applicable provisions of Section 4.D.  In addition, if, as of any Adjustment Date,
the amount allocated to a Participant’s Deferred Compensation Account is less
than $1,000, the Plan Administrator may elect to pay such amount to the
Participant and reduce the balance of his Deferred Compensation Account to
zero.  The method of distribution shall be
elected by the Participant in the Deferral Notice delivered to the Plan
Administrator at the time the deferral election is made.  Cash Accounts shall be distributed in
cash.  Stock Accounts shall be
distributed either in Common Shares or in cash at the election of the Plan
Administrator.  In the event that a
distribution of a Participant’s Stock Account is made in cash, the Plan
Administrator shall determine the amount of such distribution by using the Fair
Market Value of the Common Shares as of either the date of distribution
specified by the Participant in his Deferral Notice or the date on which the
Participant’s service as a Director terminated, whichever may be applicable.


 


C.            Hardship
Distributions.  Prior to the time a
Participant’s Deferred Compensation Account becomes payable, the Plan
Administrator, in its sole discretion, may elect to distribute all or a portion
of such account in the event such Participant requests a distribution due to
severe financial hardship.  For purposes
of this Plan, severe financial hardship shall be deemed to exist in the event
the Plan Administrator determines that a Participant needs a distribution to
meet immediate and heavy financial needs resulting from a sudden or unexpected
illness or accident of the Participant or a member of the Participant’s family,
loss of the Participant’s property due to casualty or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. 
A distribution based on financial hardship shall not exceed the amount
required to meet the immediate financial need created by the hardship and shall
be made in cash.  With respect to a
Participant’s Stock Account, any hardship distribution shall be made in cash,
based upon the Fair Market Value of the Common Shares as of the date of
distribution.


 


D.            Designation of
Beneficiary.  Upon the death of a
Participant, his Deferred Compensation Account shall be paid to the Beneficiary
designated by the Participant.  If there
is no designated Beneficiary or no designated Beneficiary surviving at a
Participant’s death, payment of the Participant’s Deferred Compensation Account
shall be made to the Participant’s estate.


 


E.             Taxes.  In the event any taxes are required by law
to be withheld or paid from any payments made pursuant to the Plan, the Plan
Administrator shall deduct such amounts from such payments and shall transmit
the withheld amounts to the appropriate taxing authority.


 


Section 6.  ASSIGNMENT
OR ALIENATION - The right of a Participant, Beneficiary or any
other person to the payment of a benefit under this Plan may not be assigned,
transferred, pledged or encumbered except by Will or by the laws of descent and
distribution.


 


Section 7.  PLAN
ADMINISTRATION - The Plan Administrator will have the right to
interpret and construe the Plan and to determine all questions of eligibility
and of status, rights and benefits of Participants and all other persons
claiming benefits under the Plan.  In
all such interpretations and constructions, the Plan Administrator’s
determination will be based upon


 


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uniform rules and practices applied in a
nondiscriminatory manner and will be binding upon all persons affected
thereby.  Subject to the provisions of
Section 8 below, any decision by the Plan Administrator with respect to any
such matters will be final and binding on all parties.  The Plan Administrator will have absolute
discretion in carrying out its responsibilities under this Section 7.


 


Section 8.  CLAIMS
PROCEDURE


 


A.            Filing Claims.  Any Participant or Beneficiary entitled to
benefits under the Plan will file a claim request with the Plan Administrator.


 


B.            Notification to
Claimant.  If a claim request is wholly
or partially denied, the Plan Administrator will furnish to the claimant a
notice of the decision within ninety (90) days in writing and in a manner
calculated to be understood by the claimant, which notice will contain the
following information:


 


(i)                                     the specific reason
or reasons for the denial;


 


(ii)                                  specific reference
to pertinent Plan provisions upon which the denial is based;


 


(iii)                               a description of
any additional material or information necessary for the claimant to perfect
the claim and an explanation of why such material or information is necessary;
and


 


(iv)                              an explanation of
the Plan’s claims review procedure describing the steps to be taken by a
claimant who wishes to submit his claims for review.


 


C.            Review Procedure.  A claimant or his authorized representative
may, with respect to any denied claim:


 


(i)                                     request a review
upon a written application filed within sixty (60) days after receipt by the
claimant of written notice of the denial of his claim;


 


(ii)                                  review pertinent
documents; and


 


(iii)                               submit issues and
comments in writing.


 


Any request or submission will be in writing and
will be directed to the Plan Administrator (or its designee).  The Plan Administrator (or its designee)
will have the sole responsibility for the review of any denied claim and will
take all steps appropriate in the light of its findings.


 


D.            Decision on Review.  The Plan Administrator (or its designee)
will render a decision upon review.  If
special circumstances (such as the need to hold a hearing on any matter
pertaining to the denied claim) warrant additional time, the decision will be
rendered as soon as possible, but not later than one hundred twenty (120) days
after receipt of the request for review. 
Written notice of any such extension will be furnished to the claimant
prior to the commencement of the extension. 
The decision on review will be in writing and will include specific
reasons for the decision, written in a manner calculated to be understood by
the claimant, as well as specific references to the pertinent provisions of the
Plan on which the decision is based.  If
the decision on review is not furnished to the claimant within the time limits
prescribed above, the claim will be deemed denied on review.


 


Section 9.  UNSECURED
AND UNFUNDED OBLIGATION - Notwithstanding any provision herein to
the contrary, the benefits offered under the Plan shall constitute an unfunded,
unsecured promise by the Company and its Affiliates to pay benefits determined
hereunder which are accrued by Participants while such Participants are
Directors.  No provision shall at any
time be made with respect to segregating any assets of the Company or any
Affiliate for payment of any benefits hereunder.  No Participant, Beneficiary or any other person shall have any
interest in any particular assets of the Company or any Affiliate by reason of
the right to receive a benefit under the Plan and any such Participant,
Beneficiary or other person shall have only the rights of a general unsecured
creditor of the Company and its Affiliates with respect to any rights under the
Plan.  Nothing contained in the Plan
shall constitute a guaranty by the Company, any Affiliate or any other entity
or person that the assets of the Company or its Affiliates will be sufficient
to pay any benefit hereunder.  All
expenses and fees incurred in the administration of the Plan shall be paid by
the Company or an Affiliate.


 


Section 10.  AMENDMENT
AND TERMINATION OF THE PLAN - The Company reserves the right, by
a resolution of the Board, to amend the Plan at any time, and from time to
time, in any manner which it deems desirable, provided that no amendment will
adversely affect the accrued benefits of any Participant under the Plan.  The Company also reserves the right, by a
resolution of the Board, to terminate this Plan at any time without providing
any advance notice to any Participant;


 


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and in the event of any Plan termination, the
Company reserves the right to then distribute all amounts allocated to
Participants’ Deferred Compensation Accounts.


 


Section 11.  BINDING
UPON SUCCESSORS - The Plan shall be binding upon and inure to the
benefit of the Company, its Affiliates, any of their successors and assigns and
the Participants and their heirs, executors, administrators and legal
representatives.  In the event of the
merger or consolidation of the Company or any of its Affiliates with or into
any other corporation, or in the event substantially all of the assets of the
Company or any of its Affiliates shall be transferred to another corporation,
the successor corporation resulting from the merger or consolidation, or the
transferee of such assets, as the case may be, shall, as a condition to the
consummation of the merger, consolidation or transfer, assume the obligations
of the Company or Affiliate hereunder and shall be substituted for the Company
or Affiliate hereunder.


 


Section 12.  NO
GUARANTEE OF PLAN PERMANENCY - This Plan does not contain any
guarantee of provisions for continued service as a Director to any Participant
nor is it guaranteed by the Company or any of its Affiliates to be a permanent
plan.


 


Section 13.  GENDER - Any
reference in the Plan made in the masculine pronoun shall apply to both men and
women.


 


Section 14.  INCAPACITY
OF RECIPIENT - In the event that a Participant or Beneficiary is
declared incompetent and a guardian, conservator or other person legally
charged with the care of his person or of his estate is appointed, any benefits
under the Plan to which such Participant or Beneficiary is entitled shall be
paid to such guardian, conservator or other person legally charged with the
care of his person or his estate. 
Except as provided hereinabove, when the Plan Administrator, in its sole
discretion, determines that a Participant or Beneficiary is unable to manage
his financial affairs, the Plan Administrator may, but shall not be required
to, direct the Company to make distribution(s) to any one or more of the
spouse, lineal ascendants or descendants or other closest living relatives of
such Participant or Beneficiary who demonstrates to the satisfaction of the
Plan Administrator the propriety of making such distribution(s).  Any payment made under this Section 14 shall
be in complete discharge of any liability under the Plan for such payment.  The Plan Administrator shall not be required
to see to the application of any such distribution made to any person.


 


Section 15.  GOVERNING
LAW - This Plan shall be construed in accordance with and
governed by the laws of the State of Ohio.


 


IN
WITNESS WHEREOF, the Company has caused this Plan to be executed by a duly
authorized officer as of the Effective Date.


 


 


	
   

  	
  AIRNET SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  



 


AIRNET SYSTEMS, INC.


DIRECTOR DEFERRED COMPENSATION PLAN


 


DEFERRAL NOTICE


 


1.             ELECTION TO DEFER.


 


In accordance with the provisions of the AirNet
Systems, Inc. Director Deferred Compensation Plan (the “Plan”), I hereby elect
to defer
            
percent or $             
of the Eligible Compensation (as defined in the Plan) payable to me for
services as a Director of AirNet Systems, Inc., or any of its Affiliates.  This election supersedes any prior deferral
election made by me and shall remain in effect until terminated or otherwise
amended.


 


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2.             DISTRIBUTION
ELECTION.


 


I hereby elect to commence distribution of my
Deferred Compensation Account in the Plan within 30 days of my termination as a
Director or, if earlier, within 30 days of
                       .


 


3.                                       INVESTMENT
ELECTION.


 


I hereby elect to have amounts deferred pursuant to
this election allocated to the applicable subaccounts in the following
percentages (total must equal 100%):


 


              
Cash Account


 


              
Stock Account


 


4.                                       METHOD OF PAYMENT.


 


I hereby elect to receive the distribution of my
Deferred Compensation Account in the Plan in the following form of payment:


 


              
A single lump sum payment; or


 


              
Substantially equal annual installments over a period of
              
(not to exceed 10) years.


 


5.                                       DESIGNATION OF
BENEFICIARY.


 


I hereby designate
                                     
as my primary Beneficiary and
                                     
as my contingent Beneficiary(ies) to receive any amounts payable under the Plan
in the event of my death.


 


6.                                       ACKNOWLEDGMENT.


 


I hereby acknowledge that my election to defer
Eligible Compensation under the Plan is irrevocable with respect to amounts
which are deferred under the Plan and shall remain in effect until terminated
or modified.


 


	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name (please print)

  	
   

  



 


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