Document:

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                                                                    EXHIBIT 10.7

                              AIRNET SYSTEMS, INC.
                       DIRECTOR DEFERRED COMPENSATION PLAN

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designation may be withdrawn or changed in writing (without the consent of the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.

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        "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.

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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. Notwithstanding the preceding sentence, to the extent that
a Participant elects, under Section 4.D.(i), to have a portion of his Eligible
Compensation deferred under Section 4.B. allocated to his Stock Account, the
Company or applicable Affiliate shall increase such amount by 25% and allocate
such additional amount to the Participant's Stock Account. 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. 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.

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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.

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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 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.

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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;
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.

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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:_________________________________

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                              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.

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)

                                       8<PAGE>

                                    Exhibit 4.1

March 17, 2000                                            $500,000

                      SECURED EXCHANGEABLE PROMISSORY NOTE

         FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, the undersigned, Hawaiian Natural Water Company, Inc., a Hawaii
corporation ("Maker"), hereby promises to pay to the persons listed on Schedule
I hereto (collectively, the "Holders"), in lawful money of the United States of
America, the aggregate principal amount of $500,000, plus interest thereon at
the rate set forth below, upon the terms and conditions set forth in this
Secured Exchangeable Promissory Note (this "Note"). This Note is being issued to
the Holders in partial payment of the merger consideration owing to them in
connection with the merger of Aloha Water Company, Inc., a Hawaii corporation
wholly owned by the Holders ("Aloha"), with and into AWC Acquisition Corp., a
Hawaii corporation and a wholly owned subsidiary of Maker ("Subsidiary"),
Subsidiary being the surviving corporation in such merger, as more fully set
forth in that certain Merger Agreement and Plan of Reorganization (the "Merger
Agreement") dated March 17, 2000 by and among Maker, Subsidiary, Aloha and the
Holders, which is incorporated herein by reference (capitalized terms appearing
herein without definition having the meanings assigned to them in the Merger
Agreement). In the event of any conflict between the provisions of the Merger
Agreement and this Note, the provisions of the Merger Agreement shall govern.
All rights of the Holders hereunder shall rank pari passu, and all payments of
principal and interest hereunder shall be made to the Holders pro rata in
accordance with their interests as set forth on Schedule I hereto.

         1. PAYMENT OF INTEREST. Maker promises to pay interest on the
outstanding principal amount of this Note, from the date hereof or from the most
recent date as of which interest has been paid, until this Note has been paid in
full, at the annual rate of 10%, compounded annually. Interest for the period
from the date hereof through April 30, 2000 shall be payable on May 1, 2000;
interest for all periods thereafter shall be payable monthly in arrears on the
first day of each month, commencing June 1, 2000. Interest shall be computed on
the basis of a 360-day year, consisting of twelve 30-day months.

         The foregoing notwithstanding, Maker shall offset against the interest
payments due hereunder, the amount of any Lease Obligation owing to Maker by the
Holders as provided in Section 6.7 of the Merger Agreement until such Lease
Obligation is paid in full.

         2. PAYMENT OF PRINCIPAL. The entire principal amount of this Note, plus
all accrued and unpaid interest thereon, shall become due and payable on April
1, 2001.

         3. PREPAYMENT. Maker may prepay this Note in whole or in part (in each
case, a "Prepayment") at any time without premium or penalty.

         4. SECURITY. This Note is secured by a first priority security interest
in all of the capital stock of Subsidiary (the "Pledged Shares") as further
described in that certain Pledge and Security Agreement of even date herewith
(the "Security Agreement"), a copy of which is attached hereto and made a part
hereof.

         5. EXCHANGE. Solely in the event of an Acceleration (as defined in
Section 6 hereof), the Holders may elect (an "Exchange Election") to exchange
this Note, in whole but not in part for convertible preferred stock of Maker
("Exchange Preferred") with an aggregate liquidation preference equal to the
then outstanding principal amount of this Note, plus all accrued but unpaid
interest thereon. The Exchange Preferred will have such rights, preferences,
privileges and restrictions as are set forth in its governing instrument,
including without limitation the following: the Exchange Preferred will be
convertible, at any time at the option of the holder thereof, into common stock
of Maker ("Common Stock")

                                       30
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at a conversion price per share equal to the trading price of the Common Stock
on the date of the Acceleration on the principal market on which the Common
Stock is then traded (currently the OTC Bulletin Board) or, if the Common Stock
is not then publicly traded, at the fair market value thereof as determined in
good faith by the Board of Directors of Maker; provided, however, that the
Holders may rescind any Exchange Election within ten days following receipt of
written notice of any such determination by the Board of Directors. In the event
of a conversion of the Exchange Preferred into shares of Common Stock, at the
request of a majority in interest of the holders thereof, Maker shall be
obligated to register such conversion shares for resale under the Securities Act
of 1933, as amended, provided that Form S-3 or other similar short form
registration statement is then available to Maker.

         6. DEFAULT. The occurrence of any of the following events shall
constitute a default hereunder (a "Default"): (i) the failure of Maker to pay
the principal of this Note when due; (ii) ) the failure of Maker to pay interest
on this Note when due which failure shall have continued for a period of 60 days
following the applicable due date; (iii) the breach of any covenant or
representation and warranty contained in this Note, which breach shall not have
been cured within 30 days following written notice thereof from the Holders;
(iv) the occurrence of any Event of Default (as defined in the Security
Agreement); and (v)(A) any assignment for the benefit of creditors of Maker, or
(B) the involuntary application (which application is not dismissed within 60
days) for, or appointment of, a receiver for Maker or any assets of Maker, or
(C) the commencement of any bankruptcy or insolvency proceedings against Maker
under any of the provisions of the Federal bankruptcy laws or of any comparable
rule of law of any other jurisdiction to which Maker is subject.

In case of a Default pursuant to any of clauses (i) through (iv) above, the
Holders shall be entitled to declare the entire outstanding principal amount of
this Note, together with any accrued but unpaid interest thereon at the rate
specified above, immediately due and payable (an "Acceleration"); in case of a
Default pursuant to clause (v) above, an Acceleration of this Note shall occur,
without notice to or action of any kind by the Holders.

         If any amount required to be paid pursuant to this Note is not paid in
full when due, Maker shall pay to the Holders all costs and expenses of
collection, including (without limitation) reasonable attorneys' fees,
arbitration fees and costs, and court fees and costs.

         7. CERTAIN COVENANTS. Except with the written consent of the Holders,
Maker hereby covenants that it will not, and will not permit Subsidiary to:

         (a) Declare or pay any dividend or make any distribution, loan or
management fee to Maker, unless at the time of any such action and after giving
effect thereto:

                  (i) no Default under this Note has occurred and is continuing;
                  and

                  (ii) the aggregate amount expended for all such purposes
                  subsequent to the date hereof does not exceed the aggregate
                  amount of the Subsidiary's net income for such period
                  (determined in accordance with generally accepted accounting
                  principles ("GAAP"), consistent with past practice); provided,
                  however, that Maker shall be obligated to repay to Subsidiary
                  all such amounts received in the event of a foreclosure on the
                  Pledged Shares as provided in Section 6 of the Security
                  Agreement; and, provided further, that for purposes of the
                  foregoing a management fee shall not include the Subsidiary's
                  allocable portion of Maker's corporate overhead expense
                  ("Allocated Overhead"), determined in accordance with GAAP,
                  which Aloha shall be permitted to pay to Maker without regard
                  to the foregoing restrictions and conditions.

                  (b) Transfer or assign to Subsidiary, or cause Subsidiary to
                  assume or guarantee, any liability of Maker (other than
                  Allocated Overhead), or transfer or assign to Maker any asset
                  of Subsidiary, other than for fair equivalent value.

                                       31
<PAGE>

                  (c) Adopt any plan of liquidation of Subsidiary or sell, lease
                  or otherwise convey or dispose of all or substantially all of
                  the assets of Subsidiary or merge Subsidiary with or into any
                  other person.

8.       REPRESENTATIONS AND WARRANTIES OF MAKER. Maker represents and warrants
         to the Holders as follows:

                  (a) The issuance of this Note, the Exchange Preferred and the
                  conversion shares underlying the Exchange Preferred have been
                  duly authorized by all necessary corporate action on the part
                  of Maker and do not and will not conflict with any provision
                  of Maker's charter documents or any material rule, law
                  regulation or agreement, or any order, judgment or decree, to
                  which Maker is subject or by which it is bound.

                  (b) The Exchange Preferred and the conversion shares
                  underlying the Exchange Preferred, if and when issued and paid
                  for in accordance with the provisions of this Note and the
                  governing instrument of the Exchange Preferred, will be duly
                  authorized, fully paid and non-assessable shares of capital
                  stock of Maker.

                  (c) Maker has reserved for issuance, and will continue to
                  reserve for issuance at all times while either this Note or
                  the Exchange Preferred are outstanding, such number of shares
                  of its Common Stock as is sufficient for the conversion in
                  full of the Exchange Preferred.

         9. ACTION BY MAJORITY IN INTEREST. By acceptance of this Note, each of
the Holders agrees that wherever this Note permits or requires any action to be
taken (or foregone) at the election of the Holders, such action may be taken (or
foregone) at the election of a majority in interest of the Holders, and all of
the Holders agree to be bound by any such election.

         10. NOTICES. In the event that any notice or other communication is to
be sent pursuant to this Note, such notice shall be in writing, sent by
facsimile or by certified mail, return receipt requested, or delivery in person
(including, without limitation, by Federal Express or similar service),
addressed as follows, or to such other address as a party may notify the others
in accordance with the provisions hereof:

                  If to Maker, to:

                  Hawaiian Natural Water Company, Inc.
                  98-746 Kuahao Place
                  Pearl City, Hawaii  96782
                  Facsimile: (808) 483-0536
                  Attn: Marcus Bender, President

                  If to the Holders, to them at their respective addresses or
         facsimile numbers set forth on Schedule I hereto.

         All notices, payments, and other communications hereunder shall be
deemed given when faxed or delivered, or three days following deposit in the
United States mails, if mailed, in accordance with this Section.

11.      SEVERABILITY. In case any provision in this Note shall be invalid,
         illegal or unenforceable, the validity, legality and enforceability of
         the remaining provisions shall not in any way be affected or impaired
         thereby.

                                       32
<PAGE>

         12. GOVERNING LAW. This Note shall be governed by and construed in
         accordance with the laws of the State of Hawaii, without regard to the
         conflicts of law principles thereof.

                                    HAWAIIAN NATURAL WATER COMPANY, INC.

                                        /s/ Marcus Bender
                                        -----------------------------------
                                    By: Marcus Bender, President

                                       33
<PAGE>

                               SCHEDULE OF HOLDERS

         NAME                                           PERCENTAGE INTEREST
         ----                                           -------------------

         Daniel Gabriel                                          51
         94-112 Ahahui Way
         Mililani, Hawaii  96789

         Patricia Gabriel                                        20
         94-112 Ahahui Way
         Mililani, Hawaii  96789

         David Smith                                             29
         C/o White Tiger Development
         16490 Vineyard Boulevard
         Morgan Hill, California  95037

                                       34

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