DEFERRED COMPENSATION PLAN FOR DEFERRALS

Exhibit 10.7

 

MORRIS COMMUNICATIONS COMPANY, LLC

 

DEFERRED COMPENSATION PLAN FOR DEFERRALS

 

ARTICLE I

INTRODUCTION

 

1.1 Purpose Of Plan. The Employer has adopted the Plan set forth herein to provide a means by which certain employees may elect to defer receipt of designated percentages or amounts of their Compensation.

 

1.2 Status Of Plan. The Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), and shall be interpreted and administered to the extent possible in a manner consistent with that intent.

 

ARTICLE II

DEFINITIONS

 

Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

 

2.1 “Account” means, for each Participant, the account established for his or her benefit under Section 5.1. Such Account shall include both salary and bonus deferrals.

 

2.2 “Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.

 

2.3 “Compensation” means the annual bonus and the base salary of a Participant. The Board Committee, in its sole discretion, shall designate from time to time the maximum percentage of base salary and bonus that can be deferred under the Plan. Such designation shall be listed in Appendix A. For purposes of the Plan, Compensation shall be determined before giving effect to Elective Deferrals and other salary reduction amounts which are not included in the Participant’s gross income under Code Sections 125, 401(k), 402(h) or 403(b).

 

2.4 “Corporation” or “Company” means the Employer.

 

2.5 “Effective Date” means October 1, 2003.

 

2.6 “Election Form” means the participation election form as approved and prescribed by the Plan Administrator.

 

2.7 “Elective Deferral” means the portion of Compensation which is deferred by a Participant under Article IV.

 

2.8 “Eligible Employee” means: Any member of management or highly compensated employee specifically designated by the President of the Company.

 

2.9 “Employer” means Morris Communications Company, LLC, any successor to all or a major portion of the Employer’s assets or business which assumes the obligations of the Employer, and each other entity that is affiliated with the Employer whose employees, with the consent of the Employer, are eligible, as provided under Section 2.8, to participate in the Plan.

 

2.10 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.

 

2.11 “Management Committee” means a committee of the Board of Directors of the Employer that has been delegated authority over the Plan; or in absence of such a committee, the Management Committee means the Board of Directors of the Employer.

 

2.12 “Insolvency” means either (i) the Employer is unable to pay its debts as they become due, or (ii) the Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

 

2.13 “Participant” means any Eligible Employee who participates in the Plan in accordance with Article III.

 

2.14 “Plan” means Morris Communications Company Deferred Compensation Plan For Deferrals and all amendments thereto.

 

2.15 “Plan Administrator” means the person, persons or entity designated by the Employer under Article VIII to oversee the administration of the Plan. If no such person or entity is so serving at any time, the Employer shall be the Plan Administrator.

 

2.16 “Plan Year” means the 12-month period beginning on January 1 and ending on December 31 of each year, except for the first plan year which begins on the Effective Date, and ends on December 31^st, 2003.

 

2.17 “Recordkeeper” means the person(s) or entity appointed or hired by the Management Committee under Section 8.1.

 

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2.18 “Total And Permanent Disability” means the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, and the permanence and degree of which shall be supported by medical evidence satisfactory to the Plan Administrator.

 

2.19 “Trust” means the trust established by the Employer that identifies the Plan as a plan with respect to which assets are to be held by the Trustee. Plan assets in the trust are subject to the general creditors of the Employer in the event of Insolvency.

 

2.20 “Trustee” means the trustee or trustees under the Trust.

 

2.21 “Valuation Option” means the performance of the investment funds listed in Appendix B of the Plan.

 

ARTICLE III

PARTICIPATION

 

3.1 Commencement Of Participation. Any Eligible Employee who elects to defer part of his or her Compensation in accordance with Article IV shall become a Participant in the Plan as of the date such deferrals commence in accordance with such Article.

 

3.2 Continued Participation. A Participant in the Plan shall continue to be a Participant so long as any amount remains credited to his or her Account. However, future deferrals under the Plan may be made only if such Participant continues to be an Eligible Employee under the Plan.

 

ARTICLE IV

ELECTIVE DEFERRALS

 

4.1 Elective Deferrals. An individual who is an Eligible Employee on the Effective Date may, by completing an Election Form and filing it with the Plan Administrator by the end of the first month following the Effective Date, elect to defer the receipt of a portion of one or more payments of Compensation for a period of at least one Plan Year and on such terms as the Management Committee may permit. Thereafter, any Eligible Employee may elect to defer the receipt of a percentage or dollar amount of one or more payments of Compensation for a period of a least one Plan Year and on such terms as the Management Committee may permit, commencing with Compensation paid in the next succeeding Plan Year, by completing an Election Form during the annual enrollment period for the Plan as determined by the Plan Administrator.

 

An Eligible Employee may elect a deferral period of any number of Plan Years up to but not exceeding termination of employment or Total And Permanent Disability.

 

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No Participant may defer more than the portion of his or her Compensation designated by the Management Committee in Appendix A. A Participant’s Compensation shall be reduced in accordance with the Participant’s election hereunder and amounts deferred hereunder shall be paid by the Employer to the Trust as soon as administratively feasible and credited to the Participant’s Account as of the date the amounts are received by the Trustee.

 

4.2 Investment Election. An individual who is an Eligible Employee and elects to defer Compensation under this Plan shall elect to have his or her Account valued based on the Valuation Option represented by the performance of one or more of the investment funds listed in Appendix B of the Plan. Such Appendix B may be amended at any time by an action of the Management Committee. If a Participant does not elect a Valuation Option for his or her Account, the Account shall be valued based on the Valuation Option represented by the performance of Fund A. A participant may change his or her selection of Valuation Options on any date to be effective on the first business day of the next month that commences more than four (4) business days following delivery of such selection to the Plan Administrator.

 

ARTICLE V

ACCOUNTS

 

5.1 Accounts. The Plan Administrator and/or the Recordkeeper shall establish an Account for each Participant reflecting his or her Elective Deferrals made for the Participant’s benefit together with any adjustments for income, gain or loss and any payments from the Account. The Plan Administrator and/or the Recordkeeper shall establish sub-accounts for each Participant that has more than one election in effect under Section 7.1 and such other sub-accounts as are necessary for the proper administration of the Plan. As of the last business day of each calendar quarter, the Plan Administrator shall provide, or cause to be provided, the Participant with a statement of his or her Account reflecting the income, gains and losses (realized and unrealized), amounts of deferrals, fund transfers and distributions of such Account since the prior statement.

 

5.2 Investments. The assets of the Trust shall be invested as provided in Article IV of the Trust Agreement. The Trustee may (but is not required to) consider the Employer’s or a Participant’s investment preferences when investing the assets attributable to a Participant’s Account.

 

ARTICLE VI

VESTING

 

6.1 Vesting. A Participant shall be vested in, i.e., shall have a nonforfeitable right to, funds only when such funds are due and payable by Employer. A Participant shall be immediately vested in, i.e., shall have a nonforfeitable right to, all Elective Deferrals, and all income and gain attributable thereto, credited to his or her Account.

 

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ARTICLE VII

PAYMENTS

 

7.1 Election As To Form Of Payment. Payments to Participants shall be made in annual installments over a period of 10 years commencing between January 2 and March 15 immediately following the end of each deferral period. The amount of each installment payment will equal the balance of a Participant’s Account immediately prior to the installment payment divided by the number of installment payments remaining to be made.

 

The above notwithstanding, a Participant may elect in writing to receive the value of his or her Account in one lump sum, in annual installments over a period of five years, or in annual installments over a period of fifteen years, so long as such election is made at least 13 months prior to the end of the deferral period. Additionally, a Participant may elect in writing to receive the value of his or her Account in a partial lump sum where the Participant may choose the percent of an expiring deferral to be paid in a lump sum with the balance in annual installments over the remainder of the 5, 10 or 15 year- installment period; provided, however, that such election is made at least 13 months prior to the end of the deferral period.

 

A Participant’s election as to the form of payment as set forth in this Section 7.1 shall apply to the Participant’s entire Account. If the Participant begins to receive distributions of his or her Account pursuant to this Section 7.l, a subsequent election to defer additional Compensation shall be subject to a new election under this Section 7.1 and shall not affect the payment stream established by the prior distribution election.

 

7.2 Extension Of Deferral Periods. A Participant may make an election in writing to extend any deferral period for three to ten additional Plan Years so long as such Participant makes an election therefor at least 13 months prior to the expiration of the deferral period.

 

Terminated Participants will not be permitted to renew their deferral elections. Payments to terminated Participants will begin at the expiration of their current deferral period in accordance with the method selected under Section 7.1 (unless the Participant had attained age 65 and completed at least ten years of service as of his or her date of termination, in which case additional elections to defer are permitted).

 

7.3 Termination Of Employment. Upon termination of a Participant’s employment for any reason other than death or Total and Permanent Disability, the Participant’s Account shall be paid to the Participant in the form of payment in effect at the time termination of employment occurs and after the expiration of the deferral period. The above notwithstanding, the Plan Administrator, in its sole discretion, may: (a) pay out a Participant’s Account balance in one lump sum at any time prior to the expiration of each deferral period; (b) accelerate the beginning of payments of deferrals to any time prior to the expiration of a deferral period; and (c) revoke the deferral elections of a Participant for the year of the termination of his/her employment.

 

7.4 Total And Permanent Disability. Upon determination of Total and Permanent Disability, the Par