ATLANTIC SOUTHEAST AIRLINES, INC.
INVESTMENT SAVINGS PLAN

 

		PAGE
ARTICLE 1	DEFINITIONS	1
ARTICLE 2	ELIGIBILITY	11
ARTICLE 3	CONTRIBUTIONS	11
ARTICE 4	ALLOCATIONS	13
ARTICLE 5	INDIVIDUAL FUNDS AND INVESTMENTS OF TRUST ASSETS	14
ARTICLE 6	PLAN LOANS	15
ARTICLE 7	WITHDRAWALS DURING EMPLOYMENT	18
ARTICLE 8	PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT	20
ARTICLE 9	PAYMENT OF BENEFITS OF RETIREMENT OR DISABILITY	22
ARTICLE 10	DEATH BENEFITS	22
ARTICLE 11	GENERAL RULES ON DISTRIBUTIONS	23
ARTICLE 12	ADMINISTRATION OF THE PLAN	26
ARTICLE 13	CLAIM REVIEW PROCEDURE	29
ARTICLE 14	INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS	31
ARTICLE 15	PROHIBITION AGAINST DIVERSION	32
ARTICLE 16	LIMITATION OF RIGHTS	32
ARTICLE 17	AMENDMENT TO OR TERMINATION OF THE PLAN AND THE TRUST	33
ARTICLE 18	ADOPTION OF PLAN BY AFFILIATES	34
ARTICLE 19	QUALIFICATION AND RETURN OF CONTRIBUTIONS	35
ARTICLE 20	INCORPORATION OF SPECIAL LIMITATIONS	35
APPENDIX A	LIMITATION ON ALLOCATIONS	A-37
APPENDIX B	TOP-HEAVY PROVISIONS	B-1
APPENDIX C	SPECIAL NONDISCRIMINATION RULES	C-1

 

 

ARTICLE 1

DEFINITIONS

 

Wherever used herein, the masculine pronoun shall be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise and the following words and phrases shall, when used herein, have the meanings set forth below:

 

1.1            “ Account ” means a Participant’s aggregate balance in the following accounts, as adjusted pursuant to the Plan as of any given date:

 

(a)            “ Deferred Account ” which shall reflect a Participant’s interest in contributions made by a Plan Sponsor under Section 3. 1.

 

(b)            “ Matching Account ” which shall reflect a Participant’s interest in matching contributions made by a Plan Sponsor under Section 3.2.

 

(c)            “ Rollover Account ” which shall reflect a Participant’s interest in contributions made by a Plan Sponsor under Section 3.4.

 

In addition, the Plan Administrator shall allocate the interest of a Participant in any funds transferred to the Plan in a trust-to-trust transfer (other than Rollover Amounts) or pursuant to the merger of another tax-qualified retirement plan with the Plan among the above accounts as the Plan Administrator determines best reflects the interest of the Participant.

 

1.2            “ Affiliate ” means

 

(a)            any corporation which is a member of the same controlled group of corporations (within the meaning of Code Section 414(b)) as is a Plan Sponsor;

 

(b)            any other trade or business (whether or not incorporated) under common control (within the meaning of Code Section 414(c)) with a Plan Sponsor;

 

(c)            any other corporation, partnership or other organization which is a member of an affiliated service group (within the meaning of Code Section 414(m)) with a Plan Sponsor; and

 

(d)            any other entity required to be aggregated with a Plan Sponsor pursuant to regulations under Code Section 414(o). Notwithstanding the foregoing, for purposes of applying the limitations set forth in Appendix A and for purposes of determining Annual Compensation under Appendix A, the references to Code Sections 414(b) and (c) above shall be as modified by Code Section 415(h).

 

1.3            “ Annual Compensation ” means wages within the meaning of Code Section 3401(a) (for purposes of income tax withholding at the source) and all other compensation paid to an Employee by a Plan Sponsor and Affiliates during a Plan Year for which the Plan Sponsor

 

A-1

 

or an Affiliate, to the extent applicable, is required to furnish the Employee a written statement under Code Sections 6041(d), 6051(a)(3) and 6052, to the extent not in excess of the Annual Compensation Limit for all purposes under the Plan except for purposes of determining who are Highly Compensated Employees. Notwithstanding the above, Annual Compensation shall be determined as follows:

 

(a)            for purposes of determining, with respect to each Plan Sponsor, the amount of contributions made by or on behalf of an Employee under Section 3.1 and allocations under Section 4.1(a), Annual Compensation shall only include amounts received for the portion of the Plan Year during which the Employee was a Participant;

 

(b)            for purposes of determining with respect to each Plan Sponsor, the amount of contributions made by or on behalf of an Employee under Section 3.2 and allocations under Section 4.1(b), and for purposes of applying the provisions of Appendix C hereto for such Plan Years as the Secretary of the Treasury may allow, Annual Compensation shall not be limited to amounts received for the portion of the Plan Year during which the Employee was a Participant;

 

(c)            for purposes of determining the amount of contributions under Plan Section 3 and allocations under Plan Section 4 made by or on behalf of an Employee, Annual Compensation shall not include reimbursements of pilot flight training expenses;

 

(d)            for all purposes under the Plan, except as provided in Subsection (e) of this Section, Annual Compensation shall include any amount which would have been paid during a Plan Year, but was contributed by a Plan Sponsor on behalf of an Employee pursuant to a salary reduction agreement which is not includable in the gross income of the Employee under Code Sections 125, 402(g)(3), 457 and, effective on January 1, 2001, Section 132(f)(4); and

 

(e)            effective until December 31, 1997, for purposes of applying the annual addition limits in Appendix A, Annual Compensation shall not include the amounts described in Subsection (d).

 

1.4            “ Annual Compensation Limit ” means $150,000, which amount may be adjusted in subsequent Plan Years based on changes in the cost of living as announced by the Secretary of the Treasury.

 

1.5            “ Beneficiary ”

 

(a)            A Participant’s Beneficiary is the person or trust that a Participant designated most recently in writing to the Plan Administrator on such form and in such manner as is reasonably required by the Plan Administrator. Except as outlined in Subsection (c) below, a Participant may change his Beneficiary at any time by providing a new written election to the Plan Administrator on such form and in such manner as is reasonably required by the Plan Administrator.

 

A-2

 

(b)            If the Participant has failed to make a designation, no person designated is alive, no trust has been established, or no Beneficiary or successor Beneficiary has been designated who is alive, the term “Beneficiary” means:

 

(1)            the Participant’s spouse; or

 

(2)            if no spouse is alive, the Participant’s estate.

 

(c)            Nonspouse Beneficiaries

 

(1)            Notwithstanding the foregoing, the spouse of a married Participant shall be his Beneficiary unless that spouse has consented in writing to the designation by the Participant of some other person or trust and the spouse’s consent acknowledges the effect of the designation and is witnessed by a notary public or a Plan representative.

 

(2)            A Participant may change his designation of a nonspouse beneficiary at any time. However, a Participant may not change his designation without further consent of his spouse unless the spouse’s consent permits designation of another person or trust without further spousal consent and acknowledges that the spouse has the right to limit consent to a specific beneficiary and that the spouse voluntarily relinquishes this right.

 

(3)            The spouse’s consent shall not be required if the Participant establishes to the satisfaction of the Plan Administrator that

 

(A)           the spouse cannot be located,

 

(B)            the Participant has a court order indicating that he is legally separated or has been abandoned (within the meaning of local law) unless a “qualified domestic relations order” (as defined in Code Section 414(p)) provides otherwise, or

 

(C)            there are other circumstances as the Secretary of the Treasury prescribes.

 

If the spouse is legally incompetent to give consent, consent by the spouse’s legal guardian shall be deemed to be consent by the spouse.

 

(d)            If, subsequent to the death of a Participant, the Participant’s Beneficiary dies while entitled to receive benefits under the Plan, the successor Beneficiary, if any, or the Beneficiary listed under Subsection (b)(1) or, if no spouse is alive, Subsection (b)(2) shall be the Beneficiary.

 

1.6            “ Board of Directors ” means the Board of Directors of the Primary Sponsor.

 

A-3

 

1.7            “ Break in Service ” means the failure of an Employee, in connection with a Termination of Employment other than by reason of death, Disability, or attainment of a Retirement Date, to complete more than 500 Hours of Service in any Plan Year.

 

1.8            “ Code ” means the Internal Revenue Code of 1986, as amended.

 

1.9            “ Deferral Amount ” means a contribution of a Plan Sponsor on behalf of a Participant pursuant to Section 3.1.

 

1.10          “ Delta Stock ” means the common stock, par value $1.50 per share, of Delta Airlines, Inc.

 

1.11          “ Delta Stock Fund ” means the Individual Fund under the Plan created to hold shares of Delta Stock.

 

1.12          “ Direct Rollover ” means a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

 

1.13          “ Disability ” means a disability of a Participant within the meaning of Code Section 72(m)(7), to the extent that the Participant is, or would be, entitled to disability retirement benefits under the federal Social Security Act or to the extent that the Participant is entitled to recover benefits under any long term disability plan or policy maintained by the Plan Sponsor. The determination of whether or not a Disability exists shall be determined by the Plan Administrator and shall be substantiated by competent medical evidence.

 

1.14          “ Distributee ” means an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order (as defined in Code Section 414(p)), are Distributees with regard to the interest of the spouse or former spouse.

 

1.15          “ Elective Deferrals ” means, with respect to any taxable year of the Participant, the sum of

 

(a)            any Deferral Amounts;

 

(b)            any contributions made by or on behalf of a Participant under any other qualified cash or deferred arrangement as defined in Code Section 401(k), whether or not maintained by a Plan Sponsor, to the extent such contributions are not or would not, but for Code Section 402(g)(1) be included in the Participant’s gross income for the taxable year; and

 

(c)            any other contributions made by or on behalf of a Participant pursuant to Code Section 402(g)(3).

 

A-4

 

1.16          “ Eligibility Service ” means

 

(a)            for the period beginning January 1, 1997 and ending September 30, 2000, a twelve-consecutive-month period during which the Employee completes no less than 1,000 Hours of Service beginning on the date on which the Employee first performs an Hour of Service upon his employment or reemployment with the Plan Sponsor or, in the event the Employee fails to complete 1,000 Hours of Service in that twelve-consecutive-month period, any Plan Year thereafter during which the Employee completes no less than 1,000 Hours of Service, including the Plan Year which includes the first anniversary of the date the Employee first performed an Hour of Service upon his employment or reemployment; and

 

(b)            for the period beginning October 1, 2000, the completion of a ninety-consecutive-day period beginning on the date on which the Employee first performs an Hour of Service upon his employment or reemployment with the Plan Sponsor.

 

1.17          “ Eligible Employee ” means any Employee of a Plan Sponsor compensated by a Plan Sponsor on a salaried basis other than an Employee who is

 

(a)            covered by a collective bargaining agreement between a union and a Plan Sponsor, provided that retirement benefits were the subject of good faith bargaining, unless the collective bargaining agreement provides for participation in the Plan;

 

(b)            a leased employee within the meaning of Code Section 414(n)(2);

 

(c)            deemed to be an Employee of a Plan Sponsor pursuant to regulations under Code Section 414(o);

 

(d)            a non-resident alien (within the meaning of Code Section 7701(b)(1)(B)) who received no earned income (within the meaning of Code Section 911(d)(2)) from a Plan Sponsor which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(d)(3)); or

 

(e)            initially classified by a Plan Sponsor as an independent contractor for federal income tax purposes for the period of such classification, regardless of any subsequent determination that any such person should have been characterized as a common law employee of the Plan Sponsor for such period.

 

1.18          “ Eligible Retirement Plan ” means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a) or a qualified trust described in Code Section 401(a) that accepts the Distributee’s Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.

 

1.19          “ Eligible Rollover Distribution ” means any distribution of all or any portion of the Distributee’s Account, except that an Eligible Rollover Distribution does not include: any

 

A-5

 

distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and, effective for distributions made after December 31, 1999, any hardship distributions of Deferral Amounts pursuant to Section 7.1.

 

1.20          “ Employee ” means any person who is

 

(a)            a common law employee of a Plan Sponsor or an Affiliate;

 

(b)            a leased employee within the meaning of Code Section 414(n)(2) with respect to a Plan Sponsor; or

 

(c)            deemed to be an employee of a Plan Sponsor pursuant to regulations under Code Section 414(o).

 

For purposes of this Section, an Employee shall be deemed to be a leased employee within the meaning of Code Section 414(n)(2) if the individual is a person (other than an Employee of the recipient) who, pursuant to an agreement between the recipient and any other person, has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)), on a substantially full-time basis for a period of at least one (1) year, and such services are performed under the primary direction and control of the service recipient.

 

1.21          “ Entry Date ” means (a) for the period beginning January 1, 1997 and ending on September 30, 2000, January 1 and July 1 of each Plan Year; and (b) for the period beginning October 1, 2000, “Entry Date” means January 1, April 1, July 1, and October 1.

 

1.22          “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

1.23          “ Fiduciary ” means each Named Fiduciary and any other person who exercises or has any discretionary authority or control regarding management or administration of the Plan, any other person who renders investment advice for a fee or has any authority or responsibility to do so with respect to any assets of the Plan, or any other person who exercises or has any authority or control respecting management or disposition of assets of the Plan.

 

1.24          “ Fund ” means the amount at any given time of cash and other property held by the Trustee pursuant to the Plan.

 

A-6

 

1.25          “ Highly Compensated Employee ” means, with respect to a Plan Year, each Employee who:

 

(a)            was at any time during the Plan Year or the immediately preceding Plan Year an owner of more than five percent (5%) of the outstanding stock of a Plan Sponsor or Affiliate or more than five percent (5%) of the total combined voting power of all stock of a Plan Sponsor or Affiliate;

 

(b)            received Annual Compensation in excess of $80,000 during the immediately preceding Plan Year ($85,000 during the immediately preceding Plan Year for Plan Years beginning on or after January 1, 2000), which amount shall be adjusted for changes in the cost of living as provided in regulations issued by the Secretary of the Treasury; or

 

(c)            is a former Employee who met the requirements of Subsection (a) or (b) at the time the former Employee separated from service with the Plan Sponsor or an Affiliate or at any time after the former Employee attained age 55.

 

1.26          “ Hour of Service ” means:

 

(a)            Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for a Plan Sponsor or any Affiliate during the applicable computation period, and such hours shall be credited to the computation period in which the duties are performed;

 

(b)            Each hour for which an Employee is paid, or entitled to payment, by a Plan Sponsor or any Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence;

 

(c)            Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by a Plan Sponsor or any Affiliate, and such hours shall be credited to the computation period or periods to which the award or agreement for back pay pertains rather than to the computation period in which the award, agreement or payment is made; provided, that the crediting of Hours of Service for back pay awarded or agreed to with respect to periods described in Subsection (b) of this Section shall be subject to the limitations set forth in Subsection (f);

 

(d)            Solely for purposes of determining whether a Break in Service has occurred, each hour during any period that the Employee is absent from work (1) by reason of the pregnancy of the Employee, (2) by reason of the birth of a child of the Employee, (3) by reason of the placement of a child with the Employee in connection with the adoption of the child by the Employee, or (4) for purposes of caring for such child for a period immediately following its birth or placement shall be credited (A) only in the computation period in which the absence from work begins, if the Employee would be prevented from incurring a Break in Service in that year solely because of that credit, or (B), in any other case, in the next following computation period;

 

A-7

 

(e)            Without duplication of the Hours of Service counted pursuant to Subsection (d) hereof and solely for such purposes as required pursuant to the Family and Medical Leave Act of 1993 and the regulations thereunder (the “FMLA”), each hour (as determined pursuant to the FMLA) for which an Employee is granted leave under the FMLA (1) for the birth of a child, (2) for placement with the Employee of a child for adoption or foster care, (3) to care for the Employee’s spouse, child or parent with a serious health condition, or (4) for a serious health condition that makes the Employee unable to perform the functions of the Employee’s job;

 

(f)             The Plan Administrator shall credit Hours of Service in accordance with the provisions of Section 2530.200b-2(b) and (c) of the U.S. Department of Labor Regulations or such other federal regulations as may from time to time be applicable and determine Hours of Service from the employment records of a Plan Sponsor or in any other manner consistent with regulations promulgated by the Secretary of Labor, and shall construe any ambiguities in favor of crediting Employees with Hours of Service. Notwithstanding any other provision of this Section, in no event shall an Employee be credited with more than 501 Hours of Service during any single continuous period during which he performs no duties for the Plan Sponsor or Affiliate; and

 

(g)            In the event that a Plan Sponsor or an Affiliate acquires substantially all of the assets of another corporation or entity or a controlling interest of the stock of another corporation or merges with another corporation or entity and is the surviving entity, then service of an Employee who was employed by the prior corporation or entity and who is employed by the Plan Sponsor or an Affiliate at the time of the acquisition or merger shall be counted in the manner provided, with the consent of the Primary Sponsor, in resolutions adopted by the Plan Sponsor which authorizes the counting of such service.

 

Notwithstanding the foregoing, solely for purposes of determining Hours of Service for Eligible Employees who are designated as “flight crew employees,” each hour for which such an Employee is paid, or entitled to payment, pursuant to this Section while designated as a “flight crew employee” shall be multiplied by 2.2857.

 

1.27          “ Individual Fund ” means individual subfunds of the Fund as may be established by the Plan Administrator from time to time for the investment of the Fund.

 

1.28          “ Investment Committee ” means a committee, which may be established to direct the Trustee with respect to investments of the Fund.

 

1.29          “ Investment Manager ” means a Fiduciary, other than the Trustee, the Plan Administrator, or a Plan Sponsor, who may be appointed by the Primary Sponsor:

 

(a)            who has the power to manage, acquire, or dispose of any assets of the Fund or a portion thereof; and

 

(b)            who

 

A-8

 

(1)            is registered as an investment adviser under the Investment Advisers Act of 1940;

 

(2)            is a bank as defined in the Investment Advisers Act of 1940; or

 

(3)            is an insurance company qualified to perform services described in Subsection (a) above under the laws of more than one state; and

 

(c)            who has acknowledged in writing that he is a Fiduciary with respect to the Plan.

 

1.30          “ Named Fiduciary ” means only the following:

 

(a)            the Plan Administrator;

 

(b)            the Trustee;

 

(c)            the Investment Committee; and

 

(d)            the Investment Manager.

 

1.31          “ Normal Retirement Age ” means (a) age 65 for all Participants other than those described in Subsection (b) of this Section, and (b) age 60 for Participants designated as flight crew employees operating aircraft under FAR Part 121.

 

1.32          “ Participant ” means any Employee or former Employee who has become a participant in the Plan for so long as his vested Account has not been fully distributed pursuant to the Plan.

 

1.33          “ Plan Administrator ” means the organization or person designated to administer the Plan by the Primary Sponsor and, in lieu of any such designation, means the Primary Sponsor.

 

1.34          “ Plan Sponsor ” means individually the Primary Sponsor and any Affiliate or other entity which has adopted the Plan and Trust.

 

1.35          “ Plan Year ” means the calendar year.

 

1.36          “ Retirement Date ” means the date on which the Participant terminates employment on or after reaching Normal Retirement Age.

 

1.37          “ Rollover Amount ” means any amount transferred to the Fund by a Participant, which amount qualifies as an Eligible Rollover Distribution under Code Section 402(c)(4), or for rollover treatment under Code Sections 403(a)(4) or 408(d)(3)(A)(ii), and any regulations issued thereunder.

 

A-9

 

1.38          “ Termination Completion Date ” means the last day of the fifth consecutive Break in Service computation period, determined under the Plan Section which defines Break in Service, in which a Participant completes a Break in Service.

 

1.39          “ Termination of Employment ” means the termination of employment of an Employee from all Plan Sponsors and Affiliates for any reason other than death or attainment of a Retirement Date. Any absence from active employment of the Plan Sponsor and Affiliates by reason of an approved leave of absence shall not be deemed for any purpose under the Plan to be a Termination of Employment. Transfer of an Employee from one Plan Sponsor to another Plan Sponsor or to an Affiliate shall not be deemed for any purpose under the Plan to be a Termination of Employment. In addition, transfer of an Employee to another employer in connection with a corporate transaction involving a sale of assets, merger or sale of stock, shall not be deemed to be a Termination of Employment, for purposes of the timing of distributions under Plan Section 8.1, if the employer to which such Employee is transferred agrees with the Plan Sponsor to accept a transfer of assets from the Plan to its tax-qualified plan in a trust-to-trust transfer meeting the requirements of Code Section 414(l). If the employer to which such Employee is transferred does not agree to accept a transfer of assets from the Plan to its tax-qualified Plan, Plan Section 8.6 is applicable in the event that such Termination of Employment is not a distributable event under Code Section 401(k)(10)(A).

 

1.40          “ Trust ” means the trust established under an agreement between the Primary Sponsor and the Trustee to hold the Fund or any successor agreement.

 

1.41          “ Trustee ” means the trustee under the Trust.

 

1.42          “ Valuation Date ” means each day on which the New York Stock Exchange is open for business or any other day which the Plan Administrator declares to be a Valuation Date.

 

1.43          “ Year of Vesting Service ” means each Plan Year during which an Employee completes no less than 1,000 Hours of Service. Notwithstanding anything contained herein to the contrary, Vesting Service shall not include:

 

(a)            In the case of an Employee who completes five consecutive Breaks in Service for purposes of determining the vested portion of his Account derived from Plan Sponsor contributions which accrued before his Termination Completion Date, all service in Plan Years after his Termination Completion Date.

 

(b)            In the case of an Employee who completes five consecutive Breaks in Service and at that time does not have any vested right in Plan Sponsor contributions, all service before those Breaks in Service commenced.

 

A-10

 

ARTICLE 2

ELIGIBILITY

 

2.1            New Hires . Each Eligible Employee shall become a Participant as of the Entry Date coinciding with or next following the date he completes his Eligibility Service.

 

2.2            Existing Participants . Each individual who was a Participant on December 31, 1996 shall continue to be a Participant as of January 1, 1997.

 

2.3            Former Participants Rehired . Each former Participant who is reemployed by a Plan Sponsor shall become a Participant as of the date of his reemployment as an Eligible Employee.

 

2.4            Former Employees Rehired . Each former Employee who completes his Eligibility Service but terminates employment with a Plan Sponsor before becoming a Participant shall become a Participant as of the latest of the date he:

 

(a)            is reemployed;

 

(b)            would have become a Participant if he had not incurred a Termination of Employment; or

 

(c)            becomes an Eligible Employee.

 

ARTICLE 3

CONTRIBUTIONS

 

3.1            (a)            Deferral Amounts . The Plan Sponsor shall make a contribution to the Fund on behalf of each Participant who is an Eligible Employee and has elected to defer a portion of Annual Compensation otherwise payable to him for the Plan Year and to have such portion contributed to the Fund. The election must be made before the Annual Compensation is payable and may only be made pursuant to an agreement between the Participant and the Plan Sponsor which shall be in such form and subject to such rules and limitations as the Plan Administrator may prescribe and shall specify the percentage of Annual Compensation that the Participant desires to defer and to have contributed to the Fund. Once a Participant has made an election for a Plan Year, the Participant may revoke or modify his election to increase or reduce the rate of future deferrals, as provided in accordance with the administrative procedures provided by the Plan Administrator. Any increase or reduction in deferrals will be effective on the first day of the calendar quarter following the Plan Administrator’s receipt of the Participant’s request. A Participant may revoke his election and discontinue his deferrals at any time in accordance with the administrative procedures provided by the Plan Administrator. The revocation will be effective for the first payroll period following the Plan Administrator’s receipt of the Participant’s request. The contribution made by a Plan Sponsor on behalf of a Participant under this Section 3.1 shall be in one percent (1%)

 

A-11

 

increments in an amount equal to the amount specified in the Participant’s deferral agreement, but not in excess of twenty percent (20%) of the Participant’s Annual Compensation. Pursuant to Section 4 of Appendix C, the Plan Administrator may restrict the amount which Highly Compensated Employees may defer under this Section 3.1.

 

(b)            Limits on Deferral Amounts . Elective Deferrals shall in no event exceed $9,500 (for 1997) in any one taxable year of the Participant, which amount shall be adjusted for changes in the cost of living as provided by the Secretary of the Treasury. In the event the amount of Elective Deferrals exceeds $9,500 (for 1997) as adjusted, in any one taxable year then, (1) not later than the immediately following March 1, the Participant may designate to the Plan the portion of the Participant’s Deferral Amounts which consist of excess Elective Deferrals, and (2) not later than the immediately following April 15, the Plan may distribute the amount designated to it under Paragraph (1) above, as adjusted to reflect income, gain, or loss attributable to it through the end of the Plan Year, and reduced by any “Excess Deferral Amounts,” as defined in Appendix C hereto, previously distributed or recharacterized with respect to the Participant for the Plan Year beginning with or within that taxable year. The payment of the excess Elective Deferrals, as adjusted and reduced, from the Plan shall be made to the Participant without regard to any other provision in the Plan. In the event that a Participant’s Elective Deferrals exceed $9,500, as adjusted, in any one taxable year under the Plan and other plans of the Plan Sponsor and its Affiliates, the Participant shall be deemed to have designated for distribution under the Plan the amount of excess Elective Deferrals, as adjusted and reduced, by taking into account only Elective Deferral amounts under the Plan and other plans of the Plan Sponsor and its Affiliates.

 

3.2            Matching Contributions . The Plan Sponsor proposes to make contributions to the Fund with respect to each Plan Year on behalf of each Participant who is an Eligible Employee entitled to an allocation under Plan Section 4.1(b) in an amount equal to a percentage, as determined by the Plan Sponsor, of the Participant’s Annual Compensation deferred by the Participant pursuant to Section 3.1, to the extent the contribution under Plan Section 3.1 does not exceed six percent (6%) of his Annual Compensation.

 

3.3            Forfeitures . Forfeitures shall be used to reduce Plan Sponsor contributions made for the Plan Year in which the forfeitures arose or the following Plan Year and not to increase benefits.

 

3.4            Rollover Contributions . Any Eligible Employee may, with the consent of the Plan Administrator and subject to such rules and conditions as the Plan Administrator may prescribe, transfer a Rollover Amount to the Fund; provided, however, that the Plan Administrator shall not administer this provision in a manner which is discriminatory in favor of Highly Compensated Employees.

 

3.5            Form of Contributions . Contributions may be made only in cash or other property which is acceptable to the Trustee. In no event will the sum of contributions under Plan Sections 3.1 and 3.2 exceed the deductible limits under Code Section 404.

 

A-12

 

3.6            Military Service . Effective December 12, 1994, notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

 

3.7            Corrective Actions . Notwithstanding any provision of the Plan to the contrary, the Plan Sponsor may make corrective distributions, contributions, allocations or other remedial actions as required or permitted to comply with any program promulgated by the Internal Revenue Service or the U.S. Department of Labor.

 

ARTICLE 4

ALLOCATIONS

 

4.1            (a)            Allocation of Deferral Amounts . As soon as reasonably practicable following the date of withholding by the Plan Sponsor, if applicable, and receipt by the Trustee, Plan Sponsor contributions made on behalf of each Participant under Plan Section 3.1 and Rollover Amounts contributed by the Participant, shall be allocated to the Deferred Account and Rollover Account, respectively, of the Participant on behalf of whom the contributions were made.

 

(b)            Allocation of Matching Contributions . As of the last day of the Plan Year, Plan Sponsor contributions made under Section 3.2 and forfeitures used to reduce Plan Sponsor matching contributions, if any, for a Plan Year shall be allocated to the Matching Account of each Participant who is employed by a Plan Sponsor on the last day of the Plan Year who has completed at least 1,000 Hours of Service during the Plan Year. The matching contribution for each Plan Year, if any, shall be allocated to each eligible Participant based on his Completed Years of Service. The matching contribution for each eligible Participant shall be determined by multiplying the aggregate matching contribution made by the Plan Sponsor by the ratio of the weighted amount of Deferral Amounts of the Participant for the Plan Year to the weighted amount of Deferral Amounts of all Participants for the Plan Year. The weighted amount of Deferral Amounts is determined by multiplying the Participant’s Deferral Amounts, excluding Deferral Amounts in excess of six percent (6%) of Annual Compensation, by the appropriate percentage as provided in the following schedules, as applicable:

 

(i)             for the period beginning January 1, 1997 and ending July 31, 1998:

 

 

A-13

 

(ii)            for the period beginning August 1, 1998,

 

 

For purposes of the Section, “Completed Years of Service” means the number of full years from the Employee’s date of hire to the date on which his vested percentage is being determined.

 

4.2            Allocation of Earnings . As of each Valuation Date, the Trustee shall allocate the net income or net loss of each Individual Fund to each Account in the proportion that the value of the Account as of the Valuation Date bears to the value of all Accounts invested in that Individual Fund as of the Valuation Date.

 

ARTICLE 5

INDIVIDUAL FUNDS AND INVESTMENTS OF TRUST ASSETS

 

5.1            Participant Direction of Contributions . Until such time as the Plan Administrator may direct otherwise, each Participant may direct the Plan Administrator to invest contributions to his Account in one or more Individual Funds, including the Delta Stock Fund, as the Participant shall designate by providing notice to the Plan Administrator according to the procedures established by the Plan Administrator for that purpose.

 

(a)            All investment directions, or changes in investment directions, of contributions shall be made in multiples of one percent (1%) in accordance with the procedures established by the Plan Administrator. New investment directions shall be effective as of the date that such directions are process by the Plan Administrator in accordance with the procedures established for such purpose.

 

(b)            An investment direction, once given, shall be deemed to be a continuing direction until changed as otherwise provided herein. If no direction is effective for the date a contribution is to be made, all contributions which are to be made for such date shall be invested in such Individual Fund as the Plan Administrator, the Investment Manager, the Investment Committee, or the Trustee, as applicable, may determine. To the extent permissible by law, no Fiduciary shall be liable for any loss, which results from a Participant’s exercise or failure to exercise his investment election.

 

5.2            Participant Directions to Transfer Among Individual Funds . A Participant may elect according to the procedures established by the Plan Administrator to transfer, in multiples of one percent (1%), his Account among Individual Funds. An election under this Section 5.2

 

A-14

 

shall be effective as of the date that such directions are processed by the Plan Administrator in accordance with the procedures established for such purpose.

 

5.3            A Participant who makes an election pursuant to Section 5.1 or Section 5.2 may apply the new investment direction to his current Account, all future contributions, or both his current Account and all future contributions.

 

5.4            Loan Fund . A Loan Fund shall be established by the Trustee on behalf of each Participant for whom a loan is made pursuant to Article 6. The Loan Fund shall be credited with the amount of any loan made by the Plan to the Participant and shall be debited with all principal and interest repayments of any such loans. Under rules established by the Plan Administrator, a Participant’s interest in the Individual Funds shall be debited by the amount credited to the Participant’s Loan Fund. All principal and interest repayments debited to the Loan Fund shall be invested as contributions to the Participant’s Account pursuant to Section 5.1. Each Loan Fund shall be invested in a note or notes made by the Participant evidencing the promised repayment of monies loaned to the Participant from the Fund.

 

5.5            Employer Securities . The Trustee may acquire and hold shares of Delta Stock and other “qualifying employer securities” (within the meaning of Code Section 4975(e)(8)) which are (a) shares of common stock issued by the Primary Sponsor or a corporation which is a member of a controlled group of corporations which includes the Primary Sponsor (within the meaning of Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C)), which are readily tradeable on an established securities market or, if there is no such common stock, shares of common stock issued by the Primary Sponsor or a corporation which is a member of a controlled group of corporations which includes the Primary Sponsor (within the meaning of Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C)), which have voting power and dividend rights no less favorable than the voting power and dividend rights of any other common stock issued by the Primary Sponsor or the corporation, or (b) shares of noncallable preferred stock issued by the Primary Sponsor, which are at all times immediately convertible into stock described in (a) above at a reasonable conversion price.

 

5.6            404(c) Protection . Each Member’s investment direction to the Plan Administrator with respect to his Account shall be in a manner compliant with the requirements of ERISA Section 404(c) and the regulations issued thereunder.

 

ARTICLE 6

PLAN LOANS

 

6.1            Eligible Individuals . Subject to the provisions of the Plan and the Trust, each Participant who is an Employee shall have the right, subject to prior approval by the Plan Administrator, to borrow from the Fund. In addition, each “party in interest,” as defined in ERISA Section 3(14), who is (a) a Participant but no longer an Employee, (b) the Beneficiary of a deceased Participant, or (c) an alternate payee of a Participant pursuant to the provisions of a “qualified domestic relations order,” as defined in Code Section 414(p), shall also have the right,

 

A-15

 

subject to prior approval by the Plan Administrator, to borrow from the Fund; provided, however, that loans to such parties in interest may not discriminate in favor of Highly Compensated Employees.

 

6.2            Application . In order to apply for a loan, a borrower must complete and submit to the Plan Administrator documents or information required by the Plan Administrator for this purpose.

 

6.3            Equivalent Basis . Loans shall be available to all eligible borrowers on a reasonably equivalent basis which may take into account the borrower’s creditworthiness, ability to repay, and ability to provide adequate security. Loans shall not be made available to Highly Compensated Employees, officers or shareholders of a Plan Sponsor in an amount greater than the amount made available to other borrowers. This provision shall be deemed to be satisfied if all borrowers have the right to borrow the same percentage of their interest in the Participant’s vested Account, notwithstanding that the dollar amount of such loans may differ as a result of differing values of Participants’ vested Accounts.

 

6.4            Interest Rate . Each loan shall bear a “reasonable rate of interest” and provide that the loan be amortized in substantially level payments, made no less frequently than quarterly, over a specified period of time. A “reasonable rate of interest” shall be that rate that provides the Plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. Notwithstanding the foregoing, to the extent that any loan interest rate is subject to the provisions of the Soldiers and Sailors Relief Act of 1940, it shall not exceed six percent (6%) per annum.

 

6.5            Security . Each loan shall be adequately secured, with the security for the outstanding balance of all loans to the borrower to consist of one-half (½) of the borrower’s interest in the Participant’s vested Account, or such other security as the Plan Administrator deems acceptable.

 

6.6            Loan Limit . Each loan, when added to the outstanding balance of all other loans to the borrower from all retirement plans of the Plan Sponsor and its Affiliates which are qualified under Section 401 of the Code, shall not exceed the least of:

 

(a)            $25,000, reduced by the excess, if any, of

 

(1)            the highest outstanding balance of loans made to the borrower from all retirement plans qualified under Code Section 401 of the Plan Sponsor and its Affiliates during the one (1) year period immediately preceding the day prior to the date on which such loan was made, over

 

(2)            the outstanding balance of loans made to the borrower from all retirement plans qualified under Code Section 401 of the Plan Sponsor and its Affiliates on the date on which such loan was made;

 

A-16

 

(b)            one-half (½) of the value of the borrower’s interest in the Account attributable to the Participant’s Deferred Account and Rollover Account (excluding any amounts made subject to a qualified domestic relations order as defined in Code Section 414(p)); or

 

(c)            the amount that produces a monthly repayment of principal and interest that equals twenty-five percent (25%) of the Participant’s monthly salary at the time the loan is taken.

 

For purposes of this Section, the value of the Participant’s Account attributable to a Participant’s Deferred Account and Rollover Account shall be established as of the latest preceding Valuation Date, or any later date on which an available valuation was made, and shall be adjusted for any distributions or contributions made through the date of the origination of the loan.

 

6.7            Loan Term . Each loan, by its terms, shall be repaid within five (5) years;

 

6.8            Minimum Amount . Each loan shall be made in an amount of no less than $1,000.

 

6.9            Limit on Number of Loans . A borrower is permitted to have only one loan existing under this Plan at any one time and only one loan will be permitted for a borrower in a twelve-consecutive-month period.

 

6.10          Certain Leaves of Absence . If a borrower incurs an unpaid leave of absence for a period of one (1) year or less, the Plan Administrator may freeze the borrower’s loan status and the loan will be reamortized upon the borrower’s return to work. In this event, the limitation provided in Section 6.6(c) with respect to twenty-five percent (25%) of the borrower’s monthly salary will be waived for purposes of reamortization.

 

6.11          Default . The loan shall be in default if:  (a) a borrower fails to make any loan payment when due; (b) a Participant ceases to be an Employee and is not otherwise a “party in interest” as defined in ERISA Section 3(14); (c) the vested Account held as security under the Plan for the borrower will, as a result of an impending distribution or withdrawal, be reduced to an amount less than the amount of all unpaid principal and accrued interest then outstanding under the loan; (d) a borrower makes any untrue representations or warranties in connection with the obtaining of the loan; or (e) a Participant becomes subject to a bankruptcy proceeding or the appointment of a receiver. In that event, the Plan Administrator may take such steps as it deems necessary to preserve the assets of the Plan (in the case of Subsection (a), after any cure period allowed by the Plan Administrator, if applicable, not to continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due), including, but not limited to, directing the Trustee to make a distribution to the borrower of an offset amount (i.e., a deduction of the unpaid principal sum, accrued interest, and any other applicable charge under the note evidencing the loan from the Participant’s Account). To the extent that such distribution of an offset amount in the case of Subsection (a) would violate the requirements of Section 401(a) or 401(k) (because for example, the deduction would have to be made from the Participant’s Deferred Account while the Participant is an Employee), the entire outstanding balance of the loan (including accrued interest) shall be a deemed distribution as

 

A-17

 

provided in Treasury Regulations under Code Section 72(p), and thereafter a distribution of an offset amount may be made at the earliest date legally permissible or deferred, at the Plan Administrator’s discretion applied on a basis not discriminating in favor of Highly Compensated Employees, until the borrower receives another distribution from the Plan. If any part of the indebtedness under the note evidencing the loan is collected by law or through an attorney, the borrower shall be liable for attorneys’ fees in an amount equal to ten percent (10%) of the amount then due and all costs of collection.

 

Notwithstanding the foregoing, a loan may be satisfied upon a Participant’s Termination of Employment arising from the Participant’s transfer to another employer (other than a Plan Sponsor or Affiliate) in connection with a corporate transaction involving a sale of assets, merger, or sale of stock, by distributing the note evidencing the debt as part of an Eligible Rollover Distribution if the trustee, custodian, or administrator for the Eligible Retirement Plan indicates its willingness to accept such property.

 

6.11          Regulation . Each loan shall be made only in accordance with regulations and rulings of the Internal Revenue Service and the Department of Labor and any supplemental loan procedures established by the Plan Administrator. The Plan Administrator shall be authorized to administer the loan program of this Section and shall act in his sole discretion to ascertain whether the requirements of such regulations and rulings and this Section have been met.

 

ARTICLE 7

WITHDRAWALS DURING EMPLOYMENT

 

7.1            Hardship Withdrawal . The Trustee shall, upon the direction of the Plan Administrator, withdraw all or a portion of a Participant’s Deferred Account consisting of Deferral Amounts (but not earnings thereon) prior to the time such account is otherwise distributable in accordance with the other provisions of the Plan; provided, however, that any such withdrawal shall be made only if the Participant is an Employee and demonstrates that he is suffering from “hardship” as determined herein. For purposes of this Section, a withdrawal will be deemed to be an account of hardship if the withdrawal is on account of:

 

(a)            expenses for medical care described in Code Section 213(d) incurred by the Participant, his spouse, or any dependents of the Participant (as defined in Code Section 152) or necessary for these persons to obtain medical care described in Code Section 213(d);

 

(b)            purchase (excluding mortgage payments) of a principal residence for the Participant;

 

(d)            payment of tuition and related educational fees for the next twelve (12) months of post-secondary education for the Participant, his spouse, children, or dependents;

 

A-18

 

(e)            the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; or

 

(f)             any other contingency determined by the Internal Revenue Service to constitute an “immediate and heavy financial need” within the meaning of Treasury Regulations Section 1.401(k)-l(d).

 

7.2            Additional Hardship Withdrawal Requirements . In addition to the requirements set forth in Section 7.1, any withdrawal pursuant to Section 7.1 shall not be in excess of the amount necessary to satisfy the need determined under Section 7.1 and shall also be subject to the requirements of either 7.2(a) or 7.2(b).

 

(a)            (1)            The Participant shall first obtain all withdrawals, other than hardship withdrawals, and all nontaxable loans currently available under all plans maintained by the Plan Sponsor;

 

(2)            the Plan Sponsor shall not permit Elective Deferrals or after-tax employee contributions to be made to the Plan or any other plan maintained by the Plan Sponsor, for a period of twelve (12) months after the Participant receives the withdrawal pursuant to this Section; and

 

(3)            the Plan Sponsor shall not permit Elective Deferrals to be made to the Plan or any other plan maintained by the Plan Sponsor for the Participant’s taxable year immediately following the taxable year of the hardship withdrawal in excess of the limit under Plan Section 3.1(b) for the taxable year, less the amount of the Elective Deferrals made to the Plan or any other plan maintained by the Plan Sponsor for the taxable year in which the withdrawal under this Section occurs.

 

(b)            A hardship withdrawal shall be permitted only pursuant to the suspension method in Section 7.2(a) and not pursuant to the certification method in this Section 7.2(b), unless the Plan Administrator permits a hardship withdrawal pursuant to either Section 7.2(a) or 7.2(b). Under the certification method, a hardship withdrawal is permitted if the Plan Administrator relies on the Participant’s certification by execution of a form provided by the Plan Administrator, unless the Plan Administrator has actual knowledge to the contrary, that the need determined under Plan Section 6.1 cannot be relieved

 

(1)            through reimbursement or compensation by insurance or otherwise,

 

(2)            by reasonable liquidation of the assets of the Participant, his spouse and minor children, to the extent that the liquidation would not itself cause an immediate and heavy financial need and to the extent that the assets of the spouse and minor children are reasonably available to the Participant,

 

A-19

 

(3)            by cessation of Elective Deferrals, or

 

(4)            by other distributions or nontaxable (at the time of the distribution) loans from plans maintained by the Plan Sponsor or any other employer, or by borrowing from commercial sources on reasonable commercial terms.

 

Such withdrawals shall be made only in accordance with such other rules, policies, procedures, restrictions, and conditions as the Plan Administrator may from time to time adopt. Any determination of the existence of hardship and the amount to be withdrawn on account thereof shall be made by the Plan Administrator (or such other person as may be required to make such decisions) in accordance with the foregoing rules as applied in a uniform and nondiscriminatory manner; provided that, unless the Participant requests otherwise, any such withdrawal shall include the amount necessary to pay any federal, state and local income taxes and penalties reasonably anticipated to result from the withdrawal. A withdrawal under this Section shall be made in a lump sum to the Participant.

 

7.3            Account Transfers to Plans Sponsored by Affiliates . In the event that a Participant terminates his employment with the Primary Sponsor and is no longer eligible to receive an allocation under Section 4 hereof and becomes an employee of an Affiliate, such Participant may elect to transfer the value of his Account under the Plan to the qualified plan sponsored by such Affiliate. Notwithstanding the foregoing, a Participant’s Account may not be transferred to the plan of an Affiliate without the Participant’s voluntary and informed election as described in Treasury Regulation Section 1.411(d)-4, Q&A-3(b)(1)(i). Alternatively, the Participant must be provided the opportunity to retain the benefits, rights, and features protected under Section 411(d)(6) of the Code with respect to any transferred amounts. The transferred amount shall be paid in the form of a cash lump-sum payment plus a direct transfer in kind of any outstanding Participant loans. Such transfer shall be made pursuant to the procedures established by the Plan Administrator, and may only be made with the consent of the plan administrator of the plan into which the transfer is being made.

 

ARTICLE 8

PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT

 

8.1            Eligibility for Payment . A Participant who has a Termination of Employment shall be eligible to receive payment of his vested Account as soon as administratively practicable after the Participant’s Termination of Employment.

 

8.2            Vesting . That portion of a Participant’s Account in which he is vested at any given time shall be:

 

(a)            his Deferred Account and Rollover Account, which shall be fully vested and nonforfeitable at all times; and

 

(b)            his Matching Account computed according to the following vesting schedule:

 

A-20

 

 

If a Participant receives a distribution from these accounts at any time when the Participant is less than one hundred percent (100%) vested then until the earlier of the date the Participant forfeits his nonvested Account or the Participant’s Termination Completion Date, the vested portion of these accounts of the Participant at any time shall be equal to “X” computed according to the formula X=P(AB+D)-D. For purposes of the formula, “P” is the vested percentage at the relevant time, “AB” is the Account balance at the relevant time, and “D” is the amount of the distribution(s).

 

8.3            Cash-out/Buyback .

 

(a)            The nonvested portion of the Account of a Participant who has had a Termination of Employment shall be forfeited as of the earlier of the date the Participant receives a distribution of the vested portion of his Account or the Participant’s Termination Completion Date. For such purposes, a Participant who has had a Termination of Employment and who is not vested in any portion of his Account, the Participant shall be deemed to have received a distribution of his Account.

 

(b)            If a Participant who has received (or has been deemed to have received) a distribution of the vested portion of his Account is reemployed by a Plan Sponsor or an Affiliate prior to his Termination Completion Date and (1) if the Participant’s Account was partially vested, and the Participant repays to the Fund no later than the fifth anniversary of the Participant’s reemployment by the Plan Sponsor or an Affiliate all of that portion of his vested Account which was paid to him or (2) if the Participant’s Account was not vested upon his Termination of Employment, then any portion of his Account which was forfeited shall be restored effective on the Valuation Date coinciding with or next following the repayment or the Participant’s reemployment, respectively. The restoration on any Valuation Date of the forfeited portion of the Account of a Participant pursuant to the preceding sentence shall be made first from forfeitures available for allocation on that Valuation Date, to the extent available, and secondly from contributions by the Plan Sponsor. Only after restorations have been made shall the remaining net income be available for allocation under Section 4.

 

8.4            Changes t