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EXTENDED SYSTEMS INCORPORATED 401(K) PLAN

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ADOPTION AGREEMENT - ARTICLE 1

NON-STANDARDIZED PROFIT SHARING PLAN





1.1 PLAN INFORMATION:



(a) Name of Plan: This is the

Extended Systems, 401K Plan (the "Plan").



(b) Type of Plan:



(1) [X] 401(k) and Profit Sharing



(2) [ ] Profit Sharing Only



(3) [ ] 401(k) Only



(c) Name of Plan Administrator, if not the Employer:



Name: Extended Systems of Idaho, Inc.



Address: P.O. Box 4937, Boise, Idaho 83711

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Phone Number: (208) 322-7575



The Plan Administrator is the agent for service of legal process for the Plan.



(d) Limitation Year (check one):



(1) [X] Calendar Year



(2) [ ] Plan Year



(3) [ ] Other:



(e) Three-Digit Plan Number: 002



(f) Plan Year End (month/day): 12/31



(g) Plan Status (check one):



(1) [ ] Effective Date of new Plan:















(2) [X] Amendment Effective Date: 04/01/96 This is (check

one):



(A) [ ] an amendment of The CORPORATE plan for

Retirement Adoption Agreement previously

executed by the Employer; or



(B) [X] a conversion from another plan document

into The CORPORATE plan for Retirement.



The original Effective Date of the Plan: 01/01/91



The substantive provisions of the Plan shall apply prior

to the Effective Date to the extent required by the Tax

Reform Act of 1986 or other applicable laws.



1.2 EMPLOYER:



(a) The Employer is: Extended Systems, Inc. of Delaware



Address: 5777 North Meeker Avenue

Boise, ID 83713



Contact's Name: Stephen M. Shaffer



Telephone Number: (208) 322-7575



(1) Employer's Tax Identification Number: 82-0399670



(2) Business form of Employer (check one):





(A) [X] Corporation (B) [ ] Governmental





(C) [ ] Sole Proprietor or (D) [ ] Tax-exempt

Partnership Organization



(E) [ ] Subchapter S (F) [ ] Rural Electric

Corporation Cooperative



(3) Employer's fiscal year end: June 30



(4) Date business commenced: 03/01/85



(b) The term "Employer" includes the following Related Employer(s)

(as defined in Section 2.01(a)(26)):













Extended Systems Inc. of Delaware

Extended Systems of Idaho, Inc.





1.3 COVERAGE:



(a) All Employees who meet the conditions specified below will be

eligible to participate in the Plan:



(1) Service requirement (check one):



(A) [ ] no service requirement.



(B) [ ] three consecutive months of service (no

minimum number Hours of Service can be

required).



(C) [X] six consecutive months of service (no

minimum number Hours of Service can be

required).



(D) [ ] one Year of Service.

(1,000 Hours of Service is required during

the Eligibility Computation Period.)



(2) Age requirement: (check one)



(A) [ ] no age requirement.



(B) [X] must have attained age 21 (not to exceed

21).



(3) The class of Employees eligible to participate in the Plan (check one):



(A) [ ] includes all Employees of the Employer.



(B) [X] includes all Employees of the Employer

except for (check the appropriate box(es)):



(i) [X] Employees covered by a collective

bargaining agreement.



(ii) [ ] Highly Compensated Employees as

defined in Code Section 414(q).













(iii) [X] Leased Employees as defined in

Section 2.01(a)(18).



(iv) [X] Nonresident aliens who do not

receive any earned income from the

Employer which constitutes United

States source income.



(v) [X] Other: Student Hires and Temporary



Note: No exclusion in this section may create a discriminatory

class of Employees. An Employer's Plan must still pass the

Internal Revenue Code coverage and participation requirements if

one or more of the above groups of Employees have been excluded

from the Plan.



(b) The Entry Date(s) shall be (check one):



(1) [ ] the first day of each Plan Year (do not select if

Section 1.03(a)(1)(D) is elected or if there is an

age requirement of greater than 20 1/2 in Section

1.3(a)(2)(13)).



(2) [ ] the first day of each Plan Year and the date six

months later.



(3) [ ] the first day of each Plan Year and the first day

of the fourth, seventh, and tenth months.



(4) [X] the first day of each month.



(c) Date of Initial Participation - An Employee will become a

Participant unless excluded by Section 1.3(a)(3) above on the

Entry Date immediately following the date the Employee completes

the service and age requirement(s) in Section 1.3(a), if any,

except (check one):



(1) [X] No exceptions.



(2) [ ] Employees employed on the Effective Date in

Section l.1(g) will become Participants on that



(3) [ ] Employees who meet the age and service

requirement(s) of Section 1.3(a) on the Effective

Date in Section 1.1(g) will become Participants on

that date.













1.4 COMPENSATION:



(a) For purposes of determining contributions under the Plan,

Compensation shall be as defined in Section 2.1(a)(7), but

excluding (check the appropriate box(es)):



(1) [ ] Overtime Pay.



(2) [ ] Bonuses.



(3) [ ] Commissions.



(4) [X] The value of a qualified or a non-qualified

stock option granted to an Employee by the Employer

to the extent such value is includable in the

Employee's taxable income.



Note: These exclusions shall not apply for purposes of the

"Top-Heavy" requirements in Section 9.3 or for allocating

Discretionary Employer Contributions if an Integrated Formula is

elected in Section 1.5(a)(29).



(5) [ ] No exclusions.



(b) Compensation for the First Year of Participation



Contributions for the Plan Year in which an Employee first

becomes a Participant shall be determined based on the Employee's

Compensation (check one):



(1) [ ] For the entire Plan Year.



(2) [X] For the portion of the Plan Year in which the

Employee is eligible to participate in the Plan.



1.5 CONTRIBUTIONS:



(a) [ ] Employer Contributions:



(1) [ ] Fixed Formula - Nonintegrated Formula (check (A) or

(B) and fill in the blank):



(A) [ ] Fixed Percentage Employer Contribution:



For each Plan Year, the Employer will contribute

for each eligible Participant an amount equal to

____% (not to exceed 15%) of such Participant's











(B) [ ] Fixed Flat Dollar Employer Contribution:



For each Plan Year, the Employer will contribute

for each eligible Participant all amount equal

to $__________.



(2) [X] Discretionary Formula



The Employer may decide each Plan Year whether to make a

discretionary Employer contribution on behalf of eligible

Participants in accordance with Section 4.6. Such contribution

shall be allocated to eligible Participants based upon the

following (check (A) or (B)):



(A) [X] Nonintegrated Allocation Formula:



In the ratio that each eligible

Participant's Compensation bears to the

total Compensation paid to all eligible

Participants for the Plan Year.



(B) [ ] Integrated Allocation Formula:



In accordance with Section 4.6.



Note: An Employer who maintains any other plan that provides for

Social Security Integration (permitted disparity) may not elect

(2)(B).



(3) Eligibility Requirement(s)



A Participant shall be entitled to Employer contributions for a

Plan Year under this Subsection (a) if the Participant satisfies

the following requirement(s) (Check the appropriate box(es) -

Options (B) and (C) may not be elected together):



(A) [ ] is employed by the Employer on the last day of the

Plan Year.



(B) [ ] earns at least 500 Hours of Service during the

Plan Year.



(C) [X] earns at least 1,000 Hours of Service during the

Plan Year.



(D) [ ] no requirements.



Note: If option (A), (B), or (C) above is selected, then Employer

contributions can only be funded by the Employer after Plan Year

end. Employer contributions funded during the Plan Year Shall not

be subject to the eligibility requirements of this section

1.5(a)(3).











(b) [X] Deferral Contributions



(1) Regular Contributions



The Employer shall make a Deferral Contribution in accordance

with Section 4.1 on behalf of each Participant who has an

executed salary reduction agreement in effect with the Employer

for the payroll period in question, not to exceed 15% (no more

than 15%) of Compensation for that period.



(A) A Participant may increase or decrease, on a

prospective basis, his salary reduction agreement

percentage (check one):



(i) [ ] As of the beginning of each payroll



(ii) [X] As of the first day of each month.



(iii) [ ] As of the next Entry Date.



(iv) [ ] (Specify, but must be at least once per

Plan Year.)



--------------------------------------------------



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(B) A Participant may revoke, on a prospective basis, a

salary reduction agreement at any time upon proper

notice to the Administrator but in such case may

not file a new salary reduction agreement until

(check one):



(i) [ ] The first day of the next Plan Year.



(ii) [X] Any subsequent Plan Entry Date.



(iii) [ ] (Specify, but must be at least once

per Plan Year.)





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--------------------------------------------------



(2) [X] Catch-Up Contributions



The Employer may allow Participants upon proper notice and

approval to enter into a special salary reduction agreement to

make additional Deferral Contributions in an amount up to 100% of

their Compensation for the payroll period(s) in the final month

of the Plan Year.









(3) [X] Bonus Contributions



The Employer may allow Participants upon proper notice and

approval to enter into a special salary reduction agreement to

make Deferral Contributions in an amount up to 100% of any

Employer-paid cash bonuses made for such Participants during the

Plan Year. The Compensation definition elected by the Employer in

Section 1.4(a) must include bonuses if bonus contributions are



Note: A Participant's contributions under (2) and/or (3) may not

cause the Participant to exceed the percentage limited specified

by the Employer in (1) after the Plan Year. The Employer has the

right to restrict a Participant's right to make Deferral

Contributions if they will adversely affect the Plan's ability to

pass the actual deferral percentage test and/or the actual

contribution percentage test.



(4) [ ] Qualified Discretionary Contributions



The Employer may contribute an amount which it designates as a

Qualified Discretionary Contribution to be included in the actual

deferral percentage or actual contribution percentage test.

Qualified Discretionary Contributions shall be allocated to

Non-highly Compensated Employees (check one):



(A) [ ] in the ratio which each such Participant's

Compensation for the Plan Year bears to the

total of all such Participants' Compensation

for the Plan Year.



(B) [ ] as a flat dollar amount for each such

Participant for the Plan Year.



(c) [X] Matching Contributions (only if Section 1.5(b) is checked)



(1) The Employer shall make a Matching Contribution on behalf

of each Participant in an amount equal to the following

percentage of a Participant's Deferral Contributions

during the Plan Year (check one):



(A) [ ] 50%



(B) [X] 100%



(C) [ ] ___%



(D) [ ] (Tiered Match) ____% of the first ____% of

the Participant's Compensation contributed

to the Plan, ____% of the next ____% of the

Participant's Compensation contributed to











Plan, ____% of the next % of the

Participant's Compensation contributed to

the Plan.



Note: The percentages specified above for Matching

Contributions may not increase as the percentage of

Compensation contributed increases.



(E) [ ] The percentage declared for the year, if

any, by a Board of Directors' Resolution or

by a Letter of Intent for a Sole Proprietor

or Partnership.



(2) [X] The Employer may at Plan Year end make an

additional Matching Contribution equal to a

percentage declared by the Employer, through a

Board of Directors' Resolution or by a Letter of

Intent for a Sole Proprietor or Partnership, of the

Deferral Contributions made by each Participant

during the Plan Year (only if an option is checked

under Section 1.5(c)(1)).



(3) [X] Matching Contribution Limits (check the appropriate

box):



(A) [X] Deferral Contributions in excess of 3%

of the Participant's Compensation for the

period in question shall not be considered

for Matching Contributions.



Note: If the Employer elects a percentage limit in (A)

above and requests the Trustee to account separately for

matched and unmatched Deferral Contributions, the Matching

Contributions allocated to each Participant must be

computed, and the percentage limit applied, based upon

each payroll period.



(B) [ ] Matching Contributions for each

Participant for each Plan Year shall be

limited to $___________.



(4) [ ] Eligibility Requirement(s)



A Participant who makes Deferral Contributions during the Plan

Year under Section 1.5(b) shall be entitled to Matching

Contributions for that Plan Year if the Participant satisfies the

following requirement(s) (Check the appropriate box(es).

Options (B) and (C) may not be elected together):



(A) [ ] Is employed by the Employer on the last day of the

Plan Year.



(B) [ ] Earns at least 500 Hours of Service during the

Plan Year.











(C) [ ] Earns at least 1,000 Hours of Service during the

Plan Year.



(D) [ ] Is not a Highly Compensated Employee for the Plan



(E) [ ] Is not a Partner of the Employer, if the

Employer is a Partnership.



(F) [X] No requirements.



Note: If option (A), (B), or (C) above is selected, then Matching

Contributions can only be funded by the Employer after the Plan

Year ends. Any Matching Contribution funded before Plan Year end

shall not be subject to the eligibility requirements of this

Section 1.5(c)(4)). If option (A), (B), or (C) is adopted during

a Plan Year, such option shall not become effective until the

first day of the next Plan Year.



(d) [ ]Employee After-Tax Contributions (check one):



(1) [ ] Future Contributions



Participants may make voluntary non-deductible Employee

contributions pursuant to Section 4.9 of the Plan. This option

may only be elected if the Employer has elected to permit

Deferral Contributions under Section 1.5(b). Matching

Contributions by the Employer are not allowed on any voluntary

non-deductible Employee contributions. Withdrawals are limited to

one per year unless Employee contributions were allowed under a

previous plan document which authorized more frequent



(2) [ ] Frozen Contributions



Participants may not make voluntary non-deductible Employee

contributions, but the Employer does maintain frozen Participant

voluntary non-deductible Employee Contribution Accounts.



1.6 RETIREMENT AGE(S):



(a) [X] The Normal Retirement Age under the Plan is (check one):



(1) [X] age 65.



(2) [ ] age _____ (specify between and 64).



(3) [ ] later of the age _____ (cannot exceed 65) or the

fifth anniversary of the Participant's Employment

Commencement Date.









(b) [X] The Early Retirement Age is the first day of the month

after the Participant attains age 55 (specify 55 or

greater) and completes 5 Years of Service for Vesting.



(c) [X] A Participant is eligible for Disability Retirement if

he/she (check the appropriate box(es)):



(1) [X] satisfies the requirements for benefits under

the Employer's Long- Term Disability Plan.



(2) [ ] satisfies the requirements for Social Security

disability benefits.



(3) [ ] is determined to be disabled by a physician

approved by the Employer.



1.7 VESTING SCHEDULE:



(a) The Participant's vested percentage in Employer contributions

(Fixed or Discretionary) elected in Section 1.5(a) and/or

Matching Contributions elected in Section 1.5(c) shall be based

upon the schedule(s) selected below, except with respect to any

Plan Year during which the Plan is Top-Heavy. The schedule

elected in Section 1.12(d) shall automatically apply for a

Top-Heavy Plan Year and all Plan Years thereafter unless the

Employer has already elected a more favorable Vesting Schedule





(1) Employer Contributions (2) Matching Contributions

(check one): (check one):

(A) [ ] N/A - No Employer Contributions (A) [ ] N/A - No Matching Contributions

(B) [X] 100% Vesting immediately (B)[ ] 100% Vesting immediately

(C) [ ] 3-year cliff (see C below) (C)[ ] 3-year cliff (see C below)

(D) [ ] 5-year cliff (see D below) (D)[ ] 5-year cliff (see D below)

(E) [ ] 6-year graduated (see E below) (E)[ ] 6-year graduated (see E below)

(F) [ ] 7-year graduated (see F below) (F)[ ]
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