SALTON, INC. FLEXIBLE DEFERRAL PLAN

 

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                                                                   EXHIBIT 10.35

 

 

                                  SALTON, INC.

 

                             FLEXIBLE DEFERRAL PLAN

 

 

 

 

 

 

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                       SALTON, INC. FLEXIBLE DEFERRAL PLAN

 

                                TABLE OF CONTENTS

 

 

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Article 1.        INTRODUCTION...................................................................................1

         1.1      "THE PLAN".....................................................................................1

         1.2      "PURPOSES".....................................................................................1

         1.3      COMPLIANCE WITH SECTION 409A...................................................................1

 

Article 2.        Definitions....................................................................................2

         2.1      "BENEFICIARY"..................................................................................2

         2.2      "BENEFIT"......................................................................................2

         2.3      "CHANGE OF CONTROL"............................................................................2

         2.4      "CODE".........................................................................................2

         2.5      "COMPANY"......................................................................................2

         2.6      "DETERMINATION DATE"...........................................................................2

         2.7      "DISABILITY"...................................................................................2

         2.8      "EFFECTIVE DATE"...............................................................................2

         2.9      "ELECTED DISTRIBUTION DATE"....................................................................3

         2.10     "ELIGIBLE EMPLOYEE"............................................................................3

         2.11     "EMPLOYER".....................................................................................3

         2.12     "ERISA"........................................................................................3

         2.13     "FLEXIBLE DEFERRAL ACCOUNT"....................................................................3

         2.14     "PARTICIPANT"..................................................................................3

         2.15     "PLAN ADMINISTRATOR"...........................................................................3

         2.16     "PLAN YEAR"....................................................................................3

         2.17     "RELATED COMPANY"..............................................................................3

         2.18     "RETIREMENT"...................................................................................3

         2.19     "RETIREMENT ACCOUNT"...........................................................................3

         2.20     "SHORT-TERM ACCOUNT"...........................................................................4

         2.21     "TRUST"........................................................................................4

         2.22     "TRUSTEE"......................................................................................4

         2.23     "VOLUNTARY DEFERRAL"...........................................................................4

 

Article 3.        PARTICIPATION..................................................................................5

         3.1      SELECTION......................................................................................5

         3.2      PARTICIPATION..................................................................................5

         3.3      DURATION OF PARTICIPATION......................................................................5

 

Article 4.        PARTICIPANT ELECTIONS AND EMPLOYER CONTRIBUTIONS...............................................6

         4.1      INITIAL ELECTIONS..............................................................................6

         4.2      RETIREMENT ACCOUNTS AND SHORT-TERM ACCOUNTS....................................................6

         4.3      ELECTION TO DEFER COMPENSATION.................................................................7

         4.4      [SUSPENSION OF VOLUNTARY DEFERRALS.............................................................7

         4.5      DISCRETIONARY COMPANY CREDITS..................................................................8

 

Article 5.        DETERMINATION OF BENEFIT.......................................................................9

         5.1      CREDITS TO FLEXIBLE DEFERRAL ACCOUNT...........................................................9

         5.2      HYPOTHETICAL SHARES............................................................................9

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         5.3      INVESTMENT ELECTION............................................................................9

         5.4      EARNINGS (OR LOSSES) ON THE FLEXIBLE DEFERRAL ACCOUNT.........................................10

         5.5      STATEMENT OF ACCOUNT..........................................................................10

         5.6      VESTING.......................................................................................10

         5.7      TITLE TO AND OWNERSHIP OF ASSETS..............................................................11

 

Article 6.        PAYMENT OF BENEFITS...........................................................................12

         6.1      FORM OF BENEFITS..............................................................................12

         6.2      ELECTION AND CHANGE OF ELECTION OF FORM OF BENEFITS...........................................12

         6.3      PAYMENT OF BENEFITS AT RETIREMENT OR ELECTED DISTRIBUTION DATE................................12

         6.4      PAYMENT OF BENEFITS AT DISABILITY.............................................................12

         6.5      PAYMENT OF BENEFITS AT TERMINATION OF EMPLOYMENT..............................................12

         6.6      PAYMENT OF DEATH BENEFITS.....................................................................13

         6.7      PAYMENT OF BENEFITS UPON HARDSHIP.............................................................13

         6.8      INVOLUNTARY CASH-OUTS.........................................................................13

         6.9      BENEFICIARY DESIGNATION.......................................................................14

         6.10     DISBURSEMENT OF BENEFIT.......................................................................14

         6.11     INCAPACITY OF PARTICIPANT.....................................................................14

 

Article 7.        POWERS AND LIABILITIES........................................................................15

         7.1      PLAN ADMINISTRATION...........................................................................15

         7.2      NO FUNDING OBLIGATION.........................................................................16

         7.3      TRUST.........................................................................................16

 

Article 8.        GENERAL PROVISIONS............................................................................17

         8.1      CLAIMS........................................................................................17

         8.2      SPENDTHRIFT CLAUSE............................................................................18

         8.3      NO EMPLOYMENT CONTRACT........................................................................18

         8.4      ASSIGNMENT AND BINDING EFFECT.................................................................18

         8.5      WITHHOLDING FOR TAXES.........................................................................18

         8.6      AMENDMENTS....................................................................................18

         8.7      TERMINATION OF PLAN...........................................................................18

         8.8      COMPANY ACTION................................................................................19

         8.9      NO WAIVER.....................................................................................19

         8.10     SECTION HEADINGS..............................................................................19

         8.11     NOTICES.......................................................................................19

         8.12     CHOICE OF LAWS................................................................................19

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ARTICLE 1.   INTRODUCTION

 

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     1.1 THE PLAN. The Salton, Inc. Flexible Deferral Plan (the "Plan") is

hereby amended and restated effective as of January 1, 2005 as set forth herein.

Salton, Inc. (the "Company") originally established the Plan effective June 1,

2002.

 

     1.2 PURPOSES. The purpose of the Plan is to permit designated employees of

the Company and participating affiliates to accumulate additional retirement

income through a nonqualified deferred compensation plan that enables them to

defer compensation to which they will be entitled in the future. The Company

intends to continue and maintain the Plan as an unfunded, nonqualified deferred

compensation plan for a select group of management or highly compensated

employees, and intends that the Plan constitute a "top-hat" plan within the

meaning of Section 201(2) of ERISA.

 

     1.3 COMPLIANCE WITH SECTION 409A. The Company intends for the Plan to

comply with the applicable requirements of Section 409A of the Code and

regulations, rulings and other guidance issued thereunder (collectively,

"Section 409A") and shall be interpreted and administered accordingly.

 

 

 

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ARTICLE 2. DEFINITIONS

 

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     2.1 "BENEFICIARY" means the person entitled to receive a Participant's

Benefit hereunder in the event of the Participant's death.

 

     2.2 "BENEFIT" means:

 

          (a) With respect to a Participant's Retirement Account, the sum of:

 

               (1) the Voluntary Deferral Amounts that the Participant elected

     with respect to the Retirement Account,

 

               (2) the discretionary Company credits, if any, to his or her

     Retirement Account in accordance with Section 4.6; and

 

               (3) earnings credited (and losses debited) to the Participant's

     Retirement Account during the period beginning on the date the

     Participant's First Voluntary Deferral is credited to the Retirement

     Account up to and including the time as the Benefit is fully paid.

 

          (b) With respect to each Short-Term Account of a Participant, the sum

     of:

 

               (1) the Voluntary Deferral Amounts that the Participant elected

          with respect to the Short-Term Account; and

 

               (2) earnings credited (and losses debited) to the Participant's

          Short-Term Account during the period beginning on the date the

          Participant's First Voluntary Deferral Amount is credited to the

          Short-Term Account up to and including such time as the Benefit is

          fully paid.

 

     2.3 "CHANGE OF CONTROL" shall mean, to the extent provided under Section

409A, a change in the ownership or effective control of the Company, or in the

ownership of a substantial portion of the assets of the Company.

 

     2.4 "CODE" means the Internal Revenue Code of 1986, as amended.

 

     2.5 "COMPANY" means Salton, Inc.

 

     2.6 "DETERMINATION DATE" means each date, occurring at least once in each

calendar quarter, on which the earnings (or losses) on hypothetical investment

accounts referred to in Section 5.2 can be determined.

 

     2.7 "DISABILITY" means the Participant is unable to engage in any

substantial gainful activity by reason of any medically determinable physical or

mental impairment that can be expected to result in death or can be expected to

last for a continuous period of not less than 12 months.

 

     2.8 "EFFECTIVE DATE" of this amendment and restatement means January 1,

2005.

 

 

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     2.9 "ELECTED DISTRIBUTION DATE" means January 1 of the year designated by

the Participant for payment of his or her Short-Term Account.

 

     2.10 "ELIGIBLE EMPLOYEE" means an Employee of the Employer who is

affirmatively selected by the Plan Administrator to participate in the Plan and

notified by the Plan Administrator of his or her eligibility pursuant to Section

3.1. An employee's designation as an Eligible Employee may be revoked by the

Plan Administrator effective as of the first day of the next following Plan

Year.

 

     2.11 "EMPLOYER" means the Company and any corporation or other business

entity that directly, or through one or more intermediaries, controls, or is

controlled by, or is under common control with, the Company, and that elects to

adopt the Plan pursuant to Section 8.8(b).

 

     2.12 "ERISA" means the Employee Retirement Income Security Act of 1974, as

amended.

 

     2.13 "FLEXIBLE DEFERRAL ACCOUNT" means the unfunded bookkeeping account

maintained pursuant to Article 5 of this Plan representing the sum of the

Participant's Benefit. A Participant's Flexible Deferral Account may consist of

a Retirement Account and up to four Short-Term Accounts (each an "Account"), for

which separate accountings shall be maintained.

 

     2.14 "PARTICIPANT" means an Eligible Employee who has become a Participant

in accordance with Article 3 and whose participation has not terminated.

 

     2.15 "PLAN ADMINISTRATOR" means the Company, or such other person or

persons as may be appointed by the Company to administer the Plan.

 

     2.16 "PLAN YEAR" means the calendar year.

 

     2.17 "RELATED COMPANY" means any corporation or business organization which

is a member of a controlled group of corporations which includes the Company (as

determined under Code Section 414(b)); a corporation or business organization

which is under common control with the Company (as determined under Code Section

414(c)); any corporation or business organization which is a member of an

affiliated service group that includes the Company (as determined under Code

Section 414(m); and any other entity required to be aggregated with the Company

under Treasury regulations to be issued under Code Section 414(o).

 

     2.18 "RETIREMENT" means a Participant's termination of employment (that

constitutes a "Separation from Service" within the meaning of Section 409A) with

the Employer for any reason on or after attaining age 60, regardless of his or

her years of service. The transfer of a Participant from employment by an

Employer or Related Company to employment by another Employer or Related Company

shall not constitute a termination of employment.

 

     2.19 "RETIREMENT ACCOUNT" means the portion of a Participant's Flexible

Deferral Account that is designated by the Participant at the time the first

Voluntary Deferral to such Account is elected, to be payable at the

Participant's Retirement.

 

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     2.20 "SHORT-TERM ACCOUNT" means the portion of a Participant's Flexible

Deferral Account that is designated by the Participant at the time the first

Voluntary Deferral to such Account is elected, to be payable (subject to

Sections 6.4 through 6.8 and Section 8.7) on or after an Elected Distribution

Date.

 

     2.21 "TRUST" means the trust so established pursuant to Section 7.3.

 

     2.22 "TRUSTEE" means the trustee or trustees of the Trust.

 

     2.23 "VOLUNTARY DEFERRAL" means the amount by which a Participant elects to

have his or her current cash salary or bonus reduced in consideration of credits

to his or her Flexible Deferral Account pursuant to this Plan, and the credits

resulting from such election.

 

 

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ARTICLE 3. PARTICIPATION

 

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     3.1 SELECTION. The Plan Administrator shall select Participants from among

the Eligible Employees. The Plan Administrator shall advise each Eligible

Employee selected for participation of his or her selection, and afford the

Eligible Employee the opportunity to make Voluntary Deferrals in accordance with

Article 4.

 

     3.2 PARTICIPATION. Participation in the Plan is voluntary. An Eligible

Employee who is selected and who wishes to participate in the Plan must complete

the initial election form specified in Section 4.1, and return such form to the

Plan Administrator, in order to become a Participant. Subject to that

requirement, an Eligible Employee who is selected for inclusion in the Plan

shall become a Participant on the date that the Company determines his or her

participation may begin.

 

     3.3 DURATION OF PARTICIPATION. A Participant shall continue to be a

Participant so long as he or she is an Eligible Employee. A Participant who for

any reason ceases to be an Eligible Employee must cease to make Voluntary

Deferrals, but shall continue to be a Participant for purposes of maintaining

his or her Accounts (including changing his or her designation of hypothetical

investments pursuant to Section 5.3); and the Participant may resume making

Voluntary Deferrals on the January 1 next following the date on which the

Participant becomes an Eligible Employee; provided such Eligible Employee shall

have returned a new election form to the Plan Administrator prior to such

January 1. A Participant shall cease participation after the Participant or such

Participant's Beneficiary, as the case may be, receives full payment of the

Participant's Benefit under the Plan.

 

 

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ARTICLE 4. PARTICIPANT ELECTIONS AND EMPLOYER CONTRIBUTIONS

 

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     4.1 INITIAL ELECTIONS. Each Participant shall complete and file with the

Plan Administrator an initial election on a form or forms prescribed and

approved by the Plan Administrator specifying:

 

          (a) the date that Benefits will be paid, in accordance with Section

4.2;

 

          (b) the salary and bonus to be deferred as Voluntary Deferrals, in

 accordance with Section 4.3;

 

          (c) the form of Benefit payment, as described in Section 6.1;

 

          (d) the initial investment allocation(s), as described in Section 5.3;

and

 

          (e) his or her Beneficiary designation, as described in Section 6.7.

 

     4.2 RETIREMENT ACCOUNTS AND SHORT-TERM ACCOUNTS. When a Participant elects

to make Voluntary Deferrals in accordance with Section 4.3, the Participant

shall designate the portions of such Voluntary Deferrals to be credited to his

or her Retirement Account and to his or her Short-Term Account(s).

 

          (a) Any amount credited to a Participant's Retirement Account shall be

payable (subject to Sections 6.4 through 6.8 and Section 8.7) at or beginning at

such Participant's Retirement.

 

          (b) Any amount credited to a Participant's Short-Term Account shall be

payable (subject to Sections 6.4 through 6.8 and Section 8.7) at or beginning at

his or her Elected Distribution Date, which shall be a specific future date

selected in accordance with the following:

 

               (1) The Participant may establish one Short-Term Account each

     Plan Year, subject to a maximum of four Short-Term Accounts per

     Participant.