<PAGE>
EXHIBIT 10.35
SALTON, INC.
FLEXIBLE DEFERRAL PLAN
<PAGE>
.
.
.
SALTON, INC. FLEXIBLE DEFERRAL PLAN
TABLE OF CONTENTS
<TABLE>
<S>
<C>
<C>
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
</TABLE>
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page i
<PAGE>
<TABLE>
<S>
<C>
<C>
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
</TABLE>
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page ii
<PAGE>
ARTICLE 1. INTRODUCTION
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 1
<PAGE>
ARTICLE 2. DEFINITIONS
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 2
<PAGE>
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.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 3
<PAGE>
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.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 4
<PAGE>
ARTICLE 3. PARTICIPATION
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 5
<PAGE>
ARTICLE 4. PARTICIPANT ELECTIONS AND
EMPLOYER CONTRIBUTIONS
--------------------------------------------------------------------------------
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.
(2) The Elected Distribution Date selected for each Short-Term
Account shall be
January 1 of a year that is more than five (for the 2002
Plan Year, more
than three; and for the 2003 Plan Year, more than four)
full calendar
years later than the date of the Participant's first
Voluntary
Deferral election that relates to such Short-Term Account.
(3) A Participant who has established a Short-Term Account may
direct that part
or all of his or her Voluntary Deferrals shall continue to
be credited to
such Short-Term Account during any Plan Year before the Plan
Year in which
the Elected Distribution Date for such Short-Term Account
occurs.
--------------------------------------------------------------------------------
Salton, Inc. Flexible Deferral Plan
Page 6
<PAGE>
(c) The election of an Elected Distribution Date for a
Short-Term
Account shall be irrevocable. A Participant
may not transfer accumulated
Benefits between or among any Short-Term
Accounts or the Retirement Account.
4.3 ELECTION TO
DEFER COMPENSATION. For each Plan Year the Participant may
elect to make Voluntary Deferrals by
completing and filing with the Plan
Administrator a Voluntary Deferral election
on a form prescribed and approved by
the Plan Administrator.
(a) Types of Deferrals:
(1) Salary Deferrals. A Participant may defer any whole
percentage up to
50% of his or her base salary each Plan Year. The minimum
salary deferral
shall be 1%.
(2) Bonus Deferrals. A Participant may defer any whole
percentage
up to 100% of
his or her annual cash bonus (if any) otherwise payable in
each Plan Year
beginning with Plan Year 2003. The minimum bonus deferral
shall be 1%.
(b) A Voluntary Deferral election for a Plan Year must be filed
with
the Plan Administrator before the beginning
of the Plan Year to which it
pertains, and shall be effective on the
first day of the Plan Year after it is
filed with the Plan Administrator. A
Voluntary Deferral election filed by a
Participant who first becomes eligible to
participate during a Plan Year must be
filed within the first thirty (30) days
following the Participant's eligibility.
Every Voluntary Deferral election shall be
applied only with respect to a
Participant's salary or bonus for services
performed during the Plan Year for
which the election pertains; provided,
however, notwithstanding the foregoing, a
Voluntary Deferral Election for the Plan
Year beginning January 1, 2005 may
relate in whole or part to services
performed on or before December 31, 2005 as
long as such election is made on or before
March 15,2005.
(c) A Participant's Voluntary Deferral election shall be
effective
only for the Plan Year for which such
election is made. It shall continue in
effect for the Plan Year for which it is
made. Each Participant who wishes to
make Voluntary Deferrals in a later Plan
Year must complete a new Voluntary
Deferral election form for that later Plan
Year in accordance with subsection
(b).
4.4 SUSPENSION
OF VOLUNTARY DEFERRALS. Notwithstanding any Voluntary
Deferral election
