Exhibit 10.1


 


	
  

  	
   

  	
  2841 Dow Avenue,
  Tustin, California 92780 USA

  

  Phone: 714 544 6665 Fax: 714 838 4742

  

  www.cherokeepwr.com

  



 


February 29,
2008


 


Mr. Jeffrey M. Frank


15 Calle de Princesa


Coto de Caza, CA 92679


 


Re:          Amendment of Severance Agreement


 


Dear
Mr. Frank:


 


Reference
is made to that certain Amended and Restated Severance Agreement between you
and Cherokee International Corporation, dated as of December 5, 2006 (the “Agreement”).  The
purpose of this letter agreement is to amend certain provisions of the
Agreement as follows:


 


1.             The first paragraph of Section 3 of the
Agreement is hereby amended and restated, effective immediately, to read in its
entirety as follows:


 


“(3)                            Severance Payment.  Provided that the Executive is not entitled
to any benefits set forth in Section 4 below and subject to the Executive’s
having executed and, if applicable, not revoked, a release of claims reasonably
satisfactory to the Company (the “Release of Claims”), in the event the
Executive’s employment is terminated by the Company other than for Cause, the
Executive shall be entitled to the following (collectively, the “Severance
Benefits”):  (i) a cash payment, in
lieu of any other severance payment pursuant to any other plan or agreement of
the Company or any subsidiary thereof to which the Executive is otherwise
entitled, of an amount equal to two (2) times his then annual base salary
as in effect immediately prior to the date of termination (the “Severance
Payment”), and (ii) continued medical, hospitalization, life and other
insurance benefits being provided to the Executive and the Executive’s family
at the date of termination, for a period of twenty-four (24) months after the
date of termination; provided, however, that the Company shall have no
obligation to continue to provide the Executive with such insurance benefits
for any periods after the date the Executive obtains comparable benefits (with
no significant pre existing condition exclusions) as a result of the Executive’s
employment in a new position.  Subject to
Section 7, the Severance Payment shall be payable in a lump sum within 10
business days following the effective date of the Release of Claims.”


 

















 


2.             Section 4 of the Agreement is hereby
amended and restated, effective immediately, to read in its entirety as
follows:


 


“(4)                            Change in Control Benefit.  Subject to Section 7 and
the Executive’s having executed and, if applicable, not revoked, a Release of
Claims, in the event the Executive’s employment is terminated (a) by the
Company other than for Cause or (b) by the Executive for any reason, in
either case within two (2) years following a Change in Control, the
Executive shall be entitled to the following (collectively, the “Change in
Control Benefits”):  (i) an amount
equal to two (2) times his then annual base salary as in effect
immediately prior to the date of termination, of which 100% shall be payable in
a cash lump sum payment within 10 business days following the effective date of
the Release of Claims; (ii) the bonus that would have been due the Executive
for the year in which the Executive’s termination of employment occurs,
calculated as if the Company achieved financial performance for that year equal
to that set forth in the then most recent budget for that year approved by the
Board of Directors of the Company, prorated for the number of months worked in
the fiscal year the termination occurred (the “Bonus Payment”), payable in a
cash lump sum within 10 business days following the effective date of the
Release of Claims; (iii) immediate vesting of all outstanding stock
options; (iv) continued medical, hospitalization, life and other insurance
benefits being provided to the Executive and the Executive’s family at the date
of termination, for a period of twenty-four (24) months after the date of termination;
provided, however, that the Company shall have no obligation to continue to
provide the Executive with such insurance benefits for any periods after the
date the Executive obtains comparable benefits (with no significant pre
existing condition exclusions) as a result of the Executive’s employment in a
new position; (v) a cash payment equal to the amount forfeited by the
Executive under the Company’s 401(k) Plan or equivalent plans in effect
for the Executive; (vi) the right to utilize the services of a nationally
recognized executive placement service of the Executive’s choosing at the
Company’s expense in an amount not to exceed $50,000 in the aggregate for the
Executive at the Executive’s request, which request may be made at any time
within twenty-four (24) months following the date of termination, or, in lieu
of the foregoing, the Executive may request a cash lump sum payment from the
Company to the Executive in the aforementioned amount for the purpose of
arranging and managing his own executive placement services; and (vii) other
or additional benefits then due or earned in accordance with applicable plans
and programs of the Company.


 


2

















 


For purposes of this
Agreement, the Executive’s employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
for any reason if the Executive’s employment is terminated by the Company
without Cause (within the meaning of Section 14(a)) within six (6) months
prior to a Change in Control and such termination was in connection with the
Change in Control.


 


The Executive shall not be
entitled to the Change in Control Benefits if the Executive’s employment is
terminated by the Company for Cause or as a result of the Executive’s death or
Disability. Further, the Executive shall not be entitled to the Change in
Control Benefits if the Executive is terminated under his then current contract
and enters into a similar contract with a successor to the Company, provided
that the Executive’s rate of base salary, target annual bonus amount, benefits
(including, without limitation severance protections) and other material terms
of employment remain substantially similar under the new contract.”


 


3.             Section 6(c) of the Agreement is
hereby amended and restated, effective immediately, to read in its entirety as
follows:


 


“(c)                            Non Solicitation. The Executive, except within the course of
the good faith performance of his duties hereunder, shall not at any time while
he is in the employ of the Company, any constituent partner of the Company or
any of their respective parents, subsidiaries, or affiliates, and for 12 months
following the termination of his employment for any reason (the “Restricted
Period”), solicit, recruit, request, cause, induce or encourage any individual
who is then employed by the Company, was employed by the Company at any time
during the 12-month period ending on the Executive’s termination date, any
constituent partner of the Company or any of their respective parents,
subsidiaries or affiliates to leave the employment of or terminate the
relationship with the Company, its constituent partners, their respective
parents, subsidiaries, and affiliates, for any reason and/or otherwise
encourage to perform work (as an employee, independent contractor or otherwise)
for any entity or person (including the Executive) that directly or indirectly
competes with the Company at any time during the Restricted Period and/or whose
business is or includes the design, manufacture and marketing of power supplies
for the datacom, telecom, medical, process-control and other related industries
(or any portion thereof).  During the
Restricted Period, the Executive will not directly or indirectly through any
other person influence or attempt to influence customers, vendors, suppliers,
licensors, lessors, joint venturers, associates, consultants, agents, or
partners of the Company or any affiliate of the Company to divert their
business away from the Company or such affiliate, and the Executive will not
otherwise interfere with, disrupt or attempt to disrupt the business
relationships, contractual or otherwise, between the Company or any affiliate
of the Company, on the one hand, and any of its or their customers, suppliers,
vendors, lessors, licensors, joint venturers, associates, officers, employees,
consultants, managers, partners, members or investors, on the other hand.”


 


3

















 


4.             Section 10 of the Agreement is hereby
amended, effective immediately, to include the following sentence at the end of
such Section:


 


“For
purposes of this Agreement, all references to the “Company” shall include
references to any “successor” to all or substantially all of the business
and/or assets of the Company.”


 


5.             Section 14(b)(i) of the Agreement
is hereby amended by adding the term “equity” at the beginning of such
subsection.


 


6.             Section 14(f) of the Agreement is
hereby deleted in its entirety.


 


7.             Sections 14(g) and 14(h) of the
Agreement are hereby renumbered as Sections 14(f) and 14(g), respectively.


 


This
letter agreement does not modify any other terms of the Agreement except as
expressly set forth above.


 


If this letter accurately sets forth our agreement
with respect to the foregoing matters, please sign the enclosed copy of this
letter and return it to me.


 


 


	
   

  	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Raymond Meyer

  
	
   

  	
   

  	
  Raymond
  Meyer, Chairman of the Board

  
	
   

  	
   

  	
  Cherokee
  International Corporation

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jeffrey M. Frank

  	
   

  	
   

  
	
  Jeffrey
  M. Frank

  	
   

  	
   

  



 


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