Exhibit 10.3


 


	
  

  	
   

  	
  2841 Dow Avenue,
  Tustin, California 92780 USA

  

  Phone: 714 544 6665 Fax: 714 838 4742

  

  www.cherokeepwr.com

  



 


February 29,
2008


 


Mr. Mukesh
Patel


15
Rocky Mountain


Coto
de Caza, CA 92679


 


Re:                             Amendment of Severance Agreement


 


Dear
Mr. Patel:


 


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.  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 (i) by the Executive
for Good Reason within one (1) year following a Change in Control or (ii) by
the Company other than for Cause (whether before or after a Change in Control),
then the Executive shall be entitled to the following (collectively, the “Severance
Benefits”):  (a) 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 (b) 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 5, the Severance Payment shall be payable in a lump sum within 10
business days following the effective date of the Release of Claims.


 

















 


The Executive shall not be
entitled to the Severance Benefits if (i) the Executive’s employment is
terminated by the Company for Cause or as a result of the Executive’s death or
Disability or (ii) the Executive terminates his employment with the
Company for any reason prior to or more than one (1) year after a Change in
Control, or other than for Good Reason within the one (1) year period
following a Change in Control.  Further,
the Executive shall not be entitled to any Severance Benefits contingent on a
Change in Control 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.”


 


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


 


“(c)                            Non Solicitation. The Executive will not at any time while he
is employed by the Company or any of its subsidiaries, and for 12 months
following the termination of his employment (the “Restricted Period”), solicit,
recruit, request, cause, induce or encourage any individual who is then
employed by the Company, or was employed by the Company at any time during the
12-month period ending on the Executive’s termination date, to leave the
employment of the Company or any of its subsidiaries.


 


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 (each, a “Restricted 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.


 


However, nothing in the
paragraph above shall prevent the Executive from accepting employment with any
other person or entity during the Restricted Period, including any Restricted
Company, provided that the Executive continues to otherwise comply with the
restrictions in this paragraph.”


 


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3.             Section 8 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.”


 


4.             A new Section 12(b) is hereby added
to the Agreement to read in its entirety as follows:


 


“(b)         “Change in Control” shall mean the occurrence of any of the following events:


 


(i)                                    equity securities of the Company representing
more than fifty point one (50.1%) of the combined voting power of the then
outstanding voting  securities of
the Company are acquired by any person or group of persons acting in concert
(within the meaning of Section 14(d) of the Securities Exchange Act
of 1934) other than (x) the Company, a direct or indirect subsidiary or
parent of the Company, or an employee benefit plan or trust established by the
Company, or (y) Oaktree, GSC or any of their respective affiliates;


 


(ii)                                 a merger or consolidation is consummated in
which the Company is a constituent corporation and which results in less than
fifty percent (50%) of the outstanding voting securities of the surviving or
resulting entity being owned by the then existing stockholders of the Company
(in the aggregate);


 


(iii)                              a sale is consummated by the Company of
substantially all of the Company’s assets to a person or entity which is not (x) a
direct or indirect subsidiary or parent of the Company, or an employee benefit
plan or trust established by the Company, or (y) Oaktree, GSC or any of
their respective affiliates; or


 


(iv)                             during any period of two consecutive years,
individuals who, at the beginning of such period, constituted the Board (plus
each additional director who was approved by the vote of at least two-thirds of
the directors then still in office who were directors at the beginning of such
two-year period or whose appointment, election or nomination for election was
previously so approved or recommended) cease, for any reason, to constitute at
least a majority thereof.


 


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Notwithstanding the
foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions
immediately following which the holders of the common stock of the Company
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all
or substantially all of the assets of the Company immediately following such
transaction or series of transactions.”


 


5.             A new Section 12(f) is hereby added
to the Agreement to read in its entirety as follows:


 


“(f)          “Good Reason” shall mean the occurrence of one or more of the following
events without Executive’s prior written consent (except as a result of a prior
termination):


 


(i)            any material change in the Executive’s status,
title, authorities or responsibilities (including reporting responsibilities) which
represents a demotion from Executive’s status, title, position or
responsibilities (including reporting responsibilities) immediately prior to
the Change in Control; the assignment to the Executive of any duties or work
responsibilities which are materially inconsistent with Executive’s status,
title, position or work responsibilities immediately prior to the Change in
Control, or which are materially inconsistent with the status, title, position
or work responsibilities of a similarly situated senior officer; or any removal
of the Executive from, or failure to appoint, elect, reappoint or reelect the
Executive to, any of such positions, except in the event of Executive’s death
or Disability and other than any such change primarily attributable to the fact
the Company may no longer be a public company;


 


(ii)           any decrease in Executive’s annual Base Salary or target annual
incentive award opportunity except for across-the-board salary reductions
similarly affecting all senior officers of the Company;


 


(iii)          the reassignment of the Executive to a location more than twenty-five
(25) miles from Executive’s then current work location;


 


(iv)          the failure by the Company to continue in effect any incentive, bonus
or other compensation plan in which the Executive participates, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to the failure to continue such plan, or 


 


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the failure by the Company
to continue Executive’s participation therein, or any action by the Company
which would directly or indirectly materially reduce his participation therein
or reward opportunities thereunder; provided, however, that the Executive
continues to meet substantially all eligibility requirements thereof;


 


(v)                                the failure by the Company to continue in
effect any employee benefit plan (including any medical, hospitalization, life
insurance, disability or other group benefit plan in which the Executive
participates), or any material fringe benefit or perquisite enjoyed by the
Executive unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to the failure to continue such
plan, or the failure by the Company to continue Executive’s participation
therein, or any action by the Company which would directly or indirectly
materially reduce Executive’s participation therein or reward opportunities
thereunder, or the failure by the Company to provide the Executive with the
benefits to which the Executive is entitled as an employee of the Company;
provided, however, that the Executive continues to meet substantially all
eligibility requirements thereof;


 


(vi)                             any purported termination of Executive’s
employment for Cause which is not effective; or


 


(vii)                          the failure of the Company to obtain a
satisfactory agreement from any successor or assignee of the Company to fully
assume and agree to perform this Agreement;


 


provided, however, that Good
Reason shall be deemed not to exist until the Company has first been (1) supplied
with notice from the Executive setting forth the Executive’s assertion of Good
Reason and (2) provided with the opportunity to cure the facts giving rise
to such assertion within ten (10) days of delivery of the written notice
by the Executive to the Company.”


 


Notwithstanding
the foregoing, it will not constitute “Good Reason” if the Executive becomes
employed by a parent corporation of the Company and his status, title, position
or responsibilities change as a result of his employment by the parent
corporation so long as the Executive retains the same general authority for the
operations of the Company as he had immediately prior to the Change in Control
and his status, title, position and responsibilities with the parent
corporation are consistent with other officers


 


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of
the parent who have similar operational responsibilities for other businesses
of the parent or its subsidiaries.


 


6.             A new Section 12(g) is hereby added
to the Agreement to read in its entirety as follows:


 


“(g)                           “GSC” shall mean, collectively, GSC Recovery II, L.P., GSC Recovery       IIA, L.P., GSC Partners CDO Funds, Limited and GSC Partners CDO         Fund II, Limited.”


 


7.             A new Section 12(h) is hereby added
to the Agreement to read in its entirety as follows:


 


“(h)                           “Oaktree” shall mean, collectively, OCM Principal Opportunities Fund,
L.P., OCM/GFI Power Opportunities Fund, L.P. and GFI Two LLC.”


 


8.             Sections 12(b), 12(c) and 12(d) of
the Agreement are hereby renumbered as Sections 12(c), 12(d) and 12(e),
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/ Jeffrey M. Frank

  
	
   

  	
   

  	
  Jeffrey
  M. Frank, President and CEO

  
	
   

  	
   

  	
  Cherokee
  International Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mukesh Patel

  	
   

  	
   

  
	
   

  	
  Mukesh
  Patel

  	
   

  	
   

  



 


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