**Exhibit 10.1**

**AGREEMENT**

ThisAgreement (as it may be amended, modified or supplemented from time to time inaccordance with the terms hereof, this “**Agreement**”),dated as of October 27, 2002, is entered into by and among CherokeeInternational, LLC, a California limited liability company (“**Cherokee LLC**”), Cherokee InternationalCorporation (formerly, Cherokee International Finance, Inc.), a Delawarecorporation (“**Cherokee Corporation**,”and, together with Cherokee LLC, the “**OriginalIssuers**”), each of the persons listed on the signature pages heretounder the caption “Oaktree Noteholders” (each, an “**Oaktree Noteholder**”) and each of the persons listed on thesignature pages hereto under the caption “GSC Noteholders” (each, a “**GSC Noteholder**”; each Oaktree Noteholder orGSC Noteholder sometimes being referred to herein as a “**Consenting Noteholder**,” and collectively,the “**Consenting Noteholders**”).  Each of the Consenting Noteholders is aholder of the Original Issuers’ 10 1/2% Senior Subordinated Notes due 2009 (the“**Existing Notes**”) issued pursuantto an Indenture, dated as of April 30, 1999 (the “**Existing Indenture**”), by and among the Original Issuers andU.S. Bank, N.A. (f/k/a Firstar Bank of Minnesota, N.A.), as Trustee (the “**Existing Trustee**”).  Capitalized terms used but not definedherein shall have the respective meanings ascribed to such terms in theExisting Indenture.  In connection withand prior to consummation of the Exchange Offer (defined below), Cherokee LLC intendsto reorganize as a corporation under the laws of the State of Delaware bymerging with and into Cherokee Corporation. References herein to Cherokee shall refer (i) collectively to theOriginal Issuers so long as they are both in existence and (ii) to CherokeeCorporation upon consummation of the reorganization.

**R** E  C  I T  A  L S

WHEREAS,Cherokee believes it is necessary to reduce the cash flow and covenant burdensimposed by the Existing Notes and its existing Credit Agreement, dated as ofApril 30, 1999, among Cherokee LLC, as borrower, and the agents and lendersnamed therein, as amended through the date hereof (the “**Credit Agreement**”);

WHEREAS,Cherokee and the Consenting Noteholders have engaged in good faith negotiationswith the objective of reaching a mutually acceptable agreement for the exchangeof the Existing Notes for any one of the following: (i) units (the “**Units**”), consisting of 5 1/4% Senior Notesdue 2008 to be issued by Cherokee Corporation (the “**New Senior Notes**”) and warrants (the “**Warrants**”) to purchase shares of commonstock of Cherokee Corporation (the “**WarrantShares**”) each having terms substantially as set forth on Annex A-1hereto, which is incorporated into this Agreement as if fully set forth herein,or (ii) 12% Pay-In-Kind 

 

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Senior Convertible Notes due 2008 to be issued by CherokeeCorporation (the “**New Convertible Notes**”and, together with the Units, the New Senior Notes and the Warrants, the “**Securities**”), which will be convertibleinto shares of common stock of Cherokee Corporation (the “**Conversion Shares**”) having termssubstantially as set forth on Annex A-2 hereto, which is incorporated into thisAgreement as if fully set forth herein, which shall be consummated pursuant tothe Exchange Offer;

WHEREAS, inconnection with the Exchange Offer, Cherokee desires to conduct the ConsentSolicitation (defined below), pursuant to which it will seek to obtain consentsto certain proposed amendments to the Existing Indenture;

WHEREAS, inconnection with and as a condition to the Exchange Offer, Cherokee intends to(a) amend and restate its Credit Agreement in accordance with termssubstantially as set forth on Annex A-3 hereto, which is incorporated into thisAgreement as if fully set forth herein (the “**Amendment**”),and (b) refinance a portion of the indebtedness outstanding under the CreditAgreement pursuant to a term loan having terms substantially as set forth onAnnex A-4 hereto (the “**Term Loan**”)(Annexes A-1, A-2, A-3 and A-4 collectively referred to herein as the “**Term Sheet**”);

WHEREAS,the Consenting Noteholders desire to tender their Existing Notes in theExchange Offer and consent to the proposed amendments in the ConsentSolicitation (the Exchange Offer and the Consent Solicitation collectively, the“**Exchange Transactions**”), on theterms and subject to the conditions set forth herein;

WHEREAS theOaktree Noteholders (the “**Equity Holders**”)hold a substantial portion of the outstanding equity interests in Cherokee LLCand, upon Cherokee LLC’s reorganization as Cherokee Corporation, will hold asubstantial portion of the outstanding shares of common stock of CherokeeCorporation and desire to have Cherokee effect the Exchange Transactions; and

WHEREAS, toexpedite and implement the Exchange Transactions, (i) Cherokee is prepared topropose the Exchange Transactions, to seek the necessary approvals for theExchange Transactions and the other transactions contemplated thereby asexpeditiously as possible, and to perform its other obligations hereunder, and(ii) the Consenting Noteholders are prepared to commit, on the terms andsubject to the conditions of this Agreement and applicable law, to exchangetheir Existing Notes when solicited to do so and to perform their otherobligations hereunder, including delivering their consent in the ConsentSolicitation.

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NOW,THEREFORE, in consideration of the foregoing recitals and the terms andconditions set forth herein, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, Cherokee, CherokeeFinance and each Consenting Noteholder (each a “**Party**” and, collectively, the “**Parties**”), intending to be legally bound, hereby agree asfollows:

1.     Exchange Offer andConsent Solicitation.

(a)           Exchange Offer.  Cherokee shall conduct an exchange offer inaccordance with the terms hereof, in which Cherokee shall offer to the holdersof the Existing Notes the opportunity to exchange the Existing Notes for (i)the Units or (ii) the New Convertible Notes, at the election of the holder ofthe Existing Notes (the “**Exchange Offer**”),each of which shall be delivered to the holders of the Existing Notes on theClosing Date (as defined below).  TheSecurities issued in the Exchange Offer shall have terms substantially as setforth on Annexes A-1 and A-2 hereto. In the Exchange Offer, Cherokee shall offer to exchange, for each $1,000principal amount of Existing Notes held by a holder thereof, at the option ofthat holder, any one of the following (the “**Consideration**”),but not a combination thereof:

(i)                    1****Unit, consisting of $1,000 principal amount of New SeniorNotes and 1 Warrant to purchase initially between 119.3995 and 183.7512 WarrantShares, determined as provided below; or

(ii)                   $1,000 principal amount ofNew Convertible Notes, which will be convertible into a number of ConversionShares that will vary depending upon the number of Units issued in the ExchangeOffer (which shall not exceed 30,903,646 shares in the aggregate), determinedas provided below.

The number of Warrant Sharesinitially issuable upon exercise of each Warrant will vary depending upon theaggregate principal amount of Existing Notes tendered and accepted in exchangefor Units in the Exchange Offer, and no more than 11,939,951 Warrant Shareswill be initially issuable in the aggregate. Accordingly, if $22****millionor less in aggregate principal amount of Existing Notes is tendered andaccepted in exchange for Units, 183.7512 Warrant Shares will be initiallyissuable upon exercise of each Warrant. If $79 million or more in aggregate principal amount of Existing Notesis tendered and accepted in exchange for Units, 119.3995 Warrant Shares will beinitially issuable upon exercise of each Warrant, and if between $22 millionand $79 million in aggregate principal amount of Existing Notes is tendered andaccepted in exchange for Units, the number of Warrant Shares initially issuableupon exercise of each Warrant shall be adjusted *pro*

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* rata*between183.7512 and 119.3995 Warrant Shares. The number of Warrant Shares issuable upon exercise will be adjusted forcertain dilutive events.

Similarly, the number ofConversion Shares initially issuable upon conversion of each $1,000 principalamount of New Convertible Notes also will vary depending upon the aggregateprincipal amount of Existing Notes tendered and accepted in exchange for Unitsin the Exchange Offer, and no more than 30,903,646 Conversion Shares will beinitially issuable in the aggregate. Accordingly, if all holders of Existing Notes exchange their ExistingNotes for an aggregate of $100,000,000 principal amount of New ConvertibleNotes, 309.0365 Conversion Shares will be initially issuable upon conversion ofeach $1,000 principal amount of New Convertible Notes.  The number of Conversion Shares initiallyissuable upon conversion of each $1,000 principal amount of New ConvertibleNotes will increase *pro rata* asthe aggregate principal amount of New Convertible Notes issued in the ExchangeOffer decreases.  Accordingly, if, asassumed herein, $43,550,000 aggregate principal amount New Convertible Notesand $56,450,000 aggregate principal amount of New Senior Notes are issued inexchange for Existing Notes, then 541.9853 Conversion Shares will be initiallyissuable upon conversion of each $1,000 principal amount of New ConvertibleNotes, or an aggregate of 23,603,458 Conversion Shares.  The number of Conversion Shares issuableupon conversion will be adjusted for certain dilutive events.

In addition, on the ClosingDate, Cherokee will pay interest, in cash, to holders of Existing Notestendered and accepted for exchange in the Exchange Offer that was due to suchholders on November 1, 2002.  Payment ofany interest that has accrued since November 1, 2002 on Existing Notes tenderedand accepted in exchange for New Senior Notes or New Convertible Notes, asapplicable, will be paid on the next regularly scheduled interest payment date,which is May 1, 2003 for the New Senior Notes and November 1, 2003 for the NewConvertible Notes, at the rate applicable to the New Senior Notes and NewConvertible Notes, respectively. Cherokee also will pay, on the Closing Date, interest, in cash, onExisting Notes not tendered or accepted for exchange in the Exchange Offer thatwas due to such holders on November 1, 2002. Payment of any interest that has accrued since November 1, 2002 on suchnon-tendered or non-accepted Existing Notes will be paid on the next regularlyscheduled interest payment date, which is May 1, 2003, at the rate applicableto the Existing Notes.

(b)           Consent Solicitation; SupplementalIndenture.  As part of the ExchangeOffer, Cherokee shall solicit the consent (the “**Consent Solicitation**”) of the holders of record or beneficialowners of Existing Notes as of the close of business on September 12, 2002 (the“**Record Date**”) to amendments tocertain 

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provisionsof the Existing Indenture (the “**Proposals**”),which Proposals are set forth in, and shall be effected by, a supplementalindenture (the “**Supplemental Indenture**”),substantially in the form attached hereto as Annex B.  In the Exchange Offer, exchanging holders ofExisting Notes shall be required, as a condition to Cherokee’s acceptance ofsuch holders’ tender of Existing Notes in the Exchange Offer, to consent toeach of the Proposals or, if such holders were not holders of record orbeneficial owners of such Existing Notes as of the Record Date, to deliver aconsent to the Proposals with respect to such tendered Existing Notes from theholder of record or beneficial owner thereof as of Record Date.

(c)           Preparation of Exchange OfferDocuments; Commencement of Exchange Offer. Promptly upon execution of this Agreement, Cherokee shall prepare alldocuments necessary to commence, effect and consummate the ExchangeTransactions as contemplated by this Agreement (collectively, the “**Exchange Offer Documents**”).  As soon as reasonably practicable afterpreparation of the Exchange Offer Documents, Cherokee shall commence theExchange Offer and the Consent Solicitation.

(d)           Cooperation.  Cherokee, on the one hand, and each of theConsenting Noteholders, on the other hand, shall cooperate with each other anduse (and Cherokee shall cause its subsidiaries to use) its respective reasonableefforts to take or cause to be taken all actions, and do or cause to be doneall things, necessary, proper or advisable on its part to consummate and makeeffective the Exchange Transactions and the other transactions contemplatedthereby, including preparing and filing as promptly as practicable alldocumentation to effect all necessary notices, reports and other filings and toobtain as promptly as practicable all consents, registrations, approvals,permits and authorizations necessary or advisable to be obtained from any thirdparty and/or any federal, state or other government, governmental or regulatoryagency or body, court or self-regulatory organization, domestic or foreign(each, a “**Governmental Entity**”) inorder to consummate the Exchange Transactions or any of the other transactionscontemplated by the Exchange Offer Documents.

(e)           Support of Equity Holders.  The Equity Holders hereby agree to (i) usetheir reasonable efforts to cause Cherokee to comply with its obligations underthis Agreement and (ii) to the extent the Equity Holders’ approval or consentof the Exchange Transactions is required, grant such approval or consent in atimely manner.

(f)            Compliance with Securities Laws.  Cherokee and the Consenting Noteholdersagree that the Exchange Offer is intended to conform with the 

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requirementsof Section 3(a)(9) of the Securities Act of 1933, as amended (the “SecuritiesAct”), and Rule 150 adopted thereunder, and the applicable provisions ofSection 14(e) of the Securities Exchange Act of 1934, as amended (the “**Exchange Act**”), and Regulation 14E adoptedthereunder, and all other applicable federal and state securities laws.

(g)           Closing.  The closing of the Exchange Offer andConsent Solicitation (the “**Closing**”)shall take place (i) at the offices of Skadden, Arps, Slate, Meagher & FlomLLP, New York, New York at 10:00 A.M. on the first business day on which thelast to be fulfilled or waived of the conditions to the Exchange Transactionsset forth in Section 2 (other than in each case those conditions that by theirnature are to be satisfied at the Closing, but subject to the fulfillment orwaiver of those conditions) shall be satisfied or waived in accordance withthis Agreement or (ii) at such other place and time and/or on such other dateas Cherokee and the Consenting Holders may agree in writing (either such time,the “**Closing Date**”).

2.     Conditions to theExchange Transactions.  Theobligations of the Parties to consummate the Exchange Transactions are subjectto satisfaction or waiver of the following conditions:

(a)           Requisite Consents Condition.  Cherokee shall have timely received validlydelivered consents to the Proposals from holders of not less than a majority inaggregate principal amount of Existing Notes outstanding on the Record Date(other than Existing Notes held on the Record Date by Cherokee or itsAffiliates).

(b)           Minimum Tender Condition.  Not less than 51% in aggregate outstandingprincipal amount of Existing Notes shall have been validly and timely tenderedand not properly withdrawn in the Exchange Offer.

(c)           Credit Agreement Amendment.  The Amendment shall have been executed anddelivered by the lenders party thereto.

(d)           Term Loan.  The Term Loan shall have been executed anddelivered by the lenders party thereto.

(e)           Outside Closing Date.  The Exchange Offer shall have beenconsummated on or prior to December 31, 2002 (the “**Outside Closing Date**”).

(f)            Blue Sky.  Cherokee shall have received all statesecurities and “blue sky” permits and approvals, if any, necessary toconsummate the Exchange Transactions.

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(g)           No Restrictions.  No Governmental Entity of competentjurisdiction shall have enacted, issued, promulgated, enforced or entered anystatute, law, ordinance, rule, regulation, judgment, decree, injunction orother order (whether temporary, preliminary or permanent) that is in effect andrestrains, enjoins or otherwise prohibits consummation of the ExchangeTransactions.

3.     Agreements of ConsentingNoteholders in Connection With the Exchange Transactions.

(a)           Each of the Consenting Noteholdershereby agrees, subject to the conditions that, and only for so long as, (i) thematerial terms of the Exchange Offer Documents are substantially identical tothe terms set forth in this Agreement and the Term Sheet, and (ii) noNoteholders Termination Event (as defined below) shall have occurred withrespect to it and not have been waived in accordance herewith:

(i)                    it shall validly and timelytender all of its Existing Notes held of record or beneficially owned by it asof the date of this Agreement, and any Existing Notes acquired by suchConsenting Noteholder after the date of this Agreement, for exchange pursuantto the Exchange Offer, and accept in exchange therefor Units, New ConvertibleNotes or the Cash Election, as set forth opposite such Consenting Noteholder’sname on Schedule I hereto;

(ii)                   it shall validly and timelydeliver consents to (and, upon request of Cherokee shall cause its nominee toconsent to) the Proposals with respect to all of its Existing Notes held ofrecord or beneficially owned by it as of the Record Date, and, with respect toany Existing Notes held of record or beneficially owned by it as of the date ofthis Agreement or acquired by such Consenting Noteholder after the date of thisAgreement that were not so held or owned as of the Record Date, it shallvalidly and timely deliver the consent of the record or beneficial owner ofsuch Existing Notes as of the Record Date, pursuant to the Consent Solicitationand in accordance with the terms hereof;

(iii)                  it shall not object to theconsummation of the Exchange Transactions or otherwise commence any proceedingto oppose, or that could materially adversely affect or materially delay, theExchange Transactions or the use of any of the Exchange Offer Documents inconnection therewith;

(iv)                  it shall agree to and shallexecute execution versions of the Exchange Offer Documents to which it is partyand containing terms and conditions substantially identical to those containedin this Agreement and the Term Sheet;

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(v)                   it shall execute agreementssetting forth the stockholder arrangements contained in the Term Sheet

(vi)                  it shall not vote for, consentto, or directly or indirectly seek, solicit, support, participate in orencourage any other exchange of the Existing Notes, or any restructuring orrecapitalization of Cherokee, or any plan of reorganization or liquidationunder applicable bankruptcy or insolvency laws, whether domestic or foreign, inrespect of Cherokee, or any plan, proposal or offer of dissolution, winding up,liquidation, reorganization, merger, recapitalization or restructuring ofCherokee (other than as described in the Exchange Offer Documents (includingCherokee LLC’s reorganization into a Delaware corporation), in connection withthe amendment or refinancing of the Credit Agreement on terms acceptable toCherokee or one agreed to in writing by Cherokee and each of the ConsentingNoteholders); and

(vii)                 it shall not take any otheraction (and shall prevent its nominee from taking any action on its behalf),including but not limited to initiating any legal proceeding, that ismaterially inconsistent with, or that could materially delay consummation of,any of the Exchange Transactions.

(b)           Upon request of Cherokee, eachConsenting Noteholder agrees:

(i)                    to the extent permittedunder the Existing Indenture, to waive (and, upon request of Cherokee, shallcause its nominee to waive) any Default or Event of Default arising after thedate of this Agreement under the Existing Indenture through the earlier ofconsummation of the Exchange Offer or termination of this Agreement inaccordance with the provisions hereof; or

(ii)                   in the event that anyacceleration of the Existing Notes is effected pursuant to Section 6.02 of theExisting Indenture as a result of any Event of Default, to vote (and, uponrequest of Cherokee, shall cause its nominee to vote) pursuant to Section 6.02of the Existing Indenture to rescind such acceleration and its consequences andthat all such rescissions of acceleration shall include instructions to theExisting Trustee under the Existing Indenture to such effect.

4.     Agreements of Cherokeein Connection with the Exchange Transactions.

(a)           Cherokee hereby agrees that (i)promptly upon execution of this Agreement by all Parties, to prepare all of theExchange Offer Documents in a timely fashion in accordance with the terms ofthis Agreement, (ii) to ensure that all of the Exchange Offer Documents containterms and conditions substantially identical to 

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thosecontained in this Agreement and the Term Sheet, (iii) to use its reasonableefforts to obtain any and all requisite material regulatory and/or materialthird party approvals for the Exchange Transactions and (iv) to execute anddeliver any documents, agreements or instruments necessary to effectuate theExchange Transactions.

(b)           Cherokee also shall keep theConsenting Noteholders apprised of the status of matters relating to completionof the Exchange Transactions and the other transactions contemplated thereby,including promptly furnishing the Consenting Noteholders with copies of (i) anyamendments or supplements to any of the Exchange Offer Documents in advance ofany mailing to holders of Existing Notes and (ii) any notice or other materialcommunications received by Cherokee from any Governmental Entity with respectto the Exchange Transactions and the other transactions contemplated thereby.

5.     Termination.

(a)           Termination of the Obligations ofthe Consenting Noteholders.  Uponthe occurrence of any of the events set forth below (each, a “**Noteholder Termination Event**”), each of theConsenting Noteholders may terminate its obligations hereunder and rescind itsacceptance of the Exchange Offer by giving written notice of such terminationto the other Consenting Noteholders, if any, and Cherokee:

(i)                    the Exchange Offer Documentsprovide or are modified to provide for any terms that are materially adverse tothe Consenting Noteholders or materially inconsistent with any of the materialterms or conditions of this Agreement or the Term Sheet;

(ii)                   Cherokee materially breachesthis Agreement or fails to satisfy in any material respect any of the terms orconditions of this Agreement or the Term Sheet;

(iii)                  the Exchange Offer has notbeen consummated on or prior to the Outside Closing Date;

(iv)                  Cherokee shall file a petitionor commence a proceeding under any provision of any applicable bankruptcy orinsolvency laws, whether state, federal or foreign (collectively, “BankruptcyLaws”);

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(v)                   any person shall file apetition or commence a proceeding against Cherokee under any provision of anyapplicable Bankruptcy Law;

(vi)                  Cherokee shall withdraw orrevoke the Exchange Offer, or Cherokee shall publicly announce its intentionnot to pursue the Exchange Offer; or

(vii)                 any other Consenting Noteholdershall have materially breached this Agreement or failed to satisfy in anymaterial respect any of the terms or conditions of this Agreement, which breachshall not have been cured within 3 days after receiving notice thereof;

(viii)                any order permanentlyrestraining, enjoining or otherwise prohibiting consummation of any of theExchange Transactions shall become final and non-appealable;

(ix)                   there shall exist any action,proceeding, claim or counterclaim by any Governmental Entity (other than any action,proceeding, claim or counterclaim by the Party seeking to terminate itsobligations hereunder), before any court, authority, agency or tribunal thatchallenges the Exchange Offer or the Consent Solicitation or any relatedtransactions contemplated hereby which, if decided adversely to Cherokee or anyother Party, would reasonably be expected to prohibit, prevent, restrict, limitor delay consummation of the Exchange Offer, the Consent Solicitation or anysuch related transactions; or

(x)                    any of the representationsand warranties of Cherokee contained herein that are qualified as tomateriality shall not be true and correct, and any representations andwarranties that are not so qualified shall not be true and correct in allmaterial respects, in each case on and as of the Closing Date, except thatthose representations and warranties that speak only as of a specific date needonly be true as of such specified date;

*provided*, that theright to terminate this Agreement pursuant to this Section 5(a) shall not beavailable (1) to any party if it or any Noteholder Affiliate (as defined below)of such party has breached in any material respect its obligations under thisAgreement in any manner, which breach shall have proximately contributed to theoccurrence of the failure of the Exchange Transactions to be consummated, or(2) to any Oaktree Noteholder based on a Noteholder Termination Event describedin clause (ii), (vi) or (x) above.  Forpurposes hereof, a “Noteholder Affiliate” of (x) any GSC Noteholder shall beany other GSC Noteholder and of (y) any Oaktree Noteholder shall be Cherokee orany other Oaktree Noteholder.

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(b)           Termination of the Cherokee’sObligations. Upon the occurrence of any of the events set forth below,Cherokee shall have the right to terminate this Agreement by the giving ofwritten notice of such termination to each of the Consenting Noteholders:

(i)                    any GSC Noteholdermaterially breaches this Agreement or fails to satisfy in any material respectany of the terms or conditions of this Agreement;

(ii)                   the Exchange Offer has notbeen consummated on or prior to the Outside Closing Date;

(iii)                  any order permanentlyrestraining, enjoining or otherwise prohibiting consummation of any of theExchange Transactions shall become final and non-appealable;

(iv)                  there shall exist any action,proceeding, claim or counterclaim by any Governmental Entity (other than anyaction, proceeding, claim or counterclaim by the Party seeking to terminate itsobligations hereunder), before any court, authority, agency or tribunal thatchallenges the Exchange Offer or the Consent Solicitation or any relatedtransactions contemplated hereby which, if decided adversely to Cherokee or anyother Party, would reasonably be expected to prohibit, prevent, restrict, limitor delay consummation of the Exchange Offer, the Consent Solicitation or anysuch related transactions; or

(v)                   any of the representationsand warranties of any Consenting Noteholder contained herein that are qualifiedas to materiality shall not be true and correct, and any representations andwarranties that are not so qualified shall not be true and correct in allmaterial respects, in each case on and as of the Closing Date, except thatthose representations and warranties that speak only as of a specific date needonly be true as of such specified date;

*provided*, that the right toterminate this Agreement pursuant to this Section 5(b) shall not be availableto Cherokee if it or any Oaktree Noteholder has breached in any materialrespect its obligations under this Agreement in any manner which breach shallhave proximately contributed to the occurrence of the failure of the ExchangeTransactions to be consummated.

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(c)           Mutual Termination.  This Agreement may be terminated by mutualwritten agreement of Cherokee and the Consenting Noteholders.

(d)           Effects of Termination.  Except for clauses (f) and (p) of Section 11hereof, upon the termination of the obligations of a Consenting Noteholderpursuant to Section 5(a) hereof (such Consenting Noteholder whose obligationshave been so terminated, an “**ExcludedNoteholder**”), this Agreement shall terminate with respect to suchExcluded Noteholder and all of the rights and obligations under this Agreementof such Excluded Noteholder and of all of the other Parties in respect of suchExcluded Noteholder shall become null and void and of no further force oreffect, and there shall be no liability or obligation hereunder of suchExcluded Noteholder or of any of the other Parties in respect of any suchExcluded Noteholder.  Except for clauses(f) and (p) of Section 11 hereof, upon the termination of this Agreementpursuant to Section 5(b) or 5(c) hereof, this Agreement shall become null andvoid and of no further force or effect, and there shall be no liability orobligation hereunder of any nonbreaching Party in respect of any of the otherParties.  It is expressly understood andagreed that if this Agreement is terminated pursuant to Section 5(b) or 5(c)hereof, Cherokee shall have no obligation to commence, effect or consummate theExchange Offer or the Consent Solicitation, and none of the Parties shall haveany obligation to consummate any of the Exchange Transactions or any of thetransactions contemplated thereby.  Inthe event of a termination of the obligations of a Consenting Noteholderpursuant to Section 5(a) hereof or a termination of this Agreement pursuant toSection 5(b) or 5(c) hereof, each Party shall have all of the rights andremedies available to it under applicable law and/or the Existing Indenture,and any ancillary documents or agreements thereto, including under thisAgreement.  Notwithstanding anything inthis Section 5(d), no such termination of the obligations of a ConsentingNoteholder pursuant to Section 5(a) hereof or termination of this Agreementpursuant to Section 5(b) or 5(c) hereof shall relieve any Party from liabilityfor any breach or non-performance of its obligations hereunder prior to thedate of such termination.

6.     Forbearance;Restrictions on Transfers and Liens. Each Consenting Noteholder, so long as the obligations of suchConsenting Noteholder have not been terminated pursuant to Section 5 hereof,agrees that:

(a)           it shall not file a notice of defaultor sale or take any other action to collect on the Existing Notes, including,without limitation, instructing the Existing Trustee on how to proceed in theexercise of any and all remedies;

(b)           it shall give instructions to theExisting Trustee, if and when reasonably appropriate, to desist from takingaction that is inconsistent with this 

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Agreementor the Exchange Transactions, so long as no indemnity of such ConsentingNoteholder is required for such action to be taken by the Existing Trustee;

(c)           it shall not, directly or indirectly,sell, assign, transfer, hypothecate or otherwise dispose of (1) any of theExisting Notes owned beneficially or of record by such Consenting Noteholder oras to which such Consenting Noteholder has investment authority or discretion(including any of the Existing Notes acquired after the date hereof), or grantany proxies to any person in connection with such Existing Notes, (2) any claim(as that term is defined in Section 101(5) of the Bankruptcy Law) arising from,based on or related to the Existing Notes, or (3) any option, interest in, orright to acquire any of the Existing Notes or claim referred to in clauses (1)and (2) above, unless (x) the transferee thereof agrees in writing for thebenefit of the other Parties to be bound by all of the terms of this Agreementand executes a counterpart signature page of this Agreement and the transferorprovides Cherokee with a copy thereof, and (y) the transferor delivers to suchtransferee at the time of such transfer a consent to the Proposals with respectto the Existing Notes so transferred that were held of record or beneficiallyowned by the transferor as of the Record Date, in which event each Party shallbe deemed to have acknowledged that its obligations to the ConsentingNoteholders hereunder shall be deemed to constitute obligations in favor ofsuch transferee and shall be deemed to have made the representations andwarranties contained in Section 7 hereof; and

(d)           shall not encumber any Existing Noteswith any Lien.

7.     Representations andWarranties of the Parties.  Each ofthe Parties represents and warrants to each of the other Parties, as of thedate hereof, as follows:

(a)           Power, Authority and Authorization.  Such Party has all requisite power andauthority to execute and deliver this Agreement, to perform its obligationsunder this Agreement and to consummate the Exchange Transactions. Theexecution, delivery and performance of this Agreement and the consummation ofthe Exchange Transactions have been duly authorized by all necessary action(corporate or other) on the part of such Party, and the person executing thisAgreement on behalf of such Party is duly authorized to do so.

(b)           Binding Obligation.  This Agreement has been validly executed anddelivered by such Party and is the legal, valid and binding obligation of suchParty, enforceable against such Party in accordance with its terms, except asenforcement may be limited by bankruptcy, insolvency or other similar laws,both foreign and 

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domestic,relating to or limiting creditors’ rights generally or by equitable principlesrelating to enforceability.

(c)           No Conflicts.  None of the execution, delivery orperformance of this Agreement, nor the compliance with the terms and provisionshereof, nor the consummation of any of the Exchange Transactions, shallconflict with, violate, or constitute a breach of or a default (with thepassage of time or otherwise) under, (i) any law, statute, rule, regulation,ordinance, judgment, decree or order applicable to such Party or any of itssubsidiaries or any of their respective businesses or properties, (ii) suchParty’s organizational documents or those of any of its subsidiaries or (iii)except to the extent the consummation of the Exchange Transactions require theapproval of the lenders under the Credit Agreement, any contractual obligationsto which such Party or any of its subsidiaries is a party or by which suchParty, any of its subsidiaries or any of their respective properties are bound,except in each case, for such conflicts, violations, breaches or defaults thatwould not reasonably be expected to have, individually or in the aggregate, a materialadverse effect on the business, assets, operations, property or financialcondition of such Party and its subsidiaries.

(d)           Governmental Consents.  No permit, certificate, authorization,approval, consent, license or order of, or filing, registration, declaration orqualification with, or notice to, any Governmental Entity or arbitrator isrequired in connection with, or as a condition to, the execution, delivery andperformance of this Agreement, the compliance with any of the terms andprovisions hereof or the consummation of any of the Exchange Transactions,except for (i) such filings as may be required by the Securities and ExchangeCommission or pursuant to state securities or “blue sky” laws, (ii) thequalification of the indentures governing the New Senior Notes, the NewConvertible Notes and the Existing Notes under the Trust Indenture Act of 1939,as amended, and (iii) such permits, certificates, authorizations, approvals,consents, licenses or orders of, or filings, registrations, declarations orqualifications with, or notices that would not reasonably be expected to have,individually or in the aggregate, a material adverse effect on the business,assets, operations, property or financial condition of such Party and itssubsidiaries.

(e)           No Proceedings.  There is no action, claim, suit, demand,hearing, notice of violation or deficiency, or proceeding (including, withoutlimitation, any investigation or partial proceeding, such as a deposition),domestic or foreign, pending, or to the knowledge of such Party threatened,against or that affects such Party that would reasonably be expected to preventthe consummation of or materially impair or materially delay any of theExchange Transactions.

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(f)            Representation by Counsel.  Each Party acknowledges that it has beenrepresented by counsel (or had the opportunity to be represented by counsel andwaived its right to such representation) in connection with this Agreement,including the negotiation of this Agreement, and the Exchange Transactions,including with respect to tax matters. Accordingly, any rule of law or any legal decision that would provideany Party with a defense to the enforcement of the terms of this Agreementagainst such Party based upon lack of legal counsel shall have no applicationand is expressly waived by such Party.

8.     AdditionalRepresentations and Warranties of the Consenting Noteholders.  Each Consenting Noteholder represents andwarrants to the other Parties as follows:

(a)           Such Consenting Noteholder isacquiring the Securities it elects to receive in the Exchange Offer (the “**Applicable Securities**”) for its own accountfor investment only and not with a view to, or for resale in connection with,any public sale or distribution thereof. Such Consenting Noteholder is (A) a “qualified institutional buyer” asdefined in Rule 144A under the Securities Act, or (B) an institutional “accred­it­edinves­tor” as defined in sub­para­graph (1), (2), (3) or (7) of Rule 501(a)under the Securities Act.  SuchConsenting Noteholder has not ac­quired the Existing Notes on behalf, or at therequest, of Cherokee or any of its Affiliates.

(b)           As of the date hereof, suchConsenting Noteholder owns of record and/or beneficially, and/or has investmentauthority or discretion with respect to, the aggregate principal amount ofExisting Notes set forth next to such Consenting Noteholder’s name on thesignature pages hereto, and such aggregate principal amount of Existing Notesconstitutes all of the Existing Notes so owned or controlled by such holder andsuch Affiliates as of the date hereof, and such Consenting Noteholder or suchAffiliate, as applicable, so owned or controlled such Existing Notes as of theRecord Date and, if not so owned or controlled as of the Record Date, hasreceived or will obtain prior to the expiration of the Exchange Offer a consentto the Proposals from the holder who so owned or controlled such Existing Notesas of the Record Date.

(c)           Such Consenting Noteholder owns theExisting Notes free and clear of all Liens.

(d)           Such Consenting Noteholder hasadequate informa­tion concerning the businesses, finances and operations, condi­tion(finan­cial and otherwise), re­sults of opera­tions, prop­er­ties, plans andpros­pects of Cherokee to make an in­formed decision regarding the sale of theExisting Notes in exchange for the Applicable Securities and the purchase ofthe Applicable Securities in exchange for the Existing 

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Notesand has independently and without reliance upon Cherokee made its own analysisand decision to sell the Existing Notes and purchase the ApplicableSecurities.  Such Consenting Noteholderand its advisors have such knowledge and experience in financial and businessmatters that they are capable of evaluating the merits and risks of aninvestment in the Applicable Securities, have all information deemed by them tobe necessary or appropriate to evaluate the risks and merits of an investmentin the Applicable Securities, and have received all information requested bythem from Cherokee.  Such ConsentingNoteholder has been afforded the opportunity to ask questions of Cherokee andhas received satisfactory answers to any such inquiries.  Such Consenting Noteholder understands thatits investment in the Applicable Securities involves a high degree of risk.

(e)           The proposed sale of the ExistingNotes in exchange for the Applicable Securities by such Consenting Noteholderwas privately negotiat­ed in an independent transac­tion and was not solicit­edby or on behalf of Cherokee or any of its Affiliates.  The terms of this Agreement were the result of negotiationsbetween such Consenting Noteholder and Cherokee, and such Consenting Noteholderwas given the opportunity to review and comment upon the proposed terms of thisAgreement.

9.     Notices.  All notices and other communicationshereunder shall be in writing and shall be deemed sufficiently given and servedfor all purposes when personally delivered or given by telex ormachine-confirmed facsimile or one business day after a writing is delivered toa national overnight courier service or three business days after a writing isdeposited in the United States mail, first class postage or other chargesprepaid and registered, return receipt requested, addressed as follows (or atsuch other address for a Party as shall be specified by like notice):

If to Cherokee, to:

 

CherokeeInternational LLC

2841Dow Avenue

Tustin, CA 92780

Attention:Chief Financial Officer

Telephone:(714) 544-6665

Facsimile: (714) 838-4742

With a copy (which shall notconstitute notice) to:

JeffreyH. Cohen, Esq.

Skadden,Arps, Slate, Meagher & Flom LLP

 

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300South Grand Avenue, 34th Floor

LosAngeles, California  90071

Telephone:(213) 687-5000

Facsimile: (213) 687-5600

If to the ConsentingNoteholders, as specified on Schedule I hereto.

10.   Acknowledgment. ThisAgreement and the terms of the Exchange Transactions are the product of privatenegotiations between Cherokee and the Consenting Noteholders. This Agreement isnot and shall not be deemed to be a solicitation of consents to amendments tothe Existing Indenture, or waivers of any provision thereof, or a solicitationto tender or exchange Existing Notes. Neither tenders of Existing Notes in the Exchange Offer nor delivery ofconsents in the Consent Solicitation will be solicited from any holder ofExisting Notes until such holder has received the Exchange Offer Documents andany other disclosures required under applicable law.  Notwithstanding anything contained herein to the contrary, theConsenting Noteholders shall be under no requirement to consent to amendmentsto the Existing Indenture or to exchange their Existing Notes, if the ExchangeOffer Documents presented to the Consenting Noteholders provide for any termsthat are materially inconsistent with this Agreement, including, not limitedto, the provisions of the Term Sheet. Cherokee acknowledges and agrees that the Existing Indenture and allinstruments and documents executed in connection therewith constitute valid andbinding agreements of Cherokee. Cherokee further acknowledges that it is not currently aware of anyclaim, counterclaim, setoff or defense of any kind or nature that would in anyway affect the validity or enforceability of any claim of any ConsentingNoteholder arising from the Existing Notes or that would in any way reduce oraffect the absolute and unconditional obligation of Cherokee to pay all of theobligations arising from the Existing Notes.

11.   Miscellaneous.  

(a)           Further Assurances.  Each of the Parties hereby further covenantsand agrees that it shall take all such further actions as may be reasonablynecessary to carry out the purposes and intent of this Agreement and shallrefrain from taking any action which would frustrate the purposes and intent ofthis Agreement.

(b)           Effectiveness; Counterparts.  This Agreement shall not become effectiveand binding on the Parties unless and until counterpart signature pages heretoshall have been executed and delivered by each of the Parties hereto.  This Agreement may be executed by one ofmore of the Parties in any number of counterparts, each of which shall bedeemed to be an original, but all such 

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counterpartswhen taken together shall constitute one and the same instrument.  The agreements, representations andobligations of the Consenting Noteholders under this Agreement are, in allrespects, several and not joint.

(c)           Entire Agreement. ThisAgreement constitutes the entire agreement among the Parties with respect tothe subject matter hereof and supersedes all prior negotiations and all prioragreements and understandings, both written and oral, among the Parties withrespect to the subject matter hereof; *provided*that any confidentiality agreement heretofore executed betweenCherokee and any Consenting Noteholder shall continue in full force and effect(each, a “**Confidentiality Agreement**”).

(d)           Interpretation.  When a reference is made in this Agreementto Sections, paragraphs, clauses or Annexes, such reference shall be to aSection, paragraph or clause of or Annex to this Agreement unless otherwiseindicated.  The words “**include**”, “**includes**”, and “**including**”when used herein shall be deemed in each case to be followed by the words “**without limitation**.”  The words “**hereof**,”“**herein**,” “**herewith**,” “**hereby**” and “**hereunder**”and words of similar import shall, unless otherwise stated, be construed torefer to this Agreement as a whole and not to any particular provision of thisAgreement.  Unless the context otherwiserequires, defined terms shall include the singular and plural and theconjunctive and disjunctive forms of the terms defined.  None of the Parties shall have any term orprovision construed against such Party solely by reason of such Party havingdrafted the same.

(e)           Specific Performance.  Each of the Parties recognizes and agreesthat if for any reason any of the provisions of this Agreement are not performedby such Party in accordance with their specific terms or are otherwisebreached, immediate and irreparable harm or injury would be caused to the otherParties for which money damages would not be an adequate remedy.  Accordingly, each Party agrees that, inaddition to any other available remedies, the Parties shall be entitled to aninjunction restraining any violation or threatened violation of the provisionsof this Agreement without the necessity of any Party posting a bond or otherform of security.  In the event that anyaction should be brought in equity to enforce the provisions of this Agreement,each Party agrees that it will not allege, and each other Party hereby waivesthe defense, that there is an adequate remedy at law.

(f)            Indemnification.  Cherokee hereby agrees to indemnify and holdharmless each Consenting Noteholder, each person, if any, who controls (withinthe meaning of Section 15 of the Securities Act or Section 20(a) of theExchange Act) any Consenting Noteholder (each, a “**controlling person**”) and the respective 

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officers,directors, partners, employees, representatives and agents of each ConsentingNoteholder and any such controlling person from and against any and all losses,claims, damages, liabilities and expenses (including, without limitation, costsand expenses incurred in connection with investigating, preparing, pursuing ordefending against any of the foregoing) actually incurred by such ConsentingNoteholder as a result of any claim, suit, action, proceeding, investigation orinquiry brought or asserted by any third party against the ConsentingNoteholder arising out of (A) such Consenting Noteholder’s compliance withSection 3(b)(ii) hereof or (B) any untrue statement or alleged untrue statementof any material fact contained in any Exchange Offer Document, or any amendmentor supplement thereto, or as a result of the omission or alleged omission tostate therein a material fact necessary in order to make the statements therein,in the light of the circumstances under which they were made, not misleading; *provided*, *however*,that Cherokee will not be liable in any such case to the extent that any suchloss, claim, damage, liability or expense arises out of or is based upon (x)with respect to clause (A) above, the gross negligence or willful misconduct ofsuch Consenting Noteholder and (y) with respect to clause (B) above, any untruestatement or alleged untrue statement in, or omission or alleged omission from,any Exchange Offer Document in reliance upon and in conformity with writteninformation relating to such person furnished to Cherokee by such personspecifically for use therein.

(g)           Assignment; Successors and Assigns.  Neither this Agreement nor any of therights, interests or obligations of the Consenting Noteholders under thisAgreement shall be assigned or delegated, in whole or in part, by operation oflaw or otherwise by any of the Consenting Noteholders without the prior writtenconsent of Cherokee.  Neither thisAgreement nor any of the rights, interests or obligations of Cherokee underthis Agreement shall be assigned or delegated, in whole or in part, byoperation of law or otherwise by Cherokee without the prior written consent ofeach of the Consenting Noteholders. This Agreement has been and is made solely for the benefit of and shallbe binding upon each of the Parties and, to the extent provided in Section11(f) hereof, the controlling persons, officers, directors, partners,employees, representatives and agents referred to in such Section 11(f), andtheir respective heirs, executors, administrators, successors and assigns, allas and to the extent provided in this Agreement, and no other person shallacquire or have any right under or by virtue of this Agreement; *provided*, *however*,that nothing contained in this Section 11(g) shall be deemed to permit sales,assignments or transfers other than in accordance with Section 6(c) hereof.

(h)           Fees and Expenses.  Except as otherwise provided herein,Cherokee shall pay all fees, costs and expenses incurred by it on its behalfand by the Consenting Noteholders in connection with the Exchange Transactionsand the other 

19

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transactionscontemplated thereby, including, without limiting the generality of theforegoing, reasonable fees, costs and expenses of the financial consultants,accountants and counsel of each of the Consenting Noteholders.  Such fees include the fees of Milbank,Tweed, Hadley & McCloy LLP and Stroock & Stroock & Lavan LLP.

(i)            No Third Party Beneficiaries.Unless expressly stated herein, this Agreement shall be solely for the benefitof the Parties and no other person or entity and is not intended to, and shallnot, confer upon any other person any rights or remedies hereunder.

(j)            Headings.  The headings of the sections, paragraphs andsubsections of this Agreement are inserted for convenience only and shall notaffect the meaning or interpretation of such section, paragraph or subsectionor of this Agreement.

(k)           Further Acquisition of ExistingNotes. Any Consenting Noteholder may acquire additional Existing Notes tothe extent permitted by applicable law; *provided*,*however*, that any such additionalExisting Notes shall be subject to the terms hereof, and each such ConsentingNoteholder shall exchange any such additional Existing Notes, and deliver aconsent to the Proposals from the record holder or beneficial owner as of theRecord Date with respect thereto, in accordance with the terms hereof and forso long as such Consenting Noteholder is obligated to exchange Existing Notesin accordance with the terms hereof.

(l)            Amendments and Waivers.  This Agreement may not be modified, amendedor supplemented except in writing signed by Cherokee, not less than a majorityof the then outstanding aggregate principal amount of the Existing Notes heldby the GSC Noteholders and not less than a majority of the then outstandingaggregate principal amount of the Existing Notes held by the OaktreeNoteholders.

(m)          GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED ANDINTERPRETED, AND THE RIGHTS OF THE PARTIES SHALL BE DETERMINED IN ACCORDANCEWITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION, SECTIONS5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAWS AND RULE 327(b) OFTHE NEW YORK CIVIL PRACTICE LAWS AND RULES. EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OFANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEWYORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OFNEW YORK IN RESPECT OF ANY SUIT, ACTION OR 

20

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PROCEEDINGARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FORITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAYEFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT ITMAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTIONOR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,ACTION OR PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENTFORUM.  EACH OF PARTIES IRREVOCABLYCONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCHACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED ORCERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET FORTH HEREIN, SUCH SERVICETO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF CHEROKEE TO SERVEPROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGSOR OTHERWISE PROCEED AGAINST ANY OF THE CONSENTING NOTEHOLDERS IN ANY OTHERJURISDICTION.

(n)           Consideration.  Each of the Parties acknowledges and agreesthat no consideration shall be due, payable or paid to any of the ConsentingNoteholders for their agreement to participate in the Exchange Transactions,other than the performance by Cherokee of the contractual obligations imposedupon Cherokee by this Agreement.

(o)           Severability.  If any term, provision, covenant orrestriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms,provisions, covenants and restrictions set forth herein shall remain in fullforce and effect and shall in no way be affected, impaired or invalidated, andthe Parties shall use their best efforts to find and employ an alternativemeans to achieve the same or substantially the same result as that contemplatedby such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of theParties that they would have executed the remaining terms, provisions,covenants and restrictions without including any of such that may be hereafterdeclared invalid, illegal, void or unenforceable.

(p)           Confidentiality.  Each Party agrees that this Agreement, the TermSheet and the other attachments hereto shall constitute “ConfidentialInformation” 

21

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forpurposes of the Confidentiality Agreements binding on such Party with respectto information of Cherokee.

**[**signature pagesfollow]

22

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                IN WITNESS WHEREOF, each of the Parties has executedthis Agreement as of the date and year first above written.
| **CHEROKEE INTERNATIONAL, LLC** |
|---------------------------------|
|                            |
| By:                             | /s/  R.V. Holland, Jr. |
|                            | Name: | R.V.  Holland, Jr. |
|                            | Title: | V.P.  Finance, CFO |

 

 
| **CHEROKEE INTERNATIONAL CORPORATION** |
|----------------------------------------|
|                                   |
| By:                                    | /s/  Ian Schapiro |
|                                   | Name: | Ian  Schapiro |
|                                   | Title: | Vice  President |

 

----

 
|   |                        |                                             |                                |                                        |                                  |   |
|--------|-----------------------------|--------------------------------------------------|-------------------------------------|---------------------------------------------|---------------------------------------|--------|
|   | **GSC NOTEHOLDERS:**.       |
|   |                        |                                             |                                |                                        |                                  |   |
|   | **GSC RECOVERY II, L.P.**   |
|   |                        |
|   | By:                         | GSC Recovery II GP,  L.P.,  its general partner  |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        | By:                                              | GSC RII, LLC,  its general partner  |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        |                                             | By:                                 | GSCP (NJ) Holdings,  L.P.,  its sole member |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        |                                             |                                | By:                                         | GSCP (NJ), Inc.,  its general partner |
|   |                        |                                             |                                |                                        |                                  |   |
|   | By:                         | /s/  Robert Hamwee                               |
|   |                        | Name:                                            | Robert  Hamwee                      |
|   |                        | Title:                                           | Managing  Director                  |
|   |                        |                                             |                                |                                        |                                  |   |
|   | **GSC  RECOVERY IIA, L.P.** |
|   |                        |                                             |                                |                                        |                                  |   |
|   | By:                         | GSC Recovery IIA GP,  L.P.,  its general partner |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        | By:                                              | GSC RIIA, LLC,  its general partner |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        |                                             | By:                                 | GSCP (NJ) Holdings,  L.P.,  its sole member |
|   |                        |                                             |                                |                                        |                                  |   |
|   |                        |                                             |                                | By:                                         | GSCP (NJ), Inc.,  its general partner |
|   |                        |                                             |                                |                                        |                                  |   |
|   | By:                         | /s/  Robert Hamwee                               |
|   |                        | Name:                                            | Robert  Hamwee                      |
|   |                        | Title:                                           | Managing  Director                  |
|        |                             |                                                  |                                     |                                             |                                       |        |  |  |

 

 

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| **GSC PARTNERS CDO FUND, LIMITED**         |
|--------------------------------------------|
|                                       |   |
|                                       |   |
|                                       |   |
| By:                                        | /s/  Thomas Libassi |
|                                       | Name:  Thomas Libassi |
|                                       | Title:  Managing Director |
| **GSC PARTNERS CDO FUND II, LIMITED**      |
| By:                                        | /s/  Thomas Libassi |
|                                       | Name:  Thomas Libassi |
|                                       | Title:  Managing Director |
| **OAKTREE NOTEHOLDERS**                    |
| **OCM/GFI POWER OPPORTUNITIES FUND, L.P.** |
| By:                                        | GFI  Energy Ventures LLC |
|                                       | its  General Partner |
|                                       |   |
|                                       |   |
| By:                                        | /s/  Ian Shapiro |
|                                       | Name:  Ian Schapiro |
|                                       | Title:  Chief Financial Officer |
| **OCM PRINCIPAL OPPORTUNITIES FUND, L.P.** |
| By:                                        | Oaktree  Capital Management, LLC |
|                                       | its  General Partner |
|                                       |   |
|                                       |   |
| By:                                        | /s/  Christopher S. Brothers |
|                                       | Name:Christopher  S. Brothers |
|                                       | Title:  Managing Director |
|                                       |   |
|                                       |   |
| By:                                        | /s/  Michael P. Harmon |
|                                       | Name:  Michael P. Harmon |
|                                       | Title:  Senior Vice President |
|                                            |  |  |

 

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