Document:

Exhibit 10.15

 

SEVERANCE AGREEMENT

This Severance Agreement (the “Agreement”) is
entered into by and between Cherokee International Corporation (the “Company”),
a Delaware corporation, and Jeffrey M. Frank (the “Executive”).

R E  C
I  T  A  L  S

WHEREAS, the Executive is currently employed by the Company as
its President and Chief Executive Officer; and

WHEREAS, the Executive and the Company desire
to memorialize their understanding with respect to severance benefits payable
to the Executive in the event his employment is terminated by the Company other
than for Cause (as defined in Section 3 below).

NOW, THEREFORE, in consideration of the
foregoing premises and the mutual agreements and covenants herein contained,
the Company and the Executive agree as follows:

1.                                       At Will Employment. 
The Executive’s employment with the Company is currently on an at-will
basis, meaning that either the Executive or the Company may terminate the
employment relationship at any time for any reason or for no reason, and
without further obligation or liability, except as set forth in this Agreement.

2.                                       Term of
Agreement. This Agreement shall remain in effect for so long
as the Executive is employed as the President and Chief Executive Officer of
the Company.

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 by the Company other than for Cause (as
such term is defined below), the Executive shall be entitled to a cash payment
(the “Severance 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 his then annual base
salary as in effect immediately prior to the date of termination.  Subject to Section 409A of the Internal
Revenue Code of 1986, as amended, the Severance Payment shall be payable in a lumpsum commencing within 10 business
days following the effective date of the Release of Claims.  If required by Section 409A, the Severance
Payment may be delayed for a period of six months.

For purposes of this
Agreement, “Cause” for termination by the Company of the Executive’s employment
shall mean (i) the willful and continued failure by the Executive to perform
his or her duties with the Company, (ii) the Executive’s

 

 

 

conviction of, or entry of a
plea of guilty or nolo contendere to, a felony or other crime involving moral
turpitude, (iii) the commission by the Executive of any act of theft,
embezzlement or fraud in connection with his employment with the Company, or
(iv) the Executive’s appropriation (or attempted appropriation) of a
material business opportunity of the Company, including attempting to secure or
securing from anyone other than the Company any personal profit without the
Company’s consent in connection with any transaction entered into on behalf of
the Company.

The
Executive shall not be entitled to the Severance Payment 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.

4.                                       No Mitigation.  The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise.

5.                                       Successors.  Any successor to the Company (whether direct
or indirect, by purchase, merger, consolidation or otherwise) or to all or
substantially all of the business and/or assets of the Company shall assume all
obligations of the Company under this Agreement and all rights of the Company
under this Agreement shall inure to such successor, in the same manner and to
the same extent that the Company would be required to perform and be entitled
to the benefits of this Agreement if no such succession had taken place.

6.                                       Notices.  All notices and other communications under
this Agreement shall be in writing and delivered to the addresses set forth
below and shall be effective when delivered, if hand delivered; three (3) days
after mailing by first class mail, certified or registered with return receipt
requested; and 24 hours after transmission of a fax :

If
to the Company:                                             Cherokee
International Corporation

 2841 Dow Avenue

 Tustin, CA 92780

 Attention:  Chairman of the Board

 

If to the Executive:                                             Jeffrey M.
Frank

 15 Calle de Princesa

 Coto de Caza, CA 92679

 

                                                Either party
may change such party’s address for notices by notice duly given pursuant
hereto.

7.                                       Arbitration.  The Company and Executive agree that any
dispute arising as to the parties’ rights and obligations hereunder shall, at
the election and upon written demand of either party, be submitted to
arbitration before a single neutral

 

2

 

arbitrator
in Orange County, California and will be conducted in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association, which Rules shall be modified by the arbitrator to the
extent necessary to comply with applicable law. 
The arbitrator shall not have authority to add to, modify, change or
disregard any lawful terms of this Agreement or to issue an award that is
contrary to applicable law.  The decision
of the arbitrator shall be final and binding and enforceable in any court of
competent jurisdiction.  The parties
further agree, notwithstanding the foregoing, that (i) the provisions of the
California Arbitration Act, including Sections 1281.8 and 1283.05 of the
California Code of Civil Procedure, will apply to any arbitration hereunder;
(ii) the Company shall pay any costs and expenses that the Executive would not
otherwise have incurred if the dispute had been adjudicated in a court of law,
rather than through arbitration, provided, however, that if either party
prevails on a statutory claim that affords the prevailing party an award of
attorney’s fees, the arbitrator may award reasonable attorney’s fees to the
prevailing party, consistent with applicable law; and (iii) any hearing must be
transcribed by a court reporter and any decision of the arbitrator must be set
forth in writing, consistent with the applicable state or federal law and
supported by essential findings of fact and conclusion of law.  The provisions of this Section 7 shall
survive the termination or revocation of this Agreement.

8.                                       Miscellaneous.

(a)                                  Modification
and Waiver.  Except as
otherwise specifically provided in this Agreement, no provision of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by both the
Company and the Executive.  No waiver at
any time by either party to this Agreement of any breach by the other party
hereto of, or failure to comply with, any provision hereof shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or similar time.

(b)                                 Entire
Agreement.  No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  This Agreement supercedes any and all prior
agreements between the parties and/or any of their affiliates with respect to
the subject matter hereof.

(c)                                  Governing Law.  This Agreement and the legal rela­tions thus
created between the parties hereto shall be governed by and construed under and
in accordance with the internal laws of the State of California.

(d)                                 Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

3

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed by its duly authorized officer, and the Executive
has executed this Agreement, as of the date set forth below.

	
  EXECUTIVE

  	
  CHEROKEE INTERNATIONAL 

  
	
   

  /s/ Jeffrey M. Frank

  	
   

  	
  CORPORATION

  
	
   

  	
  /s/  Van
  Holland

  	
   

  
	
  Date: March 31, 2005

  	
  By:          Van
  Holland

  
	
   

  	
  Its:          Chief
  Financial Officer

  
	
   

  	
  Date: March 31, 2005

  
				

 

4Exhibit 10.12

 

 

 

 

Executive Incentive Plan

 

 

2005

 

 

CONFIDENTIAL

 

The information
contained within this document is highly sensitive and confidential and must be
handled with utmost discretion and integrity.

 

 

 

Effective Date

 

The Executive Incentive Plan
is effective January 1, 2005 and supersedes all previously implemented
plans.

 

Modification
of the Plan

 

IHOP Corp. and its
subsidiaries reserve the right to modify, terminate or make exceptions to the
Executive Incentive Plan (“Plan”) at any time without prior notice.  The Plan will be reviewed on an annual basis
allowing for updates or revisions to be considered.  The Plan and this Plan Document do not
constitute or imply an employment contract, and participants accrue no
interest, right or any benefit in the Plan, except as specifically set forth in
this document.

 

Eligibility

 

The Plan includes the
Chief Executive Officer& President, other Chief Officers, Vice
Presidents/Executive Officers, and Vice Presidents/Non-executive Officers.  Participants must be actively employed with
IHOP Corp. and its subsidiaries through the end of the Plan Year.  The Company’s Plan Year is based on IHOP’s
fiscal year.  The last day worked is the
last day an employee is considered active. 
In the case of termination, vacation or other payments can not be used
to extend the last day worked.

 

New
Hires/Re-Hires

 

Incentive eligibility
begins with the first complete calendar month worked in an eligible position.

 

For participant’s that
begin work with IHOP Corp. during the Plan Year, the incentive will be paid on
a prorated basis.  The prorated
percentage is determined based on when the employee begins work.  If the employee begins work during the first
full workweek of the month, they will be credited for a whole month worked.
However, if the employee begins work after the first full workweek of the
month, he/she will not be entitled to receive an incentive for that
month.

 

Employees hired on or
after October 1, 2005 are not eligible for a bonus payout.

 

Promotions

 

Promotion
from a non-eligible position to an eligible position: Any
employee promoted from a non-eligible position to an eligible position during
the incentive period will have an incentive based on the number of whole months
worked in the incentive period.  If the participant
is promoted on the first calendar or workday of the month, credit will be for a
full month worked. The effective date of the promotion will be used to
determine the number of whole months worked. 
Eligibility begins with the first full month in the eligible position.

 

Promotion
from an eligible position to another: When an employee is
promoted from one eligible position to another, that month’s incentive will be
based on the prior position providing that the promotion occurred after the 15th
of the month. When a promotion occurs on or before the 15th of the
month, that month’s incentive will be based on the new position.

 

Short-Term
or Long-Term Disability, Workers’ Compensation and other Leaves of Absence

 

Any participant on leave of absence or otherwise
not actively working during the incentive period may be eligible for a prorated
incentive excluding the period on leave. 
The date the leave is effective and the date ending leave will be used
to calculate the number of whole months worked in the incentive period.

 

2

 

Termination
Due to Death or Retirement

 

Any incentive earned will be prorated for
the incentive period based upon the actual number of whole months worked and
paid simultaneously with the normal distribution of incentives.  For the purposes of this plan, retirement
occurs if the individual’s age plus years of service is equal to, or greater
than, 70.

 

Plan
Description

 

The Executive Incentive Plan is an annual
incentive.  For all participants, the
Corporate Performance Measure is based on EPS. 
In addition, some participants are measured on the achievement of
specific individual business objectives (IBOs).

 

For the Vice President, Franchise
Operations, the Performance Measure is based on a combination of Corporate
Performance (EPS) and Franchise Operations Performance (see discussion below).

 

Target
Incentive & Weighting

 

The target incentive is
expressed as a percentage of base salary and is based on the position of the
participant (see “Target Incentive Table”). 
The Target Payout % multiplied by the participant’s base salary on the
last day of the fiscal year is the Target Incentive in dollars.

 

Target Incentive Table

 

	
   

  	
   

  	
  Chief

  Executive

  Officer &

  President

  	
   

  	
  Chief

  Officers

  	
   

  	
  Vice

  Presidents/

  Executive

  Officers

  	
   

  	
  Vice

  Presidents/

  Non-Executive

  Officers

  	
   

  
	
  TARGET PAYOUT AS A% OF BASE SALARY

  	
   

  	
  75%

  	
   

  	
  50%

  	
   

  	
  40%

  	
   

  	
  40%

  	
   

  

 

The incentive weighting
for the Chief Executive Officer & President is based 100% on Corporate Performance (EPS).

 

The incentive weighting
for Chief Officers and Vice Presidents is 30% Individual
Business Objectives and 70% Corporate
Performance (EPS).

 

The incentive weighting
for the Vice President, Franchise Operations is 30% Individual
Business Objectives, 35% Corporate
Performance (EPS), and 35% Franchise
Operations Performance (Sales -  17.5%
and Operating Profit - 17.5%).

 

Corporate
Performance

 

The Corporate Performance
measure is based on EPS (Earnings Per Share). 
For calculating payouts for the 2005 Executive Incentive Plan, the EPS
calculation will include the following adjustments:

 

•                  Budgeted shares outstanding will be
used to exclude the impact of any share buyback.

 

•                  Extraordinary items may also be
excluded from bonus calculations.  If
there are any major changes in Corporate direction, budgets, or EPS target, the
Payout Matrix may be re-evaluated with Compensation Committee approval.

 

3

 

For bonus calculation
purposes, EPS will be calculated by using the following formula:

 

	
  Net Income (taking into account any adjustments
  highlighted above)

  
	
  19,770,000 (budgeted shares)

  

 

No bonus
will be paid out if EPS is less than $1.85. 
Target bonuses are paid out for EPS between $2.05 and
$2.059.  For every one cent in EPS
achieved at and above $2.059, the payout increases by 5%.  There is no maximum on the payout matrix.

 

In addition to the
calculated individual portion of the incentive, an award may be granted at the
discretion of the Chief Executive Officer (with approval by the Compensation
Committee) to individuals exceeding expected levels of performance.

 

Refer to the “Corporate
Performance (EPS) Payout Matrix” to determine the incentive achieved for the
Company performance portion of the incentive.

 

Corporate Performance (EPS) Payout  Matrix

 

	
  Threshold EPS

  	
   

  	
  $

  	
  1.85

  	
   

  	
   

  	
   

  
	
  Target EPS

  	
   

  	
  $

  	
  2.05

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPS Range

  	
   

  	
  Payout (as

  a % of

  target)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less Than $1.85

  	
   

  	
  0

  	
  %

  	
   

  
	
  $1.850 - $1.921

  	
   

  	
  50

  	
  %

  	
   

  
	
  $1.922 - $1.953

  	
   

  	
  60

  	
  %

  	
   

  
	
  $1.954 - $1.985

  	
   

  	
  70

  	
  %

  	
   

  
	
  $1.986 - $2.017

  	
   

  	
  80

  	
  %

  	
   

  
	
  $2.018 - $2.049

  	
   

  	
  90

  	
  %

  	
   

  
	
  $2.050 - $2.059

  	
   

  	
  100

  	
  %

  	
   

  
	
  $2.060 - $2.069

  	
   

  	
  105

  	
  %

  	
   

  
	
  $2.070 - $2.079

  	
   

  	
  110

  	
  %

  	
   

  
	
  $2.080 - $2.089

  	
   

  	
  115

  	
  %

  	
   

  
	
  $2.090 - $2.099

  	
   

  	
  120

  	
  %

  	
   

  
	
  $2.100 - $2.109

  	
   

  	
  125

  	
  %

  	
   

  
	
  $2.110 - $2.119

  	
   

  	
  130

  	
  %

  	
   

  
	
  $2.120 - $2.129

  	
   

  	
  135

  	
  %

  	
   

  
	
  $2.130 - $2.139

  	
   

  	
  140

  	
  %

  	
   

  
	
  $2.140 - $2.149

  	
   

  	
  145

  	
  %

  	
   

  
	
  $2.150 - $2.159

  	
   

  	
  150

  	
  %

  	
   

  
	
  Each .01 over 2.168

  	
   

  	
  Additional

  5%

  	
   

  

 

Individual
Business Objectives (IBOs)

 

Annually,
each participant in the plan sets individual business objectives in conjunction
with his or her immediate supervisor in December of each year.  During this process, challenging and measurable
objectives that significantly impact the Company performance are to be mutually
determined.  No participant will have
more than three IBOs without approval by the Chief Executive Officer.  After the fiscal year, a percentage of
achievement is then established by the immediate supervisor and approved by the
Chief Executive Officer.  This amount is
used to determine the IBO portion of the annual payout.  If EPS is less than $1.85,
there will be no payout for Individual Business Objectives, regardless of
individual achievement level.

 

4

 

Franchise
Operations Performance

 

Franchise Operations
Performance is based on actual sales and operating profit versus original
budget, not flex budget.

 

The following payout
matrix is used to determine the incentive achieved for the Franchise Operations
performance portion of the incentive payout.

 

Any changes to the
original budget due to sales or re-sales will require the CEO &
President’s approval.  New units are
excluded from the Franchise Operations performance portion of the plan.

 

Franchise Operations - Sales & Operating
Profit Payout Matrix

 

	
  Performance Achievement

  	
   

  	
  % Of Incentive Achieved

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Operating

  	
   

  
	
  Min

  	
   

  	
  Max

  	
   

  	
  Sales

  	
   

  	
  Profit

  	
   

  
	
  0.00

  	
  %

  	
  91.99

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
  92.00

  	
  %

  	
  92.99

  	
  %

  	
  20

  	
  %

  	
  20

  	
  %

  
	
  93.00

  	
  %

  	
  93.99

  	
  %

  	
  30

  	
  %

  	
  30

  	
  %

  
	
  94.00

  	
  %

  	
  94.99

  	
  %

  	
  40

  	
  %

  	
  40

  	
  %

  
	
  95.00

  	
  %

  	
  95.99

  	
  %

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  96.00

  	
  %

  	
  96.99

  	
  %

  	
  60

  	
  %

  	
  60

  	
  %

  
	
  97.00

  	
  %

  	
  97.99

  	
  %

  	
  70

  	
  %

  	
  70

  	
  %

  
	
  98.00

  	
  %

  	
  98.99

  	
  %

  	
  80

  	
  %

  	
  80

  	
  %

  
	
  99.00

  	
  %

  	
  99.99

  	
  %

  	
  90

  	
  %

  	
  90

  	
  %

  
	
  100.00

  	
  %

  	
  100.99

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  
	
  101.00

  	
  %

  	
  101.99

  	
  %

  	
  105

  	
  %

  	
  105

  	
  %

  
	
  102.00

  	
  %

  	
  102.99

  	
  %

  	
  110

  	
  %

  	
  110

  	
  %

  
	
  103.00

  	
  %

  	
  103.99

  	
  %

  	
  115

  	
  %

  	
  115

  	
  %

  
	
  104.00

  	
  %

  	
  104.99

  	
  %

  	
  120

  	
  %

  	
  120

  	
  %

  
	
  105.00

  	
  %

  	
  105.99

  	
  %

  	
  125

  	
  %

  	
  125

  	
  %

  
	
  106.00

  	
  %

  	
  106.99

  	
  %

  	
  130

  	
  %

  	
  130

  	
  %

  
	
  107.00

  	
  %

  	
  107.99

  	
  %

  	
  135

  	
  %

  	
  135

  	
  %

  
	
  108.00

  	
  %

  	
  and above

  	
   

  	
  140

  	
  %

  	
  140

  	
  %

  

 

If EPS is
less than $1.85, there will be no payout for the Company Portion of the bonus,
but the Franchise Operations performance and IBO portions of the bonus will
still be paid out.  If the threshold for
both the Corporate Performance measure (EPS) and Franchise Operations measures
are not met, no bonus will be paid for IBO achievement.

 

Payment
Distribution

 

Incentive payouts will be
distributed within 90 days following the close of the fiscal year for which the
incentive was earned.  Payouts will be
paid in a separate check from the regular payroll check, and are subject to
normal withholding deductions.

 

Plan
Administration

 

The Executive Incentive
Plan is administered by the IHOP Corp. Human Resources Department.  This Plan Document and its provisions
regulate all plan guidelines and participant eligibility.  Any exception must be submitted in writing to
the Human Resources Department and must be approved by the Chief Executive
Officer and the Compensation Committee of the Board of Directors.

 

5

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