Document:

Exhibit 10.4

 

April 16, 2008

 

Peter Knepper

 

Dear Peter:

 

Please allow this Employment Letter (the “Agreement”)
to serve as the entire agreement between International Rectifier Corporation
(the “Company”) and Peter Knepper (the “Employee”) with respect to certain
aspects of Employee’s employment relationship with the Company.

 

Position
and Beginning Date

 

Effective as of April 16, 2008 (the “Beginning
Date”), the Employee will serve as the Company’s Chief Financial Officer
(acting) and, if applicable, a duly elected or appointed officer of the
Company.  The Employee will work on a
full-time basis and be subject to the supervision, direction and control of and
report directly to the Company’s President and CEO.

 

Compensation

 

Salary:  $63,000 per
month.  Employee’s Salary may be
increased from time to time by the Company. 
The Salary
will be processed through payroll and paid at the same time as other
employees.  Salary for any portion of a
month will be prorated based upon the number of normal workdays remaining in
the month.

 

Cash Bonus:  Employee
shall participate in the Company’s executive incentive plan, with a target
payout of 35% percent of Employee’s base salary.  The incentive objectives include corporate
and individual objectives as established by the CEO and the Compensation
Committee of the Board of Directors.

 

Benefits

 

The Employee will be eligible for any Company
employee retirement and/or 401(k) plan, medical, life insurance and for
vacation and holidays consistent with the Company’s policy as it applies to
senior management.  The Employee will be
exempt from any delay periods otherwise required for vacation and holiday
eligibility.

 

The Company will reimburse the Employee for
out-of-pocket expenses incurred by the Employee to the same extent that the
Company reimburses other senior managers for such expenses.

 

The Company agrees to indemnify the Employee as set
forth in the Company’s current Bylaws and applicable Delaware law in connection
with any cause of action, suit, or other proceeding arising in connection with
the Employee’s employment with the Company. 
If at a later date the Company amends its Bylaws to make more
restrictive Employee’s rights of indemnification, then Employee shall remain
subject to indemnification under the Company’s current Bylaws except to the
extent in conflict or inconsistent with Delaware law.

 

The Company will provide the Employee with written
evidence that the Company maintains directors’ and officers’ insurance covering
the Employee at no additional cost to the Employee, and the Company will
maintain director’s and officer’s insurance at all times while the Employee 

 

 

is employed by the Company on the same basis as
other senior executives with the Company. 
Furthermore, the Company will maintain such insurance coverage with
respect to occurrences arising during the term of Employee’s employment
relationship with the Company for at least three years following the
termination of such employment relationship on the same basis as maintained for
then senior executives of the Company.

 

Termination

 

Employee shall be at-will and can be terminated by
the Company at any time without cause and without notice; provided however, if
the Company does not provide at least thirty days written notice of termination
to Employee, Employee shall be entitled to a severance benefit equal to thirty
day’s base salary in lieu of any other severance benefit except in the case of
illegal or unethical conduct..  Employee
may terminate his or her employment for any reason upon at least 30 days’ prior
written notice to the Company, such termination to be effective on the date 30
days following the date of the notice. 
The Employee will continue to render services and to be paid during such
30-day period.  The Employee may
terminate this Agreement immediately if the Company has not remained current in
its obligations under this Agreement following a cure period of three business
days after written notice from Employee or if the Company engages in or asks
the Employee to engage in or to ignore any illegal or unethical conduct.

 

This Agreement will terminate immediately upon the
death or disability of the Employee.  For
purposes of this Agreement, disability will be as defined by the applicable
policy of disability insurance or, in the absence of such insurance, by the
Company’s Board of Directors acting in good faith.

 

Miscellaneous

 

The Company acknowledges and agrees that the
Employee is and will remain a member of, and has and will retain a non-equity
interest in, Tatum, LLC (“Tatum”); provided however, Employee shall receive no
compensation from Tatum for the services rendered hereunder.  The Company will have access to certain Tatum
resources pursuant to a separate agreement between the Company and Tatum.

 

This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof and supersede any
and all agreements, whether oral or written, between the parties with respect
to its subject matter.  No amendment or
modification to this Agreement will be valid unless in writing and signed by
both parties.

 

If any
portion of this Agreement is found to be invalid or unenforceable, such
provision will be deemed severable from the remainder of this Agreement and
will not cause the invalidity or unenforceability of the remainder of this
Agreement, except to the extent that the severed provision deprives either
party of a substantial portion of its bargain.

 

Neither
the Company nor Employee will be deemed to have waived any rights or remedies
accruing under this Agreement unless such waiver is in writing and signed by
the party electing to waive the right or remedy.  The waiver by any party of a breach or
violation of any provision of this Agreement will not operate or be construed
as a waiver of any subsequent breach of such provision or any other provision
of this Agreement.

 

This
Agreement will be governed by and construed in all respects in accordance with
the laws of the State of California, without giving effect to conflicts-of-laws
principles.

 

The provisions in this Agreement concerning director’s
and officer’s insurance, indemnity, and any payment or compensation obligations
(including payment of Salary, severance and bonuses) will survive any
termination or expiration of this Agreement.

 

 

Please sign below and return a signed copy of this
Agreement to indicate your agreement with its terms and conditions.

 

Sincerely yours,

 

	
  International
  Rectifier Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and agreed by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
  Print
  Name: Peter KnepperExhibit 10.2

 

SOURCE INTERLINK COMPANIES, INC.

2007 OMNIBUS LONG-TERM COMPENSATION PLAN

NON-STATUTORY STOCK OPTION AGREEMENT

 

Pursuant to the 2007 Omnibus
Long-Term Compensation Plan (the “Plan”) of Source Interlink Companies, Inc.,
a Delaware corporation (the “Company”), the Company grants to                                       
(the “Optionee”) the right and the option (the “Option”) to purchase all or any
part of          shares of the Company’s
Common Stock at a purchase price of $            
per share, subject to the terms and conditions of this agreement between the
Company and the Optionee (this “Agreement”) and the Plan.  By accepting this Option grant, the Optionee
agrees to all of the terms and conditions of the Option grant.  The terms and conditions of the Option grant
set forth in attached Exhibit A are incorporated into and made a
part of this Agreement.  All capitalized
terms not defined in this Agreement shall have the definition ascribed to such
terms in the Plan.

 

1.             Grant
Date; Expiration Date.  The Grant Date for this Option is                   .  The Option shall continue in effect until                   
(the “Expiration Date”) unless earlier terminated as provided in Section 1
of Exhibit A.  The Option
shall not be exercisable on or after the Expiration Date.

 

2.             Vesting
of Option. The Vesting Reference Date of this
Option is                   .  Until it expires or is terminated as provided
in Section 1 of Exhibit A, the Option may be exercised from
time to time to purchase whole shares as to which it has become
exercisable.  The Option shall become
exercisable for one-third of the shares on each of the first three
anniversaries of the Vesting Reference Date, so that the Option will be fully
exercisable on the third anniversary of the Vesting Reference Date.

 

3.             Non-Statutory Stock Option.  The Company hereby designates the Option to
be a non-statutory stock option, rather than an Incentive Stock Option as
defined in Section 422 of the United States Internal Revenue Code of 1986,
as amended.

 

	
   

  	
  Source Interlink Companies, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

EXHIBIT A

 

1.                                      Termination
of Employment or Service.

 

1.1           Termination
Generally.  If the Optionee’s
employment or service with the Company terminates for any reason, voluntarily
or involuntarily, other than because of the Optionee’s Disability, death or
Retirement (the consequences of termination for which reasons are described in
Sections 1.2, 1.3 and 1.4, respectively), the Option may be exercised at any
time before the Expiration Date or the expiration of 30 days after the date of
termination, whichever is the shorter period, but only if and to the extent the
Optionee was entitled to exercise the Option at the date of termination.

 

1.2           Termination
Because of Disability.  If the
Optionee’s employment or service with the Company terminates because of
Disability, the Option shall immediately become exercisable in full and may be
exercised at any time before the Expiration Date or before the date that is one
year after the date of termination, whichever is the shorter period.

 

1.3           Termination
Because of Death.  If the Optionee
dies while employed by or in the service of the Company, the Option shall
immediately become exercisable in full and may be exercised at any time before
the Expiration Date or before the date that is one year after the date of
death, whichever is the shorter period, but only by the person or persons to
whom the Optionee’s rights under the Option shall pass by the Optionee’s will
or by the laws of descent and distribution of the state or country of domicile
at the time of death.

 

1.4           Termination
Because of Retirement.  If the
Optionee’s employment or service with the Company terminates because of the
Optionee’s Retirement, the Option may be exercised at any time before the
Expiration Date or before the expiration of three months after the date of
termination, whichever is the shorter period, but only to the extent specified
in this Section 1.4.

 

1.5           Absence on Leave.  Absence on leave or on account of illness or
Disability under rules established by the committee of the Board of
Directors of the Company appointed to administer the Plan (the “Committee”)
shall not be deemed an interruption of employment or service.

 

1.6           Failure to
Exercise Option.  To the extent that
following termination of employment or service, the Option is not exercised
within the applicable periods described above, all further rights to purchase
shares pursuant to the Option shall cease and terminate.

 

2.                                      Method
of Exercise of Option.  The Option
may be exercised only by notice in writing from the Optionee to the Company of
the Optionee’s binding commitment to purchase shares, specifying the number of
shares the Optionee desires to purchase under the Option and the date on which
the Optionee agrees to complete the transaction and, if required to comply with
the Securities Act of 1933, as amended, containing a representation that it is
the Optionee’s intention to acquire the shares for investment and not with a
view to distribution.  On or before the
date specified for completion of the purchase, the Optionee must pay the
Company the full 

 

 

purchase price of those shares
in cash or by check. Unless the Committee determines otherwise, no shares shall
be issued until full payment for the shares has been made, including all
amounts owed for tax withholding.  The
Optionee shall, immediately upon notification of the amount due, if any, pay to
the Company in cash or by check amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements.  If additional withholding is or becomes
required (as a result of exercise of the Option or as a result of disposition
of shares acquired pursuant to exercise of the Option) beyond any amount deposited
before delivery of the certificates, the Optionee shall pay such amount to the
Company, in cash or by check, on demand. 
If the Optionee fails to pay the amount demanded, the Company or any
parent or subsidiary corporation of the Company (an “Employer”) may withhold
that amount from other amounts payable to the Optionee, including salary,
subject to applicable law.

 

3.             Nontransferability.  The Option is nonassignable and
nontransferable by the Optionee, either voluntarily or by operation of law,
except as provided below and except by will or by the laws of descent and
distribution of the state or country of the Optionee’s domicile at the time of
death, and during the Optionee’s lifetime, the Option is exercisable only by
the Optionee.  The Option shall also be
transferable pursuant to a qualified domestic relations order as defined under
the Internal Revenue Code of 1986 or Title I of the Employee Retirement Income
Security Act.  Following any permitted
transfer, the Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer, provided that,
except for purposes of Section 1, the term “Optionee” shall be deemed to
refer to the transferee.  All references
in Section 1 to employment or service, termination of employment or
service and Disability, death and Retirement shall continue to be applied with
respect to the original Optionee. 
Following any termination of employment or service or Disability, death
or Retirement of the original Optionee as described in Section 1, the
Option shall be exercisable by the transferee only to the extent and for the
periods specified.

 

4.             Conditions
on Obligations. 
The Company shall not be obligated to issue shares of Common Stock upon
exercise of the Option if the Company is advised by its legal counsel that such
issuance would violate applicable state or federal laws, including securities
laws.  The Company will use its best
efforts to take steps required by state or federal law or applicable
regulations in connection with issuance of shares upon exercise of the Option.

 

5.             No
Right to Employment or Service.  Nothing in the Plan or this Agreement shall (a) confer
upon the Optionee any right to be continued in the employment of an Employer or
interfere in any way with the Employer’s right to terminate the Optionee’s
employment at will at any time, for any reason, with or without cause, or to
decrease the Optionee’s compensation or benefits, or (b) confer upon the
Optionee any right to be retained or employed by the Employer or to the
continuation, extension, renewal or modification of any compensation, contract
or arrangement with or by the Employer. 
The determination of whether to grant any option under the Plan is made
by the Company in its sole discretion. The grant of the Option shall not confer
upon the Optionee any right to receive any additional option or other award
under the Plan or otherwise.

 

6.             Successors
of Company. 
This Agreement shall be binding upon and shall inure to the benefit of
any successor of the Company, but, except as provided herein, the Option may 

 

 

not be assigned or otherwise
transferred by the Optionee.

 

7.             Rights
as a Stockholder. 
The Optionee shall have no rights as a stockholder with respect to any
shares of Common Stock until the date the Optionee becomes the holder of record
of those shares.  No adjustment shall be
made for dividends or other rights for which the record date occurs before the
date the Optionee becomes the holder of record.

 

8.             Amendments.  The Company may at any time amend this
Agreement to extend the expiration periods provided in Section 1 or to
increase the portion of the Option that is exercisable.  Otherwise, this Agreement may not be amended
without the written consent of the Optionee and the Company.

 

9.             Committee
Determinations. 
The Optionee agrees to accept as binding, conclusive and final all
decisions and interpretations of the Committee or other administrator of the
Plan as to the provisions of the Plan or this Agreement or any questions
arising thereunder.

 

10.          Governing
Law.  This
Agreement shall be governed by the laws of the State of Delaware.

 

11.          Complete
Agreement. 
This Agreement and the Plan constitute the entire agreement between the
Optionee and the Company, both oral and written concerning the matters
addressed herein, and all prior agreements or representations concerning the
matters addressed herein, whether written or oral, express or implied, are
terminated and of no further effect.

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