Document:

Exhibit 10.1 

 

 

September 19, 2008

 

Ilan Daskal

1498 Saskatchewan Drive

Sunnyvale, California 94087

 

Dear Ilan,

 

It is my pleasure to extend you an offer to join International
Rectifier Corporation (the “Company”). Your initial position will be Executive
Vice President and Chief Financial Officer, reporting to Oleg Khaykin, President
and Chief Executive Officer, at a starting annual base salary of $350,000.  It is current contemplated that if accepted,
your employment start date would be on or about October 6, 2008, with your
actual employment date reasonably earlier or later as agreed between you and
Oleg.

 

This offer includes the following:

 

·                  Stock Option Award: 
Management will recommend to Compensation and Stock Options Committee
of the Board of Directors (“Compensation Committee”) that you be granted an
option to purchase 75,000 shares of IR common stock.  It is anticipated that the option award would be
formally granted on the third business day following the filing of its next
periodic report on Form 10-K or Form 10-Q, whichever is next due,
after the date your employment commences and the exercise price of the options
would equal the fair market value of a share of the Company’s common stock and
would be priced at the closing price of a share of Company stock on the New
York Stock Exchange on that day (provided that if such date is within 15 days
prior to the close of a Company fiscal quarter or is subsequent to the close of
a Company fiscal quarter but prior to the Company’s filing of its periodic report
on Form 10-Q or Form 10-K for such quarter, then such date shall be
the third business day following the filing with the SEC of such report). 
The date may be further extended in the discretion of the Compensation
Committee.  The option award will have a maximum of a five year term
commencing on the date of grant.  The option award will be scheduled to
vest, subject to your continued employment, in equal annual installments over
three years from your employment start date.  All grants are subject to the
approval of the Compensation Committee and will also be subject to the terms
and conditions of the Company’s 2000 Incentive Plan, as amended, as well as the
Company’s then standard option award agreement for employee stock option grants
under the plan (provided however, such standard option award agreement shall be
superseded to the extent in conflict with the provisions of this offer letter).

 

 

·                  Restricted
Share Unit Award:  Management
will recommend to Compensation Committee of the Board of Directors that you be
granted a restricted stock unit (“RSU”) award for 25,000 shares of IR common
stock (“RSU Award”).  It is
anticipated that the RSU award would be formally granted on the third business
day following the Company’s filing of its next periodic report on Form 10-K
or Form 10-Q, whichever is next due, after the date your employment
commences (provided that if such date is within 15 days prior to the close of a
Company fiscal quarter or is subsequent to the close of a Company fiscal
quarter but prior to the Company’s filing of its periodic report on Form 10-Q
or Form 10-K for such quarter, then such date shall be the third business
day following the filing with the SEC of such report).  The date may be
further extended in the discretion of the Compensation Committee.  The
award of restricted stock units will be scheduled to vest, subject to your
continued employment, in equal annual installments over three years from your
employment start date.  All grants are subject to the approval of the
Compensation Committee and will also be subject to the terms and conditions of
the Company’s 2000 Incentive Plan, as amended, as well as the Company’s then
standard award agreement for RSUs under the plan (provided however, such
standard RSU award agreement shall be superseded to the extent in conflict with
the provisions of this offer letter).

 

·                  Incentive
Plan:  You will participate in
the annual executive incentive bonus plan, with a bonus target of seventy (70%)
percent of your base salary.  Neither
your bonus target nor your annual base pay shall be reduced during the first
two years from your employment start date.  The bonus plan includes corporate and
individual objectives.  The corporate
objectives have been established by the Compensation Committee.  Your individual objectives will be
established by the Compensation Committee with recommendations from the Company’s
Chief Executive Officer.

 

·                  Severance
Agreement:  The Company’s offer includes the benefits set
forth in the attached Severance Agreement (“Severance Agreement”) that provides
for certain benefits under Section 2 therein in the event of a Qualifying
Termination on certain terms and conditions as described in the Severance
Agreement.

 

·                  Other Severance:  If your employment by the Company is
terminated for any reason other than by the Company with Cause or you terminate
your employment for Good Reason (as defined below) and such termination does
not constitute a Qualifying Termination that gives rise to your eligibility for
benefits under Section 2 of the Separation Agreement, you will receive as
severance a cash amount equal to the sum of one times your annual Base Pay and
that year’s Target Bonus.  In such event, with respect to any stock
options that are vested as of the date of your employment termination, you will
have one year following your employment termination for the purposes of the
exercise of stock options under the Company’s stock option plan, after which
time any and all of your stock options that you have not exercised shall
terminate and be of no further force and effect; provided however, your vested
stock options shall be subject to all other terms and conditions of the plan
and other documents under which the options were originally granted, including,
without limitation, early termination upon the first to occur of (i) the
maximum year term of such options upon grant or (ii) a change of control
of the Company, in each case on the terms provided for under the applicable
option plan and option agreement.  You will only be entitled to receive
the benefits described in this paragraph upon a termination of employment upon
your execution and delivery to the Company of a release agreement in the form
set forth in Section 2(p) of the Severance Agreement. (For purposes
of this paragraph, the terms Cause, Qualifying Termination, Base Pay and Target
Bonus, have the meanings set forth in the Separation Agreement.)  If, however, your employment by the Company
is terminated for any reason other than by the Company with Cause or by you for
Good Reason and 

 

 

such termination constitutes a Qualifying
Termination that gives rise to your entitlement to benefits under Section 2
of the Separation Agreement, you will only be entitled to the benefits provided
under the Separation Agreement and will not be entitled to any additional
benefits under this paragraph (and if a Qualifying Termination has occurred
under the Separation Agreement giving rise to your entitlement to benefits
under Section 2 thereunder and you have not yet been granted the RSU
Award, on the date of the Qualifying Termination, the Company’s obligation to
grant the RSU Award will terminate and you will instead be entitled to be paid
a cash payment in an amount equal to 25,000 multiplied by the per share closing
price of the Company’s common stock on such date in addition to the other
benefits to which you would be entitled under Section 2(a) of the
Separation Agreement, subject to and on such terms and conditions as such other
benefits would be payable thereunder).For purposes of this offer letter and its
“Other Severance” provision, “Good Reason” means that the following has
occurred without your prior written consent: you do not hold the title and
perform the similar functions of the Company’s Chief Financial Officer. Before “Good
Reason” has been deemed to have occurred, you must give the Company written
notice detailing why you believe the Good Reason event has occurred and such
notice must be provided to the Company within sixty days of the initial
occurrence of such alleged Good Reason event(s) or else such Good Reason
event(s) will be deemed to have been irrevocably waived by you.  The Company shall then have thirty days after
its receipt of written notice to cure or remedy the items cited in the written
notice so that “Good Reason” will not have formally occurred with respect to
the event(s) in question.  If the
Company does not timely remedy or cure the Good Reason events, then your
employment shall be terminated for Good Reason as of the end of the thirty day
cure period.  Any dispute regarding the
application of this “Other Severance” section shall be resolved through
arbitration on the same terms and conditions as is set forth in Section 7
of the Separation Agreement.

 

·                  Signing Bonus: You will be entitled to
receive a one-time signing bonus from the Company equal to $125,000; provided
however, if you voluntarily terminate your employment with the Company within
one year following the your employment start date for reasons other than a
Qualifying Termination (as defined in the Severance Agreement), you will repay
such amount within 30 days following the date of your employment termination.

 

·                  International Rectifier’s Executive Relocation
package:  A copy of the
relocation policy has been provided for your reference.  The relocation package must be used within
twelve (12) months of your start date.  Should you voluntarily terminate your
employment with the Company within one year following the your
employment start date for reasons other than Good Reason (as defined in this
offer letter) a Qualifying Termination (as defined in the Severance Agreement),
you will reimburse the Company for any relocation benefits expended within 30
days following the date of your employment termination.  The foregoing sentence shall supersede the
terms for the time and amount of reimbursement upon voluntary termination of
employment otherwise set forth in the Company’s relocation policy.

 

·                  Temporary Living Assistance:  International Rectifier will
provide you with up to twelve months of temporary living assistance not to
exceed $3,000 per month and reasonable coach air fare (up to approximately
weekly) for you from your current residence to the Los Angeles/Southern
California area, while you and your family make the transition to the Los
Angeles/Southern California area.

 

 

·                  Closing
assistance on the sale of your current residence: International
Rectifier will reimburse you a maximum of six (6%) percent towards closing
costs on the sale of your current residence (maximum reimbursable sales price
of $1,500,000 will apply).

 

·                  Closing assistance on the purchase of a home in the
Los Angeles/Southern California area:  International
Rectifier will reimburse you up to two (2%) percent for closing costs on the
purchase of a home in the Los Angeles/Southern California area (maximum reimbursable
purchase price of $1,500,000 will apply).

 

·                  Tax
Relief:  Items related to your
relocation package which are considered taxable will be grossed up to offset
tax liabilities you may incur.

 

·                  Car
Allowance:  Once you relocate
to El Segundo, California, you will receive $560.00 a month car allowance. 
Employees receiving a car allowance must purchase insurance coverage and
provide evidence of such insurance to the Company’s Treasury department.  Insurance maintained by the employee on the
vehicle should be no less than $100,000.00 bodily injury, each person
300,000.00 each accident and $50,000.00 property damage each accident.

 

·                  International Rectifier Benefits:  This offer includes paid time off,
medical, dental, life insurance, 401(k) plan, and all other benefits in
accordance with standard company plans and any revisions thereof.

 

·                  Reimbursement of Legal
Expenses: International Rectifier shall reimburse you or pay the
reasonable legal fees incurred by the you relating to the negotiation and
preparation of this offer letter and the Severance Agreement, provided that in
no event shall International Rectifier’s obligation with respect to such
reimbursement or payment of such legal fees exceed TEN THOUSAND DOLLARS
($10,000).

 

Employment at International Rectifier is contingent upon proof of legal
right to work in the United States, satisfactorily completing a post-offer
physical examination, drug test and background check. Arrangements will be made
to accomplish this upon the acceptance of this offer. Your employment is at
will and can be terminated by either party at any time, for any reason, with or
without cause. International Rectifier reserves the right to change the terms
and conditions of anyone’s employment at any time.

 

New Hire Orientation will be held from 9:15am - 3:00pm on your first
day. Please report to the first floor reception area at 101 N. Sepulveda Blvd.
El Segundo, CA 90245.

 

Your acceptance of this offer and the conditions upon which it is made
will be confirmed by your signing and returning this agreement. This offer will expire if not accepted by September 23,
2008.

 

Please let me know if you have any questions.  We’re looking forward to you joining the IR
senior leadership team.

 

 

Sincerely,

 

 

Acknowledgement & acceptance

 

Your acceptance of this offer and the conditions upon which it is made
will be confirmed by your signing and returning this agreement

 

 

	
   

  	
   

  	
   

  
	
  Ilan Daskal

  	
  L. P. Quiggle 

  
	
   

  	
  Vice President, Human Resources

  
	
   

  	
   

  
	
   

  	
   

  
	
  9/21/08

  	
   

  	
  9/22/08

  
	
  Date

  	
  DateExhibit 10.2

 

SEVERANCE
AGREEMENT

 

THIS SEVERANCE AGREEMENT (this “Agreement”) is made by and between
International Rectifier Corporation, a Delaware corporation (the “Company”),
and Ilan Daskal (“Employee”), dated as of September 19, 2008 to be
effective upon Employee’s first day of employment with the Company.  This term of this Agreement extends from the
Effective Date through the End Date.

 

WITNESSETH:

 

WHEREAS, Employee has accepted an offer to be a senior level employee
of the Company to serve as its Executive Vice President and Chief Financial
Officer;

 

WHEREAS, Employee is expected to continue to make major contributions
to the short- and long-term profitability, growth and financial strength of the
Company;

 

WHEREAS, the Company desires to assure itself of both present and
future continuity of management and desires to establish certain severance
benefits for Employee, applicable in the event of a Change in Control; and

 

WHEREAS, the Compensation Committee of the Board of Directors of this
Company authorized the Company to enter into this Agreement.

 

NOW, THEREFORE, the Company and Employee agree as follows:

 

1. Certain Defined Terms.  In
addition to terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital letters:

 

(a) “Base Amount” has the same meaning provided to it under the
Code Section 280G final regulations.

 

(b) “Base Pay” means Employee’s annual rate of base salary as in
effect from time to time.

 

(c) “Board” means the Board of Directors of the Company.

 

(d) “Cause” means any one or more of the following committed (or
omitted) by Employee:

 

(i) conviction
of, or guilty plea or plea of nolo contendre to, a felony crime; or 

 

(ii) gross
misconduct that is materially injurious to the Company and/or any of its
Subsidiaries or affiliates; or

 

 

(iii) repeated
failure to follow the reasonable and lawful directions of the Company after the
Employee has received at least one written warning from the Company; or

 

(iv) any
willful and/or intentional material violation of any written Company policy or
procedure; or

 

(v) a
material breach of this Agreement

 

Whether or not Cause
exists in clauses (ii) through (v) shall in each case be determined
in good faith by the Board.

 

Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for “Cause”
under clauses (ii) through (v) unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Board then in office at a
meeting of the Board.  In addition,
before such termination for Cause is effective, the Company shall provide the
Employee with written notice detailing why the Company believes a Cause event
has occurred and specifying the particulars thereof in detail.  The Board shall also provide the Employee
with ten days after his/her receipt of such notice to cure the Cause
event(s)(if curable) and the opportunity, together with the Employee’s counsel
(if the Employee chooses to have counsel present at such meeting), to be heard
before the Board (or, in the Board’s discretion, the Committee or their
delegates) during such ten day period. 
Nothing herein will limit the right of the Employee to contest the
validity or propriety of any such determination.

 

(e) “Change in Control” means the occurrence of any one or more of
the following events:

 

(1) Approval
by the stockholders of the Company of the dissolution or liquidation of the
Company, except to the extent the dissolution is in connection with a sale of
assets which would not constitute a Change in Control Event under subsection (2) below.

 

(2) Approval
by the stockholders of the Company of an agreement to merge, consolidate or
otherwise reorganize, with or into, sell or transfer substantially all of the
Company’s business and/or assets as an entirety to one or more entities that
are not Subsidiaries, as a result of which 50% or less of the outstanding
voting securities of the surviving or resulting entities immediately after the
reorganization are, or are to be, owned by former stockholders of the Company
immediately before such reorganization (assuming for purposes of such
determination that there is no change in the record ownership of the Company’s
securities from the record date for such approval until such reorganization,
but including in such determination any securities of the other parties to such
reorganization held by such affiliates of the Company).

 

(3) The
occurrence of any of the following:

 

2

 

Any “person,”
alone or with “affiliates” and “associates” of such person, without the prior
approval of the Board, becomes the “beneficial 
owner” of more than 50% of the outstanding voting securities of the
Company (the terms “person,” “affiliates,” “associates” and “beneficial owner”
are used as such terms are used in the Exchange Act and the General Rules and
Regulations thereunder); provided, however, that a “Change in Control Event”
shall not be deemed to have occurred if such “person” is/are:

 

(A) the
Company,

 

(B) any
Subsidiary, or

 

(C) any
employee benefit plan or employee stock plan of the Company, or any trust or
other entity organized, established or holding shares of such voting securities
by, for, or pursuant to the  terms of any
such plan.

 

(4) Individuals who at the beginning of any period of two
consecutive calendar years constitute a majority of the Board cease for any
reason, during such period, to constitute at least a  majority thereof, unless the election, or the
nomination for election by the Company’s stockholders, of each new Board member
was approved by a vote of at least two-thirds of the Board members then still
in office who were Board members at the beginning of such period.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended.

 

(g) “Committee” means the Compensation and Stock Options Committee
of the Board.

 

 (h) “Disability”
means disability as defined in the Company’s long-term disability plan in which
the Employee participates at the relevant time or, if the Employee does not
participate in a Company long-term disability plan at the relevant time, as
such term is defined in the Company’s principal long-term disability plan that
generally covers the Company’s senior-level employees at that time, or, if
neither of the foregoing applies, as defined in Code Section 22(e)(3).

 

(i) “Employee
Benefits” means any Company group health or dental benefit plan; provided,
however, that Employee Benefits shall not include contributions made by the Company
to any retirement plan, pension plan or profit sharing plan for the benefit of
the Employee.

 

(j) “Employee
Benefits Continuation Period” means the 18 month period commencing as of the
first day of the month following a Qualifying Termination.

 

(k) “End Date”
means the earlier of: (i) the effective date that the Company and Employee
mutually agree in writing to terminate this Agreement, (ii) the date,
following a Qualifying Termination, when the Company has fulfilled all of its
obligations to Employee under this Agreement, (iii) the Termination Date
arising from a non-Qualifying Termination of Employee’s employment, or (iv) the
date that is two years after the date when the Company provided written

 

3

 

notice to the Employee
that it is terminating this Agreement provided, however, that the End Date
under this clause (iv) can be no earlier than the date that is two years
after a Change in Control that occurred during the term of the Agreement or the
date determined under clause (ii) if there is a Qualifying Termination.

 

(l) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(m) “Good
Reason” means that any one or more of the following have occurred without the
Employee’s prior written consent either in connection with a Change in Control
or during the Protected Period:

 

(i) Employee
has, except in connection with termination of employment for Cause or due to
Employee’s death or Disability, suffered a material and substantial diminution
in Employee’s job responsibilities as in effect immediately prior to the public
announcement of a contemplated Change in Control (and where such Change in
Control does occur), provided, however, that neither mere changes in title
and/or reporting relationship, nor reassignment following a Change in Control
to a position that is similar to the position held immediately prior to such
public announcement of the contemplated Change in Control shall constitute a
material and substantial diminution in job responsibilities.  In addition, if Employee’s job title as of
the Effective Date (as specified in the above recitals) is denoted as or is in
effect an “Interim” or “Acting” position, then a subsequent reassignment to a
position of the same level which Employee held immediately prior to assuming
such Interim or Acting position or to a higher level shall not constitute a
Good Reason event; or

 

(ii) Employee
has incurred a reduction in his or her Base Pay or his/her Target Bonus
opportunity; or

 

(iii) Employee
has been notified that his or her principal place of work will be relocated to
a new location that is twenty miles or more from Employee’s principal work
location as of immediately before the public announcement of a contemplated
Change in Control (and where such Change in Control does occur); or

 

(iv) The
Company has materially breached this Agreement including without limitation the
failure to timely comply with Section 3(a).

 

Before “Good Reason” has been deemed to have occurred, Employee must
give the Company written notice detailing why the Employee believes a Good
Reason event has occurred and such notice must be provided to the Company
within sixty days of the initial occurrence of such alleged Good Reason event(s) or
else such Good Reason event(s) will be deemed to have been irrevocably
waived by Employee.  The Company shall
then have thirty days after its receipt of written notice to cure or remedy the
items cited in the written notice so that “Good Reason” will not have formally
occurred with respect to the event(s) in question.  If the Company does not timely remedy or cure
the Good Reason events, then Employee’s employment shall be terminated for Good
Reason as of the end of the thirty day cure period.

 

4

 

(n) “Protected Period” means the two year period immediately
following (and commencing on) a Change in Control.

 

(o) “Qualifying Termination” means termination of the Employee’s
employment either by the Company without Cause or by the Employee for Good
Reason, in each case occurring either in connection with a Change in Control
(or an impending Change in Control) or during the Protected Period.  For avoidance of doubt, termination of
employment due to Employee’s death or Disability is not a Qualifying Termination.

 

(p) “Release Agreement” means a separation agreement containing
the release of all employment related claims against the Company and its
affiliates along with Employee’s covenant not to sue the Company or its
affiliates in substantially the following form and where such separation
agreement will also contain only those covenants expressed in Section 12
below.

 

The release of claims
will provide that in exchange for good and valuable consideration, the “Employee
hereby covenants not to sue and releases and forever discharges the Company,
its parents, subsidiaries, attorneys, insurers, agents, employees,
shareholders, directors, officers, affiliates, predecessors and successors of
and from any and all employment related rights, claims, actions, demands,
causes of action, obligations, attorneys’ fees, costs, damages, and liabilities
of whatever kind or nature arising from his service with the Company, in law or
in equity, that Employee may have (whether known or not known) (collectively, “Claims”),
accruing to Employee as of the Termination Date, that Employee has ever had,
including but not limited to Claims based on and/or arising under Title VII of
the Civil Rights Act of 1964, as amended, The Americans with Disabilities Act,
The Family Medical Leave Act, The Equal Pay Act, The Employee Retirement Income
Security Act, The Fair Labor Standards Act, and/or the California Fair
Employment and Housing Act; The California Constitution, The California
Government Code, The California Labor Code, The Industrial Welfare Commission’s
Orders, The Securities Act of 1933, The Securities Exchange Act of 1934, the
Worker Adjustment and Retraining Notification Act, California Labor Code
sections 1400-1408, and any and all other Claims Employee may have under any
other federal, state or local Constitution, Statute, Ordinance and/or
Regulation; and all other Claims arising under common law including but not
limited to tort, express and/or implied contract and/or quasi-contract, arising
out of or, in any way, related to Employee’s previous relationship with the
Company as an employee, consultant and/ or director.  Furthermore, Employee acknowledges that
Employee is waiving and releasing any rights Employee may have under the Older
Workers Benefit Protection Act, Age Discrimination in Employment Act of 1967 (“ADEA”),
as amended, and that this waiver and release is knowing and voluntary.  Employee acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Employee was already entitled.  Employee
further acknowledges that Employee has been advised by this writing that:

 

(a)      Employee should consult with an attorney
prior to executing this Agreement;

 

5

 

(b)     Employee has at least twenty-one (21) days
within which to consider this Agreement;

 

(c)      Employee has up to seven (7) days
following the execution of this Agreement by the Parties to revoke the
Agreement; and

 

(d)     this Agreement shall not be effective until
the revocation period in subsection (c) has expired without revocation by
Employee.

 

The Company and Employee
agree that this release shall be and remain in effect in all respects as a
complete general release as to the matters released.”

 

Such Release Agreement
will not require a release of the Employee’s rights to indemnification and
contribution by the Company or to coverage under the Company’s directors and
officers liability insurance coverage if applicable or any claims that may not
be released as a matter of law.

 

(q) “Subsidiary” means any corporation or other entity a majority
of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.

 

(r) “Target Bonus” means the targeted annualized cash-based
incentive compensation opportunity for the Employee during each Company fiscal
year.  Solely for the purposes of
determining whether Good Reason applies, this Target Bonus amount can not be
reduced from any prior fiscal year without the Employee’s express prior written
consent, although the actual amount of any bonus earned and paid to Employee
for any year shall be determined pursuant to the terms of each year’s bonus
arrangement.

 

(s) “Termination Date” means the last date of Employee’s
employment with the Company (and any Subsidiary).

 

2. Qualifying Termination Consequences. 
If a Qualifying Termination occurs during the term of this Agreement and
also occurs either in connection with a Change in Control (or an impending
Change in Control) and/or during the Protected Period, then the following
subsections in this Section 2 shall apply (with Sections 2(b) through
2(g) being subject to the effectiveness of the Release Agreement
referenced in Section 2(h) below):

 

(a) Within ten days of his/her Termination Date (or such earlier
time required by applicable law), Employee shall be paid for (i) his/her
unpaid salary and paid time off and vacation pay that are accrued through the
Termination Date, (ii) earned but unpaid bonuses for performance periods
completed on or prior to the Termination Date, and (iii) unreimbursed
valid business expenses that were or are submitted in accordance with Company
policies and procedures.  Employee is
also eligible for other vested benefits pursuant to the express terms of any
applicable Company employee benefit plan.

 

(b) The Company shall pay in cash to Employee an amount equal to one
(1) times (provided however, if the Termination Date takes place within
the first year following the 

 

6

 

Effective Date, then two
times) the sum of the Employee’s Base Pay and Target Bonus as in effect on the
Termination Date (the “Cash Severance”). 
The Board shall determine in good faith whether such Qualifying
Termination is occurring in connection with an impending Change in
Control.  However, such a Qualifying
Termination shall in any event be deemed to be in connection with an impending
Change in Control if such Qualifying Termination (i) is required by the
merger agreement or other instrument relating to such Change in Control, or (ii) is
made at the express request of the other party (or parties) to the transaction
constituting such Change in Control, or (iii) occurs after the public
announcement of an impending Change in Control. 
The Cash Severance shall be paid to Employee in a cash lump sum within
ten days after the effectiveness of the Release Agreement.

 

(c) For the Employee Benefits Continuation Period, the Company
shall continue to provide to Employee the Employee Benefits which were received
by, or with respect to, Employee as of the date of the Qualifying Termination,
at the same expense to Employee as before the Qualifying Termination subject to
immediate cessation (other than as to any pre-existing condition not covered by
the new benefits coverage) if Employee is offered employee benefits coverage in
connection with new employment.  From the
Termination Date through the Employee Benefits Continuation Period, Employee
shall provide advance written notice to the Company informing the Company when
the Employee is offered or becomes eligible for other employee benefits in
connection with new employment.  In
addition, if periodically requested by the Company during the Employee Benefits
Continuation Period, the Employee will provide the Company with written
confirmation that he/she has not been offered other employee benefits.

 

(d) The Company shall pay in cash to Employee an amount equal to a
pro-rata portion (based on the number of whole months Employee served as a
Company employee during the fiscal year of the Qualifying Termination divided
by twelve) of the Target Bonus for such year. 
Any amounts payable to Employee under this Section 2(d) will
be paid to Employee at the same time that the Cash Severance is paid.  The Company shall also provide, at Company
expense and not to exceed $50,000 in the aggregate, job outplacement services
for the Employee until the earlier of nine months after the Termination Date or
the date when Employee accepts an offer of new employment.  The Company shall select the outplacement
service provider and provide any compensation benefit hereunder directly with
and to the service provider.

 

(e) In the event that the Employee is entitled to receive payment
of the Cash Severance, and notwithstanding anything to the contrary in any
restricted stock, stock option or other equity compensation plan or agreement
or deferred compensation or retirement plan or agreement, even if such
agreements are entered into after the date hereof, upon the Termination Date
the Employee shall become immediately fully vested (and all vesting
restrictions and Company repurchase rights removed) in all of his/her then
outstanding stock options, stock appreciation rights, warrants, restricted
stock, phantom stock, nonqualified deferred compensation, nonqualified retirement
agreement or similar nonqualified plans or agreements with the Company.  In addition, subject to the terms of any
applicable Company equity compensation plan or merger agreement or other
instrument relating to the Change in Control that provides that all Company
stock options will be canceled and not continued upon a Change in Control, the 

 

7

 

Employee shall have at
least until the earlier of (i) the scheduled expiration date of the stock
option term or (ii) six months after the Termination Date to exercise
his/her vested then-outstanding stock options. 
Notwithstanding the foregoing, any award that is subject to a
performance condition will vest only to the extent the performance condition
has been satisfied on or prior to the Termination Date.

 

(f) In the event that it is determined that any payment or
distribution of any type to or for the benefit of the Employee made by the
Company, by any of its affiliates, by any person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company’s assets (within the meaning of section 280G of the Code, and the
regulations thereunder or by any affiliate of such person, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the “Total Payments”), would be subject to the excise tax imposed
by section 4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or penalties, are
collectively referred to as the “Excise Tax”), then either paragraphs (1) or
(2) of this Section 2(f) below shall occur as applicable:

 

(1) If the aggregate
present value of the Total Payments (as calculated pursuant to the Code Section 280G
final regulations) is less than 345% of the Employee’s Base Amount, then such
Total Payments shall be reduced to the smaller amount that is equal to $1.00
less than 300% of the Employee’s Base Amount.

 

(2) If the aggregate
present value of the Total Payments (as calculated pursuant to the Code Section 280G
final regulations) is equal to or greater than 345% of the Employee’s Base
Amount, then, subject to the maximum dollar limit expressed in Section 2(g),
the Company shall pay Employee a cash amount equal to the sum of: (i) any
excise taxes that may be imposed on Employee under Code Sections 280G and 4999
(the “Excise Tax Restoration”) and (ii) for any taxes (including excise
taxes) imposed on the Excise Tax Restoration payment, and for any interest or
penalties related to such excise tax with all such computations performed
applying the then highest marginal tax rates. 
Such payment shall be made to Employee within thirty days of the
determination that there are excise taxes owed and will be in an amount so that
Employee will be in the same position on an after-tax basis that he would have
been if no excise taxes, interest and/or penalties had been imposed.

 

(3) All mathematical
determinations and all determinations of whether any of the Total Payments are “parachute
payments” (within the meaning of section 280G of the Code) that are required to
be made under this Section 2(f), shall be made by a nationally recognized
independent registered public accounting firm not currently retained by the
Company immediately prior to the Change in Control (the “Accountants”), who
shall provide their determination, together with detailed supporting
calculations regarding the amount of any relevant matters, both to the Company
and to the Employee within seven (7) business days of the Change in
Control or Termination Date, as applicable, or such earlier time as is
requested by the Company.  Such
determination shall be made by the Accountants using reasonable good faith
interpretations of the Code.  Any
determination by the Accountants shall be binding upon the Company and the
Employee, absent 

 

8

 

manifest error.  The Company shall pay the fees and costs of
the Accountants which are incurred in connection with this Section 2(f).

 

(g) In the event the Employee is subject to additional taxes
imposed by Code Section 409A with respect to any payments or benefits due
to the Employee under this Agreement, the Company shall pay Employee a cash
amount equal to the sum of: (i) any taxes that may be imposed on Employee
under Code Section 409A (the “409A Tax Restoration”) and (ii) for any
taxes (including excise taxes) imposed on the 409A Tax Restoration payment, and
for any interest or penalties related to such Code Section 409A taxes with
all such computations performed applying the then highest marginal tax
rates.  Such payment shall be made to
Employee within thirty days of the determination that there are Code Section 409A
taxes owed and will be in an amount so that Employee will be in the same
position on an after-tax basis that he would have been if no Code Section 409A
taxes, excise taxes, interest and/or penalties had been imposed.

 

Notwithstanding anything
to the contrary, the maximum aggregate amount of payments that the Company will
be required to make under Sections 2(f)(2) and 2(g) is $3,000,000.

 

(h) All payments and benefits provided under Sections 2(b) through
2(g) are conditioned on and subject to the Employee’s continuing
compliance with this Agreement and the Employee’s timely execution (and
non-revocation and effectiveness) of the Release Agreement on or after the
Termination Date and the Employee’s on-going compliance with the terms of the
Release Agreement.  The Company will
provide the Release Agreement to the Employee for his/her review and execution
within three days of the Termination Date. 
There is no entitlement to any payments or benefits unless and until
such Release Agreement is effective and the Release Agreement must become
effective within sixty days after the Termination Date or else no payments or
benefits will be provided to Employee under Sections 2(b) through
2(g).  In addition, to the extent
Employee receives severance or similar payments and/or benefits under any other
Company plan, program, agreement, policy, practice, or the like, or under the
WARN Act or similar state law, the payments and benefits due to Employee under
this Agreement will be correspondingly reduced on a dollar-for-dollar basis (or
vice-versa).

 

3. Successors and Binding Agreement.

 

(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by written
agreement in form and substance reasonably satisfactory to the Employee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place.  This
Agreement will be binding upon and inure to the benefit of the Company and any
successor to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or assets of
the Company whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be 

 

9

 

deemed the “Company” for
the purposes of this Agreement), but will not otherwise be assignable,
transferable or delegable by the Company.

 

(b) This Agreement will inure to the benefit of and be enforceable
by the Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.

 

(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 3(a) and 3(b).  Without limiting the generality or effect of
the foregoing, the Employee’s right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Employee’s will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 3(c), the Company shall
have no liability to pay any amount so attempted to be assigned, transferred or
delegated.

 

4. No Retention Rights.  This
Agreement is not an employment agreement and does not give the Employee the
right to be retained by the Company (or its Subsidiaries or affiliates) and the
Employee agrees that he/she is an employee-at-will subject to any effective
employment agreement between the parties. The Company (or its Subsidiaries or
affiliates) reserves the right to terminate the Employee’s service at any time
and for any reason.

 

5. Notices.  For all purposes of
this Agreement, all communications, including without limitation notices,
consents, requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when hand
delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or three business days after having been sent by a nationally
recognized overnight courier service such as FedEx, UPS, or DHL, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive office and to the Employee at his/her principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

 

6. Validity.  If any provision of
this Agreement or the application of any provision hereof to any person or
circumstances is held invalid, unenforceable or otherwise illegal, the
remainder of this Agreement and the application of such provision to any other
person or circumstances will not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal will be reformed to the extent (and
only to the extent) necessary to make it enforceable, valid or legal.

 

7. Arbitration; Governing Law. 
Any dispute between the parties under this Agreement shall be resolved
(except as provided below) in Los Angeles, California through informal
arbitration by an arbitrator selected under the rules of the American
Arbitration Association. The 

 

10

 

arbitrator shall have the
right only to interpret and apply the provisions of this Agreement and may not
change its provisions. The arbitrator shall permit reasonable pre-hearing
discovery of facts, to the extent necessary to establish a claim or a defense
to a claim, subject to supervision by the arbitrator.  The determination of the arbitrator shall be
conclusive and binding upon the parties and judgment upon the same may be
entered in any court having jurisdiction thereof.  The arbitrator shall give written notice to
the parties stating his determination and shall furnish to each party a signed
copy of such written decision.  To the
extent required by applicable law, the expenses of the arbitration shall be
borne by the Company, otherwise the arbitration expenses shall be borne equally
by the Company and the Employee provided, however, that each party shall be
responsible for their own legal fees and expenses (except that the Company
shall reimburse the Employee for the Employee’s legal fees within thirty days
of the arbitration decision if the Employee successfully enforces at least one
material claim of his Section 2 entitlements under this Section 7).
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of California without regard to the
conflicts of laws principles thereof.

 

8. Miscellaneous.  No provision
of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Employee and
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. This Agreement and
the Compensation Agreement constitute the entire agreement of the parties with
respect to the subject matter thereof and supersede any and all prior
agreements of the parties with respect to such subject matter.  No agreements or representations, oral or
otherwise, expressed or implied with respect to the subject matter thereof have
been made by either party which are not set forth expressly in this Agreement
and/or the Compensation Agreement.

 

9. Counterparts.  This Agreement
may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same
agreement.

 

10. Section 409A.  The
Agreement is not intended to constitute a “nonqualified deferred compensation
plan” within the meaning of section 409A of the Code.  Notwithstanding the foregoing, in the event
this Agreement or any benefit paid under this Agreement to Employee is deemed
to be subject to section 409A of the Code, the Employee consents to the Company’s
adoption of such conforming amendments as the Company deems advisable or
necessary, in its sole discretion, to comply with section 409A of the Code
(including without limit delaying the timing of payments).  Notwithstanding anything to the contrary, if,
upon Employee’s separation from service, Employee is then a Company “specified
employee” (as defined in Section 409A of the Code), then to the extent
necessary to comply with Code Section 409A, the Company will defer payment
(without interest) of certain of the amounts owed to Employee under this
Agreement until the earlier of the Employee’s death or the first business day
of the seventh month following Employee’s separation from service.

 

11

 

11. Withholding.  All payments
and benefits made under this Agreement shall be subject to reduction to reflect
any withholding taxes or other amounts required by applicable law or
regulation.

 

12. Restrictive Covenants.  The
provisions of this Section 12 shall survive termination of this Agreement
and/or termination of Employee’s employment for any reason.

 

(a) Nondisparagement.  The
Employee will not disparage the Company, its directors, officers, employees,
affiliates, Subsidiaries, predecessors, successors or assigns in any written or
oral communications to any third party. 
The Employee further agrees that he/she will not direct anyone to make
any disparaging oral or written remarks to any third parties, provided,
however, that the Employee may testify or otherwise provide information
truthfully in connection with any (i) governmental and/or regulatory
proceeding, (ii) required governmental or regulatory filing, or (iii) any
subpoena for testimony served upon the Employee.

 

(b) Nonsolicit.  During the
Employee’s employment with Company and for 12 months after the Termination
Date, the Employee shall not, directly or indirectly, either as an individual
or as an employee, agent, consultant, advisor, independent contractor, general
partner, officer, director, stockholder, investor, lender, or in any other
capacity whatsoever, of any person, firm, corporation or partnership: (i) solicit,
induce, recruit or encourage any of the Company’s employees or consultants to
terminate their relationship with the Company, or attempt to solicit, induce,
recruit or encourage any of the Company’s employees or consultants to terminate
their relationship with the Company, or (ii) attempt to negatively
influence any of the Company’s clients or customers from purchasing Company
products or services.

 

(c) Nondisclosure. 
Notwithstanding any requirement that the Company may have to publicly
disclose the terms of this Agreement pursuant to applicable law or regulations,
the Employee agrees to use reasonable efforts to maintain in confidence the
existence of this Agreement, the contents and terms of this Agreement, and the
consideration for this Agreement (hereinafter collectively referred to as “Agreement
Information”).  The Employee also agrees
to take every reasonable precaution to prevent disclosure of any Agreement
Information to third parties, except for disclosures required by law or
reasonably necessary with respect to Employee’s immediate family members or
personal advisors who shall also agree to maintain confidentiality of the
Agreement Information.

 

(d) Confidentiality. 
Employee shall not, except as required by any court or administrative
agency, without the written consent of the Board, or the Company’s Chief
Executive Officer, or a person authorized thereby, disclose to any person,
other than an employee of the Company or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Employee or
his duties to the Company, any confidential information obtained by him while
in the employ of the Company with respect to any of the Company’s inventions,
processes, customers, methods of distribution, methods of manufacturing,
attorney-client communications, pending or contemplated acquisitions, other
trade secrets, or any other 

 

12

 

material which the
Company is obliged to keep confidential pursuant to any confidentiality
agreement or protective order; provided, however, that confidential information
shall not include any information now known or which becomes known generally to
the public (other than as a result of an unauthorized disclosure by the
Employee) or any information of a type not otherwise considered confidential by
a person engaged in the same business or a business similar to that conducted
by the Company.  Employee acknowledges
that he also continues to be bound by the Inventions and Confidential
Information agreement with the Company that Employee previously executed.

 

(e) Remedy for Breach.  The
parties hereto agree that, in the event of breach or threatened breach of any
covenants herein, the damage or imminent damage shall be inestimable, and that
therefore any remedy at law or in damages shall be inadequate. Accordingly, the
parties hereto agree that the Company and Employee shall be entitled to apply
for injunctive relief in the event of any breach or threatened breach of any of
such provisions by Employee or the Company, in addition to any other relief
(including damages) available to the Company or Employee under this Agreement
or under law.  If the Employee materially
breaches the Release Agreement then within thirty days of the Company’s notice
to the Employee regarding such breach, the Employee must repay to the Company
in cash all of the payments and benefits previously provided to the Employee
under Section 2 and the Company will owe no further obligations to
Employee under this Agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered to be effective as of the Effective Date.

 

 

INTERNATIONAL
RECTIFIER CORPORATION

 

 

	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Ilan Daskal

  

 

13

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