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Exhibit 10.11  

 
 

CHEROKEE INTERNATIONAL CORPORATION    
    
    2002 STOCK OPTION PLAN    
    

Section 1.    General Purpose of Plan; Definitions.    

        The
name of this plan is the Cherokee International Corporation 2002 Stock Option Plan (the "Plan"). The Plan was adopted by the Board (as defined below) on July 30, 2003, subject
to the approval of the stockholders of the Company (as defined below) holding a majority of the outstanding Shares (as defined below). The purpose of the Plan is to enable the Company to attract and
retain highly qualified personnel who will contribute to the Company's success and to provide incentive to Participants (as defined below) that are linked directly to increases in stockholder value
and will therefore inure to the benefit of all stockholders of the Company. 

        For
purposes of the Plan, the following terms shall be defined as set forth below: 

        (1)   "Administrator" means the Board, or if and to the extent the Board does not administer the Plan, the Committee in
accordance with Section 2 below. 

        (2)   "Board" means the Board of Directors of the Company. 

        (3)   "Committee" means any committee the Board may appoint to administer the Plan. If at any time or to any extent the Board
shall not administer the Plan, then the functions of the Board specified in the Plan shall be exercised by the Committee. 

        (4)   "Common Stock" means the common stock, par value $0.001 per share, of the Company. 

        (5)   "Company" means Cherokee International Corporation, a Delaware corporation. 

        (6)   "Disability" means the inability of a Participant to perform the essential functions of his or her position with the
Company or any Parent or Subsidiary by reason of a physical or mental disability or infirmity, as determined by the Board in its sole discretion, (i) for a continuous period of more than ninety
(90) days, or (ii) for one hundred twenty (120) days in any consecutive twelve (12) month period. The date of such Disability shall be the ninety-first consecutive day or
the one hundred twenty-first day in any consecutive twelve (12) month period, as the case may be. 

        (7)   "Eligible Recipient" means an officer, director, employee, consultant or advisor of the Company or of any Parent or
Subsidiary. 

        (8)   "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. 

        (9)   "Fair Market Value" means, as of any given date, with respect to any Options granted hereunder, (A) if the Company
is a Public Company, the closing sale price of a Share on such date on the principal securities exchange on which the Company's equity securities are listed or traded, or (B) if the Company is
not a Public Company, (a) the fair market value of a Share, as determined in accordance with a method prescribed in the agreement evidencing any Option hereunder, or (b) unless otherwise
determined by the Board, in its sole discretion, the fair market value of a Share as stated in the Company's financial statements for the most recently completed fiscal year, as audited or reviewed by
the Company's independent accountants, or (c) if the Board determines otherwise, fair market value of a Share as determined by the Board in its sole discretion. 

        (10) "Option" means an option to purchase Shares granted pursuant to Section 5 below. 

        (11) "Parent" means any entity (other than the Company) in an unbroken chain of entities ending with the Company, if each of
the entities in the chain (other than the Company) owns 

 

equity
securities possessing 50% or more of the combined voting power of all classes of equity securities in one of the other entities in the chain. 

        (12) "Participant" means any Eligible Recipient selected by the Administrator, pursuant to the Administrator's authority in
Section 2 below, to receive grants of Options. 

        (13) "Public Company" means a company that has equity securities that are listed on a national or regional securities
exchange, or traded over the counter on the Nasdaq National Market. 

        (14) "Sale of the Company" means (i) any liquidation or dissolution of the Company, (ii) a sale of all or
substantially all of the Company's assets other than in the ordinary course of its business, (iii) a merger or consolidation involving the Company in which the Company is not the surviving
entity or becomes a Subsidiary of another entity, or (iv) a sale or other acquisition for value of at least 51% of the Company's outstanding Shares by its stockholders. 

        (15) "Securities Act" means the Securities Act of 1933, as amended from time to time. 

        (16) "Shares" means shares of Common Stock, and any successor security. 

        (17) "Stockholders' Agreement" means that certain Stockholders' Agreement, dated as of November 27, 2002, by and among
the Company and certain of its securityholders, as may be amended or amended and restated from time to time. 

        (18) "Subsidiary" means any entity (other than the Company) in an unbroken chain of entities beginning with the Company, if
each of the entities (other than the last entity) in the unbroken chain owns equity securities possessing 50% or more of the total combined voting power of all classes of equity securities in one of
the other entities in the chain. 

Section 2.    Administration.    

        The
Plan shall be administered by the Board or, at the Board's sole discretion, by the Committee, which shall be appointed by the Board, and which shall serve at the pleasure of the
Board. The provisions of Options granted hereunder need not be the same with respect to each Participant. Pursuant to the terms of the Plan, the Administrator shall have the power and authority: 

        (a)   to
select those Eligible Recipients who shall be Participants; 

        (b)   to
determine whether and to what extent Options are to be granted hereunder to Participants; 

        (c)   to
determine the number of Shares to be covered by Options granted hereunder; 

        (d)   to
determine the terms and conditions, not inconsistent with the terms of the Plan, of Options granted hereunder; and 

        (e)   to
determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing the Options. 

        The
Administrator shall have the authority, in its sole discretion, to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from
time to time deem advisable; to interpret the terms and provisions of the Plan and any Option issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration
of the Plan. 

        All
decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. 

2

 

Section 3.    Shares Subject to Plan.    

        The
total number of Shares reserved and available for issuance under the Plan shall be 5,500,000 shares. Such Shares may consist, in whole or in part, of authorized and unissued Shares
or treasury shares. 

        To
the extent that an Option expires or is otherwise terminated without being exercised, the Shares subject to such Option shall again be available for issuance in connection with future
grants of Options under the Plan. If any Shares have been pledged as collateral for indebtedness incurred by a Participant in connection with the exercise of an Option and such Shares are returned to
the Company in satisfaction of such indebtedness, such Shares shall again be available for issuance in connection with future grants of Options under the Plan. 

Section 4.    Eligibility.    

        Eligible
Recipients shall be eligible to be granted Options. The Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from among
the Eligible Recipients, and the Administrator shall determine, in its sole discretion, the number of Shares covered by each Option. 

Section 5.    Options.    Any Option granted under the Plan shall be in such
form as the Administrator may from time to time approve. Participants who are granted Options shall enter into a subscription and/or option agreement with the Company, in such form as the
Administrator shall determine, which agreement shall set forth, among other things, the exercise price of the Option, the term of the Option and provisions regarding exercisability of the Option
granted thereunder. 

        Options
granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan,
as the Administrator shall deem desirable or as shall be set forth in the applicable subscription or option agreement: 

        (a)    Exercise Price.    The exercise price per Share purchasable under Options shall be determined by the
Administrator in its sole discretion at the time of grant, but shall not be less than 85% of the Fair Market Value of a Share on such date. To the extent required at the time of grant by California
"Blue Sky" law with respect to any Option, if a Participant owns more than 10% of the combined voting power of all classes of equity securities of the Company or of any Parent or Subsidiary and an
Option is granted to such Participant, the exercise price of such Option shall be no less than 110% of the Fair Market Value of a Share on the date such Option is granted. 

        (b)    Option Term.    The term of each Option shall be fixed by the Administrator, but no Option shall be exercisable
more than ten years after the date such Option is granted. 

        (c)    Exercisability.    Options shall be exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Administrator at or after the time of grant; provided, however, that, to the extent required at the time of grant by the California "Blue Sky" law, Options granted to
individuals other than officers, directors or consultants of the Company shall be exercisable at the rate of at least 20% per year over five years from the date of grant. The Administrator may provide
at the time of grant, in its sole discretion, that any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole or
in part, based on such factors as the Administrator may determine, in its sole discretion, including but not limited to in connection with any "Sale of the Company." 

        (d)    Method of Exercise.    Subject to paragraph (c) of this Section 5 and to the terms of any
applicable option or subscription agreements, Options may be exercised in whole or in part at any 

3

 

time
during the Option period, by giving written notice of exercise to the Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate exercise price in
cash or its equivalent, as determined by the Administrator, for the purchased Shares. As determined by the Administrator, in its sole discretion, payment in whole or in part may also be made
(i) by means of any cashless exercise procedure approved by the Administrator, or (ii) in the form of unrestricted Shares already owned by the Participant which, (x) in the case
of unrestricted Shares acquired upon exercise of an option, have been owned by the Participant for more than six months on the date of surrender, and (y) have an aggregate Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised. A Participant shall have the rights to dividends and any other rights of a
stockholder of the Company with respect to the Shares subject to the Option only after the Participant has given written notice of exercise, has paid in full for such Shares, has complied with any
other requirements of the subscription and/or option agreement and, if requested, has given the representation described in paragraph (b) of Section 9 below. Notwithstanding anything to
the contrary contained herein, an Option may not be exercised for a fraction of a Share. 

        (e)    Loans.    The Company or any Parent or Subsidiary may make loans available to Option holders in connection with
the exercise of outstanding Options, as the Administrator, in its sole discretion, may determine. Such loans shall (i) be evidenced by promissory notes entered into by the Option holders in
favor of the Company or any Parent or Subsidiary, (ii) be subject to the terms and conditions set forth in this Section 5(e) and such other terms and conditions, not inconsistent with
the Plan, as the Administrator shall determine, (iii) bear interest at the applicable Federal interest rate or such other rate as the Administrator shall determine, and (iv) be subject
to Board approval (or to approval by the Administrator to the extent the Board may delegate such authority). In no event may the principal amount of any such loan exceed the sum of (x) the
aggregate exercise price, and (y) any Federal, state, and local income tax attributable to such exercise. The initial term of the loan, the schedule of payments of principal and interest under
the loan, the extent to which the loan is to be with or without recourse against the holder with respect to principal and/or interest and the conditions upon which the loan will become payable in the
event of the holder's termination of service to the Company or to any Parent or Subsidiary shall be determined by the Administrator. Unless the Administrator determines otherwise, when a loan is made,
Shares having an aggregate Fair Market Value at least equal to the principal amount of the loan shall be pledged by the holder to the Company as security for payment of the unpaid balance of the loan,
and such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the Administrator, in its sole discretion; provided, however, that each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction. 

        (f)    Non-Transferability of Options.    Except by will or under the laws of descent and distribution,
the Participant shall not be permitted to sell, transfer, pledge or assign any Option, and all Options shall be exercisable, during the Participant's lifetime, only by the Participant. 

        (g)    Termination of Employment or Service.    If a Participant's employment with or service as a director,
consultant or advisor to the Company or to any Parent or Subsidiary terminates by reason of his or her death, Disability or for any other reason, the Option may thereafter be exercised to the extent
provided in the applicable subscription or option agreement, or as otherwise determined by the Administrator; provided, however, that if such termination occurs by reason of Participant's death or
Disability, the Option shall be exercisable for a period of no less than six months following such termination; provided, further, if such termination occurs other than by reason of Participant's
death or Disability or for Cause (as defined in the applicable subscription or option agreement), the Option shall be exercisable for a period of no less than thirty (30) days following such
termination. 

4

 

Section 6.    Significant Transactions.    

        In
connection with a proposed Sale of the Company, the Board may, in its sole discretion, determine the appropriate treatment, if any, of Options granted hereunder and may make such
amendments to the Plan as are necessary to reflect such determination and that are consistent with the terms of any Options granted hereunder. 

        Except
as otherwise provided in this Section 6, in the event of any merger, reorganization, consolidation or other change in corporate structure affecting Shares, an equitable
substitution or proportionate adjustment, if any, as determined by the Board or the Administrator, in either case in its sole discretion, may be made in (i) the aggregate number of Shares
reserved for issuance under the Plan, and (ii) the kind, number and exercise price of Shares subject to outstanding Options granted under the Plan. 

        Except
as otherwise provided in this Section 6, in the event of any stock split, reverse stock split, distribution of stock, recapitalization, combination or reclassification of
stock, an equitable substitution or proportionate adjustment, as determined by the Board or the Administrator, may be made in (i) the aggregate number of Shares reserved for issuance under the
Plan, and (ii) the kind, number and exercise price of Shares subject to outstanding Options granted under the Plan. 

        In
connection with any event described in this section, the Board or Administrator may provide, in either case in its sole discretion, for the cancellation of any outstanding Options, or
any portion thereof
(whether vested or unvested). In connection with any such cancellation of vested Options, the Company shall make a payment, if any, to the Participant in cash or other property equal to the
difference, if any, between the aggregate Fair Market Value of the Shares subject to the cancelled vested Options, or portion thereof, and the aggregate exercise price of the cancelled vested Options,
or portion thereof. 

Section 7.    Amendment and Termination.    

        Subject
to Section 6 of the Plan, the Board may amend, alter or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made that would impair the rights
of a Participant under any Option theretofore granted without such Participant's consent, or that, without the approval of the stockholders of the Company would: 

        (a)   except
as provided in Section 6 of the Plan, increase the total number of Shares reserved for issuance under the Plan; 

        (b)   extend
the maximum option period under paragraph (b) of Section 5 of the Plan. 

        Notwithstanding
the foregoing, stockholder approval under this Section 7 shall only be required at such time and under such circumstances as stockholder approval would be required
under any applicable law, rule or regulation with respect to any material amendment to an employee benefit plan of the Company. 

        The
Administrator may amend the terms of any Option theretofore granted, prospectively or retroactively, but, subject to Section 6 of the Plan, no such amendment shall impair the
rights of any holder without his or her consent. 

Section 8.    Unfunded Status of Plan.    

        The
Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a general creditor of the Company. 

Section 9.    General Provisions.    

        (a)   Shares
shall not be issued pursuant to the exercise of any Option granted hereunder unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply 

5

 

with
all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act and, if the Company is a Public Company, the requirements of any stock
exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

        (b)   The
Administrator may require each person acquiring Shares hereunder to represent to and agree with the Company in writing that such person is acquiring the Shares
without a view to distribution thereof and to make such other reasonable representations as the Administrator shall request. The certificates for such Shares may include any legend which the
Administrator deems appropriate to reflect any restrictions on transfer. 

        All
certificates for Shares delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission, any applicable Federal or state securities law and, if the Company is a Public Company, any stock exchange upon which the
Common Stock is then listed, and the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. 

        (c)   Nothing
contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval in accordance with
Section 7 hereof, if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan shall not confer upon any
Eligible Recipient any right to continued employment or service with the Company or any Parent or Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any
Parent or Subsidiary to terminate the employment or service of any of its Eligible Recipients at any time. 

        (d)   Each
Participant shall, no later than the date as of which the value of an Option first becomes includible in the gross income of the Participant for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to
the Option. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the Participant. 

        (e)   No
Board member or the Administrator, nor any officer or employee of the Company acting on behalf of the Board or the Administrator, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with respect to the Plan, and all Board members or the Administrator and each and any officer or employee of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. 

        (f)    Unless
the Board determines that the Plan is not intended to qualify for the exemption from qualification under Section 25120(o) of the Corporate Securities Law
of 1968, as amended, the Company shall, pursuant to the provisions of Section 260.140.46 of Title 10 of the California Code of Regulations, provide to each Participant and to each individual
who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Participant has one or more Options granted under the Plan outstanding, and, in the case of an
individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of the Company's annual financial statements. The Company shall not be required to
provide such statements to key employees of the Company whose duties in connection with the Company assure their access to equivalent information. 

        (g)   Unless
the Board determines that the Plan is not intended to qualify for the exemption from qualification under Section 25120(o) of the Corporate Securities Law
of 1968, as amended, the 

6

 

provisions
of Sections 260.140.41 and 260.140.45 of Title 10 of the California Code of Regulations are incorporated herein by reference. 

        (h)   Except
as otherwise provided by the Administrator, all Shares delivered under the Plan shall be subject to the terms and conditions of the Stockholders' Agreement and
the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. 

Section 10.    Stockholder Approval; Effective Date of Plan.    

        (a)   The
grant of any Option hereunder shall be contingent upon approval of the Plan by the stockholders of the Company holding a majority of the outstanding Shares being
obtained within 12 months before or after the date the Board adopts the Plan. 

        (b)   The
Plan shall become effective (the "Effective Date") on July 30, 2003. 

Section 11.    Term of Plan.    

        No
Option shall be granted pursuant to the Plan on or after the tenth anniversary of the Effective Date, but Options theretofore granted may extend beyond that date. 

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Exhibit 10.12    
    

 
 

CHEROKEE INTERNATIONAL CORPORATION    
    
    2002 STOCK OPTION PLAN    
    
    OPTION AGREEMENT    
    

        This OPTION AGREEMENT (this "Option Agreement"), dated as of the [    ]th day of
[                        ],
[2003] (the "Date of Grant"), by and between Cherokee International Corporation, a Delaware corporation (the "Company"), and [            ] (the
"Optionee"). 

        Pursuant
to the Company's 2002 Stock Option Plan (the "Plan"), the Board, as the Administrator of the Plan, has determined that the Optionee is to be granted an option (the "Option") to
purchase Shares of the Company, on the terms and conditions set forth herein, and hereby grants such Option. 

        Any
capitalized terms not defined herein shall have their respective meanings set forth in the Plan. 

        1.    Number of Shares.    The Option entitles the Optionee to purchase [            ]
Shares at a price of $[            ] per share (the "Option Exercise Price"). 

        2.    Option Term.    The term of the Option and of this Option Agreement (the "Option Term") shall commence on the
Date of Grant and, unless the Option is previously terminated pursuant to this Option Agreement, shall terminate upon the expiration of ten (10) years from the Date of Grant. Upon expiration of
the Option Term, all rights of the Optionee hereunder shall terminate. 

        3.    Conditions of Exercise.    

        (a)   Subject
to subsection (b) of this Section 3 and Section 7, the Option shall vest and become exercisable [insert vesting
schedule]. Upon the occurrence of a Sale of the Company, the Option shall become immediately vested and exercisable with respect to all the then unexercised Shares that are subject to this
Option. 

        (b)   As
a condition to exercising this Option, (i) Optionee agrees to abide by and be bound as a Stockholder (as defined in the Stockholders' Agreement) by the terms
and conditions of the Stockholders' Agreement and must deliver to the Company, a writing, substantially in the form of Exhibit A (the "Agreement to be Bound"), so agreeing and
(ii) Optionee's spouse, if any, agrees to abide by and be bound by the terms and conditions of the Spousal Consent (attached hereto as Exhibit B) and must deliver to the Company an
executed copy of such Spousal Consent so agreeing. 

        (c)   Except
as otherwise provided herein, the right of the Optionee to purchase Shares with respect to which this Option has become exercisable may be exercised in whole or
in part at any time or from time to time prior to expiration of the Option Term; provided, however, that the Option may not be exercised for a fraction of a share; provided, further, that Optionee
shall be permitted to exercise the Option in whole or in part only once per calendar year, unless such exercise occurs (i) following termination of Optionee's employment or service with the
Company or any Parent or Subsidiary or (ii) in connection with a transaction referenced in Section 6 of the Plan. 

        4.    Adjustments.    In connection with a Sale of the Company, the Board may, in its sole discretion, determine the
appropriate treatment, if any, of the Option and may make such amendments to the Plan as are necessary to reflect such determination. 

        Except
as otherwise provided in this Section 4, in the event of any merger, reorganization, consolidation or other change in corporate structure affecting Shares, an equitable
substitution or proportionate adjustment, if any, as determined by the Board or the Administrator, in either case in its sole discretion, may be made in the kind, number and exercise price of Shares
subject to outstanding Options. 

 

        Except
as otherwise provided in this Section 4, in the event of any stock split, reverse stock split, distribution of stock, recapitalization, combination or reclassification of
stock, an equitable substitution or proportionate adjustment, as determined by the Board or the Administrator, shall be made in the kind, number and exercise price of Shares subject to this Option. 

        In
connection with any event described in this section, the Board or Administrator may provide, in either case in its sole discretion, for the cancellation of all or any portion of the
Option that is unexercised (whether vested or unvested). In connection with any such cancellation of vested Options, the Company shall make a payment, if any, to Optionee in cash or other property
equal to the difference between the aggregate Fair Market Value of the Shares subject to the cancelled vested Options, and the aggregate Option Exercise Price of the cancelled vested Options, or
portion thereof. 

        5.    Nontransferability of Option and Shares.    

        (a)    Option.    Except by will or under the laws of descent and distribution, the Option and this Option Agreement
shall not be transferable and, during the lifetime of Optionee, the Option may be exercised only by Optionee. Without limiting the generality of the foregoing, except as otherwise provided herein, the
Option may not be assigned, transferred, exchanged, mortgaged, pledged, hypothecated, gifted or otherwise disposed of or encumbered (including, without limitation, by operation of law) and the
Optionee may not agree to do any of the foregoing. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment or similar process upon the Option, shall be null and void and without effect. 

        (b)    Shares.    Holders of Shares acquired upon exercise of the Option may not sell, assign, transfer, exchange,
mortgage, pledge, grant a security interest, gift or otherwise dispose of or encumber (including, without limitation, by operation of law), or agree to do any of the foregoing (each, a "Disposition")
with respect to such Shares without the prior written consent of the Company; provided, however, that prior written consent of the Company shall not be required for a Disposition of Shares to the
Company. 

        6.    Method of Exercise of Option.    The Option may be exercised by means of written notice of exercise to the
Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate Option Exercise Price and any applicable withholding taxes in cash or by check. As determined
by the Administrator, in its sole discretion, payment in whole or in part may also be made (i) by means of a cashless exercise procedure either through a broker or through withholding of Shares
otherwise issuable upon exercise of the Option in an amount sufficient to pay the aggregate Option Exercise Price and any applicable withholding taxes, (ii) in the form of unrestricted Shares
already owned by the Optionee which, (x) in the case of unrestricted Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of
surrender, and (y) have an aggregate Fair Market Value on the date of surrender equal to the aggregate Option Exercise Price of the Shares as to which such Option shall be exercised, or
(iii) by any other means of exercise authorized from time to time in the Plan and/or by the Board. 

        7.    Effect of Termination of Employment.    

        (a)    Unvested Options Terminate; Company Purchase Right.    Upon termination of Optionee's employment or service
with the Company or any Parent or Subsidiary for any reason, the Option shall immediately terminate as to any portion that has not previously vested as of the date of such termination (the
"Termination Date"). Within sixty days following the expiration of the applicable exercise period as set forth in subsections (c) and (d) below, unless Optionee's employment or service
with the Company or any Parent or Subsidiary is terminated pursuant to subsection (b) below, the Company shall pay to Optionee or Optionee's estate, successor or beneficiary, as applicable, a
cash amount equal to the difference between (i) the aggregate Fair Market Value of 

2

 

the
portion of the Option that has vested as of the Termination Date but has not been exercised (the "Vested Shares") and (ii) the aggregate Option Exercise Price of the Vested Shares. 

        (b)    Termination for Cause.    In the event Optionee's employment or service with the Company or any Parent or
Subsidiary is terminated for Cause (as defined below), the Option shall also immediately terminate (whether vested or not) as to any portion of the Option that has vested as of the Termination Date.
For purposes of this Option Agreement, "Cause" shall mean: (i) Optionee's acts of personal dishonesty, theft, fraud or embezzlement in connection with his or her duties as an employee, officer,
or Board member of the Company or any Parent or Subsidiary; (ii) Optionee's use of alcohol or drugs that, in the Board's determination, interferes with Optionee's performance of his or her
essential job functions with the Company or any Parent or Subsidiary; (iii) Optionee's excessive absenteeism that, in the Board's determination, interferes with the Optionee's ability to
perform his or her essential job functions for the Company or any Parent or Subsidiary; (iv) any conflict of interest between Optionee and the Company or any Parent or Subsidiary that, in the
Board's determination, inappropriately affects Optionee's ability to carry on Optionee's normal duties as an employee of the Company or any Parent or Subsidiary; (v) Optionee's act of gross
insubordination in connection with his or her duties as an employee, officer, or Board member of the Company or any Parent or Subsidiary; (vi) Optionee's conviction of or guilty plea to a
felony; (vii) Optionee's material breach of the Company's, any Parent's or any Subsidiary's Code of Conduct or other corporate policies; or (viii) any material breach by Optionee of any
employment or other agreement between the Optionee and the Company or any Parent or Subsidiary. 

        (c)    Termination as a Result of Death or Disability.    In the event Optionee's employment or service with the
Company or any Parent or Subsidiary is terminated as a result of Optionee's death or Disability, any portion of the Option that has vested as of the Termination Date shall be exercisable in whole or
in part according to the terms of this Option Agreement for a period of six (6) months following the Termination Date. Upon expiration of such six-month period, any unexercised
portion of the Option shall terminate in full. 

        (d)    Termination Other than for Cause, Death or Disability.    In the event Optionee's employment or service with
the Company or any Parent or Subsidiary is terminated other than for Cause or as a result of Optionee's death or Disability, any portion of the Option that has vested as of the Termination Date shall
be exercisable in whole or in part according to the terms of this Option Agreement for a period of thirty (30) days following the Termination Date. Upon expiration of such
thirty-day period, any unexercised portion of the Option shall terminate in full. 

        8.    Call Option.    Upon termination of Optionee's employment or service with the Company or any Parent or
Subsidiary for any reason, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Shares acquired upon exercise of the Option in accordance with the terms
and conditions set forth in this Section 8 (the "Call Option"). 

        (a)    Right to Repurchase.    

        (i)    Termination for Cause.    In the event Optionee's employment or service with the Company or any Parent or
Subsidiary is terminated for Cause, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Shares previously acquired by Optionee through exercise of the
Option. The purchase price for each Share shall be the lower of (i) the Option Exercise Price and (ii) the Fair Market Value of a Share on the date the Company exercises the Call
Option. 

        (ii)    Termination Other Than for Cause.    In the event Optionee's employment or service with the Company or any
Parent or Subsidiary is terminated for any reason other than for Cause, the Company shall have the right, but not the obligation, to repurchase all or any 

3

 

portion
of the Shares acquired (whether acquired prior to or following the Termination Date) by Optionee or Optionee's estate, successors or beneficiaries, as applicable, through exercise of the
Option. The purchase price for each Share shall be equal to the Fair Market Value of a Share on the date the Company exercises the Call Option. 

        (b)    Exercise of Call Option.    The Company may at any time, and from time to time, by giving written notice (the
"Notice") to the Optionee or any transferee (either, a "Holder"), elect to purchase all of the Shares previously acquired by the Optionee through exercise of the Option, at the purchase price
determined in accordance with subsection (a) above, as applicable. 

        (c)    Payment.    Payment of the applicable purchase price (as determined in accordance with subsection
(a) above) shall be made, at the option of the Company, in cash, by check, by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company, or by any
combination thereof, within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice. 

        (d)    Termination of Call Option.    In the event the Company becomes a Public Company, the Call Option shall
immediately terminate as to any Shares acquired upon exercise of the Option. 

        9.    Investment Representation.    Optionee represents and warrants to the Company that (a) Optionee is
acquiring and (b) upon exercise of the Option, Optionee will be purchasing Shares, in each case, for Optionee's own account and not with a view to or for sale in connection with any
distribution of the Shares. 

        10.    Notices.    All notices and other communications under this Agreement shall be in writing and shall be given by
facsimile or first class mail, certified or registered with return receipt requested, and 

4

 

shall
be deemed to have been duly given three days after mailing or 24 hours after transmission by facsimile to the respective parties named below: 

	

If to Company:	
 	

Cherokee International Corporation

2841 Dow Avenue

Tustin, California 92780

Attn: Chief Financial Officer

Facsimile: (714) 838-4742
	

with a copy to:	
 	

Skadden, Arps, Slate, Meagher & Flom LLP

300 S. Grand Avenue, Suite 3400

Los Angeles, CA 90071

Attn: Jeffrey H. Cohen

Facsimile: (213) 687-5600
	

and	
 	

 
	

 	
 	

GFI Energy Ventures LLC

11611 San Vicente Blvd., Suite 710

Los Angeles, CA 90049

Attn: Ian Schapiro

Facsimile: (310) 442-0540
	

and	
 	

 
	

 	
 	

Oaktree Capital Management, LLC

333 S. Grand Ave., 28th Floor

Los Angeles, CA 90071

Attn: Christopher S. Brothers

Facsimile: (213) 830-6395
	

If to the Optionee:	
 	

[Name of Optionee]

[Address]

Facsimile:

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

        11.    Securities Laws Requirements.    The Option shall not be exercisable to any extent, and the Company shall not
be obligated to transfer any Shares to the Optionee upon exercise of such Option, if such exercise, in the opinion of counsel for the Company, would violate the Securities Act (or any other Federal or
state securities laws as may be in effect at that time). Further, the Company may require as a condition of transfer of any Shares pursuant to any exercise of the Option that the Optionee furnish a
written representation that he or she is purchasing or acquiring the Shares for investment and not with a view to resale or distribution to the public. The Optionee hereby represents and warrants that
he or she understands that the Shares are "restricted securities," as defined in Rule 144 under the Securities Act, and that any resale of the Shares must be in compliance with the registration
requirements of the Securities Act, or an exemption therefrom, and with the requirements of California "Blue Sky" law. Each certificate representing Shares shall bear the legends set forth below and
with any other legends that may be required by the Company or by any Federal or state securities laws: 

        THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS IN RELIANCE 

5

 

ON
EXEMPTIONS THEREFROM. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND THE REGULATIONS PROMULGATED PURSUANT THERETO (UNLESS EXEMPT THEREFROM) AND COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS AND REGULATIONS. 

        THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER AND OTHERWISE, ALL AS SET FORTH IN AN OPTION AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL
OPTIONEE OF THESE SECURITIES AND THE STOCKHOLDERS' AGREEMENT, COPIES WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. 

        Further,
if the Company decides, in its sole discretion, that the listing or qualification of the Shares under any securities or other applicable law is necessary or desirable, the
Option shall not be exercisable, in whole or in part, unless and until such listing or qualification, or a consent or approval with respect thereto, shall have been effected or obtained free of any
conditions not acceptable to the Company. 

        12.    No Obligation to Register Shares.    The Company shall be under no obligation to register the Shares pursuant
to the Securities Act or any other Federal or state securities laws. 

        13.    Protections Against Violations of Agreement.    No purported sale, assignment, mortgage, hypothecation,
transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the Shares or any interest therein by any
holder thereof in violation of the provisions of this Agreement or the Stockholders' Agreement, will be valid, and the Company will not transfer any of said Shares on its books nor will any of said
Shares be entitled to vote, nor will any dividends be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions
are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions. 

        14.    Withholding Requirements.    The Company's obligations under this Option Agreement shall be subject to all
applicable tax and other withholding requirements, and the Company shall, to the extent permitted by law, have the right to deduct any withholding amounts from any payment or transfer of any kind
otherwise due to the Optionee. 

        15.    Successors and Assigns.    All the terms and provisions of this Option Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, including the Optionee's estate, successors and beneficiaries; provided, however, that,
except as otherwise set forth herein, this Option Agreement may not be assigned by the Optionee without the prior written consent of the Company. 

        16.    Failure to Enforce Not a Waiver.    The failure of the Company to enforce at any time any provision of this
Option Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. 

        17.    Governing Law.    This Option Agreement shall be governed by and construed according to the laws of the State
of California without regard to its principles of conflict of laws. 

        18.    Incorporation of Plan.    The Plan is hereby incorporated by reference and made a part hereof, and the Option
and this Option Agreement shall be subject to all terms and conditions of the Plan. 

        19.    Amendments.    This Option Agreement may be amended or modified at any time only by an instrument in writing
signed by each of the parties hereto. 

6

 

        20.    Rights as a Stockholder of the Company.    Neither the Optionee nor any of the Optionee's successors in
interest shall have any rights as a stockholder of the Company with respect to any Shares subject to the Option until the date of issuance of a certificate for such Shares. 

        21.    Agreement Not a Contract of Employment.    Neither the Plan, the granting of the Option, this Option Agreement
nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Optionee has a right to continue to provide services as
an officer, Board member, employee, consultant or advisor of the Company or any Parent, Subsidiary or affiliate of the Company for any period of time or at any specific rate of compensation. 

        22.    Authority of the Board.    The Board shall have full authority to interpret and construe the terms of the Plan
and this Option Agreement. The determination of the Board as to any such matter of interpretation or construction shall be final, binding and conclusive. 

        23.    Dispute Resolution.    The parties hereto will use their reasonable best efforts to resolve any dispute
hereunder through good faith negotiations. A party hereto must submit a written notice to any other party to whom such dispute pertains, and any such dispute that cannot be resolved within 30 calendar
days of receipt of such notice (or such other period to which the parties may agree) will be submitted to an arbitrator selected by mutual agreement of the parties. In the event that, within
50 days of the written notice referred to in the preceding sentence, a single arbitrator has not been selected by mutual agreement of the parties, a panel of arbitrators (with each party to the
dispute being entitled to select one arbitrator and, if necessary to prevent the possibility of deadlock, one additional arbitrator being selected by such arbitrators selected by the parties to the
dispute) shall be selected by the parties. Except as otherwise provided herein or as the parties to the dispute may otherwise agree, such arbitration will be conducted in accordance with the then
existing rules of the American Arbitration Association. The decision of the arbitrator or arbitrators, or of a majority thereof, as the case may be, made in writing will be final and binding upon the
parties hereto as to the questions submitted, and the parties will abide by and comply with such decision; provided, however, the arbitrator or arbitrators, as
the case may be, shall not be empowered to award punitive damages. Unless the decision of the arbitrator or arbitrators, as the case may be, provides for a different allocation of costs and expenses
determined by the arbitrator or arbitrators, as the case may be, to be equitable under the circumstances, the prevailing party or parties in any arbitration will be entitled to recover all reasonable
fees (including but not limited to attorneys' fees) and expenses incurred by it or them in connection with such arbitration from the nonprevailing party or parties. 

        24.    Market Stand-Off.    In connection with any underwritten public offering by the Company of its
equity securities pursuant to an effective registration statement filed under the Securities Act, for such period as the Company or its underwriters may request (such period not to exceed
180 days following the date of the applicable offering), the Optionee shall not, directly or indirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option
or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect
to, any Shares acquired under this Option Agreement without the prior written consent of the Company or its underwriters. 

7

 

        IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Option Agreement on the day and year first above written. 

	CHEROKEE INTERNATIONAL CORPORATION
	

By:	
 	

 
	 	 	

	Name:	 	 
	 	 	

	Title:	 	 
	 	 	

        OPTIONEE EXPRESSLY AKCNOWLEDGES AND AGREES THAT ANY RIGHT THAT OPTIONEE HADTO PURCHASE MEMBERSHIP UNITS PURSUANT TO OPTIONS GRANTED UNDER THE 1999 UNIT OPTION
PLAN OF CHEROKEE INTERNATIONAL, LLC WERE PREVIOUSLY CANCELLED AND OPTIONEE AND THE COMPANY HAVE NO RIGHTS OR OBLIGATIONS IN RESPECT THEREOF. The undersigned has had the
opportunity to read the terms and provisions of the foregoing Option Agreement, the terms and provisions of the Plan and the terms and provisions of the Stockholders' Agreement, herein incorporated by
reference. The undersigned hereby accepts and
agrees to all the terms and provisions of the foregoing Option Agreement and to all the terms and provisions of the Plan, herein incorporated by reference. 

	The Optionee:	 
	 	

	Address:	 
	 	

	

 	

	

 	

8

  

 
 

Exhibit A
  
    AGREEMENT TO BE BOUND    
    

        Reference is made to the Stockholders' Agreement, dated as of December    , 2002, by and among the Cherokee International Corporation and certain of
its securityholders, as may be amended or amended and restated from time to time (the "Agreement"). All capitalized terms used but not otherwise defined herein are used with the meanings ascribed to
such terms in the Agreement. 

        The
undersigned purchased on the date hereof                        shares of Common Stock (the "Securities"). The undersigned hereby
joins the Agreement as a party thereto with respect to the
Securities, entitled to the rights and benefits of, and subject to the obligations of, a Stockholder with respect to the Securities. 

	

 	
 	

The undersigned's address for notice is:	

 
	

 	
 	

	

 
	

 	
 	

	

 
	

 	
 	

Dated this            day of            , 20            .
	

By:	
 	

 	

 
	 	 	
	 

9

  

 
 

Exhibit B
  
    SPOUSAL CONSENT    
    

        The undersigned represents that the undersigned is the spouse of 

	

    	

 
	

 Name of Employee

	

 

and
that the undersigned is familiar with the terms of the 2002 Stock Option Plan (the "Plan"), the Option Agreement and the Stockholders' Agreement (together with the Option Agreement, the
"Agreements"), each of which the undersigned's spouse is entering into on today's date. The undersigned hereby agrees that the interest of the undersigned's spouse in all property which is the subject
of such Plan or Agreements shall be irrevocably bound by the terms of such Plan or Agreements and by any amendment, modification, waiver or termination signed by the undersigned's spouse. The
undersigned further agrees that the undersigned's community property interest in all property which is the subject of such Plan or Agreements shall be irrevocably bound by the terms of such Plan or
Agreements, and that such Plan or Agreements shall be binding on the executors, administrators, heirs and assigns of the undersigned. The undersigned further authorizes the undersigned's spouse to
amend, modify or terminate such Plan or Agreements, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned's spouse shall be
binding on the community property interest of the undersigned in all property which is the subject of such Plan or Agreements and on the executors, administrators, heirs and assigns of the
undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination. 

	

Dated:          , 20    	

 
	

    	

 
	

            Signature of Spouse:

	

 

10

QuickLinks

Exhibit 10.12

CHEROKEE INTERNATIONAL CORPORATION 2002 STOCK OPTION PLAN OPTION AGREEMENT

Exhibit A AGREEMENT TO BE BOUND

Exhibit B SPOUSAL CONSENT

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