Document:

exhibit10-9.htm

    Exhibit
10.9

     

    
      	
               

              2008
      Management Incentive Plan  (MIP)

               

            
	
              Participants

            	
              Chief
      Information Officer

              Chief
      Financial Officer

              VP
      Human Resources

              General
      Counsel

              Senior
      VP Sales  (also participates in Sales Incentive
      Plan)

              Executive
      VP Corporate Sales (also participates in Sales Incentive
Plan)

              VP
      Products and Services (also participates in Product Revenue
      Plan)

               

            
	
              Objectives

            	
              · Achieve
      corporate performance Shareholders care about

              · Drive
      and reward unified performance across exec team

              · Focus
      on building trend for long term, profitable growth

               

            
	
              Key
      Achievement Measures for 2008

            	
               

              Achievement
      of Board defined goals around Bookings Growth, Cash Flow Profitability and
      Profitability Objectives.

               

               

            
	
              Bonus
      Target

               @
      100% Achievement

            	
              § VP
      Products and Services     33% of Base
      Salary

              § Chief
      Information Officer     33% of Base
      Salary

              § Chief
      Financial Officer     33% of Base
      Salary

              § VP
      Human
      Resources           25% of Base
      Salary

              § General
      Counsel                   11% of Base
      Salary

              § Sr.
      VP
      Sales                                  $25,000

              § Exec.
      VP Bus.
      Dev.                      $25,000

               

            
	
              Terms
      of Achievement and Payment of Incentive Bonus

            	
              § All
      three Measures of Success must be achieved

              § All
      or Nothing, no partial payment or accelerators

              § Verification
      by the Board of measures achieved

              § Approximately
      January 2009

              Bonus
      to be paid upon completion of annual
auditExhibit
10.5

 

April 14,
2008

 

Jeffrey
M. Frank

15
Calle De Princesa

Coto
De Caza, CA  92679

 

Re:          Transaction
Bonus Agreement

 

Dear
Mr. Frank:

 

Cherokee
International Corporation (the “Company”) has decided to grant selected
employees of the Company an opportunity to receive a cash bonus (“Transaction
Bonus”) on the terms and conditions set forth in this letter agreement (this “letter
agreement”) in the event there is a Company Sale (as defined below).  The purpose of this letter agreement is to
notify you that you have been selected to become eligible for a Transaction
Bonus and to set forth the terms and conditions of your opportunity.

 

Bonus Opportunity.  If a
Company Sale occurs and the conditions set forth below under “Conditions of
Bonus Opportunity” are satisfied, you will be entitled to receive a Transaction
Bonus based on the Net Proceeds (as defined below) received by common
stockholders in the Company Sale.  In the
event of a Company Sale in which the Net Proceeds are less than $    per share, you will not be entitled to a
Transaction Bonus under this letter agreement. 
If the Net Proceeds are $    per
share, you will be entitled to a Transaction Bonus of $500,000.  If the Net Proceeds are more than $    per share but less than $    per share, your Transaction Bonus shall be
scaled linearly between $500,000 and $2.5 million (for example, if the Net
Proceeds are $    per share, you will be
entitled to a $1.5 million Transaction Bonus, and if the Net Proceeds are $    per share, you will be entitled to a $1.83
million Transaction Bonus).  If the Net
Proceeds are $    per share, you will be
entitled to a $2.5 million Transaction Bonus. 
If the Net Proceeds are more than $   
per share but less than $    per
share, your Transaction Bonus shall be scaled linearly between $2.5 million and
$5 million (for example, if the Net Proceeds are $    per share, you will be entitled to a $2.75
million Transaction Bonus, and if the Net Proceeds are $    per share, you will be entitled to a $3.5
million Transaction Bonus).  If the Net
Proceeds are $10.00 per share or more, you will be entitled to a $5 million
Transaction Bonus.  Your maximum
Transaction Bonus will be $5 million.

 

For
purposes of this letter agreement, the term “Company Sale” means (1) a
sale or other disposition of all or substantially all of the assets of the
Company and its subsidiaries on a consolidated basis, or (2) a sale or
other transfer (including by way of merger) by the Company of more than 50% of
the issued and outstanding voting equity securities of the Company (other than
a transfer to the Company or any of its respective affiliates or to GSC or
Oaktree);

 

 

provided,
however, that in no event will any transaction that occurs before the date of
this letter agreement be considered a Company Sale for purposes of this letter
agreement.  For this purpose, a series of
related transactions will be deemed a single sale.

 

For purposes of this letter
agreement, the term “Net Proceeds” means the value of proceeds actually
distributed per share to the common stockholders in a Company Sale, as and when
distributed, after deducting all fees and related expenses (including the cost
of bonuses under this letter agreement and similar Company Sale bonus letter
agreements).  For example, in the event
that proceeds from a Company Sale are subject to escrow, hold-back, earn-out or
similar delayed payment provisions (“Contingent Consideration”), you will
initially be entitled to a bonus based on Net Proceeds excluding the Contingent
Consideration.  If any Contingent Consideration
is subsequently distributed to common stockholders, you will then receive an
additional bonus based on the incremental Net Proceeds from the Contingent
Consideration.  This additional bonus
shall be calculated as the difference between your Transaction Bonus based on
all aggregate Net Proceeds as of that date and all Transaction Bonuses
previously paid to you.

 

Conditions of Bonus Opportunity.  If a Company Sale occurs, you will be
entitled to receive a cash bonus if:

 

1.             You execute and deliver to the
Company, on or promptly after the date of the Company Sale and in a form
acceptable to the Company, a general release of claims related to the Company’s
obligations under this letter agreement, and you do not revoke such release
within any revocation period provided under applicable law; and

 

2.             You are either (i) employed
with the Company or one of its subsidiaries at the time of the Company Sale, (ii) you
are terminated by the Company other than for Cause within six (6) months
prior to a Company Sale, or (iii) you terminate your employment with the
Company for Good Reason within six (6) months prior to a Company Sale.

 

If you terminate your
employment with the Company voluntarily or you are terminated by the Company
for Cause prior to a Company Sale, you shall not be entitled to any bonus
payable under this letter agreement.

 

Payment.  All payment of Transaction Bonuses shall be
on substantially the same schedule as the distribution of the underlying Net
Proceeds to common stockholders.  Your
bonus will be subject to and reduced by all required tax withholding.

 

Definition of Cause.  For purposes of
this letter agreement, “Cause” is defined as the occurrence of any of the
following:  (i) your willful and
continued failure to perform your duties with the Company or follow reasonable
and lawful directives of the Board (including any material breach of the
Company’s or any subsidiary’s Code of Conduct or other corporate policies); (ii) your
conviction of, or entry of a plea of guilty or nolo contendere to, a felony or
other crime involving moral turpitude;

 

2

 

(iii) the
commission by you of any act of theft, embezzlement or fraud in connection with
your employment with the Company; (iv) any material breach by you of any
employment or other agreement between you and the Company or any subsidiary of
the Company; (v) any conflict of interest between you and the Company or
any subsidiary of the Company that, in the Board’s determination,
inappropriately affects your ability to carry on your normal duties as an
employee of the Company or any subsidiary of the Company; or (vi) your
appropriation (or attempted appropriation) of a material business opportunity
of the Company, including attempting to secure or securing from anyone other
than the Company any personal profit without the Company’s consent in
connection with any transaction entered into on behalf of the Company.  For purposes of this definition of Cause, an
act or failure to act on your part shall be considered “willful” if it was done
or omitted to be done by you not in good faith, and shall not include any act
or failure to act by you resulting from any incapacity.  Cause shall be deemed not to exist until you
have first been (1) supplied with notice from the Company setting forth
the Board’s finding of Cause, (2) provided with the opportunity to appear
before the Board to dispute the Board’s findings of Cause or present evidence
that the facts giving rise to the finding of Cause have been cured and (3) following
a final finding of Cause by the Board, provided with the opportunity to cure
the facts giving rise to such finding within ten (10) days of delivery of
the written notice of the Board’s final findings to you by the Company.

 

Definition of Good Reason.  For purposes of this letter agreement, “Good
Reason” is defined as the occurrence of one or more of the following events
without your prior written consent (except as a result of a prior
termination):  (i) any material
change in your status, title, authorities or responsibilities (including
reporting responsibilities) which represents a demotion from your status,
title, position or responsibilities (including reporting responsibilities)
immediately prior to the Company Sale; the assignment to you of any duties or
work responsibilities which are materially inconsistent with your status,
title, position or work responsibilities immediately prior to the Company Sale,
or which are materially inconsistent with the status, title, position or work
responsibilities of a similarly situated senior officer; or any removal of you
from, or failure to appoint, elect, reappoint or reelect you to, any of such
positions, except in the event of your death or Disability and other than any
such change primarily attributable to the fact the Company may no longer be a
public company; (ii) any decrease in your annual base salary or target
annual incentive award opportunity except for across-the-board salary
reductions similarly affecting all senior officers of the Company; (iii) the
reassignment of you to a location more than twenty-five (25) miles from your
then current work location; (iv) the failure by the Company to continue in
effect any incentive, bonus or other compensation plan in which you
participate, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to the failure to continue such
plan, or the failure by the Company to continue your participation therein, or
any action by the Company which would directly or indirectly materially reduce
your participation therein or reward opportunities thereunder; provided,
however, that you continue to meet substantially all eligibility requirements
thereof;

 

3

 

(v) the
failure by the Company to continue in effect any employee benefit plan
(including any medical, hospitalization, life insurance, disability or other
group benefit plan in which you participate), or any material fringe benefit or
perquisite enjoyed by you unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to the
failure to continue such plan, or the failure by the Company to continue your
participation therein, or any action by the Company which would directly or
indirectly materially reduce your participation therein or reward opportunities
thereunder, or the failure by the Company to provide you with the benefits to
which you are entitled as an employee of the Company; provided, however, that you
continue to meet substantially all eligibility requirements thereof; (vi) any
purported termination of your employment for Cause which is not effective; or (vii) the
failure of the Company to obtain a satisfactory agreement from any successor or
assignee of the Company to fully assume and agree to perform this letter
agreement; provided, however, that Good Reason shall be deemed not to exist
until the Company has first been (1) supplied with notice from you setting
forth your assertion of Good Reason and (2) provided with the opportunity
to cure the facts giving rise to such assertion within thirty (30) days of
delivery of the written notice by you to the Company.

 

Notwithstanding the foregoing, it will not constitute “Good Reason” if
you become employed by a parent corporation of the Company and your status,
title, position or responsibilities change as a result of your employment by
the parent corporation so long as you retain the same general authority for the
operations of the Company as you had immediately prior to the Company Sale and
your status, title, position and responsibilities with the parent corporation
are consistent with other officers of the parent who have similar operational
responsibilities for other businesses of the parent or its subsidiaries.

 

Non-Solicitation.  You
will not at any time while you are employed by the Company or any of its
subsidiaries, and for 12 months following the termination of your employment
(the “Restricted Period”), solicit, recruit, request, cause, induce or encourage
any individual who is then employed by the Company, or was employed by the
Company at any time during the 12-month period ending on your termination date,
to leave the employment of the Company or any of its subsidiaries.

 

During the Restricted Period, you will not directly or indirectly
through any other person, influence or attempt to influence customers, vendors,
suppliers, licensors, lessors, joint venturers, associates, consultants,
agents, or partners of the Company or any affiliate of the Company (each, a “Restricted
Company”) to divert their business away from the Company or such affiliate, and
you will not otherwise interfere with, disrupt or attempt to disrupt the
business relationships, contractual or otherwise, between the Company or any affiliate
of the Company.

 

However, nothing in the paragraph above shall prevent you from
accepting employment with any other person or entity during the Restricted
Period, including any Restricted Company, provided that you continue to
otherwise comply with the restrictions in this paragraph.

 

No Right to Continued Employment.  Subject to any written
employment agreement you may have with the Company (or any of its affiliates)
and subject to applicable law, nothing contained in this letter agreement
constitutes an employment or service commitment by the Company (or any of its
affiliates), affects your status as an employee at will who is subject to
termination without cause at any time, or interferes in any way with the
Company’s right (or the right of its affiliates) to change your compensation or
other terms of employment at any time.

 

4

 

Attorneys’ Fees and Costs.  The Company shall pay to any law
firm chosen by you, all reasonable fees and costs incurred by you, in an amount
not to exceed $30,000 in the aggregate in enforcing the terms of this letter
agreement or in the resolution of any dispute with respect to the benefits
payable under this letter agreement. 
Said fees shall be paid, as incurred, directly to the law firm chosen by
you as invoiced by the law firm.

 

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

 

Governing Law.  This letter agreement shall be
governed by the laws of the State of California.

 

Entire Agreement.  This letter agreement contains all of the
terms and conditions of your bonus opportunity and supersedes all prior
understandings and agreements, written or oral, between you and the Company or
any of its respective affiliates with respect thereto.  This letter agreement may be amended only by
a written agreement, signed by an authorized officer, that expressly refers to
this letter agreement.  For purposes of
clarity, this letter agreement does not supersede your severance agreement with
the Company.

 

[Remainder of page intentionally left blank]

 

5

 

If
this letter agreement accurately sets forth our understanding with respect to
the foregoing matters, please indicate your acceptance by signing this
agreement below and returning it to me. 
A duplicate copy of this letter agreement is included for your records.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ RAYMOND MEYER

  
	
   

  	
  Raymond
  Meyer, Chairman of the Board

  
	
   

  	
  Cherokee
  International Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  JEFFREY M. FRANK

  	
   

  
	
  Jeffrey
  M. Frank

  	
   

  

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]