AMENDED AND RESTATED SEVERANCE AGREEMENT

EXHIBIT 10.3

This Amended and Restated Severance Agreement (the “Agreement”) is entered into by and between Cherokee International Corporation (the “Company”), a Delaware corporation, and Xxxxxx Xxxxx (the “Executive”).

R E C I T A L S

WHEREAS, the Executive and the Company have previously entered into that certain severance agreement dated June 16, 2005 (the “Old Severance Agreement”); and

WHEREAS, the Executive and the Company desire to amend and restate in its entirety the Old Severance Agreement.

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

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

2. Term of Agreement. This Agreement shall remain in effect for so long as the Executive is employed as its Executive Vice President, Global Operations of the Company (the “Term”).

3. Severance Payment. Subject to the Executive’s having executed and, if applicable, not revoked, a release of claims reasonably satisfactory to the Company (the “Release of Claims”), in the event the Executive’s employment is terminated by the Company other than for Cause, the Executive shall be entitled to the following (collectively, the “Severance Benefits”): (i) a cash payment, in lieu of any other severance payment pursuant to any other plan or agreement of the Company or any subsidiary thereof to which the Executive is otherwise entitled, of an amount equal to his then annual base salary as in effect immediately prior to the date of termination (the “Severance Payment”); (ii) the bonus that would have been due the Executive for the year in which the Executive’s termination of employment occurs, calculated as if the Company achieved financial performance for that year equal to that set forth in the then most recent budget for that year approved by the Board of Directors of the Company, prorated for the number of months worked in the fiscal year the termination occurred (the “Bonus Payment”); (iii) continued medical, hospitalization, life and other insurance benefits being provided to the Executive and the Executive’s family at the date of termination, for a period of

twelve (12) months after the date of termination; provided, however, that the Company shall have no obligation to continue to provide the Executive with such insurance benefits for any periods after the date the Executive obtains comparable benefits (with no significant pre existing condition exclusions) as a result of the Executive’s employment in a new position; and (iv) to the extent permitted under Section 409A of the Code, a lump sum settlement of all deferred compensation arrangements. Subject to Section 5, the Severance Payment and the Bonus Payment shall be payable in a lump sum within 10 business days following the effective date of the Release of Claims.

The Executive shall not be entitled to the Severance Benefits if (i) the Executive’s employment is terminated by the Company for Cause or as a result of the Executive’s death or Disability or (ii) the Executive terminates his employment with the Company for any reason.

4. Confidentiality and Related Covenants

(a) Confidentiality. The Executive shall not, at any time hereafter, disclose to any person, firm or corporation or otherwise use any confidential or proprietary information (“Confidential Information”) relating to the Company, its constituent partners, their respective parents, subsidiaries, and affiliates, including Confidential Information relating to its customers, suppliers, market arrangements or methods of operations, employees, trade practices, trade secrets, know how, and other matters that are not publicly known outside the Company, except to the extent necessary to conduct the business of the Company, or to comply with law or the valid order of a governmental agency or court of competent jurisdiction. Without limiting the generality of the foregoing, the parties hereto acknowledge and agree that all information not otherwise generally known to the public relating to each of (i) this Agreement, or (ii) the Company, any constituent partner of the Company or any of their respective parents, subsidiaries or affiliates, is Confidential Information and is not to be disclosed to any persons or entities or otherwise used, except to the extent necessary to conduct the business of the Company or to comply with law or the valid order of a governmental agency or court of competent jurisdiction.

(b) Rights to Innovations. Any invention, improvement, design, development or discovery conceived, developed, invented or made by the Executive, alone or with others, during his employment hereunder and applicable to the business of the Company, its parents, subsidiaries or affiliates shall become the sole and exclusive property of the Company. The Executive shall (i) disclose the same completely and promptly to the Company, (ii) execute all documents requested by the Company in order to vest in the Company the entire right, title and interest, in and to the same, (iii) execute all documents required by the Company for the filing, and prosecuting of such applications for patents, copyrights and/or trademarks,

which the Company, in its sole discretion, may desire to prosecute, and (iv) provide to the Company all assistance it may reasonably require including, without limitation, the giving of testimony in any suit, action or proceeding, in order to obtain, maintain and protect the Company’s rights therein and thereto.

(c) Non Solicitation. The Executive, except within the course of the good faith performance of his duties hereunder, shall not at any time while he is in the employ of the Company, any constituent partner of the Company or any of their respective parents, subsidiaries, or affiliates, and for 12 months following the termination of his employment for any reason (the “Restricted Period”), solicit, recruit, request, cause, induce or encourage any individual who is then employed by the Company, any constituent partner of the Company or any of their respective parents, subsidiaries or affiliates to leave the employment of or terminate the relationship with the Company, its constituent partners, their respective parents, subsidiaries, and affiliates, for any reason and/or otherwise encourage to perform work (as an employee, independent contractor or otherwise) for any entity or person (including the Executive) that directly or indirectly competes with the Company at any time during the Restricted Period and/or whose business is or includes the design, manufacture and marketing of power supplies for the datacom, telecom, medical, process-control and other related industries (or any portion thereof).

(d) Enforcement. The Executive acknowledges that as a high-level executive of the Company, the Executive provides services of a special and unique character that are of a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and any breach or threatened breach by the Executive of any provision of this Section 4 shall cause the Company irreparable harm which cannot be remedied solely by damages. Specifically, the Executive acknowledges that (a) the provisions of this Section 4 are reasonable and necessary to protect the legitimate interests of the Company and/or any of its related entities, and (b) any violation of this Section 4 will result in irreparable injury to the Company and/or any of its related entities, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such violation would not be reasonable or adequate compensation to the Company and/or any of its related entities for such a violation. Accordingly, the Executive agrees that in the event of a breach or threatened breach by the Executive of any of the provisions of this Section 4, the Company shall be entitled to injunctive relief restraining the Executive and any business, firm, partnership, individual, corporation or entity participating in such breach or threatened breach. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available at law or in equity for such breach or threatened breach, including the recovery of damages and the immediate termination of the Company’s duties under this Agreement.

(e) Modification of Restrictions. It is hereby further agreed that if any court of competent jurisdiction shall determine that the restrictions imposed in this Section 4 are unreasonable (including, but not limited to, time and scope of coverage of this Section 4), the parties hereto hereby agree to any restrictions that such court would find to be reasonable under the circumstances.

5. Withholding; Section 409A. The Company shall make such deductions and withhold such amounts from each payment made to the Executive hereunder as may be required from time to time by law, governmental regulation or order. If required by Section 409A of the Code, all or part of any payment made to the Executive hereunder may be delayed for a period of six months.

6. Attorneys’ Fees and Costs. The Company shall pay to any law firm chosen by the Executive, all reasonable fees and costs incurred by the Executive, in an amount not to exceed $30,000 in the aggregate in enforcing the terms of this Agreement. Said fees shall be paid, as incurred, directly to the law firm chosen by the Executive as invoiced by the law firm.

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

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

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

If to the Company:		Cherokee International Corporation
		0000 Xxx Xxxxxx
		Xxxxxx, XX 00000
		Attention: Chairman of the Board

If to the Executive:		Xxxxxx Xxxxx
		00 Xxxxx Xxxxxxxx
		Xxxx xx Xxxx, XX 00000

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

10. Arbitration. The Company and the Executive agree that any dispute arising as to the parties’ rights and obligations hereunder shall, at the election and upon written demand of either party, be submitted to arbitration before a single neutral arbitrator in Orange County, California and shall be administered by the Judicial Arbitration Mediation Service (“JAMS”) pursuant to its Employment Arbitration Rules and Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards or Procedural Fairness (“Rules”), which Rules shall be modified by the arbitrator to the extent necessary to comply with applicable law. The arbitrator shall not have authority to add to, modify, change or disregard any lawful terms of this Agreement or to issue an award that is contrary to applicable law. The decision of the arbitrator shall be final and binding and enforceable in any court of competent jurisdiction. The parties further agree, notwithstanding the foregoing, that (i) except as provided in this Section 10, the Federal Arbitration Act shall govern the interpretation and enforcement of this Agreement, (ii) the procedural protections and requirements of the California Arbitration Act, Section 1280 et seq. of the California Code of Civil Procedure, will apply to any arbitration proceedings hereunder; (iii) the Company shall pay any costs and expenses that the Executive would not otherwise have incurred if the dispute had been adjudicated in a court of law, rather than through arbitration, provided, however, that if either party prevails on a statutory claim that affords the prevailing party an award of attorney’s fees, the arbitrator may award reasonable attorney’s fees to the prevailing party, consistent with applicable law; and (iv) any hearing must be transcribed by a court reporter and any decision of the arbitrator must be set forth in writing, consistent with the applicable state or federal law and supported by essential findings of fact and conclusion of law. The provisions of this Section 10 shall survive the termination or revocation of this Agreement. The parties acknowledge and agree that any claims by the Executive for Worker’s Compensation or unemployment compensation benefits are not covered by this Agreement.

11. Miscellaneous.

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

(b) Entire Agreement. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

This Agreement supersedes any and all prior agreements between the parties and/or any of their affiliates with respect to the subject matter hereof.

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

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

(e) Termination of Old Severance Agreement. The Old Severance Agreement is hereby amended, restated and superseded in its entirety as of the date hereof.

12. Definitions.

(a) “Cause” shall mean (1) the willful and continued failure by the Executive to perform his 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), (2) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere to, a felony or other crime involving moral turpitude, (3) the commission by the Executive of any act of theft, embezzlement or fraud in connection with his employment with the Company, (4) any material breach by the Executive of any employment or other agreement between the Executive and the Company or any subsidiary of the Company, (5) any conflict of interest between the Executive and the Company or any subsidiary of the Company that, in the Board’s determination, inappropriately affects the Executive’s ability to carry on the Executive’s normal duties as an employee of the Company or any subsidiary of the Company or (6) the Executive’s appropriation (or attempted appropriation) of a material business opportunity of the Company, including attempting to secure or securing from anyone other than the Company any personal profit without the Company’s consent in connection with any transaction entered into on behalf of the Company.

For purposes of this definition of Cause, an act or failure to act on the Executive’s part shall be considered “willful” if it was done or omitted to be done by the Executive not in good faith, and shall not include any act or failure to act resulting from any incapacity of the Executive.

(b) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) “Disability” shall mean a physical or mental illness which, in the judgment of the Company after consultation with the licensed physician attending Executive, impairs Executive’s ability to substantially perform his duties as an employee and as a result of which the Executive shall have been unable to perform his duties for the Company on a full-time basis for a period of 180 consecutive days.

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

EXECUTIVE	CHEROKEE INTERNATIONAL CORPORATION

/s/ XXXXXX XXXXX	/s/ XXXXXXX X. XXX

Date: December 5, 2006	By:	Xxxxxxx X. Xxx
	Its:	Executive Vice President/ Chief Financial Officer

	Date:	December 5, 2006

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AMENDED AND RESTATED SEVERANCE AGREEMENT

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