Exhibit 10.2

MONOLITHIC POWER SYSTEMS, INC.

2004 EQUITY INCENTIVE PLAN

PERFORMANCE UNIT AGREEMENT

Unless otherwise defined herein, the terms defined in the 2004 Equity Incentive
Plan (the “Plan”) shall have the same defined meanings in this Performance Unit
Agreement (the “Agreement”).

 

I. NOTICE OF PERFORMANCE UNIT GRANT

Name: Maurice Sciammas

Address: 983 University Ave., Bldg. A, Los Gatos, CA 95032

You have been granted the right to receive Performance Units, subject to the
terms and conditions of the Plan and this Agreement as follows:

 

Grant Number    U0000659 Date of Grant    October 26, 2006 Vesting Commencement
Date    October 26, 2006 Total Number of Performance Units/ Shares    25,000

Vesting Schedule:

Fifty percent (50%) of the Performance Units shall vest on the first anniversary
of the Vesting Commencement Date, and 50% of the Performance Units shall vest on
the second anniversary of the Vesting Commencement Date (and if there is no
corresponding date, the last day of the month), subject to Participant
continuing to be a Service Provider through such dates.

Termination Period:

In the event Participant ceases to be a Service Provider for any or no reason
(including death or Disability) before Participant vests in the Performance
Units, the unvested Performance Units and the Participant’s right to acquire any
Shares hereunder shall immediately terminate.

 

II. TERMS AND CONDITIONS OF PERFORMANCE UNITS

1. Grant. The Company hereby grants to the Participant under the Plan an Award
of Performance Units, subject to all of the terms and conditions in this
Agreement and the Plan.

2. Company’s Obligation to Pay. Each Performance Unit represents the right to
receive a Share on the date it vests. Unless and until the Performance Units
shall have vested in the manner set forth in Section 3, the Participant shall
have no right to payment of any such Performance Units. Prior to actual payment
of any Performance Units, such Performance Units shall represent an unsecured
obligation of the Company, payable (if at all) only from the general assets of
the Company.

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3. Vesting Schedule. Subject to Section 4, the Performance Units awarded by this
Agreement shall vest in the Participant according to the vesting schedule set
forth in the Notice of Performance Unit Grant, subject to the Participant
continuing to be a Service Provider through each applicable vesting date.
Notwithstanding the foregoing, the Administrator, in its sole discretion, may
reduce or waive any performance objectives or other vesting provisions for such
Performance Units.

4. Forfeiture upon Termination as Service Provider. Notwithstanding any contrary
provision of this Agreement, if the Participant ceases to be a Service Provider
for any or no reason, the then-unvested Performance Units awarded by this
Agreement shall thereupon be forfeited at no cost to the Company and the
Participant shall have no further rights thereunder.

5. Payment after Vesting. Any Performance Units that vest in accordance with
Section 3 will be paid to the Participant (or in the event of the Participant’s
death, to his or her estate) in whole Shares, provided that to the extent
determined appropriate by the Company, any federal, state and local withholding
taxes with respect to such Performance Units will be paid by reducing the number
of Shares actually paid to the Participant.

6. Payments after Death. Any distribution or delivery to be made to the
Participant under this Agreement shall, if the Participant is then deceased, be
made to the Participant’s designated beneficiary, or if no beneficiary survives
the Participant, the administrator or executor of Participant’s estate. Any such
transferee must furnish the Company with (a) written notice of his or her status
as transferee, and (b) evidence satisfactory to the Company to establish the
validity of the transfer and compliance with any laws or regulations pertaining
to said transfer.

7. Withholding of Taxes. Notwithstanding any contrary provision of this
Agreement, no certificate representing the Shares will be issued to the
Participant, unless and until satisfactory arrangements (as determined by the
Administrator) will have been made by the Participant with respect to the
payment of income, employment and other taxes which the Company determines must
be withheld with respect to such Shares so issuable. The Administrator, in its
sole discretion and pursuant to such procedures as it may specify from time to
time, may permit the Participant to satisfy such tax withholding obligation, in
whole or in part by one or more of the following (without limitation):
(a) paying cash, (b) electing to have the Company withhold otherwise deliverable
Shares having a Fair Market Value equal to the minimum amount required to be
withheld, (c) delivering to the Company already vested and owned Shares having a
Fair Market Value equal to the amount required to be withheld, or (d) selling a
sufficient number of such Shares otherwise deliverable to Participant through
such means as the Company may determine in its sole discretion (whether through
a broker or otherwise) equal to the amount required to be withheld. To the
extent determined appropriate by the Company in its discretion, it will have the
right (but not the obligation) to satisfy any tax withholding obligations by
reducing the number of Shares otherwise deliverable to Participant. If the
Participant fails to make satisfactory arrangements for the payment of any
required tax withholding obligations hereunder at the time any applicable
Performance Units otherwise are scheduled to vest pursuant to Section 3, the
Participant will permanently forfeit such Performance Units and the Performance
Units will be returned to the Company at no cost to the Company and Participant
will have no further right to receive Shares with respect thereto.

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8. Rights as Stockholder. Neither the Participant nor any person claiming under
or through the Participant shall have any of the rights or privileges of a
stockholder of the Company in respect of any Shares deliverable hereunder unless
and until certificates representing such Shares shall have been issued, recorded
on the records of the Company or its transfer agents or registrars, and
delivered to the Participant.

9. No Effect on Service. Participant acknowledges and agrees that the vesting of
the Performance Units pursuant to Section 3 hereof is earned only by Participant
continuing to be a Service Provider through the applicable vesting dates (and
not through the act of being hired or acquiring Shares hereunder). Participant
further acknowledges and agrees that this Agreement, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of Participant’s continuation as a
Service Provider for the vesting period, for any period, or at all, and shall
not interfere with the Participant’s right or the right of the Company (or any
Parent or Subsidiary employing or retaining Participant) to terminate
Participant’s status as a Service Provider at any time, with or without cause.

10. Address for Notices. Any notice to be given to the Company under the terms
of this Agreement shall be addressed to the Company, in care of its Chief
Financial Officer at Monolithic Power Systems, Inc., 983 University Avenue,
Building A, Los Gatos, California, 95032, or at such other address as the
Company may hereafter designate in writing.

11. Grant is Not Transferable. Except to the limited extent permitted in the
event of the Participant’s death, this grant and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any
right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this grant and the rights and
privileges conferred hereby immediately shall become null and void.

12. Binding Agreement. Subject to the limitation on the transferability of this
grant contained herein, this Agreement shall be binding upon and inure to the
benefit of the heirs, legatees, legal representatives, successors and assigns of
the parties hereto.

13. Additional Conditions to Issuance of Stock. If at any time the Company shall
determine, in its discretion, that the listing, registration or qualification of
the Shares upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory authority is necessary or
desirable as a condition to the issuance of shares to the Participant (or his or
her estate), such issuance shall not occur unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company. Where the Company
determines that the delivery of the payment of any Shares shall violate federal
securities laws or other Applicable Laws, the Company shall defer delivery until
the earliest date at which the Company reasonably anticipates that the delivery
of Shares shall no longer cause such violation. The Company shall make all
reasonable efforts to meet the requirements of any such state or federal law or
securities exchange and to obtain any such consent or approval of any such
governmental authority.

14. Plan Governs. This Agreement is subject to all terms and provisions of the
Plan. In the event of a conflict between one or more provisions of this
Agreement and one or more provisions of the Plan, the provisions of the Plan
shall govern.

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15. Administrator Authority. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Performance Units have vested). All actions
taken and all interpretations and determinations made by the Administrator in
good faith shall be final and binding upon Participant, the Company and all
other interested persons. No member of the Administrator shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or this Agreement.

16. Captions. Captions provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

17. Agreement Severable. In the event that any provision in this Agreement shall
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this Agreement.

18. Modifications to the Agreement. This Agreement constitutes the entire
understanding of the parties on the subjects covered. Participant expressly
warrants that he or she is not accepting this Agreement in reliance on any
promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
Notwithstanding anything to the contrary in the Plan or this Agreement, the
Company reserves the right to revise this Agreement as it deems necessary or
advisable, in its sole discretion and without the consent of Participant, to
comply with Section 409A of the Code or to otherwise avoid imposition of any
additional tax or income recognition under Section 409A of the Code in
connection to this Award of Performance Units.

19. Governing Law. This Agreement shall be governed by the laws of the State of
California, without giving effect to the conflict of law principles thereof. For
purposes of litigating any dispute that arises under this Award of Performance
Units or this Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of California, and agree that such litigation shall be
conducted in the courts of Santa Clara County, California, or the federal courts
for the United States for the Northern District of California, and no other
courts, where this Award of Performance Units is made and/or to be performed.

oOo

By Participant’s signature and the signature of the Company’s representative
below, Participant and the Company agree that this Award of Performance Units is
granted under and governed by the terms and conditions of the Plan and this
Agreement. Participant has reviewed the Plan and this Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of the Plan and
this Agreement. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Agreement. Participant further agrees to notify the
Company upon any change in the residence address indicated below.

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PARTICIPANT:       MONOLITHIC POWER SYSTEMS, INC.

/s/ Maurice Sciammas

     

/s/ C. Richard Neely

Signature       By

Maurice Sciammas

     

Chief Financiel Officer

Print Name       Title

 

     

 

      Residence Address