Exhibit 10.1
MONOLITHIC POWER SYSTEMS,
INC.
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“ Agreement ”) by and between Adriana Guevara
Chiocchi (the “ Chief Legal Officer & Corporate
Secretary, (CLO)” ) and Monolithic Power Systems, Inc.
(the “ Company ”), is entered into as of
October 2, 2006 (the “ Effective Date
”).
WHEREAS, subject to the
Company’s satisfaction of the result of the CLO’s
background check and the commencement of the “Hire
Date” as defined in paragraph 2 below, the Company desires to
employ the CLO and the CLO desires to accept employment with the
Company on the terms and conditions set forth below;
NOW, THEREFORE, the parties hereto
agree as follows:
1. Certain Definitions. For purposes
of this Agreement:
(a) “ Cause ”
means (i) the CLO’s failure to perform the duties or
responsibilities of his employment, in any material respect, as
reasonably required or directed by the Board of Directors of the
Company (the “ Board ”) or the Chief Executive
Officer (the “CEO”) and the President, (or the relevant
supervising officer, manager or board of directors of a successor
company), which failure is not cured within thirty (30) days
following notice to the CLO of the poor performance which notice
describes in reasonable detail the poor performance; (ii) the
CLO personally engaging in illegal conduct that is detrimental to
the Company; (iii) the CLO being convicted of a felony; or
(iv) the CLO committing a material act of dishonesty, fraud or
misappropriation of property.
(b) “ Good Reason
” means, without the CLO’s consent, (i) a
reduction by the Company in the base salary of the CLO as in effect
immediately prior to such reduction, except where a substantially
equivalent percentage reduction in base salary is applied to all
other officers of the Company; (ii) a material reduction by
the Company in the kind or level of employee benefits to which the
CLO is entitled immediately prior to such reduction with the result
that the CLO’s overall benefits package is significantly
reduced, except where a substantially equivalent reduction in
benefits is applied to all other officers of the Company;
(iii) a material, adverse change in the CLO’s title,
authority, responsibilities or duties, as measured against his
title, authority, responsibilities or duties immediately prior to
such change; or (iv) the relocation of the CLO’s place
of work to a facility or a location more than fifty (50) miles
from the CLO’s then-present work location.
(c) “ Disability
” means the CLO’s inability to substantially perform
the CLO’s duties as required by the CLO’s employment
with or services to the Company as the result of the CLO’s
incapacity due to physical or mental illness.
(d) “ Change of Control
” means any of the following that occurs with respect to the
Company if the stockholders of the Company immediately before such
transaction do not retain
immediately after the transaction, in
substantially the same proportions as their ownership of shares of
the Company’s voting stock immediately before the
transaction, direct or indirect beneficial ownership of more than
fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or
corporations to which the assets of the Company are
transferred:
(i) the direct or indirect sale or
exchange in a single or series of related transactions by the
Company or the stockholders of the Company of more than fifty
percent (50%) of the voting stock of the Company;
(ii) a merger or a consolidation in
which the Company is a party; or
(iii) the sale, exchange, or
transfer of all or substantially all of the assets of the
Company.
2. Employment and Duties .
The CLO shall be appointed as Chief Legal Officer &
Corporate Secretary of the Company and report to the Company as of
October 2, 2006 (“Hire Date”). The CLO shall
report to the Chief Executive Officer (CEO) and President, and
shall assume and discharge such responsibilities as are mutually
agreed upon by the CLO and the CEO or the Board, and consistent
with such office and position. The CLO shall perform faithfully the
duties assigned to her to the best of her ability.
3. Compensation .
(a) In consideration of the
CLO’s services, the CLO shall be paid a base salary at the
rate of $225,000 per year during the period of employment (the
“ Base Salary ”), to be paid in installments in
accordance with the Company’s standard payroll practices.
This Base Salary shall be reviewed for increases at least annually
by the Compensation Committee on the same basis and at the same
time as the Compensation Committee shall review the compensation of
other executive officers of the Company including any review for
the next fiscal year which has not yet occurred, but such increases
are not guaranteed.
(b) The CLO shall be granted an
option under the Company’s 2004 Stock Option Plan entitling
her to purchase 150,000 shares of the Company’s Common Stock
(the “Stock Options”) with vesting over four
(4) years, as set forth more fully in the Stock Options
Agreement therefor.
(c) The CLO shall participate in the
Company bonus plan. Executive’s annual target bonus will be
payable upon achievement of personal and company specific
performance objectives established by the Board, CEO or the
Compensation Committee of the Board. For the first year only, in no
event will the minimum paid bonus be less than 20% of base salary
or $45,000.
4. At-Will Employment . The
Company and the CLO acknowledge that the CLO’s employment is
and shall continue at all times to be at-will, as defined under
applicable law. If the CLO’s employment terminates for any
reason, the CLO shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with the
Company’s established employee plans and policies or other
written agreements with the CLO at the time of
termination.
5. Benefits . The CLO,
together with his spouse and dependent children, if any, shall be
permitted, to the extent eligible, to participate at the
Company’s expense in any group medical, dental, life
insurance and disability insurance plans, or similar benefit plans
of the Company that are available to other executive officers in
each case pursuant to the terms and conditions of each such plan or
program. The CLO shall also be entitled to fifteen days of paid
time off (PTO) annually.
6. Termination for Cause and
Voluntary Termination without Good Reason . In the event that
the CLO resigns from the Company without Good Reason, or the
Company terminates the CLO’s employment for Cause, the CLO
shall not receive any compensation or benefits under this Agreement
on account of such termination, except for obligations accrued at
such time. The CLO’s rights under any applicable Company
benefit plans upon such termination shall be determined under the
provisions of the respective benefit plans.
7. Termination without Cause and
Voluntary Termination with Good Reason . Subject to
Section 10 below, if the Company terminates the CLO’s
employment without Cause, or the CLO resigns from the Company for
Good Reason, then the CLO shall receive severance payments and
partial acceleration of the vesting of the Stock Options (together
the “Severance Benefits”) pursuant to sub-sections 7(a)
and (b) below:
(a) Severance Payments .
After the date of such termination, the Company shall continue to
pay the CLO at a rate based on his then Base Salary and target
annual bonus, in installments in accordance with the
Company’s standard payroll practices, and will provide the
CLO and his dependents full medical benefits, for a period of six
(6) months after the date of such termination; provided;
however, such payments and benefits shall terminate immediately
upon the date of the CLO’s commencement of new employment
with another company, and the CLO shall provide the Company with
written notice of his acceptance of new employment within three
(3) days thereof. In the event such termination occurs within
one (1) year following a Change of Control, then such payments
and benefits shall continue for a period of one (1) year after
the date of such termination.
(b) Vesting Acceleration .
Effective upon such termination, the CLO shall receive accelerated
vesting equivalent to six (6) months of service beyond the
date of his termination with respect to the shares subject to the
Stock Options granted to the CLO; provided, however, that in the
event such termination occurs within one (1) year following a
Change of Control, then seventy five percent (75%) of the
remaining shares subject to the Stock Options and any other options
grated to the CLO shall become vested in full and the period during
which the CLO is permitted to exercise such options shall be
extended for the full term of such options, all as set forth more
fully in the Stock Option Agreements therefor.
8. Death . In the event of
the CLO’s death, except for obligations accrued at such time,
the Company shall have no obligation to pay or provide any
compensation or benefits under this Agreement. The CLO’s
rights under the Company’s benefit plans in the event of the
CLO’s death shall be determined under the provisions of such
benefit plans.
9. Disability . In the event
of the CLO’s Disability, except for obligations that have
accrued prior to the CLO’s Disability, no compensation or
benefits will be paid or provided to the CLO under this Agreement.
The CLO’s rights under the Company’s benefit plans
shall be determined under the provisions of such benefit
plans.
10. Conditional Nature of
Severance Benefits .
(a) Noncompete . CLO
acknowledges that the nature of the Company’s business is
such that if CLO were to become employed by, or substantially
involved in, the business of a direct competitor of the Company
during the six (6) months following the termination of
CLO’s employment with the Company, it would be very difficult
for CLO not to rely on or use the Company’s trade secrets and
confidential information. Thus, to avoid the likely disclosure of
the Company’s trade secrets and confidential information, CLO
agrees and acknowledges that CLO’s right to receive the
Severance Benefits set forth above (to the extent Executive is
otherwise entitled to such Severance Benefits) shall be conditioned
upon CLO not directly engaging in (whether as an employee,
consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), nor having participation
in the financing, operation, management or control of, any person,
firm, corporation or business that directly competes with the
Company. “Direct Competitor” shall be defined as a
semiconductor company whose primary revenue is derived from analog
products that are sold into the same customer, application, and end
product base as the Company and would be considered direct
competitors by an independent person. Upon any breach of this
Section 10 or Section 13 below, all Severance Benefits to
which the CLO may be entitled, if any, pursuant to this Agreement
shall immediately cease.
11. Other Activities . The
CLO shall devote substantially all of his working time and efforts
during the Company’s normal business hours to the business
and affairs of the Company and its subsidiaries and to the diligent
and faithful performance of the duties and responsibilities duly
assigned to him pursuant to this Agreement, except for vacations,
holidays and sickness. However, the CLO may devote a reasonable
amount of his time to civic, community, or charitable activities
and, with the prior written approval of the Company, to serve as a
director of other corporations and to other types of business or
public activities not expressly mentioned in this
paragraph.
12. Proprietary Information .
During the period of employment and thereafter, the CLO shall not,
without the prior written consent of the Company, disclose or use
for any purpose (except in the course of his employment under this
Agreement and in furtherance of the business of the Company or any
of its affiliates or subsidiaries) any confidential information or
proprietary data of the Company. The CLO agrees to execute the
Company’s form of Proprietary Information Agreement, which is
attached hereto as Exhibit A and incorporated herein by
reference.
13. Covenant Not to Solicit .
Beginning with the date of the CLO’s termination and until
one (1) year thereafter, the CLO agrees that he will
not:
(i) solicit, encourage, or take any
other action which is intended to induce any other employee of the
Company to terminate his employment with the Company, or
(ii) interfere in any manner with
the contractual or employment relationship between the Company and
any employee of the Company.
14. Tax Provisions . In the
event that the benefits provided for in the Agreement, when
aggregated with any other payments or benefits received by the CLO,
would (i) constitute “parachute payments” within
the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “ Code ”), and
(ii) would be subject to the excise tax imposed by
Section 4999 of the Code (the “ Excise Tax
”), then the CLO’s benefits hereunder shall be
either
(a) delivered in full, or
(b) delivered as to such lesser
extent which would result in no portion of such benefits being
subject to the Excise Tax,
whichever of the foregoing amounts,
taking into account the applicable federal, state and local income
taxes and the Excise Tax, results in the receipt by the CLO on an
after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. Unless the Company and
the CLO otherwise agree in writing, any determination required
under this paragraph shall be made in writing by the
Company’s independent public accountants (the “
Accountants ”) whose determination shall be conclusive
and binding upon the CLO and the Company for all purposes. For
purposes of making the calculations required by this paragraph, the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and
4999 of the Code. The Company and the CLO shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
paragraph.
15. Governing Law . This
Agreement shall be governed by and construed in accordance with the
laws of the State of California applicable to agreements made and
to be performed entirely within such state, without regard to
principles of conflicts of laws.
16. Integration . This
Agreement, any written agreements or other documents evidencing
matters referred to herein and any written Company existing plans
that are referenced herein represent the entire agreement and
understanding between the parties as to the subject matter hereof
and thereof and supersede all prior or contemporaneous agreements
as to the subject matter hereof and thereof, whether written or
oral.
17. Notices . Notices and all
other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the
CLO, mailed notices shall be addressed to him at the home address
that he most rece
