AMENDMENT NO. TWO TO LOAN AND SECURITY AGREEMENT

   This Amendment No. Two to Loan and Security Credit Agreement is dated as of
the 20th day of December, 2002, and entered into by and between MICREL
INCORPORATED ("Borrower"), and BANK OF THE WEST ("Bank") with reference to the
following facts:

                                   RECITALS

   A.  On or about June 29, 2001, the Borrower made, executed and delivered to
the Bank that certain LOAN AND SECURITY CREDIT AGREEMENT (together with all
addenda, exhibits, schedules and amendments thereto, the "Agreement").
Capitalized terms used in this Amendment and not otherwise defined herein
shall have the meaning given such terms in the Agreement.

   B.  Pursuant to the terms of the Agreement, Bank has extended a
$5,000,000.00 line of credit to the Borrower for Revolving Loans, and an
Equipment Purchase Facility in the maximum amount not to exceed
$10,000,000.00. In addition, Bank has extended the following additional term
facilities to Borrower which remain outstanding: (i) a $2,000,000.00 term loan
pursuant to the terms of that certain Loan and Security Agreement dated as of
March 8, 2000 (the "2000 Agreement") and (ii) a $2,100,000.00 term loan under
that certain Amended and Restated Loan and Security Agreement (Receivables and
Inventory) dated as of November 29, 1990 (as amended from time to time the
"1990 Agreement").

   C.  The Borrower and the Bank desire to amend the Agreement in the
following particulars.

                                   AGREEMENT

   For valuable consideration, the receipt of which is hereby acknowledged,
the Borrower and the Bank agree as follows:

   1. Recitals. The Recitals are incorporated herein by this reference, as are
all exhibits and schedules, and the parties agree that the information recited
above is true and correct.

   2. Amendments. The Agreement is hereby amended as follows:

      (a) The fourth and fifth sentences of the first paragraph of Section 4.1
      are amended and restated in their entirety to read as follows:

         With respect to Borrower's right to request revolving loan advances
         under Article 2 of this Agreement only, such requests must be before
         June 30, 2003 (the "date of termination"). The date of termination
         may be extended from time to time by written agreement of the Bank
         and Borrower.

      (b) In Subsection 10 .13(b) of the Agreement the dollar amount of Two
      Hundred Seventy Four Million Dollars ($274,000,000.00) is replaced with
      the dollar amount of Two Hundred Forty Five Million Dollars
      ($245,000,000.00).

      (c) In Subsection 10 .13( c) of the Agreement the dollar amount of
      Twenty Million Dollars ($20,000,000.00) is replaced with the dollar
      amount of Fifteen Million Dollars ($15,000,000.00) for Borrower's fiscal
      year 2003 and thereafter.

      (d) Subsection 1 0.13(d) is deleted in its entirety without re-lettering
      the subsequent subsection.

      (e) Borrower has advised Bank that for the fiscal quarter ending
      September 30,2002, Borrower has incurred certain non-recurring expenses
      and charges in the amount of $29,000,000.00 (the 'Impairment Charge") in
      connection with Borrower's closure of its operating facility in Santa
      Clara, California. In addition, Borrower has advised Bank that for the
      fiscal quarter ending December 31, 2002, Borrower will incur a special
      charge of up to $23,000,000.00 in connection with a non-cash stock
      option charge (the "Swap Charge"). Solely for the purposes of
      calculating Borrower's net after-tax loss for its fiscal year 2002, only
      the lesser of (a) 63% of the aggregate amount of Borrower's Impairment
      Charge and Swap Charge actually incurred and (b) $33,000,000.00 shall be
      excluded from net-after tax loss.

                              AMENDMENT - Page 1


   3. Acknowledgments. Borrower acknowledges and agrees that, as of the date
of this Amendment:

      a. Borrower has no defense, offset or counter-claim with respect to
      repayment of the indebtedness evidenced by, or performance of the
      obligations under, the Agreement or any of the agreements referred to or
      contemplated thereby.

      b. By entering into this Amendment, the Bank does not waive any existing
      Event of Default, or become obligated to waive any future Event of
      Default, under the Agreement or any other document referred to or
      contemplated thereby.

      c. Borrower hereby releases and forever discharges the Bank, its
      directors, officers, agents, attorneys and employees, from and against
      any claims or causes of action the Borrower now has or hold or have ever
      had or held, whether known or unknown, liquidated or contingent, against
      any of them, to the date of this Amendment relating to the Bank's
      performance under the Agreement.

   4. Representations and Warranties. The Borrower represents and warrants as
follows:

      a. Each of the representations and warranties contained in the
      Agreement, as amended hereby, is hereby reaffirmed as of the date
      hereof, each as if set forth herein.

      b. The execution, delivery and performance of this Amendment are within
      the Borrower's powers, have been duly authorized by all necessary
      action, have received all necessary governmental approvals, if any, and
      do not contravene any law or any contractual restrictions binding on the
      Borrower;

      c. This Amendment is the legal, valid and binding obligation of the
      Borrower, enforceable against the Borrower in accordance with its terms;

      d. No event has occurred and is continuing or would result from this
      Amendment which constitutes an Event of Default under the Agreement, or
      would constitute an Event of Default but for the requirement that notice
      be given or time elapse or both; and

      e. The execution, delivery and performance of this Amendment will not
      violate any provision of law or regulation or any order of any
      governmental authority, court, arbitration board or tribunal or the
      Articles of Incorporation or By-laws of Borrower, or result in the
      breach of, constitute a default under, contravene any provisions of, or
      result in the creation of any security interest, lien charge, or
      encumbrance upon, any of the property or assets of Borrower pursuant to
      any indenture or agreement to which Borrower or any of its properties is
      bound.

   5. Effect: Each reference in the Agreement to "this Agreement," "the
Agreement," "hereunder", "herein", "hereof', or words of like import referring
to the Agreement shall mean and be a reference to the Agreement as amended by
this Amendment.

   6. Affirmation: Except as specifically amended above, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed.

   7. Choice of Law: THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER AND SUBJECT TO, AND SHALL BE CONSTRUED FOR All PURPOSES AND IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES.

   8. Integration. This Amendment and the documents and instruments referred
to herein constitute a single, integrated written contract expressing the
entire agreement of the parties hereto relative to the subject matter hereof.
No covenants, agreements, representations or warranties of any kind whatsoever
have been made by any party hereto, except as specifically set forth in this
Amendment.

   9. Counterparts: This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

   10. Condition Precedent. As a condition precedent to the effectiveness of
this Amendment, Borrower shall have executed and delivered to Bank a 14th
Amendment to the 1990 Agreement, an Amendment to the 2000 Agreement and a new
Promissory Note evidencing the term loan thereunder, all such documents to be
in form and substance satisfactory to Bank.

   WITNESS the due execution hereof as of the date first above written.

                              AMENDMENT - Page 2



BANK OF THE WEST                                    MICREL INCORPORATED


By: /S/ Tien Lim                               By: /S/ Raymond D. Zinn
    --------------                               ----------------------------
    Tien Lim,                                          Raymond D. Zinn,
Assistant Vice President                        President, CEO and Chairman
                                                   of the Board Directors

                                               By: /S/Richard D. Crowley, Jr.
                                                 ----------------------------
                                                 Vice President, Finance and
                                                 Chief Financial Officer