MONOLITHIC POWER SYSTEMS, INC.
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
 
This Second Amendment to the Employment Agreement (the “Amendment”) is made as
of March 3, 2011 (the “Start Date”), by and between Monolithic Power Systems,
Inc. (the “Company”) and Deming Xiao (the “Executive”).
 
RECITALS
 
WHEREAS, the Company and the Executive entered into that certain Employment
Agreement dated March 10, 2008, as amended by that certain Amendment to
Employment Agreement dated as of December 16, 2008 (the “Agreement”).
 
WHEREAS, the Company and the Executive wish to amend the Agreement to provide an
additional benefit to Employee.
 
NOW, THEREFORE, the Company and the Executive agree that in consideration of the
foregoing and the promises and covenants contained herein, the parties agree as
follows:
 
AGREEMENT
 
1.           Additional Definitions.
 
Section 1 of the Agreement is hereby amended by adding the following at the end
thereof:
 
“(e)           ‘Apartment’ means that residential apartment in Chengdu, China,
having the address of 成都市高新区天泰路265号 华敏世家1栋1单元15层1502号
Hua Min Shi Jia Apartment NO. 1 Building  Room Number 1502
No. 265, Tiantai Road, High-tech Zone, Chengdu Sichuan PRC, which is currently
owned by the Subsidiary.
 
(f)           ‘LLC Equity’ means the entire one-hundred percent (100%) ownership
interest in the LLC.
 
(g)           ‘LLC’ shall mean a newly formed limited liability company
organized under the laws of Delaware under the name Hue Ming LLC.
 
(h)           ‘Start Date’ shall mean the effective date of this Second
Amendment to Employment Agreement.
 
(i)           ‘Subsidiary’ means Chengdu Monolithic Power Systems Co., Ltd., a
wholly-foreign owned enterprise organized under the laws of China, which is
wholly-owned by the Company.”
 
 
 

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2.           Apartment.
 
The Agreement is hereby amended by adding the following after section 22
thereof:
 
“2.3           Apartment
 
(a)           The Company will form the LLC.  The Company will transfer the LLC
Equity to the Executive, subject to the restrictions described below.
 
(b)           The Company shall cause the Subsidiary to enter a contract with
the LLC.  Such contract will require the Subsidiary, as soon as the Executive's
interest in the LLC Equity is 100% vested, to convey (without any further
consideration) title to the Apartment, free of any mortgages, to the LLC or any
person or legal entity designated by the LLC.
 
(c)           The beneficial interest of the Executive in the LLC Equity shall
vest ratably over five (5) years.  Thus, one (1) year after the Start Date, his
vested interest will be 20%, 40% two (2) years after Start Date, etc.  Vesting
shall occur only on each anniversary of the Start Date, and there shall be no
partial vesting between anniversaries.
 
(d)           After five (5) years of continuous employment after the Start
Date, the Executive's beneficial interest in the LLC Equity will be 100% vested
and be free of any restrictions.
 
(e)           In the event that the Executive becomes entitled to vesting
acceleration of Equity Grants pursuant to Section 7(b) of this Agreement, he
shall be entitled to the same vesting acceleration with respect to the LLC
Equity.
 
(f)           In the event that the Executive resigns without Good Reason, dies,
or suffers Disability, or the Company terminates his employment for Cause, then
vesting of the LLC Equity shall cease as of the date of resignation or
termination.  In the event that the Executive's employment with the Company ends
before his interest in the LLC Equity is 100% vested, then:
 
 
(i)
The Company shall cause the fair market value of the LLC Equity (the "FMV") to
be determined by appraisal;

 
 
(ii)
The Executive (or his estate) shall have the right to purchase the unvested
interest in the LLC Equity from the Company for a cash price equal to the FMV of
the LLC Equity multiplied by the unvested percentage; and

 
 
(iii)
If the Executive (or his estate) does not elect to purchase the unvested
interest in the LLC Equity, then the Company shall purchase, and the Executive
(or his estate) shall sell, his vested interest in the LLC Equity for a cash
price equal to the FMV of the LLC Equity multiplied by the vested percentage.

 
 
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(g)           Until his interest in the LLC Equity is 100% vested, the Executive
shall not sell, transfer, mortgage or otherwise encumber the LLC Equity.
 
3.           Full Force and Effect.  To the extent no expressly amended hereby,
the Agreement shall remain in full force and effect.
 
4.           Entire Agreement.  This Second Amendment and the Agreement
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
 
5.           Successors and Assigns.  This Second Amendment and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns, and legal representatives.
 
6.           Counterparts.  This Second Amendment may be executed in
counterparts, all of which together shall constitute one instrument, and each of
which may be executed by less than all of the parties to this Second Amendment.
 
7.           Governing Law.  This Second Amendment shall be governed in all
respects by the internal laws of California, without regard to principles of
conflicts of law.
 
8.           Amendment.  Any provision of this Second Amendment may be amended,
waived o terminated by a written instrument signed by the Company and the
Employee.
 
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be
executed as of the date first set forth above.
 
                                                              

DEMING XIAO     MONOLITHIC POWER SYSTEMS, INC.          
/s/ Deming Xiao
  /s/ Michael Hsing  
 
Signature
  Signature          
Deming Xiao
  Michael Hsing  
Print Name      
  Print Name               President & CEO          
Print Title
 

(Signature Page to Second Amendment to Deming Xiao Employment Agreement)

 
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