SUMMARY

                 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
               COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER
                     THE SECURITIES ACT OF 1933, AS AMENDED.


                        CYPRESS SEMICONDUCTOR CORPORATION
                             1994 STOCK OPTION PLAN

       (As amended and Restated on January 25, 1996 and November __, 1996)

1.   Purposes of the Plan. The purposes of this Stock Option Plan are:

     o    to attract and retain the best  available  personnel  for positions of
          substantial responsibility;

     o    to  provide   additional   incentive  to   Employees,   Directors  and
          Consultants and Outside Directors; and

     o    to promote the success of the Company's business.

2.   Components of the Plan. The Plan provides for:

     o    the  discretionary  granting of Options to  Employees,  Directors  and
          Consultants,  which Options may be either  Incentive  Stock Options or
          Nonstatutory Stock Options,  as determined by the Administrator at the
          time of grant; and

     o    the grant of Nonstatutory  Stock Options to Outside Directors pursuant
          to an automatic, non-discretionary formula.

3.   Definitions. As used herein, the following definitions shall apply:

     (a)  "Administrator"  means the Board or any of its  Committees as shall be
administering the Plan, in accordance with Section 5 of the Plan.

     (b)  "Applicable  Laws"  means  the  legal  requirements  relating  to  the
administration  of stock  option plans under U.S.  state  corporate  laws,  U.S.
Federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the common stock is listed or quoted and the applicable  laws of
any foreign country or jurisdiction where options are, or will be, granted under
the Plan.

     (c) "Board" means the Board of Directors of the Company.

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     (d) "Code" means the Internal Revenue Code of 1986, as amended.

     (e) "Committee" means a Committee appointed by the Board in accordance with
Section 5 of the Plan.

     (f) "Common Stock" means the Common Stock of the Company.

     (g)  "Company"  means  Cypress   Semiconductor   Corporation,   a  Delaware
corporation.

     (h)  "Consultant"  means any person,  including an advisor,  engaged by the
Company or a Parent or Subsidiary to render services to such entity.

     (i) "Continuous Status as a Director" means that the Director  relationship
is not interrupted or terminated.

     (j)  "Continuous  Status  as an  Employee  or  Consultant"  means  that the
employment  or  consulting  relationship  with  the  Company  or any  Parent  or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered  interrupted in the case of: (i) any leave of
absence  approved by the Company,  including sick leave,  military leave, or any
other personal leave;  provided,  however,  that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract  (including  certain  Company
policies) or statute; provided,  further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's  Incentive  Stock  Option  shall cease to be treated as an  Incentive
Stock  Option and will be  treated  for tax  purposes  as a  Nonstatutory  Stock
Option;  or (ii)  transfers  between  locations  of the  Company or between  the
Company, its Parent, its Subsidiaries or its successor.

     (k) "Director" means a member of the Board.

     (l) "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.

     (m) "Employee" means any person, including Officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company.  Neither service as a
Director nor payment of a director's  fee by the Company  shall be sufficient to
constitute "employment" by the Company.

     (n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (o) "Existing Directors" means members of the Board on October 12, 1988.


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     (p) "Fair Market  Value" means,  as of any date,  the value of Common Stock
determined as follows:

          (i) If the Common Stock is listed on any established stock exchange or
     a national market system,  including without limitation the National Market
     System of the National  Association of Securities  Dealers,  Inc. Automated
     Quotation  ("NASDAQ")  System,  the Fair Market  Value of a Share of Common
     Stock  shall be the  closing  sale price for such stock (or the mean of the
     closing bid and asked prices, if no sales were reported), as quoted on such
     exchange  (or the exchange  with the  greatest  volume of trading in Common
     Stock) or system on the date of such  determination  (or, in the event such
     date is not a trading day, the trading day immediately prior to the date of
     such  determination),  as reported in The Wall Street Journal or such other
     source as the Administrator deems reliable; or

          (ii) If the Common  Stock is quoted on the NASDAQ  system  (but not on
     the National Market System thereof) or is regularly  quoted by a recognized
     securities  dealer but  selling  prices are not  reported,  the Fair Market
     Value of a Share of Common  Stock  shall be the mean of the closing bid and
     asked prices for such stock on the date of such  determination  (or, in the
     event such date is not a trading day, the trading day immediately  prior to
     the date of such determination),  as reported in The Wall Street Journal or
     such other source as the Administrator deems reliable; or

          (iii) In the absence of an  established  market for the Common  Stock,
     the  Fair  Market  Value  shall  be   determined   in  good  faith  by  the
     Administrator.

     (q)  "Incentive  Stock  Option"  means an Option  intended to qualify as an
incentive  stock  option  within the  meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (r) "Nonstatutory  Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.

     (s) "Notice of Grant" means a written notice  evidencing  certain terms and
conditions  of an individual  Option  grant.  The Notice of Grant is part of the
Option Agreement.

     (t)  "Officer"  means a person who is an officer of the Company  within the
meaning  of  Section  16 of the  Exchange  Act and  the  rules  and  regulations
promulgated thereunder.

     (u)  "Option"  means a stock  option  granted  pursuant  to the Plan or the
Terminated Plans.

     (v) "Option Agreement" means a written agreement between the Company and an
Optionee  evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.


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     (w) "Option Exchange Program" means a program whereby  outstanding  options
are surrendered in exchange for options with a lower exercise price.

     (x)  "Optioned  Stock"  means  the  Common  Stock  subject  to  an  Option.

     (y) "Optionee" means an Employee,  Consultant or Outside Director who holds
an outstanding Option.

     (z)  "Outside  Director"  means  a  Director  who  is not  an  Employee  or
Consultant.

     (aa)  "Parent"  means a  "parent  corporation",  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

     (bb) "Plan" means this 1994 Stock Option Plan, as amended.

     (cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any  successor to
Rule 16b-3,  as in effect when discretion is being exercised with respect to the
Plan.

     (dd) "Share" means a share of the Common  Stock,  as adjusted in accordance
with Section 14 of the Plan.

     (ee)  "Subsidiary"  means  a  "subsidiary  corporation",   whether  now  or
hereafter existing, as defined in Section 424(f) of the Code.

     (ff)  "Terminated  Plans" means the Company's 1985  Incentive  Stock Option
Plan and 1988 Directors'  Stock Option Plan,  which are terminated upon adoption
of,  and  superseded  by,  this Plan;  however,  outstanding  Options  under the
Terminated  Plans  shall  continue  in full  force  in  effect,  subject  to the
provisions of such Options and this Plan.

     4. Stock Subject to the Plan.  Subject to Section 14 of the Plan, the total
number of Shares reserved and available for issuance under the Plan is 3,455,791
Shares (pre-split)  (including 455,791 Shares (pre-split)  previously authorized
but  unissued  under the  Terminated  Plans),  plus  shares  subject  to options
outstanding  under the  Terminated  Plans at the time of  adoption  of this plan
which are subsequently forfeited in connection with termination of employment or
other failure to exercise, increased on the first day of each new fiscal year of
the Company from and  including the 1995 fiscal year by a number of Shares equal
to  4.5% of the  number  of  Shares  outstanding  as of the  last  business  day
preceding  each such first day of each new fiscal year.  However,  the number of
Shares  available  for issuance  pursuant to Incentive  Stock  Options shall not
include  the  foregoing  annual  increase,   which  shall  be  used  solely  for
Nonstatutory Stock Options.

     Subject to Section 14 of the Plan,  if any Shares  that have been  optioned
under an Option (whether granted under this Plan or the Terminated  Plans) cease
to be subject to such Option (other than through exercise of the Option),  or if
any Option granted hereunder or thereunder is forfeited, or any Option otherwise
terminates prior to the issuance of Common Stock to the

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participant,  the  Shares  that  were  subject  to such  Option  shall  again be
available for  distribution  in connection  with future  Options under the Plan.
Shares that have  actually been issued under the Plan upon exercise of an Option
shall not in any event be  returned  to the Plan and shall not become  available
for future distribution under the Plan.

     5. Administration of the Plan.

     (a) Procedure.

          (i) Multiple  Administrative  Bodies.  The Plan may be administered by
     different  Committees  with  respect  to.  Different  groups of  Employees,
     Consultants and Directors.

          (ii) Section 162(m). To the extent that the  Administrator  determines
     it  to   be   desirable   to   qualify   Options   granted   hereunder   as
     "performance-based  compensation"  within the meaning of Section  162(m) of
     the Code,  the Plan shall be  administered  by a  Committee  of two or more
     "outside directors" within the meaning of Section 162(m) of the Code.

          (iii) Rule  16b-3.  To the extent  desirable  to qualify  transactions
     hereunder  as  exempt  under  Rule  16b-3,  the  transactions  contemplated
     hereunder  shall be  structured to satisfy the  requirements  for exemption
     under Rule 16b-3.

          (iv) Other  Administration.  Other than as  provided  above,  the Plan
     shall be administered by (A) the Board or (B) a Committee,  which committee
     shall be constituted to satisfy Applicable Laws.

          (v)  Administration  With  Respect  to  Automatic  Grants  to  Outside
     Directors.  Automatic  Grants to Outside  Directors  shall be pursuant to a
     non-discretionary  formula as set forth in Section 11 hereof and  therefore
     shall not be subject to any discretionary administration.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a  Committee,  subject to the  specific  duties  delegated by the
Board to such  Committee,  the  Administrator  shall have the authority,  in its
discretion:

          (i) to  determine  the Fair  Market  Value  of the  Common  Stock,  in
     accordance with Section 3(p) of the Plan;

          (ii) to  select  the  Consultants,  Directors  and  Employees  to whom
     Options may be granted hereunder;

          (iii) to  determine  whether  and to what  extent  Options are granted
     hereunder;

          (iv) to  determine  the number of shares of Common Stock to be covered
     by each Option granted hereunder;


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          (v) to approve forms of agreement for use under the Plan;

          (vi) to determine the terms and conditions,  not inconsistent with the
     terms  of the  Plan,  of any  Option  granted  hereunder.  Such  terms  and
     conditions include, but are not limited to, the exercise price, the time or
     times when  Options  may be  exercised  (which may be based on  performance
     criteria),  any vesting acceleration or waiver of forfeiture  restrictions,
     and any  restriction  or  limitation  regarding any Option or the shares of
     Common Stock  relating  thereto,  based in each case on such factors as the
     Administrator, in its sole discretion, shall determine;

          (vii) to reduce the  exercise  price of any Option to the then current
     Fair Market Value if the Fair Market  Value of the Common Stock  covered by
     such Option shall have declined since the date the Option was granted;

          (viii) to  construe  and  interpret  the terms of the Plan and Options
     granted pursuant to the Plan;

          (ix) to prescribe, amend and rescind rules and regulations relating to
     the Plan, including rules and regulations relating to sub-plans established
     for the purpose of qualifying for preferred tax treatment under foreign tax
     laws;

          (x) to modify or amend each Option  (subject  to Section  16(c) of the
     Plan);

          (xi) to allow  Optionees to satisfy  withholding  tax  obligations  by
     electing  to have the  Company  withhold  from the Shares to be issued upon
     exercise of an Option or Stock  Purchase Right that number of Shares having
     a Fair Market Value equal to the amount  required to be withheld.  The Fair
     Market Value of the Shares to be withheld  shall be  determined on the date
     that the amount of tax to be withheld is to be determined. All elections by
     an Optionee to have Shares  withheld for this purpose shall be made in such
     form and under such conditions as the  Administrator  may deem necessary or
     advisable;

          (xii) to authorize  any person to execute on behalf of the Company any
     instrument  required to effect the grant of an Option previously granted by
     the Administrator;

          (xiii) to institute an Option Exchange Program;

          (xiv) to determine the terms and  restrictions  applicable to Options;
     and

          (xv) to make all other  determinations  deemed  necessary or advisable
     for administering the Plan.

     (c) Effect of  Administrator's  Decision.  The  Administrator's  decisions,
determinations and  interpretations  shall be final and binding on all Optionees
and any other holders of Options.


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     6. Eligibility.

     (a) Discretionary Stock Options.  Nonstatutory Stock Options may be granted
to Employees, Directors and Consultants.  Incentive Stock Options may be granted
only to Employees. If otherwise eligible, an Employee or Consultant who has been
granted an Option may be granted additional Options.

     (b) Outside  Director Stock Options.  Outside  Directors shall also receive
Nonstatutory Stock Options pursuant to Section 11 hereof.

     7. Limitations.

     (a) Each  Option  shall be  designated  in the  Notice  of Grant or  Option
Agreement as either an Incentive  Stock Option or a  Nonstatutory  Stock Option.
However,  notwithstanding  such  designations,  to the extent that the aggregate
Fair Market Value:

          (i) of Shares subject to an Optionee's incentive stock options granted
     by the Company, any Parent or Subsidiary, which

          (ii) become  exercisable  for the first time during any calendar  year
     (under all plans of the Company or any Parent or Subsidiary)

exceeds  $100,000,  such excess Options shall be treated as  Nonstatutory  Stock
Options.  For purposes of this Section  7(a),  incentive  stock options shall be
taken into account in the order in which they were granted,  and the Fair Market
Value of the Shares shall be determined as of the time of grant.

     (b) Neither the Plan nor any Option shall confer upon an Optionee any right
with respect to continuing the Optionee's employment or consulting  relationship
or tenure as a director  with the Company,  nor shall they  interfere in any way
with the Optionee's,  the Company's,  or the Company's  stockholders',  right to
terminate  such  employment or consulting  relationship  or tenure as a director
with the Company at any time, with or without cause.

     (c)  The  following  limitations  shall  apply  to  grants  of  Options  to
Employees:

          (i) No Employee  shall be granted,  in any fiscal year of the Company,
     Options to purchase more than 500,000 Shares.

          (ii) The foregoing  limitation  shall be adjusted  proportionately  in
     connection with any change in the Company's  capitalization as described in
     Section 14(a).

          (iii) If an  Option  is  canceled  (other  than in  connection  with a
     transaction  described in Section 14), the canceled  Option will be counted
     against the limit set forth in Section  7(c)(i).  For this purpose,  if the
     exercise price of an Option is reduced,  the transaction will be treated as
     a cancellation of the Option and the grant of a new Option.


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     8. Term of Plan. The Plan shall become effective upon the date, in 1994, of
its approval by the stockholders of the Company. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 16 of the Plan.

     9. Term of Option. The term of each Option shall be ten (10) years from the
date of grant or such  shorter term as may be provided in the Notice of Grant or
Option  Agreement.  In the  case of an  Incentive  Stock  Option  granted  to an
Optionee  who, at the time the  Incentive  Stock  Option is granted,  owns stock
representing  more than ten percent  (10%) of the voting power of all classes of
stock of the  Company or any  Parent or  Subsidiary,  the term of the  Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Notice of Grant or Option Agreement.

     10. Option Exercise Price and Consideration.

     (a)  Exercise  Price.  The per share  exercise  price for the  Shares to be
issued   pursuant  to  exercise  of  an  Option  shall  be   determined  by  the
Administrator, subject to the following:

          (i) In the case of an Incentive Stock Option

               (A) granted to an Employee who, at the time the  Incentive  Stock
          Option is granted, owns stock representing more than ten percent (10%)
          of the  voting  power of all  classes  of stock of the  Company or any
          Parent or  Subsidiary,  the per Share  exercise price shall be no less
          than 110% of the Fair Market Value per Share on the date of grant.

               (B) granted to any Employee  other than an Employee  described in
          paragraph (A) immediately above, the per Share exercise price shall be
          no less than one hundred  (100%) of the Fair Market Value per Share on
          the date of grant.

          (ii) In the  case  of a  Nonstatutory  Stock  Option,  the  per  Share
     exercise  price  shall be no less than  eighty-five  percent  (85%) of Fair
     Market Value per Share on the date of grant.  In the case of a Nonstatutory
     Stock Option intended to qualify as "performance-based compensation" within
     the meaning of Section  162(m) of the Code,  the per Share  exercise  price
     shall be no less than 100% of the Fair  Market  Value per Share on the date
     of grant.

     (b) Waiting  Period and Exercise  Dates.  At the time an Option is granted,
the Administrator  shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised.  In so doing, the Administrator may specify that an Option may not
be exercised until the completion of a service period.

     (c) Form of  Consideration.  Except with respect to automatic  stock option
grants to Outside  Directors,  the Administrator  shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator  shall determine the
acceptable form of consideration at the time of grant. Such


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form of  consideration  shall be set  forth  in the  Notice  of Grant or  Option
Agreement and may, as determined by the Administrator, consist entirely of:

          (i) cash;

          (ii) check;

          (iii) promissory note;

          (iv)  other  Shares  which  (A) in the case of  Shares  acquired  upon
     exercise of an option,  have been owned by the  Optionee  for more than six
     months on the date of  surrender,  and (B) have a Fair Market  Value on the
     date of surrender equal to the aggregate exercise price of the Shares as to
     which said Option shall be exercised;

          (v) delivery of a properly executed exercise notice together with such
     other  documentation as the  Administrator  and the broker,  if applicable,
     shall  require to effect an  exercise  of the Option  and  delivery  to the
     Company of the sale or loan proceeds required to pay the exercise price;

          (vi) any combination of the foregoing methods of payment; or

          (vii) such other  consideration and method of payment for the issuance
     of Shares to the extent permitted by Applicable Laws.

     11. Automatic Stock Option Grants to Outside Directors.

     (a)  Procedure  for  Grants.  All grants of  Options  to Outside  Directors
hereunder shall be automatic and non-discretionary and shall be made strictly in
accordance with the following provisions:

          (i) Each Outside Director shall be automatically  granted an Option to
     purchase  80,000  Shares (the "First  Option")  upon the date on which such
     person  first  becomes  a  Director,   whether  through   election  by  the
     stockholders  of the Company or  appointment  by the Board of  Directors to
     fill a vacancy.

          (ii) After the First Option has been  granted to an Outside  Director,
     such Outside Director shall  thereafter be automatically  granted an Option
     to purchase 20,000 Shares (a "Subsequent  Option") on a date one year after
     the date of grant of the  First  Option  and on the  same  date  each  year
     thereafter.

          (iii)  Notwithstanding  the provisions of  subsections  (ii) and (iii)
     hereof,  in the event that an  automatic  grant  hereunder  would cause the
     number of Shares subject to  outstanding  Options plus the number of Shares
     previously  purchased  upon  exercise  of  Options  to exceed the number of
     Shares  available  for issuance  under the Plan,  then each such  automatic
     grant shall be for


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     that number of Shares  determined  by dividing  the total  number of Shares
     remaining  available  for grant by the number of Outside  Directors  on the
     automatic  grant date. Any further grants shall then be deferred until such
     time,  if any, as additional  Shares  become  available for grant under the
     Plan.

          (iv) The terms of an Option granted hereunder shall be as follows:

               (A) the term of the Option shall be ten (10) years.

               (B) the  Option  shall be  exercisable  only  while  the  Outside
          Director  remains a Director  of the  Company,  except as set forth in
          subsection (c) hereof.

               (C) the exercise price per Share shall be 100% of the fair market
          value per Share on the date of grant of the Option.

               (D) the Option shall become exercisable as follows:

                    (1) If it is a First  Option,  it shall  become  exercisable
               cumulatively  in installments of 16,000 Shares per year beginning
               on the date one year after such Director's  election to the Board
               of Directors.

                    (2)  If  it  is  a  Subsequent   Option,   it  shall  become
               exercisable cumulatively in installments of 4,000 Shares per year
               beginning  on the date one  year  after  the date on which it was
               granted.

     (b)  Consideration  for Exercising  Outside  Director  Stock  Options.  The
consideration  to be paid  for the  Shares  to be  issued  upon  exercise  of an
automatic Outside Director Option shall consist entirely of cash,  check,  other
Shares of Common Stock which (i) either have been owned by the Optionee for more
than six (6)  months  or were not  acquired,  directly  or  indirectly  from the
Company and (ii) have a fair market value on the date of surrender  equal to the
aggregate  exercise  price  of the  Shares  as to  which  said  Option  shall be
exercised, or any combination of such methods of payment.

     (c) Post-Directorship Exercisability.

          (i) Termination of Status as a Director. If an Outside Director ceases
     to serve as a Director,  he may, but only within ninety days (90) after the
     date he ceases to be a Director of the Company,  exercise his Option to the
     extent that he was entitled to exercise it at the date of such termination.
     To the extent that he was not entitled to exercise an Option at the date of
     such  termination,  or if he does not  exercise  such Option  (which he was
     entitled to exercise)  within the time specified  herein,  the Option shall
     terminate.

          (ii) Disability of Director. Notwithstanding the provisions of Section
     11(c)(i)  above,  in the event a Director is unable to continue his service
     as a Director with the Company as a result of his  Disability,  he may, but
     only within six (6) months from the date of


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     termination,  exercise his Option to the extent he was entitled to exercise
     it at the date of such termination.  To the extent that he was not entitled
     to  exercise  the  Option  at the  date of  termination,  or if he does not
     exercise  such Option  (which he was entitled to exercise)  within the time
     specified herein, the Option shall terminate.

          (iii) Death of Director. In the event of the death of an Optionee:

               (A) during the term of the Option who is at the time of his death
          a Director of the Company and who shall have been in Continuous Status
          as a Director since the date of grant of the Option, the Option may be
          exercised,  at any time  within six (6) months  following  the date of
          death, by the Optionee's  estate or by a person who acquired the right
          to  exercise  the Option by bequest  or  inheritance,  but only to the
          extent  of the right to  exercise  that  would  have  accrued  had the
          Optionee continued living and remained in Continuous Status a Director
          for twelve (12) months after the date of death; or

               (B) within thirty (30) days after the  termination  of Continuous
          Status as a Director, the Option may be exercised,  at any time within
          six (6) months  following the date of death, by the Optionee's  estate
          or by a person  who  acquired  the  right to  exercise  the  Option by
          bequest  or  inheritance,  but  only to the  extent  of the  right  to
          exercise that had accrued at the date of termination.

     12. Exercise of Option.

     (a) Procedure for Exercise;  Rights as a  Stockholder.  Any Option  granted
hereunder  shall be  exercisable  according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
options granted hereunder shall be tolled during any unpaid leave or absence. An
Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives:  (i) written
notice of exercise (in  accordance  with the Option  Agreement)  from the person
entitled  to  exercise  the  Option,  and (ii) full  payment for the Shares with
respect  to which the  Option is  exercised.  Full  payment  may  consist of any
consideration  and  method  of  payment  authorized  by  the  Administrator  and
permitted by the Option  Agreement and the Plan.  Shares issued upon exercise of
an Option  shall be issued in the name of the  Optionee  or, if requested by the
Optionee,  in the name of the  Optionee  and his or her spouse.  Until the stock
certificate  evidencing  such Shares is issued (as evidenced by the  appropriate
entry on the books of the Company or of a duly authorized  transfer agent of the
Company),  no  right to vote or  receive  dividends  or any  other  rights  as a
stockholder shall exist with respect to the Optioned Stock,  notwithstanding the
exercise of the Option.  The  Company  shall issue (or cause to be issued)  such
stock certificate promptly after the Option is exercised.  No adjustment will be
made for a dividend  or other  right for which the  record  date is prior to the
date the stock  certificate  is issued,  except as provided in Section 14 of the
Plan.


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     Exercising  an Option in any  manner  shall  decrease  the number of Shares
thereafter  available,  both for  purposes  of the Plan and for sale  under  the
Option, by the number of Shares as to which the Option is exercised.

     (b) Termination of Employment or Consulting Relationship.  Upon termination
of an Optionee's Continuous Status as an Employee or Consultant, other than upon
the Optionee's  death or Disability,  the Optionee may exercise the Option,  but
only within such period of time as is specified in the Notice of Grant or Option
Agreement,  and only to the extent that the Optionee was entitled to exercise it
at the date of  termination  (but in no event later than the  expiration  of the
term of such Option as set forth in the Notice of Grant or Option Agreement). In
the absence of a specified time in the Notice of Grant or Option Agreement,  the
Option  shall  remain  exercisable  for three months  following  the  Optionee's
termination of Continuous Status as an Employee or Consultant. In the case of an
Incentive  Stock  Option,  such period of time shall not exceed three (3) months
from the date of termination;  in the case of a Nonstatutory Stock Option,  such
period of time  shall not  exceed  twenty-  four  (24)  months  from the date of
termination.  If, at the date of  termination,  the  Optionee is not entitled to
exercise the entire Option,  the Shares covered by the unexercisable  portion of
the Option shall revert to the Plan.  If, after  termination,  the Optionee does
not exercise the Option  within the time  specified  by the  Administrator,  the
Option shall  terminate,  and the Shares  covered by such Option shall revert to
the Plan.

     (c)  Disability  of Optionee.  In the event that an  Optionee's  Continuous
Status as an Employee or  Consultant  terminates  as a result of the  Optionee's
Disability,  the  Optionee may exercise his or her Option at any time within (i)
for discretionary stock options, six (6) months or such other period of time not
exceeding  twelve (12) months,  as is specified in the Notice of Grant or Option
Agreement,  or (ii) for automatic stock option grants to Outside Directors,  six
(6)  months  from the date of such  termination.  Any such  Options  may only be
exercised  to the extent that the  Optionee  was  entitled to exercise it at the
date of such  termination (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant or Option Agreement).  If, at
the date of  termination,  the  Optionee is not  entitled to exercise his or her
entire  Option,  the Shares covered by the  unexercisable  portion of the Option
shall revert to the Plan. If, after termination,  the Optionee does not exercise
his or her Option within the time specified herein,  the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

     (d) Death of Optionee. In the event of the death of an Optionee:

          (i)  during  the term of the Option who is at the time of his death an
     of the Company and who shall have been in Continuous  Status as an Employee
     or  Consultant  since the date of grant of the  Option,  the  Option may be
     exercised,  at any time within six (6) months  following the date of death,
     by the Optionee's  estate or by a person who acquired the right to exercise
     the Option by bequest or  inheritance,  but only to the extent of the right
     to exercise that would have accrued had the Optionee  continued  living and
     remained in  Continuous  Status an Employee or  Consultant  for twelve (12)
     months after the date of death; or


                                      -12-

<PAGE>



          (ii)  within  thirty  (30) days after the  termination  of  Continuous
     Status as an Employee or  Consultant,  the Option may be exercised,  at any
     time within six (6) months  following the date of death,  by the Optionee's
     estate or by a person  who  acquired  the right to  exercise  the Option by
     bequest or  inheritance,  but only to the  extent of the right to  exercise
     that had accrued at the date of termination.

     13.  Non-Transferability  of Options.  Unless  determined  otherwise by the
Administrator,  an  Option  may not be sold,  pledged,  assigned,  hypothecated,
transferred,  or disposed of in any manner  other than by will or by the laws of
descent  or  distribution  and may be  exercised,  during  the  lifetime  of the
Optionee,   only  by  the  Optionee.   If  the  Administrator  makes  an  Option
transferable,  such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

     14. Adjustments Upon Changes in Capitalization,  Dissolution, Merger, Asset
Sale or Change of Control.

     (a)  Changes  in  Capitalization.  Subject  to any  required  action by the
stockholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option,  and the number of shares of Common  Stock which have
been  authorized for issuance under the Plan but as to which no Options have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration of an Option,  as well as the price per share of Common Stock covered
by each such  outstanding  Option,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  shares of Common  Stock  resulting
from a  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification  of the Common Stock,  or any other increase or decrease in the
number  of  issued  shares  of  Common  Stock   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company,  with respect to discretionary Options granted under
the Plan (but not with  respect to Options  granted  to Outside  Directors)  the
Board may, in the exercise of its sole  discretion  in such  instances,  declare
that any such Option  shall  terminate  as of a date fixed by the Board and give
each  Optionee  the right to exercise his or her Option as to all or any part of
the Optioned Stock,  including Shares as to which the Option would not otherwise
be exercisable.

     (c) Merger or Asset Sale.  In the event of a merger of the Company  with or
into another corporation,  or the sale of substantially all of the assets of the
Company,  each outstanding Option shall be assumed or an equivalent option shall
be  substituted  by the successor  corporation  or a Parent or Subsidiary of the
successor corporation.  With respect to a discretionary Option granted under the
Plan (but not with  respect  to  Options  granted  to  Outside  Directors),  the
Administrator  may,


                                      -13-

<PAGE>



in the  exercise  of its  sole  discretion  and in lieu of  such  assumption  or
substitution, provide for the Optionee to have the right to exercise such Option
as to all of  the  Optioned  Stock,  including  as to  Shares  which  would  not
otherwise be exercisable.  With respect to Options granted to Outside  Directors
on or after the  Effective  Date of the Plan,  in the event  that the  successor
corporation  does not agree to assume such Options or to  substitute  equivalent
options, each such outstanding Option shall become fully vested and exercisable,
including as to Shares as to which it would not otherwise be exercisable, unless
the Board,  in its  discretion,  determines  otherwise.  With respect to Options
granted to Outside  Directors  prior to the  Effective  Date of the Plan, in the
event that the successor corporation does not agree to assume such Options or to
substitute equivalent options, such Options shall terminate.

     If the Administrator makes a discretionary Option fully exercisable in lieu
of assumption or  substitution  in the event of a merger or sale of assets,  the
Administrator  shall  notify  the  Optionee  that  the  Option  shall  be  fully
exercisable  for a period of thirty (30) days from the date of such notice,  and
the Option will terminate upon the expiration of such period.

     For the purposes of this subsection, the Option shall be considered assumed
if,  following  the merger or sale of assets,  the option  confers  the right to
purchase,  for each Share of Optioned  Stock  subject to the Option  immediately
prior to the merger or sale of assets,  the consideration  (whether stock, cash,
or other  securities  or  property)  received in the merger or sale of assets by
holders  of  Common  Stock  for each  Share  held on the  effective  date of the
transaction (and if holders were offered a choice of consideration,  the type of
consideration  chosen by the holders of a majority of the  outstanding  Shares);
provided,  however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor  corporation  or its Parent,
the Administrator  may, with the consent of the successor  corporation,  provide
for the  consideration to be received upon the exercise of the Option,  for each
Share of Optioned Stock subject to the Option,  to be solely common stock of the
successor  corporation or its Parent equal in fair market value to the per share
consideration  received  by  holders  of Common  Stock in the  merger or sale of
assets.

     15. Option Date of Grant.  The date of grant of an Option shall be, for all
purposes,  the date on which the Administrator makes the determination  granting
such Option,  or such other later date as is  determined  by the  Administrator.
Notice  of the  determination  shall  be  provided  to each  Optionee  within  a
reasonable time after the date of such grant.

     16. Amendment and Termination of the Plan.

     (a)  Amendment  and  Termination.  The Board may at any time amend,  alter,
suspend or terminate the Plan.

     (b) Stockholder Approval.  The Company shall obtain stockholder approval of
any Plan  amendment  to the  extent  necessary  and  desirable  to  comply  with
Applicable Laws.

     (c)  Effect  of  Amendment  or  Termination.   No  amendment,   alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise

                                      -14-

<PAGE>



between the Optionee and the  Administrator,  which agreement must be in writing
and signed by the Optionee and the Company.

     17. Conditions Upon Issuance of Shares.

     (a) Legal  Compliance.  Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with  Applicable  Laws and shall be further  subject to
the approval of counsel for the Company with respect to such compliance.

     (b)  Investment  Representations.  As a  condition  to the  exercise  of an
Option,  the Company may require the person  exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company,  such a representation  is
required.

     18. Liability of Company.

     (a) Inability to Obtain  Authority.  The inability of the Company to obtain
authority  from any  regulatory  body having  jurisdiction,  which  authority is
deemed by the Company's  counsel to be necessary to the lawful issuance and sale
of any Shares  hereunder,  shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     19. Reservation of Shares. The Company,  during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.


                                      -15-

<PAGE>



                        CYPRESS SEMICONDUCTOR CORPORATION
                             1994 STOCK OPTION PLAN
                                 NOTICE OF GRANT

     Unless otherwise  defined herein,  capitalized terms used herein shall have
the same meanings as set forth in the Plan.

[Optionee's Name and Address]

     You have been  granted an option to purchase  Common  Stock of the Company,
subject to the terms and  conditions of the Plan and this Option  Agreement,  as
follows:

         Grant Number                         _________________________

         Date of Grant                        _________________________

         Vesting Commencement Date            _________________________

         Exercise Price per Share             $________________________

         Total Number of Shares Granted       _________________________

         Total Exercise Price                 $_________________________

         Type of Option:                      ___  Incentive Stock Option

                                              ___  Nonstatutory Stock Option

         Term/Expiration Date:                _________________________

         Vesting Schedule:

     This Option may be exercised,  in whole or in part, in accordance  with the
following schedule:

     25% of the Shares  subject to the Option shall vest twelve months after the
Vesting  Commencement  Date,  and 1/48 of the Shares subject to the Option shall
vest each month thereafter.

     Termination Period:

     This  Option  may  be  exercised  for  30  days  after  termination  of the
Optionee's  employment or  consulting  relationship  with the Company.  Upon the
death or  Disability  of the  Optionee,  this Option may be  exercised  for such
longer period as provided in the Plan. In the event of the Optionee's  change in
status from  Employee to  Consultant  or  Consultant  to  Employee,  this Option
Agreement  shall  remain in effect.  In no event shall this Option be  exercised
later than the Term/Expiration Date as provided above.

<PAGE>



                        CYPRESS SEMICONDUCTOR CORPORATION
                             1994 STOCK OPTION PLAN
                                OPTION AGREEMENT


     Unless otherwise  defined herein,  capitalized terms used herein shall have
the same meanings as set forth in the Plan.

     1. Grant of Option.  The Plan Administrator of the Company hereby grants to
the Optionee  named in the Notice of Grant  attached as Part I of this Agreement
(the "Optionee"),  an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant,  at the exercise  price per share set forth in
the Notice of Grant (the "Exercise Price"),  subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(c)
of the Plan, in the event of a conflict  between the terms and conditions of the
Plan and the  terms  and  conditions  of this  Option  Agreement,  the terms and
conditions of the Plan shall prevail.

     If designated in the Notice of Grant as an Incentive  Stock Option ("ISO"),
this Option is intended to qualify as an Incentive  Stock  Option under  Section
422 of the Code.  However,  if this Option is intended to be an Incentive  Stock
Option,  to the extent that it exceeds the $100,000 rule of Code Section  422(d)
it shall be treated as a Nonstatutory Stock Option ("NSO").

     2. Exercise of Option.

     (a) Right to  Exercise.  This  Option  is  exercisable  during  its term in
accordance  with the  Vesting  Schedule  set out in the  Notice of Grant and the
applicable  provisions  of the Plan and this Option  Agreement.  In the event of
Optionee's death,  Disability or other  termination of Optionee's  employment or
consulting  relationship,  the  exercisability  of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

     (b) Method of  Exercise.  This  Option is  exercisable  by  delivery  of an
exercise  notice,  in the form  attached as Exhibit A (the  "Exercise  Notice"),
which shall state the election to exercise  the Option,  the number of Shares in
respect of which the Option is being  exercised (the  "Exercised  Shares"),  and
such other  representations  and  agreements  as may be  required by the Company
pursuant to the provisions of the Plan.  The Exercise  Notice shall be signed by
the  Optionee  and shall be  delivered  in person  or by  certified  mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate  Exercise Price as to all Exercised  Shares.  This Option shall be
deemed to be  exercised  upon  receipt by the  Company  of such  fully  executed
Exercise Notice accompanied by such aggregate Exercise Price.

     No Shares shall be issued  pursuant to the  exercise of this Option  unless
such issuance and exercise complies with all relevant  provisions of law and the
requirements  of any stock  exchange or quotation  service upon which the Shares
are then listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.


<PAGE>



     3. Method of Payment.  Payment of the aggregate  Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

     (a) cash; or

     (b) check; or

     (c) delivery of a properly  executed  exercise  notice  together  with such
other  documentation as the Administrator  and the broker, if applicable,  shall
require to effect an exercise  of the Option and  delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

     (d) surrender of other Shares which (i) in the case of Shares acquired upon
exercise  of an option,  have been owned by the  Optionee  for more than six (6)
months on the date of  surrender,  and (ii) have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the Exercised Shares.

     4. Non-Transferability of Option. This Option may not be transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee.  The terms of
the  Plan  and this  Option  Agreement  shall  be  binding  upon the  executors,
administrators, heirs, successors and assigns of the Optionee.

     5. Term of Option.  This Option may be  exercised  only within the term set
out in the  Notice  of  Grant,  and may be  exercised  during  such term only in
accordance with the Plan and the terms of this Option Agreement.

     6. Tax  Consequences.  Some of the federal and California tax  consequences
relating to this  Option,  as of the date of this  Option,  are set forth below.
THIS SUMMARY IS NECESSARILY  INCOMPLETE,  AND THE TAX LAWS AND  REGULATIONS  ARE
SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE  EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.

     (a) Exercising the Option.

          (i) Nonstatutory  Stock Option. The Optionee may incur regular federal
     income tax and California  income tax liability upon exercise of a NSO. The
     Optionee will be treated as having received compensation income (taxable at
     ordinary income tax rates) equal to the excess,  if any, of the Fair Market
     Value of the Exercised  Shares on the date of exercise over their aggregate
     Exercise  Price.  If the  Optionee  is an  Employee,  the  Company  will be
     required to withhold from his or her  compensation or collect from Optionee
     and  pay  to  the  applicable  taxing  authorities  an  amount  equal  to a
     percentage of this compensation income at the time of exercise.

          (ii) Incentive Stock Option.  If this Option  qualifies as an ISO, the
     Optionee will have no regular  federal income tax or California  income tax
     liability upon its exercise,


                                       -2-

<PAGE>



     although  the excess,  if any, of the Fair  Market  Value of the  Exercised
     Shares on the date of exercise over their aggregate  Exercise Price will be
     treated as an adjustment to alternative  minimum taxable income for federal
     tax purposes and may subject the Optionee to alternative minimum tax in the
     year of  exercise.  In the event that the  Optionee  undergoes  a change of
     status from  Employee to  Consultant,  any  Incentive  Stock  Option of the
     Optionee  that remains  unexercised  shall cease to qualify as an Incentive
     Stock Option and will be treated for tax purposes as a  Nonstatutory  Stock
     Option on the ninety-first (91st) day following such change of status.

     (b) Disposition of Shares.

          (i) NSO. If the Optionee  holds NSO Shares for at least one year,  any
     gain  realized on  disposition  of the Shares will be treated as  long-term
     capital gain for federal income tax purposes.

          (ii) ISO. If the Optionee holds ISO Shares for at least one year after
     exercise  and two  years  after  the  grant  date,  any  gain  realized  on
     disposition  of the Shares will be treated as  long-term  capital  gain for
     federal income tax purposes.  If the Optionee disposes of ISO Shares within
     one year  after  exercise  or two  years  after the  grant  date,  any gain
     realized  on  such  disposition  will be  treated  as  compensation  income
     (taxable at ordinary income rates) to the extent of the excess,  if any, of
     the  lesser of (A) the  difference  between  the Fair  Market  Value of the
     Shares  acquired on the date of exercise and the aggregate  Exercise Price,
     or (B) the  difference  between  the  sale  price  of such  Shares  and the
     aggregate Exercise Price.

     (c) Notice of  Disqualifying  Disposition  of ISO Shares.  If the  Optionee
sells or otherwise  disposes of any of the Shares acquired pursuant to an ISO on
or  before  the later of (i) two years  after the grant  date,  or (ii) one year
after the exercise date, the Optionee  shall  immediately  notify the Company in
writing of such  disposition.  The Optionee agrees that he or she may be subject
to income tax withholding by the Company on the compensation  income  recognized
from such  early  disposition  of ISO  Shares by  payment  in cash or out of the
current earnings paid to the Optionee.


                                       -3-

<PAGE>



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

OPTIONEE:                                  CYPRESS SEMICONDUCTOR
                                           CORPORATION



                                           By:
-----------------------------------           ----------------------------------
Signature

                                           Title:
-----------------------------------               ------------------------------
Print Name


-----------------------------------
Residence Address


-----------------------------------




                                CONSENT OF SPOUSE

     The  undersigned  spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option  Agreement.  In  consideration of the
Company's  granting his or her spouse the right to purchase  Shares as set forth
in the Plan and this  Option  Agreement,  the  undersigned  hereby  agrees to be
irrevocably  bound by the  terms  and  conditions  of the  Plan and this  Option
Agreement  and further  agrees that any  community  property  interest  shall be
similarly bound.  The undersigned  hereby appoints the  undersigned's  spouse as
attorney-in-fact  for the undersigned  with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.


                                             -----------------------------------
                                             Spouse of Optionee



                                       -4-

<PAGE>



                                    EXHIBIT A

                        CYPRESS SEMICONDUCTOR CORPORATION

                             1994 STOCK OPTION PLAN

                                 EXERCISE NOTICE




Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA  95134
Attention:  Secretary

     1. Exercise of Option. Effective as of today, ________________,  199__, the
undersigned  ("Purchaser") hereby elects to purchase  ______________ shares (the
"Shares")  of  the  Common  Stock  of  Cypress  Semiconductor  Corporation  (the
"Company") under and pursuant to the 1994 Stock Option Plan (the "Plan") and the
Stock Option Agreement dated _________________,  19___ (the "Option Agreement").
The purchase price for the Shares shall be $______________________,  as required
by the Option Agreement.

     2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.

     3. Representations of Purchaser.  Purchaser acknowledges that Purchaser has
received,  read and understood  the Plan and the Option  Agreement and agrees to
abide by and be bound by their terms and conditions.

     4.  Rights  as  Shareholder.  Until  the  issuance  (as  evidenced  by  the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the Company) of the stock certificate  evidencing such Shares, no right
to vote or receive  dividends or any other rights as a  shareholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
A share  certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend  or other right for which the record date is prior to the
date the stock  certificate  is issued,  except as provided in Section 14 of the
Plan.

     5. Tax  Consultation.  Purchaser  understands  that  Purchaser  may  suffer
adverse tax  consequences as a result of Purchaser's  purchase or disposition of
the Shares.  Purchaser  represents  that  Purchaser has  consulted  with any tax
consultants  Purchaser  deems  advisable  in  connection  with the  purchase  or
disposition  of the Shares and that  Purchaser is not relying on the Company for
any tax advice.


<PAGE>


     6. Entire  Agreement;  Governing  Law.  The Plan and Option  Agreement  are
incorporated  herein  by  reference.  This  Agreement,  the Plan and the  Option
Agreement  constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Purchaser with
respect  to the  subject  matter  hereof,  and such  agreement  is  governed  by
California law except for that body of law pertaining to conflict of laws.


Submitted by:                               Accepted by:

PURCHASER:                                  CYPRESS SEMICONDUCTOR
                                            CORPORATION


                                            By:
------------------------------------              ------------------------------
Signature

                                            Its:
------------------------------------              ------------------------------
Print Name


Address:                                    Address:

------------------------------------
                                            3901 North First Street
------------------------------------        San Jose, CA  95134




                                       -2-