XICOR INC, 10-K405, 1996-03-29

XICOR INC
10-K405, 1996-03-29
SEMICONDUCTORS & RELATED DEVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NUMBER 0-9653

XICOR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
CALIFORNIA 94-2526781
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1511 BUCKEYE DRIVE
MILPITAS, CALIFORNIA 95035
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 432-8888

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, WITHOUT PAR VALUE
(TITLE OF CLASS)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Paragraph 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]

The aggregate market value of the voting stock (Common Stock, without par
value) held by non-affiliates of the Registrant was approximately $117,142,837
on March 22, 1996.

The aggregate number of outstanding shares of Common Stock, without par
value, of the Registrant was 18,541,277 on March 22, 1996.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in Parts
II, III and IV of this Form 10-K Report: (1) Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995 and (2) Proxy Statement
for Registrant's 1996 Annual Meeting of Shareholders.

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PART I

ITEM 1. BUSINESS

Xicor, Inc. ("Xicor" or the "Company") designs, develops, manufactures and
markets reprogrammable nonvolatile semiconductor memory devices for use in
commercial, industrial and military applications. Xicor's E(2)PROMs
(Electrically Erasable Programmable Read-Only Memories), SerialFlash(TM)
(Xicor's trademark) memory devices and NOVRAMs (Xicor's acronym for its
Nonvolatile Random Access Memories) serve as support products to microprocessors
and microcontrollers. Xicor's series of products called E(2)POT(R) (Xicor's
trademark) electronically controlled potentiometers incorporate Xicor's
nonvolatile memory technology and are a replacement for mechanical
potentiometers.

Xicor's devices offer a comprehensive set of features to its customers. By
virtue of their nonvolatility, Xicor's devices retain their information content
when power is lost or turned off. Reprogramming is accomplished by "writing"
over the old data without a need for first "erasing" the old data. Xicor's
devices can be reprogrammed bit by bit or in larger groups of bits called
"words" and "pages" without being removed from the system, all using the 5-volt
power source common in microcontroller and microprocessor-based systems, or
lower voltages, making them suitable for portable applications. Further, control
and timing circuits are fully integrated "on-chip", thereby eliminating the need
for such external support circuits. Xicor products are sold in a variety of
packages, including plastic, ceramic and small outline surface mount packages
for small footprint and height.

The combination of reprogrammability and nonvolatility has enabled Xicor's
customers to develop products which have characteristics that can be altered
from a remote location by a technician or on-site by a non-technical user
through a keyboard, or which are automatically self-calibrating, thereby
reducing field service costs. Microcontroller and microprocessor-based products
incorporating Xicor's devices can be customized by either the distributor or the
end user subsequent to the production process. This simplifies production
control, reduces the lead time required for such customization and permits lower
inventory levels to be maintained. Xicor products also offer programmable
security locks enabling system producers to prevent changes to embedded
programs.

Xicor's strategy is to continue to apply its electrically reprogrammable
memory technology to develop innovative products combining nonvolatility and
in-system data alterability. Xicor products are used by manufacturers of
electronic products throughout the world in a wide range of applications,
including telecommunications, consumer, computer, industrial, automotive and
military products.

SEMICONDUCTOR MEMORY DEVICES

A variety of currently available semiconductor memories offer different
degrees of programming flexibility and the ability to retain data when power is
lost or turned-off (nonvolatility). Read-Only Memories ("ROMs") have the data
permanently programmed into the memory during the manufacturing process in
accordance with customer specifications, necessitating long-range planning prior
to introducing a new product incorporating ROMs. Since ROMs are nonvolatile,
data is not lost when power is turned off, making ROMs suitable for applications
in which the information is to be stored permanently and used repetitively.
Random Access Memories ("RAMs"), unlike ROMs, can be reprogrammed repeatedly
without being removed from the system; however, RAMs are volatile and lose their
data without power. To partially bridge the gap between ROMs and RAMs,
Programmable ROMs ("PROMs") were developed which are nonvolatile and are
programmable one time after manufacture. However, programming a PROM is complex
and in practice is only done at the factory or by distributors.

The need for further programming flexibility led to the development of
Electrically Programmable ROMs ("EPROMs"). EPROMs are nonvolatile and may be
reprogrammed several times. However, reprogramming an EPROM is a two-step
process, initially requiring ultraviolet light for erasure of the old data and
then programming the new data into the EPROM using voltages higher than 5 volts,
the voltage most common in microprocessor-based products. Since ultraviolet
light and an auxiliary power source are required, the erasure

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and reprogramming generally are performed outside the system, thus requiring
physical removal of the EPROM from the printed circuit board.

Additional programming flexibility was provided with the development of
E(2)PROMs, nonvolatile memories which do not require ultraviolet light for
erasure of old data, thereby permitting the reprogramming to be electrically
performed within the printed circuit board. Full featured E(2)PROMs offer full
and simple reprogrammability utilizing 5 volts or lower voltages, thereby
eliminating the need for an auxiliary higher voltage power source. Devices
called Flash EPROMs have also been developed. Flash memories offer a middle
ground in price and features between EPROMs, which can be reprogrammed only a
limited number of times and only if removed from a system, and relatively more
expensive parallel interface E(2)PROMs, in which any individual byte of data can
be reprogrammed on the device in-system tens of thousands of times. In
nonvolatile reprogrammable memory chips containing less than 256K bits, the
memory cell array takes up less than half of the chip area and the support
circuitry the balance. Accordingly, to date manufacturers of Flash EPROMs have
focused on parallel interface high density devices where customers are willing
to forego the ease of use of the full featured E(2)PROMs for lower cost of the
Flash EPROMs or where the Flash EPROM has achieved higher density than the full
featured E(2)PROM due to its smaller memory cell size.

NOVRAMs were developed to combine the versatility and rapid data access of
the RAM with the nonvolatility of the full featured E(2)PROM to allow the user
to capture and retain continuously changing operating data upon command or in
the event of power loss.

XICOR PRODUCTS AND APPLICATIONS

Xicor's product line currently consists of E(2)PROMs, SerialFlash memory
devices, NOVRAMs, and E(2)POT electronically controlled potentiometers, all of
which are nonvolatile, are reprogrammable using only a 5-volt or lower power
supply and eliminate the need for external control and timing circuits by
integrating such circuits "on-chip". Xicor's products operate over a wide speed
and temperature range and are sold in a variety of package options, including
plastic, ceramic and surface mount. Both silicon-gate n-channel metal oxide
silicon ("NMOS") technology and complementary metal oxide silicon ("CMOS")
technology are utilized in manufacturing Xicor's devices, with the latter being
the predominant technology due to its lower power consumption.

Xicor's E(2)PROMs and NOVRAMs offer the designer of systems requiring field
reprogrammable nonvolatile memories a choice between increased functionality and
cost. Xicor's NOVRAMs combine a RAM with an E(2)PROM within the same chip,
allowing the NOVRAM to operate at the high speeds of a RAM and, upon command or
in the event of unexpected power failure, to transfer all data from the RAM to
the E(2)PROM for nonvolatile storage. The complex dual-memory structure of the
NOVRAM, while providing substantially greater functionality than the E(2)PROM,
results in a significantly greater cost per memory bit.

Xicor's SerialFlash memory devices offer smaller memory density than the
typical parallel interface Flash EPROM produced by other manufacturers.
SerialFlash devices have a serial interface, consume little power and operate
well at low voltages making them well-suited for hand-held and portable
applications.

Xicor's E(2)POT electronically controlled potentiometers, incorporating
Xicor's nonvolatile memory technology, provide the user with capabilities not
readily available with either mechanical potentiometers or digital-to-analog
circuits.

For military applications, Xicor manufactures E(2)PROMs and NOVRAMs which
are fully compliant with paragraph 1.2.1 of MIL-STD-883 Revision D for Class B
products as well as various Standard Microcircuit Drawings.

Applications

Xicor's products are sold worldwide for a broad range of applications,
including telecommunications, consumer, computer, industrial, automotive and
military applications.

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Generally, mechanical components such as switches and potentiometers have
been used to store alterable but nonvolatile data in various applications, such
as set-up parameters in computer printers or configuration parameters in
telephone systems, and to provide calibration constants in electronic
measurement instruments. PROMs and EPROMs have been replacing such mechanical
components, introducing the reliability of semiconductors and enhancing
automated test and assembly. However, EPROMs and PROMs generally have to be
physically removed from the printed circuit board in the event the program data
stored in such devices must be corrected. Unlike mechanical components and PROMs
and EPROMs, Xicor's devices permit parameters to be easily corrected without
opening the system enclosure.

The ease and flexibility with which Xicor's devices can be programmed allow
a system incorporating such devices to be programmed after final production and
reprogrammed in-the-field as required, either through a keyboard or from a
remote location via telephone lines, satellite link or from a central database
over a local area network. For example, a technician need no longer travel to
the user's site to initialize a computer printer since this can be accomplished
by the user through a keyboard. Similar advantages exist over products that
incorporate batteries to provide nonvolatility to RAMs, since a site visit is
still necessary to replace a run-down battery and then rewrite the data.

The ease of reprogrammability of Xicor's E(2)PROMs, SerialFlash memory
devices and NOVRAMs also permits customized features to be implemented at a late
stage of the manufacturing process or at the point of distribution, thereby
reducing the lead time required for such customization and permitting lower
inventory levels to be maintained. Xicor's E(2)PROMs, SerialFlash memory devices
and NOVRAMs further enhance productivity and minimize service costs by enabling
microprocessor-based products to perform self-diagnostics, adjust and
recalibrate themselves and then store the parameters in Xicor's nonvolatile
memories until subsequent self-diagnostics and adjustment. Process controllers
and other equipment subject to harsh environmental conditions, as well as
measurement and data recording instruments which routinely require calibration,
can thereby be kept constantly and automatically calibrated.

Similarly, the E(2)POT potentiometer, as a solid state device, offers
designers of equipment various benefits, including (i) automated assembly line
calibration rather than mechanical "tweaking" of potentiometers; (ii) protection
against parameter drift due to vibration or contamination; (iii) elimination of
potentiometer access problems; and (iv) product enhancements such as keyboard
adjustments for volume or brightness control and calibration of equipment from
the front panel.

MARKETING AND SALES

Xicor's products generally require long "design-in" cycles for customer
applications with extensive field application engineering support by Xicor.
Xicor considers close support of its customers' design efforts to be an
important aspect of its marketing strategy.

Xicor markets its products directly from its headquarters in Milpitas,
California and from regional domestic and foreign sales offices. Products are
also marketed domestically through a national network of independent sales
representatives, each of which has been granted an exclusive sales territory,
and through national and regional stocking distributors which also handle
competitive products. Xicor's products are also marketed abroad through an
international network of independent non-exclusive stocking sales
representatives. Generally, sales to distributors and stocking sales
representatives are made under agreements allowing rights of return and price
protection on unsold merchandise. Xicor's policy is to defer recognition of
sales and income on such shipments until the products are sold by the
distributors and stocking sales representatives.

During the years ended December 31, 1995, 1994 and 1993, Xicor's export
sales constituted 47%, 50%, and 46%, respectively, of revenues. Xicor's export
sales, which are generally denominated in U.S. currency, are subject to risks
common to all export activities, including governmental regulation and the risk
of imposition of tariffs or other trade barriers. Further, export sales must be
licensed by the Office of Export Administration of the U.S. Department of
Commerce.

One distributor accounted for 14% and 12% of Xicor's revenues in 1995 and
1994, respectively. Distributors are not themselves end users, but rather serve
as a channel of sale to many end users of Xicor's

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products. No other distributor or customer accounted for more than 10% of
Xicor's annual revenues from 1993 to 1995.

Although Xicor receives volume purchase orders, such orders do not
necessarily result in sales as they are in most cases, consistent with industry
practice, terminable by the customer without penalty. Consequently, backlog
figures are not necessarily indicative of future sales.

MANUFACTURING

Wafers are fabricated in Xicor's six-inch wafer fabrication plant in
Milpitas, California. The wafer fabrication processes for Xicor's products are
highly complicated, utilize numerous highly toxic and corrosive chemicals and
gases, and require stringent control of many extremely precise steps, similar to
those used in the semiconductor industry for the production of other large scale
integrated circuits. These steps include complex processes such as
microphotolithography, wet chemical and dry plasma etch, chemical vapor
deposition, high temperature diffusion and oxidation, ion implantation and
vacuum metallization, which are applied to silicon wafers to form several
hundred to several thousand devices ("chips") per wafer depending on the
product. Each chip, in turn, contains thousands to millions of individual
transistors and other circuit elements. The sensitivity of the manufacturing
process to dust and other contaminants requires the production process to take
place in a highly controlled, clean environment. Xicor uses sophisticated
computer-controlled testing equipment to test each chip on the wafer to identify
those potentially meeting the desired electrical criteria.

Although Xicor's manufacturing process is highly controlled, minute
impurities, difficulties in the process or defects in the masks can cause wafers
to be rejected or a substantial percentage of individual chips to be
nonfunctional, a problem indigenous to the semiconductor industry. Xicor from
time to time experiences a variety of technical problems in its manufacturing
processes which adversely affect manufacturing yields until they are corrected.
Maintaining and improving manufacturing yields is essential for profitability.

Fabricated wafers are shipped for assembly to either a dedicated
subcontract line in Taiwan or to other independent subcontractors located in
South Korea and Thailand where the wafers are separated into individual chips.
Each potentially functional chip is encapsulated in a plastic or ceramic package
containing external leads to which the chip is connected by extremely fine
wires. Completed packages then undergo inspection, sealing and limited testing.
Xicor also makes limited use of assembly subcontractors in California to satisfy
particular customer requirements and provide rapid turnaround for new product
development.

Most of the assembled devices undergo comprehensive electrical testing
offshore at one of Xicor's independent subcontractors located in Taiwan,
Thailand and South Korea. Currently most military and new products undergo such
testing by Xicor at its facility in Milpitas, California. Quality assurance
testing for all products is also performed in Milpitas prior to shipment to
customers. In accordance with industry practice, Xicor provides a limited
warranty for its devices against defects in materials and workmanship for
periods ranging from 90 days to one year.

Reliance on foreign assembly and test contractors and Xicor's maintenance
of inventories and equipment at such contractors' facilities entails certain
political and economic risks, including political instability and expropriation,
currency controls and exchange fluctuations, and changes in tariff and freight
rates. In the event Xicor's foreign assembly and test operations, or air
transportation to or from foreign contractors, were disrupted, Xicor's
operations would be materially adversely affected.

The principal raw materials utilized in the production process are polished
silicon wafers, ultra-pure metals, chemicals and gases. Encapsulation materials
that enclose the chip and provide the external connecting leads are provided by
the independent assembly contractors or are purchased by Xicor and shipped to
such contractors. Even though polished silicon wafers and certain ceramic
packages were in tight supply during 1995, Xicor was able to obtain such
materials in adequate quantities. However, should Xicor's current suppliers of
these materials experience manufacturing difficulties or otherwise deliver
insufficient quantities of such materials, Xicor may not be able to obtain such
materials from other suppliers on a timely basis which would have a material
adverse affect on Xicor's operations.

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Cost reduction is an important on-going activity at Xicor since continually
lower selling prices are essential to maintain and improve Xicor's competitive
position. Xicor's cost reduction program is designed to minimize defects,
simplify testing and reduce the physical size of its chips.

Compliance with Environmental Regulations

The manufacture of semiconductors requires the use and storage of
substantial amounts of toxic chemicals, solvents and gases. Government
regulations impose various environmental controls on the storage, use and
disposal of such materials. Such regulations have grown more complex and
enforcement more rigorous and increasing attention has been focused on the
environmental impact of semiconductor manufacturing operations. While Xicor to
date has not experienced any materially adverse effect on its business from
environmental regulations, there can be no assurance that changes in such
regulations will not necessitate the acquisition of costly equipment or require
costly procedures or process changes to be initiated.

RESEARCH AND DEVELOPMENT

Xicor believes the continuing development of new and improved processes and
products is essential to maintain its competitive position. Process development
is an on-going activity designed to improve Xicor's technology. Product
development is a difficult and lengthy process, the ultimate success of which is
dependent upon Xicor's ability to transfer newly developed products to volume
production in a timely fashion. There can be no assurance that any research and
development efforts will be successfully completed or that future products will
be available on a timely basis or achieve market acceptance.

Xicor's product development strategy is currently focused on developing
proprietary microchips incorporating Xicor's programmable technology which
enable customers to rapidly bring to market products with improved efficiency,
features and maintainability. Research and development activities are requiring
an increasing degree of complexity of design and manufacturing process and
consequently a significant percentage of revenues is again expected to be
invested in research and development in 1996.

During the years ended December 31, 1995, 1994 and 1993, Xicor expended
$15,270,000, $14,085,000 and $12,847,000, respectively, on research and
development. At December 31, 1995, 97 employees were engaged in research and
development activities.

PATENTS AND LICENSES

Xicor holds numerous United States patents and corresponding foreign
patents covering various circuit designs and the structure of its devices.
Further, additional patent applications for such products are pending in the
United States and abroad. However, there can be no assurance that the patents
granted or pending will provide Xicor with any meaningful protection. Similar to
other semiconductor manufacturers, Xicor has granted licenses under its patents
and may continue to do so in the future. Xicor believes that, due to the rapidly
changing technology in the semiconductor industry, its future success will be
dependent primarily upon the technical expertise and creative skills of its
personnel rather than patent protection.

As is the case with many companies in the semiconductor industry, it may
become necessary or desirable for Xicor to obtain licenses relating to its
products from others. Xicor has received notices claiming infringement of
patents from several semiconductor manufacturers and other patent holders with
respect to certain aspects of Xicor's processes, devices and equipment use and
these matters are under investigation and review. Although patent holders
typically offer licenses and Xicor has in prior years entered into license
agreements, there can be no assurance that licenses can be obtained on
acceptable terms or that in all cases the dispute will be resolved without
costly litigation.

COMPETITION

The semiconductor industry is highly competitive and characterized by
steadily declining product prices. Numerous companies are currently selling
products competitive with those of Xicor. Customers are extremely price
sensitive and competitors often lower prices in an attempt to gain market share,
causing responsive

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reductions by other manufacturers, including Xicor, and resulting in reduced
profitability or losses. In addition to price, important elements of competition
include product performance, quality and reliability, delivery capability,
diversity of product line, application support, financial strength and the
ability to respond rapidly to technological innovations. Xicor may be at a
disadvantage in competing with major domestic and foreign concerns that have
significant financial resources, established and diverse product lines,
worldwide vertically integrated production facilities and extensive research and
development staffs. Further, the industry is characterized by rapid
technological change and Xicor will be required to continually develop new and
improved manufacturing processes and products to remain competitive.

EMPLOYEES

At December 31, 1995 Xicor had 641 employees. None of the employees are
represented by a labor organization and Xicor considers its employee relations
to be good. Many of Xicor's employees are highly skilled and Xicor's success
will depend in part on its ability to attract and retain such employees in the
highly competitive semiconductor industry.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth each executive officer of Xicor, their ages
(as of December 31, 1995) and office with Xicor:

<TABLE>
<CAPTION>
NAME AGE OFFICE
- --------------------------- --- ------------------------------------------------------
<S> <C> <C>
Raphael Klein.............. 52 President and Chairman of the Board
David J. Coakley........... 43 Vice President, Wafer Operations
Joseph Drori............... 50 Vice President, Product Design, Engineering, Quality
and Reliability
Geraldine N. Hench......... 38 Vice President and Controller
Klaus G. Hendig............ 56 Vice President, Finance and Administration and
Chief Financial Officer
Timothy D. Kanemoto........ 49 Vice President, Product Operations
Bruce W. Mattern........... 52 Vice President, Sales and Marketing
William H. Owen, III....... 47 Vice President, Technology Development and
Intellectual Properties
</TABLE>

Raphael Klein, President and Chairman of the Board. Mr. Klein has been
Xicor's President and a director since founding Xicor in August 1978, its
Chairman of the Board since August 1982 and was its Chief Financial Officer from
August 1980 to September 1987, with overall responsibility as chief executive
officer for implementing its business plan. Mr. Klein received the degree of
Master of Science in Physics from the Israeli Institute of Technology
("Technion") and is the inventor or co-inventor of two patented inventions.

David J. Coakley, Vice President, Wafer Operations. Mr. Coakley joined
Xicor in May 1991 as Director of Wafer Fabrication, and became Vice President,
Wafer Operations in June 1994. Mr. Coakley has over 19 years of manufacturing
and operations experience in the semiconductor industry. From July 1989 through
May 1991 he was Director of Wafer Fabrication Operations at Seeq Technology.
Prior thereto, Mr. Coakley held various management and engineering positions
with Unisys, Monolithic Memories and National Semiconductor Corporation. Mr.
Coakley received the Degree of Bachelor of Science in Physical Electronics from
the Newcastle Polytechnic, United Kingdom.

Joseph Drori, Vice President, Product Design, Engineering, Quality and
Reliability. Mr. Drori has been employed by Xicor since October 1979 and became
a Vice President in June 1988. Mr. Drori received the degree of Master of
Science in Electrical Engineering from the University of California at Los
Angeles and is the inventor or co-inventor of several patented inventions in the
semiconductor field.

Geraldine N. Hench, Vice President and Controller. Ms. Hench, a certified
public accountant, has been employed by Xicor as its Corporate Controller since
November 1987 and became a Vice President in June 1993. Ms. Hench received the
degree of Bachelor of Science in Accounting from Santa Clara University.

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Klaus G. Hendig, Vice President, Finance and Administration and Chief
Financial Officer. Mr. Hendig, a certified public accountant, has been employed
by Xicor since February 1981 and became a Vice President in January 1983 and its
Chief Financial Officer in September 1987. Mr. Hendig received the degree of
Bachelor of Science in Accounting and Finance from San Jose State University.

Timothy D. Kanemoto, Vice President, Product Operations. Mr. Kanemoto
joined Xicor in January 1990, and became a Vice President in June 1994. He
received the Degree of Bachelor of Science in Business Administration from
California State University, Hayward.

Bruce W. Mattern, Vice President, Sales and Marketing. Mr. Mattern has been
employed by Xicor since October 1983 and became a Vice President in April 1990.
Mr. Mattern received the degree of Bachelor of Science in Electrical Engineering
from Pennsylvania State University.

William H. Owen, III, Vice President, Technology Development and
Intellectual Properties. Mr. Owen, one of Xicor's founders, joined Xicor in
October 1978, shortly after its formation to aid in the development of its
advanced memory devices, with principal responsibility for circuit design. Mr.
Owen is presently involved in process development and patent activities. Mr.
Owen received the degree of Master of Science in Electrical Engineering from the
University of Wisconsin and is the inventor or co-inventor of several patented
inventions in the semiconductor field.

INSURANCE

Xicor presently carries various insurance coverages including property
damage, business interruption and general liability including certain product
liability coverage. As a result of the reduced availability of coverages and
significantly increasing premium costs, Xicor has been unable to obtain
pollution insurance at reasonable costs and limits. Xicor is also uninsured
against earthquake risks.

ITEM 2. PROPERTIES

Xicor leases a 43,834 square foot facility in Milpitas, California which
contains Xicor's silicon wafer fabrication and process technology and research
and development operations. The lease, which expires in 2001, provides for an
annual base rental of $554,556, with an escalation in 1996 to reflect the
percentage increase in the consumer price index during the prior 60 months, not
to exceed 15% for such 60 month period, and requires Xicor to pay all real
estate taxes, utilities and insurance and to maintain the building and premises.
Xicor has three successive five-year renewal options upon the same terms and
conditions. This lease has been accounted for as a capital lease.

Xicor leases a 55,767 square foot facility near its wafer fabrication
facility which houses its product testing operations and a small quick-turn
assembly line. The lease, which expires in 1999, provides for an annual base
rental of $401,520. Xicor has a five-year renewal option upon the same terms and
conditions, except that the rental will be 95% of the then market rental rate in
the industrial park where the property is located.

Xicor also leases a 73,622 square foot facility constructed to its
specifications adjacent to its existing wafer fabrication facility. This
facility, which could potentially be used for future expansion of silicon wafer
fabrication, presently houses Xicor's design and reliability operations and
executive, marketing and administrative offices and also serves as Xicor's main
stockroom. This lease expires in 2000 and provides for an annual base rental of
$1,285,776 and requires Xicor to pay all real estate taxes, utilities and
insurance and to maintain the building and premises. Xicor has three successive
five-year renewal options upon the same terms and conditions at increased rental
rates based on the consumer price index, not to exceed 15% for the prior five-
year period.

Xicor believes that its existing facilities should be adequate for its
needs in the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

Xicor is not a party, nor is its property subject, to any material pending
legal proceedings.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

The information required by this Item is incorporated by reference to page
17 of the Company's 1995 Annual Report to Shareholders.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data for the five years ended December 31, 1995,
which appears on page 16 of the Company's 1995 Annual Report to Shareholders, is
incorporated by reference in this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information required by this Item is incorporated by reference to pages
4 to 7 of the Company's 1995 Annual Report to Shareholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements, together with the report thereon of Price
Waterhouse LLP dated January 24, 1996, appearing on pages 8 to 15 and the
financial information by quarter appearing on page 17 of the Company's 1995
Annual Report to Shareholders, are incorporated by reference in this Annual
Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None
- ---------------
With the exception of the information incorporated in Items 5,6,7,8 and 14
of Parts II and IV of this Form 10-K, the Company's 1995 Annual Report to
Shareholders is not to be deemed filed as a part of this Annual Report on Form
10-K.

PART III

Certain information required by Part III is omitted from this Report in
that the Registrant will file a definitive proxy statement pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this Report, and certain information included therein
is incorporated herein by reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning the Company's directors required by this Item is
incorporated by reference to the information contained in the section captioned
"Election of Directors" in the Company's Proxy Statement.

The information concerning the Company's executive officers required by
this Item is included in Part I hereof entitled "Executive Officers of the
Registrant".

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the
information contained in the section captioned "Executive Compensation" in the
Company's Proxy Statement.

8
<PAGE> 10

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated by reference to the
information contained in the section captioned "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the
information contained in the section captioned "Election of Directors" in the
Company's Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:

(1) FINANCIAL STATEMENTS. The following Consolidated Financial Statements
of Xicor, Inc. and the Report of Independent Accountants are
incorporated by reference from the indicated pages of the Company's
1995 Annual Report to Shareholders:

<TABLE>
<CAPTION>
PAGE IN
ANNUAL
REPORT
-------
<S> <C>
Consolidated Statements of Operations for the three years ended December 31,
1995...................................................................... 9
Consolidated Balance Sheets as of December 31, 1995 and 1994................ 8
Consolidated Statements of Shareholders' Equity for the three years ended
December 31, 1995......................................................... 11
Consolidated Statements of Cash Flows for the three years ended December 31,
1995...................................................................... 10
Notes to Consolidated Financial Statements.................................. 12-15
Report of Independent Accountants........................................... 15
</TABLE>

(2) FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants on Financial Statement Schedule............ 10
II -- Valuation and Qualifying Accounts...................................... 13
</TABLE>

All other schedules have been omitted since the required information
is not present or not present in amounts sufficient to require submission
of the schedule or because the information required is included in the
consolidated financial statements or notes thereto.

(3) EXHIBITS. The exhibits listed in the accompanying Index to Exhibits
are filed or incorporated by reference as part of this Annual Report.

(b) REPORTS ON FORM 8-K

None.

9
<PAGE> 11

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Shareholders and Board of Directors of Xicor, Inc.

Our audits of the consolidated financial statements referred to in our
report dated January 24, 1996, appearing on page 15 of the 1995 Annual Report to
Shareholders of Xicor, Inc. (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.

PRICE WATERHOUSE LLP
San Jose, California
January 24, 1996

10
<PAGE> 12

XICOR, INC.

INDEX TO EXHIBITS
ITEM 14(A)3.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -------------------------------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Articles of Incorporation dated December 9, 1987 filed as
Exhibit 3.1 with Form 10-K for the year ended December 31, 1987, is hereby
incorporated by reference.
3.2 By-Laws, as amended to date, filed as Exhibit 3.2 with Form 10-K for the year ended
December 31, 1987, is hereby incorporated by reference.
10.1 Non-Qualified (Non-Incentive) and Incentive Stock Option Plan as amended as of
December 31, 1987 filed as Exhibit 10.1 with Form 10-K for the year ended December
31, 1987, is hereby incorporated by reference.
10.1A Amended and Restated Xicor, Inc. 1990 Incentive and Non-incentive Stock Option Plan
is filed herewith as Exhibit 10.1A.
10.2 Lease dated July 2, 1980, Exhibit 13-E of the Exhibits filed with Form S-1
Registration Statement, File No. 2-69109, is hereby incorporated by reference.
10.2A Amendment to lease dated July 2, 1980 filed as Exhibit 10.2A with Form 10-K for the
year ended December 31, 1990, is hereby incorporated by reference.
10.3 Lease dated November 23, 1983, Exhibit 1 of the Exhibits filed with Form 10-K for the
year ended December 31, 1983, is hereby incorporated by reference.
10.3A Amendment to lease dated November 23, 1983 filed as Exhibit 10.3A with Form 10-K for
the year ended December 31, 1990, is hereby incorporated by reference.
10.4 Lease dated February 15, 1984, Exhibit 10(v) of the Exhibits filed with Form 10-K for
the year ended December 31, 1984, is hereby incorporated by reference.
10.4A Amendment to lease dated February 15, 1984 filed as Exhibit 10.4A with Form 10-K for
the year ended December 31, 1994, is herein incorporated by reference.
10.6 Form of Indemnification Agreement entered into between Xicor, Inc. and each of its
Officers and Directors filed as Exhibit 10.10 with Form 10-K for the year ended
December 31, 1987, is hereby incorporated by reference.
10.7 Lingsen-Xicor Dedicated Production Agreement dated September 21, 1988 as amended on
March 11, 1989, April 14, 1989 and September 8, 1989 filed as Exhibit 10.8 with Form
10-K for the year ended December 31, 1989, is hereby incorporated by reference.
10.8 Loan and Security Agreement dated March 10, 1993 with CoastFed Business Credit
Corporation filed as Exhibit 10.8 with Form 10-K for the year ended December 31,
1992, is hereby incorporated by reference.
10.8A Amendment to Loan and Security Agreement dated February 26, 1996 is filed herewith as
Exhibit 10.8A.
10.9 Xicor, Inc. 1995 Director Option Plan is filed herewith as Exhibit 10.9.
11.1 Statement of Computation of Earnings (Loss) Per Share.
13.1 Pertinent pages of the 1995 Annual Report to Shareholders (to be deemed filed only to
the extent required by the instructions to exhibits for reports on Form 10-K).
21. List of Subsidiaries.
23. Consent of Price Waterhouse LLP.
24. Powers of Attorney (included on the signature pages hereof).
27. Financial Data Schedule.
</TABLE>

11
<PAGE> 13

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS ANNUAL REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF MILPITAS, STATE OF CALIFORNIA, ON THE 22ND DAY OF MARCH 1996.

XICOR, INC.
Registrant

By /s/ RAPHAEL KLEIN

------------------------------------
Raphael Klein
Chairman of the Board and President
(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Raphael Klein and Klaus G. Hendig, and
each of them, jointly and severally, his attorneys-in-fact, each with the power
of substitution, for him in any and all capacities, to sign any and all
amendments to this Report on Form 10-K and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
<C> <S> <C>
/s/ RAPHAEL KLEIN Chairman of the Board and March 22, 1996
- -------------------------------------------- President
(Raphael Klein) (Principal Executive Officer)

/s/ JULIUS BLANK Director March 22, 1996
- ---------------------------------------------
(Julius Blank)

/s/ HANS G. DILL Director March 22, 1996
- ---------------------------------------------
(Hans G. Dill)

/s/ ANDREW W. ELDER Director March 22, 1996
- ---------------------------------------------
(Andrew W. Elder)

/s/ S. ALLAN KLINE Director March 22, 1996
- ---------------------------------------------
(S. Allan Kline)

/s/ KLAUS G. HENDIG Vice President, Finance and March 22, 1996
- --------------------------------------------- Administration
(Klaus G. Hendig) (Principal Financial Officer)

/s/ GERALDINE N. HENCH Vice President and Controller March 22, 1996
- --------------------------------------------- (Principal Accounting
(Geraldine N. Hench) Officer)
</TABLE>

12
<PAGE> 14

XICOR, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ----------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1993........... $500,000 $4,000 $(4,000) $500,000
Year ended December 31, 1994........... 500,000 -- -- 500,000
Year ended December 31, 1995........... 500,000 -- -- 500,000
</TABLE>

<PAGE> 1
EXHIBIT 10.1A

XICOR, INC.
AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN

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

. to attract and retain the best available personnel for positions
of substantial responsibility,

. to provide additional incentive to Employees and Consultants, and

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

Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.

2. 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 4 of the Plan.

(b) "Applicable Laws" means the legal requirements relating to
the administration of stock option plans under state corporate and securities
laws and the Code.

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

(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.

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

(g) "Company" means Xicor, Inc., a California corporation.

(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services. The term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

(i) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or
<PAGE> 2
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 or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. A leave of absence
approved by the Company shall include sick leave, military leave, or any other
personal leave approved by an authorized representative of the Company. For
purposes of Incentive Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the 91st day of such leave any Incentive
Stock Option held by the Optionee shall cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option.

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

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

(l) "Employee" means any person, including Officers who are
not also directors, employed by the Company or any Parent or Subsidiary of the
Company.

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

(n) "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
Nasdaq National Market 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 sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last
market trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is quoted on the Nasdaq System
(but not on the Nasdaq National Market 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 between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

(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.

-2-
<PAGE> 3
(o) "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.

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

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

(r) "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.

(s) "Option" means a stock option granted pursuant to the Plan.

(t) "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.

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

(v) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.

(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Stock Purchase Right.

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

(y) "Plan" means this Amended and Restated 1990 Incentive and
Non-Incentive Stock Option Plan.

(z) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.

(aa) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

-3-
<PAGE> 4
(bb) "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.

(cc) "Section 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.

(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

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

3. Stock Subject to the Plan. Subject to the provisions of Section
13 of the Plan, the maximum aggregate number of Shares which may be optioned
and sold under the Plan is 1,500,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated); provided, however, that Shares that have actually
been issued under the Plan, whether upon exercise of an Option or Right, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, and the original
purchaser of such Shares did not receive any benefits of ownership of such
Shares, such Shares shall become available for future grant under the Plan.
For purposes of the preceding sentence, voting rights shall not be considered a
benefit of Share ownership.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
Officers who are not Directors and Employees who are neither Directors nor
Officers.

(ii) Administration With Respect to Officers who are
not Directors Subject to Section 16(b). With respect to Option or Stock
Purchase Right grants made to Employees who are also Officers subject to
Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in a manner complying with the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are

-4-
<PAGE> 5
to be made, or (B) a committee designated by the Board to administer the Plan,
which committee shall be constituted to comply with the rules under Rule 16b-3
relating to the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of equity securities
are to be made. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new members,
fill vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made.

(iii) Administration With Respect to Other Persons.
With respect to Option or Stock Purchase Right grants made to Employees or
Consultants who are not Officers of the Company, the Plan shall be administered
by (A) the Board or (B) a committee designated by the Board, which committee
shall be constituted to satisfy Applicable Laws. Once appointed, such
Committee shall serve in its designated capacity until otherwise directed by
the Board. The Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.

(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 2(n) of the Plan;

(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may be granted hereunder;

(iii) to determine whether and to what extent Options
and Stock Purchase Rights or any combination thereof, are granted hereunder;

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

(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 award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of

-5-
<PAGE> 6
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right 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 or
Stock Purchase Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was granted;

(viii) to construe and interpret the terms of the Plan
and awards 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 or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options
longer than is otherwise provided for in the Plan;

(xi) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

(xii) to institute an Option Exchange Program;

(xiii) to determine the terms and restrictions applicable
to Options and Stock Purchase Rights and any Restricted Stock; and

(xiv) 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 or Stock Purchase Rights.

5. Eligibility. Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Employees and Consultants. Incentive Stock Options
may be granted only to Employees. If otherwise eligible, an Employee or
Consultant who has been granted an Option or Stock Purchase Right may be
granted additional Options or Stock Purchase Rights.

-6-
<PAGE> 7
6. Limitations.

(a) Each Option shall be designated in the Notice of Grant 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 6(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 or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's employment or consulting relationship with the Company, nor shall
they interfere in any way with the Optionee's right or the Company's right to
terminate such employment or consulting relationship at any time, with or
without cause.

(i) No Employee shall be granted, in any fiscal year
of the Company, Options and Stock Purchase Rights to purchase more than 200,000
Shares.

(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 13.

(iii) If an Option or Stock Purchase Right is
canceled in the same fiscal year of the Company in which it was granted (other
than in connection with a transaction described in Section 13), the canceled
Option or Stock Purchase Right will be counted against the limit set forth in
Section 6(c)(i). For this purpose, if the exercise price of an Option or Stock
Purchase Right is reduced, the transaction will be treated as a cancellation of
the Option or Stock Purchase Right and the grant of a new Option or Stock
Purchase Right.

7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 19 of the
Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 15 of the Plan.

-7-
<PAGE> 8
8. Term of Option. The term of each Option shall be stated in the
Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. Moreover, 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.

9. 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 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 determined by the Administrator.

(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. 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 consideration may consist entirely of:

(i) cash;

(ii) check;

-8-
<PAGE> 9
(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) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

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

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

10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. 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.

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 shareholder 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 13 of the Plan.

-9-
<PAGE> 10
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 his or her Option, but only within such period of time as is
specified in the Notice of Grant, 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).
In the absence of a specified time in the Notice of Grant, 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 months from the date
of termination. 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 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 twelve (12) months from the date of such termination, but only 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). 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, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), 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 that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert to
the Plan. If, after death, the Optionee's estate or a person who acquired the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

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<PAGE> 11
(e) Rule 16b-3. Options granted to individuals subject to
Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid,
and the time within which the offeree must accept such offer, which shall in no
event exceed six (6) months from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted
by execution of a Restricted Stock Purchase Agreement in the form determined by
the Administrator.

(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

(c) Rule 16b-3. Stock Purchase Rights granted to Insiders,
and Shares purchased by Insiders in connection with Stock Purchase Rights,
shall be subject to any restrictions applicable thereto in compliance with Rule
16b-3. An Insider may only purchase Shares pursuant to the grant of a Stock
Purchase Right, and may only sell Shares purchased pursuant to the grant of a
Stock Purchase Right, during such time or times as are permitted by Rule 16b-3.

(d) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be
the same with respect to each purchaser.

(e) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 13 of the Plan.

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<PAGE> 12
12. Non-Transferability of Options and Stock Purchase Rights. An
Option or Stock Purchase Right 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.

13. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.

(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Stock Purchase Right, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, 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 or Stock Purchase Right.

(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or
Stock Purchase Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The Board may,
in the exercise of its sole discretion in such instances, declare that any
Option or Stock Purchase Right shall terminate as of a date fixed by the Board
and give each Optionee the right to exercise his or her Option or Stock
Purchase Right as to all or any part of the Optioned Stock, including Shares as
to which the Option or Stock Purchase Right would not otherwise be exercisable.

-12-
<PAGE> 13
days from the date of such notice, and the Option or Stock Purchase Right will
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right
to purchase, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right 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 or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, 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.

14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, 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.

15. Amendment and Termination of the Plan.

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

(b) Shareholder Approval. The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and
desirable to comply with Rule 16b-3 or with Section 422 of the Code (or any
successor rule or statute or other applicable law, rule or regulation,
including the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted). Such shareholder approval, if required,
shall be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.

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

16. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with all relevant provisions of law,

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<PAGE> 14
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable
Laws, and the requirements of any stock exchange or quotation system upon which
the Shares may then be listed or quoted, 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 or Stock Purchase Right, the Company may require the
person exercising such Option or Stock Purchase Right 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.

17. 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.

(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Stock Purchase Right exceeds, as of the date of grant,
the number of Shares which may be issued under the Plan without additional
shareholder approval, such Option or Stock Purchase Right shall be void with
respect to such excess Optioned Stock, unless shareholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 15(b) of the Plan.

18. 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.

19. Shareholder Approval. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the manner and to the degree required under applicable federal and
state law.

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<PAGE> 15
AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I. NOTICE OF INCENTIVE STOCK OPTION GRANT ("ISO")

[Optionee's Name]

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:

Date of Grant _________________________

Vesting Commencement Date _________________________

Exercise Price per Share $________________________

Total Number of Shares
Underlying Option Granted _________________________

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 25% of the Shares subject to the Option
shall vest on each anniversary of the Commencement Date thereafter.

Termination Period:

This Option may be exercised for thirty 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
<PAGE> 16
Option Agreement shall remain in effect. In no event shall this Option be
exercised later than the Expiration Date as provided above.

II. AGREEMENT

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 15(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.

This Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, 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 Vice President and Controller 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.

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<PAGE> 17
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.

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. The Optionee will have no regular
federal income tax or California income tax liability upon its exercise,
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. 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

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<PAGE> 18
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.

7. Entire Agreement; Governing Law. The Plan is incorporated herein
by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by California
law except for that body of law pertaining to conflict of laws.

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: XICOR, INC.

____________________________________ By:_________________________________
Signature

____________________________________ Title:______________________________
Print Name

____________________________________
Residence Address

____________________________________

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<PAGE> 19
AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I. NOTICE OF NONSTATUTORY STOCK OPTION GRANT ("NSO")

[Optionee's Name]

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:

Date of Grant _________________________

Vesting Commencement Date _________________________

Exercise Price per Share $________________________

Total Number of Shares
Underlying Option Granted _________________________

Expiration Date: _________________________

Vesting Schedule:

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

Termination Period:

This Option may be exercised for thirty 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
<PAGE> 20
Option Agreement shall remain in effect. In no event shall this Option be
exercised later than the Expiration Date as provided above.

II. AGREEMENT

2. Exercise of Option.

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

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<PAGE> 21
(b) check; or

(a) Exercising the 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 or a former 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 in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.

(b) Disposition of Shares. 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.

-3-
<PAGE> 22
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: XICOR, INC.

____________________________________ By:_________________________________
Signature

____________________________________ Title:______________________________
Print Name

____________________________________
Residence Address

____________________________________

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<PAGE> 23
EXHIBIT A

AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN

EXERCISE NOTICE

Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035

Attention: Vice President and Controller

1. Exercise of Option. Effective as of today, ________________,
199__, the undersigned ("Purchaser") hereby elects to purchase ______________
shares (the "Shares") of the Common Stock of Xicor, Inc. (the "Company") under
and pursuant to the Amended and Restated 1990 Incentive and Non-Incentive 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 plus any federal or state taxes required
to be withheld by the Company.

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 13
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> 24
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 with respect to the
subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict
of laws.

Submitted by: Accepted by:

PURCHASER: XICOR, INC.

______________________________________ By:_________________________________
Signature

______________________________________ Its:________________________________
Print Name

Address: Address:

______________________________________ 1511 Buckeye Drive
______________________________________ Milpitas, CA 95035

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<PAGE> 25
EXHIBIT B

SECURITY AGREEMENT

This Security Agreement is made as of __________, 19___ between Xicor,
Inc., a California corporation ("Pledgee"), and _________________________
("Pledgor").

Recitals

Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's Amended and Restated 1990 Incentive and Non-Incentive Stock Option
Plan, and Pledgor's election under the terms of the Option to pay for such
shares with his promissory note (the "Note"), Pledgor has purchased _________
shares of Pledgee's Common Stock (the "Shares") at a price of $________ per
share, for a total purchase price of $__________. The Note and the obligations
thereunder are as set forth in Exhibit C to the Option.

NOW, THEREFORE, it is agreed as follows:

1. Creation and Description of Security Interest. In consideration
of the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number(s) ______, duly endorsed in blank or with executed stock powers, and
herewith delivers said certificate to the Vice President and Controller of
Pledgee ("Pledgeholder"), who shall hold said certificate subject to the terms
and conditions of this Security Agreement.

The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.

2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:

a. Payment of Indebtedness. Pledgor will pay the principal
sum of the Note secured hereby, together with interest thereon, at the time and
in the manner provided in the Note.
<PAGE> 26
b. Encumbrances. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.

c. Margin Regulations. In the event that Pledgee's Common
Stock is now or later becomes margin-listed by the Federal Reserve Board and
Pledgee is classified as a "lender" within the meaning of the regulations under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"),
Pledgor agrees to cooperate with Pledgee in making any amendments to the Note
or providing any additional collateral as may be necessary to comply with such
regulations.

3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.

4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee, all new, substituted and
additional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee under the terms of this Security
Agreement in the same manner as the Shares originally pledged hereunder. In
the event of substitution of such securities, Pledgor, Pledgee and Pledgeholder
shall cooperate and execute such documents as are reasonable so as to provide
for the substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held
under the terms of this Security Agreement in the same manner as the Shares
pledged.

6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:

a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or

b. Pledgor fails to perform any of the covenants set forth in
the Option or contained in this Security Agreement for a period of 10 days
after written notice thereof from Pledgee.

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<PAGE> 27
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the
California Commercial Code.

7. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be
that number of full Shares which bears the same proportion to the initial
number of Shares pledged hereunder as the payment of principal bears to the
initial full principal amount of the Note.

8. Withdrawal or Substitution of Collateral. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.

9. Term. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
stock shall be promptly delivered to Pledgor, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.

10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.

11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.

12. Invalidity of Particular Provisions. Pledgor and Pledgee agree
that the enforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.

13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.

14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.

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<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

"PLEDGOR" By: ________________________________

____________________________________
Print Name

Address: ____________________________________

____________________________________

"PLEDGEE" Xicor, Inc.,
a California corporation

By: ________________________________

Title: _____________________________

"PLEDGEHOLDER" ____________________________________
Vice President and Controller
Xicor, Inc.

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<PAGE> 29
EXHIBIT C

NOTE

$_______________ Milpitas, CA

______________, 19___

FOR VALUE RECEIVED, _______________ promises to pay to Xicor, Inc., a
California corporation (the "Company"), or order, the principal sum of
_______________________ ($_____________), together with interest on the unpaid
principal hereof from the date hereof at the rate of _______________ percent
(____%) per annum, compounded semiannually.

Principal and interest shall be due and payable on __________, 19___.
Should the undersigned fail to make full payment of principal or interest for a
period of 10 days or more after the due date thereof, the whole unpaid balance
on this Note of principal and interest shall become immediately due at the
option of the holder of this Note. Payments of principal and interest shall be
made in lawful money of the United States of America.

The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.

The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

In the event the undersigned shall cease to be an employee or consultant
of the Company for any reason, this Note shall, at the option of the Company,
be accelerated, and the whole unpaid balance on this Note of principal and
accrued interest shall be immediately due and payable.

Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.

____________________________________

____________________________________
<PAGE> 30
AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN

NOTICE OF GRANT OF STOCK PURCHASE RIGHT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.

[Grantee's Name]

You have been granted the right to purchase Common Stock of the Company,
subject to the Company's repurchase option and your ongoing Continuous Status
as an Employee or Consultant (as described in the Plan and the attached
Restricted Stock Purchase Agreement), as follows:

Date of Grant _________________________

Price Per Share $________________________

Total Number of Shares Subject _________________________
to This Stock Purchase Right

Expiration Date: _________________________

YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the Amended and Restated 1990 Incentive
and Non-Incentive Stock Option Plan and the Restricted Stock Purchase
Agreement, all of which are attached and made a part of this document. You
further agree to execute the attached Restricted Stock Purchase Agreement as a
condition to purchasing any shares under this Stock Purchase Right.

GRANTEE: XICOR, INC.

______________________________________ By: ________________________________
Signature

______________________________________ Title: _____________________________
Print Name
<PAGE> 31
EXHIBIT A-1

AMENDED AND RESTATED
1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.

WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an employee or consultant of the Company, and the Purchaser's continued
participation is considered by the Company to be important for the Company's
continued growth; and

WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser
stock purchase rights subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this restricted stock purchase agreement (the "Agreement").

THEREFORE, the parties agree as follows:

1. Sale of Stock. The Company hereby agrees to sell to the
Purchaser and the Purchaser hereby agrees to purchase shares of the Company's
Common Stock (the "Shares"), at the per share purchase price and as otherwise
described in the Notice of Grant.

2. Payment of Purchase Price. The purchase price for the Shares may
be paid by delivery to the Company at the time of execution of this Agreement
of cash, a check, or some combination thereof.

3. Repurchase Option.

(a) In the event the Purchaser's Continuous Status as an
Employee or Consultant terminates for any or no reason (including death or
disability) before all of the Shares are released from the Company's repurchase
option (see Section 4), the Company shall, upon the date of such termination
(as reasonably fixed and determined by the Company) have an irrevocable,
exclusive option for a period of sixty (60) days from such date to repurchase
up to that number of shares which constitute the Unreleased Shares (as defined
in Section 4) at the original purchase price per share (the "Repurchase
Price"). Said option shall be exercised by the Company by delivering written
notice to the Purchaser or the Purchaser's executor (with a copy to the Escrow
Holder) AND, at the Company's option, (i) by delivering to the Purchaser or the
Purchaser's executor a check in the amount of the aggregate Repurchase Price,
or (ii) by the Company canceling an amount of the Purchaser's indebtedness to
the Company equal to the

<PAGE> 32
aggregate Repurchase Price, or (iii) by a combination of (i) and (ii) so that
the combined payment and cancellation of indebtedness equals such aggregate
Repurchase Price. Upon delivery of such notice and the payment of the
aggregate Repurchase Price in any of the ways described above, the Company
shall become the legal and beneficial owner of the Shares being repurchased and
all rights and interests therein or relating thereto, and the Company shall
have the right to retain and transfer to its own name the number of Shares
being repurchased by the Company.

(b) Whenever the Company shall have the right to repurchase
Shares hereunder, the Company may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or
organizations to exercise all or a part of the Company's purchase rights under
this Agreement and purchase all or a part of such Shares; provided that if the
Fair Market Value of the Shares to be repurchased on the date of such
designation or assignment (the "Repurchase FMV") exceeds the aggregate
Repurchase Price of such Shares, then each such designee or assignee shall pay
the Company cash equal to the difference between the Repurchase FMV and the
aggregate Repurchase Price of such Shares.

4. Release of Shares From Repurchase Option.

(a) ___________________ (_______) of the Shares shall be
released from the Company's repurchase option
__________________________________________________________, provided in each
case that the Purchaser's Continuous Status as an Employee or Consultant has
not terminated prior to the date of any such release.

(b) Any of the Shares which have not yet been released from
the Company's repurchase option are referred to herein as "Unreleased Shares."

(c) The Shares which have been released from the Company's
repurchase option shall be delivered to the Purchaser at the Purchaser's
request (see Section 6).

5. Restriction on Transfer. Except for the escrow described in
Section 6 or transfer of the Shares to the Company or its assignees
contemplated by this Agreement, none of the Shares or any beneficial interest
therein shall be transferred, encumbered or otherwise disposed of in any way
until the release of such Shares from the Company's repurchase option in
accordance with the provisions of this Agreement, other than by will or the
laws of descent and distribution.

6. Escrow of Shares.

(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Company's
repurchase option under Section 3 above, the Purchaser shall, upon execution of
this Agreement, deliver and deposit with an escrow holder designated by the
Company (the "Escrow Holder") the share certificates representing the
Unreleased Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit A-2. The Unreleased Shares and stock assignment
shall be held by

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<PAGE> 33
the Escrow Holder, pursuant to the Joint Escrow Instructions of the Company and
Purchaser attached as Exhibit A-3 hereto, until such time as the Company's
repurchase option expires.

(b) The Escrow Holder shall not be liable for any act it may
do or omit to do with respect to holding the Unreleased Shares in escrow and
while acting in good faith and in the exercise of its judgment.

(c) If the Company or any assignee exercises its repurchase
option hereunder, the Escrow Holder, upon receipt of written notice of such
option exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.

(d) When the repurchase option has been exercised or expires
unexercised or a portion of the Shares has been released from such repurchase
option, upon Purchaser's request the Escrow Holder shall promptly cause a new
certificate to be issued for such released Shares and shall deliver such
certificate to the Company or the Purchaser, as the case may be.

(e) Subject to the terms hereof, the Purchaser shall have all
the rights of a shareholder with respect to such Shares while they are held in
escrow, including without limitation, the right to vote the Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
the Company's repurchase option, there is (i) any stock dividend, stock split
or other change in the Shares, or (ii) any merger or sale of all or
substantially all of the assets or other acquisition of the Company, any and
all new, substituted or additional securities to which the Purchaser is
entitled by reason of the Purchaser's ownership of the Shares shall be
immediately subject to this escrow, deposited with the Escrow Holder and
included thereafter as "Shares" for purposes of this Agreement and the
Company's repurchase option.

7. Legends. The share certificate evidencing the Shares issued
hereunder shall be endorsed with the following legend (in addition to any
legend required under applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY.

8. Adjustment for Stock Split. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend or other
change in the Shares which may be made by the Company after the date of this
Agreement.

9. Tax Consequences. The Purchaser has reviewed with the
Purchaser's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Purchaser is relying solely on such advisors

-3-
<PAGE> 34
and not on any statements or representations of the Company or any of its
agents. The Purchaser understands that the Purchaser (and not the Company)
shall be responsible for the Purchaser's own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement.
The Purchaser understands that Section 83 of the Internal Revenue Code of 1986,
as amended (the "Code"), taxes as ordinary income the difference between the
purchase price for the Shares and the Fair Market Value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to its
repurchase option. The Purchaser understands that the Purchaser may elect to
be taxed at the time the Shares are purchased rather than when and as the
Company's repurchase option expires by filing an election under Section 83(b)
of the Code with the I.R.S. within 30 days from the date of purchase. The form
for making this election is attached as Exhibit A-5 hereto.

THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO
MAKE THIS FILING ON THE PURCHASER'S BEHALF.

10. General Provisions.

(a) This Agreement shall be governed by the laws of the State
of California. This Agreement, subject to the terms and conditions of the Plan
and the Notice of Grant, represents the entire agreement between the parties
with respect to the purchase of Common Stock by the Purchaser. Subject to
Section 15(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 Agreement, the
terms and conditions of the Plan shall prevail. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Agreement.

(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end
of this Agreement or such other address as a party may request by notifying the
other in writing.

Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party not sending the notice.

(c) The rights and benefits of the Company under this
Agreement shall be transferable to any one or more persons or entities, and all
covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and
obligations of the Purchaser under this Agreement may only be assigned with the
prior written consent of the Company.

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<PAGE> 35
(d) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party from thereafter
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.

(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.

(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN
EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER 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 CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING
RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser 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 this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.

PURCHASER: XICOR, INC.

______________________________________ By: ________________________________
Signature

______________________________________ Title: _____________________________
Print Name

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<PAGE> 36
EXHIBIT A-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto _________________________________________________
______________________________________________ (__________) shares of the
Common Stock of Xicor, Inc. standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint _____________________________________
_______ to transfer the said stock on the books of the within named corporation
with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between________________________ and the undersigned
dated ______________, 19__.

Dated: _______________, 19__

Signature: ____________________________

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring
additional signatures on the part of the Purchaser.
<PAGE> 37
EXHIBIT A-3

JOINT ESCROW INSTRUCTIONS

_____________, 19__

Vice President and Controller
Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035

Dear _________________:

As Escrow Agent for both Xicor, Inc., a California corporation (the
"Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock
Purchase Agreement ("Agreement") between the Company and the undersigned, in
accordance with the following instructions:

1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") exercises
the Company's repurchase option set forth in the Agreement, the Company shall
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing hereunder
at the principal office of the Company. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate evidencing the shares of stock to be transferred, to the Company or
its assignee, against the simultaneous delivery to you of the purchase price
(by cash, a check, or some combination thereof) for the number of shares of
stock being purchased pursuant to the exercise of the Company's repurchase
option.

3. Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer
of, the securities. Subject to the provisions of this paragraph 3, Purchaser
<PAGE> 38
shall exercise all rights and privileges of a shareholder of the Company while
the stock is held by you.

4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 30 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

5. If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.

6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.

7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to
do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting
in good faith, and any act done or omitted by you pursuant to the advice of
your own attorneys shall be conclusive evidence of such good faith.

8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or decree,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.

9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

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<PAGE> 39
11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with
your obligations hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor.

12. Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be an officer or agent of the Company or if you shall
resign by written notice to each party. In the event of any such termination,
the Company shall appoint a successor Escrow Agent.

13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.

15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.

COMPANY: Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035

PURCHASER: ____________________________________________
____________________________________________
____________________________________________

ESCROW AGENT: Vice President and Controller
Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035

16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.

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<PAGE> 40
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.

18. These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California.

Very truly yours,

XICOR, INC.

By: ________________________________

Title: _____________________________

PURCHASER:

____________________________________
(Signature)

____________________________________
(Typed or Printed Name)

ESCROW AGENT:

______________________________________
Vice President and Controller

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<PAGE> 41
EXHIBIT A-4
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to the above-referenced
Federal Tax Code, to include in taxpayer's gross income for the current taxable
year, the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:

NAME : TAXPAYER: SPOUSE:

ADDRESS: :

IDENTIFICATION NO. : TAXPAYER: SPOUSE:

TAXABLE YEAR:

2. The property with respect to which the election is made is described as
follows: __________ shares (the "Shares") of the Common Stock of
Xicor, Inc. (the "Company").

3. The date on which the property was transferred is: ______________,
19__.

4. The property is subject to the following restrictions:

The Shares may be repurchased by the Company, or its assignee, on
certain events. This right lapses with regard to a portion of the
Shares based on the continued performance of services by the taxpayer
over time.

5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms
will never lapse, of such property is: $_______________.

6. The amount (if any) paid for such property is:

$_______________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated: ___________________, 19__ ____________________________________

__________________________, Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ___________________, 19__ ____________________________________
Spouse of Taxpayer

<PAGE> 1
EXHIBIT 10.8A

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated as of
February 26, 1996 (this "Amendment"), amends that certain Loan and Security
Agreement, dated as of March 10, 1993, between Xicor, Inc., a California
corporation ("Borrower") and COAST BUSINESS CREDIT, a Division of Southern
Pacific Thrift & Loan Association ("Coast"), a California corporation, the
successor in interest to COASTFED BUSINESS CREDIT CORPORATION, as amended from
time to time (the "Loan Agreement"). All initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Loan Agreement
unless specifically defined herein.

WHEREAS, pursuant to the Loan Agreement, Coast and Borrower have agreed
to extend the renewal date from April 1, 1996 to March 31, 1997;

WHEREAS, to facilitate the extension of the renewal date, the parties
hereto wish to make certain amendments to the Loan Agreement;

NOW THEREFORE, the parties hereto agree as follows:

Section 1. Amendments.

1.1 All references to COASTFED BUSINESS CREDIT CORPORATION ("CoastFed")
in the Loan Agreement shall be deleted and replaced with the following: COAST
BUSINESS CREDIT, a Division of Southern Pacific Thrift & Loan Association
("Coast"), a California corporation, the successor in interest to COASTFED
BUSINESS CREDIT CORPORATION.

1.2 Section 1.2 of the Loan Agreement is amended by deleting the first
sentence of such section in its entirety and replacing it with the following:

Unless specifically provided to the contrary in any Collateral
Agreement, all Loans shall bear interest at a rate equal to
the "Primary Rate" (as hereinafter defined), plus 2% per
annum, calculated on the basis of a 360-day year for the
actual number of days elapsed.

1.3 Section 1.3 of the Loan Agreement is amended by deleting the first
sentence of such section in its entirety and replacing it with the following:

"Borrower shall pay to Coast a loan renewal fee of $40,000, on
April 1, 1996 for the period April 1, 1996 to March 31, 1997,
and each renewal date thereafter.

1.4 Section 8 of the Loan Agreement is amended by deleting the first
sentence of such section in its entirety and replacing it with the following:

"This Loan Agreement and all Collateral Agreement(s) shall
continue to effect until March 31, 1997 (the "renewal date")
and shall thereafter automatically and continuously renew for
successive additional terms of one year(s) each unless
terminated as to future transactions as hereinafter provided."

Section 2. Entire Agreement. The Loan Agreement, as amended hereby,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Borrower represents, warrants and agrees that in entering into
the Loan Agreement and consenting to this Amendment, it has not relied on any
representation, promise, understanding or

<PAGE> 2

agreement, oral or written, of, by or with, Coast or any of its agents,
employees, or counsel, except the representations, promises, understandings and
agreements specifically contained in or referred to in the Loan Agreement, as
amended hereby.

Section 3. Conflicting Terms: In the event of a conflict between the
terms and provisions of this Amendment and the terms and provisions of the Loan
Agreement, the terms of this Amendment shall govern. In all other respects, the
Loan Agreement, as amended and supplemented hereby, shall remain in full force
and effect.

Section 4. Miscellaneous. This Amendment shall be governed by and
construed in accordance with the laws of the State of California. This Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this Amendment by
signing such counterpart.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.

Borrower:

XICOR, INC.,

a California corporation

By: /s/ KLAUS G. HENDIG
-----------------------------

Title: Vice President
--------------------------

Coast:

COAST BUSINESS CREDIT
a Division of Southern Pacific Thrift & Loan Association

By: /s/ EDIT KONDOROSI
-----------------------------

Title: Vice President
--------------------------

<PAGE> 1
EXHIBIT 10.9

XICOR, INC.

1995 DIRECTOR OPTION PLAN

1. Purposes of the Plan. The purposes of this 1995 Director
Option Plan are to attract and retain the best available personnel for service
as Directors (as defined herein) of the Company, to provide additional
incentive to the Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.

All options granted hereunder shall be nonstatutory stock
options.

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

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

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

(d) "Company" means Xicor, Inc., a California corporation.

(e) "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director.

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

(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and
of itself to constitute "employment" by the Company.

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

(i) "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 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 sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in Common Stock) on the
date of grant, as reported in The Wall Street Journal or such other source as
the Board deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices
<PAGE> 2
are not reported, the Fair Market Value of a Share of Common Stock shall be the
mean between the high bid and low asked prices for the Common Stock on the day
of determination, as reported in The Wall Street Journal or such other source
as the Board deems reliable, or;

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

(j) "Option" means a stock option granted pursuant to the
Plan.

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

(l) "Optionee" means a Director who receives an Option.

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

(n) "Plan" means this 1995 Director Option Plan.

(o) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.

(p) "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986.

3. Stock Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 200,000 Shares of Common Stock (the
"Pool"). The Shares may be authorized, but unissued, or reacquired Common
Stock.

If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued
under the Plan shall not be returned to the Plan and shall not become available
for future distribution under the Plan.

4. Administration and Grants of Options under the Plan.

(a) Administrator. Except as otherwise required herein,
the Plan shall be administered by the Board.

(b) Procedure for Grants. The provisions set forth in
this Section 4(b) shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. All grants

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<PAGE> 3
of Options to Directors under this Plan shall be automatic and nondiscretionary
and shall be made strictly in accordance with the following provisions:

(i) No person shall have any discretion to select
which Directors shall be granted Options or to determine the number of Shares
to be covered by Options granted to Directors, the exercise price thereof or
the timing of the grant of such Options.

(ii) Each Director shall be automatically granted
an Option to purchase 20,000 Shares (the "First Option") on the date on which
the later of the following events occurs: (A) the effective date of this Plan,
as determined in accordance with Section 6 hereof, or (B) the date on which
such person first becomes a Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy.

(iii) After the First Option has been granted to a
Director, such Director shall thereafter be automatically granted an Option to
purchase 5,000 Shares (a "Subsequent Option") on the first trading day of May
of each year, if on such date, he or she shall have served on the Board for at
least six (6) months.

(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, the right to exercise any Option granted pursuant to
this Plan before the Company has obtained shareholder approval of the Plan in
accordance with Section 16 hereof shall be conditioned upon obtaining such
shareholder approval of the Plan in accordance with Section 16 hereof.

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

(A) the Option may be exercised by the
Optionee as to each portion thereof which becomes vested as set forth in clause
(D) below for a period of ten (10) years from the date of grant.

(B) the Option shall be exercisable only
while the Director remains a Director of the Company, except as set forth in
Section 8 hereof.

(D) the Option shall become cumulatively
exercisable as to 25% of the Shares subject to the Option on each anniversary
of its date of grant, provided that the Optionee continues to serve as a
Director on such dates.

(vi) In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding Options plus
the number of Shares previously purchased under Options to exceed the Pool,
then the remaining Shares available for Option grant shall be granted under
Options to the Directors on a pro rata basis. No further grants shall be made
until

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<PAGE> 4
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.

(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information and in
accordance with Section 2(i) of the Plan, the Fair Market Value of the Common
Stock; (ii) to interpret the Plan; (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan; (iv) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of an
Option previously granted hereunder; and (v) to make all other determinations
deemed necessary or advisable for the administration of the Plan.

(d) Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final.

5. Eligibility. Options may be granted only to Directors. All
Options shall be automatically granted in accordance with the terms set forth
in Section 4 hereof. A Director who has been granted an Option may, if he or
she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.

6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 16 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan.

7. Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall consist of (i) cash, (ii) check, (iii) promissory note, (iv)
other shares which (x) 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 (y) 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 Company 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 under applicable law.

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<PAGE> 5
8. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of
payment allowable under Section 7 of the Plan. 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 shall 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 10 of the Plan.

Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be 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) Rule 16b-3. Options granted to Directors must comply
with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act
or any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify Plan transactions, and
other transactions by Directors that otherwise could be matched with Plan
transactions, for the maximum exemption from Section 16 of the Exchange Act.

(c) Termination of Continuous Status as a Director. In
the event an Optionee's Continuous Status as a Director terminates (other than
upon the Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option,
but only within thirty (30) days following the date of such termination, and
only to the extent that the Optionee was entitled to exercise it on the date of
such termination (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

-5-
<PAGE> 6
(d) Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), the Optionee may
exercise his or her Option, but only within twelve (12) months following the
date of such termination, and only to the extent that the Optionee was entitled
to exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of termination, or if he or she does
not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

(e) Death of Optionee. In the event of an Optionee's
death, the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance may exercise the Option, but only within
twelve (12) months following the date of death, and only to the extent that the
Optionee was entitled to exercise it on the date of death (but in no event
later than the expiration of its ten (10) year term). To the extent that the
Optionee was not entitled to exercise an Option on the date of death, and to
the extent that the Optionee's estate or a person who acquired the right to
exercise such Option does not exercise such Option (to the extent otherwise so
entitled) within the time specified herein, the Option shall terminate.

9. Non-Transferability of Options. The 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.

10. Adjustments Upon Changes in Capitalization.

(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Option and the number of Shares 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 covered by each such outstanding Option
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares 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 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, to the extent that an
Option has not been previously exercised, it will terminate immediately prior
to the consummation of such proposed action. The Board may, in the

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<PAGE> 7
exercise of its sole discretion in such instances, declare that any 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 may be assumed or an
equivalent option or right may be substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. The Administrator may, in
lieu of such assumption or substitution, provide for the Optionee to have the
right to exercise the Option as to all or a portion of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If the
Administrator makes an Option 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 fifteen
(15) days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, 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.

11. Amendment and Termination of the Plan.

(a) Amendment and Termination. Except as set forth in
Section 4 or as further limited by the Rule 16b-3 provisions relating to
formula award plans, the Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 promulgated under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such
a degree as required.

(b) Effect of Amendment or Termination. Any such
amendment, alteration, suspension, discontinuation, or termination of the Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if this Plan had not been amended, altered, suspended,
discontinued or terminated.

-7-
<PAGE> 8
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4
hereof. Notice of the determination shall be given to each Director to whom an
Option is so granted within a reasonable time after the date of such grant.

13. Conditions Upon Issuance of Shares. 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 pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any
stock exchange or quotation system upon which the Shares may then be listed or
quoted, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.

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 by any of
the aforementioned relevant provisions of law.

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.

14. 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. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.

16. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company at or prior to the first
annual meeting of shareholders held subsequent to the first granting of an
Option hereunder. Such shareholder approval shall be obtained in the degree
and manner required under applicable state and federal law.

-8-
<PAGE> 9
XICOR, INC.

DIRECTOR OPTION AGREEMENT

Xicor, Inc., a California corporation (the "Company"), has granted to
____________________________________________________ (the "Optionee"), an
option to purchase a total of [__________________ (_________)] shares of the
Company's Common Stock (the "Optioned Stock"), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions of the Company's 1995 Director Option Plan (the "Plan") adopted by
the Company which is incorporated herein by reference. The terms defined in
the Plan shall have the same defined meanings herein.

1. Nature of the Option. This Option is a nonstatutory option
and is not intended to qualify for any special tax benefits to the Optionee.

2. Exercise Price. The exercise price is $_______ for each share
of Common Stock.

3. Exercise of Option. This Option shall be exercisable during
its term in accordance with the provisions of Section 8 of the Plan as follows:

(i) Right to Exercise.

(a) This Option shall become exercisable in
installments cumulatively with respect to twenty-five percent (25%) of the
Optioned Stock one year after the date of grant, and as to an additional
twenty-five percent (25%) of the Optioned Stock on each anniversary of the date
of grant, so that one hundred percent (100%) of the Optioned Stock shall be
exercisable four (4) years after the date of grant; provided, however, that in
no event shall any Option be exercisable prior to the date the shareholders of
the Company approve the Plan.

(b) This Option may not be exercised for a
fraction of a share.

(c) In the event of Optionee's death, disability
or other termination of service as a Director, the exercisability of the Option
is governed by Section 8 of the Plan.

(ii) Method of Exercise. This Option shall be exercisable
by written notice which shall state the election to exercise the Option and the
number of Shares in respect of which the Option is being exercised. Such
written notice, in the form attached hereto as Exhibit A, shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by
payment of the exercise price.

4. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee:

(i) cash;

(ii) check; or
<PAGE> 10
(iii) delivery of a properly executed exercise notice
together with such other documentation as the Company 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.

5. Restrictions on Exercise. This Option may not be exercised if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted. As a condition to
the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.

6. 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 this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

7. Term of Option. This Option may be exercised by the Optionee
as to each portion thereof which becomes vested as set forth in subsection
3(i)(a) hereof for a period of ten (10) years from the date of grant, and may
be exercised during such periods only in accordance with the Plan and the terms
of this Option.

8. Taxation Upon Exercise of Option. Optionee understands that,
upon exercise of this Option, he or she will recognize income for tax purposes
in an amount equal to the excess of the then Fair Market Value of the Shares
purchased over the exercise price paid for such Shares. Since the Optionee is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended,
under certain limited circumstances the measurement and timing of such income
(and the commencement of any capital gain holding period) may be deferred, and
the Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of
such Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the Option, to the extent
not included in income as described above, will be treated as capital gain or
loss.

DATE OF GRANT: ______________

XICOR, INC.,
a California corporation

By: ________________________________

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<PAGE> 11
Optionee acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto, and represents that he or she is familiar with the terms
and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.

Dated: _________________

____________________________________
Optionee

____________________________________
Residence Address

____________________________________

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<PAGE> 12
EXHIBIT A

DIRECTOR OPTION EXERCISE NOTICE

Xicor, Inc.
1511 Buckeye Drive
Milpitas, CA 95035

Attention: Corporate Secretary

1. Exercise of Option. The undersigned ("Optionee") hereby
elects to exercise Optionee's option to purchase ______ shares of the Common
Stock (the "Shares") of Xicor, Inc. (the "Company") under and pursuant to the
Company's 1995 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").

2. Representations of Optionee. Optionee acknowledges that
Optionee has received, read and understood the Agreement.

3. Federal Restrictions on Transfer. Optionee understands that
the Shares must be held indefinitely unless they are registered under the
Securities Act of 1933, as amended (the "1933 Act"), or unless an exemption
from such registration is available, and that the certificate(s) representing
the Shares may bear a legend to that effect. Optionee understands that the
Company is under no obligation to register the Shares and that an exemption may
not be available or may not permit Optionee to transfer Shares in the amounts
or at the times proposed by Optionee.

4. Tax Consequences. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee is not relying on
the Company for any tax advice. The Company recommends that Optionee consult
with a tax consultant in connection with the purchase or disposition of the
Shares.

5. Delivery of Payment. Optionee herewith delivers to the
Company the aggregate purchase price for the Shares that Optionee has elected
to purchase plus any federal or state taxes required to be withheld by the
Company and has made provision for the payment of any other federal or state
taxes required to be paid by the Optionee.
<PAGE> 13
6. Entire Agreement. The Agreement is incorporated herein by
reference. This Exercise Notice and the Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof. This Exercise Notice and the Agreement are governed by California law
except for that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

OPTIONEE: XICOR, INC.

_________________________________ By: ________________________________

Its: _______________________________

Address:

Dated: __________________________ Dated: _____________________________

-2-

<PAGE> 1

EXHIBIT 11.1

XICOR, INC.

STATEMENT OF COMPUTATION OF EARNINGS (LOSS) PER SHARE

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income (loss) $10,036,000 $2.299,000 $(5,817,000)
=========== ========== ===========

Weighted average number of
common shares outstanding
during the period 18,217,000 18,004,000 17,988,000

Equivalent common shares
attributed to dilutive
employee stock options 814,000 360,000 --(1)
----------- ----------- -----------

Total common and common
equivalent shares 19,031,000 18,364,000 17,988,000
=========== =========== ===========

Earnings (loss) per share $ 0.53 $ 0.13 $ (0.32)
=========== =========== ===========
</TABLE>

(1) Common share equivalents have been excluded because they were
antidilutive.

Fully diluted earnings per share do not differ significantly from primary
earnings per share.

<PAGE> 1
Exhibit 13.1

Management's Discussion & Analysis of Financial Condition and Results of
Operations

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing on pages 8 to 15.

Results of Operations

Xicor's sales were $113.6 million in 1995, a 10% increase over 1994 sales of
$103.4 million. Over the past several years, Xicor has been focusing its chip
design efforts toward the development of new proprietary products, with the
intent of increasing sales and gross profit margins. The growth in sales during
1995 was primarily due to increased sales of proprietary products. Proprietary
product sales also increased in 1994 compared to 1993. Sales of commodity
products decreased in 1994 compared to 1993 due to price attrition and the
reduction of certain low margin sales, causing 1994 sales to be essentially
level with 1993 sales of $104.4 million. While the number of units shipped
increased during each of the last three years, unit prices have continually
decreased, a pattern that is inherent to the semiconductor industry.

Gross profit as a percentage of sales was 39% in 1995, 34% in 1994 and 25% in
1993. The sequential improvement from 1993 to 1995 was due primarily to
increased manufacturing efficiencies and a greater percentage of sales of
products with higher margins. The gross profit margin in 1995 was also favorably
impacted by a reduction in depreciation expense. These improvements continue to
be partially offset by price erosion. Maintaining or increasing the gross profit
percentage in 1996 is contingent upon increased sales, product mix and prices
and successful execution of Xicor's plans to further improve manufacturing
efficiencies.

Research and development expenses were 13% of sales in 1995, 14% in 1994 and 12%
in 1993. Xicor is continuing to invest substantial funds in the development of
innovative proprietary products and an advanced submicron manufacturing process
with the goal of further improving the gross profit percentage by increasing the
proportion of higher margin proprietary products and improving manufacturing
efficiencies. Research and development activities require an increasing degree
of complexity of design and manufacturing process and consequently a larger
amount of funds is expected to be invested in research and development in 1996
than was invested in 1995.

Selling, general and administrative expenses represented 17% of sales in 1995,
18% in 1994 and 17% in 1993. Selling, general and administrative expenses
increased 4% in absolute dollars from 1994 to 1995 to support higher revenue
levels, but decreased as a percentage of sales due to ongoing cost control
measures. Selling, general and administrative expenses increased from 1993 to
1994 primarily due to increased marketing and selling activities related to new
product promotions and increased international selling expenses.

Interest expense remained relatively stable from 1994 to 1995 after decreasing
in 1994 compared to 1993 due to normal principal payments on outstanding lease
debt. Interest expense is expected to increase substantially in 1996 due to the
financing of $4.7 million of capital equipment during the latter part of 1995
and the planned financing of approximately $15 million of capital equipment
additions during 1996.

Interest income increased in both 1995 and 1994 primarily due to an increase in
the average balance invested caused by funds generated from operations in 1995
and 1994 and, to a lesser extent, the upward trend in interest rates during
1994.

The provision for income taxes for 1995 and 1994 consisted primarily of federal
and state minimum taxes, which result from limitations on the use of net
operating loss carryforwards, and foreign taxes. No taxes were provided in 1993
due to the net loss. Net deferred tax assets of $34 million at December 31, 1995
remain fully reserved because of the uncertainty regarding the ultimate
realization of these assets.

Page 4
<PAGE> 2
Xicor's return to profitability in 1994 was aided by a planned program to
realign its product mix to maximize sales of higher margin proprietary products
and selectively reduce sales of low margin commodity products. Order levels
declined in the summer of 1994, largely due to the realignment of Xicor's
product mix, which resulted in a lower sales level in the fourth quarter of 1994
compared to the first three quarters of 1994. Net income increased in 1995
compared to 1994 due to a substantial increase in orders in 1995 and resultant
increase in sales and improvement in the gross profit percentage. Sales and
gross profit improved sequentially each quarter in 1995 through the third
quarter. Sales for the fourth quarter of 1995 remained at the third quarter 1995
run rate and the gross profit percentage decreased slightly due to capacity
issues and related manufacturing inefficiencies that arose during the fourth
quarter. Starting in the fourth quarter of 1995 and continuing through the first
half of 1996, additional wafer production and test equipment is being installed
to increase capacity and productivity.

Maintaining or improving operating results in 1996 is contingent upon increased
order and sales levels, product mix and prices and successful execution of
Xicor's plans to increase manufacturing capacity and further improve
manufacturing efficiencies.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding the expectation of
increased capacity and productivity. Except for historical information, the
matters discussed in this Annual Report are forward-looking statements that are
subject to certain risks and uncertainties that could cause the actual results
to differ materially from those projected. Factors that could cause actual
results to differ materially include the following: Xicor's ability to have an
appropriate amount of production capacity in a timely manner, fluctuations in
customer demand, competitive factors such as pricing pressures on existing
products and the timing and market acceptance of new product introductions, the
timely development of new products and processes, general economic conditions
and conditions specific to the semiconductor industry and the risk factors
listed from time to time in Xicor's SEC reports, including but not limited to
the "Factors Affecting Future Results" section below and Part I, Item 1. of the
Form 10-K. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Xicor
undertakes no obligation to publicly release or otherwise disclose the result of
any revision to these forward-looking statements which may be made as a result
of events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Page 5
<PAGE> 3
Factors Affecting Future Results

The semiconductor industry is highly competitive and characterized by rapidly
changing technology and steadily declining product prices. Xicor's results of
operations are affected by a wide variety of factors, including general economic
conditions and conditions specific to the semiconductor industry, decreases in
average selling price over the life of any particular product, the timing of new
product introductions (both by Xicor and competitors), availability of new
manufacturing technologies, the ability to secure intellectual property rights
in a rapidly evolving market and the ability to have an appropriate amount of
production capacity in a timely manner. The sales level in any specific quarter
is also a function of orders received during that quarter, as customers continue
to shorten lead times for purchase commitments. Consistent with industry
practice, customer orders are generally subject to cancellation by the customer
without penalty. Xicor may be at a disadvantage in competing with major domestic
and foreign concerns that have significant financial resources, established and
diverse product lines, worldwide vertically integrated production facilities and
extensive research and development staffs.

The semiconductor industry is also characterized by substantial capital and
research and development investment for products and processes. The rapid rate
of technological change within the industry requires Xicor to continually
develop new and improved products and processes to maintain its competitive
position. Xicor expects to continue to invest in the research and development of
new products and manufacturing processes in 1996 and beyond, although there can
be no assurances that such research and development efforts or new products will
be successful.

Due to the foregoing and other factors, past results are a much less reliable
predictor of the future than is the case in many older, more stable and less
dynamic industries. In addition, the securities of many high technology
companies have historically been subject to extensive price and volume
fluctuations that may adversely affect the market price of their common stock.

Adoption of New Accounting Pronouncement

In 1995, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Only
the disclosure requirements of this standard will be adopted by Xicor for the
year ending December 31, 1996, and therefore there will be no impact on Xicor's
consolidated financial position or results of operations.

Page 6
<PAGE> 4
Adoption of New Quarterly Accounting Calendar

Since inception, Xicor's quarterly accounting periods have consisted of three
12-week quarters and one 16-week fourth quarter. To make comparative analysis
easier for Xicor shareholders and other potential investors, Xicor's quarterly
accounting periods are being changed to four even 13-week quarters beginning in
1996. Xicor's fiscal year, which ends on the Sunday nearest December 31, will
not change. In 1996, Xicor's quarters will end on March 31, June 30, September
29 and December 29.

Liquidity and Capital Resources

At December 31, 1995, Xicor had $35.4 million in cash, cash equivalents and
short-term investments. Corresponding balances at the end of 1994 and 1993 were
$20.6 million and $10.4 million, respectively. During 1995, Xicor generated
$20.8 million of cash from operating activities and $1.6 million from the
exercise of employee stock options, resulting in a $14.8 million net increase in
Xicor's cash and short-term investment position after capital asset purchases of
$4.8 million and long-term debt repayments of $2.8 million. Xicor used long-term
financing to acquire additional capital assets of $4.7 million in 1995.

Capital expenditures for 1996 are presently planned at approximately $25 million
consisting principally of production equipment to support anticipated sales
growth in 1996 and beyond. Initially some of this equipment will be used in the
development of an advanced manufacturing process and related products currently
under development. Financing has been arranged for approximately $6 million of
the planned 1996 equipment acquisitions. Xicor is presently investigating
additional equipment financing. At December 31, 1995, Xicor had entered into
commitments for equipment purchases and leasehold improvements aggregating
approximately $11.5 million.

Xicor has a line of credit agreement with a financial institution that expires
March 31, 1997, provides for borrowings of up to $7.5 million against eligible
accounts receivable and is secured by all of Xicor's assets. Interest on
borrowings is charged at the prime lending rate plus 2% and is payable monthly.
At December 31, 1995, the entire $7.5 million was available to Xicor based on
the eligible accounts receivable balances and the borrowing formulas. To date,
no amounts have been borrowed under this line of credit. Management believes
that currently available cash and equipment financing and expected cash flow
from operations will be adequate to support Xicor's operations for the next
twelve months.

Page 7
<PAGE> 5
Consolidated Balance Sheets

<TABLE>
<CAPTION>
December 31,
1995 1994
------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 17,259,000 $ 14,754,000
Short-term investments 18,136,000 5,886,000
Accounts receivable 13,430,000 11,060,000
Inventories 11,977,000 15,234,000
Prepaid expenses and other current assets 902,000 610,000
------------------------------
Total current assets 61,704,000 47,544,000
Property, plant and equipment, at cost
less accumulated depreciation 17,369,000 15,383,000
Other assets 366,000 356,000
------------------------------
$ 79,439,000 $ 63,283,000
------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 6,128,000 $ 5,976,000
Accrued expenses 8,174,000 6,879,000
Deferred income on shipments to distributors 13,394,000 12,190,000
Current portion of obligations under capital leases 3,483,000 2,668,000
------------------------------
Total current liabilities 31,179,000 27,713,000
------------------------------
Long-term obligations under capital leases 5,229,000 4,186,000
------------------------------

Commitments and contingencies

Shareholders' equity:
Preferred stock; 5,000,000 shares authorized - -
Common stock; 75,000,000 shares authorized;
18,524,202 and 18,022,727 shares
outstanding 122,431,000 120,820,000
Accumulated deficit (79,400,000) (89,436,000)
------------------------------
43,031,000 31,384,000
------------------------------
$ 79,439,000 $ 63,283,000
------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

Page 8
<PAGE> 6
Consolidated Statements of Operations

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
Net sales $113,550,000 $103,386,000 $104,415,000
Cost of sales 69,214,000 68,056,000 78,725,000
--------------------------------------------
Gross profit 44,336,000 35,330,000 25,690,000
--------------------------------------------

Operating expenses:
Research and development 15,270,000 14,085,000 12,847,000
Selling, general and administrative 19,474,000 18,779,000 18,026,000
--------------------------------------------
34,744,000 32,864,000 30,873,000
--------------------------------------------
Income (loss) from operations 9,592,000 2,466,000 (5,183,000)
Interest expense (605,000) (618,000) (840,000)
Interest income 1,584,000 580,000 206,000
--------------------------------------------
Income (loss) before income taxes 10,571,000 2,428,000 (5,817,000)
Provision for income taxes 535,000 129,000 -
--------------------------------------------
Net income (loss) $ 10,036,000 $ 2,299,000 $ (5,817,000)
--------------------------------------------
Net income (loss) per share $ .53 $ .13 $ (.32)
--------------------------------------------
Average common shares and equivalents 19,031,000 18,364,000 17,988,000
--------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

Page 9
<PAGE> 7
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
-----------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income(loss) $ 10,036,000 $ 2,299,000 $(5,817,000)
Adjustments to reconcile net
income (loss) to cash provided
by operating activities:
Depreciation and amortization 7,482,000 12,425,000 14,581,000
Changes in assets and liabilities:
Accounts receivable (2,370,000) 3,433,000 (3,913,000)
Inventories 3,257,000 (2,293,000) 3,504,000
Prepaid expenses and other
current assets (292,000) (213,000) (136,000)
Other assets (10,000) 9,000 41,000
Accounts payable and accrued expenses 1,447,000 (2,189,000) (2,676,000)
Deferred income on shipments
to distributors 1,204,000 1,442,000 4,455,000
-----------------------------------------
Net cash provided by operating activities 20,754,000 14,913,000 10,039,000
-----------------------------------------
Cash flows from investing activities:
Investments in plant and equipment, net (4,762,000) (1,290,000) (2,325,000)
Purchases of short-term investments (26,315,000) (10,893,000) (3,524,000)
Maturities of short-term investments 14,065,000 7,017,000 2,512,000
-----------------------------------------
Net cash used for investing activities (17,012,000) (5,166,000) (3,337,000)
-----------------------------------------
Cash flows from financing activities:
Repayments of obligations under capital leases (2,848,000) (3,393,000) (2,610,000)
Proceeds from sale of common stock
to employees 1,611,000 53,000 1,000
-----------------------------------------
Net cash used for financing activities (1,237,000) (3,340,000) (2,609,000)
-----------------------------------------
Increase in cash and cash equivalents 2,505,000 6,407,000 4,093,000
Cash and cash equivalents at beginning of year 14,754,000 8,347,000 4,254,000
-----------------------------------------
Cash and cash equivalents at end of year $ 17,259,000 $ 14,754,000 $ 8,347,000
-----------------------------------------

Supplemental information:
Cash paid during the year for:
Interest expense $ 608,000 $ 619,000 $ 845,000
Income taxes 248,000 134,000 83,000
Equipment acquired pursuant to
capital leases 4,706,000 3,402,000 -
</TABLE>

See accompanying notes to consolidated financial statements.

Page 10
<PAGE> 8
Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
Common Stock Accumulated
Shares Amount Deficit Total
----------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 17,987,552 $120,766,000 $(85,918,000) $34,848,000
Exercise of stock options 1,500 1,000 - 1,000
Net loss - - (5,817,000) (5,817,000)
----------------------------------------------------
Balance at December 31, 1993 17,989,052 120,767,000 (91,735,000) 29,032,000
Exercise of stock options 33,675 53,000 - 53,000
Net income - - 2,299,000 2,299,000
----------------------------------------------------
Balance at December 31, 1994 18,022,727 120,820,000 (89,436,000) 31,384,000
Exercise of stock options 501,475 1,611,000 - 1,611,000
Net income - - 10,036,000 10,036,000
----------------------------------------------------
Balance at December 31, 1995 18,524,202 $122,431,000 $(79,400,000) $43,031,000
----------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

Page 11
<PAGE> 9
Notes to Consolidated Financial Statements

Note 1--The Company and its significant accounting policies:

Xicor, Inc. (Xicor) operates in a single industry segment and is engaged in the
development, manufacture and sale of semiconductor devices.

Export sales, principally to customers in Europe and the Far East, were
$53,136,000 in 1995, $51,882,000 in 1994 and $48,358,000 in 1993. One customer
accounted for 14% and 12% of Xicor's revenues in 1995 and 1994, respectively. No
customer accounted for 10% of revenues in 1993.

Xicor has adopted accounting practices which are generally accepted in the
industry in which it operates. Following are Xicor's significant accounting
policies:

Fiscal year

Xicor's fiscal year ends on the Sunday nearest December 31. For purposes of
financial statement presentation, each fiscal year is deemed to have ended on
December 31.

Principles of consolidation

The consolidated financial statements include the accounts of Xicor and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

Cash equivalents and short-term investments

Cash equivalents and short-term investments consist principally of United States
Government Treasury Bills and certificates of deposit. Highly liquid investments
with a maturity of three months or less at the time of purchase are considered
cash equivalents. All investments are classified as "held-to-maturity
securities" and are valued at amortized cost, which approximates fair market
value.

Concentrations of credit risk

Financial instruments which potentially subject Xicor to concentrations of
credit risk consist principally of cash equivalents and short-term investments
and accounts receivable. Xicor invests primarily in United States Government
Treasury Bills and certificates of deposit and places its investments with
high-credit-quality financial institutions. Xicor's accounts receivable are
derived from sales to original equipment manufacturers and distributors serving
a variety of industries located primarily in the United States, Europe and the
Far East. Xicor performs ongoing credit evaluations of its customers and to date
has not experienced any material losses.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out basis for raw materials and supplies, and a standard
cost basis (which approximates first-in, first-out) for work in process and
finished goods.

Property and equipment

Depreciation for financial reporting purposes is computed using the
straight-line method and the assets' estimated useful lives, principally five
years. Amortization of capitalized leased building and building improvements,
and of leasehold improvements, is computed over the shorter of the remaining
terms of the leases or the estimated useful lives of the improvements.
Construction in progress consists of leasehold improvements not completed and
equipment received but not yet placed in service.

Revenue recognition

Certain of Xicor's sales are made to distributors under agreements allowing
rights of return and price protection on unsold merchandise. Such sales are not
recognized until the merchandise is sold by the distributors. Amounts billed to
<PAGE> 10
the distributors are included as accounts receivable and the related gross
profit is deferred and reflected as a current liability until the merchandise is
sold by the distributors. Revenue from all other product sales is recognized
upon shipment.

Net income (loss) per share

Net income (loss) per share is computed using the weighted average number of
common shares and dilutive common equivalent shares outstanding during the
period.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.

Income taxes

The provision for income taxes is determined in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, which
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
financial statements and tax returns. The measurement of deferred tax assets may
be reduced by a valuation allowance.

Page 12
<PAGE> 11
Notes to Consolidated Financial Statements

Note 2--Balance sheet detail:

<TABLE>
<CAPTION>
December 31,
1995 1994
--------------------------------------
<S> <C> <C>
Inventories:
Raw materials and supplies $ 3,996,000 $ 1,686,000
Work in process 3,497,000 8,048,000
Finished goods 4,484,000 5,500,000
--------------------------------------
$ 11,977,000 $ 15,234,000
--------------------------------------
Property, plant and equipment:
Leased building and
building improvements $ 1,602,000 $ 1,602,000
Leasehold improvements 16,679,000 16,558,000
Equipment 76,981,000 72,763,000
Furniture and fixtures 1,699,000 1,680,000
Construction in progress 5,245,000 950,000
--------------------------------------
102,206,000 93,553,000
Accumulated depreciation (84,837,000) (78,170,000)
--------------------------------------
$ 17,369,000 $ 15,383,000
--------------------------------------
Accrued expenses:
Accrued wages and
employee benefits $ 4,089,000 $ 2,890,000
Other accrued expenses 4,085,000 3,989,000
---------------------------------------
$ 8,174,000 $ 6,879,000
--------------------------------------
</TABLE>

Accounts receivable

Accounts receivable at December 31, 1995 and 1994 are presented net of an
allowance for doubtful accounts of $500,000.

Note 3--Leasing arrangements and commitments:

Xicor leases its facilities and certain equipment under non-cancelable lease
agreements. Xicor's major facilities leases expire at various dates through 2001
and provide for renewal options to extend the leases for up to 15 years. These
leases provide for increased rental rates, generally based on the Consumer Price
Index with specified limitations, at various times during the lease terms and
during the renewal periods. Equipment leases are generally for terms of three to
four years and require Xicor to pay property taxes, insurance and maintenance
and repair costs.

Leases which meet certain specific criteria are considered capital leases and,
accordingly, are accounted for as the acquisition of an asset and the incurrence
of a liability. Upon expiration of the related lease, the then fully depreciated
asset (and the related accumulated depreciation) are removed from the accounts.
Assets recorded under capital leases were as follows:

<TABLE>
<CAPTION>
December 31,
1995 1994
------------------------------------
<S> <C> <C>
Leased building and building
improvements $ 1,602,000 $ 1,602,000
Equipment 13,618,000 10,135,000
------------------------------------
15,220,000 11,737,000
</TABLE>
<PAGE> 12
<TABLE>
<S> <C> <C>
Accumulated depreciation (6,650,000) (3,889,000)
------------------------------------
$ 8,570,000 $ 7,848,000
------------------------------------
</TABLE>

Minimum future lease payments under all non-cancelable leases as of December 31,
1995 were as follows:

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-----------------------------
<S> <C> <C>
Years:
1996 $ 4,076,000 $ 2,992,000
1997 3,051,000 2,923,000
1998 1,437,000 2,853,000
1999 1,399,000 3,168,000
2000 - 554,000
2001 - 185,000
-----------------------------
Total minimum lease payments 9,963,000 $12,675,000
-----------
Less amount representing interest (1,251,000)
-----------
Present value of minimum
lease payments 8,712,000
Less current portion (3,483,000)
-----------
Long-term lease obligation $ 5,229,000
-----------
</TABLE>

Total rental expense under all non-capitalized leases was as follows (including
month-to-month rentals): 1995--$2,423,000; 1994--$2,604,000; 1993--$2,540,000.

Note 4--Line of credit agreement:

Xicor has a line of credit agreement with a financial institution which expires
on March 31, 1997 and provides for borrowings of up to 80% of eligible accounts
receivable, not to exceed $7.5 million. Interest is charged at the prime lending
rate plus 2%, with a minimum rate of 8%, and is payable monthly. This credit
facility is secured by all the assets of Xicor. The agreement contains
restrictions which, among other things, preclude the payment of dividends, stock
repurchases and the sale of assets other than in the normal course of business.

Note 5--Stock options:

Xicor has two stock option plans for its employees, the 1979 Plan, under which
no further options may be granted, and the 1990 Plan. In 1995 the Board of
Directors, subject to shareholder

Page 13
<PAGE> 13
Notes to Consolidated Financial Statements

approval, increased the number of shares that may be issued under the 1990 Plan
from 1,500,000 to 2,400,000. At December 31, 1995, options for 367,500 shares
had been granted subject to such shareholder approval. These options are
included in the table below.

In April 1995, Xicor adopted the 1995 Director Option Plan, under which 200,000
shares of common stock have been reserved for issuance. The Plan provides for an
initial grant of 20,000 options to each of the Company's directors and automatic
annual grants of 5,000 options thereafter. As of December 31, 1995, options for
100,000 shares had been granted under the Director Plan.

Options under all plans generally are exercisable in 25% annual increments and
expire no later than ten years from date of grant. All outstanding options were
granted at 100% of the fair market value of the stock at the date of grant. The
following table summarizes the option activity under all plans.

<TABLE>
<CAPTION>
December 31,
1995 1994 1993
---------------------------------
<S> <C> <C> <C>
Outstanding at
beginning of year 1,582,575 1,779,463 1,598,375
Granted 818,000 50,000 631,300
Cancelled (215,662) (213,213) (448,712)
Exercised (501,475) (33,675) (1,500)
---------------------------------
Outstanding at end of year 1,683,438 1,582,575 1,779,463
---------------------------------
Exercisable at end of year 645,188 1,023,200 936,438
---------------------------------
Options available for grant 950,400 537,075 488,350
---------------------------------
</TABLE>

Options outstanding at December 31, 1995 were granted at exercise prices ranging
from $0.69 to $11.00 per share, with an average option exercise price of $3.28
per share. At December 31, 1995, 2,658,838 shares of common stock were reserved
for issuance of stock options.

Note 6--Employee Incentive Cash Bonus Profit Sharing Program:

Xicor has an Employee Incentive Cash Bonus Profit Sharing Program (the
"Program"). Under the Program, twice a year (two profit sharing periods) 5% to
15% of Xicor's consolidated operating income, excluding certain non-product
revenues, is distributed to employees. The exact percentage to be distributed is
determined by a Committee of the Board of Directors; however, in no event may
the distribution result in a net loss after taxes to Xicor for any profit
sharing period. Profit sharing bonuses relating to 1995 and 1994 totaled
$1,062,000 and $370,000, respectively. No profit sharing bonuses were
distributed in 1993.

Note 7--Income taxes:

The current income tax provision consists of the following:

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
---------------------------------
<S> <C> <C>
Federal $171,000 $ 49,000
State 72,000 9,000
Foreign 292,000 71,000
---------------------------------
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C>
$535,000 $129,000
---------------------------------
</TABLE>

The reconciliation between the amount computed by applying the U.S. Federal
statutory rate and the reported tax expense is as follows:

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
----------------------------------
<S> <C> <C>
Federal statutory rate 35.0% 35.0%
Utilization of previously
reserved net operating losses (24.3) (27.8)
Other (5.4) (1.9)
----------------------------------
5.3% 5.3%
----------------------------------
</TABLE>

Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
December 31,
1995 1994
--------------------------------------
<S> <C> <C>
Deferred tax assets:
Federal and state loss and
credit carryforwards $ 21,056,000 $ 24,701,000
Capitalized research
and development 2,946,000 4,176,000
Inventory reserves
and basis differences 4,948,000 3,929,000
Deferred income on
shipments to distributors 2,112,000 1,898,000
Depreciation 2,041,000 2,146,000
Other 2,282,000 2,498,000
-------------------------------------
35,385,000 39,348,000
Deferred tax liabilities (1,196,000) (1,363,000)
Deferred tax assets
valuation allowance (34,189,000) (37,985,000)
-------------------------------------
Net deferred taxes $ - $ -
-------------------------------------
</TABLE>

Page 14
<PAGE> 15
Notes to Consolidated Financial Statements

The deferred tax assets valuation allowance is attributed to U.S. Federal and
state deferred tax assets. Management believes sufficient uncertainty exists
regarding the realizability of the net deferred tax assets such that a full
valuation allowance is required.

At December 31, 1995, Xicor had Federal tax net operating loss carryforwards and
general business credit carryforwards of approximately $47,000,000 and
$3,000,000, respectively. These carryforwards expire in varying amounts from
1996 through 2009. The net operating loss carryforward includes approximately
$7,000,000 resulting from employee exercises of non-incentive stock options, the
tax benefit of which, when realized, will be accounted for as an addition to
common stock rather than as a reduction of the provision for income taxes. At
December 31, 1995, Xicor also had California state tax net operating loss and
credit carryforwards of approximately $8,000,000 and $1,000,000, respectively.
These carryforwards expire in varying amounts from 1997 to 2005. Availability of
the net operating loss and general business credit carryforwards may potentially
be reduced in the event of certain substantial changes in equity ownership.

Note 8--Contingencies:

In the normal course of business, Xicor receives and makes inquiries with regard
to possible patent infringement. Where deemed advisable, Xicor may seek to enter
into or extend licenses or negotiate settlements. Outcomes of such negotiations
may not be determinable at any one point in time; however, management currently
does not believe that such licenses or settlements will materially affect
Xicor's financial position or results of operations.

Report of Independent Accountants

To the Shareholders and Board of Directors of Xicor, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Xicor, Inc.
and its subsidiaries at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

Price Waterhouse LLP

San Jose, California
January 24, 1996

Page 15
<PAGE> 16
Financial Operating Information

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations Data:
Net sales $113,550,000 $103,386,000 $104,415,000 $ 93,017,000 $ 93,822,000
Cost of sales 69,214,000 68,056,000 78,725,000 73,792,000 68,951,000
------------------------------------------------------------------------
Gross profit 44,336,000 35,330,000 25,690,000 19,225,000 24,871,000
------------------------------------------------------------------------

Operating expenses:
Research and development 15,270,000 14,085,000 12,847,000 22,448,000 23,781,000
Selling, general and
administrative 19,474,000 18,779,000 18,026,000 17,960,000 17,143,000
Restructuring charge - - - 7,979,000 -
------------------------------------------------------------------------
34,744,000 32,864,000 30,873,000 48,387,000 40,924,000
------------------------------------------------------------------------
Income (loss) from operations 9,592,000 2,466,000 (5,183,000) (29,162,000) (16,053,000)
Interest expense (605,000) (618,000) (840,000) (849,000) (580,000)
Interest income 1,584,000 580,000 206,000 506,000 980,000
------------------------------------------------------------------------
Income (loss) before income taxes 10,571,000 2,428,000 (5,817,000) (29,505,000) (15,653,000)
Provision for income taxes 535,000 129,000 - - -
------------------------------------------------------------------------
Net income (loss) $ 10,036,000 $ 2,299,000 $ (5,817,000) $(29,505,000) $(15,653,000)
------------------------------------------------------------------------
Net income (loss) per share $ .53 $ .13 $ (.32) $ (1.64) $ (.87)
------------------------------------------------------------------------
Average common shares
and equivalents 19,031,000 18,364,000 17,988,000 17,988,000 17,988,000
------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
December 31,
1995 1994 1993 1992 1991
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 30,525,000 $ 19,831,000 $ 9,627,000 $ 5,913,000 $ 21,884,000
Total assets 79,439,000 63,283,000 61,669,000 68,316,000 95,998,000
Long-term debt 5,229,000 4,186,000 4,076,000 6,843,000 6,780,000
Accumulated deficit (79,400,000) (89,436,000) (91,735,000) (85,918,000) (56,413,000)
Shareholders' equity 43,031,000 31,384,000 29,032,000 34,848,000 64,353,000
</TABLE>

Page 16
<PAGE> 17
Financial Information by Quarter (Unaudited)

The following table sets forth unaudited financial information for each
quarterly reporting period in the two fiscal years ended December 31, 1995 and
1994:

<TABLE>
<CAPTION>
1995
First Second Third Fourth(1)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $23,535,000 $25,683,000 $27,931,000 $36,401,000
Cost of sales 14,562,000 15,696,000 16,569,000 22,387,000
Research and development 3,458,000 3,459,000 3,981,000 4,372,000
Selling, general and administrative 4,342,000 4,592,000 4,718,000 5,822,000
Net income 1,233,000 2,026,000 2,766,000 4,011,000
Net income per share .07 .11 .14 .21
Common Stock Market price range(2) High 2-15/16 7-5/8 9 8-11/16
Low 2 2-1/4 5-1/2 6-1/16

<CAPTION>
1994
First Second Third Fourth(1)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $24,768,000 $24,783,000 $23,276,000 $30,559,000
Cost of sales 17,018,000 16,420,000 15,180,000 19,438,000
Research and development 2,773,000 3,102,000 3,365,000 4,845,000
Selling, general and administrative 4,368,000 4,508,000 4,217,000 5,686,000
Net income 511,000 684,000 471,000 633,000
Net income per share .03 .04 .03 .03
Common Stock Market price range(2) High 3-1/8 2-15/16 2-15/16 2-3/4
Low 1-1/2 2-3/16 1-5/8 1-7/8
</TABLE>

(1) Fourth quarter consisted of 16 weeks; other quarters consisted of 12 weeks.
(2) Xicor's Common Stock trades on the Nasdaq National Market tier of the
Nasdaq Stock Market(SM) under the symbol: XICO. The above table sets forth
the high and low sales prices for the Common Stock as reported by Nasdaq
for each calendar quarter. There were approximately 1,720 shareholders of
record on December 31, 1995. Xicor has never paid dividends and does not
anticipate paying any dividends in the foreseeable future.

Page 17

<PAGE> 1
EXHIBIT 21

XICOR, INC.

LIST OF SUBSIDIARIES(1)

<TABLE>
<CAPTION>
STATE OR
OTHER JURISDICTION
NAME OF INCORPORATION
---- ----------------
<S> <C>
Xicor GmbH Germany
Xicor Japan K.K. Japan
Xicor Korea, Ltd. Korea
Xicor Limited United Kingdom
Xicor S.A.R.L. France
Xicor 2000 Ltd. Israel
</TABLE>

(1) All subsidiaries are wholly-owned.

<PAGE> 1

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-17806, 33-39627, 33-46687, 33-81986 and
33-60947) of Xicor, Inc. of our report dated January 24, 1996, appearing on page
15 of the 1995 Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by reference of
our report on the Financial Statement Schedule, which appears on page 10 of this
Form 10-K.

PRICE WATERHOUSE LLP
San Jose, California
March 27, 1996

<ARTICLE> 5
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,259,000
<SECURITIES> 18,136,000
<RECEIVABLES> 13,930,000
<ALLOWANCES> 500,000
<INVENTORY> 11,977,000
<CURRENT-ASSETS> 61,704,000
<PP&E> 102,206,000
<DEPRECIATION> 84,837,000
<TOTAL-ASSETS> 79,439,000
<CURRENT-LIABILITIES> 31,179,000
<BONDS> 0
0
0
<COMMON> 122,431,000
<OTHER-SE> (79,400,000)
<TOTAL-LIABILITY-AND-EQUITY> 79,439,000
<SALES> 113,550,000
<TOTAL-REVENUES> 113,550,000
<CGS> 69,214,000
<TOTAL-COSTS> 69,214,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 605,000
<INCOME-PRETAX> 10,571,000
<INCOME-TAX> 535,000
<INCOME-CONTINUING> 10,036,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,036,000
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0

</TABLE>