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                        Cypress Semiconductor Corporation

                                       and

             State Street Bank and Trust Company of California, N.A.
                                     Trustee


                          Supplemental Trust Indenture

                          Dated as of January 15, 2000

                           Supplementing that certain

                             Subordinated Indenture

                          Dated as of January 15, 2000


                    Authorizing the Issuance and Delivery of

                          Subordinated Debt Securities

                   4% Convertible Subordinated Notes due 2005


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                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

ARTICLE ONE ISSUANCE OF NOTES..................................................2

         Section 101       Issuance of Notes; Principal Amount; Maturity.......2
         Section 102       Interest on the Notes; Payment of Interest..........2

ARTICLE TWO CERTAIN DEFINITIONS................................................3

         Section 201       Certain Definitions.................................3

ARTICLE THREE CERTAIN COVENANTS................................................4

         Section 301       Registration and Listing............................4

ARTICLE FOUR REDEMPTION OF NOTES...............................................4

         Section 401       Right of Redemption.................................4
         Section 402       Conversion Arrangement on Call for Redemption.......4

ARTICLE FIVE CONVERSION OF NOTES...............................................5

         Section 501       Conversion Privilege and Conversion Price...........5
         Section 502       Adjustment of Conversion Price......................6
         Section 503       No Adjustment......................................11

ARTICLE SIX REDEMPTION AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL..........11

         Section 601       Purchase of Securities at Option of the Holder
                              Upon Change in Control..........................11
         Section 602       Effect of Change in Control Purchase Notice........14
         Section 603       Deposit of Change in Control Purchase Price........15
         Section 604       Notes Purchased In Part............................15
         Section 605       Compliance With Securities Laws Upon
                              Purchase of Notes...............................15
         Section 606       Repayment to the Company...........................15
         Section 607       Successive Consolidations, Mergers, Etc............16

ARTICLE SEVEN MISCELLANEOUS...................................................16

         Section 701       Consent of Holders Required........................16
         Section 702       Applicability of Certain Indenture Provisions......16
         Section 703       Reference to and Effect on the Indenture...........17
         Section 704       Supplemental Indenture May be Executed
                              In Counterparts.................................17
         Section 705       Effect of Headings.................................17
         Section 706       Separability.......................................17



                                       -i-

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     This  Supplemental  Trust  Indenture,  dated as of  January  15,  2000 (the
"Supplemental   Indenture"),   between  Cypress  Semiconductor   Corporation,  a
corporation  duly organized and existing under the laws of the State of Delaware
(the "Company"), and State Street Bank and Trust Company of California,  N.A., a
national banking association organized and existing under the laws of the United
States of  America,  as Trustee  (the  "Trustee"),  supplementing  that  certain
Subordinated  Indenture,  dated as of January 15, 2000,  between the Company and
the Trustee (such Indenture,  as supplemented by this Supplemental Indenture for
this series of Securities, being referred to herein as the "Indenture").

                                    Recitals

     A. The  Company  has duly  authorized  the  execution  and  delivery of the
Indenture  heretofore  executed and  delivered to provide for the issuance  from
time  to  time  of its  unsecured  debentures,  notes,  or  other  evidences  of
indebtedness to be issued in one or more series as provided for in the Indenture
heretofore executed and delivered.

     B. The  Indenture  heretofore  executed  and  delivered  provides  that the
Securities  of each series shall be in  substantially  the form set forth in the
Indenture  heretofore  executed and  delivered,  or in such other form as may be
established by or pursuant to a Board Resolution or in one or more  supplemental
indentures  thereto, in each case with such appropriate  insertions,  omissions,
substitutions,  and  other  variations  as  are  required  or  permitted  by the
Indenture, and may have such letters,  numbers, or other marks of identification
and such  legends or  endorsements  placed  thereon as may be required to comply
with the rules of any securities exchange or as may,  consistently  herewith, be
determined  to be  required  by  the  officers  executing  such  securities,  as
evidenced by their execution thereof.

     C. The Company and the Trustee have agreed that the Company shall issue and
deliver,  and  the  Trustee  shall  authenticate,   Securities  denominated  "4%
Convertible  Subordinated Notes due 2005" (the "Notes") pursuant to the terms of
this  Supplemental  Indenture and  substantially in the form set forth below, in
each case with such appropriate insertions, omissions,  substitutions, and other
variations as are required or permitted by the Indenture heretofore executed and
delivered and this Supplemental  Indenture,  and with such letters,  numbers, or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any  securities  exchange or as may,
consistently  herewith, be determined by the officers executing such Securities,
as evidenced by their execution of such Securities.

<PAGE>


                                  ARTICLE ONE
                                ISSUANCE OF NOTES

Section 101 Issuance of Notes; Principal Amount; Maturity.

     (a) On  January  25,  2000,  the  Company  shall  issue and  deliver to the
Trustee, and the Trustee shall authenticate, Notes substantially in the form set
forth in Annex 1, in each  case  with such  appropriate  insertions,  omissions,
substitutions and other variations as are required or permitted by the Indenture
and this Supplemental Indenture, and with such letters,  numbers, or other marks
of  identification  and such legends or  endorsements  placed  thereon as may be
required  to  comply  with  the  rules  of any  Securities  exchange  or as may,
consistently  herewith,  be determined by the officers  executing such Notes, as
evidenced by their execution of such Notes.

     (b) There is hereby  authorized a series of  Securities  designated  the 4%
Convertible  Subordinated  Notes  due  2005,  which  may  be  authenticated  and
delivered under the Indenture in an unlimited  principal amount. The Notes shall
mature on February 1, 2005, which shall be the Stated Maturity.

Section 102 Interest on the Notes; Payment of Interest.

     (a) The Notes shall bear  interest at the rate of 4% per annum from January
25, 2000 and to and including February 1, 2005. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.

     (b) The interest so payable,  and punctually  paid or duly provided for, on
any Interest  Payment Date shall, as provided in such Indenture,  be paid to the
Person  in whose  name a Note is  registered  at the  close of  business  on the
Regular Record Date for such interest,  which shall be the January 15 or July 15
(whether  or not a  Business  Day),  as the case  may be,  next  preceding  such
Interest Payment Date.

     (c) Payment of the principal of (and  premium,  if any) and any interest on
the Notes  shall be made at the office or agency of the Company  maintained  for
that  purpose in the Borough of  Manhattan,  The City of New York  (which  shall
initially  be State  Street Bank and Trust  Company,  N.A.,  an affiliate of the
Trustee,  as agent of the  Trustee)  or at the  Corporate  Trust  Office  of the
Trustee in such coin or currency of the United  States of America as at the time
of payment is legal  tender for payment of public and private  debts;  provided,
however,  that at the option of the Company  payment of interest  may be made by
check  mailed to the  address of the  Person  entitled  thereto as such  address
appears in the  Security  Register;  provided  that a Holder  with an  aggregate
principal  amount in  excess  of  $2,000,000  will be paid by wire  transfer  in
immediately available funds at the election of such Holder.

     The  Company  hereby  initially  designates  the  Trustee as Paying  Agent,
Security  Registrar,  Custodian and conversion  agent, and each of the Corporate
Trust  Office of the  Trustee  and the office



                                      -2-
<PAGE>

of the Trustee in the Borough of  Manhattan,  The City of New York (which  shall
initially  be State  Street Bank and Trust  Company,  N.A.,  an affiliate of the
Trustee,  as agent of the Trustee located at 61 Broadway,  15th floor, New York,
New York, 10006, Attn:  Corporate Trust  Administration  (Cypress  Semiconductor
Corporation 4%  Convertible  Subordinated  Notes due 2005)),  one such office or
agency of the Company for each of the aforesaid purposes.


                                  ARTICLE TWO
                               CERTAIN DEFINITIONS

Section 201 Certain Definitions.

     The terms defined in this Section 201 (except as herein otherwise expressly
provided  or  unless  the  context  of  this  Supplemental  Indenture  otherwise
requires) for all purposes of this  Supplemental  Indenture and of any indenture
supplemental  hereto have the respective meanings specified in this Section 201.
All other  terms used in this  Supplemental  Indenture  that are  defined in the
Indenture or the Trust Indenture Act,  either  directly or by reference  therein
(except as herein  otherwise  expressly  provided  or unless the context of this
Supplemental  Indenture  otherwise  requires),   have  the  respective  meanings
assigned to such terms in the Indenture or the Trust  Indenture Act, as the case
may be, as in force at the date of this  Supplemental  Indenture  as  originally
executed.

     "Capital  Stock" or "capital stock" of any person means any and all shares,
interests,  partnership interests,  participations,  rights or other equivalents
(however designated) of such person's equity interest (however designated).

     "Interest  Payment Dates" with respect to the Notes shall be February 1 and
August 1.

     "Principal Amount" of a Security means the principal amount as set forth on
the face of the Security.

     "Regular  Record  Dates" with  respect to the Notes shall be January 15 and
July 15.

     "Trading Day" means each Monday,  Tuesday,  Wednesday,  Thursday and Friday
other than any day on which the Common Stock is not traded on the New York Stock
Exchange,  or if the Common Stock is not traded on the New York Stock  Exchange,
on the  principal  exchange  or market on which  the  Common  Stock is traded or
quoted.

     "Voting  Stock"  means any class or classes of Capital  Stock  pursuant  to
which the holders thereof under ordinary circumstances have the power to vote in
the election of the board of  directors,  managers or trustees of any Person (or
other persons performing similar functions),  irrespective of whether or not, at
the time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency.

     The definitions of other terms are specified in Articles Five and Six.



                                      -3-
<PAGE>

                                 ARTICLE THREE
                                CERTAIN COVENANTS

     The  following  covenant  shall be applicable to the Company for so long as
any of the Notes are outstanding.

Section 301 Registration and Listing.

     The  Company  (i) will  effect  all  registrations  with,  and  obtain  all
approvals  by, all  governmental  authorities  that may be  necessary  under any
United States Federal or state law  (including the Securities  Act, the Exchange
Act and state  securities  and Blue Sky laws)  before the shares of Common Stock
issuable upon  conversion  of Notes may be lawfully  issued and  delivered,  and
thereafter  publicly  traded,  and qualified or listed as contemplated by clause
(ii);  and (ii) will list the shares of Common  Stock  required to be issued and
delivered upon conversion of the Notes prior to such issuance or delivery on the
New York Stock  Exchange or such other  exchange or  automated  quotation as the
Common  Stock is then  listed  at such date of  conversion.  The  provisions  of
Section 1008 of the Indenture shall not apply to this Section 301.


                                  ARTICLE FOUR
                               REDEMPTION OF NOTES

Section  401 Right of  Redemption.  The Notes will not be subject to  redemption
prior to February 5, 2003 and will be  redeemable  on and after such date at the
option of the Company,  in whole or in part, upon not less than 20 nor more than
60 days'  notice  to the  Holders,  at the  Redemption  Prices  (expressed  as a
percentage of principal amount) set forth below.

     The Redemption Price (expressed as a percentage of principal  amount) is as
follows:

   Year                                                         Redemption Price
   ----                                                         ----------------

   Beginning on February 5, 2003 and ending on January 31, 2004       101%
   Beginning on February 1, 2004 and thereafter                       100%

in each case together with accrued and unpaid  interest to, but  excluding,  the
Redemption Date;  provided,  however,  that interest  installments  whose Stated
Maturity  is on such  Redemption  Date will be  payable  to the  Holders of such
Notes, or one or more Predecessor Securities, of record at the close of business
on the relevant Record Dates referred to on the face hereof,  all as provided in
the Indenture.

     The Notes are not subject to  redemption  through  operation of any sinking
fund.

Section 402 Conversion Arrangement on Call for Redemption.



                                      -4-
<PAGE>

     In connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other  purchasers  to purchase such Notes by paying to the Trustee in
trust for the Holders, on or before the date fixed for redemption, an amount not
less than the applicable  Redemption  Price,  together with interest  accrued to
(but  excluding) the date fixed for redemption,  of such Notes.  Notwithstanding
anything to the contrary  contained herein, the obligation of the Company to pay
the  Redemption  Price of such Notes,  together  with  interest  accrued to (but
excluding) the Redemption  Date,  shall be deemed to be satisfied and discharged
to the extent such amount is so paid by such purchasers. If such an agreement is
entered  into,  a copy of which  will be filed  with  the  Trustee  prior to the
Redemption  Date, any Notes not duly  surrendered  for conversion by the Holders
thereof  may, at the option of the  Company,  be deemed,  to the fullest  extent
permitted  by  law,   acquired  by  such   purchasers   from  such  Holders  and
(notwithstanding  anything to the contrary contained herein) surrendered by such
purchasers for conversion,  all as of immediately prior to the close of business
on the  Redemption  Date  (and the  right to  convert  any such  Notes  shall be
extended  through  such  time),  subject  to  payment  of the  above  amount  as
aforesaid.  At the direction of the Company,  the Trustee shall hold and dispose
of any such amount paid to it in the same  manner as it would  monies  deposited
with it by the Company for the redemption of Notes.  Without the Trustee's prior
written consent,  no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall  increase or otherwise  affect any of
the powers, duties,  responsibilities or obligations of the Trustee as set forth
in this  Indenture,  and the Company  agrees to indemnify the Trustee from,  and
hold it harmless  against,  any loss,  liability or expense arising out of or in
connection  with any such  arrangement  for the purchase and  conversion  of any
Notes  between  the  Company  and such  purchasers  to which the Trustee has not
consented in writing,  including  the costs and expenses,  including  reasonable
legal fees,  incurred  by the  Trustee in the defense of any claim or  liability
arising out of or in connection  with the exercise or  performance of any of its
powers, duties, responsibilities or obligations under this Indenture.

                                  ARTICLE FIVE
                               CONVERSION OF NOTES

Section 501 Conversion Privilege and Conversion Price

     Subject to and upon compliance with the provisions of this Article,  at the
option of the  Holder  thereof,  any Note may be  converted  into fully paid and
nonassessable  shares of Common  Stock of the Company at the  Conversion  Price,
determined as hereinafter  provided,  in effect at the time of conversion.  Such
conversion  right shall  commence on January 25, 2000 and expire at the close of
business on  February 1, 2005,  subject,  in the case of the  conversion  of any
Global  Security,  to any  applicable  book-entry  procedures of the  Depositary
therefor.  In  case a Note is  called  for  redemption  at the  election  of the
Company,  such conversion right in respect of the Note shall expire at the close
of business on the Business Day next  preceding the  Redemption  Date. A Note in
respect of which a Holder is exercising its option to require  redemption upon a
Change in Control may be converted only if such Holder withdraws its election to
exercise  its  option  in  accordance  with  Article  Six of  this  Supplemental
Indenture.

                                      -5-
<PAGE>

         The initial Conversion Price of the Notes is $46.25 per share of Common
Stock,  and shall be adjusted in certain  instances  as provided in this Article
Five.

Section 502 Adjustment of Conversion Price

     The Conversion  Price shall be adjusted from time to time by the Company as
follows:

     (a) In case the  Company  shall (i) pay a dividend  on its Common  Stock in
shares of Common Stock,  (ii) make a distribution  on its Common Stock in shares
of Common Stock,  (iii)  subdivide its  outstanding  Common Stock into a greater
number of shares,  or (iv) combine its  outstanding  Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior thereto shall
be  adjusted  so that the  Holder of any  Security  thereafter  surrendered  for
conversion  shall be entitled to receive  that number of shares of Common  Stock
which it would have owned had such Note been converted  immediately prior to the
happening of such event.  An  adjustment  made pursuant to this  subsection  (a)
shall  become  effective  immediately  after  the  record  date in the case of a
dividend  or  distribution  and shall  become  effective  immediately  after the
effective date in the case of subdivision or  combination.  The Company will not
pay any dividend on or make any  distribution on shares of its Common Stock held
in the treasury of the Company.

     (b)  In  case  the  Company  shall  issue  rights  or  warrants  to  all or
substantially  all  holders of its  Common  Stock  entitling  them (for a period
commencing no earlier than the record date described below and expiring not more
than 60 days after such record  date) to  subscribe  for or  purchase  shares of
Common Stock (or securities  convertible into Common Stock) at a price per share
(or having a conversion  price per share) less than the current market price per
share of Common Stock (as determined in accordance  with  subsection (e) of this
Section 502) on the record date for the  determination of shareholders  entitled
to receive such rights or warrants,  the Conversion Price in effect  immediately
prior  thereto  shall be  adjusted  so that  the  same  shall  equal  the  price
determined by multiplying the Conversion  Price in effect  immediately  prior to
such  record date by a fraction  of which the  numerator  shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate  conversion price of the convertible  securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible  securities by the conversion
price per  share of  Common  Stock  pursuant  to the  terms of such  convertible
securities)  would purchase at the current market price per share (as defined in
subsection  (e) of this  Section 502) of Common Stock on such record date and of
which the denominator  shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
(or into which the  convertible  securities  so offered are  convertible).  Such
adjustment shall be made  successively  whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights or warrants are  exercisable  not all
rights or warrants  shall have been  exercised,  the adjusted  Conversion  Price
shall be immediately readjusted to what it would have been based upon the number
of additional shares of Common Stock actually issued (or


                                      -6-
<PAGE>

the number of shares of Common Stock  issuable upon  conversion  of  convertible
securities actually issued).

     (c) In case  the  Company  shall  distribute  to all or  substantially  all
holders of its Common Stock any shares of capital stock (other than dividends or
distributions  of Common Stock on Common Stock to which Section 502(a)  applies)
of the  Company,  or  evidences  of  indebtedness  or  other  assets  (including
securities  of any  person  other  than  the  Company,  but  excluding  all-cash
distributions  to which 502(d) applies or any rights or warrants  referred to in
502(b)),  then in each such case the Conversion  Price shall be adjusted so that
the same shall equal the price determined by multiplying the current  Conversion
Price by a fraction of which the numerator shall be the current market price per
share (as defined in subsection  (e) of this Section 502) of the Common Stock on
the record date  mentioned  below less the fair market value on such record date
(as  determined  by  the  Board  of  Directors,  whose  determination  shall  be
conclusive evidence of such fair market value and which shall be evidenced by an
Officers'  Certificate  delivered  to the Trustee) of the portion of the capital
stock,  evidences of  indebtedness or other non-cash assets so distributed or of
such rights or warrants  applicable to one share of Common Stock  (determined on
the basis of the  number of shares of Common  Stock  outstanding  on the  record
date) and of which the  denominator  shall be the current market price per share
(as defined in  subsection  (e) of this Section 502) of the Common Stock on such
record  date.  Such  adjustment  shall be made  successively  whenever  any such
distribution  is made and shall become  effective  immediately  after the record
date  for  the   determination   of   shareholders   entitled  to  receive  such
distribution.

     In the event that the Company  implements a stockholder  rights plan,  such
rights plan shall provide, subject to customary exceptions, that upon conversion
of the Notes the Holders will receive,  in addition to the Common Stock issuable
upon such conversion,  the rights issued under such rights plan (notwithstanding
the occurrence of an event causing such rights to separate from the Common Stock
at or prior to the time of conversion).  Any  distribution of rights or warrants
pursuant to a stockholder  rights plan complying with the requirements set forth
in the immediately  preceding  sentence of this paragraph shall not constitute a
distribution of rights or warrants for the purposes of this Section 502(c).

     Rights or  warrants  distributed  by the  Company to all  holders of Common
Stock  entitling the holders  thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights  or  warrants,  until  the  occurrence  of a  specified  event or  events
("Trigger  Event"):  (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable;  and (iii) are also issued in respect of future
issuances  of Common  Stock,  shall be deemed not to have been  distributed  for
purposes of this Section 502(c) (and no adjustment to the Conversion Price under
this  Section  502(c) will be  required)  until the  occurrence  of the earliest
Trigger Event.  If such right or warrant is subject to subsequent  events,  upon
the  occurrence  of which such  right or warrant  shall  become  exercisable  to
purchase  different  securities,  evidences of  indebtedness  or other assets or
entitle the holder to purchase a different  number or amount of the foregoing or
to  purchase  any of the  foregoing  at a  different  purchase  price,  then the
occurrence  of each such event  shall be deemed to be the date of  issuance  and
record  date  with  respect  to a new right or  warrant  (and a  termination  or
expiration  of the  existing  right or warrant  without  exercise  by


                                      -7-
<PAGE>

the holder  thereof).  In addition,  in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto, that resulted in
an adjustment to the Conversion Price under this Section 502(c), (1) in the case
of any such rights or warrants which shall all have been redeemed or repurchased
without  exercise  by  any  holders  thereof,  the  Conversion  Price  shall  be
readjusted  upon such final  redemption  or  repurchase  to give  effect to such
distribution  or  Trigger  Event,  as the case may be,  as though it were a cash
distribution,  equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights or warrants  (assuming such
holder had  retained  such  rights or  warrants),  made to all holders of Common
Stock as of the date of such  redemption or  repurchase,  and (2) in the case of
such  rights or  warrants  all of which  shall have  expired or been  terminated
without exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.

     (d) (1) In case the Company  shall,  by dividend or otherwise,  at any time
distribute (a "Triggering  Distribution") to all or substantially all holders of
its Common Stock all cash  distributions in an aggregate  amount that,  together
with  the  aggregate  amount  of (A) any  cash and the  fair  market  value  (as
determined by the Board of Directors,  whose  determination  shall be conclusive
evidence  thereof  and which  shall be  evidenced  by an  Officers'  Certificate
delivered to the Trustee) of any other  consideration  payable in respect of any
tender  offer by the Company or a  Subsidiary  of the  Company for Common  Stock
consummated within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of which no Conversion Price adjustment  pursuant to
this  Section 502 has been made and (B) all other cash  distributions  to all or
substantially  all  holders  of its  Common  Stock  made  within  the 12  months
preceding the date of payment of the Triggering  Distribution  and in respect of
which no Conversion Price adjustment pursuant to this Section 502 has been made,
exceeds an amount  equal to 10% of the product of the current  market  price per
share of Common Stock (as determined in accordance  with  subsection (e) of this
Section  502)  on  the  Business  Day  (the  "Determination  Date")  immediately
preceding  the day on which such  Triggering  Distribution  is  declared  by the
Company  multiplied by the number of shares of Common Stock  outstanding  on the
Determination  Date (excluding shares held in the treasury of the Company),  the
Conversion  Price  shall be  reduced  so that the same  shall  equal  the  price
determined by multiplying such Conversion Price in effect  immediately  prior to
the Determination Date by a fraction of which the numerator shall be the current
market price per share of the Common Stock (as  determined  in  accordance  with
subsection  (e) of this Section 502) on the  Determination  Date less the sum of
the aggregate amount of cash and the aggregate fair market value  (determined as
aforesaid)  of any such  other  consideration  so  distributed,  paid or payable
within  such  12  months   (including,   without   limitation,   the  Triggering
Distribution)  applicable to one share of Common Stock  (determined on the basis
of the number of shares of Common Stock outstanding on the Determination  Date),
and of which the denominator shall be such current market price per share of the
Common Stock (as  determined in accordance  with  subsection (e) of this Section
502) on the Determination  Date, such reduction to become effective  immediately
prior to the  opening of  business  on the day  following  the date on which the
Triggering  Distribution is paid; provided that, in the event the portion of the
cash so  distributed  applicable  to one  share of  Common  Stock is equal to or
greater than such current market price per share of the Common Stock, in lieu of
the  foregoing,  an  adequate  adjustment  provision  shall be made so that each
holder of Notes shall have the right to


                                      -8-
<PAGE>

receive upon  conversion  the amount of cash such holder would have received had
such holder converted each Note immediately prior to such distribution.

     (2) In case any tender offer made by the Company or any of its Subsidiaries
for  Common  Stock  shall  expire and such  tender  offer (as  amended  upon the
expiration  thereof) shall involve the payment of aggregate  consideration in an
amount  (determined as the sum of the aggregate amount of cash consideration and
the aggregate fair market value (as determined by the Board of Directors,  whose
determination  shall be conclusive evidence thereof and which shall be evidenced
by an  Officers'  Certificate  delivered  to the Trustee  thereof ) of any other
consideration)  that, together with the aggregate amount of (A) any cash and the
fair market value (as determined by the Board of Directors,  whose determination
shall  be  conclusive  evidence  thereof  and  which  shall be  evidenced  by an
Officers'  Certificate  delivered  to the  Trustee)  of any other  consideration
payable in respect of any other tender  offers by the Company or any  Subsidiary
of the Company for Common Stock  consummated  within the 12 months preceding the
date of the  Expiration  Date (as  defined  below)  and in  respect  of which no
Conversion Price  adjustment  pursuant to this Section 502 has been made and (B)
all cash  distributions to all or substantially  all holders of its Common Stock
made within the 12 months  preceding the Expiration Date and in respect of which
no  Conversion  Price  adjustment  pursuant  to this  Section 502 has been made,
exceeds an amount  equal to 10% of the product of the current  market  price per
share of Common Stock (as determined in accordance  with  subsection (e) of this
Section 502) as of the last date (the "Expiration Date") tenders could have been
made  pursuant  to such tender  offer (as it may be  amended)  (the last time at
which such tenders could have been made on the  Expiration  Date is  hereinafter
sometimes  called the "Expiration  Time")  multiplied by the number of shares of
Common Stock  outstanding  (including  tendered  shares but excluding any shares
held in the treasury of the Company) at the Expiration Time,  then,  immediately
prior to the  opening of  business  on the day after the  Expiration  Date,  the
Conversion  Price  shall be  reduced  so that the same  shall  equal  the  price
determined by multiplying the Conversion  Price in effect  immediately  prior to
close of business on the  Expiration  Date by a fraction of which the  numerator
shall be the  product  of the  number  of shares  of  Common  Stock  outstanding
(including  tendered shares but excluding any shares held in the treasury of the
Company) at the Expiration Time multiplied by the current market price per share
of the Common Stock (as  determined in accordance  with  subsection  (e) of this
Section 502) on the Trading Day next  succeeding  the  Expiration  Date,  and of
which  the  denominator  shall  be the  sum of (x) the  aggregate  consideration
(determined as aforesaid) payable to stockholders based on the acceptance (up to
any maximum  specified in the terms of the tender  offer) of all shares  validly
tendered  and not  withdrawn  as of the  Expiration  Time (the shares  deemed so
accepted,  up to any such maximum,  being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common  Stock  outstanding  (less
any  Purchased  Shares and  excluding  any shares  held in the  treasury  of the
Company) at the Expiration Time and the current market price per share of Common
Stock (as determined in accordance  with  subsection (e) of this Section 502) on
the Trading Day next  succeeding the Expiration  Date,  such reduction to become
effective  immediately prior to the opening of business on the day following the
Expiration  Date. In the event that the Company is obligated to purchase  shares
pursuant to any such tender offer,  but the Company is permanently  prevented by
applicable  law  from  effecting  any or all such  purchases  or any or all such
purchases are rescinded,  the Conversion Price shall again be adjusted to be the
Conversion Price which would have been in


                                      -9-
<PAGE>

effect based upon the number of shares actually purchased. If the application of
this  Section  502(d)(2)  to any tender  offer would result in a decrease in the
Conversion  Price, no adjustment  shall be made for such tender offer under this
Section 502(d)(2).

     (3) For purposes of this Section 502(d), the term "tender offer" shall mean
and  include  both  tender  offers  and  exchange  offers,   all  references  to
"purchases" of shares in tender offers (and all similar  references)  shall mean
and include both the purchase of shares in tender offers and the  acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar  references)  shall mean and include shares  tendered in both tender
offers and exchange offers.

     (e) For the purpose of any computation  under  subsections (b), (c) and (d)
of this Section  502, the current  market price per share of Common Stock on any
date shall be deemed to be the  average of the daily  closing  prices for the 30
consecutive  Trading  Days  ending on the last full  Trading  Day before (i) the
Determination  Date or the Expiration  Date, as the case may be, with respect to
distributions  or tender offers under subsection (d) of this Section 502 or (ii)
the  record  date with  respect  to  distributions,  issuances  or other  events
requiring such computation  under subsection (b) or (c) of this Section 502. The
closing price for each day shall be the last reported sales price or, in case no
such reported sale takes place on such date, the average of the reported closing
bid and asked prices in either case on the New York Stock  Exchange (the "NYSE")
or, if the Common Stock is not listed or admitted to trading on the NYSE, on the
principal  national  securities  exchange on which the Common Stock is listed or
admitted to trading  or, if not listed or  admitted  to trading on any  national
securities exchange, the last reported sales price of the Common Stock as quoted
on NASDAQ (the term  "NASDAQ"  shall  include,  without  limitation,  the Nasdaq
National  Market) or, in case no reported sales takes place,  the average of the
closing bid and asked prices as quoted on NASDAQ or any comparable system or, if
the Common Stock is not quoted on NASDAQ or any comparable  system,  the closing
sales price or, in case no reported sale takes place, the average of the closing
bid  and  asked  prices,  as  furnished  by any  two  members  of  the  National
Association  of  Securities  Dealers,  Inc.  selected  from  time to time by the
Company for that purpose.  If no such prices are  available,  the current market
price per share shall be the fair value of a share of Common Stock as determined
by the Board of Directors (which shall be evidenced by an Officers'  Certificate
delivered to the Trustee).

     (f) In any case in which this Section 502 shall  require that an adjustment
be made following a record date or a Determination  Date or Expiration  Date, as
the case may be,  established  for purposes of this Section 502, the Company may
elect to defer (but only until five  Business  Days  following the filing by the
Company  with the Trustee of the  certificate  described  in Section 1405 of the
Indenture) issuing to the Holder of any Note converted after such record date or
Determination  Date or  Expiration  Date the  shares of  Common  Stock and other
capital stock of the Company  issuable upon such  conversion  over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion  Price prior to adjustment;  and,
in lieu of the shares the  issuance of which is so deferred,  the Company  shall
issue or cause its  transfer  agents  to issue  due  bills or other  appropriate
evidence  prepared by the Company of the right to receive  such  shares.  If any
distribution  in  respect  of which an  adjustment  to the


                                      -10-
<PAGE>

Conversion  Price is required to be made as of the record date or  Determination
Date or Expiration  Date therefor is not thereafter  made or paid by the Company
for any reason, the Conversion Price shall be readjusted to the Conversion Price
which  would  then be in effect if such  record  date had not been fixed or such
effective date or Determination Date or Expiration Date had not occurred.

     (g) The  Company  may make such  reductions  to the  Conversion  Price,  in
addition to those  required by Article  Five,  as the board of  directors of the
Company considers to be advisable to avoid or diminish any income tax to holders
of Common Stock or rights to purchase  Common Stock  resulting from any dividend
or  distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes.

     To the extent  permitted  by  applicable  law, the Company may from time to
time  reduce  the  Conversion  Price by any amount for any period of time if the
period is at least 20 days, the reduction is  irrevocable  during the period and
the board of directors of the Company shall have made a determination  that such
reduction  would be in the best  interests of the Company,  which  determination
shall be conclusive.  Whenever the Conversion  Price is reduced  pursuant to the
preceding sentence, the Company shall mail to the holders of record of the Notes
a notice of reduction at least 15 days prior to the date the reduced  Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.

Section 503 No Adjustment.

     No  adjustment  in the  Conversion  Price  shall  be  required  unless  the
adjustment  would  require  an  increase  or  decrease  of at  least  1% in  the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this  Section  503 are not  required  to be made  shall be  carried
forward and taken into account in any subsequent  adjustment.  All  calculations
under  this  Article  4  shall  be made to the  nearest  cent or to the  nearest
1/1000th of a share, as the case may be.

                                   ARTICLE SIX
            REDEMPTION AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL

Section  601  Purchase  of  Securities  at Option of the Holder  Upon  Change in
Control.

     (a) If at any time that Notes remain outstanding there shall occur a Change
in Control, Notes shall be purchased by the Company at the option of the Holders
thereof  as of the date that is 30  Business  Days after the  occurrence  of the
Change in Control (the "Change in Control  Purchase  Date") at a purchase  price
equal to the principal amount of the Notes, plus accrued and unpaid interest to,
but  excluding,  the Change in  Control  Purchase  Date (the  "Change in Control
Purchase  Price"),  subject to satisfaction by or on behalf of any Holder of the
requirements set forth in subsection (c) of this Section 601.

     A  "Change  in  Control"  shall be deemed  to have  occurred  if any of the
following occurs after the date hereof:



                                      -11-
<PAGE>

     (1) any "person" or "group" (as such terms are defined below) is or becomes
the "beneficial owner" (as defined below), directly or indirectly,  of shares of
Voting Stock of the Company  representing  50% or more of the total voting power
of all  outstanding  classes  of Voting  Stock of the  Company or has the power,
directly  or  indirectly,  to elect a  majority  of the  members of the Board of
Directors of the Company; or

     (2) the Company  consolidates  with, or merges with or into, another Person
or the Company sells, assigns, conveys,  transfers, leases or otherwise disposes
of all  or  substantially  all of the  assets  of  the  Company,  or any  Person
consolidates with, or merges with or into, the Company,  in any such event other
than pursuant to a transaction  in which the Persons that  "beneficially  owned"
(as  defined  below),  directly  or  indirectly,  shares of Voting  Stock of the
Company  immediately  prior to such transaction  "beneficially  own" (as defined
below),  directly  or  indirectly,   shares  of  Voting  Stock  of  the  Company
representing  at least a majority of the total voting  power of all  outstanding
classes of Voting Stock of the surviving or transferee Person; or

     (3) there shall occur the liquidation or dissolution of the Company.

For the purpose of the  definition  of "Change in  Control",  (i)  "person"  and
"group" have the meanings  given such terms under Section 13(d) and 14(d) of the
Exchange Act or any successor provision to either of the foregoing, and the term
"group"  includes  any group  acting for the  purpose of  acquiring,  holding or
disposing  of  securities  within  the  meaning  of Rule  13d-5(b)(1)  under the
Exchange Act (or any successor  provision  thereto),  (ii) a "beneficial  owner"
shall be determined in accordance  with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include,  in addition to all outstanding
shares of Voting Stock of the Company and Unissued  Shares  deemed to be held by
the  "person" or "group" (as such terms are defined  above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, and (iii) the terms "beneficially
owned"  and  "beneficially  own"  shall  have  meanings  correlative  to that of
"beneficial  owner". The term "Unissued Shares" means shares of Voting Stock not
outstanding  that are  subject  to  options,  warrants,  rights to  purchase  or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.

     Notwithstanding  anything to the  contrary in this Section 601, a Change in
Control shall not be deemed to have occurred if either (i) the closing price (as
defined in Section  502(e)) of the Common Stock for any five Trading Days during
the ten Trading  Days  immediately  preceding  the Change in Control is at least
equal to 105% of the Conversion Price in effect on such day; or (ii) in the case
of a merger or consolidation,  all of the consideration  excluding cash payments
for fractional shares in such merger or consolidation constituting the Change in
Control  consists of common stock traded on a United States national  securities
exchange  or quoted on NASDAQ (or which will be so traded or quoted  when issued
or exchanged in connection  with such Change in Control) and as a result of such
transaction or transactions the Notes become convertible solely into such common
stock.

     (b) Within 10 Business  Days after the  occurrence  of a Change in Control,
the Company shall mail a written  notice of the Change in Control to the Trustee
and to each Holder (and to


                                      -12-
<PAGE>

beneficial  owners as required by applicable law) and shall cause a copy of such
notice to be published in a daily newspaper of national circulation.  The notice
shall include the form of a Change in Control Purchase Notice to be completed by
the Holder and shall state:

          (1) the date of such  Change  in  Control  and,  briefly,  the  events
     causing such Change in Control;

          (2) the date by which the Change in Control  Purchase  Notice pursuant
     to this Section 601 must be given;

          (3) the Change in Control Purchase Date;

          (4) the Change in Control Purchase Price;

          (5) briefly, the conversion rights of the Notes;

          (6) the name and address of each Paying Agent and Conversion Agent;

          (7) the Conversion Price and any adjustments thereto;

          (8) that  Notes as to which a Change in  Control  Purchase  Notice has
     been given may be converted  into Common Stock pursuant to Article 5 of the
     Supplemental  Indenture  only to the  extent  that the  Change  in  Control
     Purchase  Notice has been  withdrawn in  accordance  with the terms of this
     Indenture;

          (9) the  procedures  that the Holder must  follow to  exercise  rights
     under this Section 601;

          (10) the  procedures  for  withdrawing  a Change in  Control  Purchase
     Notice, including a form of notice of withdrawal; and

          (11) that the Holder must  satisfy the  requirements  set forth in the
     Securities in order to convert the Securities.

     If any of the Notes is in the form of a Global  Security,  then the Company
shall modify such notice to the extent  necessary to accord with the  procedures
of the Depositary applicable to the repurchase of Global Securities.

     (c) A Holder may exercise its rights  specified in  subsection  (a) of this
Section 601 upon delivery of a written  notice (which shall be in  substantially
the form  included  in  Exhibit A hereto and which may be  delivered  by letter,
overnight courier, hand delivery, facsimile transmission or in any other written
form and, in the case of Global Securities,  may be delivered  electronically or
by other means in accordance with the Depositary's  customary procedures) of the
exercise  of such rights (a "Change in Control  Purchase  Notice") to any Paying
Agent  at any time  prior to the  close of  business  on the  Business  Day next
preceding the Change in Control Purchase Date.



                                      -13-
<PAGE>

     The  delivery  of such  Security  to any Paying  Agent  (together  with all
necessary  endorsements) at the office of such Paying Agent shall be a condition
to the receipt by the Holder of the Change in Control Purchase Price therefor.

     The  Company  shall  purchase  from the Holder  thereof,  pursuant  to this
Section  601, a portion  of a Note if the  Principal  Amount of such  portion is
$1,000 or an integral multiple of $1,000. Provisions of the Indenture that apply
to the purchase of all of a Note pursuant to Sections 601 through 606 also apply
to the purchase of such portion of such Note.

     Notwithstanding anything herein to the contrary, any Holder delivering to a
Paying  Agent  the  Change  in  Control  Purchase  Notice  contemplated  by this
subsection (c) shall have the right to withdraw such Change in Control  Purchase
Notice in whole or in a portion thereof that is a Principal  Amount of $1,000 or
in an  integral  multiple  thereof at any time prior to the close of business on
the Business Day next preceding the Change in Control  Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
602.

     A Paying  Agent shall  promptly  notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.

     Anything  herein  to the  contrary  notwithstanding,  in the case of Global
Securities,  any Change in Control Purchase Notice may be delivered or withdrawn
and such  Securities  may be surrendered or delivered for purchase in accordance
with the applicable procedures of the Depositary as in effect from time to time.

Section 602 Effect of Change in Control Purchase Notice.

     Upon receipt by any Paying Agent of the Change in Control  Purchase  Notice
specified  in  Section  601(c),  the Holder of the Note in respect of which such
Change in Control Purchase Notice was given shall (unless such Change in Control
Purchase  Notice is  withdrawn  as specified  below)  thereafter  be entitled to
receive the Change in Control  Purchase  Price with  respect to such Note.  Such
Change in Control Purchase Price shall be paid to such Holder promptly following
the later of (a) the Change in Control  Purchase  Date with respect to such Note
(provided the conditions in Section 601(c) have been satisfied) and (b) the time
of delivery  of such  Security  to a Paying  Agent by the Holder  thereof in the
manner required by Section 601(c). Notes in respect of which a Change in Control
Purchase  Notice has been given by the Holder  thereof may not be converted into
shares of Common  Stock on or after the date of the  delivery  of such Change in
Control  Purchase Notice unless such Change in Control Purchase Notice has first
been validly withdrawn.

     A Change in Control  Purchase Notice may be withdrawn by means of a written
notice  (which may be delivered by letter,  overnight  courier,  hand  delivery,
facsimile  transmission  or in any other written form and, in the case of Global
Securities, may be delivered electronically or by other means in accordance with
the Depositary's  customary procedures) of withdrawal delivered by the Holder to
a Paying  Agent at any time prior to the close of business on the  Business  Day
immediately  preceding  the  Change in Control  Purchase  Date,  specifying  the
Principal  Amount of the Security or portion


                                      -14-
<PAGE>

thereof (which must be a Principal  Amount of $1,000 or an integral  multiple of
$1,000 in excess  thereof)  with respect to which such notice of  withdrawal  is
being submitted.

Section 603 Deposit of Change in Control Purchase Price.

     On or  before  11:00  a.m.  New York City  time on the  Change  in  Control
Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent
(other than the Company or an  Affiliate  of the Company) an amount of money (in
immediately available funds if deposited on such Business Day) sufficient to pay
the  aggregate  Change in Control  Purchase  Price of all the Notes or  portions
thereof that are to be purchased as of such Change in Control Purchase Date. The
manner in which the deposit  required by this Section 603 is made by the Company
shall be at the option of the Company,  provided that such deposit shall be made
in a manner  such that the  Trustee or a Paying  Agent  shall  have  immediately
available funds on the Change in Control Purchase Date.

     If a Paying  Agent  holds,  in  accordance  with the  terms  hereof,  money
sufficient to pay the Change in Control  Purchase  Price of any Note for which a
Change in  Control  Purchase  Notice  has been  tendered  and not  withdrawn  in
accordance  with this  Indenture  then, on the Change in Control  Purchase Date,
such Note will cease to be  outstanding  and the rights of the Holder in respect
thereof shall  terminate  (other than the right to receive the Change in Control
Purchase Price as aforesaid).  The Company shall publicly announce the Principal
Amount of Notes purchased as a result of such Change in Control on or as soon as
practicable after the Change in Control Purchase Date.

Section 604 Notes Purchased In Part.

     Any Note that is to be purchased  only in part shall be  surrendered at the
office of a Paying Agent and promptly after the Change in Control  Purchase Date
the Company shall execute and the Trustee shall  authenticate and deliver to the
Holder of such  Note,  without  service  charge,  a new Note or  Notes,  of such
authorized  denomination or denominations as may be requested by such Holder, in
aggregate  Principal  Amount  equal to, and in exchange  for, the portion of the
Principal Amount of the Note so surrendered that is not purchased.

Section 605 Compliance With Securities Laws Upon Purchase of Notes.

     In connection with any offer to purchase or purchase of Notes under Section
601,  the  Company  shall  (a)  comply  with Rule  13e-4 and Rule  14e-1 (or any
successor to either such Rule), if applicable,  under the Exchange Act, (b) file
the  related  Schedule  13E-4 (or any  successor  or similar  schedule,  form or
report) if required  under the Exchange Act, and (c)  otherwise  comply with all
federal and state  securities laws in connection  with such offer,  all so as to
permit the rights of the Holders and  obligations  of the Company under Sections
601 through 604 to be exercised in the time and in the manner specified therein.

Section 606 Repayment to the Company.

     To the extent that the  aggregate  amount of cash  deposited by the Company
pursuant to Section 603 exceeds the aggregate  Change in Control  Purchase Price
together with interest,  if any,


                                      -15-
<PAGE>

thereon  of the Notes or  portions  thereof  that the  Company is  obligated  to
purchase, then promptly after the Change in Control Purchase Date the Trustee or
a Paying Agent, as the case may be, shall return any such excess to the Company.

Section 607 Successive Consolidations, Mergers, Etc.

     In the case of  consolidation,  merger,  conveyance,  transfer  or lease to
which  Section 1409 of the Indenture  applies,  in which the Common Stock of the
Company is changed or  exchanged  as a result  into the right to receive  equity
securities,  cash or other property which includes shares of common Stock of the
Company or another Person that are, or upon issuance will be, traded on a United
States  national  securities  exchange or approved for trading on an established
automated  over-the-counter  trading market in the United States and such shares
constitute  at the time such change or exchange  becomes  effective in excess of
50% of the  aggregate  fair  market  value of such  securities,  cash and  other
property (as determined by the Company,  which determination shall be conclusive
and binding),  then the Person formed by such  consolidation,  or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a  supplemental  indenture  (which  shall comply with the
Trust  Indenture  Act as in force at the date of execution of such  supplemental
indenture)  modifying the  provisions  of the  Indenture  and this  Supplemental
Indenture,  as applicable,  relating to the right of the Holders of the Notes to
cause the Company to redeem the Notes  following a Change in Control,  including
without limitation the applicable  provisions of this Article Six, as determined
in good  faith by the  Company  (which  determination  shall be  conclusive  and
binding),  to make  such  provisions  apply to the  common  stock of the  issuer
thereof if  different  from the Company and the Common  Stock of the Company (in
lieu of Common Stock of the Company).

                                 ARTICLE SEVEN
                                  MISCELLANEOUS

Section 701 Consent of Holders Required.

     In addition to those  modifications or amendments  requiring the consent of
the Holder of each Outstanding Note effected thereby specified in Section 902 of
the Indenture,  there can be no  modification or amendment that would change the
obligation  of the Company to redeem any Note upon the  happening of a Change in
Control in a manner  adverse to the Holder of Notes  without  the consent of the
Holder of each outstanding Note effected thereby.

Section 702 Applicability of Certain Indenture Provisions.

     Each of the  defeasance  and  covenant  defeasance  provisions  of  Article
Thirteen of the Indenture shall apply to the Notes; provided,  however, that the
Company  will not be able to defease  the right of the  Holders  to convert  the
Notes pursuant to Article Fourteen of the Indenture.



                                      -16-
<PAGE>

Section 703 Reference to and Effect on the Indenture.

     This  Supplemental  Indenture  shall be  construed as  supplemental  to the
Indenture and all the terms and conditions of this Supplemental  Indenture shall
be deemed to be part of the terms and conditions of the Indenture. Except as set
forth  herein,  the  Indenture  heretofore  executed  and  delivered  is  hereby
ratified,  approved and confirmed. The provisions of this Supplemental Indenture
shall for the purposes of this series of Securities  supersede the provisions of
the Indenture  heretofore  executed and  delivered to the extent such  Indenture
heretofore  executed and delivered is inconsistent  herewith.  This Supplemental
Indenture is subject to the provisions of the Trust Indenture Act, and shall, to
the extent applicable, be governed by such provisions.

Section 704 Supplemental Indenture May be Executed In Counterparts.

     This  instrument  may be  executed in any number of  counterparts,  each of
which shall be an original;  but such counterparts shall together constitute but
one and the same instrument.

Section 705 Effect of Headings.

     The Article and Section  headings herein are for convenience only and shall
not affect the construction hereof.

Section 706       Separability

     In case any one or more of the  provisions  contained in this  Supplemental
Indenture or in the Notes shall for any reason be held to be invalid, illegal or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not effect any other provisions of this  Supplemental  Indenture or of the
Notes,  but this  Supplemental  Indenture and the Notes shall be construed as if
such  invalid or illegal or  unenforceable  provision  had never been  contained
herein or therein.


                                      -17-
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Supplemental
Indenture to be duly executed all as of the day and year first above written.

                                          CYPRESS SEMICONDUCTOR CORPORATION




                                          By:  /s/ Emmanuel Hernandez
                                               ---------------------------------
                                          Name: Emmanuel Hernandez
                                          Title:   Vice President and CFO







                                          STATE STREET BANK AND TRUST COMPANY OF
                                          CALIFORNIA, N. A., AS TRUSTEE




                                          By: /s/ Paula Oswald
                                              ----------------------------------
                                          Name:  Paula M. Oswald
                                          Title:  Vice President



<PAGE>





                                     Annex 1

                           [Form of Face of Security]

[If the  Security  is a Global  Security,  insert -- THIS  SECURITY  IS A GLOBAL
SECURITY  WITHIN THE  MEANING OF THE  INDENTURE  HEREINAFTER  REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE  THEREOF.  THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED,  AND NO TRANSFER
OF THIS  SECURITY  IN  WHOLE OR IN PART  MAY BE  REGISTERED,  IN THE NAME OF ANY
PERSON OTHER THAN SUCH  DEPOSITARY OR A NOMINEE  THEREOF,  EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                        CYPRESS SEMICONDUCTOR CORPORATION

                    4% Convertible Subordinated Note due 2005

No. _________                                                     $_____________

CUSIP:

     Cypress  Semiconductor   Corporation,  a  corporation  duly  organized  and
existing under the laws of Delaware  (herein  called the  "Company,"  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value  received,  hereby  promises  to pay to  ________________,  or  registered
assigns,  the principal sum of  ___________________  Dollars on February 1, 2005
and to pay  interest  thereon  from  January  25,  2000 or from the most  recent
Interest  Payment  Date to which  interest has been paid or duly  provided  for,
semi-annually  on  February 1 and August 1 in each  year,  commencing  August 1,
2000, at the rate of 4% per annum,  until the  principal  hereof is paid or made
available  for payment.  The interest so payable,  and  punctually  paid or duly
provided for, on any Interest  Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this  Security  (or one or more  Predecessor
Securities)  is registered  at the close of business on the Regular  Record Date
for such  interest,  which  shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next  preceding  such Interest  Payment Date.
Any such  interest not so punctually  paid or duly  provided for will  forthwith
cease to be payable to the Holder on such Regular  Record Date and may either be
paid to the  Person in whose  name  this  Security  (or one or more  Predecessor
Securities)  is registered at the close of business on a Special Record Date for
the  payment  of such  Defaulted  Interest  to be fixed by the  Trustee,  notice
whereof  shall be given to Holders of Securities of this series not less than 10
days  prior to such  Special  Record  Date,  or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities  exchange
on which the  Securities  of this series may be listed,  and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.

     Payment of the principal of (and premium,  if any) and any interest on this
Security will be made at the office or agency of the Company maintained for such
purpose in the Borough of


<PAGE>

Manhattan,  The  City  of New  York,  or at the  option  of the  Holder  of this
Security,  at the Corporate Trust Office, in such coin or currency of the United
States of  America as at the time of  payment  is legal  tender  for  payment of
public and private debts;  provided,  however, that at the option of the Company
payment of  interest  may be made by check  mailed to the  address of the Person
entitled  thereto  as  such  address  shall  appear  in the  Security  Register;
provided, further, that a Holder with an aggregate principle amount in excess of
$2,000,000  will be paid by wire transfer in immediately  available funds at the
election  of such  Holder.  Interest  will be computed on the basis of a 360-day
year comprised of twelve 30-day months.

     Reference  is hereby made to the further  provisions  of this  Security set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

     Unless the  certificate of  authentication  hereon has been executed by the
Trustee  referred to on the reverse  hereof by manual  signature,  this Security
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

     IN WITNESS  WHEREOF,  the Company has caused this  instrument  to be signed
manually or by facsimile by their duly authorized  officers and by its corporate
seal to be affixed or imported hereon.

Dated:     January 25, 2000             CYPRESS SEMICONDUCTOR
                                        CORPORATION

                                        By: ________________________________
                                           Title:

Attest:

By: ___________________________________
      Title:

     The Trustee's  certificates of authentication shall be in substantially the
following form:

     This is one of the Securities of the series  designated  herein referred to
in the within-mentioned Indenture.

                                         STATE STREET BANK AND TRUST COMPANY OF
                                         CALIFORNIA, N.A.
                                         As Trustee


                                         By: _______________________________
                                              Authorized Signatory


                                      -21-
<PAGE>

                           Form of Reverse of Security

     This  Security  is one of a duly  authorized  issue  of  securities  of the
Company (herein called the "Securities"), issued and to be issued in one or more
series  under a  Subordinated  Indenture,  dated as of January 15, 2000  (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument),  between  the Company  and State  Street Bank and Trust  Company of
California,  N.A., as Trustee (herein called the "Trustee,"  which term includes
any successor trustee under the Indenture),  and reference is hereby made to the
Indenture  and  all  indentures  supplemental  thereto  for a  statement  of the
respective rights,  limitations of rights,  duties and immunities  thereunder of
the Company,  the Trustee, the holders of Senior Indebtedness and the Holders of
the Securities  and of the terms upon which the  Securities  are, and are to be,
authenticated  and delivered.  This Security is one of the series  designated on
the face  hereof  and is  issued  pursuant  to a  Supplemental  Trust  Indenture
supplementing  the Indenture,  dated as of January 15, 2000, from the Company to
Trustee relating to the issuance of the "4% Convertible  Notes due 2005" of this
series (the "Supplemental Indenture").

     The Securities will not be subject to redemption  prior to February 5, 2003
and will be redeemable  on and after such date at the option of the Company,  in
whole or in part,  upon not less  than 20 nor more  than 60 days'  notice to the
Holders,  at the  Redemption  Prices  (expressed  as a  percentage  of principal
amount) set forth below.

     The Redemption Price (expressed as a percentage of principal  amount) is as
follows:

   Year                                                         Redemption Price
   ----                                                         ----------------

   Beginning on February 5, 2003 and ending on January 31, 2004       101%
   Beginning on February 1, 2004 and thereafter                       100%

in each case together with accrued and unpaid  interest to, but  excluding,  the
Redemption Date;  provided,  however,  that interest  installments  whose Stated
Maturity  is on such  Redemption  Date will be  payable  to the  Holders of such
Securities,  or one or more  Predecessor  Securities,  of record at the close of
business on the  relevant  Record Dates  referred to on the face hereof,  all as
provided in the Indenture.

     The  Securities  are not subject to  redemption  through  operation  of any
sinking fund.

     In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the  unredeemed  portion  hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.

If a Change in Control (as defined in the Supplemental  Indenture) occurs at any
time prior to February 1, 2005,  the  Securities  will be redeemable on the 30th
day after notice thereof at the option


                                      -22-
<PAGE>

of the  Holder.  Such  payment  shall be made at a purchase  price  equal to the
principal  amount of the  Security  plus  accrued  and unpaid  interest  to, but
excluding,  the Change in Control  Purchase Date (as defined in the Supplemental
Indenture).  The Company shall mail to all Holders a notice of the occurrence of
a Change in Control and of the  redemption  right arising as a result thereof on
or before the 10th Business Day after the  occurrence of such Change in Control.
For a Security  to be so repaid at the option of the Holder,  the  Company  must
receive at the office or agency of the Company  maintained  for that  purpose in
the Borough of Manhattan, the City of New York, or, at the option of the Holder,
the Corporate Trust Office of the Trustee,  such Security with the form entitled
"Option to Elect  Redemption  Upon a Change in Control"  on the reverse  thereof
duly completed,  together with such Securities duly endorsed for transfer, on or
before the 30th day after the date of such  notice (or if such 30th day is not a
Business Day, the immediately succeeding Business Day).

     The  indebtedness  evidenced by this  Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior  Indebtedness  of the Company,  and this
Security is issued  subject to such  provisions  of the  Indenture  with respect
thereto.  Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her  behalf  to take  such  action  as may be  necessary  or  appropriate  to
effectuate the  subordination so provided and (c) appoints the Trustee as his or
her attorney-in-fact for any and all such purposes.

     The Indenture contains  provisions for defeasance at any time of the entire
indebtedness  of this  Security or certain  restrictive  covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture,  except that the Company will not be able
to defease the right of the Holders to convert this Security pursuant to Article
Fourteen of the Indenture.

     Subject to the provisions of the Indenture,  the Holder of this Security is
entitled, at its option, at any time on or before February 1, 2005 (except that,
in case this Security or any portion hereof shall be redeemed,  such right shall
terminate with respect to this Security or portion  hereof,  as the case may be,
so redeemed at the close of business on the first  Business  Day next  preceding
the date fixed for redemption as provided in the  Indenture,  unless the Company
defaults  in making  the  payment  due upon  redemption  or except as  otherwise
provided in the Indenture), to convert the principal amount of this Security (or
any portion hereof which is $1,000 or an integral  multiple  thereof) into fully
paid and  non-assessable  shares of the  Common  Stock of the  Company,  as said
shares shall be constituted at the date of conversion, at the initial Conversion
Price of $46.25  or at the  adjusted  Conversion  Price in effect at the date of
conversion determined as provided in the Supplemental Indenture,  upon surrender
of this Security,  together with the conversion notice hereon duly executed,  to
be accompanied  (if so required by the Company) by  instruments of transfer,  in
form satisfactory to the Company and to the Trustee, duly executed by the Holder
or by its duly  authorized  attorney in writing.  Such surrender  shall, if made
during any period  beginning  at the close of business on a Regular  Record Date
and  ending  at the  opening  of  business  on the  Interest  Payment  Date next
following  such Regular  Record Date (unless this  Security or the portion being
converted  shall have been called for redemption on a Redemption Date during the
period beginning at the close of business on a Regular Record Date and ending at
the  opening of  business on the first


                                      -23-
<PAGE>

Business  Day  after  the next  succeeding  Interest  Payment  Date,  or if such
Interest Payment Date is not a Business Day, the second such Business Day), also
be accompanied by payment in funds  acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount of
this Security then being  converted.  Subject to the aforesaid  requirement  for
payment  and, in the case of a  conversion  after the  Regular  Record Date next
preceding any Interest Payment Date and on or before such Interest Payment Date,
to the right of the Holder of this  Security  (or any  Predecessor  Security) of
record at such Regular  Record Date to receive an  installment of interest (with
certain  exceptions  provided in the Indenture),  no adjustment is to be made on
conversion  for  interest  accrued  hereon or for  dividends on shares of Common
Stock  issued on  conversion.  The Company is not  required to issue  fractional
shares upon any such conversion,  but shall make adjustment therefor as provided
in the Indenture.  The Conversion  Price is subject to adjustment as provided in
the  Indenture.  In the event of conversion of this Security in part only, a new
Security or Securities for the unconverted portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.

     If an Event of Default  with  respect to  Securities  of this series  shall
occur and be  continuing,  the principal of the Securities of this series may be
declared  due and  payable in the manner  and with the  effect  provided  in the
Indenture.

     The Indenture  permits,  with certain  exceptions as therein provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company  and the rights of the  Holders of the  Securities  of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal  amount of the  Outstanding
Securities of each series to be affected. The Indenture also contains provisions
permitting  the Holders of  specified  percentages  in  principal  amount of the
Securities of each series at the time  Outstanding,  on behalf of the Holders of
all Securities of such series,  to waive  compliance by the Company with certain
provisions of the  Indenture  and certain past defaults  under the Indenture and
their  consequences.  Any such consent or waiver by the Holder of this  Security
shall be conclusive  and binding upon such Holder and upon all future Holders of
this  Security  and of any  Security  issued upon the  registration  of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the  Indenture,  the Holder
of this  Security  shall not have the right to  institute  any  proceeding  with
respect to the Indenture or for the  appointment of a receiver or trustee or for
any other remedy thereunder,  unless such Holder shall have previously given the
Trustee  written  notice of a  continuing  Event of Default  with respect to the
Securities of this series,  the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the  Trustee  to  institute  proceedings  in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have  received  from the Holders of a majority in principal  amount of
Securities of this series at the time Outstanding a direction  inconsistent with
such  request,  and shall have failed to institute any such  proceeding,  for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit  instituted  by the Holder of this  Security for the

                                      -24-
<PAGE>

enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

     No reference  herein to the  Indenture and no provision of this Security or
of the Indenture  shall alter or impair the obligation of the Company,  which is
absolute and unconditional, to pay the principal of and any premium and interest
on this  Security  at the times,  place and rate,  and in the coin or  currency,
herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth,  the transfer of this Security is registrable  in the Security  Register,
upon  surrender of this Security for  registration  of transfer at the office or
agency of the  Company in any place where the  principal  of and any premium and
interest on this  Security are payable,  duly endorsed by, or  accompanied  by a
written  instrument  of  transfer  in form  satisfactory  to the Company and the
Security  Registrar  duly  executed by, the Holder  hereof or its attorney  duly
authorized in writing,  and thereupon one or more new  Securities of this series
and of like  tenor,  of  authorized  denominations  and for the  same  aggregate
principal amount, will be issued to the designated transferee or transferees.

     The Securities of this series are issuable only in registered  form without
coupons  in  denominations  of $1,000  and any  integral  multiple  thereof.  As
provided in the Indenture and subject to certain  limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of  Securities  of this  series  and of like  tenor  of a  different  authorized
denomination, as requested by the Holder surrendering the same.

     No service  charge shall be made for any such  registration  of transfer or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this  Security is  registered  as the owner  hereof for all
purposes,  whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     This  Security  shall be deemed to be a contract made under the laws of New
York and for all purposes shall be construed in accordance  with the laws of New
York, without regard to principles of conflicts of laws.

     All terms used in this Security  which are defined in the  Indenture  shall
have the meanings assigned to them in the Indenture.



                                      -25-
<PAGE>

                                  Abbreviations

     The following  abbreviations,  when used in the  inscription of the face of
this  Security,  shall be  construed  as though  they were  written  out in full
according to applicable laws or regulations:


TEN COM  - as tenants in common              UNIF GIFT MIN ACT - ________
TEN ENT  - as tenants by the entireties
           (Cust)
JT TEN   - as joint tenants with right of    Custodian ___________ under Uniform
           survivorship and not as tenants              (Minor)
           in common                         Gifts to Minors Act _______________
                                                                    (State)

     Additional abbreviations may also be used though not in the above list.



                                Conversion Notice

     To Cypress Semiconductor Corporation:

     The  undersigned  owner of this Security hereby  irrevocably  exercises the
option to  convert  this  Security,  or  portion  hereof  (which is $1,000 or an
integral multiple thereof) below designated,  into shares of Common Stock of the
Company  in  accordance  with the  terms of the  Indenture  referred  to in this
Security,  and  directs  that  the  shares  issuable  and  deliverable  upon the
conversion,  together  with any check in payment for  fractional  shares and any
Securities  representing any unconverted  principal amount hereof, be issued and
delivered  to the  registered  Holder  hereof  unless a different  name has been
indicated  below. If this Notice is being delivered on a date after the close of
business  on a Regular  Record  Date and prior to the opening of business on the
related Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption on a Redemption Date after the close of
business  on a Regular  Record  Date and prior to the opening of business on the
first Business Day after the next succeeding  Interest  Payment Date, or if such
Interest  Payment Date is not a Business Day, the next such Business Day),  this
Notice is  accompanied  by payment,  in funds  acceptable to the Company,  of an
amount  equal to the  interest  payable  on such  Interest  Payment  Date of the
principal of this  Security to be  converted.  If shares are to be issued in the
name of a  person  other  than the  undersigned,  the  undersigned  will pay all
transfer taxes payable with respect  hereto.  Any amount  required to be paid by
the undersigned on account of interest accompanies this Security.



                                      -26-
<PAGE>

   Principal Amount to be Converted
(in an integral multiple of $1,000, if less
               than all)
            $_____________
                                       Owner:

Dated: ____________                           __________________________________

                                              __________________________________

                                              Signature(s) must be guaranteed by
                                              a qualified guarantor  institution
                                              with  membership  in  an  approved
                                              signature     guarantee    program
                                              pursuant to Rule 17Ad-15 under the
                                              Securities Exchange Act of 1934 if
                                              shares of  Common  Stock are to be
                                              delivered,  or  Securities  to  be
                                              issued,  other  than to and in the
                                              name of the registered owner.


                                              __________________________________
                                              Signature Guaranty

     Fill in for  registration  of shares of Common  Stock and Security if to be
issued otherwise than to the registered Holder.



____________________________________          __________________________________
(Name)                                        Social Security or Other Taxpayer
                                              Identification Number
____________________________________
(Address)

____________________________________


                                      -27-
<PAGE>

                           OPTION TO ELECT REDEMPTION
                            UPON A CHANGE OF CONTROL

To:      Cypress Semiconductor Corporation

     The  undersigned  registered  owner  of this  Security  hereby  irrevocably
acknowledges  receipt of a notice from Cypress  Semiconductor  Corporation  (the
"Company")  as to the  occurrence  of a Change in  Control  with  respect to the
Company and requests and  instructs  the Company to redeem the entire  principal
amount of this Security,  or the portion thereof (which is $1,000 or an integral
multiple  thereof)  below  designated,  in  accordance  with  the  terms  of the
Indenture  referred to in this Security at the redemption  price,  together with
accrued interest to, but excluding, such date, to the registered Holder hereof.

Dated: ____________                         ____________________________________


                                            ____________________________________
                                            Signature(s)


                                            Signature(s) must be guaranteed by a
                                            qualified guarantor institution with
                                            membership in an approved  signature
                                            guarantee  program  pursuant to Rule
                                            17Ad-15    under   the    Securities
                                            Exchange Act of 1934.

                                            ____________________________________
                                            Signature Guaranty

Principal amount to be redeemed
(in an integral multiple of $1,000, if less than all):

___________________________________

NOTICE:  The signature to the foregoing  Election must correspond to the Name as
written upon the face of this Security in every particular,  without  alteration
or any change whatsoever.


                                      -28-