Document:

Cypress Semiconductor Corporation

	

EXHIBIT 4.1

CYPRESS
NON-QUALIFIED
DEFERRED
COMPENSATION PLAN I

(As Amended
and Restated Effective January 1, 2002)

	

TABLE OF
CONTENTS

		Page

       
	ARTICLE
      I PLAN I ADMINISTRATION	2 
	 	 	 
	ARTICLE
      II ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION	2 
	 	 	 
	ARTICLE
      III PLAN I CONTRIBUTIONS AND ALLOCATIONS	3 
	 	 	 
	ARTICLE
      IV VESTING	5 
	 	 	 
	ARTICLE
      V GENERAL DUTIES	5 
	 	 	 
	ARTICLE
      VI PARTICIPANTS’ ACCOUNTS	6 
	 	 	 
	ARTICLE
      VII PAYMENTS TO A PLAN I PARTICIPANT OR BENEFICIARY	7 
	 	 	 
	ARTICLE
      VIII HARDSHIP DISTRIBUTION	11 
	 	 	 
	ARTICLE
      IX ON-DEMAND DISTRIBUTIONS	11 
	 	 	 
	ARTICLE
      X CLAIMS PROCEDURE	12 
	 	 	 
	ARTICLE
      XI MISCELLANEOUS	13 

	

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CYPRESS
NON-QUALIFIED

DEFERRED
COMPENSATION PLAN I

     The
Cypress Semiconductor Corporation Nonqualified Deferred Compensation Plan,
originally effective as of September 1, 1995, and thereafter amended, was
further amended and restated in its entirety by Cypress Semiconductor
Corporation (the “Company”), effective as of January 1, 2002 on
behalf of itself and any designated subsidiaries and was renamed the Cypress
Non-Qualified Deferred Compensation Plan II (“Plan II”). Also on
January 1, 2002, this Cypress Non-Qualified Deferred Compensation Plan I (herein
“Plan I” or the “Plan”) was adopted by the Company. Plan I
is similar to Plan II except that (i) the phantom investments, including phantom
Cypress stock, are different than those available under Plan II, and (ii)
beneficiaries of Plan I participants who die while employed by or on a leave of
absence from Cypress will receive a supplemental survivor benefit, described
more fully herein. Throughout, the term “Company” shall include
wherever relevant any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant equity or
investment interest, or any subsidiary of the Company, as determined by the
Company. 

RECITALS:

     1. The
Company maintains Plan I for the benefit of a select group of management or highly
compensated employees designated by the Company.  

     2.
Under Plan I, the Company is obligated to pay vested accrued benefits, and in certain
circumstances, a supplemental survivor benefit, to Plan I Participants and their
beneficiary or beneficiaries (“Plan I Beneficiaries”) from the Company’s
general assets.  

     3. The
Company has entered into an agreement (the “Trust Agreement”) with Emmanuel
Hernandez and Neil Weiss (the “Trustees”) under an irrevocable trust (the “Trust”)
to be used in connection with Plan I.  

     4. The
Company intends to make contributions to the Trust so that such contributions will be
held by the Trustees and invested, reinvested and distributed, all in accordance with the
provisions of this Plan I and the Trust Agreement.  

     6. The
Company intends that the assets of the Trust shall at all times be subject to the claims
of the general creditors of the Company as provided in the Trust Agreement.  

     7. The
Company intends that the existence of the Trust shall not alter the characterization of
Plan I as “unfunded” for purposes of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), and shall not be construed to provide income to Plan I
Beneficiaries under Plan I prior to actual payment of the vested accrued benefits
thereunder. 

	

     NOW
THEREFORE, the Company does hereby establish Plan I as follows and does also
hereby agree that Plan I shall be structured, held and disposed of as follows: 

ARTICLE
I.

PLAN I
ADMINISTRATION

     A. The
Deferred Compensation Committee of the Company (the “Committee”) administers
Plan I. Subject to the specific duties delegated by the Board of Directors (the
“Board”) to such Committee, the Committee shall be responsible for the general
administration and interpretation of Plan I and for carrying out its provisions. The
Committee shall have such powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following powers and duties:  

          (1)
discretionary authority to construe and interpret the terms of Plan I, and to determine
eligibility and the amount, manner and time of payment of any benefits hereunder; 

          (2) to
prescribe forms and procedures for purposes of Plan I participation and distribution of
benefits; 

          (3) to
direct the Trustees as to the distribution of Plan I assets; and 

          (4) to
take such other action as may be necessary and appropriate for the proper administration
of Plan I. 

     B. The
Committee may adopt such rules, regulations and bylaws and may make such decisions as it
deems necessary or desirable for the proper administration of Plan I. Any rule or
decision that is not inconsistent with the provisions of Plan I shall be conclusive and
binding upon all persons affected by it, and there shall be no appeal from any ruling by
the Committee that is within its authority, except as otherwise provided herein.  

     C. The
Committee shall have the power to (i) identify investment choices for the Trust
Fund; and (ii) appoint or employ agents, recordkeepers and advisors to assist the
Committee in discharging its duties under Plan I.  

ARTICLE
II.

ELIGIBILITY,
PARTICIPATION, AND BENEFICIARY DESIGNATION

     A. Eligible
Employees. The following categories of employees (“Eligible Employees”)
shall be eligible to participate in Plan I: (i) employees who are eligible to
participate in the Company’s Key Employee Bonus Plan, and (ii) any other
employee or category of employee that is approved by the CEO as eligible to participate
in Plan I. The Committee reserves the right to modify the definition of Eligible Employee
at any time with the approval of the CEO. Any Eligible Employee who has commenced
participation in Plan I shall be referred to in this Plan I as a “Participant.” 

	

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     B.
Participation. Each Eligible Employee may elect to commence participation in
Plan I by completing a Cypress Non-Qualified Deferred Compensation Plan I participation
agreement and deferral election no later than the last day of his or her Election Period.
For purposes of the foregoing, an Eligible Employee’s Election Period shall be
defined as: (i) for newly Eligible Employees, the thirty (30) day period measured
from the date that the Company notifies in writing such Eligible Employee of his or her
eligibility to participate in Plan I; and (ii) for all other Eligible Employees, no
later than the due date for the enrollment forms during the annual open enrollment period
which is from December 1st to December 31st of each year (the “Annual Open
Enrollment Period”) prior to the beginning of the Plan Year for which the election
is effective (the calendar year is the “Plan Year”). For the 2002 Plan Year
only, Participants may elect by January 4, 2002 to make deferrals commencing with the
payroll period commencing January 7, 2002 and Participants who have not yet completed a
deferral election may elect by January 16, 2002 to make deferrals starting with the
payroll period commencing January 21, 2002. Elections made for the 2002 Plan year and
subsequent Plan years shall remain in effect for successive Plan years until revoked or
modified by the Participant in a manner consistent with the rules of Plan I and the
Committee.  

     C. Beneficiary
Designation. Each Participant, prior to entering Plan I, may designate a
beneficiary or beneficiaries to receive the remainder of any interest of the Participant
and any supplemental survivor benefit under Plan I in the event of the Participant’s
death. A Participant may change his or her beneficiary designation at any time by
submitting a complete and approved form of beneficiary designation (including dated
spousal consent, if required pursuant to the beneficiary designation form) to the
Committee (or its designee). Each beneficiary designation shall be in a form prescribed
by the Committee and will be effective only when filed with the Committee (or its
designee) during the Participant’s lifetime. Each beneficiary designation filed with
the Committee will cancel all previously filed beneficiary designations. In the absence
of a valid designation, or if no designated beneficiary survives the Participant, the
Participant’s interest shall be distributed to the Participant’s estate.  

ARTICLE
III.

PLAN I
CONTRIBUTIONS AND ALLOCATIONS

     A. Participant
Deferrals. Each Participant participating in Plan I shall execute a
participation agreement and deferral election (the “Deferral Election”)
authorizing the Company to withhold a percentage amount of the Participant’s
Compensation which would otherwise be paid to the Participant with respect to services
rendered. Compensation under Plan I is defined as the annual base salary, cash bonuses
(including key employee bonus, new product bonus and any other cash bonuses), and
any cash commissions payable to the Participant in connection with the Participant’s
services to the Company, including all amounts which a Participant elects to have the
Company contribute to Plan I on his or her behalf as a deferral contribution (“Compensation”).
A deferral percentage is applied to Compensation after all other applicable
payroll deductions (other than a 401(k) wrap) have been applied. The Committee may,
in its discretion, establish in the Deferral Election minimum and maximum levels of
Compensation that may be deferred pursuant to Plan I. If the elected deferrals would not
leave sufficient cash Compensation to satisfy required deductions under other Company
Plans (e.g., 401(k) Plan, group health insurance plan), then the requested deferrals
under this Plan I may be reduced as necessary to satisfy those deductions. Compensation
deferrals made by a Participant under this Plan I shall be held as an asset of the
Company and the Company intends to deposit the amounts deferred into the Trust; provided,
however, if a Participant elects—pursuant to his or her Deferral Election—to
transfer designated amounts of Compensation to the Cypress Semiconductor 401(k) Employee
Savings Plan and related trust, then such amounts shall be held in the Trust until
distributed in accordance with Section VII(B).  

	

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     B. Election
Changes. A Participant may, in such form and at such time or times as the
Committee may prescribe, discontinue or modify deferral of future Compensation. The
Committee has the power to establish uniform and nondiscriminatory rules and from time to
time to modify or change such rules governing the manner and method by which Compensation
deferral elections shall be made, as well as the manner and method by which Compensation
deferral elections may be changed or discontinued temporarily or permanently. All
Compensation deferral contributions shall be authorized by the Participant in writing,
made by payroll deduction, deducted from the Participant’s Compensation without
reduction for any taxes or withholding (except to the extent required by law or
regulation) and paid over to the Trust by the Company. Notwithstanding the foregoing,
each Participant shall remain liable for any and all employment taxes owing with respect
to such Participant’s Compensation deferral contributions.  

     C. Cessation
of Eligible Status. In the event a Participant ceases to be an Eligible Employee
while also a participant in Plan I, such individual may continue to make Compensation
deferral contributions under Plan I through the end of the payroll period in which the
individual ceases to be an Eligible Employee. Thereafter, such individual shall not make
any further Compensation deferral contributions to Plan I unless or until he or she again
meets the eligibility requirements of Article II above.  

     D.
Company Discretionary Contributions. The Company may, in its sole discretion, make
discretionary contributions to the accounts of one or more Participants at such times and
in such amounts as the Board of the Company shall determine.  

     E. Allocations. The
Compensation deferral contributions and any Company contributions made under Plan I on
behalf of a Participant shall be credited to the Participant’s Account. The
Committee shall establish and maintain separate subaccounts as it determines to be
necessary and appropriate for the proper administration of Plan I. The Committee may
cause the Trustees to maintain and invest separate asset accounts corresponding to each
Participant account. Each Participant Account consists of the aggregate interest of the
Participant under Plan I (and in the Trust Fund), as reflected in the records maintained
by the Company for such purposes.  

     F. Plan
to Plan Transfers. Subject to the Committee’s discretion, during the annual
open enrollment period Participants shall be allowed to elect to transfer their deemed
investment accounts from Plan II to Plan I, subject to such limitations and reallocation
requirements as the Committee, in its sole discretion, determines to be appropriate. The
plan to plan transfers shall be effective as of the first day of the following Plan Year.  

	

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ARTICLE
IV.

VESTING

     A.
Compensation Deferral Contributions. The value of a Participant’s Account attributable to
Participants’ Compensation deferral contributions shall always be fully vested and
nonforfeitable.  

     B. Company
Contributions. The value of a Participant’s Account attributable to any
Company contributions pursuant to Article III.D shall vest at such time or times as
the Board may specify in connection with any such contributions. In the absence of Board
specification, a Participant’s interest in Company contributions shall be fully
vested and nonforfeitable. Upon termination of a Participant’s employment with the
Company for any reason, any portion of the Participant’s Account that is not then
vested (including allocable earnings, as determined by the Committee), shall be
forfeited. Unless otherwise determined by the Board or the Committee, forfeitures shall
be used to satisfy the Company’s obligation to remit contributions to the Trust
under Plan I.  

ARTICLE
V.

GENERAL
DUTIES

     A. Committee
Duties. The Committee will provide the Trustees with a copy of any future
amendment to this Plan I promptly upon its adoption. The Committee may from time to time
hire outside consultants, accountants, actuaries, legal counsel or recordkeepers to
perform such tasks as the Committee may from time to time determine.  

     B.
Trustees’ Duties. The Trustees shall invest and reinvest the Trust Fund as provided in
the Trust Agreement. The Trustees shall collect the income on the Trust Fund, and make
distributions therefrom, as provided in this Plan I and in the Trust Agreement.  

     C. Company
Contributions. While Plan I remains in effect, and prior to a Change in Control,
as defined below, the Company shall make contributions to the Trust Fund at least once
each quarter. The amount of any quarterly contributions shall be at the discretion of the
Company. At the close of each calendar year, the Company shall make an additional
contribution to the Trust Fund to the extent that previous contributions to the Trust
Fund for the current calendar year are not equal to the total of the Compensation
deferrals made by each Participant plus Company discretionary contributions, if any,
accrued, as of the close of the current calendar year. The Trustees shall not be liable
for any failure by the Company to provide contributions sufficient to pay all accrued
benefits under Plan I in full in accordance with the terms of Plan I.  

	

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     D. Department
of Labor Determination. In the event that any Participants are found to be
ineligible, that is, not members of a select group of management or highly compensated
employees, according to a determination made by the Department of Labor, the Committee
will take whatever steps it deems necessary, in its sole discretion, to equitably protect
the interests of the affected Participants.  

ARTICLE
VI.

PARTICIPANTS’
ACCOUNTS

     A.
Separate Accounts. The Committee shall open and maintain a separate Account for each
Participant. Each Participant’s Account shall reflect the amounts allocated thereto and
distributed therefrom and such other information as affects the value of such Account
pursuant to this Plan I.  

     B.
Timing of Account Credit. Amounts deferred under Plan I shall be credited to a
Participant’s Account within five business days following the date upon which such
amounts would otherwise have been paid to the Participant.  

     C. Statement
of Accounts. As soon as practicable after the end of each calendar year the
Committee shall furnish to each Participant a statement of Account, determined as of the
end of such calendar year. Upon the discovery of any error or miscalculation in an
Account, the Committee shall correct it, to the extent correction is practically
feasible; provided, however, that any such statement of Account shall be considered to
reflect accurately the status of the Participant’s Account for all purposes under
Plan I unless the Participant reports a discrepancy to the Committee within six (6)
months after receipt of the statement. The Committee shall have no obligation to make
adjustments to a Participant’s Account for any discrepancy reported to the Committee
more than six (6) months after receipt of the statement, or for a discrepancy caused by
the Participant’s error. Statements to Participants are for reporting purposes only,
and no allocation, valuation or statement shall vest any right or title in any part of
the Trust Fund, nor require any segregation of Trust assets, except as is specifically
provided in this Plan I.  

     D.
Distribution of Accounts. Payment to a Participant shall be based on the value of the
vested portion of the Participant’s Account as of the Valuation Date immediately
preceding the date of distribution plus any contribution subsequently credited to such
Account and less any distributions subsequently made from the Account.  

	

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ARTICLE
VII.

PAYMENTS TO
A PLAN I PARTICIPANT OR BENEFICIARY

     A. General. Payments
of vested accrued benefits to Plan I Beneficiaries from the Trust shall be made in
accordance with the distribution event specified by the Participant in the Deferral
Election between the Company and the Participant (the “Distribution Event”).
Except as otherwise expressly provided in the Participant’s Deferral Election and as
set forth in Article VII below, no distribution shall be made or commenced prior to the
time and manner as set forth in the Participant’s Deferral Election.  

     B. Upon
Retirement or Total Disability. If a Participant’s employment with the
Company terminates (i) by virtue of Participant’s Total Disability (as defined under
Section 22(e)(3) of the Internal Revenue Code and as determined in the sole discretion of
the Committee), or (ii) pursuant to Participant’s retirement (a) at age 65 or
greater, or (b) at age 55 or greater but with at least ten full years of continuous
employment by the Company (either case shall be referred to in this Plan I as “Retirement”),
then Participant shall receive, pursuant to the election selected in his or her timely
submitted Deferral Election a distribution of his or her Account balance in either a
lump-sum or in five, ten or fifteen annual payments, each such payment equal to 1/n of
the Participant’s vested accrued benefit where n is the number of installments
remaining to be paid, (an “Annual Payment”).  

     C.
Upon Death. If a Participant’s employment terminates due to his or her death, or if a
Participant dies while on a leave of absence where re-employment with the Company is not
guaranteed by contract or statute, then the Participant’s beneficiary will receive their
Account balance in either a lump-sum or in five Annual Payments, as specified in the
Participant’s Deferral Election. 

     D. Supplemental
Survivor Benefit. If a Participant dies while actively employed by the Company
or on a Company-approved leave of absence, then, in addition to the account distribution
provided for in Section VII(C) above, his or her beneficiary shall receive a taxable
survivor benefit equal to two times the total amount deferred into Plan I through the
date of death, including certain amounts deferred under Plan II that were transferred to
Plan I (as described below), and excluding certain distributions (as described below) up
to a maximum benefit of three million dollars ($3,000,000). For the purpose of
determining the amount of the supplemental survivor benefit, earnings or losses on
deferrals are not included. Any Plan I distributions prior to death shall reduce the Plan
deferral balance by a pro rata amount, calculated as of the distribution Valuation Date.
Any Plan II transfers to Plan I shall carry a pro rata credit for Plan II deferrals. For
this purpose, Plan II deferrals will be reduced by distributions similarly to Plan I. For
purposes of calculating Plan deferrals, amounts transferred to the Cypress Semiconductor
401(k) Employee Savings Plan and related trust shall be deducted from their Plan Deferral
balance; provided, however, that if a Participant dies prior to the scheduled transfer to
the Cypress Semiconductor 401(k) Employee Savings Plan, the amounts subsequently
transferred shall not be deducted from their Plan Deferral balance for purposes of
calculating the Supplemental Survivor Benefit. For purposes of valuing Plan
Distributions, any 6% penalty pursuant to Section IX hereof shall be included in
calculating the total amount distributed.  

	

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     Example
I: Participant A defers $1,750,000 to Plan I. This appreciates to
$2,000,000. Participant A then dies while employed by the Company. Because the
Supplemental Survivor Benefit is capped at $3,000,000, her beneficiary receives
a $3,000,000 Supplemental Survivor Benefit. 

     Example
II: Participant A defers $100,000 into Plan II. This appreciates to
$130,000, at which time it is transferred to Plan I. Participant A then defers
$25,000 into Plan I. Subsequently, Participant A’s Plan I total account
value declines to $80,000 based upon her phantom investments diminishing in
value. Participant A dies while on a Company-approved leave of absence. Due to
Participant A’s $100,000 Plan II transfer deferral credit, and her $25,000
deferral credit under Plan I, her beneficiary receives a $250,000 Supplemental
Survivor Benefit. 

     Example
III: Participant A defers $100,000 into Plan II. This depreciates to
$65,000, at which time it is transferred to Plan I. Participant A then defers
$25,000 into Plan I. Subsequently, Participant A’s Plan I total account
value declines to $40,000 based upon her phantom investments diminishing in
value. Participant dies while on a Company-approved leave of absence. Due to
Participant A’s $100,000 Plan II transfer deferral credit, and her $25,000
deferral credit under Plan I, her beneficiary receives a $250,000 Supplemental
Survivor Benefit. 

     Example
IV: Participant B has deferred $150,000 into Plan II. The Plan II account
appreciates to $250,000, at which time $125,000 is transferred to Plan I.
Participant B thereafter defers $30,000 to Plan I. The Plan I account
subsequently appreciates to $235,000, at which time Participant B receives a
scheduled $110,000 in-service distribution from Plan I. Subsequently Participant
B’s Plan I account appreciates to $150,000, at which time Participant B
dies while employed by the Company. 

		•		The Plan II transfer deferral credit equals $75,000, because the total deferrals under
Plan II at the time of distribution were $150,000, and because the transfer of 50% of the
Plan II balance results in a pro rata 50% transfer of the Plan II deferral credit.  

		•		The Total Plan I deferrals equal $30,000.  

		•		At the time of the distribution, the total Plan I deferral credit is $105,000 = Plan II
transfer credit of $75,000 plus Plan I deferrals of $30,000. 

		•		The $110,000 Plan I distribution results in a pro rata reduction in the Plan I deferral
credit. The $110,000 distribution is divided by the then Total Plan I account value of
$235,000 resulting in .468. Because distributions result in a pro rata reduction of
deferral credit, .468 is multiplied by the total Plan I deferral credit of $105,000 =
$49,140. This amount is reduced from the Total Plan I deferral credit ($105,000 -
$49,140) resulting in a post-distribution Total Plan I deferral credit of $55,860. 

		•		Upon Participant B’s death, his beneficiary receives a Supplemental Survivor Benefit
equal to 2 x $55,860 = $111,720. 

	

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     Example
V: Participant C defers $1,400,000 to Plan I. Participant C terminates her
employment with the Company. Shortly thereafter, Participant C dies. Because on
her date of death Participant C was neither actively employed by the Company nor
on a Company-approved leave of absence, her beneficiary does not receive a
Supplemental Survivor Benefit. 

     E. Change
of Control. In the event of a “Change of Control,“the Committee may,
in its sole discretion, decide to distribute all Account balances in a lump-sum promptly
following the Change of Control. For purposes of this Plan I, a “Change in Control“shall
be deemed to have occurred if any person (including a “Group“as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) acquires shares of
the Company either (i) having a majority of the total number of votes that may be
cast for the election of directors of the Company or (ii) possessing, directly or
indirectly, the power to control the direction of management or policies of the Company;
provided, however, that no Change of Control shall be deemed to occur in the event of a
merger, consolidation or reorganization of the Company where the shareholders of the
Company are substantially the same as before such merger, consolidation or
reorganization. The Trustees shall have no responsibility to determine whether a Change
in Control has occurred and shall be advised of such event by the Company.  

     F. Prior
to Retirement or for Cause. In the event a Participant is terminated
involuntarily for Cause (as determined by the Committee in its sole discretion), or in
the event that his or her employment terminates voluntarily prior to Retirement, then his
or her Account balance shall be distributed in a lump-sum within 60 days following such
termination.  

     G. Involuntary
Termination Due to Company Downsizing, Restructuring or Adverse Business Conditions. In
the event a Participant is terminated due to a Company down-sizing or restructuring or
adverse business conditions (as determined by the Committee in its sole discretion), then
the Participant will receive their Account balance in either a lump-sum or in five Annual
Payments, as specified in the Participant’s Deferral Election.  

     H. Scheduled
In-Service Distribution. A Participant may elect, as provided in his or her
Participant Deferral Election, to receive one or more scheduled in-service (i.e., while
employed by the Company) distributions from their Account balance without an early
withdrawal penalty. Any such distributions must be at least two full Plan Years following
the date of the Participant’s Deferral Election. Each scheduled in-service
distribution may be postponed (but only once) at least one full year in advance of the
scheduled distribution to a later date or cancelled by submitting the appropriate form to
the Company or its designated administrator. If a Participant specifies that a dollar
amount will be distributed and the Account balance is less than the dollar amount, then
the entire Account will be distributed. A Participant may increase the amount or
percentage specified for an in-service distribution by submitting the appropriate form at
any time prior to twelve months in advance of the scheduled in-service distribution. In
the event an Employee terminates employment with the Company prior to a scheduled
in-service distribution, the in-service distribution election shall be without further
force and effect and the applicable termination distribution provisions of the plan and
the Participant’s Deferral Election shall control.  

	

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     I. Method
of Distribution. Except as specified otherwise in this Section VII, payment to
any Plan I Beneficiary Pursuant to Plan I shall be made (i) in accordance with the
Deferral Election executed by the Participant, (ii) in cash, (iii) in a lump
sum or in Annual Payments. Notwithstanding the foregoing, if elected by the Participant
in his or her Deferral Election and if directed by the Committee, the Trustees shall pay
to the trustee of the Cypress Semiconductor 401(k) Employee Savings Plan the aggregate
amount of elected transfers, but only to the extent that the transferred amount would
constitute a deductible employer contribution pursuant to Code Sections 401 and 404
for the year for which they were initially contributed to Plan I. The Committee will make
the determination as to whether such amounts constitute deductible contributions pursuant
to Code Section 401 and 404.  

     J. Distributions
From Trust; Withholding. Unless the Trustees do not require this, with respect
to each Participant, the Company shall deliver to the Trustees a schedule (the “Payment
Schedule”) that indicates the amounts payable in respect of the Participant (and his
or her beneficiaries), that provides a formula or other instructions acceptable to the
Trustees for determining the amounts so payable, the form in which such amount is to be
paid and the time of commencement for payment of such amounts. The Payment Schedule shall
be delivered to the Trustees not fewer than 15 days prior to the first date on which a
payment is to be made to the Participant. Any change to a Payment Schedule shall be
delivered to the Trustees not fewer than 15 days prior to the date on which the first
payment is to be made in accordance with the changed Payment Schedule. Except as
otherwise provided herein, the Trustees shall cause the Company or the Trust to make
payments to Participants and their beneficiaries in accordance with such Payment
Schedule. The Trustees shall make provisions for the reporting and withholding of any
federal, state or local taxes that may be required to be withheld with respect to the
payment of Plan I benefits and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid by the
Company, it being understood among the parties hereto that the Company shall on a timely
basis provide the Trustees specific information as to the amount of taxes from the
Trustees and properly pay and report such withheld taxes from the Trustees and properly
pay and report such amounts to the appropriate taxing authorities.  

     K. Certain
Distributions. In case of any distribution to a minor or to a legally
incompetent person, the Committee may (1) direct the Trustees to make the
distribution to his legal representative, to a designated relative, or directly to such
person for his benefit, or (2) instruct the Trustees to use the distribution
directly for his support, maintenance, or education. The Trustees shall not be required
to oversee the application, by any third party, of any distributions made pursuant to
this Article.  

     L. IRS
Determination. Notwithstanding any other provisions of this Plan I, if any
amounts held in the Trust are found in a “determination”(within the meaning of
Section 1313(a) of the Internal Revenue Code of 1986, as amended (the “Code”)),
to have been includible in the gross income of any Trust Beneficiary prior to payment of
such amounts from the Trust, the Trustees shall, as soon as practicable pay such amounts
to the Trust Beneficiary, as directed by the Company. For purposes of this Section, the
Trustees shall be entitled to written notice from the Committee that a determination
described in the preceding sentence has occurred and to receive a copy of such notice.
The Trustees shall have no responsibility until so advised by the Committee.  

	

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     M.
Phantom Cypress Stock. Distributions of accounts with allocations credited to phantom
Cypress stock shall be made in cash, in Cypress common stock, or in some combination
thereof, in the Committee’s sole discretion. 

ARTICLE
VIII.

HARDSHIP
DISTRIBUTION

     If
a Participant suffers a financial hardship, as such term is defined in the
Cypress Semiconductor 401(k) Plan, the Participant may, with the approval of the
Committee, receive an in-service distribution from his or her Account equal to
the amount needed to satisfy such hardship. In the event a Participant receives
a hardship distribution pursuant to this Article, such Participant shall be
excluded from participating in Plan I and Plan II for the balance of Plan Year
in which the Participant received payment pursuant to a request for a hardship
distribution. A Participant requesting a hardship distribution shall apply for
the payment in writing on a form approved by the Committee and shall provide
such additional information as the Committee may require. 

ARTICLE
IX.

ON-DEMAND
DISTRIBUTIONS

     A. On-Demand
Distribution While An Employee. At any time while a Participant in Plan I, a
Participant may request to receive a distribution of not less than twenty-five percent
(25%) of the Participant’s Account. Such on-demand distribution shall be subject to
a penalty equal to six percent (6%) of the amount distributed to the Participant as an
on-demand distribution. In the event a Participant receives an on-demand
distribution pursuant to this Article, such Participant shall not be eligible to
participate in Plan I (i) for the Plan Year in which the Participant received
payment pursuant to a request for an on-demand distribution, and (ii) for the Plan
Year following the Plan Year in which the Participant received payment pursuant to a
request for an on-demand distribution. Moreover, a Participant may not receive an
on-demand distribution more frequently than once every two years. A Participant
requesting an on-demand distribution shall apply for the payment in writing on a form
approved by the Committee and shall provide such additional information as the Committee
may require.  

     B. On-Demand
Distribution Following Employment. Following a Participant’s termination of
employment, a Participant who is otherwise scheduled to receive a payment over time may
request to receive a distribution of the balance of his or her Account. Such on-demand
distribution shall be subject to a penalty equal to six percent (6%) of the amount
distributed to the Participant as an on-demand distribution. A Participant requesting an
on-demand distribution shall apply for the payment in writing on a form approved by the
Committee and shall provide such additional information as the Committee may require.  

	

-11- 

	

ARTICLE
X.

CLAIMS
PROCEDURE

     A.
Right to File Claim. Every Participant or Beneficiary shall be entitled to file with the
Committee a written claim for benefits under Plan I. 

     B.
Denial of Claim. 

          (1) If
the claim is denied by the Committee, in whole or in part, the claimant shall be
furnished within ninety (90) days after the Committee’s receipt of the claim (or
within one hundred eighty (180) days after such receipt if special circumstances require
an extension of time) a written notice of denial of such claim containing the following:  

               (i)
specific reason or reasons for denial; 

               (ii)
specific reference to pertinent Plan I provisions on which the denial is based; 

               (iii)
a description of any additional material or information necessary for the claimant to
perfect the claim, and an explanation of why the material or information is necessary; and 

               (iv)
an explanation of the claims review procedure. 

          (2) If
written notice of the denial of such claim is not furnished within the time period
prescribed under paragraph (1) above, then the claim shall be deemed denied.  

     C.
Claim Review Procedure. 

          (1)
Review may be requested at any time within sixty (60) days following the date the
claimant received written notice of the denial of his or her claim. For purposes of this
Section, any action required or authorized to be taken by the claimant may be taken by a
representative authorized in writing by the claimant to act on his or her behalf. The
Committee shall afford the claimant a full and fair review of the decision denying the
claim and, if so requested, shall:  

          (i)
permit the claimant to review any documents that are pertinent to the claim; and 

          (ii)
permit the claimant to submit to the Committee issues and comments in writing. 

	

-12- 

	

          (2)
The decision on review by the Committee shall be in writing and shall be issued within
sixty (60) days following receipt of the request for review. The period for decision may,
however, be extended up to one hundred twenty (120) days after such receipt if the
Committee determines that special circumstances require extension. The decision on review
shall include specific reasons for the decision and specific references to the pertinent
Plan I provisions on which the decision of the Committee is based.  

          (3) If
the decision on review by the Committee is not furnished within the time period
prescribed under paragraph (2) above, then the claim shall be deemed denied on review.  

ARTICLE
XI.

MISCELLANEOUS

     A. Unsecured
General Creditor. Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or interests in any specific
property or assets of the Company. No assets of the Company shall be held in any way as
collateral security for the fulfilling of the obligations of the Company under this Plan
I. Any and all of the assets of the Company shall be, and remain, the general unpledged,
unrestricted assets of the Company. The obligation of the Company under Plan I shall be
merely that of an unfunded and unsecured promise to pay money in the future, and the
rights of the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.  

     B. Restriction
Against Assignment. The Company shall pay all amounts payable hereunder only to
the person or persons designated by Plan I and not to any other person or corporation. No
part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in interest, nor
shall a Participant’s Account be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding, nor shall any such person have
any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or
payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any distribution or payment from Plan I, voluntarily
or involuntarily, the Committee, in its sole and absolute discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Committee shall direct.  

     C.
Withholding. There shall be deducted from each payment made under Plan I, all taxes that
are required to be withheld by the Company, as applicable, in respect to such payment.
The Company shall have the right to reduce any payment by the amount of cash sufficient
to provide the amount of said taxes.  

     D. Legal
Representation. The Company will reimburse all reasonable legal fees and
expenses incurred by a Plan I Beneficiary in seeking to obtain or enforce any right or
benefit provided by Plan I. This reimbursement right applies only to claims made after a
Change of Control and only for fees and expenses incurred after a Plan I Beneficiary has
exhausted the claims and appeals procedure specified in Article IX. No reimbursement
shall be made if the request is found to be frivolous by a court of competent
jurisdiction.  

-13- 

	

     E. Amendment,
Modification, Suspension or Termination. The Committee may amend, modify,
suspend or terminate Plan I in whole or in part, except that no amendment, modification,
suspension or termination shall have any retroactive effect to reduce any amounts
allocated to a Participant’s Account, provided that a termination or suspension of
Plan I or any Plan I amendment or modification that will significantly increase costs to
the Company shall be approved by the Board. In the event that this Plan I is terminated,
the timing of the disposition of the amounts credited to a Participant’s Account
shall occur in accordance with Article VII, subject to earlier distribution at the
discretion of the Committee.  

     F.
Governing Law. This Plan I shall be construed, governed and administered in accordance
with the internal substantive laws of the State of California (other than the choice of
law principles). 

     G. Receipt
or Release. Any payment to a Plan I Beneficiary in accordance with the
provisions of Plan I shall, to the extent thereof, be in full satisfaction of all claims
against the Committee and the Company. The Committee may require such Plan I Beneficiary,
as a condition precedent to such payment, to execute a receipt and release to such
effect.  

     H. Payments
on Behalf of Persons under Incapacity. In the event that any amount becomes
payable under Plan I to a person who, in the sole judgment of the Committee, is
considered by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any payment
made pursuant to such determination shall constitute a full release and discharge of the
Committee and the Company.  

     I. No
Employment Rights. Participation in this Plan I shall not confer upon any person any
right to be employed by the Company or any other right not expressly provided hereunder.  

     J.
Headings, etc. Not Part of Agreement. Headings and subheadings in this Plan I are
inserted for convenience of reference only and are not to be considered in the
construction of the provisions hereof.  

     K. Successorship. This
Plan I shall be binding upon and inure to the benefit of any successor to the Company or
its business as the result of merger, consolidation, reorganization, transfer of assets
or otherwise, and any subsequent successor thereto; and any such successor shall be
deemed to be the “Company“under this Plan I. In the event of any such merger,
consolidation, reorganization, transfer of assets or other similar transaction, the
successor to the Company or its business or any subsequent successor thereto shall
promptly notify the Trustees in writing of its successorship and furnish the Trustees
with the name or names of any person or persons authorized to act for the Company. In no
event shall any such transaction described herein suspend or delay the rights of Plan I
Beneficiaries to receive their vested accrued benefits hereunder.  

	

-14- 

	

     L. Plan
I Document. This document, the prospectus to Plan I, the Deferral Election,
certain definitions expressly mentioned herein that are defined in the Cypress
Semiconductor Employee 401(k) Plan, the Trust Agreement, and any other documents
identified by the Committee, comprise the Plan documents for Plan I.  

     M.
Definitions. 

          (1)
“Account”  means the bookkeeping account established to reflect the interest of a
Participant or beneficiary in Plan I. 

          (2)
“Cause” means: (i) Participant’s continued failure to
substantially perform Participant’s principal duties and responsibilities (other
than as a result of disability or death) after thirty (30) days written notice from
the Company specifying the nature of Participant’s failure and demanding that such
failure be remedied; (ii) Participant’s material and continuing breach of his
or her obligations to the Company set forth in any written agreement between the Company
and Participant or any written policy of the Company after thirty (30) days written
notice from the Company specifying the nature of Participant’s breach and demanding
that such breach be remedied (unless such breach by its nature cannot be cured, in which
case notice and an opportunity to cure shall not be required); (iii) Participant’s
arrest for a felony, fraud or an act of moral turpitude; or (iv) act or acts of
dishonesty undertaken by Participant and intended to result in personal enrichment of
Participant at the expense of the Company  

          (3)
“Deferral Election” means the documents that encompass the (i) Deferred
Compensation Plans’Beneficiary Designation, (ii) Deferred Compensation Plans’Distribution
Election Form, (iii) Deferred Compensation Plans’Participation Agreement and
Deferral Election, (iv) the Deferred Compensation Plan Manulife Investment
Allocation Form for Future Deferrals, (v) the Deferred Compensation Plan Nationwide
Investment Allocation Form for Future Deferrals, (vi) Deferred Compensation Plan Nationwide
Investment Allocation Change Form, (vii) the Deferred Compensation Plan Manulife
Investment Allocation Change Form, (viii) the In-Service Distribution Change Form,
(ix) the Accelerated Distribution Election Form, (x) the Election to Stop Contribution
Form, and (xi) any other documents designated by the Committee as encompassing the
Deferral Election.  

          (4)
“Involuntary Termination” means a Participant’s termination of
employment with the Company because of the Company’s downsizing and/or
restructuring, as determined in the sole discretion of the Committee.  

          (5)
“Plan Year” means the calendar year. 

          (6)“Valuation
Date” means, (i) for distributions hereunder, the Participant’s Account
shall be valued, for distributions made on or after the fifteenth day of a month, as of
the first day of such month, and for distributions made prior to the fifteenth day of a
month, as of the fifteenth day of the prior month, (ii) for allocations of deferrals and
re-allocations of amounts previously deferred, the last business day of the preceding
week; provided, however, that for re-allocations of phantom Cypress stock into another
phantom investment, the Valuation Date shall be the first business day of the week in
which the reallocation is made, and (iii) for permitted Plan II to Plan I transfers, the
last business day of the Plan Year.  

CYPRESS
SEMICONDUCTOR

CORPORATION

	

By: /s/ Neil H. Weiss
      ——————————————

	

	(Title) /s/ Vice President, Treasury
           —————————————

	

-15-Cypress Semiconductor Corp

	

EXHIBIT 4.2

CYPRESS
NON-QUALIFIED

DEFERRED
COMPENSATION PLAN II

(As Amended
and Restated Effective January 1, 2002)

	

TABLE OF
CONTENTS

		Page

       
	ARTICLE
      I PLAN II ADMINISTRATION	 	2	 
	 	 	 	 
	ARTICLE
      II ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION	 	2	 
	 	 	 	 
	ARTICLE
      III PLAN II CONTRIBUTIONS AND ALLOCATIONS	 	3	 
	 	 	 	 
	ARTICLE
      IV VESTING	 	5	 
	 	 	 	 
	ARTICLE
      V GENERAL DUTIES	 	5	 
	 	 	 	 
	ARTICLE
      VI PARTICIPANTS' ACCOUNTS	 	6	 
	 	 	 	 
	ARTICLE
      VII PAYMENTS TO A PLAN II PARTICPANT OR BENEFICIARY	 	6	 
	 	 	 	 
	ARTICLE
      VIII HARDSHIP DISTRIBUTION	 	9	 
	 	 	 	 
	ARTICLE
      IX ON-DEMAND DISTRIBUTIONS	 	9	 
	 	 	 	 
	ARTICLE
      X CLAIMS PROCEDURE	 	10	 
	 	 	 	 
	ARTICLE
      XI MISCELLANEOUS	 	11	 

	

-i- 

	

CYPRESS
NON-QUALIFIED

DEFERRED
COMPENSATION PLAN II

(As Amended
and Restated Effective January 1, 2002)

     The
Cypress Semiconductor Corporation Nonqualified Deferred Compensation Plan,
originally effective as of September 1, 1995, and thereafter amended, is
hereby further amended and restated in its entirety by Cypress Semiconductor
Corporation (the “Company”), effective as of January 1, 2002 on
behalf of itself and any designated subsidiaries and is renamed the Cypress
Non-Qualified Deferred Compensation Plan II (“Plan II”).
Effective January 1, 2002, the Company also adopted the Cypress Non-Qualified
Deferred Compensation Plan I. Plan I is similar to Plan II except that (i) the
phantom investments, including phantom Cypress stock, are different than those
available under Plan II, and (ii) beneficiaries of Plan I participants who die
while employed by or on a leave of absence from Cypress will receive a
supplemental survivor benefit, described more fully therein. Throughout, the
term “Company” shall include wherever relevant any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity or investment interest, or any subsidiary of
the Company, as determined by the Company. 

RECITALS:

     1. The
Company maintains Plan II for the benefit of a select group of management or highly
compensated employees designated by the Company.  

     2.
Under Plan II, the Company is obligated to pay vested accrued benefits to Plan II
Participants and their beneficiary or beneficiaries (“Plan II Beneficiaries”)
from the Company’s general assets.  

     3. The
Company has entered into an agreement (the “Trust Agreement”) with Emmanuel
Hernandez and Neil Weiss (the “Trustees”) under an irrevocable trust (the “Trust”)
to be used in connection with Plan II.  

     4. The
Company intends to make contributions to the Trust so that such contributions will be
held by the Trustees and invested, reinvested and distributed, all in accordance with the
provisions of this Plan II and the Trust Agreement.  

     6. The
Company intends that the assets of the Trust shall at all times be subject to the claims
of the general creditors of the Company as provided in the Trust Agreement.  

     7. The
Company intends that the existence of the Trust shall not alter the characterization of
Plan II as “unfunded”for purposes of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), and shall not be construed to provide income
to Plan II Beneficiaries under Plan II prior to actual payment of the vested accrued
benefits thereunder.  

	

 

	

     NOW
THEREFORE, the Company does hereby establish Plan II as follows and does also
hereby agree that Plan II shall be structured, held and disposed of as follows: 

ARTICLE I. 

PLAN II
ADMINISTRATION

     A. The
Deferred Compensation Committee of the Company (the “Committee”) administers
Plan II. Subject to the specific duties delegated by the Board of Directors (the “Board”)
to such Committee, the Committee shall be responsible for the general administration and
interpretation of Plan II and for carrying out its provisions. The Committee shall have
such powers as may be necessary to discharge its duties hereunder, including, but not by
way of limitation, the following powers and duties:  

          (1)
discretionary authority to construe and interpret the terms of Plan II, and to determine
eligibility and the amount, manner and time of payment of any benefits hereunder; 

          (2) to
prescribe forms and procedures for purposes of Plan II participation and distribution of
benefits; 

          (3) to
direct the Trustees as to the distribution of Plan II assets; and 

          (4) to
take such other action as may be necessary and appropriate for the proper administration
of Plan II. 

     B. The
Committee may adopt such rules, regulations and bylaws and may make such decisions as it
deems necessary or desirable for the proper administration of Plan II. Any rule or
decision that is not inconsistent with the provisions of Plan II shall be conclusive and
binding upon all persons affected by it, and there shall be no appeal from any ruling by
the Committee that is within its authority, except as otherwise provided herein.  

     C. The
Committee shall have the power to (i) identify investment choices for the Trust
Fund; and (ii) appoint or employ agents, recordkeepers and advisors to assist the
Committee in discharging its duties under Plan II.  

ARTICLE II. 

ELIGIBILITY,
PARTICIPATION, AND BENEFICIARY DESIGNATION

     A. Eligible
Employees. The following categories of employees (“Eligible Employees”)
shall be eligible to participate in Plan II: (i) employees who are eligible to
participate in the Company’s Key Employee Bonus Plan, and (ii) any other
employee or category of employee that is approved by the CEO as eligible to participate
in Plan II. The Committee reserves the right to modify the definition of Eligible
Employee at any time with the approval of the CEO. Any Eligible Employee who has
commenced participation in Plan II shall be referred to in this Plan II as a “Participant.” 

	

-2- 

	

     B. Participation. Each
Eligible Employee may elect to commence participation in Plan II by completing a Cypress
Non-Qualified Deferred Compensation Plan II participation agreement and deferral election
no later than the last day of his or her Election Period. For purposes of the foregoing,
an Eligible Employee’s Election Period shall be defined as: (i) for newly
Eligible Employees, the thirty (30) day period measured from the date that the Company
notifies in writing such Eligible Employee of his or her eligibility to participate in
Plan II; and (ii) for all other Eligible Employees, no later than the due date for
the enrollment forms during the annual open enrollment period which is from December 1st
to December 31st of each year (the “Annual Open Enrollment Period”) prior
to the beginning of Plan Year for which the election is effective (the calendar year is
the “Plan Year”). For the 2002 Plan Year only, Participants may elect by
January 4, 2002 to make deferrals commencing with the payroll period commencing January
7, 2002 and Participants who have not yet completed a deferral election may elect by
January 16, 2002 to make deferrals starting with the payroll period commencing January
21, 2002. Elections made for the 2002 Plan Year and subsequent Plan Years shall remain in
effect for successive Plan Years until revoked or modified by the Participant in a manner
consistent with the rules of Plan II and the Committee.  

     C. Beneficiary
Designation. Each Participant, prior to entering Plan II, may designate a
beneficiary or beneficiaries to receive the remainder of any interest of the Participant
under Plan II in the event of the Participant’s death. A Participant may change his
or her beneficiary designation at any time by submitting a complete and approved form of
beneficiary designation (including dated spousal consent, if required pursuant to the
beneficiary designation form) to the Committee (or its designee). Each beneficiary
designation shall be in a form prescribed by the Committee and will be effective only
when filed with the Committee (or its designee) during the Participant’s lifetime.
Each beneficiary designation filed with the Committee will cancel all previously filed
beneficiary designations. In the absence of a valid designation, or if no designated
beneficiary survives the Participant, the Participant’s interest shall be
distributed to the Participant’s estate.  

ARTICLE III.

PLAN II CONTRIBUTIONS
AND ALLOCATIONS

     A. Participant
Deferrals. Each Participant participating in Plan II shall execute a
participation agreement and deferral election (the “Deferral Election”)
authorizing the Company to withhold a percentage amount of the Participant’s
Compensation which would otherwise be paid to the Participant with respect to services
rendered. Compensation under Plan II is defined as the annual base salary, cash bonuses
(including key employee bonus, new product bonus and any other cash bonuses),and
any cash commissions payable to the Participant in connection with the Participant’s
services to the Company, including all amounts which a Participant elects to have the
Company contribute to Plan II on his or her behalf as a deferral contribution (“Compensation”).
A deferral percentage is applied to Compensation after all other applicable
payroll deductions (other than a 401(k) wrap) have been applied. The Committee may, in
its discretion, establish in the Deferral Election minimum and maximum levels of
Compensation that may be deferred pursuant to Plan II. If the elected deferrals would not
leave sufficient cash Compensation to satisfy required deductions under other Company
Plans (e.g., 401(k) Plan, group health insurance plan), then the requested deferrals
under this Plan II may be reduced as necessary to satisfy those deductions. Compensation
deferrals made by a Participant under this Plan II shall be held as an asset of the
Company and the Company intends to deposit the amounts deferred into the Trust; provided,
however, if a Participant elects—pursuant to his or her Deferral Election—to
transfer designated amounts of Compensation to the Cypress Semiconductor 401(k) Employee
Savings Plan and related trust, then such amounts shall be held in the Trust until
distributed in accordance with Section VII(B).  

	

-3- 

	

     B. Election
Changes. A Participant may, in such form and at such time or times as the
Committee may prescribe, discontinue or modify deferral of future Compensation. The
Committee has the power to establish uniform and nondiscriminatory rules and from time to
time to modify or change such rules governing the manner and method by which Compensation
deferral elections shall be made, as well as the manner and method by which Compensation
deferral elections may be changed or discontinued temporarily or permanently. All
Compensation deferral contributions shall be authorized by the Participant in writing,
made by payroll deduction, deducted from the Participant’s Compensation without
reduction for any taxes or withholding (except to the extent required by law or
regulation) and paid over to the Trust by the Company. Notwithstanding the foregoing,
each Participant shall remain liable for any and all employment taxes owing with respect
to such Participant’s Compensation deferral contributions.  

     C. Cessation
of Eligible Status. In the event a Participant ceases to be an Eligible Employee
while also a participant in Plan II, such individual may continue to make Compensation
deferral contributions under Plan II through the end of the payroll period in which the
individual ceases to be an Eligible Employee. Thereafter, such individual shall not make
any further Compensation deferral contributions to Plan II unless or until he or she
again meets the eligibility requirements of Article II above.  

     D.
Company Discretionary Contributions. The Company may, in its sole discretion, make
discretionary contributions to the accounts of one or more Participants at such times and
in such amounts as the Board of the Company shall determine. 

     E. Allocations. The
Compensation deferral contributions and any Company contributions made under Plan II on
behalf of a Participant shall be credited to the Participant’s Account. The
Committee shall establish and maintain separate subaccounts as it determines to be
necessary and appropriate for the proper administration of Plan II. The Committee may
cause the Trustees to maintain and invest separate asset accounts corresponding to each
Participant account. Each Participant Account consists of the aggregate interest of the
Participant under Plan II (and in the Trust Fund), as reflected in the records maintained
by the Company for such purposes.  

     F. Plan
to Plan Transfers. Subject to the Committee’s discretion, during the annual open
enrollment period Participants shall be allowed to elect to transfer their deemed
investment accounts from Plan II to Plan I, subject to such limitations and reallocation
requirements as the Committee, in its sole discretion, determines to be appropriate. The
plan to plan transfers shall be effective as of the first day of the following Plan Year.  

	

-4- 

	

ARTICLE IV.

VESTING

     A.
Compensation Deferral Contributions. The value of a Participant's Account attributable to
Participants' Compensation deferral contributions shall always be fully vested and
nonforfeitable. 

     B. Company
Contributions. The value of a Participant’s Account attributable to any
Company contributions pursuant to Article III.D shall vest at such time or times as
the Board may specify in connection with any such contributions. In the absence of Board
specification, a Participant’s interest in Company contributions shall be fully
vested and nonforfeitable. Upon termination of a Participant’s employment with the
Company for any reason, any portion of the Participant’s Account that is not then
vested (including allocable earnings, as determined by the Committee), shall be
forfeited. Unless otherwise determined by the Board or the Committee, forfeitures shall
be used to satisfy the Company’s obligation to remit contributions to the Trust
under Plan II.  

ARTICLE V. 

GENERAL DUTIES

     A. Committee
Duties. The Committee will provide the Trustees with a copy of any future
amendment to this Plan II promptly upon its adoption. The Committee may from time to time
hire outside consultants, accountants, actuaries, legal counsel or recordkeepers to
perform such tasks as the Committee may from time to time determine.  

     B.
Trustees' Duties. The Trustees shall invest and reinvest the Trust Fund as provided in
the Trust Agreement. The Trustees shall collect the income on the Trust Fund, and make
distributions therefrom, as provided in this Plan II and in the Trust Agreement. 

     C. Company
Contributions. While Plan II remains in effect, and prior to a Change in
Control, as defined below, the Company shall make contributions to the Trust Fund at
least once each quarter. The amount of any quarterly contributions shall be at the
discretion of the Company. At the close of each calendar year, the Company shall make an
additional contribution to the Trust Fund to the extent that previous contributions to
the Trust Fund for the current calendar year are not equal to the total of the
Compensation deferrals made by each Participant plus Company discretionary contributions,
if any, accrued, as of the close of the current calendar year. The Trustees shall not be
liable for any failure by the Company to provide contributions sufficient to pay all
accrued benefits under Plan II in full in accordance with the terms of Plan II.  

	

-5- 

	

     D. Department
of Labor Determination. In the event that any Participants are found to be
ineligible, that is, not members of a select group of management or highly compensated
employees, according to a determination made by the Department of Labor, the Committee
will take whatever steps it deems necessary, in its sole discretion, to equitably protect
the interests of the affected Participants.  

ARTICLE VI.

PARTICIPANTS’ACCOUNTS

     A.
Separate Accounts. The Committee shall open and maintain a separate Account for each
Participant. Each Participant's Account shall reflect the amounts allocated thereto and
distributed therefrom and such other information as affects the value of such Account
pursuant to this Plan II.  

     B.
Timing of Account Credit. Amounts deferred under Plan I shall be credited to a
Participant's Account within five business days following the date upon which such
amounts would otherwise have been paid to the Participant.  

     C. Statement
of Accounts. As soon as practicable after the end of each calendar year the
Committee shall furnish to each Participant a statement of Account, determined as of the
end of such calendar year. Upon the discovery of any error or miscalculation in an
Account, the Committee shall correct it, to the extent correction is practically
feasible; provided, however, that any such statement of Account shall be considered to
reflect accurately the status of the Participant’s Account for all purposes under
Plan II unless the Participant reports a discrepancy to the Committee within six (6)
months after receipt of the statement. The Committee shall have no obligation to make
adjustments to a Participant’s Account for any discrepancy reported to the Committee
more than six (6) months after receipt of the statement, or for a discrepancy caused by
the Participant’s error. Statements to Participants are for reporting purposes only,
and no allocation, valuation or statement shall vest any right or title in any part of
the Trust Fund, nor require any segregation of Trust assets, except as is specifically
provided in this Plan II.  

     D.
Distribution of Accounts. Payment to a Participant shall be based on the value of the
vested portion of the Participant's Account as of the Valuation Date immediately
preceding the date of distribution plus any contribution subsequently credited to such
Account and less any distributions subsequently made from the Account.  

ARTICLE VII.

PAYMENTS TO A PLAN II
PARTICPANT OR BENEFICIARY

     A. General. Payments
of vested accrued benefits to Plan II Beneficiaries from the Trust shall be made in
accordance with the distribution event specified by the Participant in the Deferral
Election between the Company and the Participant (the “Distribution Event”).
Except as otherwise expressly provided in the Participant’s Deferral Election and as
set forth in Article VII below, no distribution shall be made or commenced prior to the
time and manner as set forth in the Participant’s Deferral Election.  

	

-6- 

	

     B. Upon
Retirement or Total Disability. If a Participant’s employment with the Company
terminates (i) by virtue of Participant’s Total Disability (as defined under Section
22(e)(3) of the Internal Revenue Code and as determined in the sole discretion of the
Committee), or (ii) pursuant to Participant’s retirement (a) at age 65 or greater,
or (b) at age 55 or greater but with at least ten full years of continuous employment by
the Company (either case shall be referred to in this Plan II as “Retirement”),
then Participant shall receive, pursuant to the election selected in his or her timely
submitted Deferral Election a distribution of his or her Account balance in either a
lump-sum or in five, ten or fifteen annual payments, each such payment equal to 1/n of
the Participant’s vested accrued benefit where n is the number of installments
remaining to be paid, (an “Annual Payment”).  

     C.
Upon Death. If a Participant's employment terminates due to his or her death, or if a
Participant dies while on a leave of absence where re-employment with the Company is not
guaranteed by contract or statute, then the Participant's beneficiary will receive their
Account balance in either a lump-sum or in five Annual Payments, as specified in the
Participant's Deferral Election. 

     D. Change
of Control. In the event of a “Change of Control,”the Committee may, in its
sole discretion, decide to distribute all Account balances in a lump-sum promptly
following the Change of Control. For purposes of this Plan II, a “Change in Control”shall
be deemed to have occurred if any person (including a “Group”as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) acquires shares of
the Company either (i) having a majority of the total number of votes that may be
cast for the election of directors of the Company or (ii) possessing, directly or
indirectly, the power to control the direction of management or policies of the Company;
provided, however, that no Change of Control shall be deemed to occur in the event of a
merger, consolidation or reorganization of the Company where the shareholders of the
Company are substantially the same as before such merger, consolidation or
reorganization. The Trustees shall have no responsibility to determine whether a Change
in Control has occurred and shall be advised of such event by the Company.  

     E. Prior
to Retirement or for Cause. In the event a Participant is terminated involuntarily
for Cause (as determined by the Committee in its sole discretion), or in the event that
his or her employment terminates voluntarily prior to Retirement, then his or her Account
balance shall be distributed in a lump-sum within 60 days following such termination.  

     F. Involuntary
Termination Due to Company Downsizing, Restructuring or Adverse Business Conditions.
In the event a Participant is terminated due to a Company down-sizing or restructuring or
adverse business conditions (as determined by the Committee in its sole discretion), then
the Participant will receive their Account balance in either a lump-sum or in five Annual
Payments, as specified in the Participant’s Deferral Election.  

	

-7- 

	

     G. Scheduled
In-Service Distribution. A Participant may elect, as provided in his or her
Participant Deferral Election, to receive one or more scheduled in-service (i.e., while
employed by the Company) distributions from their Account balance without an early
withdrawal penalty. Any such distributions must be at least two full Plan Years following
the date of the Participant’s Deferral Election. Each scheduled in-service
distribution may be postponed (but only once) at least one full year in advance of the
scheduled distribution to a later date or cancelled by submitting the appropriate form to
the Company or its designated administrator. If a Participant specifies that a dollar
amount will be distributed and the Account balance is less than the dollar amount, then
the entire Account will be distributed. A Participant may increase the amount or
percentage specified for an in-service distribution by submitting the appropriate form at
any time prior to twelve months in advance of the scheduled in-service distribution. In
the event an Employee terminates employment with the Company prior to a scheduled
in-service distribution, the in-service distribution election shall be without further
force and effect and the applicable termination distribution provisions of the plan and
the Participant’s Deferral Election shall control.  

     H. Method
of Distribution. Except as specified otherwise in this Section VII, payment
to any Plan II Beneficiary Pursuant to Plan II shall be made (i) in accordance with
the Deferral Election executed by the Participant, (ii) in cash, (iii) in a
lump sum or in Annual Payments. Notwithstanding the foregoing, if elected by the
Participant in his or her Deferral Election and if directed by the Committee, the
Trustees shall pay to the trustee of the Cypress Semiconductor 401(k) Employee Savings
Plan the aggregate amount of elected transfers, but only to the extent that the
transferred amount would constitute a deductible employer contribution pursuant to Code
Sections 401 and 404 for the year for which they were initially contributed to Plan
II. The Committee will make the determination as to whether such amounts constitute
deductible contributions pursuant to Code Section 401 and 404.  

     J. Distributions
From Trust; Withholding. Unless the Trustees do not require this, with respect
to each Participant, the Company shall deliver to the Trustees a schedule (the “Payment
Schedule”) that indicates the amounts payable in respect of the Participant (and his
or her beneficiaries), that provides a formula or other instructions acceptable to the
Trustees for determining the amounts so payable, the form in which such amount is to be
paid and the time of commencement for payment of such amounts. The Payment Schedule shall
be delivered to the Trustees not fewer than 15 days prior to the first date on which a
payment is to be made to the Participant. Any change to a Payment Schedule shall be
delivered to the Trustees not fewer than 15 days prior to the date on which the first
payment is to be made in accordance with the changed Payment Schedule. Except as
otherwise provided herein, the Trustees shall cause the Company or the Trust to make
payments to Participants and their beneficiaries in accordance with such Payment
Schedule. The Trustees shall make provisions for the reporting and withholding of any
federal, state or local taxes that may be required to be withheld with respect to the
payment of Plan II benefits and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid by the
Company, it being understood among the parties hereto that the Company shall on a timely
basis provide the Trustees specific information as to the amount of taxes from the
Trustees and properly pay and report such withheld taxes from the Trustees and properly
pay and report such amounts to the appropriate taxing authorities.  

	

-8- 

	

     K. Certain
Distributions. In case of any distribution to a minor or to a legally
incompetent person, the Committee may (1) direct the Trustees to make the
distribution to his legal representative, to a designated relative, or directly to such
person for his benefit, or (2) instruct the Trustees to use the distribution
directly for his support, maintenance, or education. The Trustees shall not be required
to oversee the application, by any third party, of any distributions made pursuant to
this Article.  

     L. IRS
Determination. Notwithstanding any other provisions of this Plan II, if any
amounts held in the Trust are found in a “determination”(within the meaning of
Section 1313(a) of the Internal Revenue Code of 1986, as amended (the “Code”)),
to have been includible in the gross income of any Trust Beneficiary prior to payment of
such amounts from the Trust, the Trustees shall, as soon as practicable pay such amounts
to the Trust Beneficiary, as directed by the Company. For purposes of this Section, the
Trustees shall be entitled to written notice from the Committee that a determination
described in the preceding sentence has occurred and to receive a copy of such notice.
The Trustees shall have no responsibility until so advised by the Committee.  

ARTICLE VIII.

HARDSHIP DISTRIBUTION

     If
a Participant suffers a financial hardship, as such term is defined in the
Cypress Semiconductor 401(k) Plan, the Participant may, with the approval of the
Committee, receive an in-service distribution from his or her Account equal to
the amount needed to satisfy such hardship. In the event a Participant receives
a hardship distribution pursuant to this Article, such Participant shall be
excluded from participating in Plan I and Plan II for the balance of the Plan
Year in which the Participant received payment pursuant to a request for a
hardship distribution. A Participant requesting a hardship distribution shall
apply for the payment in writing on a form approved by the Committee and shall
provide such additional information as the Committee may require. 

ARTICLE IX.

ON-DEMAND DISTRIBUTIONS

     A. On-Demand
Distribution While An Employee. At any time while a Participant in Plan II, a
Participant may request to receive a distribution of not less than twenty-five percent
(25%) of the Participant’s Account. Such on-demand distribution shall be subject to
a penalty equal to six percent (6%) of the amount distributed to the Participant as an
on-demand distribution. In the event a Participant receives an on-demand
distribution pursuant to this Article, such Participant shall not be eligible to
participate in Plan II (i) for the Plan Year in which the Participant received
payment pursuant to a request for an on-demand distribution, and (ii) for the Plan
Year following the Plan Year in which the Participant received payment pursuant to a
request for an on-demand distribution. Moreover, a Participant may not receive an
on-demand distribution more frequently than once every two years. A Participant
requesting an on-demand distribution shall apply for the payment in writing on a form
approved by the Committee and shall provide such additional information as the Committee
may require.  

	

-9- 

	

     B. On-Demand
Distribution Following Employment. Following a Participant’s termination of
employment, a Participant who is otherwise scheduled to receive a payment over time may
request to receive a distribution of the balance of his or her Account. Such on-demand
distribution shall be subject to a penalty equal to six percent (6%) of the amount
distributed to the Participant as an on-demand distribution. A Participant requesting an
on-demand distribution shall apply for the payment in writing on a form approved by the
Committee and shall provide such additional information as the Committee may require.  

ARTICLE X. 

CLAIMS PROCEDURE

     A.
Right to File Claim. Every Participant or Beneficiary shall be entitled to file with the
Committee a written claim for benefits under Plan II. 

     B.
Denial of Claim.   

          (1) If
the claim is denied by the Committee, in whole or in part, the claimant shall be
furnished within ninety (90) days after the Committee’s receipt of the claim (or
within one hundred eighty (180) days after such receipt if special circumstances require
an extension of time) a written notice of denial of such claim containing the following:  

               (i)
specific reason or reasons for denial; 

               (ii)
specific reference to pertinent Plan II provisions on which the denial is based; 

               (iii)
a description of any additional material or information necessary for the claimant to
perfect the claim, and an explanation of why the material or information is necessary; and 

               (iv)
an explanation of the claims review procedure. 

          (2) If
written notice of the denial of such claim is not furnished within the time period
prescribed under paragraph (1) above, then the claim shall be deemed denied. 

     C.
Claim Review Procedure.  

          (1)
Review may be requested at any time within sixty (60) days following the date the
claimant received written notice of the denial of his or her claim. For purposes of this
Section, any action required or authorized to be taken by the claimant may be taken by a
representative authorized in writing by the claimant to act on his or her behalf. The
Committee shall afford the claimant a full and fair review of the decision denying the
claim and, if so requested, shall:  

	

-10- 

	

               (i)
permit the claimant to review any documents that are pertinent to the claim; and 

               (ii)
permit the claimant to submit to the Committee issues and comments in writing. 

          (2)
The decision on review by the Committee shall be in writing and shall be issued within
sixty (60) days following receipt of the request for review. The period for decision may,
however, be extended up to one hundred twenty (120) days after such receipt if the
Committee determines that special circumstances require extension. The decision on review
shall include specific reasons for the decision and specific references to the pertinent
Plan II provisions on which the decision of the Committee is based.  

     (3) If
the decision on review by the Committee is not furnished within the time period
prescribed under paragraph (2) above, then the claim shall be deemed denied on review.  

ARTICLE XI.

MISCELLANEOUS

     A. Unsecured
General Creditor. Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or interests in any specific
property or assets of the Company. No assets of the Company shall be held in any way as
collateral security for the fulfilling of the obligations of the Company under this Plan
II. Any and all of the assets of the Company shall be, and remain, the general unpledged,
unrestricted assets of the Company. The obligation of the Company under Plan II shall be
merely that of an unfunded and unsecured promise to pay money in the future, and the
rights of the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.  

     B. Restriction
Against Assignment. The Company shall pay all amounts payable hereunder only to
the person or persons designated by Plan II and not to any other person or corporation.
No part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in interest, nor
shall a Participant’s Account be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding, nor shall any such person have
any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or
payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any distribution or payment from Plan II, voluntarily
or involuntarily, the Committee, in its sole and absolute discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Committee shall direct.  

     C.
Withholding. There shall be deducted from each payment made under Plan II, all taxes that
are required to be withheld by the Company, as applicable, in respect to such payment.
The Company shall have the right to reduce any payment by the amount of cash sufficient
to provide the amount of said taxes. 

	

-11- 

	

     D. Legal
Representation. The Company will reimburse all reasonable legal fees and
expenses incurred by a Plan II Beneficiary in seeking to obtain or enforce any right or
benefit provided by Plan II. This reimbursement right applies only to claims made after a
Change of Control and only for fees and expenses incurred after the Plan II Beneficiary
has exhausted the claims and appeals procedure specified in Article IX. No
reimbursement shall be made if the request is found to be frivolous by a court of
competent jurisdiction.  

     E. Amendment,
Modification, Suspension or Termination. The Committee may amend, modify,
suspend or terminate Plan II in whole or in part, except that no amendment, modification,
suspension or termination shall have any retroactive effect to reduce any amounts
allocated to a Participant’s Account, provided that a termination or suspension of
Plan II or any Plan II amendment or modification that will significantly increase costs
to the Company shall be approved by the Board. In the event that this Plan II is
terminated, the timing of the disposition of the amounts credited to a Participant’s
Account shall occur in accordance with Article VII, subject to earlier distribution
at the discretion of the Committee.  

     F.
Governing Law. This Plan II shall be construed, governed and administered in accordance
with the internal substantive laws of the State of California (other than the choice of
law principles).  

     G. Receipt
or Release. Any payment to a Plan II Beneficiary in accordance with the
provisions of Plan II shall, to the extent thereof, be in full satisfaction of all claims
against the Committee and the Company. The Committee may require such Plan II
Beneficiary, as a condition precedent to such payment, to execute a receipt and release
to such effect.  

     H. Payments
on Behalf of Persons under Incapacity. In the event that any amount becomes
payable under Plan II to a person who, in the sole judgment of the Committee, is
considered by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any payment
made pursuant to such determination shall constitute a full release and discharge of the
Committee and the Company.  

     I. No
Employment Rights. Participation in this Plan II shall not confer upon any person any
right to be employed by the Company or any other right not expressly provided hereunder.  

     J.
Headings, etc. Not Part of Agreement. Headings and subheadings in this Plan II are
inserted for convenience of reference only and are not to be considered in the
construction of the provisions hereof.  

     K. Successorship. This
Plan II shall be binding upon and inure to the benefit of any successor to the Company or
its business as the result of merger, consolidation, reorganization, transfer of assets
or otherwise, and any subsequent successor thereto; and any such successor shall be
deemed to be the “Company”under this Plan II. In the event of any such merger,
consolidation, reorganization, transfer of assets or other similar transaction, the
successor to the Company or its business or any subsequent successor thereto shall
promptly notify the Trustees in writing of its successorship and furnish the Trustees
with the name or names of any person or persons authorized to act for the Company. In no
event shall any such transaction described herein suspend or delay the rights of Plan II
Beneficiaries to receive their vested accrued benefits hereunder.  

	

-12- 

	

     L. Plan
II Document. This document, the prospectus to Plan II, the Deferral Election,
certain definitions expressly mentioned herein that are defined in the Cypress
Semiconductor Employee 401(k) Plan, the Trust Agreement, and any other documents
identified by the Committee, comprise Plan documents for Plan II.  

     M.
Definitions.  

          (1)
“Account” means the bookkeeping account established to reflect the interest of a
Participant or beneficiary in Plan II. 

          (2)
“Cause” means: (i) Participant’s continued failure to
substantially perform Participant’s principal duties and responsibilities (other
than as a result of disability or death) after thirty (30) days written notice from
the Company specifying the nature of Participant’s failure and demanding that such
failure be remedied; (ii) Participant’s material and continuing breach of his
or her obligations to the Company set forth in any written agreement between the Company
and Participant or any written policy of the Company after thirty (30) days written
notice from the Company specifying the nature of Participant’s breach and demanding
that such breach be remedied (unless such breach by its nature cannot be cured, in which
case notice and an opportunity to cure shall not be required); (iii) Participant’s
arrest for a felony, fraud or an act of moral turpitude; or (iv) act or acts of
dishonesty undertaken by Participant and intended to result in personal enrichment of
Participant at the expense of the Company  

          (3)
“Deferral Election” means the documents that encompass the (i) Deferred
Compensation Plans’Beneficiary Designation, (ii) Deferred Compensation Plans’Distribution
Election Form, (iii) Deferred Compensation Plans’Participation Agreement and
Deferral Election, (iv) the Deferred Compensation Plan II Manulife Investment
Allocation Form for Future Deferrals, (v) the Deferred Compensation Plan II
Nationwide Investment Allocation Form for Future Deferrals, (vi) Deferred
Compensation Plan IINationwide Investment Allocation Change Form, (vii) the
Deferred Compensation Plan IIManulife Investment Allocation Change Form, (viii) the
In-Service Distribution Change Form, (ix) the Accelerated Distribution Election Form, (x)
the Election to Stop Contribution Form, and (xi) any other documents designated by the
Committee as encompassing the Deferral Election.  

          (4)
“Involuntary Termination” means a Participant’s termination of
employment with the Company because of the Company’s downsizing and/or
restructuring, as determined in the sole discretion of the Committee.  

          (5)
“Plan Year” means the calendar year.  

	

-13- 

	

          (6) “Valuation
Date” means, (i) for distributions hereunder, the Participant’s Account
shall be valued, for distributions made on or after the fifteenth day of a month, as of
the first day of such month, and for distributions made prior to the fifteenth day of a
month, as of the fifteenth day of the prior month, (ii) for allocations of deferrals and
re-allocations of amounts previously deferred, the last business day of the preceding
week; provided, however, that for re-allocations of phantom Cypress stock into another
phantom investment, the Valuation Date shall be the first business day of the week in
which the reallocation is made, and (iii) for permitted Plan II to Plan I transfers, the
last business day of the Plan Year.  

CYPRESS SEMICONDUCTOR
CORPORATION

	

By: /s/ Neil H. Weiss
      ——————————————

	

	(Title) /s/ Vice President, Treasury
           —————————————

	

-14-

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