EXHIBIT 10.23

 

SYNOPSYS, INC.

 

AMENDED AND RESTATED

 

DEFERRED COMPENSATION PLAN II

 

EFFECTIVE DECEMBER 31, 2008

 

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TABLE OF CONTENTS

 

 

 

PAGE(S)

 

 

 

ARTICLE 1

DEFINITIONS

2

 

 

 

1.1

Account

2

 

 

 

1.2

Base Pay

2

 

 

 

1.3

Beneficiary

2

 

 

 

1.4

Change in Control

2

 

 

 

1.5

Code

3

 

 

 

1.6

Committee

3

 

 

 

1.7

Company

3

 

 

 

1.8

Compensation

3

 

 

 

1.9

Contributions

3

 

 

 

1.10

Deferral Period

3

 

 

 

1.11

Disabled

3

 

 

 

1.12

Distributable Amount

3

 

 

 

1.13

Eligible Employee

3

 

 

 

1.14

Employee

4

 

 

 

1.15

ERISA

4

 

 

 

1.16

Fiscal Year

4

 

 

 

1.17

Fund or Funds

4

 

 

 

1.18

Fund Return

4

 

 

 

1.19

Initial Election Period

4

 

 

 

1.20

Insurable Participant

4

 

 

 

1.21

Key Employee

4

 

 

 

1.22

Participant

4

 

 

 

1.23

Plan

5

 

 

 

1.24

Plan Year

5

 

 

 

1.25

Retirement

5

 

 

 

1.26

Target Compensation

5

 

 

 

1.27

Termination of Participant’s Employment

5

 

 

 

1.28

Variable Pay

5

 

 

 

ARTICLE 2

PARTICIPATION

5

 

 

 

ARTICLE 3

CONTRIBUTIONS

6

 

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TABLE OF CONTENTS

(CONTINUED)

 

 

 

Page(s)

 

 

 

3.1

Elections to Defer Compensation

6

 

 

 

 

(a)

Initial Election Period

6

 

 

 

 

 

(b)

General Rule

6

 

 

 

 

 

(c)

Deferral Election Computation

6

 

 

 

 

 

(d)

Minimum Deferrals

7

 

 

 

 

 

(e)

Effect of Initial Election

7

 

 

 

 

 

(f)

Duration of Base Pay Deferral Election or Variable Pay Deferral Election

7

 

 

 

 

 

(g)

Elections Other Than Elections During the Initial Election Period

8

 

 

 

 

 

(h)

Special Rules for Deferral Elections

8

 

 

 

3.2

Cancellation of Compensation Deferrals

9

 

 

 

 

(a)

Automatic Cancellation

9

 

 

 

 

 

(b)

Permissible Cancellation

9

 

 

 

 

 

(c)

Section 401 and Section 409A Compliance

9

 

 

 

3.3

Company Discretionary Contributions

10

 

 

 

ARTICLE 4

INVESTMENT ELECTIONS

10

 

 

 

4.1

Participant Investment Designation

10

 

 

 

4.2

Change in Investment Designation

10

 

 

 

4.3

Company Responsibility for Investment Alternatives

10

 

 

 

ARTICLE 5

ACCOUNTS

10

 

 

 

5.1

Participant Accounts

10

 

 

 

5.2

Trust Funding

11

 

 

 

 

(a)

Trustee Duties

11

 

 

 

 

 

(b)

Employee Deferrals and Company Contributions

11

 

 

 

 

 

(c)

General Creditors

11

 

 

 

ARTICLE 6

VESTING

11

 

 

 

6.1

Base Pay and Variable Pay Deferrals

11

 

 

 

6.2

Company Contributions

12

 

 

 

ARTICLE 7

DISTRIBUTIONS

12

 

 

 

7.1

Distributions from a Participant’s Account

12

 

 

 

 

(a)

Distribution Election and Minimum Requirements

12

 

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TABLE OF CONTENTS

(CONTINUED)

 

 

 

Page(s)

 

 

 

 

(b)

Payment of Scheduled In-Service Withdrawals

12

 

 

 

 

 

(c)

Payment Upon Termination of Participant’s Employment for Any Reason Other Than
Retirement, Death or Becoming Disabled

13

 

 

 

 

 

(d)

Payment Upon Termination of Participant’s Employment as a Result of Retirement
or Becoming Disabled

13

 

 

 

7.2

Changes in Form or Time of Distribution

14

 

 

 

7.3

Default Provisions If No Election of Form of Distribution

15

 

 

 

7.4

Death Benefits

16

 

 

 

7.5

Unforeseeable Emergency

17

 

 

 

7.6

Inability To Locate A Participant

17

 

 

 

7.7

Key Employee Special Distribution Rule

17

 

 

 

7.8

Special Acceleration of Distribution Rules

18

 

 

 

ARTICLE 8

ADMINISTRATION

19

 

 

 

8.1

Committee

19

 

 

 

8.2

Committee Action

19

 

 

 

8.3

Powers and Duties of the Committee

19

 

 

 

8.4

Construction and Interpretation

20

 

 

 

8.5

Information

20

 

 

 

8.6

Compensation, Expenses and Indemnity

20

 

 

 

8.7

Quarterly Statements

21

 

 

 

ARTICLE 9

MISCELLANEOUS

21

 

 

 

9.1

Unsecured General Creditor

21

 

 

 

9.2

Restriction Against Assignment

21

 

 

 

9.3

Withholding

21

 

 

 

9.4

Disputes

21

 

 

 

9.5

Amendment, Modification, Suspension or Termination

23

 

 

 

9.6

Governing Law

23

 

 

 

9.7

Receipt or Release

23

 

 

 

9.8

Payments on Behalf of Incapacitated Persons

24

 

 

 

9.9

No Employment Rights

24

 

 

 

9.10

Department of Labor Determination

24

 

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TABLE OF CONTENTS

(CONTINUED)

 

 

 

Page(s)

 

 

 

9.11

Headings, etc. Not Part of Agreement

24

 

 

 

9.12

Compliance with Section 409A of the Code

24

 

 

 

9.13

Electronic or Other Forms

24

 

iv

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SYNOPSYS, INC.

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN II

 

SYNOPSYS, INC. (the “Company”) acting on behalf of itself and its designated
subsidiaries hereby adopts the SYNOPSYS, INC. AMENDED AND RESTATED DEFERRED
COMPENSATION PLAN II (the “Plan”).  Except as specifically provided herein or as
necessary to comply with Section 409A of the Code, the Plan as amended and
restated is effective as of December 31, 2008.

 

RECITALS

 

(a)           The Company intends to maintain the Plan as a supplemental
retirement plan for the benefit of a select group of management or highly
compensated employees as may be designated by the Company in its sole
discretion.

 

(b)           The Plan provides for the payment of vested accrued benefits to
Plan participants and their beneficiaries in accordance with the terms of this
document.

 

(c)           Under the Plan, the Company pays all of the accrued benefits from
its general assets.

 

(d)           The Company has entered into an agreement (the “Trust Agreement”)
with a person or persons, including an entity that serves as trustee (the
“Trustee”) under an irrevocable trust (the “Trust”) to be used in connection
with the Plan.

 

(e)           The Company wishes to make contributions to the Trust so that
contributions to be held by the Trustee shall be invested, reinvested and
distributed, all in accordance with the provisions of the Plan and the Trust
Agreement.

 

(f)            The Company intends that the amounts contributed to the Trust and
the earnings thereon shall be used by the Trustee to satisfy the liabilities of
the Company under the Plan with respect to each Plan Participant for whom an
Account has been established and such use of the Trust assets shall be made in
accordance with the procedures set forth herein.

 

(g)           The Company intends that the Trust be a “grantor trust” with the
principal and income of the Trust treated as assets and income of the Company
for federal and state income tax purposes.

 

(h)           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.

 

(i)            The Company intends that the existence of the Trust shall not
alter the characterization the Plan as “unfunded” for purposes of ERISA, and
shall not be construed to provide income to Participants under the Plan prior to
actual payment of the accrued benefits thereunder.

 

NOW THEREFORE, the Company does hereby adopt the Plan as follows:

 

1

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ARTICLE 1

DEFINITIONS

 

Whenever used in the Plan, the following terms shall have the meanings indicated
below, unless a different meaning is plainly required by the context.  The
singular shall include the plural, unless the context indicates otherwise.

 

1.1          Account.  “Account” means for each Participant the bookkeeping
account maintained by the Committee that is credited with amounts equal to
(i) the portion of the Participant’s Base Pay that he or she elects to defer,
(ii) the portion of the Participant’s Variable Pay that he or she elects to
defer, (iii) the Company’s discretionary contributions, if any, credited under
the Plan for the Participant’s benefit, and (iv) adjustments to reflect deemed
gains or losses pursuant to Section 5.1(c).

 

1.2          Base Pay.  “Base Pay” means the non-variable portion of an Eligible
Employee’s annual cash compensation and such other non-cash, non-variable
amounts payable to (or for the benefit of) an Eligible Employee as the Committee
in its sole discretion may determine shall be included in the definition of
“Base Pay” for the purposes of the Plan.

 

1.3          Beneficiary.  “Beneficiary” or “Beneficiaries” means the
beneficiary last designated in writing by a Participant in accordance with
procedures established by the Committee to receive the benefits specified
hereunder in the event of the Participant’s death.  No beneficiary designation
shall become effective until it is filed with the Committee.

 

1.4          Change in Control.  “Change in Control” means

 

(a)           The date that any one person or persons acting as a group acquires
ownership of Company stock constituting more than fifty percent (50%) of the
total fair market value or total voting power of the Company;

 

(b)           The date that any one person or persons acting as a group acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of the stock of the
Company possessing thirty-five percent (35%) or more of the total voting power
of the stock of the Company;

 

(c)           The date that any one person or persons acting as a group acquires
assets from the Company that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value of all of the
assets of the Company immediately prior to such acquisition; or

 

(d)           The date that a majority of members of the Company’s Board of
Directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board of
Directors prior to the date of the appointment or elections.

 

2

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(e)           The term “Change in Control” is to be interpreted in accordance
with Section 409A of the Code and regulations and guidance issued thereunder
(including Treas. Reg. Section 1.409A-3(i)(5)).

 

1.5          Code.  “Code” means the Internal Revenue Code of 1986, as amended
from time to time, and applicable valid regulations thereunder.

 

1.6          Committee.  “Committee” means the Synopsys Deferred Compensation
Plans Committee.

 

1.7          Company.  “Company” means Synopsys, Inc., any successor corporation
and 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, as
determined by the Company.

 

1.8          Compensation.  “Compensation” means a Participant’s Base Pay and
Variable Pay that is subject to deferral pursuant to Section 3.1.

 

1.9          Contributions.  “Contributions” means Base Pay or Variable Pay that
a Participant elects to defer to the Plan pursuant to Article III, plus
discretionary contributions contributed to the Participant’s Account by the
Company pursuant to Section 3.3.

 

1.10        Deferral Period.  “Deferral Period” means, for each Plan Year,
(i) the period from the first day of such Plan Year through the last day of the
Fiscal Year of the Company that ends within that Plan Year, and (ii) the period
from the first day of the Fiscal Year of the Company that begins within the Plan
Year through the last day of that Plan Year.  Notwithstanding the foregoing, if
a payroll period begins in one Deferral Period but ends in the subsequent
Deferral Period, then, for purposes of the Plan, that payroll period shall be
treated as if the payroll period both began and ended in the Deferral Period in
which the payroll period actually ends.

 

1.11        Disabled.  “Disabled” means that a Participant is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, receiving income replacement benefits for a period of
not less than three (3) months under an accident and health plan covering
employees of the Company.

 

1.12        Distributable Amount.  “Distributable Amount” means the vested
amount credited to a Participant’s Account.

 

1.13        Eligible Employee.  “Eligible Employee” for a Plan Year means (i) an
Employee regularly performing services for the Company in the United States of
America whose Target Compensation equals or exceeds, as of the October 1
immediately preceding the first day of the Plan Year, a dollar amount to be
determined for each Plan Year by the Committee, (ii) an Employee (x) who was an
Eligible Employee for a preceding Plan Year and (y) for whom an Account was
maintained with a positive balance as of the end of the immediately preceding
Plan Year, or (iii) any other Employee (x) who is designated by the Committee or
an authorized representative of the Committee pursuant to procedures established
by the Committee as eligible to participate in the Plan (including by being
within a category of employee that has been so

 

3

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designated) and (y)  who has been given notice by the Committee or its
authorized representative of such eligibility.  Notwithstanding the foregoing,
the Committee may determine that an otherwise Eligible Employee shall not be
eligible to participate in the Plan, shall not be eligible to continue to
participate in the Plan or shall be eligible to participate beginning on a later
date than would otherwise be provided by this Section 1.13.

 

1.14        Employee.  “Employee” means a common law employee of the Company who
is treated by the Company as an employee for U.S. federal employment tax
purposes and who has not been excluded by contract or employment classification
from participating in employee benefit plans of the Company.

 

1.15        ERISA.  “ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time, and applicable valid regulations thereunder.

 

1.16        Fiscal Year.  “Fiscal Year” means the Company’s fiscal year as
determined by the Company’s Board of Directors.

 

1.17        Fund or Funds.  “Fund” or “Funds” means one or more of the
investment funds selected by the Committee pursuant to Section 4.1.

 

1.18        Fund Return.  “Fund Return” means, for each Fund, an amount equal to
the net rate of gain or loss on the assets of such Fund during each month.

 

1.19        Initial Election Period.  “Initial Election Period” means the period
beginning on the date the Eligible Employee is first notified by the Committee
or the Committee’s authorized representative that the Eligible Employee is
eligible to participate in the Plan and ending on the later of (i) the day
immediately preceding commencement of the Plan Year for which such Eligible
Employee may elect to become a Participant, and (ii) thirty (30) days after the
date of delivery of such notice if the Plan Year for which such Eligible
Employee may elect to become a Participant commenced prior to the date of
delivery of such notice.  Notwithstanding the foregoing, in no event shall the
Initial Election Period extend beyond the time period permitted by Treas. Reg.
Section 1.409A-2(a).

 

1.20        Insurable Participant.  “Insurable Participant” means a Participant
who satisfies underwriting standards for the issuance of life insurance
determined by the insurance company selected by the Committee to provide the
pre-termination death benefit described in Section 7.4(a).

 

1.21        Key Employee.  “Key Employee” means, for purposes of this Plan, and
in accordance with Section 409A of the Code, a key employee as defined in
Section 416(i) of the Code, without regard to paragraph (5) thereof, of the
Company and any Eligible Employee who has been designated as a Key Employee by
the Committee.

 

1.22        Participant.  “Participant” means any Eligible Employee (or former
Eligible Employee) for whom an Account is maintained under the Plan.  For the
avoidance of doubt, the term “Participant” shall not include a Beneficiary for
whom an Account is maintained under the Plan following the death of a
Participant.

 

4

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1.23        Plan.  “Plan” means the Synopsys Deferred Compensation Plan II set
forth herein and in amendments from time to time made hereto.

 

1.24        Plan Year.  “Plan Year” means the calendar year.

 

1.25        Retirement.  “Retirement” means Termination of Participant’s
Employment on or after attaining age fifty-five (55).

 

1.26        Target Compensation.  “Target Compensation” means annualized Base
Pay plus annualized target commissions and target bonuses.

 

1.27        Termination of Participant’s Employment.  “Termination of
Participant’s Employment” means a “separation from service” from the Company as
defined in Treas. Reg. Section 1.409A-1(h)(1).

 

1.28        Variable Pay.  “Variable Pay” means any variable cash compensation
including commissions, sales bonuses and/or other incentive compensation that is
allocable to a Deferral Period as having been earned in such Deferral Period. 
Variable Pay shall not include (a) retention bonuses, (b) other bonuses subject
to possible repayment as a result of a specified future event (including sign-on
bonuses and relocation bonuses), (c) severance payments, (d) any cash
compensation if the Participant has the discretion to determine whether the
compensation will be payable in cash or some other medium,  (e) any payments to
the Participant from the Plan, the Synopsys Deferred Compensation Plan, or a
plan sponsored by the Company under Section 125 or 401(k) of the Code, (f) a
payment received from the Company by the Participant upon the exercise of a
stock appreciation right, and (g) except with respect to commissions, payments
made after the December 31st of the calendar year in which the payment became
earned and vested.   Notwithstanding the foregoing, (x) Variable Pay shall
include bonuses subject to possible repayment solely as a result of the
Compensation Recovery Policy adopted by the Compensation Committee of the Board
of Directors of the Company on December 10, 2008 as such policy may be amended
from time to time, (y) cash compensation paid in the Company’s discretion in
cash or in some other medium shall be excluded from Variable Pay if the
inclusion of such compensation as Variable Pay would result in potential tax
under Section 409A of the Code if the Plan were operated as described herein,
and (z) the Committee may, in its sole discretion, determine from time to time
that amounts excluded from the definition of Variable Pay by this Section 1.28
shall be included in the definition of “Variable Pay” for the purposes of the
Plan.

 

ARTICLE 2

PARTICIPATION

 

An Eligible Employee shall become a Participant in the Plan by (a) electing to
defer all or a portion of his or her Compensation, in accordance with
Article III, and (b) if required by the Committee in its sole and absolute
discretion, by filing a completed life insurance application along with his or
her deferral election form, and complying with such applicable medical
underwriting requirements as determined by a life insurance carrier elected by
the Committee.  An Eligible Employee who completes the requirements of the
preceding sentence shall become a

 

5

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Participant in the Plan as of the first day of the first month in which such
Eligible Employee’s Compensation is deferred.  In the event it is determined by
the Committee that the proposed life insurance policy, if applicable, cannot be
obtained in a cost efficient manner after medical underwriting requirements have
been met, the Participant shall not be eligible to receive death benefits as
provided under Section 7.4(a) of the Plan but shall otherwise be eligible to
participate in the Plan.

 

ARTICLE 3

CONTRIBUTIONS

 

3.1          Elections to Defer Compensation.

 

(a)           Initial Election Period.  Each newly hired employee who becomes an
Eligible Employee by designation and notification pursuant to Section 1.13 may
elect to defer Compensation (as described in Section 3.1(e)) for the remainder
of the Plan Year following such Eligible Employee’s Initial Election Period by
filing with the third party administrator an election for such remaining Plan
Year that conforms to the requirements of this Section.  Such election shall
specify the amount to be deferred, if any, for the remainder of each Deferral
Period in the relevant Plan Year as specified in Section 3.1(e) below.  Such
election also shall specify the time at which and the form in which such
deferred amounts shall be distributed to the Participant, as provided in
Article VII.  Such election to defer Compensation and designate the distribution
form and time must be received by the third party administrator no later than
the last day of such Eligible Employee’s Initial Election Period.

 

(b)           General Rule.  Subject to the limitation set forth in
Section 3.1(d) below, the amount of Compensation which an Eligible Employee may
elect to defer during each Deferral Period is as follows:

 

(i)            Any whole percentage of Base Pay up to fifty percent (50%);
and/or

 

(ii)           Any whole percentage of Variable Pay up to one hundred percent
(100%);

 

provided, however, that no election made for one or both Deferral Periods in a
Plan Year shall reduce the Compensation paid to an Eligible Employee for a
calendar year to an amount that is less than the amount necessary to pay
(a) applicable employment taxes (e.g., FICA, hospital insurance) payable with
respect to amounts deferred hereunder, (b) except as provided in Section 3.1(c),
amounts necessary to satisfy any other benefit plan withholding obligations,
(c) any resulting income taxes required to be withheld with respect to
Compensation that cannot be so deferred, and (d) any amounts necessary to
satisfy any wage garnishment or similar type obligations.

 

(c)           Deferral Election Computation.  Deferral elections to the Plan
shall be computed before taking into account (i)  any reduction in taxable
income by contributions to plans sponsored by the Company under Sections 125 or
401(k) of the Code or (ii) any

 

6

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withholding of Compensation, for example, to participate in the Synopsys
Employee Stock Purchase Plan.

 

(d)           Minimum Deferrals.  For each Plan Year during which the Eligible
Employee is a Participant, the minimum amount that may be deferred for any Plan
Year is one percent (1%) of the lesser of the eligible  Base Pay or the eligible
Variable Pay during one of the Deferral Periods occurring within the Plan Year.

 

(e)           Effect of Initial Election.  An election to defer Compensation
during the Initial Election Period shall be effective with respect to (i) Base
Pay earned during the first pay period beginning after both the date the initial
election becomes irrevocable and the start of the Deferral Period for which the
election is made, and (ii) Variable Pay for services performed after the date on
which the initial election becomes irrevocable and paid after the  start of the
Deferral Period for which the election is made as provided by Treas. Reg.
Section 1.409A-2(a)(7).

 

(f)            Duration of Base Pay Deferral Election or Variable Pay Deferral
Election.  Except as provided in Section 3.1(h) below, a Base Pay deferral
election or Variable Pay deferral election shall remain in effect from Plan Year
to Plan Year, notwithstanding any change in a Participant’s Base Pay or Variable
Pay, as applicable, until the Participant elects to amend or discontinue his or
her Base Pay deferral election or Variable Pay deferral election, as
applicable.  If the Participant does not amend or discontinue his or her
deferral election for a Plan Year during the applicable election period that
precedes such Plan Year, then the Participant will be deemed to have made a
deferral election for that Plan Year, and for the Deferral Periods within the
Plan Year, that is identical to the deferral election that was in effect for the
Participant in the Plan Year that immediately preceded the Plan Year at issue.

 

If the Participant does amend or discontinue his or her deferral election for a
Plan Year during the applicable election period that precedes such Plan Year,
the percentage or dollar amount of Base Pay or Variable Pay designated by the
Participant may be amended or discontinued by filing a new election, in
accordance with the terms of this Section, with the third party administrator
within the applicable election period for the Plan Year which contains the
Deferral Period for which the election shall be in effect.  A Participant’s
deferral election shall terminate with respect to future Base Pay or Variable
Pay, as applicable, upon the earlier of (x) the Participant ceasing to be
eligible to participate in the Plan, or (y) the Participant’s timely election to
discontinue all deferrals for any subsequent Deferral Period.

 

Except as provided in Section 3.1(e), in the case of Variable Pay, the
Participant’s elections in effect at the following times shall control:

 

(i)            In the case of commissions, the elections in effect at the
beginning of the Plan Year in which the commission is paid.

 

(ii)           In the case of Variable Pay that is paid in a Plan Year and 
qualifies as performance compensation within the meaning of Treas. Reg.
Section 1.409A-1(e) with a performance period of at least twelve (12) months and
with a performance period that commenced no earlier than the date that is two
and one-half (2-1/2) months prior to the commencement of either such Plan Year
or an earlier Plan Year and otherwise satisfying the

 

7

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conditions for an initial deferral election set forth in Treas. Reg.
Section 1.409A-2(a)(8), the elections in effect at the commencement of the Plan
Year that first follows the commencement of the performance period.

 

(iii)         In the case of all other Variable Pay, the elections in effect at
the commencement of the period to which the Variable Pay relates.

 

(g)           Elections Other Than Elections During the Initial Election
Period.  Any Eligible Employee who fails to elect to defer Compensation during
his or her Initial Election Period may subsequently become a Participant
provided he or she remains an Eligible Employee, and any Eligible Employee who
has suspended a prior deferral election, may elect to defer Compensation
provided he or she remains an Eligible Employee.  Such an election to defer
Compensation shall be in such form as determined by the Committee in its sole
discretion, must be filed with the third party administrator within the
applicable election period for the relevant Plan Year and will be effective for
Base Pay earned during pay periods beginning after such Plan Year begins and
Variable Pay as provided in Section 3.1(f).

 

(h)           Special Rules for Deferral Elections.  The following special
rules shall apply for the Plan Year beginning January 1, 2005 and the Plan Year
beginning January 1, 2006, as applicable.

 

(i)            This Section 3.1(h)(i) applies only to a Participant who is
notified by the Committee or the Committee’s delegate that the Participant is
eligible to make the elections described in this Section 3.1(h)(i) (“Eligible
Participant”).  Notwithstanding any other provision of the Plan to the contrary,
for the Plan Year beginning January 1, 2005 (the “2005 Plan Year”) only, an
Eligible Participant who elected to participate in the Plan for the 2005 Plan
Year by filing a deferral of Compensation election form (or who is deemed to
have filed such a deferral of Compensation election form pursuant to the deemed
election procedures of Section 3.1(f)) on or before December 31, 2004, may elect
to cancel the previously made deferral election for the 2005 Plan Year.  Such
election to cancel a previously made election for the 2005 Plan Year shall be
made by filing a change in election form with the third party administrator
during the applicable election period, but no later than December 31, 2005.

 

An Eligible Participant who elects to cancel his or her previously made election
for the 2005 Plan Year may elect to cancel (i) his or her entire election for
the first Deferral Period in 2005, (ii) his or her entire election for the
second Deferral Period in 2005, or (iii) his or her entire election for both
Deferral Periods in 2005.  No partial cancellations of a previously made
election for any Deferral Period in 2005 will be permitted; provided, however,
that an election with respect to Base Pay shall be treated as a separate
election from an election with respect to Variable Pay for the purposes of this
Section 3.1(h)(i).  Any previously deferred amounts (including any gains and
reduced by any losses) that are cancelled as provided under this
Section 3.1(h)(i) shall be includable in the income of the Eligible Participant
for the Eligible Participant’s 2005 taxable  year, or, if later, in the taxable
year in which the amounts are earned and vested.

 

(ii)           Notwithstanding the foregoing provisions of this Section 3.1, for
the Plan Year beginning January 1, 2006 (the “2006 Plan Year”), each Eligible
Employee who

 

8

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intends to participate in the Plan for the 2006 Plan Year, must file an election
to defer Compensation during the designated election period that precedes
January 1, 2006.  For the 2006 Plan Year only, the provisions of
Section 3.1(f) relating to deferral elections remaining in effect from year to
year shall not be applicable.

 

(iii)         Notwithstanding any other provisions of this Plan to the contrary,
the Committee may permit Participants to change payment elections prior to
December 31, 2006; provided, however, that no such change may be permitted if
such change would result in an impermissible subsequent deferral or acceleration
as set forth in Section XI.C. of the preamble to the proposed regulations issued
under Section 409A on September 29, 2005 (REG-158080-04).  For the avoidance of
doubt, no change to a payment election shall be permitted in 2006 if either
(x) the payment would have been made in 2006 in the absence of the change or
(y) the change would cause a payment to be made in 2006.

 

3.2          Cancellation of Compensation Deferrals.

 

(a)           Automatic Cancellation.  In the event that a Participant receives
a financial hardship withdrawal from the Synopsys 401(k) Savings and Success
Sharing Plan or any other plan maintained by the Company which contains a
qualified cash or deferred arrangement under Section 401(k) of the Code (the
“401(k) Plan”), the Participant’s Compensation deferrals under this Plan (if
any) shall be cancelled (i.e., the Participant’s deferral elections shall be
deemed to be zero) for a period until the Participant elects a deferral election
greater than zero effective with the commencement of a Plan Year that begins no
earlier than six (6) months from the date that the Participant receives such
hardship withdrawal.  Notwithstanding the foregoing, the Participant’s
Compensation deferrals under this Plan shall not be so cancelled if the
Committee determines that such cancellation is not required in order to preserve
the tax-qualification of the 401(k) Plan.

 

(b)           Permissible Cancellation.  In the event that a Participant incurs
an Unforeseeable Emergency (as defined in Section 7.5), the Committee, in its
sole discretion, may cancel the Participant’s Compensation deferrals for the
remainder of the Plan Year.  However, an election to make Compensation deferrals
under Article III shall be irrevocable as to amounts deferred as of the
effective date of any cancellation in accordance with this Section.

 

(c)           Section 401 and Section 409A Compliance.   The cancellation of
deferrals described in  Section 3.2(a) shall be required to the extent necessary
to preserve the tax-qualification of the 401(k) Plan.  The cancellation of
deferrals described in Section 3.2(a) and Section 3.2(b) shall be permitted only
in compliance with the requirements of Section 409A of the Code and regulations
and other guidance issued thereunder.  Any Participant whose deferrals are
cancelled under this Section 3.2 must meet the requirements for a new deferral
election in order to restart deferrals under the Plan.  In the event the
cancellation of deferrals described in this Section 3.2 are too short for the
Plan to be in compliance with the requirements of Section 409A of the Code and
regulations and other guidance issued thereunder, or for the 401(k) Plan to
maintain its tax-qualification, such cancellation shall be automatically
extended to the minimum extent necessary to be in such compliance or to maintain
the tax-qualification of the 401(k) Plan.

 

9

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3.3          Company Discretionary Contributions.  The Company may, in its sole
discretion, credit discretionary contributions to the Accounts of one or more
Participants at such times and in such amounts as the Committee may determine.

 

ARTICLE 4

INVESTMENT ELECTIONS

 

4.1          Participant Investment Designation.  The Committee shall provide
each Participant with a list of Funds available for hypothetical investment. 
The Participant may designate, in such manner as provided by the Committee, one
or more Funds that his or her Account will be deemed to be invested in for
purposes of determining the amount of gains or losses to be credited to his or
her Account; provided, however, that if the Participant does not designate the
deemed investment of his or her Account, the Participant’s Account shall be
deemed to be invested in the money market fund offered under the Plan.  The Fund
Return of each Fund shall be used to determine the amount to be credited to each
Participant’s Account under Section 5.1(c).  In making the designation pursuant
to this Section, the Participant may specify that all or any whole percentage of
his or her Account be deemed to be invested in one or more of the Funds selected
by the Committee.

 

4.2          Change in Investment Designation.  A Participant may change the
designation made under Section 4.1 by filing an election with the third party
administrator at the time and in the manner specified.

 

4.3          Company Responsibility for Investment Alternatives.  The Company
may, but need not, acquire investments corresponding to those designated by the
Participants hereunder, and the Company is not under any obligation to maintain
any investment it may make.  Any such investments, if made, shall be the
Company’s sole property in which no Participant shall have any interest.

 

ARTICLE 5

ACCOUNTS

 

5.1          Participant Accounts.  The Committee shall establish and maintain
an Account for each Participant under the Plan.  Each Participant’s Account
shall be further divided into separate subaccounts (“investment fund
subaccounts”), each of which corresponds to a Fund designated by the Participant
pursuant to Section 4.1.  A Participant’s Account shall be credited as follows:

 

(a)           Not later than the last day of each month, the Committee shall
cause the investment fund subaccounts of the Participant’s Account to be
credited with an amount equal to the Base Pay deferred by the Participant during
each pay period ending in that month and/or the Variable Pay deferred during
that month in accordance with the Participant’s election; that is, the portion
of the Participant’s deferred Base Pay or Variable Pay that the Participant has
elected to be deemed to be invested in a certain Fund shall be credited to the
investment fund subaccount corresponding to that Fund.

 

10

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(b)           Not later than the last day of the Plan Year or such earlier time
or times as the Committee may determine, the Committee shall credit the
investment fund subaccounts of the Participant’s Account with an amount equal to
the portion, if any, of any Company contribution for the Participant’s benefit
in accordance with Section 3.3; that is, the portion of the Participant’s
Company contribution, if any, that the Participant has elected to be deemed to
be invested in a certain Fund shall be credited to the investment fund
subaccount corresponding to that Fund.

 

(c)           Not later than the last day of each month, each investment fund
subaccount of a Participant’s Account shall be credited with gains, losses,
expenses and fees allocated to such investment fund subaccount through the
allocation date for the corresponding Fund.

 

5.2          Trust Funding.

 

(a)           Trustee Duties.  The Trustee shall manage, invest and reinvest the
Trust assets as provided in the Trust Agreement.  The Trustee shall collect the
income on the Trust assets, and shall make distributions therefrom all as
provided in the Plan and in the Trust Agreement.

 

(b)           Employee Deferrals and Company Contributions.  While the Plan
remains in effect, the Company shall make contributions to the Trust at such
times as determined in the discretion of the Committee.  Within three (3) months
after the close of each Plan Year, the Company shall make an additional
contribution to the Trust, if necessary, such that the value of the assets held
in the Trust following such contribution are at least equal to ninety percent
(90%) of the amount that is equal to (i) the balances in the Accounts of the
Participants as of the end of such Plan Year minus (ii) any distributions to
Participants after the end of such Plan Year and prior to the date of such
contribution.  For the purposes of this Section 5.2(b), the direct payment by
the Company of an obligation arising under the Plan shall be deemed to be a
contribution to the Trust.  The Trustee shall not be liable for any failure by
the Company to provide contributions sufficient to pay all accrued benefits
under the Plan in accordance with the terms of the Plan.

 

(c)           General Creditors.  Neither the Participants nor their
Beneficiaries shall have any preferred claim on, or any beneficial ownership in,
any assets of the Trust prior to the time such assets are paid to the
Participants or Beneficiaries as benefits.  All rights created under the Plan
shall be unsecured contractual rights of Plan Participants and Beneficiaries
against the Company.  Any assets held in the Trust will be subject to the claims
of the Company’s general creditors under federal and state law in the event of
insolvency, as defined in the Trust Agreement.

 

ARTICLE 6

VESTING

 

6.1          Base Pay and Variable Pay Deferrals.  A Participant’s Account
attributable to Base Pay and Variable Pay deferred by a Participant pursuant to
the terms of the Plan, together

 

11

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with any earnings credited to the Participant’s Account under
Section 5.1(c) with respect to such deferrals, shall be one hundred percent
(100%) vested at all times.

 

6.2          Company Contributions.  The portion of a Participant’s Account
attributable to Company contributions pursuant to Section 3.3, if any, including
the Fund Return credited with respect thereto, shall vest at such time or times
as the Committee shall specify in connection with any such amounts.

 

ARTICLE 7

DISTRIBUTIONS

 

7.1          Distributions from a Participant’s Account.

 

(a)           Distribution Election and Minimum Requirements.  At the time a
Participant makes (or is deemed to make, pursuant to Section 3.1(f)) an election
to defer a portion of his or her Base Pay or Variable Pay for a Plan Year, he or
she also must elect to receive or commence receiving distribution of
Contributions for that Plan Year on a certain future date (a “Scheduled
In-Service Withdrawal”), upon Termination of Participant’s Employment or upon
Retirement and the form in which such amount shall be paid.  If, at the date of
Termination of Participant’s Employment for any reason, the Participant has less
than two (2) years of service with the Company or if the Participant’s total
Account value is less than One Hundred Thousand Dollars ($100,000), then the
Participant’s Account will be paid to the Participant in a lump sum within
ninety (90) days following Termination of Participant’s Employment.  If at such
time the Participant is credited with two (2) years of service with the Company
and if his or her total Account value is One Hundred Thousand Dollars ($100,000)
or more, then the provisions set forth in Sections 7.1(c) through 7.1(e) below
shall apply.  Notwithstanding the foregoing, if the Participant is a Key
Employee, then such Participant’s distribution will be subject to the
restrictions of Section 7.7.

 

If a Participant elects, with his or her Compensation deferral election, a time
and form of distribution for that deferral election, and the Participant does
not change that deferral election with respect to distribution upon Termination
of Participant’s Employment or Retirement for subsequent Plan Years, then the
Participant shall be deemed to have elected for each subsequent Plan Years’
deferrals the same time and form of distribution with respect to distribution
upon Termination of Participant’s Employment or Retirement that was in effect
for deferrals made in the immediately preceding Plan Year.  Notwithstanding the
foregoing, a Participant must make an affirmative election for a Plan Year if
the Participant intends to receive deferrals made for that Plan Year in the form
of a Scheduled In-Service Withdrawal.

 

(b)           Payment of Scheduled In-Service Withdrawals.

 

(i)            If a Participant elects a Scheduled In-Service Withdrawal with
respect to a Plan Year, then the Participant shall receive such amount in a lump
sum paid in January of the year identified on the election form.  The lump sum
payment shall be the portion of the Participant’s Account (as adjusted for gains
and losses) attributable to Contributions in the Plan Year for which the
election form or deemed election applies.

 

12

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(ii)           The scheduled distribution date must be two (2) years or more
after the election date.  A Participant may delay receipt of a Scheduled
In-Service Withdrawal by filing a subsequent election pursuant to the
requirements of Section 7.2(a).

 

(iii)         A Participant may revoke a Scheduled In-Service Withdrawal
election and instead elect a later distribution upon Termination of
Participant’s Employment or Retirement in accordance with Sections 7.1(c) and
7.1(d) below by filing an election pursuant to the requirements of
Section 7.2(a).

 

(iv)          Notwithstanding the foregoing, in the case of Termination of
Participant’s Employment for any reason prior to the payment of a Scheduled
In-Service Withdrawal, then the provisions of this Plan with respect to payment
upon Termination of Participant’s Employment or Retirement shall override and
take precedence over such Scheduled In-Service Withdrawal and payments from the
Plan shall be made pursuant to Sections 7.1(c) or 7.1(d), as applicable.

 

(c)           Payment Upon Termination of Participant’s Employment for Any
Reason Other Than Retirement, Death or Becoming Disabled.  At the time the
Participant makes the election described in Section 7.1(a), the Participant also
must elect the form of distribution permitted under this Section 7.1(c) in which
the Participant’s benefits for Termination of Participant’s Employment other
than for Retirement, death or becoming Disabled shall be paid.  If Termination
of Participant’s Employment is for any reason other than Retirement, death or
becoming Disabled, then, subject to the minimum distribution requirements of
Section 7.1(a) above, and the provisions of Section 7.2 below and Section 409A
of the Code, the following forms of payment are available to the Participant:

 

(i)            a lump sum payable within ninety (90) days following Termination
of Participant’s Employment (or following a date not less than that required
under Section 7.2 and Section 409A of the Code if a change in form or time of
distribution is made pursuant to Section 7.2); or

 

(ii)           substantially equal annual installments over a period of five
(5) years beginning within ninety (90) days following Termination of
Participant’s Employment  (or beginning within ninety (90) days following a date
not less than that required under Section 7.2 and Section 409A of the Code if a
change in form or time of distribution is made pursuant to Section 7.2).

 

Notwithstanding the foregoing, any distribution to a Key Employee pursuant to
this Section 7.1(c) will be subject to the restrictions of Section 7.7.

 

(d)           Payment Upon Termination of Participant’s Employment as a Result
of Retirement or Becoming Disabled.  At the time the Participant makes the
election described in Section 7.1(a), the Participant also must elect the form
of distribution specified in this Section 7.1(d) in which the Participant’s
benefits upon Retirement or upon becoming Disabled shall be paid.

 

(i)            In the case of Termination of Participant’s Employment as a
result of Retirement or becoming Disabled, the Participant’s Distributable
Amount shall be paid to the

 

13

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Participant, at the Participant’s election, and subject to the requirements of
Section 7.1(d)(ii) below in the form of:

 

(1)           a cash lump sum payable within ninety (90) days following (A) the
date of Retirement (or following a date not less than that required under
Section 7.2 and Section 409A of the Code if a change in form or time of
distribution is made pursuant to Section 7.2) or (B) becoming Disabled; or

 

(2)           substantially equal annual installments over five (5), ten (10) or
fifteen (15) years beginning within ninety (90) days following (A) the date of
Retirement (or following a date not less than that required under Section 7.2
and Section 409A of the Code if a change in form or time of distribution is made
pursuant to Section 7.2) or (B) becoming Disabled.

 

Notwithstanding the foregoing, any distribution to a Key Employee pursuant to
this Section 7.1(d)(i) will be subject to the restrictions of Section 7.7.

 

(ii)           If Termination of Participant’s Employment is as a result of
Retirement or the Participant becoming Disabled, and if the Participant has
elected annual installments, then at the time distribution is to commence the
Committee shall aggregate the distribution amounts that the Participant has
elected to be paid in annual installments.

 

(1)           If the total distributable amount of such elections equals or
exceeds One Hundred Thousand Dollars ($100,000), then such amount shall be paid
to the Participant in the annual installments elected by the Participant
beginning within ninety (90) days following (A) the date of Retirement (or
following a date not less than that required under Section 7.2 and Section 409A
of the Code if a change in form or time of distribution is made pursuant to
Section 7.2) or (B) becoming Disabled.  If the total distributable amount of
such elections is less than One Hundred Thousand Dollars ($100,000), then such
amount will, subject to paragraph (2) below, be paid to the Participant in five
(5) annual installments beginning within ninety (90) days following (A) the date
of Retirement (or following a date not less than that required under Section 7.2
and Section 409A of the Code if a change in form or time of distribution is made
pursuant to Section 7.2) or (B) becoming Disabled.

 

(2)           If the total of such amounts is less than Fifty Thousand Dollars
($50,000), then such amount will be paid to the Participant in a cash lump sum
payable within ninety (90) days following (A) the date of Retirement (or
following a date not less than that required under Section 7.2 and Section 409A
of the Code if a change in form or time of distribution is made pursuant to
Section 7.2) or (B) becoming Disabled.

 

Notwithstanding the foregoing, any distribution to a Key Employee pursuant to
this Section 7.1(d)(ii) will be subject to the restrictions of Section 7.7.

 

7.2          Changes in Form or Time of Distribution.

 

(a)           Changes to Scheduled In-Service Withdrawals may be made only as
set forth in this Section 7.2(a).  A change in the time of a Scheduled
In-Service Withdrawal shall be given effect only if the election to change the
distribution date (i) does not take effect until at

 

14

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least twelve (12) months after the date on which the election change form is
filed with the third party administrator, (ii) the payment with respect to which
such change in election is made is deferred for a period of not less than five
(5) years after the date such payment would otherwise have been made, and
(iii) the election change must be made at least twelve (12) months prior to the
date that such Scheduled In-Service Withdrawal would otherwise have been made.

 

(b)           A Participant entitled to payment as a result of Termination of
Participant’s Employment or Retirement may change his or her form of
distribution from a lump sum to an installment form or from an installment form
to another installment form with a longer period of payment in accordance with
the rules of this Section 7.2(b).  A change in the form of distribution shall be
given effect only if the election to change the form of distribution (i) does
not take effect until at least twelve (12) months after the date on which the
election change form is filed with the third party administrator, and (ii) the
first payment with respect to such change in election is made is deferred for a
period of not less than five (5) years after the date such payment would
otherwise have been made.

 

(c)           Except as otherwise provided by the Committee, all distributions
to a single Participant pursuant to a single distribution election shall be
treated as a single payment.  For the avoidance of doubt, the provisions of this
Section 7.2(c) are intended to provide that installment payments are not to be
treated as separate payments as permitted by Treas. Reg.
Section 1.409A-2(b)(2)(iii).

 

7.3          Default Provisions If No Election of Form of Distribution.  If, at
the time of Termination of Participant’s Employment, for reasons other than
death, the Participant has made no election as to the form of distribution of
his or her Account, or if a distribution election is incomplete or inapplicable,
then the Participant’s Distributable Amount shall be distributed as follows:

 

(a)           If Termination of Participant’s Employment is a result of
Retirement or becoming Disabled, and the Participant’s Distributable Amount is
less than Fifty Thousand Dollars ($50,000), then the Participant’s Distributable
Amount will be paid to the Participant in a cash lump sum payable within ninety
(90) days following (A) the date of Retirement or (B) becoming Disabled;

 

(b)           If Termination of Participant’s Employment is a result of
Retirement or becoming Disabled, and the Participant’s Distributable Amount
equals or exceeds Fifty Thousand Dollars ($50,000), then the Participant’s
Distributable Amount will be paid to the Participant in five (5) annual
installments beginning within ninety (90) days following (A) the date of
Retirement or (B) becoming Disabled; or

 

(c)           If Termination of Participant’s Employment is for reasons other
than Retirement or becoming Disabled then, regardless of the value of the
Participant’s Distributable Amount at the time of Termination of Participant’s
Employment, the Participant’s Distributable Amount will be paid to the
Participant in a cash lump sum payable within ninety (90) days following
Termination of Participant’s Employment.

 

15

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Notwithstanding the foregoing, any distribution to a Key Employee pursuant to
this Section 7.3 will be subject to the restrictions of Section 7.7.

 

7.4          Death Benefits.

 

(a)           In the case of a Participant who dies prior to Termination of
Participant’s Employment, that portion of the death benefit of any  Death
Benefit Policy as defined below which is equal to the lesser of (i) the actual
Death Benefit Policy death benefit or (ii) two and one-half (2.5) times the
Participant’s Base Pay (for Participants who are not paid on a commission basis)
or Target Compensation (for Participants who are paid on a commission basis) at
the time the Participant dies, shall be paid to the Participant’s beneficiary
under the Death Benefit Policy by the insurance company that issued the Death
Benefit Policy.  Any such Death Benefit Policy shall be subject to the
conditions set forth in a “Split-Dollar Life Insurance Agreement” between the
Participant and the Trustee, pursuant to which the Participant may designate a
beneficiary (subject to Section 7.4(c) below) with respect to the portion of the
Death Benefit Policy proceeds described in the preceding sentence in the event
the Participant dies prior to Termination of Participant’s Employment.  Subject
to Section 7.4(c) below, the Participant shall have the right to designate and
change such beneficiary (which need not be his or her Beneficiary as determined
under Section 1.3) on a form provided by and filed with the insurance company,
and the life insurance proceeds designated in this Section 7.4(a) shall be paid
to such beneficiary.  A “Death Benefit Policy” is a life insurance policy that
was purchased by the Company pursuant to Article 2 to insure the life of the
Participant and that was designated by the Committee, in its sole discretion, at
the time the Participant completed the life insurance application as entitling
the Participant to a potential death benefit pursuant to this Section 7.4.

 

(b)           The benefit payable pursuant to Section 7.4(a) shall be paid only
if a Death Benefit Policy has been issued on the Participant’s life and is in
full force at the time of the Participant’s death and any such payment shall be
subject to all conditions and exceptions set forth in the Death Benefit Policy. 
A Participant who is entitled to a death benefit pursuant to this Section shall
not be entitled to any other Company-paid group term life insurance benefits
from the Company under the Plan or any other Death Benefit Policy provided by
the Company.  Notwithstanding any provision of the Plan or any other document to
the contrary, the Company shall not have any obligation to pay the Participant
or his or her Beneficiary any amounts described in Section 7.4(a); any such
amounts shall be payable solely from the proceeds of the Death Benefit Policy,
and if no Death Benefit Policy is in force, no such payment shall be made.

 

(c)           As of the beginning of each Plan Year, the Committee shall review
the existing Policies, and if a Participant or Eligible Employee has not elected
to make deferrals to the Plan and does not have an Account balance under the
Plan, then the Participant shall not be entitled to name a Beneficiary for that
Plan Year for any Death Benefit Policy insuring his or her life.  Furthermore,
the Company is not obligated to maintain any Death Benefit Policy; and no death
benefit shall be payable hereunder if the Company has been notified by the
Committee to discontinue the Death Benefit Policy for the Participant.  In
addition, no Death Benefit Policy shall be allocated to any Account.

 

(d)           Notwithstanding any payment election to the contrary, following
the death of a Participant, any balance remaining in the Participant’s Account
shall be paid to his or her

 

16

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Beneficiary or Beneficiaries in a lump sum within ninety (90) days of the date
the Committee is notified of the Participant’s death.

 

7.5          Unforeseeable Emergency.

 

(a)           If a Participant incurs an Unforeseeable Emergency, the Committee
may, in its sole and absolute discretion and at any time, accelerate the date of
distribution of a Participant’s Account or permit a Participant to suspend his
or her Contributions for the remainder of the Plan Year.  Notwithstanding the
foregoing, the suspensions of deferrals described in this Section 7.5(a) shall
be in compliance with the provisions of Section 3.2.

 

(b)           “Unforeseeable Emergency” shall mean an unanticipated emergency
that is caused by an event beyond the control of the Participant that would
result in severe financial hardship to the Participant not covered by insurance,
liquidation of other assets (to the extent the liquidation itself will not cause
severe financial hardship) or cessation of deferrals under this Plan, resulting
from (i) a sudden and unexpected illness or accident of the Participant or a
dependent (as defined in Section 152 of the Code, without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) of Section 152 of the Code), (ii) a loss of the
Participant’s property due to casualty, or (iii) such other extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant, all as determined in the sole discretion of the Committee.

 

(c)           Distribution pursuant to this Section of less than the
Participant’s entire interest in the Plan shall be made pro rata from his or her
investment Fund subaccounts according to the balances in such subaccounts. 
Subject to the foregoing, payment of any amount with respect to which a
Participant has filed a request under this Section shall be made as soon as
practicable after approval of such request by the Committee.

 

(d)           The amount that may be distributed to a Participant pursuant to
this Section 7.5 as the result of the Participant experiencing an Unforeseeable
Emergency shall be the lesser of (i) the Participant’s Distributable Amount or
(ii) the amount necessary to meet such Unforeseeable Emergency, including
amounts necessary to pay taxes on the distributed amount.

 

7.6          Inability To Locate A Participant.  It is the responsibility of a
Participant to apprise the Committee of any change in his or her address.  In
the event that the Committee is unable to locate a Participant or Beneficiary
for two (2) years, the Participant’s Account shall be forfeited and amounts
returned to the Company unless otherwise required by applicable law.

 

7.7          Key Employee Special Distribution Rule.  Notwithstanding any
provision of this Plan to the contrary, distributions to a Key Employee as a
result of Termination of Participant’s Employment or Retirement, whether the
distribution is made in the form of a lump sum or installments, shall not be
made or the payments may not commence before the date that is six (6) months
following the date of Termination of Participant’s Employment or Retirement, or,
if earlier, the date of death of the Key Employee.  For the avoidance of doubt,
this Section 7.7 shall not override the timing of distributions that are not as
a result of Termination of Participant’s Employment or Retirement (e.g.,
distributions pursuant to Section 7.8(e) or Section 9.5) even if such
distributions would commence within six (6) months following the Termination of
Participant’s Employment or Retirement.

 

17

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7.8          Special Acceleration of Distribution Rules.  Distributions under
the Plan may be accelerated only upon the occurrence of an event specified in
this Section 7.8.

 

(a)           A payment may be accelerated if such payment is made to an
alternate payee to the extent necessary to fulfill a domestic relations order as
defined in Section 414(p)(1)(B) of the Code.

 

(b)           A payment may be accelerated as may be necessary to comply with a
certificate of divestiture as defined in Section 1043(b)(2) of the Code.

 

(c)           With respect to all deferrals under the Plan, a payment may be
accelerated in the event of a de minimis amount if

 

(i)            the payment accompanies the termination of the entirety of the
Participant’s interest in the Plan;

 

(ii)           the payment is made on of before the later of

 

(1)           December 31 of the calendar year in which occurs the Termination
of Participant’s Employment, or

 

(2)           the date two and one half (2½) months after the date of
Termination of Participant’s Employment;

 

(iii)         the amount of the payment is not greater than the amount then
permitted under Sections 402(g)(1)(B) and 409A of the Code; and

 

(iv)          the amount is paid in a lump sum.

 

(d)           A payment may be accelerated to the extent required to pay the
Federal Insurance Contributions Act tax imposed under Sections 3101 and
3121(v)(2) of the Code with respect to compensation deferred under the Plan (the
“FICA Amount”).  Additionally, a payment may be accelerated to pay the income
tax on wages imposed under Section 3401 of the Code on the FICA Amount and to
pay the additional income tax at source on wages attributable to the pyramiding
Section 3401 wages and taxes.  The total payment under this Section 7.8(d) may
not exceed the aggregate of the FICA Amount and the income tax withholding
related to the FICA Amount.

 

(e)           Notwithstanding any other provision of this Plan other than
Section 9.5 of the Plan, the Participant may elect that upon a Change in
Control, his or her Account under the Plan shall be paid or retained as follows:

 

(i)            Paid no later than sixty (60) days following the Change in
Control in the form of a lump sum payment of the Participant’s Account; or

 

(ii)           Retained in the Plan and administered and distributed in
accordance with the terms of the Plan as in effect from time to time following
the Change in Control.

 

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The Change in Control distribution election provided in this Section 7.8(e) must
be made in writing by the Participant at the time the Participant files the
applicable deferral of Compensation election form with the Company as provided
in Section 7.1(a).

 

ARTICLE 8

ADMINISTRATION

 

8.1          Committee.  The composition of the Committee, including the number
of Committee members and the manner of adding or removing members of the
Committee, shall be determined by procedures adopted by the Committee.

 

8.2          Committee Action.  The Committee shall act pursuant to procedures
adopted by the Committee.  A member of the Committee shall not vote or act upon
any matter which relates solely to himself or herself as a Participant.  The
Chairperson of the Committee, the Secretary of the Committee or any other member
or members of the Committee designated by the Chairperson may execute any
certificate or other written direction on behalf of the Committee.

 

8.3          Powers and Duties of the Committee.

 

(a)           The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms, shall be
charged with the general administration of the Plan and shall have all powers
necessary to accomplish its purposes, including, but not by way of limitation,
the following:

 

(i)            To select the investments to determine the Fund Return in
accordance with ARTICLE IV hereof;

 

(ii)           To construe and interpret the terms and provisions of the Plan;

 

(iii)         To amend, modify, suspend or terminate the Plan in accordance with
Section 9.5;

 

(iv)          To compute and certify to the amount and kind of benefits payable
to Participants and their Beneficiaries and to direct the distribution of Plan
benefits;

 

(v)            To maintain all records that may be necessary for the
administration of the Plan;

 

(vi)          To provide for the disclosure of all information and the filing or
provision of all reports and statements to Participants, Beneficiaries or
governmental agencies as shall be required by law;

 

(vii)         To make and publish such rules for the regulation of the Plan and
procedures for the administration of the Plan as are not inconsistent with the
terms hereof, including, without limitation, requiring, if so determined by the
Committee, Participants to make elections and designations by electronic or
other means;

 

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(viii)        To appoint a Plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the administration of
the Plan as the Committee may from time to time prescribe; and

 

(ix)          To make any changes that may be necessary to operate and
administer the Plan in compliance with Section 409A of the Code, including,
without limitation, rejecting or reversing a deferral election or implementing
the provisions of Section 9.12.

 

8.4          Construction and Interpretation.  The Committee shall have full
discretion to construe and interpret the terms and provisions of the Plan, which
interpretation or construction, subject to Section 9.4, shall be final and
binding on all parties, including but not limited to the Company and any
Participant or Beneficiary.  The Committee shall administer such terms and
provisions in accordance with any and all laws applicable to the Plan,
including, without limitation, Section 409A of the Code.

 

8.5          Information.  To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee on all matters
relating to the Compensation of all Participants, their deaths or other causes
of termination, and such other pertinent facts as the Committee may reasonably
require.

 

8.6          Compensation, Expenses and Indemnity.

 

(a)           The members of the Committee shall serve without compensation for
their services hereunder.

 

(b)           The Committee is authorized at the expense of the Company to
employ such legal counsel as it may deem advisable to assist in the performance
of its duties hereunder.  The Company shall pay expenses and fees in connection
with the administration of the Plan.  For the avoidance of doubt, the obligation
of the Company to pay expenses and fees in connection with the administration of
the Plan shall not supersede the allocation of expenses and fees to a
Participant’s Account pursuant to Section 5.1(c).

 

(c)           The Company indemnifies and holds harmless, to the extent
permitted by law, each member of the Committee and any employee, officer or
director of the Company, from and against any and all direct and indirect
liabilities, demands, claims, losses, taxes, costs and expenses, including
(without limitation) reasonable attorney’s fees, arising out of, relating to, or
resulting from any action, inaction or conduct in their official capacity in the
oversight and administration of the Plan or in his or her defense; provided,
however, that (i) any such person shall not be indemnified and held harmless if
his or her actions, inactions or conduct arise out of, relate to, or result from
his or her gross negligence, bad faith or willful misconduct, or otherwise are
in willful violation of the law, including (without limitation) a breach of
fiduciary duty under ERISA; and (ii) such individual shall promptly notify the
Company of any litigation involving the Plan, shall cooperate in the defense of
any such lawsuit, and shall give the Company sole and exclusive authority to act
on his or her behalf in the event of any such litigation or other claim or
demand arising out of, relating to, or resulting from his or her action,
inaction or conduct in his or her official capacity with respect to the Plan. 
The Company may purchase insurance to satisfy its obligation under this Section.

 

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8.7          Quarterly Statements.  Under procedures established by the
Committee, a Participant shall receive a statement with respect to such
Participant’s Account on a quarterly basis.

 

ARTICLE 9

MISCELLANEOUS

 

9.1          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 fulfillment
of the obligations of the Company under the Plan.  Any and all of the Company’s
assets shall be, and remain, the general unpledged, unrestricted assets of the
Company.  The Company’s obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Company to pay money in the future, and
the rights of the Participants and Beneficiaries shall be no greater than those
of unsecured general creditors.

 

9.2          Restriction Against Assignment.  The Company shall pay all amounts
payable hereunder only to the person or persons designated by the Plan 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 the Plan, voluntarily or involuntarily, the Committee, in its
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.  Notwithstanding the foregoing,
amounts may be distributed in accordance with Section 7.8(a) to fulfill a
“domestic relations order” (as defined in Section 414(p)(1)(B) of the Code).

 

9.3          Withholding.  There shall be deducted from each payment made under
the Plan all taxes that are required to be withheld by the Company 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.  Except as
provided in Section 3.1, in the event no payment is being made under the Plan at
the time that withholding of taxes is required (or at such time as it is
determined that withholding of taxes was required), the Company may reduce the
Participant’s Account by the amount of such withholding.

 

9.4          Disputes.

 

(a)           The Committee shall administer the Plan.  The Committee (either
directly or through its designee) shall have the power and authority to
interpret, construe, and administer the Plan.

 

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(b)           Neither the Committee, its designee nor its advisors, shall be
liable to any person for any action taken or omitted in connection with the
interpretation and administration of the Plan.

 

(c)           The Committee shall determine each Participant’s and Beneficiary’s
right to payments under the Plan.  If a Participant or Beneficiary disagrees
with the Committee’s determination, he or she may make a written claim for
payments inconsistent with that determination.  Any such claim shall be filed
with the Committee at the principal executive offices of the Company.  The
Committee shall review the claim and notify the claimant of its decision in
writing within sixty (60) days after the claim is received.  If the Committee
denies the claim, in whole or in part, the notice shall specify the reasons for
denial, references to the Plan provisions upon which denial is based, any
additional information or material necessary to perfect the claim, and
procedures for further review of the claim.  Within sixty (60) days after
receipt of the notice of denial, the claimant may file a written appeal of the
denial of the claim, identifying the grounds, facts and any other matter upon
which the appeal is based.  The Committee shall give the claimant a final
decision within sixty (60) days after receipt of the request for review.  If the
Committee affirms the denial of the claim in whole or in part, it shall specify
in writing the reasons for the affirmance, with specific references to the Plan
provisions upon which the affirmance is based.

 

(d)           If the Committee has affirmed the denial of a claim pursuant to
the procedure described in Section 9.4(c) above, the Participant or his or her
Beneficiary may, if he or she desires, submit any denied claim for payment under
the Plan to arbitration.  This right to select arbitration shall be solely that
of the Participant or his or her Beneficiary and the Participant or his or her
Beneficiary may decide whether or not to arbitrate in his or her discretion. 
The “right to select arbitration” is not mandatory on the Participant or his or
her Beneficiary and the Participant or his or her Beneficiary may choose in lieu
thereof to bring an action in an appropriate civil court.  Once an arbitration
is commenced, however, it may not be discontinued without the mutual consent of
both parties to the arbitration.  During the lifetime of the Participant, only
he or she can use the arbitration procedure set forth in this Section.

 

(e)           Any claim for arbitration may be submitted as follows:  if the
Participant or his or her Beneficiary disagrees with the Committee regarding the
interpretation of the Plan and the claim is finally denied by the Committee in
whole or in part, such claim may be filed in writing with an arbitrator of the
Participant’s or Beneficiary’s choice who is selected by the method described in
the next four sentences.  The first step of the selection shall consist of the
Participant or his or her Beneficiary submitting a list of five (5) potential
arbitrators to the Committee.  Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate Court judge.  Within one
week after receipt of the list, the Committee shall select one of the five
(5) arbitrators as the arbitrator for the dispute in question.  If the Committee
fails to select an arbitrator in a timely manner, the Participant or his or her
Beneficiary shall then designate one of the five (5) arbitrators as the
arbitrator for the dispute in question.

 

(f)            The arbitration hearing shall be held within seven (7) days (or
as soon thereafter as possible) after selection of the arbitrator.  No
continuance of said hearing shall be allowed without the mutual consent of the
Participant or his or her Beneficiary and the

 

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Committee.  Absence from or nonparticipation at the hearing by either party
shall not prevent the issuance of an award.  Hearing procedures that will
expedite the hearing may be ordered at the arbitrator’s discretion, and the
arbitrator may close the hearing in his or her sole discretion when he or she
decides he or she has heard sufficient evidence to satisfy issuance of an award.

 

(g)           The arbitrator’s award shall be rendered as expeditiously as
possible and in no event later than one (1) week after the close of the
hearing.  In the event the arbitrator finds that the Company has breached the
Plan, he or she shall order the Company to immediately take the necessary steps
to remedy the breach.  The award of the arbitrator shall be final and binding
upon the parties.  The arbitrator’s award may be enforced in any appropriate
court as soon as possible after its rendition.  If an action is brought to
confirm the arbitrator’s award, both the Company and the Participant agree that
no appeal shall be taken by either party from any decision rendered in such
action.

 

(h)           Solely for purposes of determining the allocation of the costs
described in this Section, the Committee will be considered the prevailing party
in a dispute if the arbitrator determines (1) that the Company has not breached
the Plan and (2) the claim by the Participant or his or her Beneficiary was not
made in good faith.  Otherwise, the Participant or his or her Beneficiary will
be considered the prevailing party.  In the event that the Company is the
prevailing party, the fee of the arbitrator and all necessary expenses of the
hearing (excluding any attorneys’ fees incurred by the Company) including
stenographic reporter, if employed, shall be paid by the other party.  In the
event that the Participant or his or her Beneficiary is the prevailing party,
the fee of the arbitrator and all necessary expenses of the hearing (including
all attorneys’ fees incurred by the Participant or his or her Beneficiary in
pursuing his or her claim), including the fees of a stenographic reporter, if
employed, shall be paid by the Company.

 

9.5          Amendment, Modification, Suspension or Termination.  The Committee
may amend, modify, suspend or terminate the Plan in whole or in part, except
that no amendment, modification, suspension or termination shall have any
retroactive effect to reduce any amounts credited to a Participant’s Account
other than pursuant to a distribution to such Participant.  Notwithstanding the
foregoing, if (i) there is a Change in Control, (ii) lump sum distributions of
all remaining Account balances can be made within the twelve (12) months
following the Change in Control, and (iii) the successor employer, by resolution
of its board of directors, within twelve (12) months following the Change in
Control, elects to terminate the Plan, then the Account balances, or remaining
Account balances, of each Participant, whether such Participant is receiving
installment payments or not, shall be paid to the Participant in a single lump
sum payment.  Such lump sum payment shall be made no later than sixty (60) days
following the adoption of the resolutions of the board of directors of the
successor employer to terminate the Plan and within twelve (12) months following
the Change in Control.

 

9.6          Governing Law.  The Plan shall be construed, governed and
administered in all respects in accordance with ERISA, the Code and other
pertinent Federal laws and, to the extent not preempted by ERISA, in accordance
with the laws of the State of California (irrespective of the choice of law
principles of the State of California as to all matters).

 

9.7          Receipt or Release.  Any payment to a Participant or the
Participant’s Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full

 

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satisfaction of all claims against the Committee and the Company.  The Committee
may require such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.

 

9.8          Payments on Behalf of Incapacitated Persons.  In the event that any
amount becomes payable under the Plan 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.

 

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

 

9.10        Department of Labor Determination.  In the event that any
Participant is found to be not a member of a select group of management or
highly compensated employees or is ineligible to participate in the Plan,
according to a determination made by the Department of Labor or the Committee,
the Committee shall take whatever steps it deems necessary, in its sole
discretion, to exclude the Participant from participation in the Plan while
equitably protecting the affected Participant’s existing Account balance.

 

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

 

9.12        Compliance with Section 409A of the Code.  This Plan is intended to
comply with the requirements of Section 409A of the Code and regulations and
other guidance thereunder such that no amount deferred under the Plan shall be
subject to an additional tax as provided in Section 409A(a)(1)(b) of the Code. 
To the extent one or more provisions of this Plan do not so comply (a
“Non-complying Provision”) with Section 409A of the Code and an amendment to
such provision would result in the provision ceasing to be a Non-complying
Provision, notwithstanding any such provision of the Plan to the contrary, the
Non-complying Provision shall be automatically amended to the minimum extent
necessary consistent with preserving the economic effect of the Non-complying
Provision so that such provision ceases to be a Non-complying Provision.  In the
event of any such automatic amendment of the Plan, the Plan document shall be
amended as soon as administratively feasible to reflect such amendment.

 

9.13        Electronic or Other Forms.  Unless otherwise provided by the
Committee, any reference herein to a form, election, designation, application,
notice, statement or similar term shall include any electronic process or
procedure adopted or required by the Committee.

 

[INTENTIONALLY BLANK, SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has caused this document to be executed by its
duly authorized officer.

 

 

 

SYNOPSYS, INC.

 

 

 

 

 

By:

/s/ Erika Varga

 

 

Erika Varga, Assistant Secretary

 

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