<PAGE>   1
EXHIBIT 10.1

                                 SYNOPSYS, INC.

                             1992 STOCK OPTION PLAN

           (AMENDED JULY 29, 1992, OCTOBER 28, 1992, OCTOBER 27, 1993,
          OCTOBER 27, 1994, NOVEMBER 1, 1995, MAY 1, 1996, MAY 3, 1996,
              OCTOBER 30, 1996, JANUARY 11, 2000 AND MAY 25, 2001)


                                   ARTICLE ONE
                                     GENERAL

I.                PURPOSE OF THE PLAN

                  A. This 1992 Stock Option Plan ("Plan") is intended to promote
the interests of Synopsys, Inc., a Delaware corporation (the "Corporation"), by
providing (i) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations) and (ii) consultants and other independent advisors
who provide valuable services to the Corporation (or its parent or subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations).

                  B. The Plan shall become effective on the first date on which
the shares of the Corporation's common stock are registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"). Such date
is hereby designated as the Effective Date of the Plan.

                  C. This Plan shall serve as the successor to the Corporation's
1988 Restricted Stock Plan (the "1988 Plan"), and no further option grants shall
be made under the 1988 Plan from and after the Effective Date of this Plan. All
options outstanding under the 1988 Plan on such Effective Date are hereby
incorporated into this Plan and shall accordingly be treated as outstanding
options under this Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of the
Corporation's common stock thereunder. All outstanding unvested share issuances
under the 1988 Plan shall continue to be governed solely by the express terms
and conditions of the instruments evidencing such issuances, and no provision of
this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such unvested shares.

                  D. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:

                  Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to be a
parent of the Corporation, provided each such corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

                  Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.


II.               ADMINISTRATION OF THE PLAN

                  A. Administrator. The Plan shall be administered by the Board
of Directors or a committee that will satisfy Rule 16b-3 of the Securities and
Exchange Commission and Section 162(m) of the Internal Revenue



                                       1
<PAGE>   2
Code, as in effect with respect to the Company from time to time (in either
case, the "Administrator"). In connection with the administration of the Plan,
the Administrator shall have the powers possessed by the Board. The
Administrator may act only by a majority of its members, except that the
Administrator may authorize any one or more of its members or any officer of the
Company to execute and deliver documents on behalf of the Administrator. For so
long as not otherwise required for the Plan to comply with Rule 16b-3, the
Administrator or the Board may delegate to one or more directors of the Company
authority to grant stock options to persons who are not subject to Section 16 of
the Exchange Act, and may delegate administrative duties to such director(s) and
such employees of the Company as it deems proper. The Board at any time may
terminate the authority delegated to any committee of the Board pursuant to this
Section III(a) and revest in the Board the administration of the Plan.

                  B. Authority. The Administrator shall grant options and
authorize stock issuances (in either case an "Award") to selected eligible
employees and consultants. In particular and without limitation, the
Administrator, subject to the terms of the Plan, shall:

                           (i) select the officers, other employees, and
         consultants to whom Awards may be granted;

                           (ii) determine whether and to what extent Awards are
         to be granted under the Plan;

                           (iii) determine the number of shares to be covered by
         each Award granted under the Plan; and

                           (iv) determine the terms and conditions of any Award
         granted under the Plan and any related loans to be made by the Company,
         based upon factors determined by the Administrator;

                           provided, however, that the Administrator shall not
         have the power to approve a program whereby outstanding Awards are
         surrendered in exchange for Awards with a lower exercise price, without
         first obtaining stockholder approval of such program.

III.              ELIGIBILITY

                  A. The persons eligible to receive option grants ("Optionee")
are as follows:

                           (i) officers and other key employees of the
         Corporation (or its parent or subsidiary corporations) who render
         services which contribute to the management, growth and financial
         success of the Corporation (or its parent or subsidiary corporations);

                           (ii) those consultants or other independent advisors
         who provide valuable services to the Corporation (or its parent or
         subsidiary corporations).

                  B. Non-employee members of the Board shall not be eligible to
participate in the Plan or in any other stock option, stock purchase, stock
bonus or other stock plan of the Corporation (or its parent or subsidiary
corporations), other than the 1994 Non-Employee Directors Stock Option Plan.


IV.               STOCK SUBJECT TO THE PLAN

                  A. Shares of the Corporation's common stock (the "Common
Stock") shall be available for issuance under the Plan and shall be drawn from
either the Corporation's authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed the sum of (i)
17,767,142 shares plus (ii) an additional number of shares equal to 5% of the
number of shares of Common Stock and Common Stock equivalents outstanding on the
first day of each of the 1997, 1998 and 1999 fiscal years. Such authorized share
reserve includes the number of shares which remained available for issuance, as
of the Effective Date, under the 1988 Plan as last approved by the Corporation's
stockholders prior to such Effective Date, including the shares subject to the
outstanding options incorporated into this Plan and any other shares available
for future option grant under the 1988 Plan as last approved by the
stockholders, and such reserve shall be adjusted from time to time in accordance
with the provisions of this Section IV. To the extent one or more



                                       2
<PAGE>   3
outstanding options under the 1988 Plan which have been incorporated into this
Plan are subsequently exercised, the number of shares issued with respect to
each such option shall reduce, on a share- for-share basis, the number of shares
available for issuance under this Plan.

                  B. In no event may the maximum number of shares which may be
issued pursuant to Incentive Options granted under the Plan on or after the
first day of the 1995 fiscal year (October 2, 1994) exceed 16,000,000 shares,
subject to adjustment from time to time in accordance with the provisions of
this Section IV. The maximum number of shares which may be issued pursuant to
Incentive Options granted under the Plan prior to the first day of the 1995
fiscal year (October 2, 1994) shall not exceed 11,400,000 shares, subject to
adjustment from time to time in accordance with the provisions of this Section
IV.

                  C. In no event may the aggregate number of shares of Common
Stock for which any one individual participating in the Plan may be granted
stock options and/or separately-exercisable stock appreciation rights during any
fiscal year exceed 750,000 shares, except in the case of an individual's initial
employment with the Company, in which case such individual may be granted stock
options and/or stock appreciation rights for an additional 250,000 shares,
subject to adjustment from time to time in accordance with the provisions of
this Section IV. For purposes of such limitation, no stock options or stock
appreciation rights granted prior to January 1, 1994 shall be taken into
account.

                  D. Should one or more outstanding options under this Plan
(including outstanding options under the 1988 Plan incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section IV of Article Two of the Plan), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grant
under the Plan. Shares subject to any option or portion thereof surrendered or
cancelled in accordance with Section V of Article Two and all shares issuances
under the Plan, whether or not the shares are subsequently repurchased by the
Corporation pursuant to its repurchase rights under the Plan, shall not be
available for subsequent option grant under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock
actually issued to the holder of such option.

                  E. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
maximum number and/or class of securities which may be issued pursuant to
Incentive Options granted under the Plan, whether before or after the first day
of the 1995 fiscal year, (iii) the total number and/or class of securities for
which stock options and separately-exercisable stock appreciation rights may be
granted to any one participant in the Plan after December 31, 1993, (iv) the
number and/or class of securities and price per share in effect under each
outstanding option under the Plan and (v) the number and/or class of securities
and price per share in effect under each outstanding option incorporated into
this Plan from the 1988 Plan. Such adjustments to the outstanding options are to
be effected in a manner which shall preclude the enlargement or dilution of
rights and benefits under such options.

                  The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.

                  F. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Plan Administrator.


                                   ARTICLE TWO
                                  OPTION GRANTS

I.                TERMS AND CONDITIONS OF OPTIONS

                  Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who



                                       3
<PAGE>   4
are not Employees of the Corporation or its parent or subsidiary corporations
may only be granted non-statutory options. Each granted option shall be
evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.

                  A.  Option Price.

                  (1) The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall it be less than one hundred percent
(100%) of the fair market value per share of Common Stock on the date of the
option grant.

                  (2) The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Article Three, Section
I and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:

                       - full payment in cash or check drawn to the
         Corporation's order;

                       - full payment in shares of Common Stock held for at
         least six (6) months and valued at fair market value on the Exercise
         Date (as such term is defined below);

                       - full payment in a combination of shares of Common Stock
         held for at least six (6) months and valued at fair market value on the
         Exercise Date and cash or check; or

                       - full payment through a broker-dealer sale and
         remittance procedure pursuant to which the Optionee (I) shall provide
         irrevocable written instructions to a Corporation-designated brokerage
         firm to effect the immediate sale of the purchased shares and remit to
         the Corporation, out of the sale proceeds available on the settlement
         date, sufficient funds to cover the aggregate option price payable for
         the purchased shares plus all applicable Federal and State income and
         employment taxes required to be withheld by the Corporation in
         connection with such purchase and (II) shall provide written directives
         to the Corporation to deliver the certificates for the purchased shares
         directly to such brokerage firm in order to complete the sale
         transaction.

                  For purposes of this subparagraph (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.

                  (3) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:

                       - If the Common Stock is not at the time listed or
         admitted to trading on any national stock exchange but is traded on the
         Nasdaq National Market, the fair market value shall be the closing
         selling price per share of Common Stock on the date in question, as
         such price is reported by the National Association of Securities
         Dealers on the Nasdaq National Market System or any successor system.
         If there is no reported closing selling price for the Common Stock on
         the date in question, then the closing selling price on the last
         preceding date for which such quotation exists shall be determinative
         of fair market value.

                       - If the Common Stock is at the time listed or admitted
         to trading on any national stock exchange, then the fair market value
         shall be the closing selling price per share of Common Stock on the
         date in question on the stock exchange determined by the Plan
         Administrator to be the primary market for the Common Stock, as such
         price is officially quoted in the composite tape of transactions on
         such exchange. If there is no reported sale of Common Stock on such
         exchange on the date in question, then the fair market value shall be
         the closing selling price on the exchange on the last preceding date
         for which such quotation exists.

                  B. Term and Exercise of Options. Each option shall be
exercisable at such time or times and during such period as is determined by the
Plan Administrator and set forth in the stock option agreement



                                       4
<PAGE>   5
evidencing the grant; provided that at least 75% of the options granted
hereunder shall become exercisable ratably over a four year period from the date
of grant, with the vesting interval (i.e., monthly, quarterly, etc.) and any
period prior to the commencement of vesting determined in each case by the Plan
Administrator. No such option, however, shall have a maximum term in excess of
ten (10) years from the grant date. During the lifetime of the Optionee, the
option shall be exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution following the Optionee's death.

                  C.  Termination of Service.

                  (1) Except to the extent otherwise provided pursuant to
Section VI of this Article Two, the following provisions shall govern the
exercise period applicable to any outstanding options under the Plan which are
held by the Optionee at the time of his or her cessation of Service or death.

                       - Should the Optionee cease Service for any reason
         (including death or permanent disability as defined in Section 22(e)(3)
         of the Internal Revenue Code) while holding one or more outstanding
         options under the Plan, then none of those options shall (except to the
         extent otherwise provided pursuant to Section VI of this Article Two)
         remain exercisable beyond the limited post-Service period designated by
         the Plan Administrator at the time of the option grant and set forth in
         the option agreement.

                       - Any option granted to an Optionee under the Plan and
         exercisable in whole or in part on the date of the Optionee's death may
         be subsequently exercised, by the personal representative of the
         Optionee's estate or by the person or persons to whom the option is
         transferred pursuant to the Optionee's will or in accordance with the
         laws of descent and distribution, provided and only if such exercise
         occurs prior to the earlier of (i) the expiration of the period
         designated by the Plan Administrator at the time of the option grant
         and set forth in the option agreement, which may be any period from one
         month to three years measured from the date of the Optionee's death, or
         (ii) the specified expiration date of the option term. Upon the
         occurrence of the earlier event, the option shall terminate and cease
         to be exercisable.

                       - Under no circumstances, however, shall any such option
         be exercisable after the specified expiration date of the option term.

                       - During the limited post-Service exercise period, the
         option may not be exercised for more than the number of shares for
         which the option is exercisable on the date of the Optionee's cessation
         of Service. Upon the expiration of such limited exercise period or (if
         earlier) upon the expiration of the option term, the option shall
         terminate and cease to be exercisable. However, upon the Optionee's
         cessation of Service, each outstanding option at the time held by the
         Optionee shall immediately terminate and cease to be outstanding with
         respect to any shares for which the option is not otherwise at that
         time exercisable or in which the Optionee is not otherwise vested.

                       - Should (i) the Optionee's Service be terminated for
         misconduct (including, but not limited to, any act of dishonesty,
         willful misconduct, fraud or embezzlement) or (ii) the Optionee make
         any unauthorized use or disclosure of confidential information or trade
         secrets of the Corporation or its parent or subsidiary corporations,
         then in any such event all outstanding options held by the Optionee
         under this Article Two shall terminate immediately and cease to be
         exercisable.

                  (2) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.

                  (3) For purposes of the foregoing provisions of this Section
I.C (and for all other purposes under the Plan):

                       - The Optionee shall (except to the extent otherwise
         specifically provided in the applicable option agreement) be deemed to
         remain in the Service of the Corporation for so long as such individual



                                       5
<PAGE>   6
         renders services on a periodic basis to the Corporation (or any parent
         or subsidiary corporation) in the capacity of an Employee, a
         non-employee member of the Board or an independent consultant or
         advisor.

                       - The Optionee shall be considered to be an Employee for
         so long as he or she remains in the employ of the Corporation or one or
         more parent or subsidiary corporations, subject to the control and
         direction of the employer entity not only as to the work to be
         performed but also as to the manner and method of performance.

                  D.  Stockholder Rights.

                  An Optionee shall have no stockholder rights with respect to
any shares covered by the option until such individual shall have exercised the
option, paid the option price for the purchased shares and been issued a stock
certificate for such shares.

                  E.  Repurchase Rights.

                  The shares of Common Stock acquired upon the exercise of
options granted under this Article Two may be subject to repurchase by the
Corporation in accordance with the following provisions:

                  (a) The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.

                  (b) All of the Corporation's outstanding repurchase rights
shall automatically terminate, and all shares subject to such terminated rights
shall immediately vest in full, upon the occurrence of any Corporate Transaction
under Section III of this Article Two, except to the extent:

                       (i) any such repurchase right is to be assigned to the
         successor corporation (or parent thereof) in connection with the
         Corporate Transaction or (ii) such termination is precluded by other
         limitations imposed by the Plan Administrator at the time the
         repurchase right is issued.

                  (c) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under this
Article Two and thereby accelerate the vesting of such shares in whole or in
part at any time.


II.               INCENTIVE OPTIONS

                  The terms and conditions specified below shall be applicable
to all Incentive Options granted under the Plan. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are
specifically designated as "non- statutory" options when issued under the Plan
shall not be subject to such terms and conditions.

                  A. Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee after December 31, 1986 under
this Plan (or any other option plan of the Corporation or its parent or
subsidiary corporations) may for the first time become exercisable as incentive
stock options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two or more such options which become exercisable for the first
time in the same calendar year, the foregoing limitation on the exercisability
of such options as incentive stock options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted.

                  B. 10% Stockholder. If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing 10% or more of the total



                                       6
<PAGE>   7
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.

                  Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Three of the Plan shall apply to all
Incentive Options granted hereunder.


III.              CORPORATE TRANSACTIONS/CHANGES IN CONTROL

                  A.  In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):

                  (i) a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State of the Corporation's incorporation,

                  (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or dissolution
of the Corporation, or

                  (iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to holders different from those who held such
securities immediately prior to such merger, then the exercisability of each
option outstanding under the Plan shall automatically accelerate so that each
such option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable with respect to the total number
of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation or parent thereof or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such option is to be replaced by a comparable cash incentive
program of the successor corporation based on the option spread at the time of
the Corporate Transaction, or (iii) the acceleration of such option is subject
to other limitations imposed by the Plan Administrator at the time of the option
grant. The determination of comparability under clause (i) or (ii) above shall
be made by the Plan Administrator, and its determination shall be final, binding
and conclusive.

                  B. Immediately after the consummation of the Corporate
Transaction, all outstanding options under the Plan shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation or its
parent company.

                  C. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the maximum number and/or class
of securities available for issuance under the Plan, the maximum number and/or
class of securities which may be issued pursuant to Incentive Options granted
under the Plan, whether before or after the first day of the 1995 fiscal year,
and the total number and/or class of securities for which stock options and
separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993 shall be appropriately adjusted
following the consummation of the Corporate Transaction to reflect the effect of
such transaction upon the Corporation's capital structure.

                  D. The grant of options under the Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

                  E. The Plan Administrator shall have the discretionary
authority, exercisable at the time the option is granted or at any time while
the option remains outstanding, to provide for the automatic acceleration of



                                       7
<PAGE>   8
one or more outstanding options under this Article Two (and the termination of
one or more of the Corporation's outstanding repurchase rights under this
Article Two) upon the occurrence of a Change in Control. Alternatively, the Plan
Administrator shall have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.

                  F. For purposes of this Section III, a Change in Control shall
be deemed to occur in the event:

                  (i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or

                  (ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.

                  G. Any options accelerated in connection with the Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.

                  H. The exercisability as incentive stock options under the
Federal tax laws of any options accelerated under this Section III in connection
with a Corporate Transaction or Change in Control shall remain subject to the
dollar limitation of Section II of this Article Two.


IV.               [INTENTIONALLY OMITTED.]


V.                STOCK APPRECIATION RIGHTS

                  A. Provided and only if the Plan Administrator determines in
its discretion to implement the stock appreciation right provisions of this
Section V, one or more Optionees may be granted the right, exercisable upon such
terms and conditions as the Plan Administrator may establish, to surrender all
or part of an unexercised option under this Article Two in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
fair market value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate option price payable for
such vested shares.

                  B. No surrender of an option shall be effective hereunder
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the Optionee shall accordingly become
entitled under this Section V may be made in shares of Common Stock valued at
fair market value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

                  C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.

                  D.  One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights



                                       8
<PAGE>   9
in tandem with their outstanding options under the Plan. Upon the occurrence of
a Hostile Take-Over effected at any time when the Corporation's outstanding
Common Stock is registered under Section 12(g) of the 1934 Act, each outstanding
option with such a limited stock appreciation right in effect for at least six
(6) months shall automatically be cancelled, to the extent such option is at the
time exercisable for fully-vested shares of Common Stock. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the vested shares of Common
Stock at the time subject to the cancelled option (or cancelled portion of such
option) over (ii) the aggregate exercise price payable for such shares. The cash
distribution payable upon such cancellation shall be made within five (5) days
following the consummation of the Hostile Take-Over. Neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such option cancellation and cash distribution. The uncancelled portion of
the option (if any) shall continue to remain outstanding and become exercisable
in accordance with the terms of the agreement evidencing that grant.

                  E. For purposes of Section V.D, the following definitions
shall be in effect:

                  A Hostile Take-Over shall be deemed to occur in the event (i)
any person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept and (ii) more than fifty percent (50%) of
the securities so acquired in such tender or exchange offer are accepted from
holders other than Corporation officers and directors participating in the Plan.

                  The Take-Over Price per share shall be deemed to be equal to
the greater of (a) the fair market value per share on the date of cancellation,
as determined pursuant to the valuation provisions of Section I.A. (3) of this
Article Two, or (b) the highest reported price per share of Common Stock paid in
effecting such Hostile Take-Over. However, if the cancelled option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.

                  F. The shares of Common Stock subject to any option
surrendered or cancelled for an appreciation distribution pursuant to this
Section V shall not be available for subsequent option grant under the Plan.


VI.               EXTENSION OF EXERCISE PERIOD

                  The Plan Administrator shall have full power and authority to
extend the period of time for which any option granted under this Article Two is
to remain exercisable following the Optionee's cessation of Service or death
from the limited period in effect under Section I.C.(1) of this Article Two to
such greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration date of the option term.


                                  ARTICLE THREE
                                  MISCELLANEOUS

I.                [INTENTIONALLY OMITTED.]


II.               AMENDMENT OF THE PLAN AND AWARDS

                  A. The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification may adversely affect the rights and obligations of an
Optionee with respect to options at the time outstanding under the Plan, unless
the Optionee consents to such amendment. In addition, the Board may not, without
the approval of the Corporation's stockholders, amend the Plan to (i) materially
increase the maximum number of shares issuable under the Plan, the maximum
number of shares issuable pursuant to Incentive Options granted under the Plan
on or after the first day of the 1995 fiscal year or the number of shares for
which any one individual participating in the Plan may be granted



                                       9
<PAGE>   10
stock options and separately-exercisable stock appreciation rights in the
aggregate after December 31, 1993 (except for permissible adjustments under
Article One, Section IV) or (ii) materially modify the eligibility requirements
for participation in the Plan or the benefits accruing to Optionees under the
Plan.

                  B. Options to purchase shares of Common Stock may be granted
in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants are made,
then (I) any unexercised excess options shall terminate and cease to be
exercisable and (II) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.


III.              EFFECTIVE DATE AND TERM OF PLAN

         A. The Plan was initially adopted by the Board effective February 24,
1992. The Plan was amended by the Board on July 29, 1992, October 28, 1992,
October 27, 1993, October 27, 1994, November 1, 1995, May 1, 1996, May 3, 1996,
October 30, 1996, January 11, 2000, and May 25, 2001.

                  B. Each option issued and outstanding under the 1988 Plan
immediately prior to the Effective Date of this Plan shall be incorporated into
this Plan and treated as an outstanding option under this Plan, but each such
option shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant, and nothing in this Plan shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to their acquisition of shares of Common Stock thereunder.
Each unvested share of Common Stock outstanding under the 1988 Plan on the
Effective Date of this Plan shall continue to be governed solely by the terms
and conditions of the instrument evidencing such share issuance, and nothing in
this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holder of such unvested shares.

                  C. The sale and remittance procedure authorized for the
exercise of outstanding options under this Plan shall be available for all
options granted under this Plan on or after the Effective Date and for all
non-statutory options outstanding under the 1988 Plan and incorporated into this
Plan. The Plan Administrator may also allow such procedure to be utilized in
connection with one or more disqualifying dispositions of Incentive Option
shares effected after the Effective Date, whether such Incentive Options were
granted under this Plan or the 1988 Plan.

                  D. The option/vesting acceleration provisions of Section III
of Article Two relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
which are outstanding under the 1988 Plan on the Effective Date of this Plan but
which do not otherwise provide for such acceleration.

                  E. The Plan shall terminate upon the earlier of (i) January
13, 2002 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the outstanding options under the Plan. If the date of termination
is determined under clause (i) above, then all option grants outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.

IV.               USE OF PROCEEDS

                  Any cash proceeds received by the Company from the sale of
shares under the Plan shall be used for general corporate purposes.


V.                REGULATORY APPROVALS



                                       10
<PAGE>   11
                  A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of Common Stock upon the exercise or surrender
of the option grants made hereunder shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it, and the Common
Stock issued pursuant to it.

                  B. No shares of Common Stock or other assets shall be issued
or delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and State securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which stock of the same class is then
listed.


VI.               NO EMPLOYMENT/SERVICE RIGHTS

                  Neither the action of the Company in establishing the Plan,
nor any action taken by the Plan Administrator hereunder, nor any provision of
the Plan shall be construed so as to grant any individual the right to remain in
the employ or service of the Corporation (or any parent or subsidiary
corporation) for any period of specific duration, and the Corporation (or any
parent or subsidiary corporation retaining the services of such individual) may
terminate such individual's employment or service at any time and for any
reason, with or without cause.


VII.              MISCELLANEOUS PROVISIONS

                  A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any Optionee.

                  B. The provisions of the Plan shall be governed by the laws of
the State of California, as such laws are applied to contracts entered into and
performed in such State.

                  C. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.



                                       11
<PAGE>   12

Schedule A

                           Companies Participating in
                      International Employee Stock Purchase
                                      Plan



<TABLE>
<CAPTION>
Name                                                           Jurisdiction of Incorporation
----                                                           -----------------------------
<S>                                                            <C>
Nihon Synopsys KK                                                                      Japan
Synopsys Consulting SARL                                                              France
Synopsys Finland OY                                                                  Finland
Synopsys GmbH                                                                        Germany
Synopsys (India) Private Limited.                                                      India
Synopsys International, Inc.                                                        Barbados
Synopsys International Limited                                                       Ireland
Synopsys Ireland Limited                                                             Ireland
Synopsys Ireland Resources                                                           Ireland
Synopsys Italia, S.r.l.                                                                Italy
Synopsys Korea, Inc. (Yuhan Hoesa Synopsys Korea)                                      Korea
Synopsys (Northern Europe) Limited                                            United Kingdom
Synopsys SARL                                                                         France
Synopsys Scandinavia AB                                                               Sweden
Synopsys Services SARL                                                                France
Synopsys (Singapore) Pte. Limited.                                                 Singapore
Synopsys Israel Limited                                                               Israel
Synopsys (India) EDA Software Private Limited                                          India
Synopsys Denmark ApS                                                                 Denmark
Synopsys Leda SARL                                                                    France
Synopsys Taiwan Limited                                                               Taiwan
</TABLE>



                                       1