Exhibit 10.5


 


SYNOPSYS


 


DEFERRED COMPENSATION PLAN


 


 


As Restated Effective


 


August 1, 2002


 

















 


TABLE OF
CONTENTS


 


	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
   

  
	
   

  	
  1.1

  	
  Account

  	
   

  
	
   

  	
  1.2

  	
  Avant! Plan

  	
   

  
	
   

  	
  1.3

  	
  Base Pay

  	
   

  
	
   

  	
  1.4

  	
  Beneficiary

  	
   

  
	
   

  	
  1.5

  	
  Code

  	
   

  
	
   

  	
  1.6

  	
  Committee

  	
   

  
	
   

  	
  1.7

  	
  Company

  	
   

  
	
   

  	
  1.8

  	
  Contributions

  	
   

  
	
   

  	
  1.9

  	
  Deferral Period

  	
   

  
	
   

  	
  1.10

  	
  Distributable Amount

  	
   

  
	
   

  	
  1.11

  	
  Eligible Employee

  	
   

  
	
   

  	
  1.12

  	
  ERISA

  	
   

  
	
   

  	
  1.13

  	
  Fiscal Year

  	
   

  
	
   

  	
  1.14

  	
  Fund or Funds

  	
   

  
	
   

  	
  1.15

  	
  Fund Return

  	
   

  
	
   

  	
  1.16

  	
  Initial Election Period

  	
   

  
	
   

  	
  1.17

  	
  Insurable Participant

  	
   

  
	
   

  	
  1.18

  	
  Participant

  	
   

  
	
   

  	
  1.19

  	
  Plan

  	
   

  
	
   

  	
  1.20

  	
  Plan Year

  	
   

  
	
   

  	
  1.21

  	
  Retirement

  	
   

  
	
   

  	
  1.22

  	
  Target Compensation

  	
   

  
	
   

  	
  1.23

  	
  Variable Pay

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III CONTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Elections to Defer
  Compensation

  	
   

  
	
   

  	
  3.2

  	
  Suspension of
  Compensation Deferrals

  	
   

  
	
   

  	
  3.3

  	
  Company
  Discretionary Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV INVESTMENT ELECTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Participant
  Investment Designation

  	
   

  
	
   

  	
  4.2

  	
  Change in Investment
  Designation

  	
   

  
	
   

  	
  4.3

  	
  Company
  Responsibility for Investment Alternatives

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Participant Accounts

  	
   

  
	
   

  	
  5.2

  	
  Trust Funding

  	
   

  



 


i

















 


	
  ARTICLE VI VESTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Base Pay and
  Variable Pay Deferrals

  	
   

  
	
   

  	
  6.2

  	
  Company Contributions

  	
   

  
	
   

  	
  6.3

  	
  Avant!
  Plan Portion of a Participant’s Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Distributions
  from Avant! Plan Portion of a Participant’s Account

  	
   

  
	
   

  	
  7.2

  	
  Distributions Other than from Avant!
  Plan Portion of a Participant’s Account

  	
   

  
	
   

  	
  7.3

  	
  Changes in Form of
  Distribution

  	
   

  
	
   

  	
  7.4

  	
  No Election of
  Distribution Form

  	
   

  
	
   

  	
  7.5

  	
  Death Benefits

  	
   

  
	
   

  	
  7.6

  	
  Early Distributions

  	
   

  
	
   

  	
  7.7

  	
  Unforeseeable Emergency

  	
   

  
	
   

  	
  7.8

  	
  Inability To Locate A
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Committee

  	
   

  
	
   

  	
  8.2

  	
  Committee Action

  	
   

  
	
   

  	
  8.3

  	
  Powers and Duties
  of the Committee

  	
   

  
	
   

  	
  8.4

  	
  Construction and Interpretation

  	
   

  
	
   

  	
  8.5

  	
  Information

  	
   

  
	
   

  	
  8.6

  	
  Compensation, Expenses and Indemnity

  	
   

  
	
   

  	
  8.7

  	
  Quarterly Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Unsecured General Creditor

  	
   

  
	
   

  	
  9.2

  	
  Restriction Against
  Assignment

  	
   

  
	
   

  	
  9.3

  	
  Withholding

  	
   

  
	
   

  	
  9.4

  	
  Disputes

  	
   

  
	
   

  	
  9.5

  	
  Amendment,
  Modification, Suspension or Termination

  	
   

  
	
   

  	
  9.6

  	
  Governing Law

  	
   

  
	
   

  	
  9.7

  	
  Receipt or Release

  	
   

  
	
   

  	
  9.8

  	
  Payments on
  Behalf of Incapacitated Persons

  	
   

  
	
   

  	
  9.9

  	
  No Employment Rights

  	
   

  
	
   

  	
  9.10

  	
  Department of Labor
  Determination

  	
   

  
	
   

  	
  9.11

  	
  Headings, etc. Not
  Part of Agreement

  	
   

  



 


ii

















 


SYNOPSYS


 


DEFERRED
COMPENSATION PLAN


 


Synopsys, Inc. (the
“Company”) acting on behalf of itself and its designated subsidiaries maintains
the Synopsys Deferred Compensation Plan (the “Plan”).  The Plan was originally effective as of September 30, 1996,
and has been most recently restated effective as of October 29, 2000.  On August 1, 2002 the Avant!
Corporation Executive Deferred Compensation Plan (the “Avant! Plan”) was merged
with and into the Plan.  The Company
hereby amends and restates the Plan, effective as of August 1, 2002,
except as otherwise stated herein.


 


RECITALS


 


1.                                       The
Company currently maintains the Plan, a supplemental retirement plan for the
benefit of selected highly compensated employees or others as designated by the
Company.


 


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


 


3.                                       Under
the Plan, the Company pays all of the accrued benefits from its general assets.


 


4.                                       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.


 


5.                                       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.


 


6.                                       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 utilization shall be made in accordance with the
procedures set forth herein.


 


7.                                       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.


 


8.                                       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.


 


9.                                       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 restate the Plan as follows:


 


ARTICLE I


 


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, (iv) amounts transferred to the Plan
from the Avant! Plan, and (v) adjustments to reflect deemed gains or
losses pursuant to Section 5.1(c).


 


1.2                                 Avant! Plan. 
“Avant! Plan” means the Avant! Corporation Executive Deferred
Compensation Plan, which was merged into the Plan on August 1, 2002.


 


1.3                                 Base Pay. 
“Base Pay” means the non-variable portion of an Eligible Employee’s
annual compensation.


 


1.4                                 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.


 


1.5                                 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 administrative Committee formed in accordance with
ARTICLE VIII consisting of senior representatives from the departments of
Human Resources, Legal and Finance.


 


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                                 Contributions. 
“Contributions” means Base Pay or Variable Pay that a Participant elects
to defer to the Plan pursuant to Section 3.1 below, plus discretionary
contributions contributed to the Participant’s Account by the Company pursuant
to Section 3.3 below.


 


2

















 


1.9                                 Deferral Period.  “Deferral Period” means, for each Plan Year, (i) the period
from the first day of such Plan Year through December 31st of the calendar
year ending within that Plan Year, or (ii) the period from
January 1st of the calendar year that begins within the Plan Year through
the last day of that Plan Year.


 


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


 


1.11                           Eligible Employee.  “Eligible Employee” for a Plan Year means (i) a common law
employee of the Company performing services regularly in the United States of
America whose Target Compensation equals or exceeds, as of the August 1st
immediately preceding the Plan Year, a dollar amount to be determined for each
Plan Year by the Committee, or (ii) any other employee or category of
employee designated by the Committee. 
Notwithstanding the foregoing, the Committee may determine in writing
that an otherwise Eligible Employee shall not be eligible to participate in the
Plan.


 


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


 


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


 


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


 


1.15                           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.


 


1.16                           Initial Election Period.  “Initial Election Period” for an Eligible
Employee means the period beginning on the Eligible Employee’s initial date of
eligibility and ending thirty (30) days thereafter.


 


1.17                           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 7.5(a).


 


1.18                           Participant. 
“Participant” means any Eligible Employee or other individual for whom
an Account is maintained under the Plan.


 


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


 


1.20                           Plan Year. 
“Plan Year” means the twelve (12)-consecutive-month period beginning
with the first day of each Fiscal Year of the Company and ending on the last
day of such Fiscal Year.


 


3

















 


1.21                           Retirement.  “Retirement” means termination of employment with the Company on
or after attaining age fifty-five (55).


 


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


 


1.23                           Variable Pay.  “Variable
Pay” means any variable compensation including commissions, sales bonuses
and/or other incentive compensation that is payable in addition to the
Participant’s Base Pay.  Variable Pay
shall not include (a) retention bonuses, (b) other bonuses subject to
repayment as a result of a specified future event (including sign-on bonuses
and relocation bonuses), and (c) severance payments.


 


ARTICLE II


 


PARTICIPATION


 


An Eligible Employee shall
become a Participant in the Plan by (1) electing to defer all or a portion
of his or her compensation in accordance with Section 3.1, and (2) if
required by the Committee in its sole and absolute discretion, by filing a life
insurance application form 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 commence participation in the Plan as of the first day
of the month in which 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 7.5(a) of the Plan.


 


ARTICLE III


 


CONTRIBUTIONS


 


3.1                                 Elections to Defer Compensation.


 


(a)                                  Initial
Election Period.  Each Eligible
Employee may initially elect to defer compensation for any Deferral Period
occurring during a Plan Year which next follows his or her Initial Election
Period, by filing with the Committee an election for such Deferral Period(s)
that conforms to the requirements of this Section, by such means as are
approved by the Committee, no later than the last day of his or her Initial
Election Period.


 


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


 


4

















 


(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) amounts necessary to satisfy any other benefit plan
withholding obligations, (C) any resulting income taxes payable with
respect to compensation that cannot be so deferred, and (D) any amounts
necessary to satisfy any wage garnishment or similar type obligations.  Until an Eligible Employee (other than an
Eligible Employee who has not been required to file an insurance application
pursuant to ARTICLE II, or who has been determined not to be an Insurable
Participant) completes an application for life insurance, any deferral election
made by the Eligible Employee pursuant to this Section shall be void.


 


(c)                                  Deferral
Election Priority.  Deferral
elections to the Plan shall be computed before taking into account any
reduction in taxable income by salary deferral to  the Synopsys Employee Stock Purchase Program or to plans
sponsored by the Company under Code Sections 125 or 401(k).


 


(d)                                 Minimum
Deferrals.  For each Plan Year
during which the Eligible Employee is a Participant, the minimum dollar amount
that may be deferred under this Section is Five Thousand Dollars ($5,000),
to be satisfied based on deferrals of Base Pay and/or Variable Pay during one
or both Deferral Periods occurring within a 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
the initial election which occurs within that Deferral Period for which the
election is made, and to (ii) Variable Pay payable during that Deferral
Period for which the election is made. 
At the discretion of the Committee, certain Variable Pay may be deferred
which is payable in the first Plan Year of eligibility (even though such
variable pay was earned in a prior period).


 


(f)                                    Duration
of Base Pay Deferral Election or Variable Pay Deferral Election.  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.  In such a case, the
percentage or dollar amount of Base Pay or Variable Pay designated by the
Participant in his or her deferral election may be amended or discontinued by
filing a new election, in accordance with the terms of this Section, with the
Committee at least fifteen (15) days prior to the beginning of 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
(i) the Participant ceasing to be eligible


 


5

















 


to participate in the Plan, or (ii) the
Participant’s election to discontinue all deferrals for any subsequent Deferral
Period.


 


(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, and any Eligible Employee who has suspended a prior
deferral election may elect to again defer compensation, by filing an election
on a form or by such other means as approved by the Committee, as described in
paragraph (b) above.  An election
to defer compensation must be filed at least fifteen (15) days before the
beginning of a specific Deferral Period and will be effective for Base Pay
earned during pay periods beginning after such Deferral Period begins, and
Variable Pay paid during such Deferral Period.


 


3.2                                 Suspension of Compensation
Deferrals.


 


(a)                                  Automatic
Suspension.  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 Internal Revenue Code of 1986, as amended (the
“401(k) Plan”), the Participant’s compensation deferrals under this Plan (if
any) shall be suspended for a period of 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 be not be so suspended if the Committee determines that such
suspension is not required in order to preserve the tax-qualification of the
401(k) Plan.


 


(b)                                 Permissible
Suspension.  In the event that a
Participant incurs an Unforseeable Emergency (as defined in Section 7.7),
the Committee, in its sole discretion, may suspend the Participant’s compensation
deferrals for the remainder of the Plan Year. 
However, an election to make compensation deferrals under
Section 3.1 shall be irrevocable as to amounts deferred as of the
effective date of any suspension in accordance with this Section.


 


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 IV


 


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


 


6

















 


offered under the Plan.  The Fund Return of each Fund shall be used to determine the
amount to be credited to the Participants’ 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 at the time and in the manner
specified by the Committee.  Elections
made by 11:59 P.M. PST shall be effective the next business day.


 


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


 


ARTICLE V


 


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 assure that the
investment fund subaccounts of the Participant’s Account 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 paid 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.


 


(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 or losses in an amount equal
to that determined by multiplying the balance credited to such investment fund
subaccount as of the last day of the preceding month by the Fund Return
(positive or negative) for the corresponding Fund.


 


7

















 


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 contributions 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 least once each quarter. 
The amount of any quarterly contribution shall be at the discretion of
the Committee.  At the close of each
Plan Year, the Company shall make an additional contribution to the Trust to
the extent that previous contributions to the Trust for such Plan Year are not
at least equal to the total amount deferred by Plan Participants for such Plan
Year plus Company contributions, if any, accrued as of the close of such Plan
Year.  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 and 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 VI


 


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 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.


 


6.3                                 Avant! Plan Portion of a Participant’s
Account.  The portion of a
Participant’s Account originally accrued under the Avant! Plan and transferred
to the Plan, together with any earnings credited to the Participant’s Account
under Section 5.1(c) with respect to such amounts, shall be one hundred
percent (100%) vested at all times.


 


8

















 


ARTICLE VII


 


DISTRIBUTIONS


 


7.1                                 Distributions from Avant! Plan Portion
of a Participant’s Account.


 


(a)                                  Any
election by a Participant to receive or commence receiving distribution of all
or a portion of the amounts originally contributed to the Avant! Plan and
transferred to the Plan shall remain in effect until such time as all such
distributions have been made in accordance with the prior election.


 


(b)                                 If
a Participant wishes to change the time or form of the distribution of amounts
transferred from the Avant! Plan to this Plan, any such change must meet the
requirements of Section 7.2, both with respect to the timing of the change
and the optional forms of distribution available.  Once such a change has been made, the Participant may not choose
to re-elect the time or form of distribution previously elected under the Avant!
Plan with respect to such amounts.


 


7.2                                 Distributions Other than from Avant! Plan
Portion of a Participant’s Account.


 


(a)                                  Distribution
Election and Minimum Requirements. 
At the time a Participant makes an election to defer a portion of his or
her Base Pay or Variable Pay for a Plan Year, he or she shall 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
employment or upon Retirement.  If, at
the date of the Participant’s termination of 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 of his or her termination of 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 paragraphs (c) through (e) below shall apply.


 


(b)                                 Payment
of Scheduled In-Service Withdrawals.


 


(i)             If a Participant
elects a Scheduled In-Service Withdrawal with respect to his or her Base Pay or
Variable Pay for 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
attributable to Contributions in the Plan Year for which the election form
applies.


 


(ii)          The scheduled
distribution date must be two (2) years or more from the election date.  A Participant may delay receipt of a
Scheduled In-Service Withdrawal by filing a subsequent election, provided that
his or her subsequent election is filed with the Committee at least one (1)
year (365 days) prior to his or her scheduled distribution date.


 


9

















 


(iii)       A Participant may revoke a
Scheduled In-Service Withdrawal election and instead elect distribution upon
termination of employment or Retirement in accordance with paragraphs (c) and
(d) below; provided that, in order to be valid, such election must be filed
with the Committee at least one (1) year (365 days) prior to the Participant’s
termination of employment.


 


(iv)      Notwithstanding the
foregoing, if the Participant terminates employment with the Company for any
reason prior to the payment of a Scheduled In-Service Withdrawal, then the
Participant’s Retirement or termination payment election shall apply with
respect to any unpaid amounts.


 


(c)                                  Payment
Upon Termination of Employment for Any Reason Other Than Retirement, Death or
Long-Term Disability.  If the
Participant terminates employment with the Company for any reason other than
Retirement, death or long-term disability (as defined in the Company’s
long-term disability plan), then, subject to the requirements of
paragraph (a) above, the Participant may elect distribution of his or her
Distributable Amount in one of the following forms of payment:


 


(i)             a lump sum payable
within ninety (90) days of the Participant’s termination of employment; or


 


(ii)          substantially equal
annual installments over a period of five (5) years beginning within ninety
(90) days of the Participant’s termination of employment.


 


(d)                                 Payment
Upon Termination of Employment as a Result of Retirement or Long-Term
Disability.


 


(i)             In the case of a
Participant who terminates employment with the Company as a result of
Retirement or long-term disability (as defined in the Company’s long-term
disability plan), the Participant’s Distributable Amount shall be paid to the
Participant, at the Participant’s election, and subject to the requirement of
paragraph (ii) below in the form of:


 


(1)                                  a
cash lump sum payable within ninety (90) days of the Participant’s termination
of employment; or


 


(2)                                  substantially
equal annual installments over five (5), ten (10) or fifteen (15) years
beginning within ninety (90) days of the Participant’s termination of
employment.


 


(ii)          If the Participant has
terminated employment with the Company as a result of Retirement or long-term
disability, and if the Participant has elected annual installments, then at the
time distribution is to commence:


 


(1)                                  the
Committee shall aggregate the distribution amounts that the Participant has
elected to be paid in fifteen (15) annual installments.  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 fifteen (15) annual installments
beginning within ninety (90) days 


 


10

















 


of the Participant’s
termination of employment.  If the total
distributable amount of such elections is less than One Hundred Thousand
Dollars ($100,000), then such amount will, subject to paragraphs (2) and
(3) below, be paid to the Participant in ten (10) annual installments beginning
within ninety (90) days of the Participant’s termination of employment.


 


(2)                                  the
Committee shall aggregate the distribution amounts that the Participant has
elected to be paid in ten (10) annual installments plus any amount scheduled to
be paid in ten (10) annual installments in accordance with paragraph (1)
above.  If the total of such amounts
equals or exceeds One Hundred Thousand Dollars ($100,000), then such amount
will be paid to the Participant in ten (10) annual installments beginning
within ninety (90) days of the Participant’s termination of employment.  If the total of such amounts is less than
One Hundred Thousand Dollars ($100,000), then such amount will, subject to
paragraph (3) below, be paid to the Participant in five (5) annual
installments beginning within ninety (90) days of the Participant’s termination
of employment.


 


(3)                                  the
Committee shall aggregate the distribution amounts that the Participant has
elected to be paid in five (5) annual installments plus any amounts scheduled
to be paid in five (5) annual installments in accordance with
paragraph (2) above.  If the total
of such amounts equals or exceeds Fifty Thousand Dollars ($50,000), then such
amount will be paid to the Participant in five (5) annual installments
beginning within ninety (90) days of the Participant’s termination of
employment.  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 of
the Participant’s termination of employment.


 


7.3                                 Changes in Form of Distribution.


 


(a)                                  Changes
to Scheduled In-Service Withdrawals may only be made as set forth in Sections
7.2(b)(ii) and 7.2(b)(iii).


 


(b)                                 A
Participant entitled to payment as a result of termination of employment or
Retirement may change his or her form of distribution to one of the optional
forms listed in Section 7.2(c) or 7.2(d) above, as applicable, provided
that his or her election is filed with the Committee at least one (1) year (365
days) prior to his or her termination of employment. To the extent the
Distributable Amount is paid in installments, the Participant’s Account shall
continue to be credited with earnings monthly pursuant to Section 5.1(c),
and the installment amount shall be adjusted to reflect changes in the Account
balance until all amounts credited to his or her Account under the Plan have
been distributed.


 


7.4                                 No Election of Distribution Form.  If, at the time of the Participant’s
termination of employment with the Company, the Participant has made no
election as to the 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
the Participant’s termination of employment is a result of Retirement or long-term
disability, and the Participant’s Distributable Amount is less than Fifty
Thousand Dollars


 


11

















 


($50,000), then the Participant’s Distributable Amount
will be paid to the Participant in a cash lump sum payable within ninety (90)
days of the Participant’s termination of employment;


 


(b)                                 If
the Participant’s termination of employment is a result of Retirement or
long-term disability, 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 of the Participant’s termination of
employment; or


 


(c)                                  If
the Participant’s termination of employment is for reasons other than
Retirement or long-term disability then, regardless of the value of the
Participant’s Distributable Amount at the time of his or her termination of
employment, the Participant’s Distributable Amount will be paid to the
Participant in a cash lump sum payable within ninety (90) days of the
Participant’s termination of employment.


 


7.5                                 Death Benefits.


 


(a)                                  In
the case of a Participant who dies while employed by the Company, that portion
of the death benefit of any life insurance policy purchased by the Company to
insure the life of the Participant (the “Policy”) which is equal to the lesser
of (i) the actual 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 Policy by the insurance company that issued
the Policy.  Any such 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 paragraph (c) below) with
respect to the portion of the Policy proceeds described in the preceding
sentence in the event the Participant dies prior to terminating employment with
the Company.  Subject to paragraph (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 1.4)
on a form provided by and filed with the insurance company, and the life
insurance proceeds designated in this paragraph shall be paid to such
beneficiary.


 


(b)                                 The
benefit payable pursuant to paragraph (a) shall be paid only if a 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 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 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 paragraph (a): any such amounts shall be payable
solely from the proceeds of the Policy, and if no Policy is in force, no
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


 


12

















 


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 Policy insuring his or her life.  Furthermore, the Company is not obligated to maintain any Policy;
and no death benefit shall be payable hereunder if the Company has been
notified by the Committee to discontinue the Policy for the Participant.  In addition, no Policy shall be allocated to
any Account.


 


(d)                                 On
the death of a Participant, any balance remaining in the Participant’s Account
shall be paid to his or her Beneficiary or Beneficiaries in a lump sum as soon
as administratively feasible.


 


7.6                                 Early Distributions.  A Participant who has not terminated employment
with the Company, or a Participant who is no longer employed by the Company and
who is receiving payment of his or her Account pursuant to Section 7.1(a),
7.2(c) or 7.2(d), may request a withdrawal of amounts credited to his or her
Account (an “Early Distribution”), subject to the following restrictions:


 


(a)                                  The
request to receive an Early Distribution shall be made by filing a form
provided by and filed with the Committee (or by such other means as approved by
the Committee) prior to the end of any calendar month.


 


(b)                                 The
amount payable to a Participant in connection with an Early Distribution shall
in all cases equal ninety percent (90%) of the amount requested by the
Participant; provided that the maximum amount payable to a Participant in
connection with an Early Distribution shall be ninety percent (90%) of the
Participant’s Distributable Amount as of the end of the calendar month in which
the Early Distribution request is made.


 


(c)                                  The
amount described in paragraph (a) above shall be paid in a single cash
lump sum as soon as practicable after the end of the calendar month in which
the Early Distribution request is received.


 


(d)                                 If
a Participant receives an Early Distribution, the remaining portion of the
requested amount (i.e., ten percent (10%) of such amount), shall be permanently
forfeited and the Company shall have no obligation to the Participant or his or
her Beneficiary with respect to such forfeited amount.


 


(e)                                  If
a Participant receives an Early Distribution, the Participant shall be ineligible
to defer for the balance of the Plan Year in which the Early Distribution
occurs and the following Plan Year.


 


(f)                                    A
Participant shall be limited to a maximum of two (2) Early Distributions during
all of his or her periods of participation in the Plan.


 


13

















 


7.7                                 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, as set forth in
Section 3.2(b).


 


(b)                                 “Unforeseeable
Emergency” shall mean an unforeseeable, severe financial condition resulting
from (i) a sudden and unexpected illness or accident of the Participant or
his or her dependent(s) (as defined in Section 152(a) of the Code);
(ii) loss of the Participant’s property due to casualty; or
(iii) other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant, but which may not
be relieved through other available resources of the Participant, as determined
by 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.


 


7.8                                 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.


 


ARTICLE VIII


 


ADMINISTRATION


 


8.1                                 Committee. 
The number of Committee members may vary from time to time.  A member of the Committee may resign by
delivering a written notice of resignation to the Chairperson of the
Committee.  The Committee may remove, by
affirmative vote of a majority, any member by delivering a certified copy of
its resolution of removal to such member. 
Additional Committee members may be added or vacancies in the membership
of the Committee may be filled by any Committee member’s nomination of a
prospective member approved by affirmative vote of a majority of the existing
Committee members.


 


8.2                                 Committee Action.  The Committee shall act at meetings by affirmative vote of a
majority of the members of the Committee. 
Any action permitted to be taken at a meeting may be taken without a meeting
if, prior to such action, a written consent to the action is signed by all
members of the Committee and such written consent is filed with the minutes of
the proceedings of 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 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.


 


14

















 


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, and


 


(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.


 


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.


 


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.


 


15

















 


(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.


 


(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 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.


 


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 IX


 


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 fulfilling 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


 


16

















 


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.


 


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.


 


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.


 


(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 paragraph (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.


 


17

















 


(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 the picking 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
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 award may be enforced in
any appropriate court as soon as possible after its rendition.  If an action is brought to confirm the
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


 


18

















 


Participant’s Account.  In the event that the Plan is terminated, then in the sole
discretion of the Committee, the time the amounts credited to a Participant’s
Account are to be distributed may be accelerated.


 


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 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 ineligible, that is, not a member
of a select group of management or highly compensated employees or is otherwise
ineligible, according to a determination made by the Department of Labor, the
Committee shall take whatever steps it deems necessary, in its sole discretion,
to equitably protect the interests of the affected Participant.


 


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.


 


* * * * * * * * * * *


 


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IN WITNESS WHEREOF, the
Company has caused this document to be executed by its duly authorized officer
effective as of August 1, 2002.


 


	
   

  	
  SYNOPSYS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Rowley

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard Rowley

  	
  VP, Corporate
  Controller

  
					



 


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