EXHIBIT
10.18


SYNOPSYS


DEFERRED COMPENSATION PLAN II


EFFECTIVE
JANUARY 1, 2005





















TABLE OF CONTENTS


 




	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
  Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
  Base
  Pay

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
  Beneficiary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
  Change
  in Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
  Code

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
  Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.8

  	
  Compensation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.9

  	
  Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.10

  	
  Deferral
  Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.11

  	
  Disabled

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.12

  	
  Distributable
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.13

  	
  Eligible
  Employee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.14

  	
  ERISA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.15

  	
  Fiscal
  Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.16

  	
  Fund
  or Funds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.17

  	
  Fund
  Return

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.18

  	
  Initial
  Election Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.19

  	
  Insurable
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.20

  	
  Key
  Employee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.21

  	
  Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.22

  	
  Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.23

  	
  Plan
  Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.24

  	
  Retirement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.25

  	
  Target Compensation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.26

  	
  Variable
  Pay

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
  Elections
  to Defer Compensation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Initial
  Election Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  General
  Rule

  	
   

  






 


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  (c)

  	
  Deferral
  Election Priority

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Minimum
  Deferrals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Effect
  of Initial Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Duration
  of Base Pay Deferral Election or Variable Pay Deferral Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Elections
  Other Than Elections During the Initial Election Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Special
  Rules for Deferral Elections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
  Cancellation
  of Compensation Deferrals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Automatic
  Cancellation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Permissible
  Cancellation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Section
  409A Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Trustee
  Duties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Employee
  Deferrals and Company Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  General
  Creditors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  VESTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
  Base
  Pay and Variable Pay Deferrals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
  Company
  Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
  Distributions
  from a Participant’s Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Distribution
  Election and Minimum Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Payment
  of Scheduled In-Service Withdrawals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Payment
  Upon Termination of Employment for Any Reason Other Than Retirement, Death or
  Long-Term Disability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Payment
  Upon Termination of Employment as a Result of Retirement or Long-Term
  Disability

  	
   

  






 


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  7.2

  	
  Changes
  in Form or Time of Distribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
  Default
  Provisions If No Election of Form of Distribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
  Death
  Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
  Unforeseeable
  Emergency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
  Inability
  To Locate A Participant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.7

  	
  Key
  Employee Special Distribution Rule

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.8

  	
  Special
  Acceleration of Distribution Rules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.12

  	
  Compliance
  with Section 409A of the Code

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.13

  	
  Electronic
  or Other Forms

  	
   

  






 


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SYNOPSYS


DEFERRED
COMPENSATION PLAN II


SYNOPSYS, INC. (the “Company”) acting on behalf of itself and its designated
subsidiaries hereby adopts the SYNOPSYS
DEFERRED COMPENSATION PLAN  II
(the “Plan”).  The Plan is
effective January 1, 2005.


RECITALS


1.             The Company intends to maintain the Plan as a
supplemental retirement plan for the benefit of selected highly compensated
employees and such other employees as may be 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 use of the Trust assets 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 adopt the Plan as follows:


 


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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,
and (iv) adjustments to reflect deemed gains or losses pursuant to Section
5.1(c).


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


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


1.4          Change in Control.  “Change in
Control” means


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


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


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


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


The term “Change in
Control” is to be interpreted in accordance with Section 409A of the Code and
regulations and guidance issued thereunder.


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


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


1.7          Company.  “Company”
means Synopsys, Inc., any successor corporation and any entity that is directly
or indirectly controlled by the Company or any entity in which the Company has
a significant equity or investment interest, as determined by the Company.


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


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


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


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


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


1.13        Eligible Employee.  “Eligible
Employee” for a Plan Year means (i) 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 October 1 immediately preceding
the first day of the Plan Year, a dollar amount to be determined for each Plan
Year by the Committee, or (ii) any other employee that is (x) designated by the
Committee as eligible to participate in the Plan (including by being within a
category of employee that has been so designated) and (y) notified by the
Committee of such eligibility. 
Notwithstanding the foregoing, the Committee may determine that an
otherwise Eligible Employee shall not be eligible to participate in the Plan or
shall be eligible to participate beginning on a later date than would otherwise
be provided by this Section 1.13.


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


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


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


1.17        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.


1.18        Initial Election Period.  “Initial
Election Period” for an Eligible Employee who becomes an Eligible Employee by
designation and notification pursuant to Section 1.13(ii) means the period
beginning on the later of (i) the date the Eligible Employee is first notified
by the Committee or the Committee’s delegate that the Eligible Employee is
eligible to participate in the Plan or (ii) the date the employee becomes an
Eligible Employee and ending thirty (30) days thereafter.


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


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


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


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


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


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


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


1.26        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


4





















and relocation bonuses), (c) severance payments and (d) except with
respect to commissions, payments made after the December 31st of the calendar
year in which the payment became earned and vested.


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ARTICLE
II



PARTICIPATION


An Eligible
Employee shall become a Participant in the Plan by (a) electing to defer all or
a portion of his or her Compensation, in accordance with Article III, and (b)
if required by the Committee in its sole and absolute discretion, by filing a
completed life insurance application along with his or her deferral election
form, and complying with such applicable medical underwriting requirements as
determined by a life insurance carrier elected by the Committee.  An Eligible Employee who completes the
requirements of the preceding sentence shall become a Participant in the Plan
as of the first day of the first month in which such Eligible Employee’s
Compensation is deferred.  In the event
it is determined by the Committee that the proposed life insurance policy, if
applicable, cannot be obtained in a cost efficient manner after medical
underwriting requirements have been met, the Participant shall not be eligible
to receive death benefits as provided under Section 7.4(a) of the Plan but
shall otherwise be eligible to participate in the Plan.


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ARTICLE
III



CONTRIBUTIONS 


3.1          Elections to Defer Compensation.


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


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


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


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


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


(c)           Deferral Election 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 Sections 125 or 401(k)
of the Code.


(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 by deferrals of Base Pay and/or Variable Pay during
one or both Deferral Periods occurring within a Plan Year.


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(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.


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


If the Participant
does amend or discontinue his or her deferral election for a Plan Year during
the applicable election period that precedes such Plan Year, the percentage or
dollar amount of Base Pay or Variable Pay designated by the Participant may be
amended or discontinued by filing a new election, in accordance with the terms
of this Section, with the third party administrator within the applicable
election period for the Plan Year which contains the Deferral Period for which
the election shall be in effect.  A
Participant’s deferral election shall terminate with respect to future Base Pay
or Variable Pay, as applicable, upon the earlier of (i) the Participant ceasing
to be eligible to participate in the Plan, or (ii) the Participant’s timely
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 defer
Compensation, by filing an election, as described in Section 3.1(b) above.  Such an election to defer Compensation must
be filed with the third party administrator within the applicable election
period for the relevant Plan Year and will be effective for Base Pay earned
during pay periods beginning after such Plan Year begins and Variable Pay paid
during the Plan Year.


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


(i)            This Section 3.1(h)(i) applies only to a
Participant who is notified by the Committee or the Committee’s delegate that
the Participant is eligible to make the elections described in this Section
3.1(h)(i) (“Eligible Participant”). 
Notwithstanding any other provision of the Plan to the contrary, for the
Plan Year beginning January 1, 2005 (the “2005 Plan Year”) only, an
Eligible Participant who elected to participate in the Plan for the 2005 Plan
Year by filing a deferral of Compensation election form (or who is deemed to
have filed such a 


8





















deferral of
Compensation election form pursuant to the deemed election procedures of
Section 3.1(f)) on or before December 31, 2004, may elect to cancel the
previously made deferral election for the 2005 Plan Year.  Such election to cancel a previously made
election for the 2005 Plan Year shall be made by filing a change in election
form with the third party administrator during the applicable election period,
but no later than December 31, 2005.


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


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


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


3.2          Cancellation of Compensation Deferrals.


(a)           Automatic Cancellation.  In the event
that a Participant receives a financial hardship withdrawal from the Synopsys
401(k) Savings and Success Sharing Plan or any other plan maintained by the
Company which contains a qualified cash or deferred arrangement under Section
401(k) of the Internal Revenue Code of 1986, as amended (the “401(k) Plan”),
the Participant’s Compensation deferrals under this Plan (if any) shall be
cancelled for a period of no less than six (6) months from the date that the
Participant receives such hardship withdrawal. 
Notwithstanding the foregoing, the Participant’s Compensation deferrals
under this Plan shall not be so cancelled if the Committee determines that such
cancellation is not required in order to preserve the tax-qualification of the
401(k) Plan.


9





















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


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


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.


10





















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 offered under the Plan.  The Fund Return of each Fund shall be used to
determine the amount to be credited to each Participant’s Account under Section
5.1(c).  In making the designation
pursuant to this Section, the Participant may specify that all or any whole
percentage of his or her Account be deemed to be invested in one or more of the
Funds selected by the Committee.


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


11





















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 cause the investment fund subaccounts of the Participant’s
Account to be credited with an amount equal to the Base Pay deferred by the
Participant during each pay period ending in that month and/or the Variable Pay
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.


5.2          Trust Funding.


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


(b)           Employee Deferrals and Company Contributions.  While the Plan
remains in effect, the Company shall make
contributions to the Trust at least once each quarter.  The amount of any quarterly contribution
shall be at the discretion of the Committee. 
Within three (3) months after the close of each Plan Year, the Company
shall make an additional contribution to the Trust to the extent that previous
contributions to the Trust for such Plan Year and all prior Plan Years are not
at least equal to the total amount deferred by Plan Participants for all such
Plan Years.  For the purposes of this
Section 5.2(b), the direct payment by the Company 


12





















of an obligation arising under the Plan shall be deemed to be a
contribution to the Trust.  The Trustee
shall not be liable for any failure by the Company to provide contributions
sufficient to pay all accrued benefits under the Plan in accordance with the
terms of the Plan.


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


13





















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.


14





















ARTICLE
VII



DISTRIBUTIONS


7.1          Distributions from a Participant’s Account.


(a)           Distribution Election and Minimum Requirements.  At the time a
Participant makes (or is deemed to make, pursuant to Section 3.1(f)) an
election to defer a portion of his or her Base Pay or Variable Pay for a Plan
Year, he or she also must elect to receive or commence receiving distribution
of Contributions for that Plan Year on a certain future date (a “Scheduled
In-Service Withdrawal”), upon termination of employment or upon Retirement and
the form in which such amount shall be paid. 
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 following 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 Sections 7.1(c) through
7.1(e) below shall apply. 
Notwithstanding the foregoing, if the Participant is a Key Employee,
then such Participant’s distribution will be subject to the restrictions of
Section 7.7.


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


(b)           Payment of Scheduled In-Service Withdrawals.


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


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


(iii)         A Participant may revoke a Scheduled
In-Service Withdrawal election and instead elect a later distribution upon
termination of employment or Retirement in 


15





















accordance with
Sections 7.1(c) and 7.1(d) below by filing an election pursuant to the
requirements of Section 7.2(a).


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


(c)           Payment Upon Termination of Employment for Any Reason
Other Than Retirement, Death or Long-Term Disability.  At the time
the Participant makes the election described in Section 7.1(a), the Participant
also must elect the form of distribution permitted under this Section 7.1(c) in
which the Participant’s benefits for termination of employment other than
Retirement, death of Disability shall be paid. 
If the Participant terminates employment with the Company for any reason
other than Retirement, death or Disability, then, subject to the minimum
distribution requirements of Section 7.1(a) above, the following forms of
payment are available to the Participant:


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


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


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


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


(i)            In the case of a Participant who
terminates employment with the Company as a result of Retirement or Disability,
the Participant’s Distributable Amount shall be paid to the Participant, at the
Participant’s election, and subject to the requirements of Section 7.1(d)(ii)
below in the form of:


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


16





















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


(ii)           If 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 following 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 following 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 following 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 following 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
following 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 following the
Participant’s termination of employment.


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


7.2          Changes in Form or Time of Distribution.


(a)           Changes to Scheduled In-Service
Withdrawals may be made only as set forth in this Section 7.2(a).  A change in the time of a Scheduled
In-Service Withdrawal shall be given effect only if the election to change the
distribution date (i) does not take effect until at least twelve (12) months
after the date on which the election change form is filed with the third party
administrator, (ii) the payment with respect to which such change in election
is made is 


17





















deferred for a
period of not less than five (5) years after the date such payment would
otherwise have been made, and (iii) the election change must be made at least
twelve (12) months prior to the date that such Scheduled In-Service Withdrawal
would otherwise have been made.


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


(c)           Except as otherwise provided by the
Committee, all distributions to a single Participant to be received in a single
calendar year shall be treated as a single payment and all installment
distributions to be paid in different calendar years shall be treated as
separate payments.


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


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


(b)           If the Participant’s termination of
employment is a result of Retirement or 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 following the
Participant’s termination of employment; or


(c)           If the Participant’s termination of
employment is for reasons other than Retirement or 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
following the Participant’s termination of employment.


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


18





















7.4          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 Section 7.4(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 Section 7.4(c) below, the
Participant shall have the right to designate and change such beneficiary
(which need not be his or her Beneficiary as determined under Section 1.3)
on a form provided by and filed with the insurance company, and the life
insurance proceeds designated in this Section 7.4(a) shall be paid to such
beneficiary.


(b)           The benefit payable pursuant to Section
7.4(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 Section 7.4(a); any such
amounts shall be payable solely from the proceeds of the Policy, and if no
Policy is in force, no such payment shall be made.


(c)           As of the beginning of each Plan Year,
the Committee shall review the existing Policies, and if a Participant or
Eligible Employee has not elected to make deferrals to the Plan and does not
have an Account balance under the Plan, then the Participant shall not be
entitled to name a Beneficiary for that Plan Year for any 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)           Following 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.


7.5          Unforeseeable Emergency.


(a)           If a Participant incurs an Unforeseeable
Emergency, the Committee may, in its sole and absolute discretion and at any
time, accelerate the date of distribution of a Participant’s Account or permit
a Participant to suspend his or her Contributions for the 


19





















remainder of the
Plan Year.  Notwithstanding the
foregoing, the suspensions of deferrals described in this Section 7.5(a) shall
be in compliance with the provisions of Section 3.2.


(b)           “Unforeseeable Emergency” shall mean an unanticipated
emergency that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant not covered by
insurance, liquidation of other assets (to the extent the liquidation itself
will not cause severe financial hardship) or cessation of deferrals under this
Plan, resulting from (i) a sudden and unexpected illness or accident of the
Participant or a dependent (as defined in Section 152(a) of the Code), (ii) a
loss of the Participant’s property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, all as determined in the sole discretion
of the Committee.


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


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


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


7.7          Key Employee Special Distribution Rule. 
Notwithstanding any provision of this Plan to the contrary,
distributions to a Key Employee as a result of termination of employment or
Retirement, whether the distribution is made in the form of a lump sum or
installments, shall not be made or the payments may not commence before the
date that is six (6) months following the date of the termination of employment
or Retirement, or, if earlier, the date of death of the Key Employee.


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


(a)           A payment may be accelerated if such
payment is made to an alternate payee pursuant to and following the receipt and
qualification of a domestic relations order as defined in Section 414(p) of the
Code.


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


20





















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


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


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


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


(2)       the date two and one half (21⁄2) months
after the Participant’s Termination of Employment with the Company;


(iii)         the amount of the payment is not greater
than Ten Thousand Dollars ($10,000); and


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


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


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


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


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


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


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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.


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;


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


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


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


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


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


8.6          Compensation, Expenses and Indemnity.


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


(b)           The Committee is authorized at the
expense of the Company to employ such legal counsel as it may deem advisable to
assist in the performance of its duties hereunder.  The Company shall pay expenses and fees in
connection with the administration of the Plan.


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


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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.


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


9.2          Restriction Against Assignment.  The Company
shall pay all amounts payable hereunder only to the person or persons
designated by the Plan and not to any other person or corporation.  No part of a Participant’s Account shall be
liable for the debts, contracts, or engagements of any Participant, his or her
Beneficiary, or successors in interest, nor shall a Participant’s Account be
subject to execution by levy, attachment, or garnishment or by any other legal
or equitable proceeding, nor shall any such person have any right to alienate,
anticipate, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever.  If
any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge any distribution or payment from the Plan, voluntarily or
involuntarily, the Committee, in its discretion, may cancel such distribution
or payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Committee shall
direct.  Notwithstanding the foregoing,
amounts may be distributed in accordance with Section 7.8(a) pursuant to a
qualified domestic relations order.


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 


25





















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


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


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


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


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(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 Participant’s
Account.  Notwithstanding the foregoing,
if there is a Change in Control and the successor employer, by resolution of
its board of directors, within twelve (12) months following the Change in
Control, elects to terminate the Plan, then the Account balances, or remaining
Account balances, of each Participant, whether such Participant is receiving
installment payments or not, shall be paid to the Participant in a single lump
sum payment.  Such lump sum payment shall
be made no later than sixty (60) days following the adoption of the resolutions
of the board of directors of the successor employer to terminate the Plan and
within twelve (12) months following the Change in Control.  If the lump sum distributions cannot be made
within the twelve (12) months following the Change in Control, then such
distributions shall not be made and distributions of Plan benefits shall be
made in accordance with the remaining provisions of the Plan.


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.


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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.


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


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


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IN WITNESS WHEREOF, the Company has caused this document to be executed by
its duly authorized officer effective as of November 14, 2005.


 




	
   

  	
  SYNOPSYS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rex Jackson

  	
   

  
	
   

  	
   

  	
  Rex Jackson 

  
	
   

  	
   

  	
  Senior Vice President
  and

  
	
   

  	
   

  	
  General Counsel

  






 


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