Document:

Exhibit
10.1

 

Execution
Copy

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

 

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT, made this 14th day of November, 2005 by and
among Merisant Worldwide, Inc., a Delaware corporation (“Parent”), Merisant
Company, a Delaware corporation and wholly owned subsidiary of Parent (the
“Company”), and Paul R. Block (the “Executive”).

WHEREAS,
the Executive and the Company entered into an Employment Agreement dated August
26, 2004 (the “Original Agreement”).

WHEREAS,
since the date of the Original Agreement (i) Parent has withdrawn its initial
public offering of income deposit securities, making inapplicable the 2004 IDS
Incentive Plan and (ii) effective as of November 8, 2004, the Executive became
the Chief Executive Officer of the Company.

WHEREAS,
the Executive and the Company desire to amend and restate the Original
Agreement in order to reflect such changes, as well as other matters agreed to
by the Executive, Parent and the Company.

IN
CONSIDERATION OF the mutual covenants herein contained, and other good and
valuable consideration, the parties hereto agree as follows:

1.             Employment.  The Company hereby employs the Executive, and
the Executive agrees to serve as an employee of the Company during the Period
of Employment, as defined in Section 2, in the position and with the duties set
forth in Section 3 and at the Company’s corporate headquarters.   During the Period of Employment, the
Executive also agrees to serve, if elected as a Director of the Board of
Directors of the Company (the “Board”) and the Board of Directors of any of the
Company’s subsidiaries or the Parent, as well as a member of any committee of
the Board or of any such Board of Directors to which the Executive may be
elected or appointed.  The Executive’s
nomination to stand for election to the Board or any such Board of Directors
shall be at the sole discretion of the Board and of the Board of Directors, as
applicable.  It is agreed and understood
that the Executive shall resign as a Director of the Company and any of its
subsidiaries and Parent immediately upon the termination of his employment
hereunder for any reason.

2.             Period
of Employment.  The Executive shall
be employed by the Company for the period commencing on September 27, 2004 (the
“Effective Date”) and ending on the third anniversary of the Effective
Date.  Commencing on the third
anniversary of the Effective Date and on each anniversary thereof, the
Employment Period shall be automatically extended by one year, unless (x) the
Executive gives the Company at least sixty (60) days’ prior written notice of,
or (y) the Company gives the Executive at least sixty (60) days’ prior written
notice of, in accordance with Section 13 hereof, the intention not to extend
the Period of Employment.  Notice by the
Company not to extend the Period of Employment shall not be treated as a
termination by the Company without Cause for purposes of Section 7.  The Period of Employment may be terminated
prior thereto as provided in Section 7. 

 

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3.             Position
and Duties.  The Executive shall
serve as the President and Chief Executive Officer of the Company and the
Parent, reporting to the Board and the Board of Directors of the Parent,
respectively, with duties, responsibilities and authority as are customarily
and ordinarily exercised by executives in similar positions in similar
businesses in the United States or any other duties and responsibilities of a
member of senior management of the Company or Parent, respectively, consistent
with the foregoing which may be assigned to the Executive by the Board and the
Board of Directors of the Parent. 
Subject to Section 7(e), nothing in the foregoing shall preclude the
Company or Parent from making any organizational and reporting changes it may
deem necessary or appropriate to most effectively operate the business of the
Company or Parent.  The Executive shall
perform faithfully and loyally and to the best of the Executive’s ability the
duties assigned to the Executive hereunder and shall devote the Executive’s
full business time, attention and efforts to the affairs of the Company and
Parent and its subsidiaries during the period of Employment, provided, however,
that the Executive may engage in activities involving professional, charitable,
educational, religious and similar types of organizations, speaking
engagements, membership on the board of directors of up to two (2) for-profit
organizations, and management of personal investments, to the extent that such
other activities do not materially interfere with the performance of
Executive’s duties under this Agreement, or conflict with the Code of Business
Conduct and Ethics of the Company or violate the terms of any of the covenants
contained in Section 8 or 9 hereof.

4.             Compensation.  

(a)           Base
Salary.  As compensation for the
services of the Executive hereunder, the Company shall pay to the Executive
during the Period of Employment an initial base salary at the annual rate of
four hundred thousand dollars ($400,000), payable in accordance with the
Company’s regular payroll practices.  The
base salary shall be reviewed annually by the Compensation Committee of the
Board at the same time as other senior officers of the Company.  The Company may not decrease the base salary
except as part of an across the board reduction in base salary applicable to
other senior officers of the Company so long 
as such reduction affecting the Executive is not, on a percentage basis,
higher than the average percentage reduction applied to the Company’s other
senior officers.

(b)           Target
Bonus.  In addition to the base
salary referred to in paragraph (a) of this Section, during the Period of
Employment, the Executive shall be eligible to receive an annual cash bonus in
accordance with the terms of the Company’s Annual Incentive Plan or other
annual bonus plan, as applicable, as determined by the Compensation Committee
of the Board, in its sole discretion, with a target bonus opportunity as a
percentage of base salary no less than one hundred percent (100%).  The performance criteria under the Annual
Incentive Plan or other annual bonus plan shall be determined by the
Compensation Committee of the Board in consultation with the Executive within
forty-five (45) days after the beginning of the applicable fiscal year.  The annual cash bonus in respect of any
fiscal year shall be paid in accordance with the procedures specified 

 

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                by
the Compensation Committee, but in no event later than two and one-half months
after the end of each fiscal year. 
Assuming the Executive’s employment does not terminate either by the
Executive without Good Reason or by the Company with Cause, the Executive is
guaranteed a bonus for 2005 at least $350,000. 
If the Executive’s employment is terminated by either the Executive
without Good Reason or the Company with Cause, no annual cash bonus shall be
payable.

(c)           Executive
Compensation Plans.  In addition to
the cash compensation provided for in paragraphs (a) and (b) of this Section,
subject to meeting eligibility provisions and to the provisions of this
Agreement, the Executive shall be entitled to be a participant in the Company’s
executive compensation plans generally available to senior officers of the
Company, as presently in effect or as they may be modified by the Company from
time to time, including, without limitation, the 2005 Share Appreciation Plan
as adopted by the Board of Directors of Parent or as the same may be modified
from time to time pursuant to the terms thereof (the “2005 Plan”), for so long
as such plans are in effect and any deferred compensation plans and
supplemental retirement plans.  Subject
to the approval of the Compensation Committee of the Board of Directors of
Parent, the Executive shall be granted (i) a First Level Appreciation Award of
434,749.5 Share Units, (ii) a Second Level Appreciation Award of 555,513 Share
Units and (iii) a Third Level Appreciation Award of 681,765.5 Share Units under
the 2005 Plan.

5.             Relocation
and Commuting Expense Reimbursement. 
The Executive may continue his residence in Fairfield, Connecticut and
commute to the Chicago area to be present in the Company’s offices on a
regularly scheduled basis on business days (excluding business travel).  The Company shall reimburse the Executive for
reasonable commuting expenses and for temporary housing in the Chicago
metropolitan area during the Employment Period. 
Notwithstanding the preceding, if the Executive and the Company agree it
is in the best interest of the Company for the Executive to relocate to
Chicago, a mutually agreeable relocation package will be provided to the
Executive.  In addition, the Executive
will be fully grossed-up by the Company for any imputed income required to be
recognized with respect to any amounts reimbursed to the Executive pursuant to
this Section 5 so that the economic effect to the Executive, after taking into
account any tax deductions available to the Executive, is the same as if this
reimbursement was provided to the Executive on a non-taxable basis.

6.             Employee
Benefits.

(a)           Vacation
and Sick Leave.  The Executive shall
be entitled to paid annual vacation and sick leave in accordance with the
Company’s policy for senior officers of the Company.  In any event, the Executive will be entitled
to a minimum of four (4) weeks paid vacation each fiscal year during the Period
of Employment, with a carryover of up to two (2) weeks per fiscal year.

(b)           Regular
Reimbursed Business Expenses.  The
Company shall reimburse the Executive for all expenses and disbursements reasonably
incurred by the 

 

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                Executive
in the performance of the Executive’s duties in accordance herewith during the
Period of Employment, and provide such other facilities or services as the
Company and the Executive may, from time to time, agree are appropriate, in
each case in accordance with the Company’s policies established from time to
time for senior officers of the Company.

(c)           Employee
Benefit Plans.  In addition to the
compensation provided for in Section 4 hereof, subject to meeting eligibility
provisions and to the provisions of this Agreement, the Executive shall be
entitled to participate in employee benefit plans, practices, policies and
programs and fringe benefits, on a basis no less favorable than that provided
to other senior officers of the Company.

(d)           Perquisites.  During the Period of Employment, the
Executive shall be entitled to (i) in accordance with the Company’s auto policy
for senior managers, an automobile allowance or use of a Company owned or
leased car and (ii) the perquisites generally made available to other senior
officers of the Company.

(e)           Right
to Change Plans.  Subject to Section
7(e), nothing in this Agreement shall be construed to limit, condition or
otherwise encumber the rights of the Company or Parent to amend, discontinue,
substitute or maintain any benefit plan, program or perquisite. 

7.             Termination.

(a)           Accrued
Benefits.  In the event of the
termination of the Executive’s Period of Employment hereunder for any reason,
the Executive (or his estate or representative, as applicable) shall be
entitled to receive his Accrued Benefits. 
For purposes of this Agreement, “Accrued Benefits” means collectively
the following:  (i) any earned but unpaid
base salary through the last day of the Period of Employment, (ii) any earned
but unpaid annual cash bonus or other incentive award for the fiscal year prior
to the fiscal year during which the Period of Employment ends, (iii) any
accrued but unpaid vacation pay, (iv) any reimbursable business expenses or
unpaid perquisites through the last day of the Period of Employment, (v) any
vested benefits through the last day of the Period of Employment in accordance
with the Company’s employee benefit plans or programs and executive compensation
plans, and (vi) any benefit continuation and/or conversion rights in accordance
with the Company’s employee benefit plans or programs.

(b)           Termination
on Account of Death or Disability. 
If during the Period of Employment the Executive’s employment terminates
on account of death or Disability, the Period of Employment shall be
immediately terminated and the Executive, or the Executive’s estate or
representative, as applicable, shall be entitled under this Agreement to be
paid: (i) within thirty (30) days of such termination, his Accrued Benefits and
(ii) within two and one-half months following the end of the Company’s fiscal
year in which the termination of the Executive’s employment occurs, a lump sum
cash 

 

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                amount
equal to the result of multiplying (x) the bonus the Executive would have
received under the Company’s Annual Incentive Plan or other annual bonus plan
for such fiscal year, based on the performance criteria set forth in such
annual bonus plan for such fiscal year determined as if all conditions
applicable to said bonus had been met and as if Executive remained employed
through such fiscal year by (y) a fraction, the numerator of which is the
number of days elapsed in the fiscal year in which the termination of
employment occurs through the date of termination, and the denominator of which
is 365 reduced, if applicable, by any amounts paid from Company’s Annual
Incentive Plan or other annual bonus plan for the fiscal year in which termination
of employment occurs.

(c)           Termination
Without Cause.  The Company may
terminate the Period of Employment without Cause at any time upon sixty (60)
days’ prior written notice to the Executive. 
If the Company should terminate the Period of Employment without Cause
prior to a Change in Control or more than eighteen (18) months after a Change
in Control, the Executive shall be entitled to his Accrued Benefits.  In addition, provided that the Executive
executes the mutual release and non-disparagement agreement referred to in
paragraph (i) of this Section, the Executive will be entitled to the following
separation payments:

(i)                                     severance
compensation equal to the sum of: (A) continued payment for eighteen (18)
months of the Executive’s base salary (based on his salary in effect
immediately prior to such termination); and (B) an amount equal to the annual
cash bonus at target under the Company’s Annual Incentive Plan or other annual
bonus plan at the rate in effect immediately prior to termination of employment
which shall be paid in accordance with the Company’s regular payroll practices
reduced, if applicable, by any payments to which the Executive is entitled
under any other severance plan of the Company (other than amounts payable
pursuant to this Agreement); provided, however, that if a Change
in Control occurs during the period in which the Executive is receiving
payments hereunder, the amount payable hereunder but not yet paid shall be paid
in a lump sum within thirty (30) days following the Change in Control;

(ii)                                  no later than
two and one-half months following the end of the Company’s fiscal year in which
the termination of the Executive’s employment occurs, $350,000, if such
termination occurs prior to January 1, 2006 or if such termination occurs on or
after January 1, 2006, a lump sum cash amount equal to the result of
multiplying (x) the bonus the Executive would have received under the Company’s
Annual Incentive Plan or other annual bonus plan for such fiscal year had the
Executive remained employed with the Company through the end of such fiscal
year, based on the performance criteria set forth in such annual bonus plan for
such fiscal year by (y) a fraction, the numerator of which is the number of
days elapsed in the fiscal year in which the termination of employment occurs
through the date of termination, and the denominator of which is 

 

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                                                365; provided,
however, that if a Change in Control occurs during the period in which
the Executive is entitled to payments hereunder but has not yet received such
payments, then the pro rata bonus referred to above shall (x) be paid
within thirty (30) days following the Change in Control and (y) be based on the
Executive’s target bonus under the Company’s Annual Incentive Plan or other
annual bonus plan for the fiscal year in which the Change in Control occurs;

(iii)          continuation
of the Executive’s group health insurance, dental insurance, vision insurance,
long-term disability insurance and life insurance with respect to Executive and
his dependents for the greater of (i) the period provided pursuant to the terms
of the plan or (ii) if the coverage or insurance is subject to Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the COBRA continuation period.  In any case, for the eighteen (18) month
period immediately following the termination of the Executive’s employment (and
only for such period), the costs of such continuation shall be shared by the
Company and the Executive in the same proportion as such costs are shared by
active employees of the Company. 
Notwithstanding the foregoing, in the event the Executive becomes
reemployed with another employer and becomes eligible to receive comparable
benefits under the employee benefit plans referred to in the preceding sentence
from such employer, the Executive and the Executive’s dependent’s shall no
longer be entitled to continued participation in the applicable employee
benefits plan; and

(iv)                              senior
executive level outplacement services for a period of twelve (12) months
provided by an outplacement firm selected by the Executive and approved by the
Company (such approval not to be unreasonably withheld) and paid for by the
Company.

In addition, notwithstanding
anything to the contrary in the 2005 Plan, if the Company terminates the Period
of Employment without Cause during the 180-day period immediately preceding the
Initial Distribution Date (as defined in the 2005 Plan), the Executive shall
not forfeit his Appreciation Awards under Section 9 of the 2005 Plan.

(d)           Termination
by Executive without Good Reason; Termination by the Company for Cause.  The Executive shall have the right, upon
sixty (60) days’ prior written notice to the Company, to terminate the Period
of Employment without Good Reason.  The
Company may terminate the Period of Employment for Cause at any time.  Notwithstanding the foregoing, the Company
shall not be deemed to have terminated the Period of Employment for Cause
unless (i) the Company gives written notice to the Executive stating in
reasonable detail the events which constitute Cause, (ii) such notice is given
within the later of (x) thirty (30) days following the occurrence of such
events or (y) the date the Company knows of the event constituting Cause and,
(iii) if the Board determines, in its sole discretion, 

 

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                that
such failure or material breach is reasonably susceptible to cure, the
Executive does not effect a cure within thirty (30) days after the receipt of
the written notice referred to in clause (i) from the Company.  If the Executive should terminate the Period
of Employment without Good Reason or the Company should terminate the Period of
Employment for Cause, the Executive shall be entitled under this Agreement to
his Accrued Benefits.  The exercise by
the Company of its right to terminate the Executive’s employment for Cause
shall not abrogate the rights or remedies of the Company in respect of the
circumstances giving rise to such termination.

(e)           Termination
for Good Reason.  The Executive may
terminate the Period of Employment for Good Reason.  If the Executive should terminate the Period
of Employment for Good Reason prior to a Change in Control or more than
eighteen (18) months after a Change in Control, the Executive shall be entitled
to his Accrued Benefits.  In addition,
provided that the Executive executes the mutual release and non-disparagement
agreement referred to in paragraph (i) of this Section the Executive will be
entitled to the separation payments delineated in paragraph (c)(i)-(iv) of this
Section 7.  In addition, notwithstanding
anything to the contrary in the 2005 Plan, if the Executive should terminate
the Period of Employment for Good Reason during the 180-day period immediately
preceding the Initial Distribution Date (as defined in the 2005 Plan), the
Executive shall not forfeit his Appreciation Awards under Section 9 of the 2005
Plan.

(f)            Expiration
of Period of Employment.  If the
Period of Employment ends due to the expiration thereof as a result of notice
by the Company not to extend the Period of Employment in accordance with
Section 2, the end of the Period of Employment shall constitute and be
considered a termination without Cause pursuant to paragraph (c) of this
Section and shall entitle the Executive to his Accrued Benefits and the
separation payments delineated in paragraph (c)(i)-(v) of this Section 7.

(g)           Termination
Before or After a Change in Control. 
Notwithstanding any of the foregoing to the contrary, if during the
period that commences upon a Change in Control and ends eighteen (18) months
after a Change in Control, the Company should terminate the Period of
Employment without Cause or the Executive should terminate the Period of
Employment for Good Reason, the Executive shall be entitled to the same
separation payments and benefits as provided under paragraph (c) of this
Section 7, subject to the following modifications:

(i)                                     the severance
compensation referred to in clause (i) of paragraph (c) shall be paid in a lump
sum within thirty (30) days following the Executive’s termination of
employment; and

(ii)                                  the pro rata
bonus referred to in clause (ii) of paragraph (c) shall (x) be paid within
thirty (30) days following the Executive’s termination of employment and (y) be
based on the Executive’s target bonus under the Company’s Annual Incentive Plan
or other 

 

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                                                annual bonus
plan for the fiscal year in which the Executive’s termination of employment
occurs.

Notwithstanding anything in
the above to the contrary, amounts shall also be payable under this paragraph
(g) if such termination occurs prior to a Change in Control and it is
reasonably demonstrated by the Executive that such termination of employment
(x) was at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (y) otherwise arose in connection
with or in anticipation of a Change in Control.

(h)           Definitions.

For
purposes of this Agreement:

(i)            “Cause” shall mean: the refusal or continued willful failure
by the Executive to perform substantially his duties with the Company (other
than any failure resulting from incapacity due to physical or mental illness)
after a demand for substantial performance is delivered to the Executive by the
Company which identifies in reasonable detail the manner in which the Executive
has not substantially performed his duties; engaging in illegal conduct or
gross misconduct which causes financial or reputational harm to the Company;
habitual abuse of narcotics or alcohol; material breach of any written policy
of Company or a subsidiary, including the Company’s Code of Business Conduct
and Ethics; fraud or material dishonesty in connection with the business of
Company or a subsidiary; any material breach by the Executive of one or more of
the covenants contained in Section 8 or 9 hereof; and any violation of a
statutory or common law duty of loyalty to the Company or any of its
subsidiaries.  For purposes of this definition,
acts or omissions of the Executive shall not be considered “willful” unless
done or omitted by the Executive (A) intentionally or not in good faith and (B)
without the reasonable belief that the Executive’s action or omission was
consistent with the direction of the Board, and shall not include failure to
act resulting from incapacity due to physical or mental impairment.

(ii)           “Change in Control” shall mean:

(1)           acquisition by any individual, entity
or group (a “Person”), including any “person” within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of more than fifty percent (50%) of either
(x) the then outstanding shares of common stock of the Company (the
“Outstanding Common Stock”) or (y) the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Voting Securities”); excluding, however,
the following: (A) any acquisition directly from the Company, if a majority of
the Incumbent Board (as such term is defined below) approve a resolution
expressly providing that such acquisition does not constitute a Change in
Control under this clause (A) (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the security
being so exercised, converted or 

 

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exchanged
was acquired directly from the Company); (B) any acquisition by the Company, or
a corporation controlled by the Company; (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; (D) any acquisition by an underwriter
temporarily holding securities pursuant to an offering of such securities; or
(E) any acquisition by any corporation pursuant to a transaction that complies
with clauses (x), (y) and (z) of subsection (3) of this definition; provided further,
that for purposes of clause (B), if any Person other than the Company or any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company shall become the beneficial owner
within the meaning of Rule 13d-3 promulgated under the Exchange Act (the
“Beneficial Owner”) of more than fifty percent (50%) of the Outstanding Common
Stock or of the Outstanding Voting Securities by reason of an acquisition by
the Company, and such Person shall, after such acquisition by the Company,
become the Beneficial Owner of any additional shares of the Outstanding Common
Stock or any additional Outstanding Voting Securities and such Beneficial
Ownership is publicly announced, such additional Beneficial Ownership shall
constitute a Change in Control;

(2)           individuals who, as of the date of
this Agreement, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the date of this
Agreement, whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed a member of the Incumbent
Board; and provided further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened election
contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall not be deemed
a member of the Incumbent Board; or

(3)           consummation of a  reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a “Corporate Transaction”); excluding, however, a Corporate
Transaction pursuant to which (x) all or substantially all of the individual or
entities who are the Beneficial Owners, respectively, of the Outstanding Common
Stock and the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own within the meaning of Rule 13d-3 promulgated
under the Exchange Act (“Beneficially Own”) directly or indirectly, more than
fifty percent (50%) of, respectively, the outstanding shares of common stock,
and the combined voting power of the outstanding securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation that as a result of such transaction owns all or substantially all
of the outstanding stock of  the Company
or all or substantially all of the Company’s assets 

 

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either
directly or indirectly) in substantially the same proportions relative to each
other as their ownership, immediately prior to such Corporate Transaction, of
the Outstanding Common Stock and the Outstanding Voting Securities, as the case
may be, (y) (1) no Person (other than the Company or a corporation controlled
by the Company, any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, the
corporation resulting from such Corporate Transaction, or any Person that
Beneficially Owned, immediately prior to such Corporation Transaction, directly
or indirectly, more than fifty percent (50%) of the Outstanding Common Stock or
the Outstanding Voting Securities, as the case may be) will Beneficially Own,
directly or indirectly, more than fifty percent (50%) of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election of
directors and (2) individuals who were members of the Incumbent Board at the
time of the Board’s approval of the execution of the initial agreement
providing for such Corporate Transaction will constitute at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Transaction; or (z) consummation of a plan of complete liquidation or
dissolution of the Company.

(iii)          “Disability”
shall mean the inability of Executive for a period of 120 consecutive days or
180 days in any twelve (12) month period to render substantially the services
required of Executive under this Agreement by reason of mental or physical
impairment, whether resulting from illness, accident or otherwise.

(iv)          “Good Reason”
shall mean the occurrence of any of the following without the Executive’s
express written consent: (i) a reduction by the Company in Executive’s base
salary or target bonus opportunity as in effect on the date of this Agreement
or, in the event of a Change in Control, as in effect immediately prior to the
Change in Control, it being understood that a change in the performance
criteria applicable under any bonus plan (provided that such change, to the
extent applicable, effects executives of the Company generally), shall not be
Good Reason hereunder; (ii) the Company’s failure to keep in effect retirement,
health and welfare benefits plans, and executive compensation plans under which
Executive is eligible to receive benefits substantially similar in value in the
aggregate to the benefits Executive is eligible to receive under such plans as
of the date of this Agreement or, in the event of a Change in Control, the day
prior to the effective date of the Change in Control, it being understood that
a change in the performance criteria (provided such change is not applicable
solely to the Executive) applicable for awards under any incentive or bonus
plan, shall not be Good Reason hereunder, (iii) the Company’s requiring
Executive to be based anywhere more than fifty (50) miles from where
Executive’s principal place of employment is located on the date of this
Agreement; (iv) any change in the commuting policy or reimbursement policy set
forth in Section 5 as in effect on the 

 

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date
hereof; (v) a change in the duties or reporting responsibilities of Executive
that is inconsistent in any substantial adverse respect with Executive’s
positions, duties or responsibilities as in effect on the effective date of
this Agreement or, in the event of a Change in Control, immediately prior to
the Change in Control (including any material adverse diminution of such duties
or responsibilities); provided, however, that Good Reason shall
not be deemed to occur upon a change in duties or responsibilities that is
solely and directly a result of the Company no longer having publicly traded
securities and does not involve any other event set forth in this paragraph;
and (vi) failure by Company to obtain a satisfactory agreement from any
Successor (as defined in Section 10) to assume and agree to perform this
Agreement as provided in Section 10. 
Notwithstanding the foregoing, the Executive shall not be deemed to have
terminated the Period of Employment for Good Reason unless the Executive gives
written notice to the Company stating in reasonable detail the events which
constitute Good Reason, such notice to be given within the later of (i) thirty
(30) days of the occurrence of such event or (ii) the date the Executive
knows of the event constituting Good Reason and, if such failure or breach is
reasonably susceptible to cure, the Company does not effect a cure within such
thirty (30) day period.

(i)            Mutual Release and
Non-Disparagement Agreement.  As a
condition of the receipt of the separation payments and benefits under
paragraphs (c), (e), (f) and (g) of this Section, the Executive must execute a
separation agreement, in form and substance reasonably satisfactory to the
Company and the Executive, containing provisions under which the parties (i)
release each other, including the Company, its subsidiaries and the officers,
employees and agents of Company and its subsidiaries, from all liability arising
out of, or in connection with Executive’s employment and termination of
employment with the Company and (ii) agree not at any time to publicly
denigrate, ridicule or intentionally criticize each other including, without
limitation, by way of news interviews or the expression of personal views,
opinions or judgments to the news media; provided, however, that nothing herein
shall prohibit the Company or Executive from making disclosure to tax or legal
counsel or disclosure reasonably required under the federal securities laws and
the rules of the Securities and Exchange Commission promulgated thereunder and
the rules of any stock exchange or national securities market on which the
Company’s securities are traded.  If an
arbitrator determines that the Executive has materially breached the terms of
such separation agreement, the Company may immediately cease all payments to
the Executive under this Agreement, may seek recovery of payments received by
the Executive under this Agreement and shall be entitled to monetary damages
and an injunction, restraining order or other equitable relief restraining any
such material breach.  If an arbitrator
determines that the Company, its subsidiaries or the officers, employees and
agents of the Company have materially breached the terms of such separation
agreement, the Executive shall be entitled to monetary damages and an
injunction, restraining order or other equitable relief restraining any such
material breach.

 

11

 

(j)            Tax
Gross-Up.  If the Executive incurs an
excise tax imposed on “excess parachutes payments” under Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”) as defined in Section
280G of the Code or any additional tax under Section 409A of the Code, in each
case on account of any amount paid or payable to, or for the benefit of, the
Executive by the Company or its stockholders or affiliates in respect of
obligations of the Company or Parent, in each case, in respect of this
Agreement or any of the Company’s or Parent’s incentive and benefit plans, then
the Company shall pay the Executive an amount equal to the sum of (x) the
excise taxes payable on such excess parachutes payments and/or the additional
taxes payable on any amounts, plus (y) an additional amount such that after
payment of all taxes on such additional amount there remains a balance
sufficient to pay taxes actually due and payable on the tax referred to in
clause (x).  

(k)           No
Mitigation.  Upon termination of the
Period of Employment, the Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Company under this
Agreement.  Amounts due to the Executive
under this Agreement shall not be subject to offset by the Company for any
claims the Company may have against the Executive, unless otherwise
specifically agreed to in writing by the Executive.

8.             Confidential
Information.  The Executive reaffirms
and agrees that at all times during the Period of Employment and thereafter the
Executive will comply with the terms of the Confidentiality Agreement between
the Executive and the Company dated September 27, 2004 and attached as Exhibit
A hereto. 

9.             Non-competition
and Non-solicitation Agreement.

(a)           Non-Compete.
Without the consent in writing of the Board, during the Period of Employment
and for the period of (x) twelve (12) months following termination of
employment for any reason other than those specified in clause (y) and (y)
eighteen (18) months following termination of employment by the Company without
Cause or by the Executive for Good Reason, the Executive will not permit the
Executive’s name to be used by, or engage in, or carry on, directly or
indirectly, either for the Executive or as a member of a partnership or as a
stockholder, member, manager, investor, officer or director of a corporation,
limited liability company or similar entity or as an employee, agent, associate
or consultant of any person, partnership, corporation, limited liability
company or similar entity, any business in competition with the business
carried on by the Company or any of its subsidiaries within the geographical
areas in which the Company or its subsidiaries are conducting their business
operations or providing services as of the date of the Executive’s termination
of employment (a “Competitive Enterprise”). 
The names of the Competitive Enterprises as of the date of this
Agreement are set forth on Exhibit B. 
The Company 

 

12

 

                shall
furnish the Executive with an updated Exhibit B at least annually, provided,
however, that in no event shall the number of Competitive Enterprises exceed
ten (10) such Competitive Enterprises. 
Notwithstanding the preceding sentence, the Executive shall not be
prohibited from owning less than five percent (5%) of the equity of any
publicly traded entity.

(b)           Non-Solicit.  Without the consent in writing of the Board
(which consent shall be in the sole discretion of the Board), during the Period
of Employment, and for the period of (x) twelve (12) months following
termination of employment for any reason other than those specified in clause
(y) and (y) twenty-four (24) months following termination of employment by the
Company without Cause or by the Executive for Good Reason, the Executive shall
not, in any manner, directly or indirectly (without the prior written consent
of the Company): (i) Solicit any Customer to transact business with a
Competitive Enterprise or to reduce or refrain from doing any business with the
Company, (ii) transact business with any Customer that would cause the
Executive to be a Competitive Enterprise, (iii) interfere with or damage any
relationship between the Company and a Customer or (iv) Solicit anyone who is
then an executive of the Company (or who was an executive of the Company on the
date of the Executive’s termination of employment or within the prior twelve
(12) months) to resign from the Company or to apply for or accept employment
with any other business or enterprise.

                For
purposes of this Agreement, (A) a “Customer” means
any customer or prospective customer of the Company or its subsidiaries to whom
the Executive provided services, or for whom the Executive transacted business,
or whose identity became known to the Executive in connection with the
Executive’s relationship or employment with the Company or its subsidiaries,
and (B) “Solicit” means any direct or indirect
communication of any kind, regardless of who initiates it, that in any way
invites, advises, encourages or requests any person to take or refrain from
taking any action.

(c)           Effect
of Material Breach.  In the event the
Executive materially breaches the provisions of paragraphs (a) or (b) of this
Section 9, the Company may immediately cease all payments to the Executive
under this Agreement, may seek recovery of payments received by the Executive
under this Agreement and shall be entitled to seek an injunction, restraining
order or other equitable relief restraining any such material breach, and
monetary damages for such material breach; provided, however, that nothing in
the preceding shall prohibit or otherwise impact the Executive’s right or
ability to dispute that a material breach has occurred.

10.           Successor
of Company.  The Company will require
any Successor to expressly assume and agree, by an agreement in form and
substance 

 

13

 

                satisfactory
to the Executive, to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.  Failure of the Company to
obtain such assent at least five business days prior to the time a person
becomes a Successor (or if the Company does not have at least five business days
after having notice that a person may become a Successor, within three business
days after having notice that such person may become or has become a Successor)
shall constitute Good Reason and, if a Change in Control of the Company has
occurred or thereafter occurs, shall entitle the Executive to the benefits
provided in paragraph (c) of Section 7. 
For purposes of this Agreement, “Successor” shall mean any person (a)
that purchases all or substantially all of the assets of the Company or obtains
or succeeds to, or has the practical ability to control (either immediately or
with the passage of time), the Company’s business directly, by merger or
consolidation, or indirectly, by purchase of voting securities or otherwise or
(b) to whom the Company assigns this Agreement pursuant to Section 15(a).

11.           Resolution
of Disputes.  Any dispute or
controversy arising under or in connection with Executive’s entitlements under
this Agreement shall be settled exclusively by arbitration in Chicago, Illinois
by one arbitrator in accordance with the National Rules For The Resolution of
Employment Disputes of the American Arbitration Association then in
effect.  Judgment may be entered on the
arbitrators’ award in any court having jurisdiction.  The expenses of arbitration and reimbursement
of the prevailing party’s reasonable legal fees, costs and expenses shall be as
determined by the arbitrator in the arbitrator’s sole discretion.

12.           Legal
Fees. Notwithstanding Section 11 hereof to the contrary, Company shall
reimburse the Executive for all reasonable legal costs and fees and related
expenses incurred by Executive seeking to obtain or enforce any payment,
benefit or right provided by this Agreement if the Executive’s claim is
substantially upheld by a court or an arbitration panel.

13.           Governing
Law.  This Agreement is governed by
and is to be construed and enforced in accordance with the laws of the State of
Illinois without reference to rules relating to conflicts of law.  If under such law, any portion of this Agreement
is at any time deemed to be in conflict with any applicable statute, rule,
regulation or ordinance, such portion shall be deemed to be modified or altered
to conform thereto or, if that is not possible, to be omitted from this
Agreement; the invalidity of any such portion shall not affect the force,
effect and validity of the remaining portion hereof.

14.           Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally or by overnight courier to the following address of the
other party hereto (or such other  address
for such party as shall be specified by notice given pursuant to this Section)
or (b) sent by facsimile to the following facsimile number of the other party
hereto (or such other 

 

14

 

                facsimile
number for such party as shall be specified by notice given pursuant to this
Section), with the confirmatory copy delivered by overnight courier to the
address of such party pursuant to this Section 13:

(a)                                  Executive, to:

Paul R. Block

3257 North Street

Fairfield, Connecticut 06824

(b)                                 Company, to:

Merisant Company

10 S. Riverside Plaza

Suite 850

Chicago, Illinois 60606

Attention:  General Counsel

Facsimile No. 312-840-5347

(b)                                 Parent, to:

Merisant Worldwide, Inc.

10 S. Riverside Plaza

Suite 850

Chicago, Illinois 60606

Attention:  General Counsel

Facsimile No. 312-840-5347

15.           Miscellaneous.

(a)           Entire
Agreement.  This Agreement, any
attachments hereto, the employee benefit plans referenced herein and any agreements
thereunder and the Indemnification Agreement existing as of the Effective Date
between the Company and the Executive constitute the entire understanding
between the Company and the Executive relating to the employment of the
Executive by the Company and supersede and cancel all prior written and oral
agreements and understandings with respect to the subject matter of this
Agreement.  In the event of any
inconsistency between this Agreement and any other agreement or document
referred to herein, the terms of this Agreement shall govern.  This Agreement may be amended but only by a
subsequent written agreement of the parties. 
This Agreement shall be binding upon and shall inure to the benefit of
the Executive, the Executive’s heirs, executors, administrators and
beneficiaries, and the Company and its successors.  This Agreement may not be assigned by one
party without the express prior written consent of the other parties; provided,
however, that, subject to Section 10 hereof the Company may assign its rights
and obligations hereunder to Parent and from and after the effective time of
such assignment the “Company” as used hereunder shall mean Parent.

(b)           Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under applicable law or rule
in any 

 

15

 

                jurisdiction,
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
validity, legality or enforceability of such provision in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

(c)           Withholding
Taxes.  All amounts payable to the
Executive under this Agreement shall be subject to applicable withholding of
income, wage and other taxes if required by applicable law.

(d)           Compliance
with Section 409A.  Notwithstanding
any of the foregoing to the contrary, if any payments of money, delivery of
shares of Company stock or other benefits due to the Executive hereunder could
cause the application of an accelerated or additional tax under Section 409A of
the Code, such payments, delivery of shares or other benefits (x) shall, if
compliance with Section 409A of the Code can be effected by delaying such
payments, delivery of shares or other benefits, be delayed until the earliest
date on which such payments, delivery of shares or other benefits may be made
whout causing the application of an accelerated or additional tax under Section
409A of the Code, and (y) if compliance with Section 409A of the Code cannot be
effected by delaying such payments, delivery of shares or other benefits, may
be restructured, to the extent possible, in a manner, determined by the Company
and reasonably acceptable to the Executive, that does not cause such
accelerated or additional tax. 

(e)           Survival.  Sections 7, 8, 9, 10, 11, 12, 13, 14 and 15
of this Agreement shall survive and continue in full force and effect in
accordance with their respective terms, notwithstanding any termination of the
Period of Employment and/or this Agreement.

(f)            Fees.  The Company shall pay the legal fees incurred
by the Executive incurred in connection with the preparation and negotiation of
this Agreement up to a maximum of $15,000 promptly after receipt of reasonably
detailed invoice(s) relating thereto.

(g)           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.

(h)           Construction.  The parties acknowledge that this Agreement
is the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.

 

16

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the year and day first above
written.

 

	
   

  	
  MERISANT COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony J. Nocchiero

  
	
   

  	
   

  	
  Anthony J. Nocchiero

  
	
   

  	
   

  	
  Vice President, Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  MERISANT WORLDWIDE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony J. Nocchiero

  
	
   

  	
   

  	
  Anthony J. Nocchiero

  
	
   

  	
   

  	
  Vice President, Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul R. Block

  
	
   

  	
   

  	
  Paul R. Block

  

 

17

 

EXHIBIT A

 

Confidentiality Agreement

 

[previously executed document attached]

 

18

 

Exhibit
A

 

AGREEMENT

In
consideration of the compensation and other benefits of my employment and
continued employment by Merisant Company or one of its Subsidiaries and of other
valuable consideration, I agree with Merisant as follows:

 

EMPLOYMENT BY MERISANT

As
used herein, “Merisant” means Merisant Company or one of its Subsidiaries,
whichever is my employer.  The term
“Subsidiary” means any corporation, joint venture or other business
organization in which Merisant Company now or hereafter, directly or
indirectly, owns or controls more than a fifty percent (50%) equity interest.

 

During
my Merisant employment I shall devote my working time and best efforts to the
service of Merisant and shall comply with the policies and procedures of
Merisant, including those relating to security and employee conduct, and I
shall not engage in any planning or other business or technical activity,
competitive with or in conflict with the business interests of Merisant Company
or any Subsidiary.

 

 

CONFIDENTIAL INFORMATION

As
used herein, “Confidential Information” means all technical and business
information of Merisant Company and its Subsidiaries, whether patentable or
not, which is of a confidential, trade secret and/or proprietary character and
which is either developed by me (alone or with others) or to which I have
access during my employment. 
“Confidential Information”such also include results derived from
confidential evaluations of, and the confidential use or non-use by Merisant
Company or any Subsidiary of, technical or business information in the public
domain.

 

I
shall use my best efforts and diligence both during and after my Merisant
employment to protect the confidential, trade secret and/or proprietary
character of all Confidential Information. 
I shall not, directly or indirectly, use (for myself or another) or
disclose any Confidential Information for so long as it shall remain
proprietary or protectible as confidential or trade secret information, except
as may be necessary for the performance of my Merisant duties and as may be
required by courts, administrative or regulatory agencies.

 

I
shall deliver promptly to Merisant, at the termination of my employment, or at
any other time at Merisant’s request, without retaining any copies, all
documents and other material in my possession relating, directly or indirectly,
to any Confidential Information.

 

Each
of my obligations in this section shall also apply to the confidential, trade
secret and proprietary information learned or acquired by me during my
employment from others with whom Merisant Company or any Subsidiary has a
business relationship.

 

I
understand that I am not to disclose to Merisant Company or any Subsidiary, or
use for its benefit, any of the confidential, trade secret or proprietary
information of others, including any of my former employers.

 

A-1

 

COMPETITIVE
ACTIVITY

 

I
shall not, directly or indirectly (whether as owner, partner, consultant,
employee or otherwise), at any time during the period of two years following
termination for any reason of my final employment with Merisant Company or any
Subsidiary, engage in or contribute my knowledge to any work or activity that
involves a (a) tabletop sweetener product; or (b) any product or process, which
is then competitive with a product or process (i) from which the Subsidiary,
division or region of Merisant for which I devoted the majority of my time then
derives a material portion of its earnings and (ii) about which I accessed
Confidential Information while at Merisant Company or any Subsidiary at any
time during the period of five years immediately prior to such termination
(“Competitive Work”).  Following the
expiration of said two year period, I shall continue to be obligated under the
“Confidential Information” section of this Agreement not to use or to disclose
Confidential Information so long as it shall remain proprietary or protectible
as confidential or trade secret information.

 

During
my employment by Merisant and for a period of two years thereafter, I shall
not, directly or indirectly, induce or attempt to induce a salaried employee of
Merisant Company or any of its Subsidiaries to accept employment or affiliation
involving Competitive Work with another firm or corporation of which I am an
employee, owner, partner, shareholder, or consultant.

 

If,
at any time of enforcement of this Agreement, a court or an arbitrator holds
that the terms stated in this “Competitive Activity” section are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period or scope reasonable under such circumstances shall be substituted for
the stated period or scope and that the court shall be allowed to revise the
restrictions contained herein to cover the maximum period and/or scope
permitted by law.

 

IDEAS, INVENTIONS OR

DISCOVERIES

 

I
shall promptly disclose to Merisant all ideas, inventions or discoveries,
whether or not patentable, which I may conceive or make, alone or with others,
during my employment, whether or not during working hours, and which directly
or indirectly

 

(a)   relate to matters within the
scope of my duties or field of responsibility during my employment by Merisant
Company or its Subsidiaries; or

 

(b)   are based on my knowledge of
the actual or anticipated business or interests of Merisant Company or its
Subsidiaries; or

 

(c)   are aided by the use of
time, materials, facilities or information of Merisant Company or its Subsidiaries.

 

I
hereby assign to Merisant, or its nominee, without further compensation, all of
my right, title and interest in all such ideas, inventions or discoveries in
all countries of the world.

 

Without
further compensation but at Merisant’s expense, I shall give all testimony and
execute all patent applications, rights of priority, assignments and other
documents and in general do all lawful things requested of me by Merisant to
enable Merisant to obtain, maintain, and enforce protection of such ideas, inventions

 

A-2

 

and
discoveries for and in the name of Merisant, or its nominee, in all countries
of the world.  However, should I render
any of these services following termination of my employment, I shall be
compensated at a rate per hour equal to the base salary I received from
Merisant at the time of termination and shall be reimbursed for reasonable
out-of-pocket expenses incurred in rendering the services.

 

I recognize that ideas, inventions or discoveries of
the type described above conceived or made by me, alone or with others, within
one year after termination of my employment are likely to have been conceived
in significant part while employed by Merisant. 
Accordingly, I agree that such ideas, inventions or discoveries shall be
presumed to have been conceived during my Merisant employment unless and until
I have established the contrary by clear and convincing evidence.

 

MISCELLANEOUS

This
Agreement shall be construed under the laws of the State of Illinois and shall
be binding upon and enforceable against my heirs and legal representatives and
the assignees of any idea, invention or discovery conceived or made by me.

 

To
the extent this Agreement is legally enforceable, it shall supersede all
previous agreements covering this subject matter between me and Merisant
Company or its Subsidiaries, but shall not relieve me or such other party from
any obligations incurred under any such previous agreement while in force.

 

If
any provision of this Agreement is held invalid in any respect, it shall not
affect the validity of any other provision of this Agreement.  If any provision of this Agreement is held to
be unreasonable as to time, scope or otherwise, it shall be construed by
limiting and reducing it so as to be enforceable under then applicable law.

 

If I am transferred from the
company which was my employer at the time I signed this Agreement to the
employment of another company that is a Subsidiary of Merisant Company or is
Merisant Company itself, and I have not entered into a superseding agreement
with my new employer covering the subject matter of this Agreement, then this
Agreement shall continue in effect and my new employer shall be termed
“Merisant” for all purposes hereunder and shall have the right to enforce this
Agreement as my employer.  In the event
of any subsequent transfer, my new employer shall succeed to all rights under
this Agreement so long as such employer shall be Merisant Company or one of its
Subsidiaries and so long as this Agreement has not been superseded.

 

Nothing
in this Agreement alters the at-will employment relationship between Merisant
and its employees.

 

A-3

 

Execution
Copy

 

EXHIBIT B

 

Competitive Enterprises

 

•                  Johnson & Johnson,
McNeil Consumer Products and affiliates

•                  Cumberland Packaging, Inc.

•                  Ajinomoto Co., Inc.

•                  Hermesetas

•                  Alberto Culver Company

•                  Sara Lee Corporation

 

19EXHIBIT
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

  	
   

  

 

i

 

	
   

  	
  (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

  	
   

  

 

ii

 

	
  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

  	
   

  

 

iii

 

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:

 

1

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.

2

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.

3

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.

5

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.

6

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.

7

(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).

21

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;

22

(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 

23

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.

24

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.

26

(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.

27

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.

28

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

  

 

29

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