Document:

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                                                                    EXHIBIT 10.1

                                 SYNOPSYS, INC.

                             1992 STOCK OPTION PLAN

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

                                   ARTICLE ONE
                                     GENERAL

I.      PURPOSE OF THE PLAN

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

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

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

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

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

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

II.     ADMINISTRATION OF THE PLAN

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

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

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

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

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

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

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

        C. Administrator Determinations Binding. The Administrator may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, may interpret the terms and
provisions of the Plan, any Award and any Award agreement and may otherwise
supervise the administration of the Plan. Any determination made by the
Administrator pursuant to the provisions of the Plan with respect to any Award
shall be made in its sole discretion at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or Award, at any later
time. All decisions made by the Administrator under the Plan shall be binding on
all persons, including the Company and Plan participants. No member of the
Administrator shall be liable for any action that he or she has in good faith
taken or failed to take with respect to this Plan or any Award.

III.    ELIGIBILITY

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

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

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

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

IV.     STOCK SUBJECT TO THE PLAN

        A. Shares of the Corporation's common stock (the Common Stock) shall be
available for issuance under the Plan and shall be drawn from either the
Corporation's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the
open market. The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed

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the sum of (i) 17,767,142 shares plus (ii) an additional number of shares equal
to 5% of the number of shares of Common Stock and Common Stock equivalents
outstanding on the first day of each of the 1997, 1998 and 1999 fiscal years.
Such authorized share reserve includes the number of shares which remained
available for issuance, as of the Effective Date, under the 1988 Plan as last
approved by the Corporation's stockholders prior to such Effective Date,
including the shares subject to the outstanding options incorporated into this
Plan and any other shares available for future option grant under the 1988 Plan
as last approved by the stockholders, and such reserve shall be adjusted from
time to time in accordance with the provisions of this Section IV. To the extent
one or more outstanding options under the 1988 Plan which have been incorporated
into this Plan are subsequently exercised, the number of shares issued with
respect to each such option shall reduce, on a share-for-share basis, the number
of shares available for issuance under this Plan.

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

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

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

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

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

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

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                                   ARTICLE TWO
                                  OPTION GRANTS

I.      TERMS AND CONDITIONS OF OPTIONS

        Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees of the Corporation or its parent or subsidiary corporations may only
be granted non-statutory options. Each granted option shall be evidenced by one
or more instruments in the form approved by the Plan Administrator; provided,
however, that each such instrument shall comply with the terms and conditions
specified below. Each instrument evidencing an Incentive Option shall, in
addition, be subject to the applicable provisions of Section II of this Article
Two.

        A. Option Price.

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

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

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

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

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

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

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

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

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

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

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

        C. Termination of Service.

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

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

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

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

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

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

        (2) The Plan Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the

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Optionee under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.

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

            - The Optionee shall (except to the extent otherwise specifically
      provided in the applicable option agreement) be deemed to remain in the
      Service of the Corporation for so long as such individual renders services
      on a periodic basis to the Corporation (or any parent or subsidiary
      corporation) in the capacity of an Employee, a non-employee member of the
      Board or an independent consultant or advisor.

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

        D. Stockholder Rights.

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

        E. Repurchase Rights.

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

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

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

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

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

II.     INCENTIVE OPTIONS

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

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

        B. 10% Stockholder. If any individual to whom an Incentive Option is
granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (5) years,
measured from the grant date.

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

III.    CORPORATE TRANSACTIONS/CHANGES IN CONTROL

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

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

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

        (iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger,

then the exercisability of each option outstanding under the Plan shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option under this Article Two shall not so
accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, to be assumed by the successor corporation or parent
thereof or replaced with a comparable option to purchase shares of the capital
stock of the successor corporation or parent thereof, (ii) such option is to be
replaced by a comparable cash incentive program of the successor corporation
based on the option spread at the time of the Corporate Transaction, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
comparability under clause (i) or (ii) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.

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

        C. Each outstanding option under the Plan which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall
remain the same. In addition, the maximum number and/or class of securities
available for issuance under the Plan, the maximum number and/or class of

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securities which may be issued pursuant to Incentive Options granted under the
Plan, whether before or after the first day of the 1995 fiscal year, and the
total number and/or class of securities for which stock options and
separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993 shall be appropriately adjusted
following the consummation of the Corporate Transaction to reflect the effect of
such transaction upon the Corporation's capital structure.

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

        E. The Plan Administrator shall have the discretionary authority,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two (and the termination of one or more
of the Corporation's outstanding repurchase rights under this Article Two) upon
the occurrence of a Change in Control. Alternatively, the Plan Administrator
shall have full power and authority to condition any such option acceleration
(and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee's Service within a specified period following the
Change in Control.

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

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

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

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

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

IV.     [INTENTIONALLY OMITTED.]

V.      STOCK APPRECIATION RIGHTS

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

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

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surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.

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

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

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

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

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

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

VI.     EXTENSION OF EXERCISE PERIOD

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

                                       9
<PAGE>

                                  ARTICLE THREE
                                  MISCELLANEOUS

I.      [INTENTIONALLY OMITTED.]

II.     AMENDMENT OF THE PLAN AND AWARDS

        A. The Board has complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification may adversely affect the rights and obligations of an Optionee with
respect to options at the time outstanding under the Plan, unless the Optionee
consents to such amendment. In addition, the Board may not, without the approval
of the Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, the maximum number of shares
issuable pursuant to Incentive Options granted under the Plan on or after the
first day of the 1995 fiscal year or the number of shares for which any one
individual participating in the Plan may be granted stock options and
separately-exercisable stock appreciation rights in the aggregate after December
31, 1993 (except for permissible adjustments under Article One, Section IV) or
(ii) materially modify the eligibility requirements for participation in the
Plan or the benefits accruing to Optionees under the Plan.

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

III.    EFFECTIVE DATE AND TERM OF PLAN

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

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

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

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

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

                                       10
<PAGE>

IV.     USE OF PROCEEDS

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

V.      REGULATORY APPROVALS

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

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

VI.     NO EMPLOYMENT/SERVICE RIGHTS

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

VII.    MISCELLANEOUS PROVISIONS

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

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

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

                                       11<PAGE>
                                                                    EXHIBIT 10.2

                                 SYNOPSYS, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

                (As amended on August 1, 1999, January 11, 2001,
                      March 8, 2000 and February 28, 2001)

I.      PURPOSE

        The Synopsys, Inc. Employee Stock Purchase Plan (the "Plan") is intended
to provide Eligible Employees of the Company and one or more of its Corporate
Affiliates with the opportunity to acquire a proprietary interest in the Company
through the periodic application of their payroll deductions to the purchase of
shares of the Company's common stock.

II.     DEFINITIONS

        For purposes of plan administration, the following terms shall have the
meanings indicated.

        Base Salary means all compensation paid as wages, salaries, commissions,
overtime, and bonuses (other than bonuses subject to repayment as a result of a
specified future event), but excluding all of the following items (even if
included in taxable income): reimbursements, car allowances or other expense
allowances, severance pay, fringe benefits (cash and noncash), moving expenses,
deferred compensation, income attributable to stock options, restricted stock
grants, SARs and other equity-related incentive programs, and welfare benefits.

        Code means the Internal Revenue Code of 1986, as amended from time to
time.

        Company means Synopsys, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Synopsys,
Inc. which shall by appropriate action adopt the Plan.

        Common Stock means shares of the Company's common stock.

        Corporate Stock means shares of the Company's common stock.

        Corporate Affiliate means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.

        Effective Date means the first day of the initial offering period
scheduled to commence upon the later of (i) February 1, 1992 or (ii) the
effective date of the S-8 Registration Statement covering the share of Common
Stock issuable under the Plan. However, for any Corporate Affiliate which
becomes a participating Company in the Plan after the first day of the initial
offering period, a subsequent Effective Date shall be designated with respect to
participation by its Eligible Employees.

        Eligible Employee means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year, in the rendition of personal services to the
Company or any other Participating Company for earnings considered wages under
Section 3121(a) of the Code.

        Enrollment Date has the meaning ascribed to it in Section V.A.

        Participant means any Eligible Employee of a Participating Company who
is actively participating in the Plan.

        Participating Company means the Company and such Corporate Affiliate or
Affiliates as may be designated from time to time by the Board.

                                       1
<PAGE>
        Semi-Annual Entry Date means (i) during 1999 and each preceding calendar
year within an offering period in effect under the Plan, the first business day
of May and the first business day of November and (ii) during 2000 and all
subsequent calendar years within an offering period under the Plan, the first
business day of March and the first business day of September. The earliest
Semi-Annual Entry Date under the Plan shall be November 2, 1992.

        Semi-Annual Period of Participation means each period for which the
Participant actually participates in an offering period in effect under the
Plan. There shall be a maximum of four (4) periods of participation within each
offering period. Except as otherwise designated by the Plan Administrator, each
such period shall commence on the applicable Semi-Annual Entry Date.

        Semi-Annual Purchase Date means (i) during 1999 and each preceding year
on which shares of Common Stock are automatically purchased for Participants
under the Plan, the last business day of April and October, and (ii) during 2000
and each subsequent year on which shares of Common Stock are automatically
purchased for Participants under the Plan, the last business day of February and
August.

III.    ADMINISTRATION

        The Plan shall be administered by the Board of Directors of the Company
or a committee that will satisfy Rule 16b-3 of the Securities and Exchange
Commission, as in effect with respect to the Company from time to time (in
either case, the "Board"). The Board may from time to time select a committee or
persons (the "Plan Administrator") to be responsible for any transactions not
subject to Rule 16b-3. Subject to the express provisions of the Plan, to the
overall supervision of the Board, and to the limitations of Section 423 of the
Code, the Plan Administrator may administer, interpret and amend the Plan in any
manner it believes to be desirable (including amendments to outstanding
options/purchase rights and the designation of a brokerage firm at which
accounts for the holding of shares purchased under the Plan must be established
by each employee desiring to participate in the Plan), and any such
interpretation shall be final and binding on all parties who have an interest in
the Plan; provided, however, that the Plan Administrator may not, without the
approval of the Company's Board, (i) increase the number of shares issuable
under the Plan or the maximum number of shares which may be purchased per
Participant or in the aggregate during any one Semi-Annual Period of
Participation under the Plan, except that the Plan Administrator shall have the
authority, exercisable without such stockholder approval, to effect adjustments
to the extent necessary to reflect changes in the Company's capital structure
pursuant to Section VI.B;(ii) alter the purchase price formula so as to reduce
the purchase price payable for the shares issuable under the Plan; or (iii)
materially increase the benefits accruing to Participants under the Plan or
materially modify the requirements for eligibility to participate in the Plan

IV.     OFFERING PERIODS

        The Plan shall be implemented in a series of offering periods. Each
offering period shall be of a duration of twenty-four (24) months or less as
designated by the Plan Administrator prior to the start date of any offering
period, except that offering periods that include the Semi-Annual Entry Date on
November 1, 1999 shall be of a duration of twenty-two (22) months. Within each
offering period, there shall be a maximum of four (4) Semi-Annual Periods of
Participation.

V.      ELIGIBILITY AND PARTICIPATION

        A. Each Eligible Employee will be automatically enrolled in the Plan in
the offering period that begins on the first Semi-Annual Entry Date following
the commencement of employment; thereafter, any Eligible Employee may enroll or
re-enroll in the Plan in the offering period that begins as of any Semi-Annual
Entry Date, or such other days as may be established by the Board from time to
time (each, an "Enrollment Date"). To participate, an Eligible Employee must
complete, sign, and submit to the Company an enrollment form prescribed by the
Plan Administrator. Any enrollment form received by the Company by the 15th day
of the month preceding an Enrollment Date (or by the Enrollment Date in the case
of employees hired after such 15th day), or such other date established by the
Plan Administrator from time to time, will be effective on that Enrollment Date.
Enrollment or re-enrollment by a Participant in the Plan on an Enrollment Date
will constitute the grant by the Company to the Participant of an option to
purchase shares of Common Stock from the Company under the Plan. At the end of
each offering period, each Participant who has not withdrawn from the Plan will
automatically be re-enrolled in the Plan in the offering period that begins on
the Enrollment Date immediately following the date on which the option expires.
Furthermore, except as may otherwise be determined by the Plan Administrator,
each Participant who has

                                       2
<PAGE>

not withdrawn from the Plan will automatically be re-enrolled in the Plan in
each offering period that begins on an Enrollment Date on which the fair market
value per share of the Company's Common Stock is lower than the fair market
value per share of the Company's Common Stock on the Enrollment Date for the
offering period in which the Participant is then enrolled. Notwithstanding
anything in the Plan to the contrary, if the fair market value (the
"Authorization Date FVM") on the date (the "Authorization Date") on which
additional shares of Common Stock are authorized for issuance hereunder by the
Company's shareholders is higher than the fair market value at the beginning of
any Offering Period that commenced prior to the Authorization Date, then, with
respect to any of such authorized shares available to be issued on Purchase
Dates relating to such Offering Period, the Authorization Date FMV shall be used
instead of the fair market value on the Enrollment Date for the purposes of the
preceding sentence, provided that the Plan Administrator, in its discretion, may
waive application of this sentence with respect to the first Purchase Date
occurring after the Authorization Date.

        B. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be zero percent (0%) or any
whole multiple of one percent (1%) of the Base Salary paid to the Participant
during each Semi-Annual Period of Participation within the offering period, up
to a maximum of ten percent (10%). The deduction rate so authorized shall
continue in effect for the entire Semi-Annual Period of Participation and for
each successive Semi-Annual Period of Participation unless (i) the Participant
shall change the rate for a subsequent Semi-Annual Period of Participation by
filing the appropriate form with the Plan Administrator prior to the
commencement of that Semi-Annual Period of Participation or (ii) the Participant
shall change the rate within a Semi-Annual Period of Participation by filing the
appropriate form with the Plan Administrator. The new rate shall become
effective as soon as practicable following the filing of such form. A
Participant may not increase or decrease the deduction rate more than once per
Semi-Annual Period of Participation in addition to fixing the rate at the
beginning of the Semi-Annual Period of Participation. Payroll deductions,
however, will automatically cease upon the termination of the Participant's
purchase right in accordance with Article VII below.

        C. In no event may any Participant's payroll deductions for any one
Semi-Annual Period of Participation exceed Seven Thousand Five Hundred Dollars
($7,500.00).

VI.     STOCK SUBJECT TO PLAN

        A. The Common Stock purchasable by Participants under the Plan shall,
solely in the discretion of the Plan Administrator, be made available from
either authorized but unissued shares of the Common Stock or from shares of
Common Stock reacquired by the Company, including shares of Common Stock
purchased on the open market. The total number of shares which may be issued
under the Plan shall not exceed 7,050,000 shares, less any shares sold under the
Synopsys, Inc. International Employee Stock Purchase Plan (subject to adjustment
under Section VI.B below).

        B. In the event any change is made to the Company's outstanding Common
Stock by reason of any stock dividend, stock split, combination of shares or
other change affecting such outstanding Common Stock as a class without receipt
of consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number of shares issuable over the
term of the Plan, (ii) the class and maximum number of shares purchasable per
Participant during each Semi-Annual Period of Participation, (iii) the class and
maximum number of shares purchasable in the aggregate by all Participants on any
one purchase date under the Plan and (iv) the class and number of shares and the
price per share of the Common Stock subject to each purchase right at the time
outstanding under the Plan. Such adjustments shall be designed to preclude the
dilution or enlargement of rights and benefits under the Plan.

VII.    PURCHASE RIGHTS

        An Employee who participates in the Plan for a particular offering
period shall have the right to purchase shares of Common Stock, in a series of
successive installments during such offering period, upon the terms and
conditions set forth below and shall execute a purchase agreement embodying such
terms and conditions and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.

        Purchase Price. Common Stock shall be issuable on each Semi-Annual
Purchase Date at a purchase price equal to 85 percent of the lower of (i) the
fair market value per share on the Participant's Enrollment Date or (ii) the
fair market value per share on the Semi-Annual Purchase Date. Notwithstanding
anything in the Plan to the contrary, if the Authorization Date FVM is higher
than the fair market value at the beginning of any Offering Period that
commenced prior to the Authorization Date, then, with respect to any of such
authorized shares available to be

                                       3
<PAGE>

issued on Purchase Dates relating to such Offering Period, the Authorization
Date FMV shall be used instead of the fair market value on the Enrollment Date
for the purposes of clause (i) of the preceding sentence, provided that the Plan
Administrator, in its discretion, may waive application of this sentence with
respect to the first Purchase Date occurring after the Authorization Date.

        Valuation. For purposes of determining the fair market value per share
of Common Stock on any relevant date, the following procedures shall be in
effect:

                (i) If such fair market value is to be determined on any date on
        or after the date the Common Stock is first registered under Section
        12(g) of the Securities Exchange Act of 1934, then the fair market value
        shall be the closing selling price on that date, as officially quoted on
        the Nasdaq National Market System. If there is no quoted selling price
        for such date, then the closing selling price on the next preceding day
        for which there does exist such a quotation shall be determinative of
        fair market value.

                (ii) If such fair market value is to be determined on any date
        prior to the time of such Section 12(g) registration of the Common
        Stock, then the fair market value of the Common Stock on such date shall
        be determined by the Plan Administrator, after taking into account such
        factors as the Plan Administrator deems appropriate.

        Number of Purchasable Shares. The number of shares purchasable per
Participant on each Semi-Annual Purchase Date shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the corresponding Semi-Annual Period of Participation
by the purchase price in effect for the Semi-Annual Purchase Date. However, no
Participant may, during any Semi-Annual Purchase Period, purchase more than
2,000 shares of Common Stock, subject to periodic adjustment under Section VI.B.

        Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Corporate Affiliates.

        Payment. Payment for the Common Stock purchased under the Plan shall be
effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the Participant's Enrollment Date and shall (unless sooner terminated
by the Participant) continue through the pay day ending with or immediately
prior to the last day of the offering period.

        The amounts so collected shall be credited to the Participant's book
account under the Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected from a Participant
may be commingled with the general assets of the Company and may be used for
general corporate purposes.

        Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:

                (i) A Participant may, at any time prior to the last five (5)
        business days of the Semi-Annual Period of Participation, terminate
        his/her outstanding purchase right under the Plan by filing the
        prescribed notification form with the Plan Administrator. No further
        payroll deductions shall be collected from the Participant with respect
        to the terminated purchase right, and any payroll deductions collected
        for the Semi-Annual Period of Participation in which such termination
        occurs shall, at the Participant's election, be immediately refunded or
        held for the purchase of shares on the next Semi-Annual Purchase Date.
        If no such election is made, then such funds shall be refunded as soon
        as possible after the close of such Semi-Annual Period of Participation.

                (ii) The termination of such purchase right shall be
        irrevocable, and the Participant may not subsequently rejoin the
        offering period for which such terminated purchase right was granted. In
        order to resume participation in any subsequent offering period, such
        individual must re-enroll in the Plan in accordance with Section V.A.

                                       4
<PAGE>

                (iii) Should a Participant cease to remain an Eligible Employee
        while his/her purchase right remains outstanding or should there
        otherwise occur a change in such individual's employee status so that
        he/she is no longer an Eligible Employee while holding such purchase
        right, then such purchase right shall immediately terminate upon such
        termination of service or change in status and all sums previously
        collected from the Participant during the Semi-Annual Period of
        Participation in which the purchase right so terminates shall be
        promptly refunded to the Participant. However, should the Participant
        die or become permanently disabled while in service or should the
        Participant cease employment by reason of a leave of absence, then the
        Participant (or the person or persons to whom the rights of the deceased
        Participant under the Plan are transferred by will or the laws of
        inheritance) shall have the election, exercisable up until the end of
        the Semi-Annual Period of Participation in which the Participant dies or
        becomes permanently disabled or in which the leave of absence commences,
        to (i) withdraw all the funds credited to the Participant's account at
        the time of his/her cessation of service or at the commencement of such
        leave or (ii) have such funds held for the purchase of shares of Common
        Stock at the next Semi-Annual Purchase Date. If no such election is
        made, then such funds shall automatically be held for the purchase of
        shares of Common Stock at the next Semi-Annual Purchase Date. In no
        event, however, shall any further payroll deductions be added to the
        Participant's account following his/her cessation of service or the
        commencement of such leave. Should the Participant return to active
        service following a leave of absence, then his/her payroll deductions
        under the Plan shall automatically resume at the rate in effect at the
        time the leave began, provided such return to service occurs prior to
        the end of the offering period in which such leave began. For purpose of
        the Plan: (i) the Participant shall be considered to remain in service
        for so long as such Participant remains in the active employ of the
        Company or one or more other Participating Companies and (ii) the
        Participant shall be deemed to be permanently disabled if he/she is
        unable to engage in any substantial gainful employment, by reason of any
        medically determinable physical or mental impairment expected to result
        in death or to be of continuous duration of at least twelve (12) months.

        Stock Purchase. Shares of Common Stock shall automatically be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded or set aside for refund in accordance with the
"Termination of Purchase Right" provisions above) on each Semi-Annual Purchase
Date. The purchase shall be effected by applying each Participant's payroll
deductions for the Semi-Annual Period of Participation ending on such
Semi-Annual Purchase Date () to the purchase of whole shares of Common Stock
(subject to the limitation on the maximum number of purchasable shares set forth
above) at the purchase price in effect for such Semi-Annual Period of
Participation. Any payroll deductions not applied to such purchase (a) because
they are not sufficient to purchase a whole share or (b) by reason of the
limitation on the maximum number of shares purchasable by the Participant for
that Semi-Annual Period of Participation shall be promptly refunded to the
Participant.

        Proration of Purchase Rights. Not more than 500,000 shares of Common
Stock, subject to periodic adjustment under Section VI.B, may be purchased in
the aggregate by all Participants on any one Semi-Annual Purchase Date. Should
the total number of shares of Common Stock which are to be purchased pursuant to
outstanding purchase rights on any particular date exceed either (i) the maximum
limitation on the number of shares purchasable in the aggregate on such date or
(ii) the number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and non-discriminatory basis, and the payroll deductions for each
Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be refunded to such
Participant.

        Rights as Stockholder. A Participant shall have no stockholder rights
with respect to the shares subject to his/her outstanding purchase right until
the shares are actually purchased on the Participant's behalf in accordance with
the applicable provisions of the Plan. No adjustments shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.

        Assignability.No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.

                                       5
<PAGE>

        Change in Ownership. Should the Company or its stockholders enter into
an agreement to dispose of all or substantially all of the assets or outstanding
capital stock of the Company by means of:

                (i) a sale, merger or other reorganization in which the Company
        will not be the surviving corporation (other than a reorganization
        effected primarily to change the State in which the Company is
        incorporated), or

                (ii) a reverse merger in which the Company is the surviving
        corporation but in which more than fifty percent (50%) of the Company's
        outstanding voting stock is transferred to holders different from those
        who held the stock immediately prior to the reverse merger, then all
        outstanding purchase rights under the Plan shall automatically be
        exercised immediately prior to the consummation of such sale, merger,
        reorganization or reverse merger by applying the payroll deductions of
        each Participant for the Semi-Annual Period of participation in which
        such transaction occurs to the purchase of whole shares of Common Stock
        at eighty-five percent (85%) of the lower of (i) the fair market value
        of the Common Stock on the Participant's Enrollment Date for the
        offering period in which such transaction occurs or (ii) the fair market
        value of the Common Stock immediately prior to the consummation of such
        transaction. However, the applicable share limitations of Articles VII
        and VIII shall continue to apply to any such purchase, and the clause
        (i) amount above shall not, for any Participant whose Enrollment Date
        for the offering period is other than the start date of such offering
        period, be less than the fair market value of the Common Stock on such
        start date.

        The Company shall use its best efforts to provide at least ten (10)
days' advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.

VIII.   ACCRUAL LIMITATIONS

        A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (I) rights to purchase Common Stock
accrued under any other purchase right outstanding under this Plan and (II)
similar rights accrued under other employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company or its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Company or any Corporate Affiliate (determined on the basis of the
fair market value of such stock on the date or dates such rights are granted to
the Participant) for each calendar year such rights are at any time outstanding.

        B. For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:

                (i) The right to acquire Common Stock under each such purchase
        right shall accrue in a series of successive semi-annual installments as
        and when the purchase right first becomes exercisable for each
        semi-annual installment on the last business day of each Semi-Annual
        Period of Participation for which the right remains outstanding.

                (ii) No right to acquire Common Stock under any outstanding
        purchase right shall accrue to the extent the Participant has already
        accrued in the same calendar year the right to acquire $25,000 worth of
        Common Stock (determined on the basis of the fair market value on the
        date or dates of grant) pursuant to one or more purchase rights held by
        the Participant during such calendar year.

                (iii) If by reason of such accrual limitations, any purchase
        right of a Participant does not accrue for a particular Semi-Annual
        Period of Participation, then the payroll deductions which the
        Participant made during that Semi-Annual Period of Participation with
        respect to such purchase right shall be promptly refunded.

                                       6
<PAGE>

        C. In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.

IX.     STATUS OF PLAN UNDER FEDERAL TAX LAWS

        The Plan is designed to qualify as an employee stock purchase plan under
Code Section 423.

X.      AMENDMENT AND TERMINATION

        A. The Board may amend, alter, suspend, discontinue, or terminate the
Plan at any time, including amendments to outstanding options/purchase rights.
However, the Board may not, without the approval of the Company's stockholders:

                (i) Increase the number of shares issuable under the Plan or the
        maximum number of shares which may be purchased per Participant or in
        the aggregate during any one Semi-Annual Period of Participation under
        the Plan, except that the Plan Administrator shall have the authority,
        exercisable without such stockholder approval, to effect adjustments to
        the extent necessary to reflect changes in the Company's capital
        structure pursuant to Section VI.B;

                (ii) alter the purchase price formula so as to reduce the
        purchase price payable for the shares issuable under the Plan; or

                (iii) materially increase the benefits accruing to Participants
        under the Plan or materially modify the requirements for eligibility to
        participate in the Plan.

        B. The Board may elect to terminate any or all outstanding purchase
rights at any time. In the event the Plan is terminated, the Board may also
elect to terminate outstanding purchase rights either immediately or upon
completion of the purchase of shares on the next Semi-Annual Purchase Date, or
may elect to permit purchase rights to expire in accordance with their terms
(and participation to continue through such expiration dates). If purchase
rights are terminated prior to expiration, all funds contributed to the Plan
that have not been used to purchase shares shall be returned to the Participants
as soon as administratively feasible.

IX.     GENERAL PROVISIONS

        A. The Plan shall become effective on the designated Effective Date,
provided that no offering period shall commence, and no shares of Common Stock
shall be issued hereunder, until (i) the Plan shall have been approved by the
stockholders and (ii) the Company shall have complied with all applicable
requirements of the Securities Act of 1933 (as amended), all applicable listing
requirements of any securities exchange on which shares of the Common Stock are
listed and all other applicable requirements established by law or regulation.
In the event such stockholder approval is not obtained, or such Company
compliance is not effected, within twelve (12) months after the date on which
the Plan is adopted by the Board, the Plan shall terminate and have no further
force of effect.

        B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.

        C. Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any of its Corporate Affiliates
for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.

        D. The provisions of the Plan shall be governed by the laws of the State
of California without resort to that State's conflict-of-laws rules.

                                       7

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