Document:

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                                                                   EXHIBIT 10.17

                         1998 DIRECTOR STOCK OPTION PLAN
                           (As amended October, 2001)

        1. Purposes of the Plan. The purposes of this 1998 Director Stock Option
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.

        All options granted hereunder shall be nonstatutory stock options.

        2. Definitions. As used herein, the following definitions shall apply:

           (a) "Board" means the Board of Directors of the Company.

           (b) "Code" means the Internal Revenue Code of 1986, as amended.

           (c) "Common Stock" means the common stock of the Company.

           (d) "Company" means Altera Corporation, a Delaware corporation.

           (e) "Director" means a member of the Board.

           (f) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

           (g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

           (h) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or

               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

           (i) "Inside Director" means a Director who is an Employee.

           (j) "Option" means a stock option granted pursuant to the Plan.

           (k) "Optioned Stock" means the Common Stock subject to an Option.

           (l) "Optionee" means a Director who holds an Option.

           (m) "Outside Director" means a Director who is not an Employee.

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           (n) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

           (o) "Plan" means this 1998 Director Stock Option Plan.

           (p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.

           (q) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

        3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 680,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.

        If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

        4. Administration and Grants of Options under the Plan.

           (a) Except as otherwise provided herein, the Plan shall be
administered by the Board.

           (b) Procedure for Grants. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:

               (i) Except as provided in Section 11(c), no person shall have any
discretion to select which Outside Directors shall be granted Options or to
determine the number of Shares to be covered by Options granted to Outside
Directors.

               (ii) Each Outside Director shall be automatically granted an
Option to purchase 40,000 Shares (the "First Option") on the date on which such
person first becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy.

               (iii) Each Outside Director shall be automatically granted an
Option to purchase 10,000 Shares (a "Subsequent Option") on the day of the
annual stockholder meeting at which such Outside Director is reelected to an
additional term; provided, however, that for the first grant of a Subsequent
Option (the "First Subsequent Option"), each Outside Director shall be
automatically granted an Option to purchase the number of Shares equal to 10,000
multiplied by a fraction, the numerator of which equals the number of whole
months (rounded up to the next whole month) from the date the Outside Director
first became an Outside Director to the date of the annual stockholders' meeting
at which the Outside Director was granted the First Subsequent Option and the
denominator of which equals twelve.

               (iv) The exercise price per Share for all Options granted under
the Plan shall be 100% of the Fair Market Value per Share on the date of grant
of the Option.

               (v) The terms of a First Option granted hereunder shall be as
follows:

                   (A) the term of the First Option shall be ten (10) years.

                   (B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

                   (C) subject to Section 10 hereof, the First Option shall
become exercisable as to twenty-five percent (25%) of the Shares subject to the
First Option on the first anniversary of its date of grant and as

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to 1/48th of the Shares subject to the First Option at the end of each month
thereafter, provided that the Optionee continues to serve as a Director on such
dates.

               (vi) The terms of a Subsequent Option granted hereunder shall be
as follows:

                   (A) the term of the Subsequent Option shall be ten (10)
years.

                   (B) the Subsequent Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

                   (C) Vesting of Subsequent Options.

                   (I) If an Outside Director is first elected to the Board at
an annual stockholder meeting, then, subject to Section 10 hereof, (AA) the
first, second, and third grants of a Subsequent Option to such Outside Director
shall vest and become exercisable as to 1/12th of the Shares subject to such
grant of a Subsequent Option at the end of each month following the month in
which the First Option granted under the Plan has fully vested, provided that
the Optionee continues to serve as a Director on such dates, and (BB) all
Subsequent Options, after the first three grants of Subsequent Options, shall
vest and become exercisable as to 1/12th of the Shares subject to such
Subsequent Option at the end of each month following the month in which the such
Outside Director is reelected to an additional term at the annual stockholder
meeting and granted such Subsequent Option, provided that the Optionee continues
to serve as a Director on such dates.

                   (II) If an Outside Director is first elected to the Board
prior to the next annual stockholder meeting, then, subject to Section 10
hereof, (AA) the First Subsequent Option shall vest and become exercisable
beginning at the end of the first month following the month in which the First
Option grant made under the Plan has fully vested as to an amount equal to the
number of Shares subject to the First Subsequent Option divided by the number of
whole months (rounded up to the nearest whole month) from the date the Outside
Director first became an Outside Director to the date of the annual stockholders
meeting at which the Outside Director was granted the First Subsequent Option,
provided that the Optionee continues to serve as a Director on such dates, (BB)
the second, third, and fourth grants of a Subsequent Option to such Outside
Director shall vest and become exercisable as to 1/12th of the Shares subject to
such grant of a Subsequent Option at the end of each month following the month
in which the First Subsequent Option granted under the Plan has fully vested,
provided that the Optionee continues to serve as a Director on such dates, and
(CC) all Subsequent Options, after the first four grants of Subsequent Options,
shall vest and become exercisable as to 1/12th of the Shares subject to such
Subsequent Option at the end of each month following the month in which the such
Outside Director is reelected to an additional term at the annual stockholder
meeting and granted such Subsequent Option, provided that the Optionee continues
to serve as a Director on such dates.

               (vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

               (viii) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its discretion:
(i) to determine, upon review of relevant information and in accordance with
Section 2(h) of the Plan, the fair market value of the Common Stock; (ii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 4(b) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; (vi) to increase or decrease the number of Shares subject to
either the First Option or Subsequent Option pursuant to Section 11(c) herein;
(vii) to increase the length of time an Option remains exercisable after the
termination of an Optionee's status as a Director; and (viii) to make all other
determinations deemed necessary or advisable for the administration of the Plan.

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               (ix) Effect of Board's Decision. All decisions, determinations
and interpretations of the Board shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.

               (x) Suspension or Termination of Option. If the President or his
designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his estate shall be entitled to
exercise any option whatsoever. In making such determination, the Board of
Directors (excluding the Outside Director accused of such misconduct) shall act
fairly and shall give the Optionee an opportunity to appear and present evidence
on Optionee's behalf at a hearing before a committee of the Board.

        5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

        The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

        6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect
until terminated under Section 11 of the Plan.

        7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.

        8. Exercise of Option.

           (a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

           An Option may not be exercised for a fraction of a Share.

           An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.

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           Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

           (b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code) or Retirement (as defined in Section
8(e) of the Plan)), the Optionee may exercise his or her Option, but only within
three (3) months (or such other period of time determined by the Board at the
time of grant) following the date of such termination, and only to the extent
that the Optionee was entitled to exercise it on the date of such termination
(but in no event later than the expiration of its ten (10) year term); provided,
however, that in the event that a sale of the Option Stock received upon
exercise of this Option would subject the Director to liability under Section 16
of the Securities and Exchange Act of 1934, as amended, then the Option will
terminate on the earlier of (i) the fifteenth day after the last date upon which
such sale would result in liability, or (ii) two hundred ten (210) days
following the date of such termination of status as a Director. To the extent
that the Optionee was not entitled to exercise an Option on the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.

           (c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but
only within three (3) months following the date of such termination, and only to
the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

           (d) Death of Optionee. In the event of the death of an Optionee:

               (i) during the term of the Option who is at the time of his death
a Director of the Company and who shall have been in Continuous Status as a
Director since the date of grant of the Option, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the expiration of the Option's term), by the Optionee's estate or by
a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status a
Director for six (6) months after the date of death.

               (ii) within thirty (30) days after the termination of Continuous
Status as a Director, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the expiration of
the Option's term), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.

           (e) Retirement of Optionee. In the event an Optionee's status as a
Director terminates upon his or her Retirement (as defined below), such Optionee
may exercise his or her Option, but only within one (1) year following the date
of such Optionee's Retirement and only to the extent that such Optionee was
entitled to exercise it on the date of Retirement (but in no event later than
the expiration of the Option's ten (10) year term). If, at the end of such one
year period, such Optionee is not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall revert to
the Plan. If the Optionee does not exercise his or her Option within such one
year period, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan. For purposes of this Section 8(e), "Retirement" shall
mean a termination of an Optionee's status as a Director after such Optionee has
completed ten (10) years of service as a Director of the Company.

        9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order as defined by the Code, Title I of the Employee
Retirement Income Security Act, or the rules thereunder. An Option may be
exercised, during the lifetime of the Optionee, only by the Optionee.

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        10. Adjustments Upon changes in Capitalization, Dissolution, Merger or
Asset Sale.

            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock including Shares as to which
the Option would not otherwise be exercisable.

            (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or equivalent option shall become fully exercisable,
including as to Shares for which it would not otherwise be exercisable.
Thereafter, the Option or equivalent option shall remain exercisable in
accordance with Sections 8(b) through (d) above.

            If the Successor Corporation does not assume an outstanding Option
or substitute for it an equivalent option, the Option shall become fully vested
and exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.

            For the purposes of this Section 10(c), an Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares). If such consideration received in the merger or sale of
assets is not solely common stock of the Successor Corporation or its Parent,
the Administrator may, with the consent of the Successor Corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
Successor Corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

        11. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary

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and desirable to comply with any applicable law, regulation or stock exchange
rule, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required including any increase in the
number of Shares subject to the Plan, other than in connection with an
adjustment under Section 10(a) of the Plan.

            (b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

            (c) Adjustment of First and Subsequent Options. The Board may, at
any time, amend the Plan to increase or decrease the number of Shares subject to
either the First Option or the Subsequent Option without obtaining stockholder
approval.

        12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.

        13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

        As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

        Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

        14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

        15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

        16. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.

                                       7<PAGE>
                                                                   EXHIBIT 10.21

               SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS

        Altera Corporation ("ALTERA") and MICHAEL JACOBS ("EMPLOYEE") desire to
enter into an agreement providing economic assistance to EMPLOYEE in connection
with the termination of his employment and covering other matters relating to
the cessation of EMPLOYEE's employment with ALTERA.

        Accordingly, for and in consideration of the commitments set forth
herein, EMPLOYEE and ALTERA agree as follows:

        1. Termination of Employment. EMPLOYEE's employment with ALTERA will
cease effective the close of business on November 15, 2001 (the "Termination
Date"). The Termination Date shall be considered the termination date of
EMPLOYEE's employment with ALTERA, and EMPLOYEE shall not be considered an
employee of ALTERA after the Termination Date for any purpose.

        2. Benefits. Subject to the terms of this Agreement, ALTERA agrees to
provide EMPLOYEE with the following benefits:

           (a) ALTERA shall provide EMPLOYEE with a lump-sum payment equal to
one year of his original base salary ($300,000), less applicable taxes in
accordance with ALTERA's payroll practices. The payment shall be made on January
15, 2002, the first regularly-scheduled Altera payday in 2002.

           (b) ALTERA agrees to pay for EMPLOYEE's share of COBRA payments for
one year following the Termination Date, provided, however, that if EMPLOYEE
becomes eligible during that time for medical insurance coverage from a new
employer, ALTERA's COBRA payments on behalf of EMPLOYEE shall cease. EMPLOYEE
agrees to advise ALTERA immediately should he obtain new employment within the
one-year period encompassing the COBRA payments.

           (c) ALTERA will accelerate the vesting of one year's worth (200,000
shares) of EMPLOYEE's common stock options, which would have vested between the
Termination Date and November 15, 2002. Those options will fully vest on the
Effective Date of this Agreement and EMPLOYEE will have one (1) year from the
Termination Date to exercise the options.

           (d) Twenty-five percent (25%) of EMPLOYEE's Restricted Stock grant
(12,500 shares) shall vest as scheduled on January 11, 2002. Following the
Termination Date, ALTERA shall have ninety (90) days to repurchase the remaining
fifty percent (50%) of EMPLOYEE's unvested Restricted Stock (25,000 shares) at
the original purchase price per share, for a total repurchase price of $12.50.

        3. Consideration. EMPLOYEE acknowledges that the terms of this Agreement
constitute valid consideration for the release of claims hereunder.

        4. Releases.

           (a) EMPLOYEE, his representatives, heirs, successors, and assigns, do
hereby

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completely release and forever discharge ALTERA, its affiliate and subsidiary
corporations, and their shareholders, officers, directors, agents, employees,
attorneys, successors, and assigns (referred to hereinafter collectively as
"COMPANY") from all claims, rights, demands, actions, obligations, liabilities,
and causes of action of any and every kind, nature, and character whatsoever,
known or unknown, which EMPLOYEE may now have or has ever had against the
COMPANY including, without limitation, those arising from or in any way
connected with the employment of EMPLOYEE by ALTERA or termination thereof,
whether based on tort, contract or any federal, state or local law, statute or
regulation, including without limitation any claims EMPLOYEE may have under the
federal Age Discrimination Act (29 U.S.C. Section 621, et seq.), Title VII of
the Civil Rights Act of 1964 (42 U.S.C. Section 2000e et seq.), or the
California Fair Employment and Housing Act (Gov't Code Section 12900 et seq.).
Nothing in this Agreement shall affect ALTERA's indemnification of EMPLOYEE
through the Company's indemnification policy, which covers Executive Officers
such as EMPLOYEE.

           (b) EMPLOYEE further agrees that he will not file, nor cause to be
filed, in any court or with any governmental agency, any action, claim, or
charge against the COMPANY arising from or in any way connected with EMPLOYEE's
employment with ALTERA, including without limitation, the termination thereof.

           (c) ALTERA, on behalf of itself, its predecessors, successors,
assigns, majority-owned subsidiaries and affiliates, shareholders, directors,
officers, partners, and any other entity or person claiming by, through or under
any of the foregoing, does hereby release EMPLOYEE, and each of his
representatives, heirs, successors, and assigns, from any and all claims,
demands, causes of action and liabilities of any nature whatsoever, whether or
not known, suspected or claimed, arising directly or indirectly from any act,
omission, event or transaction occurring prior to the Effective Date of this
Agreement, with the exception of any obligations arising under or out of this
Agreement.

        5. Acknowledgement of Waiver of Claims under ADEA. EMPLOYEE acknowledges
that he is waiving and releasing any rights he/she may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. EMPLOYEE acknowledges that the consideration
given for this waiver and release Agreement is in addition to anything of value
to which EMPLOYEE was already entitled prior to his execution of this Agreement.
EMPLOYEE further acknowledges that he has been advised by this writing that (a)
he should consult with an attorney prior to executing this Agreement; (b) he has
up to twenty-one (21) days within which to consider this Agreement; (c) he has
seven (7) days following the execution of this Agreement by the parties to
revoke the Agreement; and (d) this Agreement shall not be effective until the
revocation period has expired.

        6. Civil Code Section 1542. It is understood and agreed that this is a
full and final release covering all known, unknown, anticipated, and
unanticipated injuries, debts, claims, or damages to EMPLOYEE or ALTERA which
may have arisen or may be connected with the employment of EMPLOYEE by ALTERA or
the termination thereof. EMPLOYEE and ALTERA hereby waive any and all rights or
benefits that they may now have, or in the future may have, under the terms of
Section 1542 of the California Civil Code, which provides as follows:

           A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
           NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
           THE

                                       2
<PAGE>

           RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
           SETTLEMENT WITH THE DEBTOR.

           In that regard, EMPLOYEE and ALTERA hereby acknowledge that they may
have sustained losses which are presently unknown or unsuspected, that such
damages and other losses as were sustained may give rise to additional
complaints, actions, causes of action, claims, demands and debts in the future.
Nevertheless, EMPLOYEE and ALTERA acknowledge that this Release has been
negotiated and agreed upon in light of this realization and, being fully aware
of this situation, EMPLOYEE and ALTERA nevertheless intend hereby to release,
acquit and forever discharge one another from any and all such unknown claims
including damages which are unknown or unanticipated.

        7. Proprietary Information. Following the Termination Date, EMPLOYEE
shall continue to maintain the confidentiality of all confidential and
proprietary information of ALTERA and shall continue to comply with the terms
and conditions of the Employee Proprietary Information Agreement between
EMPLOYEE and ALTERA. Employee understands and agrees that he has an obligation
to preserve as confidential all proprietary, technical and business information
pertaining to ALTERA, its customers, suppliers, distributors and licensees, and
any other companies whose information ALTERA has agreed to keep confidential and
to which EMPLOYEE had access during his employment. In addition, EMPLOYEE agrees
to promptly return to ALTERA all of ALTERA's property and confidential and
proprietary information in his possession.

        8. Confidentiality. EMPLOYEE and ALTERA understand and agree that this
Agreement, and each and every provision hereof, is confidential and shall not be
disclosed by either party to any person (including employees of ALTERA not
having a need to know as defined in the sole discretion of ALTERA), firm,
organization or entity, of any and every type, public or private, for any
reason, at any time, without the prior written consent of the other party,
unless required by law, or if such information is provided under the obligation
of confidentiality to outside financial auditors/tax advisors and attorneys.
This Paragraph shall be deemed a material term of this Agreement and shall
survive the expiration date of its operative terms.

        9. No Admission of Liability. It is understood and agreed that the
furnishing of the consideration of this Agreement shall not be deemed or
construed at any time or for any purpose as an admission of liability by ALTERA.
Liability for any and all claims is expressly denied by ALTERA.

        10. Entire Agreement. EMPLOYEE and ALTERA agree that they have had the
opportunity to be represented in the negotiation of this Agreement by
individuals of their own choosing, that they have read the Agreement and fully
understand its legal effect, that the Agreement contains all of the promises and
represents the entire agreement that they have made, and that they are entering
into this Agreement freely and not on the basis of promises that are not stated
in this Agreement. EMPLOYEE specifically acknowledges that he has been advised
to consult an attorney regarding the terms of this Agreement.

        11. Effective Date. This Agreement is effective seven (7) days after it
has been signed by both parties.

        12. Severability. In the event any term of this Agreement shall be found
to be null or void, the remaining terms shall continue to have full force and
effect.

                                       3
<PAGE>

        13. Governing Law. This Agreement shall be governed by the laws of the
State of California.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       4
<PAGE>

        IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

EMPLOYEE                                   ALTERA CORPORATION

MICHAEL JACOBS

/s/ Michael Jacobs                         By:  /s/ Jack Fitzhenry
---------------------------------             ---------------------------------
                                               Jack Fitzhenry
                                               Vice President, Human Resources

Date:  10/19/01                            Date:  10/19/01
     ----------------------------               -------------------------------

                                       5
<PAGE>

November 6, 2001

Dear Mike,

Per your request, this letter clarifies the meaning of Paragraph 2(c) of the
Separation Agreement and General Release of Claims between you and Altera that
you executed on October 19, 2001. Please be advised that you shall have one (1)
year from your Termination Date of November 15, 2001, to exercise all of your
vested and unexercised Altera stock options, whether or not the options vested
pursuant to the terms of your Separation Agreement or in the regular course of
your stock option agreement(s) with Altera.

So as to indicate your understanding and acceptance of the foregoing, please
countersign below and return this letter to me at your earliest convenience. I
have enclosed an additional copy of this letter so that you have one for your
records as well.

Should you have any further questions or concerns, please do not hesitate to
contact me.

Sincerely,

/s/ Jack Fitzhenry
Jack Fitzhenry
Vice President, Human Resources

I understand and agree to the foregoing clarification of my Separation Agreement
and General Release of Claims.

 /s/ Michael Jacobs                   11/6/01
-----------------------             -----------
Michael Jacobs                      Date

                                       6

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