Document:

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                                                                   EXHIBIT 10.38

                               ALTERA CORPORATION
                     NONQUALIFIED DEFERRED COMPENSATION PLAN

                            PLAN AND TRUST AGREEMENT
               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998)

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                                TABLE OF CONTENTS

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ARTICLE I -- PLAN ADMINISTRATION.................................................................2

ARTICLE II -- ELIGIBILITY, PARTICIPATION AND BENEFICIARY DESIGNATION.............................2

ARTICLE III -- PLAN CONTRIBUTIONS AND ALLOCATIONS................................................3

ARTICLE IV -- VESTING............................................................................4

ARTICLE V -- TRUST FUND..........................................................................5

ARTICLE VI -- GENERAL DUTIES OF THE COMMITTEE AND THE TRUSTEE....................................6

ARTICLE VII -- ALLOCATION OF TRUST INCOME OR LOSS................................................6

ARTICLE VIII -- PARTICIPANTS' ACCOUNTS...........................................................7

ARTICLE IX -- PAYMENTS TO A PLAN BENEFICIARY.....................................................8

ARTICLE X -- HARDSHIP WITHDRAWALS...............................................................10

ARTICLE XI -- TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO PLAN BENEFICIARIES WHEN COMPANY
              INSOLVENT.........................................................................11

ARTICLE XII -- INVESTMENT AND ADMINISTRATION OF TRUST FUND......................................12

ARTICLE XIII -- ACCOUNTING BY TRUSTEE...........................................................14

ARTICLE XIV -- RESPONSIBILITY OF TRUSTEE........................................................14

ARTICLE XV -- TAXES, EXPENSES AND COMPENSATION OF TRUSTEE.......................................15

ARTICLE XVI -- PROTECTION OF TRUSTEE............................................................16

ARTICLE XVII -- INDEMNIFICATION OF TRUSTEE......................................................17

ARTICLE XVIII -- RESIGNATION AND REMOVAL OF TRUSTEE AND LEGAL
                 COUNSEL........................................................................17

ARTICLE XIX -- DURATION AND TERMINATION OF TRUST AND AMENDMENT..................................18

ARTICLE XX -- MISCELLANEOUS.....................................................................18
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                               ALTERA CORPORATION

                NONQUALIFIED DEFERRED COMPENSATION PLAN AND TRUST

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998)

        THIS PLAN AND TRUST AGREEMENT, effective as of February 1, 1994, is
hereby amended and restated in its entirety effective as of January 1, 1998 by
and between Altera Corporation (the "Company"), acting on behalf of itself and
any designated subsidiaries, and Charles Schwab and Company as trustee (the
"Trustee"). Throughout, Company shall include wherever relevant any entity that
is directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity or investment interest, as determined by the
Company.

                                    RECITALS:

        1. The Company maintains the Nonqualified Deferral Compensation Plan
(the "Plan") for the benefit of a select group of management or highly
compensated employees designated by the Company as well as members of the
Company's Board of Directors (the "Board").

        2. Under the Plan, the Company is obligated to pay vested accrued
benefits to Plan Participants and their beneficiary or beneficiaries ("Plan
Beneficiaries"), from the Company's general assets.

        3. The Company has established an irrevocable trust (the "Trust") to
which it contributes to meet its obligations under the Plan, and such
contributions are held by the Trustee and invested, reinvested and distributed,
all in accordance with the provisions of this Plan.

        4. The Company intends that amounts allocated to the Trust and the
earnings thereon shall be used by the Trustee to satisfy the liabilities of the
Company under the Plan with respect to each Participant for whom an Account has
been established and such utilization shall be in accordance with the procedures
set forth herein.

        5. The Company intends that the assets of the Trust shall at all times
be subject to the claims of the general creditors of the Company as provided in
Article XI.

        6. The Company intends that the existence of the Trust shall not alter
the characterization of the Plan as "unfunded" for purposes of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and shall not be
construed to provide income to the Participants under the Plan prior to actual
payment of the vested accrued benefits thereunder.

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        NOW THEREFORE, the Company does hereby establish the Plan and Trust as
follows and does also hereby agree that the Plan and Trust shall be structured,
held and disposed of as follows:

                                    ARTICLE I

                               PLAN ADMINISTRATION

        A. The Plan shall be administered by the Retirement Plans Committee of
the Company (the "Committee"). Subject to the provisions in the Plan and to the
specific duties delegated by the Board of Directors to such Committee, the
Committee shall be responsible for the general administration and interpretation
of the Plan and for carrying out its provisions. The Committee shall have such
powers as may be necessary to discharge its duties hereunder, including, but not
by way of limitation, the following powers and duties:

                (1) discretionary authority to construe and interpret the terms
        of the Plan, and to determine eligibility and the amount, manner and
        time of payment of any benefits hereunder;

                (2) to prescribe procedures to be followed by Participants for
        purposes of Plan participation and distribution of benefits; and

                (3) to take such other action as may be necessary and
        appropriate for the proper administration of the Plan.

        B. The Committee may adopt such rules, regulations and bylaws and may
make such decisions as it deems necessary or desirable for the proper
administration of the Plan. Any rule or decision that is not inconsistent with
the provisions of the Plan shall be conclusive and binding upon all persons
affected by it, and there shall be no appeal from any ruling by the Committee
that is within its authority, except as otherwise provided herein.

                                   ARTICLE II

             ELIGIBILITY, PARTICIPATION AND BENEFICIARY DESIGNATION

        A. Eligible Participants. The following categories of individuals who
provide services to the Company ("Eligible Participants") shall be eligible to
participate in the Plan: (i) employees who are designated as eligible to
participate on the attached Exhibit A to this Plan; (ii) any other employee or
category of employee that is designated by the Committee as eligible to
participate in the Plan, and (iii) members of the Company's Board of Directors.
The Committee reserves the right to modify the definition of Eligible
Participants at any time. Any Eligible Participant who has commenced
participation in the Plan shall be referred to in this Plan as a "Participant."

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        B. Participation. Each Participant may elect to commence participation
in the Plan by completing an Altera Corporation Nonqualified Deferred
Compensation Plan Deferred Compensation Agreement ("Deferred Compensation
Agreement") within 30 days following the date on which the Committee gives such
individual written notice that the individual is an Eligible Participant. Any
Eligible Participant who does not execute a Deferred Compensation Agreement
within the time periods described herein may nevertheless participate in the
Plan commencing with Compensation paid in the next succeeding calendar year by
filing an executed Deferred Compensation Agreement with the Committee before the
beginning of such calendar year.

        C. Beneficiary Designation. Each Participant, prior to entering the
Plan, shall designate a beneficiary or beneficiaries to receive the remainder of
any interest of the Participant under the Plan. A Participant may change his or
her beneficiary designation at any time on written notice to the Committee. Each
beneficiary designation shall be in a form prescribed by the Committee and will
be effective only when filed with the Committee during the Participant's
lifetime. Each beneficiary designation filed with the Committee will cancel all
previously filed beneficiary designations. In the absence of a valid
designation, or if no designated beneficiary survives the Participant, the
Participant's interest shall be distributed to the Participant's estate.

                                   ARTICLE III

                       PLAN CONTRIBUTIONS AND ALLOCATIONS

        A. Participant Deferrals. Each Participant participating in the Plan
shall execute a Deferred Compensation Agreement authorizing the Company to
withhold a specific dollar amount or a percentage of the Participant's
Compensation which would otherwise be paid to the Participant with respect to
services rendered. Compensation shall be defined for purposes of the foregoing
as the cash compensation payable to the Participant in connection with the
Participant's services to the Company, including all amounts which a Participant
elects to have the Company contribute on his behalf as a deferral contribution
("Compensation"). The deferral percentage is applied to Compensation after all
other applicable payroll deductions have been applied. The Committee may, in its
discretion, establish in the Deferred Compensation Agreement minimum and maximum
levels of bonus and non-bonus compensation that may be deferred pursuant to the
Plan. Compensation deferrals made by a Participant under this Plan shall be held
as an asset of the Company.

        B. Election Changes. A Participant may, in such form as the Committee
may prescribe, discontinue deferral of future compensation at any time; however,
no other modifications to the Deferred Compensation Agreement may be made prior
to the commencement of the calendar year following written notification to the
Company of any desired modifications. The Committee has the power to establish
uniform and nondiscriminatory rules and from time to time to modify or change
such rules governing the manner and method by which Compensation deferral
contributions shall be made, as well as the manner and method by which
Compensation deferral contribution may be changed or discontinued temporarily or
permanently. All Compensation deferral contributions shall

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be authorized by the Participant in writing, made by payroll deduction and
deducted from the Participant's Compensation without reduction for any taxes or
withholding (except to the extent required by law or the regulations).
Notwithstanding the foregoing, each Participant shall remain liable for any and
all employment taxes owing with respect to such Participant's Compensation
deferral contributions.

        C. Cessation of Eligible Status. In the event a Participant ceases to be
an Eligible Participant while also a participant in the Plan, such Participant
may continue to make Compensation deferral contributions under the Plan through
the end of the payroll period in which the Participant ceases to be an Eligible
Participant. Thereafter, such Participant shall not make any further
Compensation deferral contributions to the Plan unless or until he or she again
meets the eligibility requirements of Article II above.

        D. Company Matching Contributions. As of the last day of each calendar
year or such earlier time or times as the Committee may determine, the Company
may make a matching contribution to the Trust in such amount as the Board shall
specify.

        E. Company Discretionary Contributions. The Company may, in its sole
discretion, make discretionary contributions to the Accounts of one or more
Participants at such times and in such amounts as the Board shall determine.

        F. Allocations. The Compensation deferral contributions and any Company
contributions made under the Plan on behalf of a Participant shall be credited
to the Participant's Account. The Committee shall establish and maintain
separate subaccounts as it determines to be necessary and appropriate for the
proper administration of the Plan. Each Participant Account consists of the
aggregate interest of the Participant under the Plan (and in the Trust Fund), as
reflected in the records maintained by the Company for such purposes.

                                   ARTICLE IV

                                     VESTING

        A. Compensation Deferral Contributions. The value of a Participant's
Account attributable to the Participant's Compensation deferral contributions
shall always be fully vested and nonforfeitable.

        B. Company Contributions. The value of a Participant's Account
attributable to any Company contributions pursuant to Article III.D and E shall
vest in its entirety five (5) years after the date of the Company contribution
to which such value relates, provided the Participant has remained in the
continuous service of the Company throughout such five-year period. If the
Participant's employment with the Company (or service on the Board, as
applicable) terminates for any reason prior to the expiration of such five-year
period, unless determined otherwise by the Board, no portion

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of the Participant's Account attributable to Company contributions occurring
within the preceding five-year period shall be considered vested for purposes of
this Plan. Upon termination of a Participant's employment with the Company for
any reason, any portion of the Participant's Account that is not then vested
(including allocable earnings, as determined by the Committee), shall be
forfeited.

                                    ARTICLE V

                                   TRUST FUND

        A. Trust. The Company hereby establishes the Trust with the Trustee,
consisting of such sums of money and other property acceptable to the Trustee as
from time to time shall be paid or delivered to the Trustee. All such money and
other property, all investments and reinvestments made therewith or proceeds
thereof and all earnings and profits thereon, less all payments and charges as
authorized herein, shall constitute the "Trust Fund" or "Trust." The Trust Fund
shall at all times be subject to the claims of general creditors of the Company
as provided in Article XI.

        B. Grantor Trust. The Trust hereby established shall be irrevocable, but
for the issuance by the Internal Revenue Service of unfavorable tax rulings on
the status of the Trust as a grantor trust. Subject to Article XI, Trust assets
shall be held for the exclusive purpose of providing vested accrued benefits to
the Trust Beneficiaries and defraying expenses of the Trust in accordance with
the provisions of this Plan. No part of the income or corpus of the Trust Fund
shall be recoverable by or for the Company prior to the termination of the Trust
and the satisfaction of all liabilities under the Plans.

        C. Assignment. No right or interest to receive accrued benefits from the
Trust may be assigned, sold, anticipated, alienated or otherwise transferred by
the Plan Beneficiaries.

        D. Trustee. The Trustee accepts the Trust established under this Plan on
the terms and subject to the provisions set forth herein, and it agrees to
discharge and perform fully and faithfully all of the duties and obligations
imposed upon it under this Plan.

        E. Trust Assets. The principal of the Trust and any earnings thereon
shall be held separate and apart from other funds of the Company and shall be
used exclusively for the uses and purposes herein set forth. Neither the Plan
Beneficiaries nor the Plan shall have any preferred claim on, or any beneficial
ownership interest in, any assets of the Trust prior to the time such assets are
paid to a Plan Beneficiary as vested accrued benefits as provided in Article IX,
and all rights created under the Plan and the Trust under this Plan shall be
mere unsecured, contractual rights of the Participants against the Company.

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                                   ARTICLE VI

                 GENERAL DUTIES OF THE COMMITTEE AND THE TRUSTEE

        A. Committee Duties. The Committee will provide the Trustee with a copy
of any future amendment to this Plan promptly upon its adoption. The Committee
may from time to time hire outside consultants, accountants, actuaries, legal
counsel or record keepers to perform such tasks as the Committee may from time
to time determine.

        B. Trustee Duties. The Trustee shall manage, invest and reinvest the
Trust Fund as provided in Article XII of this Plan. The Trustee shall collect
the income on the Trust Fund, and make distributions therefrom, all as
hereinafter provided.

        C. Company Contributions. While the Plan remains in effect, and prior to
a Change in Control, as defined below, the Company shall make contributions to
the Trust Fund at least once each quarter. The amount of any quarterly
contributions shall be at the discretion the Company. At the close of each
calendar year, the Company shall make an additional contribution to the Trust
Fund to the extent that previous contributions to the Trust Fund for the current
calendar year are not equal to the total of the Compensation deferrals made by
each Participant plus Company matching contributions and discretionary
contributions, if any, accrued, as of the close of the current calendar year.
The Trustee shall not be liable for any failure by the Company to provide
contributions sufficient to pay all accrued benefits under the Plan in full in
accordance with the terms of this Plan.

        D. Department of Labor Determination. In the event that any Participants
are found to be ineligible, that is, not members of a select group of management
or highly compensated employees, according to a determination made by the
Department of Labor, the Committee will take whatever steps it deems necessary,
in its sole discretion to equitably protect the interests of the affected
Participants.

                                   ARTICLE VII

                       ALLOCATION OF TRUST INCOME OR LOSS

        A. Determination of Net Income. As of each Valuation Date (as defined in
Article VII.D below), the Committee shall determine the net income or loss of
the Trust Fund based on a statement from the Trustee of the receipts and
disbursements of the Trust Fund since the immediately preceding Valuation Date
and of the fair market value of the Fund as of the Valuation Date. If one or
more separate investment funds have been established as provided in Article XII,
each fund shall be valued separately on each Valuation Date and the net income
or loss of each fund shall be allocated to each Account invested in such
investment fund. In addition, self-directed accounts as defined under Article
XII.B shall be valued according to Section C of this Article.

        B. Valuation. As of each Valuation Date and prior to any allocation of
contributions and forfeitures to be made as of such date, the net income or loss
of the Trust Fund since the immediately preceding Valuation Date, including net
appreciation or depreciation and any expenses paid by the

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Trust, shall be allocated to each Account in the ratio that the value, as of the
immediately preceding Valuation Date of each such Account invested in the Trust
Fund bears to the value, as of the immediately preceding Valuation Date, of all
Accounts invested in the Trust Fund. If one or more separate investment funds
have been established, the net income or loss of each fund shall be allocated to
each Account invested in such investment fund in proportion to the value of each
Account invested in such funds as of the immediately preceding Valuation Date.
The Committee shall adopt suitable procedures to establish a proportionate
crediting of Trust income or loss to those portions of Accounts in the case of
contributions or hardship withdrawals that have occurred in the interim period
since the immediately preceding Valuation Date.

        C. Valuation of Segregated Accounts. The portion of any Participants's
Account invested on a segregated basis as provided in Article XII shall be
valued separately on each Valuation Date and the net income or loss allocated to
such Account shall be based on the assets, including income, gain, loss and/or
other change in value of the assets constituting such portion of the Account.

        D. Valuation Dates. The Trust Fund, any separate investment funds and
any segregated account shall be valued as of the last day of each calendar year
and as of any other date the Company directs the Trustee to value the Trust
Fund, as provided in Article VII.E.

        E. Special Valuation Dates at Committee Discretion. The Committee may
direct the Trustee to determine the fair market value of the Trust Fund and may
make a determination of Trust income or loss as of any date other than the last
day of a calendar year.

                                  ARTICLE VIII

                             PARTICIPANTS' ACCOUNTS

        A. Separate Accounts. The Committee shall open and maintain a separate
Account for each Participant. Each Participant's Account shall reflect the
amounts allocated thereto and distributed therefrom and such other information
as affects the value of such Account pursuant to this Plan. The Committee may
maintain records of Accounts to the nearest whole dollar.

        B. Statement of Accounts. As soon as practicable after the end of each
calendar year the Committee shall furnish to each Participant a statement of his
or her Account, determined as of the end of such calendar year. Upon the
discovery of any error or miscalculation in an Account, the Committee shall
correct it, to the extent correction is practically feasible; provided, however,
that any such statement of Account shall be considered to reflect accurately the
status of the Participant's Account for all purposes under the Plan unless,
subject to any longer period required by ERISA, the Participant reports a
discrepancy to the Committee within six (6) months after receipt of the
statement. The Committee shall have no obligation to make adjustments to an
Participant's Account for any discrepancy reported to the Committee more than
six (6) months after receipt of the

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statement, or for a discrepancy caused by the Participant's error. Statements to
Participants are for reporting purposes only, and no allocation, valuation or
statement shall vest any right or title in any part of the Trust Fund, nor
require any segregation of Trust assets, except as is specifically provided in
this Plan.

        C. Accounts Which Are Not Segregated. When a Participant's services to
the Company cease and distribution of benefits is not deferred, the amount of
the benefit shall be based on the value of the vested portion of the
Participant's Account as of the Valuation Date immediately preceding his or her
termination date plus any contribution subsequently credited to such Account and
less any distributions subsequently made from the Account.

        D. Segregated Accounts. Payment to a Participant shall be based on the
value of the vested portion of the Participant's segregated Account at the date
of distribution. The value of his or her segregated Account shall be the current
fair market value, including any income or loss, of the property constituting
such segregated Account.

                                   ARTICLE IX

                         PAYMENTS TO A PLAN BENEFICIARY

        A. General. Payments of vested accrued benefits to Plan Beneficiaries
from the Trust Fund shall be made in accordance with the distribution event
specified by the Participant in the Deferred Compensation Agreement between the
Company and the Participant (the "Distribution Event"); provided, however, the
Trustee shall make such payments, as directed by the Committee, to the extent
the Company is not at such time Insolvent as defined in Article XI. Except as
otherwise expressly provided in the Participant's Deferred Compensation
Agreement, no distribution shall be made or commenced prior to the Participant's
Distribution Event or a "Change of Control," whichever occurs earlier. A
Participant may, at least one year prior to the Participant's specified
Distribution Event, revoke such Distribution Event in favor of an alternative
Distribution Event; provided that a Participant may revoke a Distribution Event
once only, and provided further, that any such revocation shall not be given
effect if, during the one year period after the date of such revocation, the
Participant voluntarily terminates his or her services to the Company. For
purposes of this Plan, a "Change in Control" shall be deemed to have occurred if
any person (including a "Group" as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) acquires shares of the Company either (i)
having a majority of the total number of votes that may be cast for the election
of directors of the Company or (ii) possessing, directly or indirectly, the
power to control the direction of management or policies of the Company;
provided, however, that no Change of Control shall be deemed to occur in the
event of a merger, consolidation or reorganization of the Company where the
shareholders of the Company are substantially the same as before such merger,
consolidation or reorganization. The Trustee shall have no responsibility to
determine whether a Change in Control has occurred and shall be advised of such
event by the Company.

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        B. Cash Distributions. Where the distribution of all or any portion of a
Participant's Account is to be deferred in the form of cash, the Account shall
continue to be held and invested in the Trust subject to revaluation as provided
in Article VII.

        C. In Kind Distributions. In kind distributions shall be (i) made only
in the Committee's discretion, (ii) made only in a form of investment that was
held on behalf of the Participant as a segregated investment pursuant to Article
XII.B in a separate investment fund pursuant to Article XII.D immediately
preceding the date of distribution, (iii) limited to the amount of such
investment so held, and (iv) based on the fair market value of the distributable
property, as determined by the Trustee at the time of distribution.

        D. Method of Distribution. Payment to any Plan Beneficiary shall be made
pursuant to the Deferred Compensation Agreement executed by the Participant, in
whole or in part. A Participant may specify, at least ninety (90) days prior to
the Participant's Distribution Event, whether such distribution shall be made:

                (1) In a lump sum, in cash and/or, in the Committee's
discretion, in kind, or

                (2) In annual installments over a period not to exceed ten (10)
years equal to 1/n of the Participant's vested accrued benefit where n is the
number of installments remaining to be paid, subject to such reasonable
procedures and guidelines as the Committee may establish, or

                (3) In annual installments over a period not to exceed ten (10)
years, based on percentages specified by the Participant, subject to an annual
minimum percentage of five percent (5%) and such other limitations as the
Committee may establish.

        E. Certain Distributions. In case of any distribution to a minor or to a
legally incompetent person, the Committee may (1) direct the Trustee to make the
distribution to his legal representative, to a designated relative, or directly
to such person for his benefit, or (2) instruct the Trustee to use the
distribution directly for his support, maintenance, or education. The Trustee
shall not be required to oversee the application, by any third party, of any
distributions made pursuant to this Article IX.E.

        F. IRS Determination. Notwithstanding any other provisions of this Plan,
if any amounts held in the Trust are found in a "determination" (within the
meaning of Section 1313(a) of the Internal Revenue Code of 1986, as amended (the
"Code")), to have been includible in the gross income of any Trust Beneficiary
prior to payment of such amounts from the Trust, the Trustee shall, as soon as
practicable pay such amounts to the Plan Beneficiary, as directed by the
Company. For purposes of this Section, the Trustee shall be entitled to written
notice from the Committee that a determination described in the preceding
sentence has occurred and to receive a copy of such notice. The Trustee shall
have no responsibility until so advised by the Committee.

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                                    ARTICLE X

                              HARDSHIP WITHDRAWALS

        A. General Rule. At the request of a Participant, the Committee shall
authorize a withdrawal at any time of the accrued benefit attributable to the
Participant's Compensation deferrals and gains or losses thereon under the
Participant's Account, provided that authorization for such withdrawal and the
amount thereof shall be given only on account of an unforeseeable emergency. The
term "unforeseeable emergency" shall mean severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Internal Revenue Code section
152(a)) of the Participant, loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The circumstances that
will constitute an unforeseeable emergency will depend upon the facts of each
case, but in any case, payment may not be made to the extent that such hardship
is or may be relieved --

                (1) Through reimbursement or compensation by insurance or
otherwise,

                (2) By liquidation of the Participant's assets, to the extent
the liquidation of such assets would not itself cause severe financial hardship,
or

                (3) By cessation of deferrals under the Plan.

The Committee shall establish reasonable procedures and guidelines uniformly
applied, to determine whether an unforeseeable emergency exists; provided,
however, that no withdrawal request shall be granted if to do so could result in
the inclusion of Trust Fund amounts in the gross income of Plan Beneficiaries
prior to payment of such amounts from the Trust Fund because approval of such
request would be inconsistent with any applicable statute, regulation, notice,
ruling or other pronouncement of the Internal Revenue Service interpreting this
or similar provisions.

                                   ARTICLE XI

                  TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
                    PLAN BENEFICIARIES WHEN COMPANY INSOLVENT

        A. Company Insolvency. The Company shall be considered "Insolvent" and
an "Insolvency" shall be deemed to exist for purposes of this Plan under any of
the following circumstances:

                (1)     The Company is unable to pay its debts as they mature,
                        defined as having a weighted average overdue payables
                        balance in excess of 270 days.

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<PAGE>   13

                (2)     A receiver or trustee is appointed to take possession of
                        all or substantially all of the assets of the Company.

                (3)     There is a general assignment by the Company for the
                        benefit of creditors.

                (4)     An action or proceeding is commenced by or against the
                        Company under any insolvency or bankruptcy act, or any
                        other statute or regulation having as its purpose the
                        protection of creditors, and the action or proceeding is
                        not discharged within 60 days after the date of
                        commencement.

        B. Plan Suspension. Notwithstanding any provision in this Plan to the
contrary, if at any time while the Trust is still in existence the Company
becomes Insolvent, the Trustee shall upon written notice thereof suspend the
payment of all amounts from the Trust Fund and shall thereafter (i) not permit
any further elective Compensation deferral contributions by the Participants and
(ii) discontinue all contributions by the Company to the Trust on behalf of the
Participants. The Trustee shall hold the Trust Fund in suspense for the benefit
of the Company's creditors until it receives a court order directing the
disposition of the Trust Fund; provided, however, that the Trustee may deduct or
continue to deduct its fees and expenses, including fees of any consultants,
actuaries, accountants, legal counsel or record keepers retained by the Company
or Trustee to provide services to the Trust.

        C. Notice of Insolvency. By its approval and execution of this Plan, the
Company represents and agrees that its Board, the Committee, and its Chief
Executive Officer, as from time to time acting, shall have the fiduciary duty
and responsibility on behalf of the Company's creditors to give to the Trustee
prompt written notice of the Company's Insolvency and the Trustee shall be
entitled to rely thereon to the exclusion of all directions or claims to pay
vested accrued benefits thereafter made. Absent such notice, the Trustee shall
have no responsibility for determining whether or not the Company has become
Insolvent.

        D. If after being Insolvent, the Company later becomes solvent without
the entry of a court order concerning the disposition of the Trust Fund, or if
any bankruptcy or insolvency proceedings referred to in Article XI.A are
dismissed, the Company shall by written notice so inform the Trustee and the
Trustee shall thereupon resume all its duties and responsibilities under this
Plan without regard to this Article XI until and unless the Company again
becomes Insolvent as such term is defined herein.

        E. If the Trustee discontinues payments from the Trust pursuant to this
Article XI and subsequently resumes payments, or removes the suspended status of
the Trust, interest will be added to the Accounts of all Executives, including
those Accounts from which a payment was held in suspense, for the period of
discontinuance at not less than the average rate on 90-Day Treasury Bills
auctioned during the period of discontinuance, to be determined and calculated
by the Company. The Company will not make any other contributions to the Trust
that otherwise would have been made during the period of discontinuance.

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                                   ARTICLE XII

                   INVESTMENT AND ADMINISTRATION OF TRUST FUND

        A. Investments. The Trustee shall have the power:

                (1)     To invest and reinvest the Trust Funds; provided,
                        however, the Trustee may delegate this investment
                        authority, in whole or in part, and subject to such
                        terms and conditions and as the Trustee shall require,
                        to the Committee or to an Investment Manager who meets
                        the requirements under the Altera Corporation Employee
                        Retirement and Savings Plan;

                (2)     To collect and receive any and all money and other
                        property due to the Trust Fund and to give full
                        discharge therefore;

                (3)     To settle, compromise or submit to arbitration any
                        claims, debts or damages due or owing to or from the
                        Trust; to commence or defend suits or legal proceedings
                        to protect any interest of the Trust; and to represent
                        the Trust in all suits or legal proceedings in any court
                        or before any other body or tribunal;

                (4)     Generally to do all acts, whether or not expressly
                        authorized, which the Trustee may deem necessary or
                        desirable for the protection of the Trust Fund.

                Persons dealing with the Trustee shall be under no obligation to
see to the proper application of any money paid or property delivered to the
Trustee or to inquire into the Trustee's authority as to any transaction.

        B. Segregated Investments; Participant Direction Permitted. The
Committee may, in its discretion, provide Participants with a list of permitted
investments available for hypothetical investment and the Participant may
designate, in a manner specified by the Committee, one or more investments that
his or her Account will be deemed to be invested in for purposes of determining
the amount of earnings to be credited to that Account. The Company may, but need
not, acquire investments corresponding to those designated by the Participants
hereunder, and it is not under any obligation to maintain any investment it may
make. Any such investments, if made, shall be in the name of the Company (or the
Trustee), and shall be an asset of the Company in which no Participant shall
have any interest. For valuation and record keeping purposes, Accounts shall be
segregated and shall be valued separately by the Trustee under the provisions of
Article VII.C. Valuations of such Accounts shall be made at such times as the
Committee may require, but no less frequently than annually. Such Accounts may
be charged with their proportionate share of any general expenses charged to the
Trust or with the full share of any expense incurred directly or indirectly in
connection with such Accounts.

                                      -12-
<PAGE>   15

        C. Participant Direction Subject to Committee and Trustee Approval.
Neither the Committee nor the Trustee shall be under any obligation to approve
or disapprove any specific investment medium. Neither the Company nor the
Trustee has any liability for any losses or damage that may occur or result from
(i) the approval of or failure to approve of any specific investment medium;
(ii) the imposition of any administrative rules relating to the timing of
investment elections of any sort; or (iii) any administrative delay in carrying
out or failure to carry out investment elections within a specified time. The
Committee or the Trustee may disapprove or refuse to carry out any investment
request which in its opinion would subject the Company or the Trustee to
burdensome administrative responsibilities or which the Committee determines to
be inappropriate from a legal, financial or social perspective. The Trustee, in
approving any investment medium or in making investments under this Plan, shall
not be restricted by statutes governing the legal investment of trust funds.

        D. Separate Investment Funds - Committee May Establish Separate Funds.
The Committee may, in its sole discretion, direct the Trustee to create one or
more separate investment funds, having such different specific investment
objectives as the Committee shall from time to time determine. The Committee
shall determine and may from time to time redetermine the number of investment
funds and the specific objectives of said funds and the investments or kinds of
investment which shall be authorized therefor.

        E. Committee To Establish Rules. The Committee may at any time make such
uniform and nondiscriminatory rules as it determines necessary regarding the
administration of the directed investment option. The Committee may also develop
and maintain rules governing the rights of Participants to change their
investment directions and the frequency with which such changes can be made.

                                  ARTICLE XIII

                              ACCOUNTING BY TRUSTEE

        The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be done,
including such specific records as shall be agreed upon in writing between the
Committee and the Trustee. All such accounts, books and records shall be open to
inspection and audit at all reasonable times by the Committee, the Committee's
representatives or agents. Within one hundred and twenty (120) days following
the close of each calendar quarter and within one hundred and twenty (120) days
after the removal or resignation of the Trustee, the Trustee shall deliver to
the Committee a written account of its administration of the Trust during such
quarter or during the period from the close of the last preceding quarter to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other actions effected by it, including a description of all
securities and investments purchased and sold, with the cost or net proceeds of
such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other

                                      -13-
<PAGE>   16

property held in the Trust at the end of such quarter or as of the date of such
removal or resignation, as the case may be. The written approval of any
accounting by the Committee shall be final as to all matters and transactions
stated or shown therein and binding upon the Committee and all persons who then
shall be or then after shall become interested in this Trust. Failure of the
Committee to notify the trustee within 180 days after receipt of any accounting
of its disapproval of such accounting shall be the equivalent of written
approval.

                                   ARTICLE XIV

                            RESPONSIBILITY OF TRUSTEE

        The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a
direction, request or approval given by the Committee or any Participant which
is contemplated by and complies with the terms of this Trust Agreement, and to
that extent the Trustee shall be relieved of the prudent person rule for
investments. The Trustee may hire agents, accountants, actuaries record keepers
and financial consultants. Expenses of such persons shall be deemed to be
expenses of management and administration of the Trust within the meaning of
Article XV.D, below. The Trustee shall have, without exclusion, all powers
conferred on Trustee by applicable law unless expressly provided otherwise
herein.

                                   ARTICLE XV

                   TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

        A. Company Assets. It is the intention of the Company to have the corpus
and income of the Trust established hereunder treated as assets and income of
the Company to be used to satisfy the Company's legal liability under the Plan
in respect of all of the Participants, and the Company agrees that all income,
deductions and credits of the Trust Fund belong to the Company as owner for
income tax purposes and will be included on the Company's income tax returns.

        B. Taxes. The Company shall from time to time pay taxes (references in
this Plan to the payment of taxes shall include interest and applicable
penalties) of any and all kinds whatsoever which at any time are lawfully levied
or upon or become payable in respect of the Trust Fund, the income or any
property forming a part thereof, or any security transaction pertaining thereto.
To the extent that any taxes levied or assessed upon the Trust Fund are not paid
by the Company or contested by the Company pursuant to the last sentence of this
Article, the Trustee shall pay such taxes out of the Trust Fund, and the Company
shall, upon demand by the Trustee, deposit into the Trust Fund an amount equal
to the amount paid from the Trust Fund to satisfy such tax liability. If
requested by the Company, the Trustee shall at the Company's expense, contest
the validity of such

                                      -14-
<PAGE>   17

taxes in any manner deemed appropriate by the Company or its counsel, but only
if it has received an indemnity bond or other security satisfactory to it to pay
any expenses of such contest. Alternatively, the Company may itself contest the
validity of any such taxes, but any such contest shall not affect the Company's
obligation to reimburse the Trust Fund for taxes paid from the Trust Fund.

        C. Withholding. In making payments from the Trust, the Trustee shall be
liable for federal income tax withholding, and shall withhold the appropriate
amount of tax, if any, as provided by applicable law and regulation, from any
payment made to a Plan Beneficiary, unless the Company does not provide the
Trustee with the necessary information as set forth in regulations, in which
case the Company shall assume all relevant liability.

        D. Compensation; Expenses. The Trustee may be paid compensation by the
Company in accordance with any written agreement for this purpose between them;
provided, however, that a Trustee who is an officer, director or employee of the
Company shall serve without compensation. The Trustee shall be reimbursed by the
Company for its reasonable expenses of management and administration of the
Trust, including reasonable compensation of any agent engaged by the Trustee to
assist it in such management and administration. The Trustee shall be able to
charge the Trust Fund for such compensation and for any reasonable expenses
including counsel, appraisal or accounting fees, and the same may be deducted
from the Trust Fund unless paid by the Company within sixty (60) days after the
Company receives written billing by the Trustee; provided that this paragraph
shall not apply while a dispute over the amount of such charges exists.

                                   ARTICLE XVI

                              PROTECTION OF TRUSTEE

        A. Certification. The Committee shall certify to the Trustee the name or
names of any person or persons authorized to act for the Company. Until the
Committee notifies the Trustee, in a similarly signed notice, that any such
person is no longer authorized to act for the Company, the Trustee may continue
to rely upon the authority of such person. The Trustee may rely upon any
certificate, notice or direction of the Committee which the Trustee reasonably
believes to have been signed by a duly authorized officer or agent of the
Company. Notices to the Trustee shall be sent in writing to the Trustee, Charles
Schwab & Company, ________. No communication shall be binding upon the Trust
Fund or the Trustee until it is received by the Trustee and unless it is in
writing and signed by an authorized person. Notices to the Company shall be sent
in writing attention to the Company's principal office to the Chief Financial
Officer, c/o Altera Corporation, 101 Innovation Drive, San Jose, CA 95134, or to
such other address as the Company may specify. No notice shall be binding upon
the Company until it is received by the Company.

        B. Legal Counsel. The Trustee may consult with any legal counsel ("Legal
Counsel"), except as provided in Article XVIII.C, for the purpose of obtaining
advice on topics including but

                                      -15-
<PAGE>   18

not limited to the construction of this Plan, its duties hereunder, or any act
which it proposes to take or omit, and shall not be liable for any action taken
or omitted in good faith pursuant to such advice. Expenses of Legal Counsel
shall be deemed to be expenses of management and administration of the Trust
within the meaning of Article XV.D hereof.

        C. Trustee Duties. The Trustee shall discharge its duties under this
Plan in a manner consistent with the objectives of this Plan. The Trustee shall
not be liable for any loss sustained by the Trust Fund by reason of the
purchase, retention, sale or exchange of any investment in good faith and in
accordance with the provisions of this Plan. The Trustee shall have no
responsibility or liability for any failure of the Company to make contributions
to the Trust Fund or to pay vested accrued benefits when due. The Trustee's
duties and obligations shall be limited to those expressly imposed upon it under
the provisions of this Plan relating to the Trust, and the Trustee shall not
have responsibility under the provisions of this Plan relating to the Plan,
notwithstanding any reference to the Plan.

                                  ARTICLE XVII

                           INDEMNIFICATION OF TRUSTEE

        To the fullest extent permitted by law, the Company agrees to indemnify,
to defend, and to hold harmless the Trustee against any liability whatsoever for
any action taken or omitted by such Trustee in good faith in connection with
this Plan or duties hereunder and for any expenses or losses for which the
Trustee may become liable as a result of any such actions or non-actions unless
resultant from gross negligence or willful misconduct.

                                  ARTICLE XVIII

              RESIGNATION AND REMOVAL OF TRUSTEE AND LEGAL COUNSEL

        A. Resignation. The Trustee may resign upon thirty (30) days' prior
written notice to the Company, except that any such resignation shall not be
effective until a successor trustee has been appointed, and such successor has
accepted the appointment in writing, but in any event no later that 90 days
after such resignation. The Company shall condition its acceptance of such
successor on the obtaining from such successor of a written statement that the
successor has read the Trust Agreement and understands its obligations
thereunder.

        B. Removal. The Company may remove the Trustee upon thirty (30) days'
prior written notice to the Trustee. Any such removal shall not be effective
until the close of such notice period and delivery by the Company to the Trustee
of (i) an instrument in writing appointing a successor trustee, (ii) an
acceptance of such appointment in writing executed by such successor, and (iii)
a

                                      -16-
<PAGE>   19

written statement by such proposed successor that the successor has read the
Trust Agreement and understands its obligations thereunder.

        C. Successor Trustee. Upon the resignation or removal of the Trustee and
appointment of a successor, the Trustee shall transfer and deliver the Trust
Fund to such successor. Following the effective date of the appointment of the
successor, the Trustee's responsibility hereunder shall be limited to managing
the assets in its possession, transferring such assets to the successor and
settling its final account. Neither the Trustee nor the successor shall be
liable for the acts of the other. All of the provisions set forth herein with
respect to the Trustee shall relate to each successor with the same force and
effect as if such successor had been originally named as the Trustee hereunder.

                                   ARTICLE XIX

                 DURATION AND TERMINATION OF TRUST AND AMENDMENT

        A. Irrevocable. The Trust is hereby declared to be irrevocable and shall
continue until all vested accrued benefits have been paid.

        B. Termination of Trust. If this Trust terminates under the provisions
of Article XIX.A, the Trustee shall liquidate the Trust Fund and, after its
final accounting has been settled, shall distribute to the Company the net
balance of any assets of the Trust Fund remaining after all vested accrued
benefits and administration expenses have been paid. Upon making such
distribution, the Trustee shall be relieved from all further liability.

        C. Plan Amendment. This Plan may be amended, or the Plan terminated or
suspended, by an instrument in writing executed on behalf of the Company by the
Committee, or a duly appointed representative of the Board of Directors and
delivered to the Trustee, provided, however, that (i) no amendment will be made
to this Plan which will cause this Plan, the Trust or the assets of the Trust
Fund to be governed by or subject to Part 2, 3 or 4 of Title I of ERISA, (ii) no
such amendment shall adversely affect any Plan Beneficiary's accrued benefit,
(iii) no such amendment shall increase the duties or responsibilities of the
Trustee unless the Trustee consents thereto in writing, (iv) no such amendment
which would cause the Trust to be other than a "grantor trust," or have
contributions to the Trust by the Company, or income and gains of the Trust
Fund, constitute a taxable event to the Trust or to the Executives, and (v) no
such amendment shall cause the vested accrued benefit paid to Plan Beneficiaries
from the Trust Fund to become nondeductible to the Company in the year of
payment.

                                      -17-
<PAGE>   20
                                   ARTICLE XX

                                  MISCELLANEOUS

        A. California Law. This Plan and the Trust hereby created shall be
construed and regulated by the laws of the State of California.

        B. Headings. The headings of sections in this Plan are used herein for
convenience of reference only and in case of any conflict the text of this Plan
shall control.

        C. Successorship. This Plan shall be binding upon and inure to the
benefit of any successor to the Company or its business as the result of merger,
consolidation, reorganization, transfer of assets or otherwise, and any
subsequent successor thereto; and any such successor shall be deemed to be the
"Company" under this Plan. In the event of any such merger, consolidation,
reorganization, transfer of assets or other similar transaction, the successor
to the Company or its business or any subsequent successor thereto shall
promptly notify the Trustee in writing of its successorship and furnish the
Trustee with the information specified in Article XVI.A of this Plan. In no
event shall any such transaction described herein suspend or delay the rights of
Trust Beneficiaries to receive their vested accrued benefits hereunder.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

                                            CHARLES SCHWAB & COMPANY
ALTERA CORPORATION                          TRUSTEE

By: /s/ Nathan M. Sarkisian                 /s/ illegible
   ---------------------------------        ---------------------------------
(Title) CFO

Date: 9/9/97                                Date: 9/25/97
     -------------------------------             ----------------------------

                                      -18-

<PAGE>   21

                               ALTERA CORPORATION
                     NONQUALIFIED DEFERRED COMPENSATION PLAN

                         DEFERRED COMPENSATION AGREEMENT

1.      I ACKNOWLEDGE THAT THE TERMS AND CONDITIONS OF THE ALTERA CORPORATION
        NONQUALIFIED DEFERRED COMPENSATION PLAN ("PLAN") HAVE BEEN EXPLAINED TO
        ME, INCLUDING THE TAX CONSEQUENCES OF MY DECISION TO PARTICIPATE IN THE
        PLAN.

2.      I AGREE TO DEFER ALL OR A PORTION OF MY CURRENT INCOME, AND TO HAVE THAT
        INCOME PAID TO ME AT A LATER DATE PURSUANT TO THE TERMS AND CONDITIONS
        OF THE PLAN, WHICH IS INCORPORATED BY REFERENCE, IN ITS ENTIRETY, IN
        THIS AGREEMENT. NOTE: ACTUAL BENEFITS PAYABLE UNDER THE PLAN MAY BE
        GREATER OR LESS THAN AMOUNTS DEFERRED DEPENDING ON THE EARNINGS OR
        LOSSES THAT ARE CREDITED TO THE PARTICIPANT'S ACCOUNT IN ACCORDANCE WITH
        THE PLAN.

3.      I ACKNOWLEDGE THAT UNDER THE TERMS OF THE PLAN, NO PAYMENTS CAN BE MADE
        IN THE EVENT ALTERA CORPORATION IS INSOLVENT (AS DEFINED IN THE PLAN).

4.      I UNDERSTAND THAT THIS AGREEMENT IS NOT AN EMPLOYMENT AGREEMENT, DOES
        NOT GUARANTEE THAT I WILL RECEIVE ANY PREDETERMINED AMOUNT OF
        COMPENSATION, AND DOES NOT GUARANTEE THAT I WILL RECEIVE ANY BONUS.

5.      I UNDERSTAND THAT ANY INCOME I DEFER WILL BE HELD AS AN ASSET OF ALTERA
        CORPORATION AND WILL REMAIN SUBJECT TO THE CLAIMS OF THE GENERAL
        CREDITORS OF ALTERA CORPORATION.

6.      I UNDERSTAND THAT THE RETIREMENT PLANS COMMITTEE HAS THE SOLE
        DISCRETIONARY AUTHORITY TO ADMINISTER THE INVESTMENT OF FUNDS DEFERRED
        UNDER THE PLAN AND TO REVIEW FROM TIME TO TIME SUCH INVESTMENTS
        CONSISTENT WITH PROPER PLAN ADMINISTRATION.

7.      I UNDERSTAND THAT ALL APPLICABLE TAXES AND ANY ELECTIVE DEFERRALS (e.g.,
        ESPP, 401(k), MEDICAL INSURANCE PREMIUMS, ETC.) WILL BE DEDUCTED FROM MY
        PAYCHECK (SALARY AND ANY BONUS) PRIOR TO DEFERRALS BEING MADE TO THE
        PLAN. THEREFORE, I UNDERSTAND THAT THE PERCENTAGE OF GROSS SALARY AND
        BONUS I ELECT TO DEFER MAY NOT EXCEED THE AMOUNT THAT IS NECESSARY TO
        MAKE ALL SUCH DEDUCTIONS.

<PAGE>   22

A.      ELECTION TO DEFER COMPENSATION

        1.      Please choose one of the following with respect to salary:

                _____ I elect to defer ______ % (not to exceed 65%) of gross
        salary; or

                _____ I elect to defer 100% of my salary after all applicable
        payroll deductions have been made; I understand that I may not
        participate in the 401(k) Plan.

        2.      Please choose one of the following with respect to any future
                bonus:

                _____ I elect to defer ______ % (not to exceed 80%) of any
        future bonus; or

                _____ I elect to defer 100% of any future bonus after all
        applicable payroll deductions have been made; I understand that I may
        not participate in the 401(k) Plan.

        3.      Please choose one of the following with respect to any incentive
                payments:

                _____ I elect to defer ______ % (not to exceed 65%) of any
        incentive payments; or

                _____ I elect to defer 100% of any incentive payments after all
        applicable payroll deductions have been made; I understand that I may
        not participate in the 401(k) Plan.

I understand that I may only contribute up to 65% of my gross salary and any
incentive payments and up to 80% of any future bonus if I also participate in
the 401(k) Plan. If I elect to defer 100% of my salary, any future bonus, or any
incentive payment (after all applicable payroll deductions have been made), I
understand that I may not participate in the 401(k) Plan. If I later decide to
participate in the 401(k) Plan, I understand that my deferrals to the Plan will
be reduced to 0% for the remainder of the year.

I understand that I may discontinue deferral of future Compensation at any time
during the year, but that I may make no other change in the Agreement until the
beginning of the calendar year after I have notified Altera Corporation in
writing of the change I desire. I also understand that if I discontinue deferral
of future Compensation during the year, I cannot restart deferral until the
beginning of the succeeding calendar year.

<PAGE>   23

I understand that under the terms of the Plan I may, under certain
circumstances, elect to make changes to the (a) Distribution Event (one-time
only), (b) method of payment, (c) distribution at death and (d) designation of
beneficiary, but at this time I am not electing to make any such changes.

                                            Agreed:
--------------------------------
(Signature)
                                            ALTERA CORPORATION
--------------------------------
(Print Name)                                By:
                                               ---------------------------------
--------------------------------
(Social Security Number)

<PAGE>   24

                               ALTERA CORPORATION
                     NONQUALIFIED DEFERRED COMPENSATION PLAN
                         DEFERRED COMPENSATION AGREEMENT

1.      I ACKNOWLEDGE THAT THE TERMS AND CONDITIONS OF THE ALTERA CORPORATION
        NONQUALIFIED DEFERRED COMPENSATION PLAN ("PLAN") HAVE BEEN EXPLAINED TO
        ME, INCLUDING THE TAX CONSEQUENCES OF MY DECISION TO PARTICIPATE IN THE
        PLAN.

2.      I AGREE TO DEFER ALL OR A PORTION OF MY CURRENT INCOME, AND TO HAVE THAT
        INCOME PAID TO ME AT A LATER DATE PURSUANT TO THE TERMS AND CONDITIONS
        OF THE PLAN, WHICH IS INCORPORATED BY REFERENCE, IN ITS ENTIRETY, IN
        THIS AGREEMENT. NOTE: ACTUAL BENEFITS PAYABLE UNDER THE PLAN MAY BE
        GREATER OR LESS THAN AMOUNTS DEFERRED DEPENDING ON THE EARNINGS OR
        LOSSES THAT ARE CREDITED TO THE PARTICIPANT'S ACCOUNT IN ACCORDANCE WITH
        THE PLAN.

3.      I ACKNOWLEDGE THAT UNDER THE TERMS OF THE PLAN, NO PAYMENTS CAN BE MADE
        IN THE EVENT ALTERA CORPORATION IS INSOLVENT (AS DEFINED IN THE PLAN).

4.      I UNDERSTAND THAT THIS AGREEMENT IS NOT AN EMPLOYMENT AGREEMENT, DOES
        NOT GUARANTEE THAT I WILL RECEIVE ANY PREDETERMINED AMOUNT OF
        COMPENSATION, AND DOES NOT GUARANTEE THAT I WILL RECEIVE ANY BONUS.

5.      I UNDERSTAND THAT ANY INCOME I DEFER WILL BE HELD AS AN ASSET OF ALTERA
        CORPORATION AND WILL REMAIN SUBJECT TO THE CLAIMS OF THE GENERAL
        CREDITORS OF ALTERA CORPORATION.

6.      I UNDERSTAND THAT THE RETIREMENT PLANS COMMITTEE HAS THE SOLE
        DISCRETIONARY AUTHORITY TO ADMINISTER THE INVESTMENT OF FUNDS DEFERRED
        UNDER THE PLAN AND TO REVIEW FROM TIME TO TIME SUCH INVESTMENTS
        CONSISTENT WITH PROPER PLAN ADMINISTRATION.

7.      I UNDERSTAND THAT ALL APPLICABLE TAXES AND ANY ELECTIVE DEFERRALS (E.G.,
        ESPP, 401(k), MEDICAL INSURANCE PREMIUMS, ETC.) WILL BE DEDUCTED FROM MY
        PAYCHECK (SALARY AND ANY BONUS) PRIOR TO DEFERRALS BEING MADE TO THE
        PLAN. THEREFORE, I UNDERSTAND THAT THE PERCENTAGE OF GROSS SALARY AND
        BONUS I ELECT TO DEFER MAY NOT EXCEED THE AMOUNT THAT IS NECESSARY TO
        MAKE ALL SUCH DEDUCTIONS.

<PAGE>   25

A.      ELECTION TO DEFER COMPENSATION

        1.      Please choose one of the following with respect to salary:

                _____ I elect to defer ______ % (not to exceed 65%) of gross
        salary; or

                _____ I elect to defer 100% of my salary after all applicable
        payroll deductions have been made; I understand that I may not
        participate in the 401(k) Plan.

        2.      Please choose one of the following with respect to any future
                bonus:

                _____ I elect to defer ______ % (not to exceed 80%) of any
        future bonus; or

                _____ I elect to defer 100% of any future bonus after all
        applicable payroll deductions have been made; I understand that I may
        not participate in the 401(k) Plan.

        3.      Please choose one of the following with respect to any incentive
                payments:

                _____ I elect to defer ______ % (not to exceed 65%) of any
        incentive payments; or

                _____ I elect to defer 100% of any incentive payments after all
        applicable payroll deductions have been made; I understand that I may
        not participate in the 401(k) Plan.

I understand that I may only contribute up to 65% of my gross salary and any
incentive payments and up to 80% of any future bonus if I also participate in
the 401(k) Plan. If I elect to defer 100% of my salary, any future bonus, or any
incentive payment (after all applicable payroll deductions have been made), I
understand that I may not participate in the 401(k) Plan. If I later decide to
participate in the 401(k) Plan, I understand that my deferrals to the Plan will
be reduced to 0% for the remainder of the year.

I understand that I may discontinue deferral of future Compensation at any time
during the year, but that I may make no other change in the Agreement until the
beginning of the calendar year after I have notified Altera Corporation in
writing of the change I desire. I also understand that if I discontinue deferral
of future Compensation during the year, I cannot restart deferral until the
beginning of the succeeding calendar year.

B.      DISTRIBUTION - ONLY TO BE COMPLETED BY FIRST YEAR PARTICIPANTS

I understand that all vested amounts held for my benefit under the Plan shall
begin to be distributed upon the occurrence of a "Distribution Event" (described
below), subject to earlier distribution upon a change of control or unforeseen
emergency as described in the Plan.

<PAGE>   26

        Distribution of vested amounts held for my benefit under the Plan should
        commence pursuant to the following choice (select one):

                _____ Specific date or age (not to exceed 70), without regard to
        termination of employment; OR

                _____ Earlier of (i) __________ specific date or age (not to
        exceed 70), or (ii) termination of employment; OR

                _____ Termination of employment.

I understand that actual payout of assets starts within 105 days after the end
of the calendar year in which my specified Distribution Event occurs. I
understand further that I may not make further deferrals to the Plan while I am
receiving a distribution of benefits from the Plan.

I understand that the Distribution Event specified above may be changed only
ONCE during the course of my Plan participation and in addition, (i) may only be
changed at least one year prior to the originally specified Distribution Event,
and (ii) if I choose a later date or age, such age or date must be at least
three years later than the original date or age; provided, however, that no such
change shall be given effect if I voluntarily terminate my services to the
Company during the one-year period after such change.

C.      METHOD OF PAYMENT (ONE METHOD MUST BE CHECKED IN ORDER FOR THIS TO BE A
        VALID AGREEMENT)

I elect that the payment of all vested amounts due me under this Agreement and
the Plan shall be made in the following manner:

        _____   One single lump sum payment.

        _____   Annual installments equal to 1/n of the assets on deposit in the
                trust credited to my account, where n is the number of
                installments remaining to be paid. I hereby elect _____ annual
                payments (not to exceed 10 years), upon my elected Distribution
                Event.

        _____   Annual installments equal to a specified % of the vested assets
                credited to my account under the Trust. I hereby elect _____
                annual payments (not to exceed 10 years). Please indicate the
                installment % by year in the space provided below. NOTE:
                Installment percentages must be in 5% increments and are subject
                to a 5% minimum percentage:

<TABLE>
<CAPTION>
                      Year                 %
                      ----               -----
                      <S>                <C>

                        1                ______
                        2                ______
</TABLE>

<PAGE>   27

<TABLE>
                      <S>                <C>
                        3                ______
                        4                ______
                        5                ______
                        6                ______
                        7                ______
                        8                ______
                        9                ______
                       10                ______
</TABLE>

I understand that my elected method of distribution can be changed up to 90 days
prior to the Distribution Event specified above; provided, however, that no such
change shall be given effect if I voluntarily terminate my services to the
Company during the 90-day period after such change.

I understand further that my elected method of distribution may be modified by
Altera Corporation at any time prior to my termination of employment, provided
that any such modification that impairs my rights under this Agreement and the
Plan shall be subject to my consent.

<PAGE>   28

D.      SPECIAL ELECTION FOR DISTRIBUTION AT DEATH

By checking the box below, I can elect a lump sum payment of the remainder of my
interest under the Plan in the event I should die before all amounts payable to
me under the Plan have been paid, notwithstanding my elections under B and C
above.

[ ]     I hereby elect a lump sum distribution at death.

[ ]     Annual installments equal to 1/n of the assets on deposit in the trust
        credited to my account, where n is the number of installments remaining
        to be paid. I hereby elect _____ annual payments (not to exceed 10
        years) at death. NOTE: If no box is checked, distribution at death will
        occur in accordance with your elections under B and C above.

[ ]     Annual installments equal to a specified % of the vested assets credited
        to my account under the Trust. I hereby elect _____ annual payments (not
        to exceed 10 years) at death. Please indicate the installment % by year
        in the space provided below. NOTE: Installment percentages must be in 5%
        increments and are subject to a 5% minimum percentage.

<TABLE>
<CAPTION>
                       Year                %
                       ----              ------
                       <S>               <C>
                        1                ______
                        2                ______
                        3                ______
                        4                ______
                        5                ______
                        6                ______
                        7                ______
                        8                ______
                        9                ______
                       10                ______
</TABLE>

<PAGE>   29

E.      DESIGNATED BENEFICIARY

I designate the following beneficiary to receive the remainder of my interest
under the Plan in the event that I should die before all amounts payable to me
under the Plan have been paid. I understand that I may change this Designated
Beneficiary at any time on written notice to Altera.

_____   Please follow the Beneficiary Election on file for the Altera
        Corporation Employee Retirement and Savings Plan.

                                       OR

_____   Name(s) and Relationship:_______________________________________________
        ________________________________________________________________________
        ________________________________________________________________________

The foregoing Election is voluntarily made by me after reviewing the terms of
the Plan and with knowledge that this Election is irrevocable until changed in
accordance with the terms of the Plan.

                                            Agreed:
---------------------------------
(Signature)
                                            ALTERA CORPORATION
---------------------------------
(Print Name)
                                            By
                                               ---------------------------------
---------------------------------
(Social Security Number)

---------------------------------           ------------------------------------
(Date)                                                    (Date)<PAGE>   1

                                                                Exhibit 10.45(b)

                             1996 STOCK OPTION PLAN
                             STOCK OPTION AGREEMENT

        Unless otherwise defined herein, the terms defined in the Plan shall
have the same meanings in this Option.

I.      1.   NOTICE OF STOCK OPTION GRANT

             NAME:     ________________________________
             ADDRESS:     _____________________________

        You have been granted an option to purchase Common Stock of the Company,
subject the terms and conditions of the Plan and this Option Agreement, as

             Grant Number                         ___________

             Date of Grant                        ___________

             Vesting Commencement                 ___________

             Exercise Price per Share             ___________

             Total Number of Shares               ___________

             Total Exercise                       ___________

             Type of Option                       Nonstatutory Stock Option

             Expiration Date                      ___________

        2. VESTING SCHEDULE. Shares in each period will become fully vested on
           the date shown (see Vesting Rights Section I.3).

<TABLE>
<CAPTION>
           Shares            Vesting Type          Start Vest Date      Full Vest Date
           ------            ------------          ---------------      --------------
           <S>               <C>                   <C>                  <C>

</TABLE>

        Agreed to subject to all of the terms and conditions of this Option
Agreement and of the 1996 Stock Option Plan, and conditioned upon due and valid
execution of this Option Agreement by the Optionee.

OPTIONEE:                                   ALTERA CORPORATION

                                            By:
-----------------------------                  ---------------------------------
                                            Title:  Vice President

<PAGE>   2

                3. Vesting Rights. This Option may be exercised, in whole or in
part, in accordance with the following schedule:

                25% of the Shares subject to the Option shall vest twelve months
after the Vesting Commencement Date, and 1/48 of the Shares subject to the
Option shall vest each month thereafter.

                4. Termination Period.

                        (a) General Rule. Except as provided below, this Option
may be exercised for thirty (30) days after termination of Optionee's employment
or consulting relationship with the Company. In the event of the Optionee's
change in status from Employee to Consultant or Consultant to Employee, this
Option Agreement shall remain in effect. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.

                        (b) Death; Disability. Upon the termination of the
Optionee's employment or consulting relationship with the Company by reason of
his or her death or Disability, this Option may be exercised for six (6) months
after such termination, provided that in no event shall this Option be exercised
later than the Term/Expiration Date as provided above.

II.

        1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

                If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

        2. Exercise of Option.

                (a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

                (b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice (the "Exercise Notice"), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised (the "Exercised Shares"), and such other representations and
agreements as may be required by the Company pursuant to the

                                       2
<PAGE>   3

provisions of the Plan. The Exercise Notice shall be delivered in person, by
mail, via electronic mail or facsimile or by other authorized method to the
Secretary of the Company or other person designated by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

                No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant provisions
of law and the requirements of any stock exchange or quotation service upon
which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.

        3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

                (a) cash; or

                (b) check; or

                (c) broker assisted cashless exercise; or

                (d) surrender of other Shares which (i) 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 (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or

                (e) other method authorized by the Company.

        4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

        5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

        6. U.S. Tax Consequences. For Optionees subject to U.S. income tax, some
of the federal and California tax consequences relating to this Option, as of
the date of this Option, are set forth below. All other Optionees should consult
a tax advisor for tax consequences relating to this Option in their respective
jurisdiction. . THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

                                       3
<PAGE>   4

                (a) Exercising the Option.

                        (i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax and California income tax liability upon exercise of
a NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.

                        (ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax or California
income tax liability upon its exercise, although the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to alternative minimum
taxable income for federal tax purposes and may subject the Optionee to
alternative minimum tax in the year of exercise. In the event that the Optionee
undergoes a change of status from Employee to Consultant, any Incentive Stock
Option of the Optionee that remains unexercised shall cease to qualify as an
Incentive Stock Option and will be treated for tax purposes as a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status.

                (b) Disposition of Shares.

                        (i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

                        (ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.

                (c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

                                       4
<PAGE>   5

        7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.

        8. NO GUARANTEE OF EMPLOYMENT. OPTIONEE UNDERSTANDS AND AGREES THAT HIS
OR HER EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES IS FOR AN UNSPECIFIED
DURATION AND CONSTITUTES "AT-WILL" EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE
COMPANY OR ITS SUBSIDIARY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S AND/OR SUBSIDIARY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR
CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

        9. Entire Agreement. This agreement sets forth the entire agreement and
understanding between the Company and Optionee relating to the subject matter
herein and merges all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in a signed writing.

        By your signature and the signature of the Company's representative on
page one of this Option Agreement, you and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and this
Option Agreement. Optionee has reviewed the Plan and this Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and fully understands all provisions of the Plan
and Option Agreement. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Option Agreement. Optionee further agrees to
notify the Company upon any change in the residence address indicated on the
Notice of Stock Option Grant.

                                       5

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