Document:

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                                                                  Exhibit 10.03

                          CADENCE DESIGN SYSTEMS, INC.

                              AMENDED AND RESTATED

                       1997 NONSTATUTORY STOCK OPTION PLAN

                      EFFECTIVE AS AMENDED NOVEMBER 1, 2000
                        STOCKHOLDER APPROVAL NOT REQUIRED
                             TERMINATION DATE: ABOVE

         1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
(as such terms are defined below) of the Company and its Affiliates, and to
promote the success of the Company's business.

              Only "nonstatutory stock options" may be granted hereunder.

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

              (a) "AFFILIATE" shall mean any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code, or such other parent
corporation or subsidiary corporation designated by the Board.

              (b) "BOARD" shall mean the Committee, if one has been appointed,
or the Board of Directors, if no Committee is appointed.

              (c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.

              (d) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

              (e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

              (f) "COMMON STOCK" shall mean the Common Stock of the Company.

              (g) "COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation.

              (h) "CONSULTANT" shall mean any consultants, independent
contractors or advisers to the Company or an Affiliate (provided that such
persons render bona fide services not in connection with the offering and sale
of securities in capital raising transactions).

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              (i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean
the absence of any interruption or termination of service to the Company or an
Affiliate, whether as an Employee or Consultant. The Board or the Chief
Executive Officer of the Company may determine, in that party's sole discretion,
whether Continuous Status as an Employee or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the Chief Executive Officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.

              (j) "EMPLOYEE" shall mean any person employed by the Company or by
any Affiliate.

              (k) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

              (l) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

              (m) "OPTION" shall mean a nonstatutory stock option granted
pursuant to the Plan.

              (n) "OPTION AGREEMENT" shall mean a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.

              (o) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.

              (p) "OPTIONEE" shall mean an Employee or Consultant who receives
an Option.

              (q) "PLAN" shall mean this 1997 Nonstatutory Stock Option Plan.

              (r) "SHARE" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.

         3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is thirty million (30,000,000) shares of Common Stock. The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for future grant
under the Plan.

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         4. ADMINISTRATION OF THE PLAN.

              (a) PROCEDURE. The Plan shall be administered by the Board of
Directors. The Board of Directors may appoint a Committee consisting of not less
than two members of the Board of Directors to administer the Plan on behalf of
the Board of Directors, subject to such terms and conditions as the Board of
Directors may prescribe. Once appointed, the Committee shall continue to serve
until otherwise directed by the Board of Directors. From time to time the Board
of Directors may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause), and appoint new members
in substitution therefor, fill vacancies however caused and remove all members
of the Committee, and thereafter directly administer the Plan. Notwithstanding
anything in this Section 4 to the contrary, at any time the Board of Directors
or the Committee may delegate to a committee of one or more members of the Board
of Directors the authority to grant Options to all Employees and Consultants or
any portion or class thereof.

              (b) POWERS OF THE BOARD. Subject to the provisions of the Plan,
the Board shall have such authority with regard to the Plan and the options as
determined by the Board of Directors, including the authority, in its
discretion: (i) to grant options under the Plan, provided, however, that only
nonstatutory options may be granted under the Plan; (ii) to determine, upon
review of relevant information and in accordance with Section 8(c) of the Plan,
the fair market value of the Common Stock; (iii) to determine the exercise price
per share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be granted
and the number of Shares to be represented by each Option, provided that no
Options may be granted to persons who are neither Employees nor Consultants; (v)
to interpret the Plan; (vi) to prescribe, amend and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and provisions of
each Option granted (which need not be identical) in accordance with the Plan,
and, with the consent of the holder thereof with respect to any adverse change,
modify or amend each Option; (viii) to accelerate or defer (the latter with the
consent of the Optionee) the exercise date and vesting of any Option; (ix) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Board; and (x) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.

              (c) 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.

         5. ELIGIBILITY. Options may be granted only to Employees or Consultants
as defined in Section 2 hereof. An Employee or Consultant who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option or Options. Notwithstanding the foregoing, no Employee or Consultant who
is an executive officer of the Company within the meaning of Section 16 of the
Exchange Act, who is a member of the Board of Directors or who beneficially owns
10% or more of the Company's Common Stock shall be entitled to receive the grant
of an Option under the Plan.

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              The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consultancy by the Company, nor shall it
interfere in any way with the Optionee's right or the Company's right to
terminate the Optionee's employment at any time or the Optionee's consultancy
pursuant to the terms of the Consultant's agreement with the Company.

         6. TERM OF THE PLAN. The Plan shall become effective upon its adoption
by the Board of Directors. It shall continue in effect until terminated under
Section 13 of the Plan.

         7. TERM OF OPTION. The term of each Option shall be ten (10) years from
the date of grant thereof or such shorter term as may be provided in the Option
Agreement.

         8. EXERCISE PRICE, CONSIDERATION AND VESTING.

              (a) EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be no less than 100% of the
fair market value per Share on the date of grant. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner which substantially satisfies the provisions of Section
424(a) of the Code.

              (b) FAIR MARKET VALUE. The fair market value shall be determined
by the Board in its discretion; provided however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the
average of the high and low prices of the Common Stock on the date of grant, as
reported on the New York Stock Exchange.

              (c) CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash or check; (ii)
promissory note (except that payment of the common stock's "par value", as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment); (iii) other shares of the Common Stock of the Company having a fair
market value on the date of surrender equal to the aggregate exercise price of
the Shares as to which the Option shall be exercised, including by delivering to
the Company an attestation of ownership of owned and unencumbered shares of the
Common Stock of the Company in a form approved by the Company; (iv) payment
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which, prior to the issuance of Common Stock, results in either
the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds; (v) any combination of such methods of payment; or (vi) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.

              (d) VESTING. The total number of Shares subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that, from time to time during each of
such installment periods, the

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Option may become exercisable ("vest") with respect to some or all of the Shares
allotted to that period, and may be exercised with respect to some or all of the
Shares allotted to such period and/or any prior period as to which the Option
became vested but was not fully exercised. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem
appropriate. The provisions of this Section 8(d) are subject to any Option
provisions governing the minimum number of Shares as to which an Option may be
exercised.

         9. EXERCISE OF OPTION.

              (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

                   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, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) 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. No adjustment will 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 11 of the Plan.

                   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.

                   The Option may, but need not, include a provision whereby the
Optionee may elect at any time while an Employee or Consultant (or while an
officer or director of the Company) to exercise the Option as to any part or all
of the shares subject to the Option, subject to a repurchase right in favor of
the Company on such terms as the Board shall establish.

              (b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an
Optionee ceases to serve as an Employee or Consultant for any reason other than
death or disability, the Optionee may, but only within three (3) months (or such
other period of time as is determined by the Board) after the date the Optionee
ceases to be an Employee or Consultant, exercise the Option to the extent that
the Optionee was entitled to exercise it at the date of such termination. To the
extent that the Optionee was not entitled to exercise the Option at the date of
such termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.

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              (c) DEATH OF OPTIONEE. In the event of the death of an Optionee
during the term of the Option who is at the time of his or her death an Employee
or Consultant and who shall have been in Continuous Status as an Employee or
Consultant since the date of grant of the Option, the Option may be exercised at
any time within twelve (12) months (or such other period of time as is
determined by the Board) following the date of death, by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, to the extent that the Optionee was entitled to exercise it at the
date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the Option is not
exercised (to the extent the Optionee was entitled to exercise) within the time
specified herein, the Option shall terminate.

              (d) DISABILITY OF OPTIONEE. In the event of the disability of an
Optionee during the term of the Option who is at the time of his or her
disability an Employee or Consultant and who shall have been in Continuous
Status as an Employee or Consultant since the date of grant of the Option, the
Optionee (or the Optionee's legal guardian or conservator) may, but only within
twelve (12) months (or such other period of time as is determined by the Board)
after the date the Optionee ceases to be an Employee or Consultant on account of
such disability, exercise the Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.

              (e) WITHHOLDING. To the extent provided by the terms of the Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold Shares from the Shares otherwise issuable to
the Optionee as a result of the exercise of the Option; or (iii) delivering to
the Company owned and unencumbered shares of the common stock of the Company.

         10. TRANSFERABILITY OF OPTIONS. Except as otherwise expressly provided
in the terms of the Option Agreement, 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 and may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing,
the Optionee may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.

         11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number of
Shares covered by each outstanding Option, and 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 of Common Stock resulting from a stock
split or the payment of a stock dividend with respect to the Common Stock or any
other increase

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or decrease in the number of issued shares of Common Stock 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". Such adjustments shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. 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 of Common Stock subject to an Option.

         For purposes of the Plan, a "Change in Control" shall be deemed to
occur upon the consummation of any one of the following events: (a) a sale of
all or substantially all of the assets of the Company; (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a transaction the principal purpose of which is to change the state of the
Company's incorporation or a transaction in which the voting securities of the
Company are exchanged for beneficial ownership of at least 50% of the voting
securities of the controlling acquiring corporation); (c) a merger or
consolidation in which the Company is the surviving corporation and less than
50% of the voting securities of the Company which are outstanding immediately
after the consummation of such transaction are beneficially owned, directly or
indirectly, by the persons who owned such voting securities immediately prior to
such transaction; (d) any transaction or series of related transactions after
which any person (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended), other than any employee benefit plan (or
related trust) sponsored or maintained by the Company or any subsidiary of the
Company, becomes the beneficial owner of voting securities of the Company
representing 40% or more of the combined voting power of all of the voting
securities of the Company; (e) during any period of two consecutive years,
individuals who at the beginning of such period constitute the membership of the
Company's Board of Directors ("Incumbent Directors") cease for any reason to
have authority to cast at least a majority of the votes which all directors on
the Board of Directors are entitled to cast, unless the election, or the
nomination for election by the Company's stockholders, of a new director was
approved by a vote of at least two-thirds of the votes entitled to be cast by
the Incumbent Directors, in which case such director shall also be treated as an
Incumbent Director in the future; or (f) the liquidation or dissolution of the
Company.

         In the event of a Change in Control, then: (a) any surviving or
acquiring corporation shall assume Options outstanding under the Plan or shall
substitute similar options (including an option to acquire the same
consideration paid to stockholders in the transaction described in this Section
11 for those outstanding under the Plan, or (b) in the event any surviving or
acquiring corporation refuses to assume such Options or to substitute similar
options for those outstanding under the Plan, (i) with respect to Options held
by persons then performing services as Employees or Consultants, the vesting of
such Options and the time during which such Options may be exercised shall be
accelerated prior to such event and the Options terminated if not exercised
after such acceleration and at or prior to such event, and (ii) with respect to
any other Options outstanding under the Plan, such Options shall be terminated
if not exercised prior to such event.

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         Notwithstanding the foregoing, the Board shall at all times have the
complete and sole discretion to accelerate the vesting and exercisability of
some or all of the shares of Common Stock subject to any or all of then
outstanding Options granted under the Plan and to establish the date as of which
any such Option shall terminate (and all other terms and conditions relating to
such termination.)

         12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

         13. AMENDMENT AND TERMINATION OF THE PLAN.

              (a) AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable.

              (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 unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

         14. CONDITIONS UPON ISSUANCE OF SHARES. The Company may require any
Optionee, or any person to whom an Option is transferred under Section 10, as a
condition of exercising any such Option, (i) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (ii) to give written assurances satisfactory to the
Company stating that such person is acquiring the Shares subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the Shares. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the Shares upon the exercise of the Option has been registered under
a then currently effective registration statement under the Securities Act of
1933, as amended, or (2) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may require
the Optionee to provide such other representations, written assurances or
information which the Company shall determine is necessary, desirable or
appropriate to comply with applicable securities and other laws as a condition
of granting an Option to such Optionee or permitting the Optionee to exercise
such Option. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the shares.

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         15. 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.

                  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.

         16. OPTION AGREEMENT. Options shall be evidenced by written Option
Agreements in such form or forms as the Board or the Committee shall approve.

         17. EFFECTIVE DATE. The Plan initially became effective on May 1, 1997.
The Plan, as amended and restated, shall become effective on November 1, 2000.

                                       9<PAGE>

                                                                   Exhibit 10.05

                               TALITY CORPORATION
                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "AGREEMENT") is entered into as of July
14, 2000, by and between ROBERT P. WIEDERHOLD, an individual residing in the
State of California ("EXECUTIVE"), and TALITY CORPORATION, a Delaware
corporation (the "COMPANY"), with its principal place of business in San Jose,
California.

         WHEREAS, the Company is engaged in the business of providing design
services for electronic devices, electronic system components and electronic
systems and related businesses;

         WHEREAS, Executive is currently employed by Cadence Design Systems,
Inc. ("CADENCE") as a senior executive; and

         WHEREAS, as part of the separation of the Company and Cadence, the
Company desires to secure the services of Executive as its President and Chief
Executive Officer, and Executive desires to perform such services for the
Company, on the terms and conditions as set forth herein;

         NOW, THEREFORE, in consideration of the promises and of the covenants
and agreements set forth below, it is mutually agreed as follows:

         1.       EMPLOYMENT BY THE COMPANY.

                  1.1 EFFECTIVE DATE. The Company agrees to employ Executive as
its President and Chief Executive Officer, and Executive hereby accepts such
employment, subject to the terms and conditions set forth herein. Executive's
employment by the Company hereunder shall commence upon the date of this
Agreement and shall continue thereafter on the same terms and conditions unless
earlier terminated pursuant to Section 4 hereof.

                  1.2 DUTIES. Executive shall report directly to the Board of
Directors (the "BOARD") and shall have such duties as are consistent with his
position as President and Chief Executive Officer and as otherwise may be
reasonably required by the Company. Executive agrees that he shall devote all of
his business time and best efforts solely and exclusively to the performance of
his duties hereunder and to the business and affairs of the Company, whether
such business is operated directly by the Company or through one or more
affiliates of the Company.

                  1.3 PLACE OF PERFORMANCE. Executive shall perform his duties
under this Agreement at the Company's principal place of business in San Jose,
California, or as relocated by the Company after the date hereof.

                  1.4 MEMBER OF THE BOARD OF DIRECTORS. Executive shall be
elected a member of the Board as of the date hereof and the Company shall use
its best efforts, subject to the fiduciary duties of the members of the Board,
to nominate Executive for re-election to the Board at each Annual Stockholder's
Meeting at which Executive is eligible for re-election during his period of
service as President and Chief Executive Officer of the Company.

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         2. COMPENSATION. As full consideration for his services rendered
hereunder, the Company shall pay to Executive the following compensation:

                  2.1 SALARY. Executive shall receive an annual base salary of
Three Hundred Fifty Thousand dollars ($350,000) the ("BASE SALARY"), payable in
installments in accordance with the Company's normal payroll practices, less
such deductions or withholdings as may be required by law.

                  2.2 BONUS. Executive shall participate in the Company's
Executive Bonus Plan (the "BONUS PLAN") and shall be entitled to receive an
annual bonus targeted at $250,000 pursuant to the terms of the Bonus Plan, as
adopted and as may be modified from time to time. Such bonus shall be pro-rated
for the remainder of the year 2000.

                  2.3 STOCK OPTIONS. Executive shall be entitled to a grant of
stock options of the Company on the terms and conditions set forth in a separate
Option Agreement entered into by and between Executive and the Company on July
14, 2000 (a copy of the grant sheet for the Option Agreement is attached hereto
as EXHIBIT A).

                  2.4 INDEMNIFICATION. In the event Executive is made, or
threatened to be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other corporation fifty percent
(50%) or more owned or controlled by the Company in any capacity at the
Company's request, Executive shall be indemnified by the Company, and the
Company shall pay Executive's related expenses when and as incurred, all to the
fullest extent permitted by law, as more fully described in the Indemnity
Agreement attached hereto as EXHIBIT B.

         3. BENEFITS. Executive shall receive such pension, profit sharing and
fringe benefits as the Board of Directors of the Company may, from time to time,
determine to provide for the key executives of the Company.

         4. TERMINATION OF EMPLOYMENT. Executive's employment by the Company
shall terminate immediately upon Executive's receipt of written notice of
termination by the Company, upon the Company's receipt of written notice of
termination by Executive, or upon Executive's death or permanent disability.

                  4.1 TERMINATION UPON DEATH, DISABILITY. The Company may
terminate Executive's employment in the event of his death or if Executive
suffers a disability that renders him unable, as determined in good faith by the
Board, to perform the essential functions of his position as President and Chief
Executive Officer, even with reasonable accommodation, for any consecutive three
(3) months within any twelve (12) month period. If Executive's employment is
terminated under this Section 4.1, Executive (or Executive's estate or other
designated beneficiary(s) as shown in the records of the Company) shall receive
payment for any earned but unpaid Base Salary, a pro rata share of any target
bonus Executive would be entitled to receive during the calendar year in which
the termination occurs, and benefits under benefit plans of the Company that
Executive may then be entitled to receive, if any, less standard withholdings
for tax and social security purposes, through the termination date. The Company
shall have no further obligation to pay any compensation of any kind nor to make
any payment in lieu of

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notice to Executive. All benefits provided to Executive by the Company under
this Agreement or otherwise, shall cease as of the termination date.

                  4.2 VOLUNTARY TERMINATION. Executive may voluntarily terminate
his employment with the Company at any time upon one (1) month's prior written
notice. The Company may accelerate the termination of Executive's employment to
a date prior to one (1) month after Executive's notice of resignation upon
written notice thereof being delivered to Executive by the Company. If
Executive's employment is terminated under this Section 4.2, Executive shall
receive payment for any earned but unpaid Base Salary, and benefits under
benefit plans of the Company that Executive may then be entitled to receive, if
any, less standard withholdings for tax and social security purposes, through
the termination date. The Company shall have no further obligation to pay any
compensation of any kind nor to make any payment in lieu of notice to Executive.
All benefits provided to Executive by the Company under this Agreement or
otherwise, shall cease as of the termination date.

                  4.3 TERMINATION FOR CAUSE.

                           (a) TERMINATION. The Company may terminate
Executive's employment at any time for "CAUSE" (as defined below). If
Executive's employment is terminated under this Section 4.3, Executive shall
receive payment for any earned but unpaid base salary, and benefits under
benefit plans of the Company that Executive may then be entitled to receive, if
any, less standard withholdings for tax and social security purposes, through
the termination date. The Company shall have no further obligation to pay any
compensation of any kind nor to make any payment in lieu of notice to Executive.
All benefits provided to Executive by the Company under this Agreement or
otherwise, shall cease as of the termination date.

                           (b) DEFINITION OF CAUSE. For purposes of this
Agreement, the Company shall have "CAUSE" to terminate Executive's employment
upon any of the following: (i) a material breach by Executive of this Agreement
or the Employee Proprietary Information and Inventions Agreement referenced in
Section 9 hereof; (ii) any breach of fiduciary duty or act of theft,
misappropriation, embezzlement, intentional fraud or other violation of the law
or similar conduct by Executive involving the Company or any affiliate; (iii) a
conviction or a plea of NOLO CONTENDERE or the equivalent in respect of a felony
involving an act of dishonesty, moral turpitude, deceit or fraud by Executive;
(iv) any damage of a material nature to the business or property of the Company
or any Affiliate caused by Executive's willful or grossly negligent conduct; (v)
the willful failure by Executive to perform reasonable duties, responsibilities
or instructions from the Board of Directors after fifteen (15) days written
notice thereof; or (vi) any act of dishonesty or misconduct by Executive in
connection with his responsibilities as President and Chief Executive Officer or
otherwise.

                  4.4 TERMINATION WITHOUT CAUSE. The Company may, at any time,
terminate Executive without cause. In the event that Executive's employment with
the Company is terminated without cause, upon execution by Executive of an
effective release of claims substantially in the form attached as EXHIBIT C, the
final wording of which shall be determined by the Company (the "RELEASE"), (a)
Executive shall receive payment for any earned but unpaid Base Salary, and
benefits under benefit plans of the Company that Executive may then be entitled
to receive, if any, less standard withholdings for tax and social security
purposes,

                                       3
<PAGE>

through the termination date; (b) the Company shall continue to pay
Executive his Base Salary for the twelve (12) months immediately following the
termination date; (c) Executive shall receive the annual target bonus he would
otherwise have been entitled to receive for the year in which such termination
occurs, prorated through the termination date, plus an additional twelve (12)
months' bonus at the same annual target rate; and (d) all of the unvested
options held by Executive on the date of such termination shall immediately vest
and become exercisable in full. The options shall remain exercisable for the
period specified in the Option Agreement.

                  4.5 CONSTRUCTIVE TERMINATION. Notwithstanding anything in this
Section 4 or Section 5 to the contrary, Executive may voluntarily end his
employment with the Company and receive the benefits detailed in Section 4.4
upon or within ninety (90) days following the occurrence of an event
constituting a "Constructive Termination," which for purposes of this Section
4.5 shall mean:

                           (a) a material adverse change in Executive's position
causing it to be of materially less stature or responsibility without
Executive's written consent, and such a materially adverse change shall in all
events be deemed to occur if Executive no longer serves as President and Chief
Executive Officer reporting to the Board of Directors, unless Executive consents
in writing to such change;

                           (b) a reduction, without Executive's written consent,
in his level of base compensation (including Base Salary and fringe benefits) by
more than ten percent (10%) or a reduction by more than ten percent (10%) in his
target bonus under the Bonus Plan; or

                           (c) the Company's failure to obtain the agreement of
a successor (after merger, consolidation, or sale of all assets) to assume the
obligations set forth in this Agreement; or

                           (d) a relocation of Executive's principal place of
employment by more than thirty (30) miles, unless Executive consents in writing
to such relocation.

                  4.6 AT-WILL EMPLOYMENT. Executive understands and agrees that
employment with the Company is at-will, which means that either Executive or the
Company may terminate this Agreement at any time, with or without cause, as set
forth in this Agreement. Any modification of the at-will nature of this
Agreement must be in writing and executed by Executive and the Company.

         5. CHANGE IN CONTROL BENEFITS.

                  5.1 Should Executive's employment with the Company terminate
upon a Change in Control (as defined below) then the following provisions shall
become applicable in lieu of severance benefits otherwise payable under Section
4:

                           (a) Upon execution of the Release, (i) Executive
shall receive payment for any earned but unpaid Base Salary, and benefits under
benefit plans of the Company that Executive may then be entitled to receive, if
any, less standard withholdings for tax and social security purposes, through
the termination date; (ii) the Company shall continue to pay Executive his Base
Salary for the twelve (12) months immediately following the termination date;
and (iii)

                                       4
<PAGE>

Executive shall receive the annual target bonus he would otherwise have been
entitled to receive for the year in which such termination occurs, prorated
through the termination date, plus an additional twelve (12) months' bonus at
the same annual target rate.

                           (b) All of the unvested options and other stock
awards held by Executive on the date of such Change in Control shall immediately
vest and become exercisable in full on the date of Executive's termination of
employment, but not prior to the eighth (8th) day following Executive's
execution of the Release, and shall remain exercisable for the period specified
in the applicable option grant.

                           (c) For purposes of this Section 5.1, a Change in
Control shall be deemed to occur upon the consummation of any one of the
following events:

                                 (i) a sale of all or substantially all of the
assets of the Company; (ii) a merger or consolidation in which the Company is
not the surviving corporation (other than a transaction the principal purpose of
which is to change the state of the Company's incorporation or a transaction in
which the voting securities of the Company are exchanged for beneficial
ownership of at least a majority of the voting securities of the acquiring
corporation); (iii) a merger or consolidation in which the Company is the
surviving corporation and less than fifty percent (50%) of the voting securities
of the Company that are outstanding immediately after the consummation of such
transaction are beneficially owned, directly or indirectly, by the persons who
owned such voting securities immediately prior to such transaction; (iv) any
transaction or series of related transactions after which any person (as such
term is used in Section 13(d)(3) of the Exchange Act), other than any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliate, becomes the beneficial owner of voting securities of the Company
representing a majority of the combined voting power of all of the voting
securities of the Company; (v) the acquisition, by an entity which is the
beneficial owner of at least fifty-one percent (51%) of the voting securities of
the Company, of all or substantially all of the voting securities of the
Company; (vi) during any period of two consecutive years, individuals who at the
beginning of such period constitute the membership of the Company's Board of
Directors ("Incumbent Directors") cease for any reason to have authority to cast
at least a majority of the votes which all Directors are entitled to cast,
unless the election, or the nomination for election by the Company's
stockholders, of a new Director was approved by a vote of at least two-thirds of
the votes entitled to be cast by the Incumbent Directors, in which case such
director shall also be treated as an Incumbent Director in the future; or (vii)
the liquidation or dissolution of the Company.

                  For purposes of Section 5.1(c)(iii) above, any person who
acquired securities of the Company prior to the occurrence of the specified
transaction in contemplation of such transaction and who immediately after such
transaction possesses direct or indirect beneficial ownership of at least ten
percent (10%) of the securities of the Company or the surviving corporation, as
appropriate, (or if the Company or the surviving corporation is a controlled
affiliate, then of the appropriate entity as determined above) shall not be
included in the calculation of the group of persons who owned such voting
securities immediately prior to such transaction.

                                       5
<PAGE>

                  5.2 In the event that the benefits payable hereunder to
Executive (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "CODE"), or any comparable
successor provisions, and (ii) but for this Section 5.2 would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable successor
provisions (the "EXCISE TAX"), then Executive's benefits hereunder shall be
either:

                           (i) provided to Executive in full, or

                           (ii) provided to Executive as to such lesser extent
which would result in no portion of such benefits being subject to the Excise
Tax,

                  whichever of the foregoing amounts, when taking into account
applicable federal, state, local and foreign income and employment taxes, the
Excise Tax, and any other applicable taxes, results in the receipt by Executive,
on an after-tax basis, of the greatest amount of benefits, notwithstanding that
all or some portion of such benefits may be taxable under the Excise Tax. Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 5.2 shall be made in writing in good faith by a nationally
recognized accounting firm which is then serving as the Company's independent
auditors (the "ACCOUNTANTS"). In the event of a reduction of benefits hereunder,
Executive shall be given the choice of which benefits to reduce. If Executive
does not provide written identification to the Company of which benefits he
chooses to reduce within ten (10) days of his receipt of the Accountants'
determination, and Executive has not disputed the Accountants' determination,
then the Company shall select the benefits to be reduced. For purposes of making
the calculations required by this Section 5.2, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of the
Code, and other applicable legal authority. The Company and Executive shall
furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section 5.2. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 5.2.

                  If notwithstanding any reduction described in this Section
5.2, the Internal Revenue Service (the "IRS") determines that Executive is
liable for the Excise Tax as a result of the receipt of the payment of benefits
as described above, the Executive shall be obligated to pay back to the Company,
within thirty (30) days after a final IRS determination or in the event that
Executive challenges the final IRS determination, a final judicial
determination, a portion of the payment equal to the "REPAYMENT AMOUNT." The
Repayment Amount with respect to the payment of benefits shall be the smallest
such amount, if any, as shall be required to be paid to the Company so that
Executive's net after-tax proceeds with respect to any payment of benefits
(after taking into account the payment of the Excise Tax an all other applicable
taxes imposed on such payment) shall be maximized. The Repayment Amount with
respect to the payment of benefits shall be zero if a Repayment Amount of more
than zero would not result in Executive's net after-tax proceeds with respect to
the payment of such benefits being maximized. If the Excise Tax is not
eliminated pursuant to this paragraph, Executive shall pay the Excise Tax.

                                       6
<PAGE>

                  Notwithstanding any other provision of this Section 5.2, if
(i) there is a reduction in the payment of benefits as described in this Section
5.2, (ii) the IRS later determines that Executive is liable for the Excise Tax,
the payment of which would result in the maximization of Executive's net
after-tax proceeds (calculated as if Executive's benefits had not previously
been reduced), and (iii) Executive pays the Excise Tax, then the Company shall
pay to Executive those benefits which were reduced pursuant to this subsection
contemporaneously or as soon as administratively possible after Executive pays
the Excise Tax so that Executive's net after-tax proceeds with respect to the
payment of benefits are maximized.

         6. INJUNCTIVE RELIEF. The parties hereto agree that damages would be an
inadequate remedy for the Company in the event of a breach or threatened breach
of Section 9, 10 or 11 of this Agreement by Executive, and in the event of any
such breach or threatened breach, the Company may, either with or without
pursuing any potential damage remedies, obtain and enforce an injunction
prohibiting Executive from violating this Agreement and requiring Executive to
comply with the terms of this Agreement.

         7. DISPUTE RESOLUTION. The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement or any dispute
arising out of Executive's employment or the termination of that employment with
the Company, except for disputes regarding the interpretation of those sections
referred to in Section 6 and disputes involving the protection of the Company's
intellectual property, shall be decided by confidential, final and binding
arbitration conducted by Judicial Arbitration and Mediation Services ("JAMS")
under the then-existing JAMS rules, rather than by litigation in court, trial by
jury, administrative proceeding, or in any other forum.

         8. COOPERATION WITH THE COMPANY AFTER TERMINATION. Following
termination by Executive, Executive shall fully cooperate with the Company in
all matters relating to his employment, the winding up of his pending work on
behalf of the Company and the orderly transfer of any such pending work to other
employees of the Company as may be designated by the Company.

         9. PROPRIETARY INFORMATION OBLIGATIONS. Executive acknowledges and
incorporates herein by reference his obligations under the Employee Proprietary
Information and Inventions Agreement executed by Executive on July 14, 2000 and
attached hereto as EXHIBIT D.

         10. NON-COMPETITION. Executive agrees that, during the Term and for a
period of one (1) year after the last day of Executive's employment with the
Company, he will not, directly or indirectly, provide services on behalf of any
competing corporation, limited liability company, partnership, or other
competing entity or person, whether as an employee, consultant, independent
contractor, agent, sole proprietor, partner, joint venturer, corporate officer
or director; nor shall Executive acquire by reason of purchase during the term
of his employment with the Company the ownership of more than one percent (1%)
of the outstanding equity interest in any such competing entity. For purposes of
this Section 10 a "competing" entity is one engaged in the business of
independent electronic design services and/or intellectual property licensing.
Subject to the foregoing, Executive may serve on boards of directors of
non-competing unaffiliated corporations, subject to advance approval by the
Board, and may serve on the boards of charitable organizations.

                                       7
<PAGE>

         11. NONINTERFERENCE. During the Term and for a period of one (1) year
after the last day of Executive's employment with the Company, Executive agrees
that he will not, except with the advance approval of the Company, voluntarily
or involuntarily, for any reason whatsoever, directly or indirectly,
individually or on behalf of Persons not now parties to this Agreement, or as a
partner, stockholder, director, officer, principal, agent, employee or in any
other capacity or relationship, for his own account or for the benefit of any
other Person: (a) encourage, induce, attempt to induce, solicit or attempt to
solicit anyone who is employed at that time, or was employed during the previous
one (1) year, by the Company or any affiliate to leave his or her employment
with the Company or any affiliate; or (b) interfere or attempt to interfere with
the relationship or prospective relationship of the Company or any affiliate
with any former, present or future client, customer, joint venture partner, or
financial backer of the Company or any affiliate; or (c) solicit, divert or
accept business, in any line or area of business engaged in by the Company or
any affiliate, from any former, present or future client, customer or joint
venture partner of the Company or any affiliate (other than on behalf of the
Company).

         12. GENERAL.

                  12.1 WAIVER. Neither party shall, by mere lapse of time,
without giving notice or taking other action hereunder be deemed to have waived
any breach by the other party of any of the provisions of this Agreement.
Further, the waiver by either party of a particular breach of this Agreement by
the other shall neither be construed as, nor constitute, a continuing waiver of
such breach or of other breaches by the same or any other provision of this
Agreement.

                  12.2 SEVERABILITY. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.

                  12.3 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
considered effective either (a) upon personal service or (b) upon delivery by
facsimile and depositing such notice in the U.S. Mail, postage prepaid, return
receipt requested and addressed to the Chairman of the Board of the Company at
its principal corporate address, and to Executive at his most recent address
shown on the Company's corporate records, or at any other address which he may
specify in any appropriate notice to the Company, or (c) upon only depositing
such notice in the U.S. Mail as described in (b) above.

                  12.4 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together constitutes one and the same instrument and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.

                  12.5 ENTIRE AGREEMENT. The parties hereto acknowledge that
each has read this Agreement, understands it, and agrees to be bound by its
terms. The parties further agree that this Agreement, including the agreements
referenced herein and attached as Exhibits hereto, constitute the complete and
exclusive statement of the agreement between the parties and

                                       8
<PAGE>

supersede any and all prior or contemporaneous understandings, agreements,
representations, conditions, covenants, proposals, and all other communications
between the parties, whether written or oral, relating to the subject matter
hereof.

                  12.6 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of California, excluding its conflict of laws rules.

                  12.7 ASSIGNMENT AND SUCCESSORS. The Company shall have the
right to assign its rights and obligations under this Agreement to an entity
which acquires substantially all of the assets of the Company. The rights and
obligation of the Company under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company. Executive shall
not have any right to assign his obligations under this Agreement and shall only
be entitled to assign his rights under this Agreement by will or the Laws of
descent and distribution.

                  12.8 SURVIVAL. Sections 6 through 12 shall survive any
termination of this Agreement.

                  12.9 AMENDMENTS. This Agreement and the terms and conditions
of the matters addressed in this Agreement may only be amended in writing
executed both by the Executive and a duly authorized representative of the
Company.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.

EXECUTIVE:

         /s/ Robert P. Wiederhold
------------------------------------------
         Robert P. Wiederhold

TALITY CORPORATION:

By:      /s/ Duane M. Bell
   ---------------------------------------
Name: Duane M. Bell
Title: Senior Vice President, Chief Financial Officer

                                       9

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