S-8

As filed with the Securities and Exchange Commission on June 26, 2002

Registration No. 333-___________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MENTOR GRAPHICS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Oregon	Mentor Graphics Corporation 8005 SW Boeckman Road Wilsonville, Oregon 97070-7777	93-0786033
(State or other jurisdiction of incorporation or organization)	(Address, including Zip Code, of Principal Executive Offices)	(I.R.S. Employer Identification Number)

Options assumed by Mentor Graphics Corporation originally granted under the
Summit Design, Inc. 1994 Stock Plan
Summit Design, Inc. 1996 Director Option Plan
Summit Design, Inc. 1997 Nonstatutory Stock Option Plan
Viewlogic Systems, Inc. 1998 Stock Incentive Plan
Transcendent Design Technology, Inc. Stock Option Plan
PADS Software, Inc. 1998 Stock Option Plan
Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan

(Full title of the Plans)

Dean M. Freed
Vice President and General Counsel
Mentor Graphics Corporation
8005 SW Boeckman Road
Wilsonville, Oregon 97070-7777
(503) 685-7000

(Name, Address and Telephone Number, including Area Code, of Agent For Service)

Copies to:
Christopher L. Kaufman
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
(650) 328-4600

CALCULATION OF REGISTRATION FEE

Title Of	Amount		Proposed		Proposed		Amount Of
Securities To	To Be		Maximum Offering		Maximum Aggregate		Registration
Be Registered	Registered(1)		Price Per Share(2)		Offering Price (2)		Fee
Common Stock, no par value		1,838,827	$	12.93	$	23,783,874.50	$	2,188.12

(1)

Pursuant to the Agreement and Plan of Merger dated as of April 23, 2002, by and among the Registrant, Indiana Merger Corporation and Innoveda, Inc., the Registrant assumed all outstanding and available options to purchase common stock of Innoveda, Inc. under the Summit Design, Inc. 1994 Stock Plan, Summit Design, Inc. 1996 Director Option Plan, Summit Design, Inc. 1997 Nonstatutory Stock Option Plan, Viewlogic Systems, Inc. 1998 Stock Incentive Plan, Transcendent Design Technology, Inc. Stock Option Plan, PADS Software, Inc. 1998 Stock Option Plan, and Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan, and such options became exercisable to purchase shares of the Registrant’s Common Stock, with adjustments to the number of shares and exercise price of each option. This Registration Statement shall also cover any additional shares of Common Stock which become issuable under these plans by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of the outstanding shares of the Registrant’s Common Stock.

(2)

Calculated solely for the purpose of the filing fee (i) pursuant to Rule 457(h), on the basis of the weighted average exercise price per share of outstanding options for 1,087,946 shares at $12.53 per share, and (ii) pursuant to Rule 457(c) for the remaining 750,881 shares registered hereunder at the average ($13.52) of the high ($13.68) and low ($13.35) prices of the Registrant's Common Stock as reported on the Nasdaq National Market on June 24, 2002.

TABLE OF CONTENTS

I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
	Item 3. Incorporation of Documents by Reference
	Item 4. Description of Securities
	Item 5. Interests of Named Experts and Counsel
	Item 6. Indemnification of Directors and Officers
	Item 7. Exemption from Registration Claimed
	Item 8. Exhibits
	Item 9. Undertakings
SIGNATURES
INDEX TO EXHIBITS
FORM S-8
EXHIBIT 5.1
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 23.3
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3
EXHIBIT 99.4
EXHIBIT 99.5
EXHIBIT 99.6
EXHIBIT 99.7

I.
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

     The information called for in Part I of Form S-8 is not being filed with or included in this Form S-8 (by incorporation by reference or otherwise) in accordance with the rules and regulations of the Securities and Exchange Commission (the “Commission”).

II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference

     We incorporate by reference the following documents we have filed with the Commission pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (Commission File Number 0-13442):

• Annual Report on Form 10-K for the year ended December 31, 2001, including information specifically incorporated by reference into our Form 10-K from our Proxy Statement for our 2002 Annual Meeting of Stockholders, filed with the SEC on March 19, 2002, as amended on May 29, 2002.

• Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.

• Current Reports on Form 8-K, filed with the SEC on March 13, 2002, April 10, 2002, April 24, 2002, May 3, 2002, May 29, 2002, May 30, 2002, June 3, 2002 and June 11, 2002.

• the description of our common stock contained in its Registration Statement on Form 8-A, filed with the SEC under Section 12 of Exchange Act; and

• all documents subsequently filed by us with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold.

     Information that we file later with the Commission will automatically update and supersede this information.

Item 4. Description of Securities

     Not Applicable.

Item 5. Interests of Named Experts and Counsel

     Not Applicable.

Item 6. Indemnification of Directors and Officers

     We are an Oregon corporation. Article V of our bylaws indemnifies directors and officers to the fullest extent permitted by the Oregon Business Corporation Act (the “Act”). The effects of Article V are summarized as follows:

(a) The Article grants a right of indemnification in respect of any action, suit, or proceeding (other than an action by or in the right of Mentor) against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred, if the persons concerned acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of Mentor, and, with respect to any criminal action or proceeding had no reasonable cause to believe the

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	conduct was unlawful. The termination of an action, suit or proceeding by judgment, order, settlement, conviction, or plea of nolo contendere does not, of itself, create a presumption that the person did not meet the required standards of conduct.
(b)	The Article grants a right of indemnification in respect of any action or suit by or in the right of Mentor against the expenses (including attorneys’ fees) actually and reasonably incurred if the person concerned acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of Mentor, except that no right of indemnification will be granted if the person is adjudged to be liable to us.
(c)	Every person who has been wholly successful on the merits of a controversy described in (a) or (b) above is entitled to indemnification as a matter of right.
(d)	We are required to promptly indemnify a director or officer unless it is determined by a majority of disinterested directors or by independent counsel that the person’s actions did not meet the relevant standard for indemnification. If the disinterested directors or independent counsel determine that indemnification is not required, the person seeking indemnification may petition a court for an independent determination. In any court action, we will have the burden of proving that indemnification would not be proper. Neither the disinterested directors’ failure to make a determination regarding indemnification for the claim nor an actual determination that the person failed to meet the applicable standard will be a defense to such action or create a presumption that the person is not entitled to indemnification.
(e)	We will advance to a director or officer the expenses incurred in defending any action, suit or proceeding in advance of its final disposition if the director or officer affirms in good faith that he or she is entitled to indemnification and undertakes to repay any amount advanced if it is determined by a court that the person is not entitled to indemnification.
(f)	We may obtain insurance for the protection of our directors and officers against any liability asserted against them in their official capacities.

     The rights of indemnification described above are not exclusive of any other rights of indemnification to which the persons indemnified may be entitled under any bylaw, agreement, vote of shareholders or directors or otherwise.

     We have also entered into Indemnity Agreements with all directors and officers. While the Indemnity Agreements in large part incorporate the indemnification provisions of the Act as described above, they vary from the Act in several respects. The Indemnity Agreements obligate us to provide the maximum indemnification protection allowed under Oregon law, which is intended to provide indemnification broader than that expressly authorized by the Act. The most significant effect of the Indemnity Agreements is to add indemnification for judgments and settlements of derivative lawsuits to the fullest extent permitted by law as may be limited by public policy considerations applied by the courts.

Item 7. Exemption from Registration Claimed

     Not Applicable.

Item 8. Exhibits

4.1 Restated Articles of Incorporation of the Registrant, as amended. Incorporated by reference to Exhibit 4A to Mentor Graphics’ Registration Statement on Form S-3 (Registration No. 33-23024) and Exhibit 3B to Mentor Graphics’ Annual Report on Form 10-K for the fiscal year ended December 31, 1998.

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4.2	Bylaws of the Registrant. Incorporated by reference to Exhibit 3C to Mentor Graphics’ Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
4.3	Rights Agreement, dated as of February 10, 1999, between Mentor Graphics Corporation and American Stock, Transfer & Trust Co. Incorporated by reference to Exhibit 4.1 to Mentor Graphics’ Current Report on Form 8-K filed on February 19, 1999.
5.1	Opinion of counsel.
23.1	Consent of KPMG LLP.
23.2	Consent of Deloitte & Touche LLP.
23.3	Consent of Ernst & Young LLP, Independent Auditors.
23.4	Consent of counsel (included in Exhibit 5.1).
24.1	Power of Attorney (incorporated by reference in the signature page to the Registration Statement).
99.1	Summit Design, Inc. 1994 Stock Plan.
99.2	Summit Design, Inc. 1996 Director Option Plan.
99.3	Summit Design, Inc. 1997 Nonstatutory Stock Option Plan.
99.4	Viewlogic Systems, Inc. 1998 Stock Incentive Plan, as amended.
99.5	Transcendent Design Technology, Inc. Stock Option Plan.
99.6	PADS Software, Inc. 1998 Stock Option Plan.
99.7	Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan.

Item 9. Undertakings

(a)  The undersigned registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

     (i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

     (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

     (iii) To include any material information with respect to the plan of distribution not previously

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disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement.

     (2)  That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (3)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)  The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pleasanton, State of California on this 26th day of June, 2002.

MENTOR GRAPHICS CORPORATION
By:	/s/ Dean M. Freed
	Dean M. Freed Vice President and General Counsel

POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Dean M. Freed and Dennis Weldon with full power of substitution and full power to act without the other, such person’s true and lawful attorney-in-fact and agent to act for such person in such person’s name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as such person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on June 26, 2002.

Signature	Title
/s/ Walden C. Rhines Walden C. Rhines	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
/s/ Gregory K. Hinckley Gregory K. Hinckley	President and Chief Operating Officer (Principal Financial Officer)
/s/ Anthony B. Adrian Anthony B. Adrian	Vice President, Corporate Controller (Principal Accounting Officer)
/s/ Sir Peter Bonfield Sir Peter Bonfield	Director
/s/ Marsha B. Congdon Marsha B. Congdon	Director
/s/ James R. Fiebiger James R. Fiebiger	Director
Kevin C. McDonough	Director
/s/ Fontaine K. Richardson Fontaine K. Richardson	Director

INDEX TO EXHIBITS

4.1	Restated Articles of Incorporation of the Registrant, as amended. Incorporated by reference to Exhibit 4A to Mentor Graphics’ Registration Statement on Form S-3 (Registration No. 33-23024) and Exhibit 3B to Mentor Graphics’ Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
4.2	Bylaws of the Registrant. Incorporated by reference to Exhibit 3C to Mentor Graphics’ Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
4.3	Rights Agreement, dated as of February 10, 1999, between Mentor Graphics Corporation and American Stock, Transfer & Trust Co. Incorporated by reference to Exhibit 4.1 to Mentor Graphics’ Current Report on Form 8-K filed on February 19, 1999.
5.1	Opinion of counsel.
23.1	Consent of KPMG LLP.
23.2	Consent of Deloitte & Touche LLP.
23.3	Consent of Ernst & Young LLP, Independent Auditors.
23.4	Consent of counsel (included in Exhibit 5.1).
24.1	Power of Attorney (incorporated by reference in the signature page to the Registration Statement).
99.1	Summit Design, Inc. 1994 Stock Plan.
99.2	Summit Design, Inc. 1996 Director Option Plan.
99.3	Summit Design, Inc. 1997 Nonstatutory Stock Option Plan.
99.4	Viewlogic Systems, Inc. 1998 Stock Incentive Plan, as amended.
99.5	Transcendent Design Technology, Inc. Stock Option Plan.
99.6	PADS Software, Inc. 1998 Stock Option Plan.
99.7	Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan.

EX-5.1 4 f82332exv5w1.txt EXHIBIT 5.1 Exhibit 5.1 June 26, 2002 Mentor Graphics Corporation 8005 SW Boeckman Road Wilsonville, Oregon 97070-7777 Ladies and Gentlemen: I have acted as counsel for Mentor Graphics Corporation, an Oregon corporation (the "Company"), in connection with the filing of a Registration Statement on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, covering the issuance by the Company of 1,838,827 shares of Common Stock, no par value (the "Shares"), of the Company. Pursuant to the Agreement and Plan of Merger dated as of April 23, 2002, by and among the Company, Indiana Merger Corporation, a Delaware corporation and wholly-owned subsidiary of the Company ("Indiana Merger"), and Innoveda, Inc., a Delaware corporation ("Innoveda"), the Company assumed all outstanding options to purchase common stock of Innoveda (the "Options") under the Summit Design, Inc. 1994 Stock Plan, Summit Design, Inc. 1996 Director Option Plan, Summit Design, Inc. 1997 Nonstatutory Stock Option Plan, Viewlogic Systems, Inc. 1998 Stock Incentive Plan, Transcendent Design Technology, Inc. Stock Option Plan, PADS Software, Inc. 1998 Stock Option Plan, Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan (collectively, the "Plans"), and, upon the consummation of the merger of Indiana Merger into Innoveda by filing a certificate of ownership and merger with the Secretary of State of Delaware on June 5, 2002, the Options became exercisable to purchase Shares. I have reviewed the corporate actions of the Company in connection with this matter and have examined those documents, corporate records, and other instruments I deemed necessary for the purposes of this opinion. Based on the foregoing, it is my opinion that: 1. The Company is a corporation duly organized and validly existing under the laws of the State of Oregon. 2. The issuance of the Shares has been duly authorized and, when issued and sold in accordance with the terms of the Plans, will be legally issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Dean M. Freed Dean M. Freed Vice President and General Counsel EX-23.1 5 f82332exv23w1.txt EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Stockholders Mentor Graphics Corporation: We consent to incorporation by reference herein of our reports dated May 24, 2002, relating to the consolidated balance sheets of Mentor Graphics Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity and cash flows and related schedule for each of the years in the three-year period ended December 31, 2001, which report appears in the December 31, 2001 annual report on Form 10-K/A of Mentor Graphics Corporation. /s/ KPMG LLP Portland, Oregon June 25, 2002 EX-23.2 6 f82332exv23w2.txt EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Mentor Graphics Corporation on Form S-8 of our report dated January 28, 2002, relating to the consolidated financial statements of Innoveda Inc. as of December 29, 2001 and December 30, 2000 and for each of the three years in the period ended December 29, 2001, appearing in the Current Report on Form 8-K of Mentor Graphics Corporation dated May 29, 2002. /S/ DELOITTE & TOUCHE LLP Boston, Massachusetts June 25, 2002 EX-23.3 7 f82332exv23w3.txt EXHIBIT 23.3 Exhibit 23.3 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) for the Options assumed by Mentor Graphics Corporation originally granted under the Summit Design, Inc. 1994 Stock Plan, Summit Design, Inc. 1996 Director Option Plan, Summit Design, Inc. 1997 Nonstatutory Stock Option Plan, Viewlogic Systems, Inc. 1998 Stock Incentive Plan, Transcendent Design Technology, Inc. Stock Option Plan, PADS Software, Inc. 1998 Stock Option Plan and the Innoveda, Inc. 2000 Amended and Restated 2000 Stock Incentive Plan of our report dated October 29, 2001 (except for the last six paragraphs of Note 11, as to which the date is December 14, 2001, and the last paragraph of Note 12, as to which the date is December 7, 2001), with respect to the consolidated financial statements of IKOS Systems, Inc. included in the Current Report on Form 8-K/A of Mentor Graphics Corporation filed with the Securities and Exchange Commission on May 29, 2002 which is incorporated by reference in this Form S-8. /s/ Ernst & Young LLP San Jose, California June 25, 2002 EX-99.1 8 f82332exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 SUMMIT DESIGN, INC. 1994 STOCK PLAN 1. Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be incentive stock options (as defined under Section 422 of the Code) or non-statutory stock options, as determined by the Administrator at the time of grant of an option and subject to the applicable provisions of Section 422 of the Code, as amended, and the regulations promulgated thereunder. 2. Definitions. As used herein, the following definitions shall apply: a. "Administrator" means the Board or any of its Committees appointed pursuant to Section 4 of the Plan. b. "Board" means the Board of Directors of the Company. c. "Code" means the Internal Revenue Code of 1986, as amended. d. "Committee" means a Committee appointed by the Board of Directors in accordance with Section 4 of the Plan. e. "Common Stock" means the Common Stock of the Company. f. "Company" means Summit Design, Inc., a Delaware corporation. g. "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services and is compensated for such services, and any director of the Company whether compensated for such services or not. h. "Continuous Status as an Employee or Consultant" means that the employment or consulting relationship with the Company, any Parent or Subsidiary is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick leave, military leave, or any other personal leave. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract, including Company policies. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. i. "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. j. "Employee" means any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company. k. "Exchange Act" means the Securities Exchange Act of 1934, as amended. l. "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is quoted on the Nasdaq System (but not on the National Market System thereof) or if the Market Value of the Common Stock cannot be determined under (i) above but the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination or; (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. m. "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. n. "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. o. "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. p. "Option" means a stock option granted pursuant to the Plan. q. "Optioned Stock" means the Common Stock subject to an Option. r. "Optionee" means an Employee or Consultant who receives an Option. s. "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code. t. "Plan" means this 1994 Stock Plan. u. "Prior TSSI ISO" means any incentive stock option granted to an employee of Test Systems Strategies, Inc. ("TSSI") pursuant to the TSSI 1988 Incentive Stock Option Plan (the "TSSI Plan") and thereafter substituted for by an Incentive Stock Option exercisable for Shares of the Company pursuant to the terms of this Plan and of the Agreement and Plan of Reorganization dated January 19, 1994 between Summit Design, Inc., TSSI, Summit Sub, Inc. and See Technologies Software Environment for Engineers, Ltd. v. "SEE" means See Technologies Software Environment for Engineers, Ltd. w. "Share" means a share of the Common Stock, as adjusted in accordance with Section 11 below. x. "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of shares which may be optioned and sold under the Plan is 2,322,000 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. 4. Administration of the Plan. (a) Plan Procedure. i. Administration With Respect to Directors and Officers. With respect to grants of Options to Employees who are also officers or directors of the Company, the Plan shall be administered by (A) the Board if the Board may administer the Plan in compliance with Rule 16b-3 promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with respect to a plan intended to qualify thereunder as a discretionary plan, or (B) a Committee designated by the Board to administer the Plan, which Committee shall be constituted in such a manner as to permit the Plan to comply with Rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board 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, all to the extent permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan. ii. Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan may be administered by different bodies with respect to directors, non-director officers and Employees who are neither directors nor officers. iii. Administration With Respect to Consultants and Other Employees. With respect to grants of Options to Employees or Consultants who are neither directors nor officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the legal requirements relating to the administration of incentive stock option plans, if any, of applicable state corporate and securities laws, of the Code, and of any applicable stock exchange (including Nasdaq) (the "Applicable Laws"). Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board 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, all to the extent permitted by the Applicable Laws. (b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any stock exchange upon which the Common Stock is listed, the Administrator shall have the authority, in its discretion: (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(l) of the Plan; (ii) to select the Consultants and Employees to whom Options may from time to time be granted hereunder; (iii) to determine whether and to what extent Options or any combination thereof are granted hereunder; (iv) to determine the number of shares of Common Stock to be covered by each such award granted hereunder; (v) to approve forms of agreements for use under the Plan, which forms may differ with respect to individual Optionees; (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, including the terms of any right of first refusal of the Company to purchase Shares granted pursuant to the Plan and the terms of any repurchase option of the Company with respect to unvested Shares; (vii) with respect to any Option, to determine whether and under what circumstances an Option may be settled in cash under subsection 9(f) instead of Common Stock; (viii) to reduce the exercise price of the Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted; and (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan. (c) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees and any other holders of any Options. (5) Eligibility. (a) Nonstatutory Stock Options may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees. An Employee or Consultant who has been granted an Option may, if otherwise eligible, be granted additional Options. (b) Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary, including Options granted in substitution of options granted under the TSSI Plan) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. (c) For purposes of Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. (d) The Plan shall not confer upon any Optionee any right with respect to continuation of employment relationship with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment relationship at any time, with or without cause. (e) The following limitations shall apply to grants of Options to Employees: (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more than 500,000 Shares. (ii) The foregoing limitation shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 11(a). (iii) If an Option is canceled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 11), the canceled Option shall be counted against the limit set forth in Section 5(e)(i). For this purpose, if the exercise price of an Option is reduced, the transaction shall be treated as a cancellation of the Option and the grant of a new Option. 6. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the stockholders of the Company, as described in Section 17 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 13 of the Plan. 7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. 8. Option Exercise Price and Consideration. (a) The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Committee, but shall be subject to the following: (i) In the case of an Incentive Stock Option (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Committee. (b) 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 Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and, in the case of a Prior TSSI ISO may consist entirely of (1) cash, (2) check, or (3) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised. In the case of all other Options, the consideration may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (5) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (6) any combination of the foregoing methods of payment. 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. 9. Exercise of Option. (a) Procedure for Exercise; Rights as a Stockholder. Any Nonstatutory Option and, subject to the $100,000 limitation of Section 5(b) on the exercisability of Incentive Stock Options in any one year, any Incentive Stock Option granted hereunder shall be exercisable 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(b) 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. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 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. (b) Termination of Employment or Consulting Relationship. In the event of termination of an Optionee's Continuous Status as an Employee or Consultant with the Company, such Optionee may within sixty (60) days after the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of such termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate. Notwithstanding the above provisions of this Section 9(b), in the event of an Optionee's change of status from Consultant to Employee, an Optionee's Nonstatutory Stock Option shall not automatically terminate solely as a result of such change of status. In addition, in the case of an Option other than a Prior TSSI ISO, in the event of an Optionee's change of status from Employee to Consultant, an Employee's Incentive Stock Option shall not automatically terminate but shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option on the ninety-first (91st) day following such change of status. (c) Disability of Optionee. In the event that an Optionee's Continuous Status as an Employee or Consultant terminates as a result of the Optionee's Disability, the Optionee may exercise his or her Option at any time within twelve (12) months from the date of such termination, but only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions. (f) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 10. Non-Transferability of Options. Options 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. 11. Adjustments Upon Changes in Capitalization or Merger. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock 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 of Common Stock 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, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase 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 adjustment 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. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Optionee shall have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby. In addition, any Company repurchase option applicable to Shares shall lapse as to all such Shares, provided such transaction takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company: (i) Options. Each Option shall be assumed or an equivalent Option shall be substituted by such successor corporation (including as a "Successor" any purchaser of substantially all of the assets of the Company) or a parent or subsidiary of such successor corporation. In the event that the successor corporation or a parent or subsidiary of such successor corporation does not agree to assume the Option or to substitute an equivalent option, the Administrator shall, as soon as practicable prior to the effective date of such transaction, provide for the Optionee to have the right to exercise the Option as to all or a portion of the Optioned Stock, including Shares that would not otherwise be exercisable. In such event the Administrator shall notify the Optionee as soon as practicable prior to the effective date of such transaction that the Option shall be fully exercisable for a period of ten (10) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger, the Option confers the right to purchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger, the consideration (whether stock, cash, or other securities or property) received in the merger by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger was not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger. (ii) Shares Subject to Repurchase Option. Any Shares subject to a repurchase option of the Company shall be exchanged for the consideration (whether stock, cash, or other securities or property) received in the merger or asset sale by the holders of Common Stock for each Share held on the effective date of the transaction, as described in the preceding paragraph. If the Optionee receives shares of stock of the successor corporation or a parent or subsidiary of such successor corporation in exchange for Shares subject to a repurchase option, such exchanged shares shall continue to be subject to the repurchase option as provided in the Restricted Stock Purchase Agreement. 12. Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such other date as is determined by the Board. 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 at any time amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other applicable law or regulation, including the requirements of Nasdaq or an established stock exchange), the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. (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. Shares shall not be issued pursuant to the exercise of an Option unless the grant and exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of Nasdaq or any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. 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. The 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. Agreements. Options shall be evidenced by written agreements in such form as the Administrator shall approve from time to time. 17. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under applicable state and federal law and the rules of any stock exchange upon which the Common Stock is listed. 18. Addendum to the 1994 Summit Design, Inc. Stock Plan. This Addendum shall apply to any person who is granted an Option under the 1994 Summit Design, Inc. Stock Plan (the "Plan") and is an employee or consultant of SEE and is a resident of the State of Israel, or is otherwise subject to the laws of the State of Israel (such persons are referred to collectively hereinafter as the "Israelis"). The Summit Design, Inc. Option Agreements and Restricted Stock Purchase Agreements delivered to the Israelis pursuant to the Options granted to the Israelis (each an "Israeli Option") shall contain certain terms and conditions as is required by applicable Israeli law or approved by the Company, including, but not limited to the following: 1) Each Israeli Option granted to an Israeli on or before January 31, 1994 shall be immediately exercisable for 25% of the shares subject to such Option, with the remaining Shares to vest equally on a monthly basis over a three year period beginning on January 1, 1994. Such vesting schedule may be accelerated by the Administrator of the Plan and shall be accelerated in accordance with any employment agreement an Israeli may have with the Company. 2) The Common Stock issuable upon exercise of an Israeli Option that is not yet vested shall be held in escrow and trust in Israel for the benefit of the Company and the applicable Israeli Optionee as required by Israeli law and according to the terms and conditions of such Israeli Optionee's Restricted Stock Purchase Agreement. 3) To the fullest extent possible, all terms and conditions necessary to qualify each Israeli Option intended by the Company to be taxed as the Israeli equivalent of an Incentive Stock Option or Nonstatutory Option, as the case may be, to be so taxed by the State of Israel. 4) All applicable foreign currency control requirements of any Israeli governmental entity. EX-99.2 9 f82332exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 SUMMIT DESIGN, INC. 1996 DIRECTOR OPTION PLAN 1. Purposes of the Plan. The purposes of this 1996 Director Option Plan are to attract and retain the best available personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside Directors of the Company to serve as Directors, and to encourage their continued service on the Board. All options granted hereunder shall be nonstatutory stock options. 2. Definitions. As used herein, the following definitions shall apply: (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1986, as amended. (c) "Common Stock" means the Common Stock of the Company. (d) "Company" means Summit Design, Inc., a Delaware corporation. (e) "Director" means a member of the Board. (f) "Employee" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director's fee by the Company shall not be sufficient in and of itself to constitute "employment" by the Company. (g) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (h) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable, or; (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. (iv) The Fair Market Value of a Share of Common Stock on the effective date of this Plan shall be the price to the public of the Common Stock as set forth in the final prospectus included within the Registration Statement on Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Common Stock. (i) "Inside Director" means a Director who is an Employee. (j) "Option" means a stock option granted pursuant to the Plan. (k) "Optioned Stock" means the Common Stock subject to an Option. (l) "Optionee" means a Director who holds an Option. (m) "Outside Director" means a Director who is not an Employee. (n) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (o) "Plan" means this 1996 Director Option Plan. (p) "Share" means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan. (q) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of 1986. 3. Stock Subject to the Plan. Subject to the provisions of Section 10 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 150,000 Shares of Common Stock (the "Pool"). The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan. 4. Administration and Grants of Options under the Plan. (a) Procedure for Grants. The provisions set forth in this Section 4(a) shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. All grants -2- of Options to Outside Directors under this Plan shall be automatic and nondiscretionary and shall be made strictly in accordance with the following provisions: (i) No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of Shares to be covered by Options granted to Outside Directors. (ii) Each Outside Director shall be automatically granted an Option (the "First Option") to purchase a number of Shares determined as follows on the later to occur of (A) the effective date of this Plan or (B) the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy: (A) If granted on the effective date of this Plan, 7,500 Shares; (B) If granted on the date the person first becomes an Outside Director, 10,000 Shares. The above notwithstanding, no Employee Director who ceases to be an Employee but who remains a Director shall receive a First Option. (iii) Each Outside Director shall be automatically granted an Option to purchase 10,000 Shares (a "Subsequent Option") each year on the date of the Company's Annual Meeting of Stockholders, provided he or she is then an Outside Director and if, as of such date, he or she shall have served on the Board for at least the preceding six (6) months. (iv) Notwithstanding the provisions of subsections (ii) and (iii) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 16 hereof. (v) The terms of a First Option granted hereunder shall be as follows: (A) the term of the First Option shall be ten (10) years. (B) the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. (C) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option. (D) subject to Section 10 hereof, the First Option shall become exercisable according to the following schedule, provided that the Optionee continues to serve as a Director on such date: -3- (a) If granted on the effective date of this Plan, the First Option shall vest in full one business day prior to the date of the first Annual Meeting of the Stockholders of the Company held thereafter; (b) If granted after the effective date of this Plan, the First Option shall vest in full on the first anniversary of the date of grant. (vi) The terms of a Subsequent Option granted hereunder shall be as follows: (A) the term of the Subsequent Option shall be ten (10) years. (B) the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. (C) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option. (D) subject to Section 10 hereof, the Subsequent Option shall become exercisable in full on the earlier of (i) the first anniversary of the date of grant, or (ii) one business day prior to the date of the Company's first Annual Meeting of the Stockholders following the date of grant, provided in each case that the Optionee continues to serve as a Director on such date. (vii) In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the number of Shares previously purchased under Options to exceed the Pool, the remaining Shares available for Option grant shall be granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made until such time, if any, as additional Shares become available for grant under the Plan through action of the Board or the stockholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder. 5. Eligibility. Options may be granted only to Outside Directors. All Options shall be automatically granted in accordance with the terms set forth in Section 4 hereof. The Plan shall not confer upon any Optionee any right with respect to continuation of service as a Director or nomination to serve as a Director, nor shall it interfere in any way with any rights which the Director or the Company may have to terminate the Director's relationship with the Company at any time. 6. Term of Plan. The Plan shall become effective on the date of the final prospectus with respect to the IPO. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 11 of the Plan. -4- 7. Form of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (iv) delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (v) any combination of the foregoing methods of payment. 8. Exercise of Option. (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable at such times as are set forth in Section 4 hereof; provided, however, that no Options shall be exercisable until stockholder approval of the Plan in accordance with Section 16 hereof has been obtained. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Rule 16b-3. Options granted to Outside Directors must comply with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any successor thereto and shall contain such additional conditions or restrictions as may be required thereunder to qualify Plan transactions, and other transactions by Outside Directors that otherwise could be matched with Plan transactions, for the maximum exemption from Section 16 of the Exchange Act. (c) Termination of Continuous Status as a Director. Subject to Section 10 hereof, in the event an Optionee's status as a Director terminates (other than upon the Optionee's death or -5- total and permanent disability (as defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only within three (3) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. (d) Disability of Optionee. In the event Optionee's status as a Director terminates as a result of total and permanent disability (as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but only within twelve (12) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of termination, or if he or she does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. (e) Death of Optionee. In the event of an Optionee's death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following the date of death, and only to the extent that the Optionee was entitled to exercise it on the date of death (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of death, and to the extent that the Optionee's estate or a person who acquired the right to exercise such Option does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. 9. Non-Transferability of Options. The Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the automatic grant provisions of Section 4 hereof shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock -6- of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action. (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation or the sale of substantially all of the assets of the Company, outstanding Options may be assumed or equivalent options may be substituted by the successor corporation or a Parent or Subsidiary thereof (the "Successor Corporation"). If an Option is assumed or substituted for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the Optionee serves as a Director or a director of the Successor Corporation. Following such assumption or substitution, if the Optionee's status as a Director or director of the Successor Corporation, as applicable, is terminated other than upon a voluntary resignation by the Optionee, the Option or option shall become fully exercisable, including as to Shares for which it would not otherwise be exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(c) through (e) above. If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. In such event the Board shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the date of such notice, and upon the expiration of such period the Option shall terminate. For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 11. Amendment and Termination of the Plan. (a) Amendment and Termination. Except as set forth in Section 4, the Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to -7- comply with Rule 16b-3 under the Exchange Act (or any other applicable law or regulation), the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. (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. 12. Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date determined in accordance with Section 4 hereof. 13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 14. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 15. Option Agreement. Options shall be evidenced by written option agreements in such form as the Board shall approve. 16. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company at or prior to the first annual meeting of stockholders held subsequent to the granting of an Option hereunder. Such stockholder approval shall be obtained in the degree and manner required under applicable state and federal law. -8- EX-99.3 10 f82332exv99w3.txt EXHIBIT 99.3 EXHIBIT 99.3 SUMMIT DESIGN, INC. 1997 NONSTATUTORY STOCK OPTION PLAN 1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option Plan are: - to attract and retain the best available personnel for positions of substantial responsibility, - to provide additional incentive to Employees, Directors and Consultants, and - to promote the success of the Company's business. Options granted under the Plan will be nonstatutory stock options. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan. (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. (f) "Common Stock" means the Common Stock of the Company. (g) "Company" means Summit Design, Inc., a Delaware corporation. (h) "Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity, and any director of the Company whether compensated for such services or not. (i) "Director" means a member of the Board. (j) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. (k) "Employee" means any person, including Officers, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (m) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. (n) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement. (o) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (p) "Option" means a nonstatutory stock option granted pursuant to the Plan, that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. -2- (q) "Option Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. (r) "Option Exchange Program" means a program whereby outstanding options are surrendered in exchange for options with a lower exercise price. (s) "Optioned Stock" means the Common Stock subject to an Option. (t) "Optionee" means the holder of an outstanding Option granted under the Plan. (u) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (v) "Plan" means this 1997 Nonstatutory Stock Option Plan. (w) "Service Provider" means an Employee, Consultant or Director. (x) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan. (y) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 250,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). 4. Administration of the Plan. (a) Administration. The Plan shall be administered by (i) the Board or (ii) a Committee, which committee shall be constituted to satisfy Applicable Laws. (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: (i) to determine the Fair Market Value of the Common Stock; (ii) to select the Service Providers to whom Options may be granted hereunder; -3- (iii) to determine whether and to what extent Options are granted hereunder; (iv) to determine the number of shares of Common Stock to be covered by each Option granted hereunder; (v) to approve forms of agreement for use under the Plan; (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted; (viii) to institute an Option Exchange Program; (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; (x) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws; (xi) to modify or amend each Option (subject to Section 14(b) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan; (xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; (xiii) to determine the terms and restrictions applicable to Options; (xiv) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and -4- (xv) to make all other determinations deemed necessary or advisable for administering the Plan. (c) Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 5. Eligibility. Options may be granted to Service Providers; provided, however, that notwithstanding anything to the contrary contained in the Plan, no greater than 25,000 Options may be granted to Directors and persons considered to be "officers" by the Nasdaq Stock Market. 6. Limitation. Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause. 7. Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for ten (10) years, unless sooner terminated under Section 14 of the Plan. 8. Term of Option. The term of each Option shall be stated in the Option Agreement. 9. Option Exercise Price and Consideration. (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator. (b) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. (c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: (i) cash; (ii) check; (iii) promissory note; (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and -5- (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; (v) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price; (vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (vii) any combination of the foregoing methods of payment. 10. Exercise of Option. (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), 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. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option, but only within such period of time as is specified in the Option Agreement, and only to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for sixty (60) days following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the -6- Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. Notwithstanding the above provisions of this Section 10(b), in the event of an Optionee's change of status from Employee to Consultant or Consultant to Employee, an Optionee's Option shall not automatically terminate solely as a result of such change of status. (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee's estate or, if none, by the person(s) entitled to exercise the Option under the Optionee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 11. Non-Transferability of Options . Unless determined otherwise by the Administrator, an 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. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate. 12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. -7- (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock 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 of Common Stock 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, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase 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 adjustment 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. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Optionee shall have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action. (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of ten (10) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock, immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor -8- corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 14. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. (b) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to options granted under the Plan prior to the date of such termination. 15. Conditions Upon Issuance of Shares. (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) Investment Representations. As a condition to the exercise of an Option the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 16. Inability to Obtain Authority. The 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. 17. 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. -9- 18. Addendum to the 1997 Summit Design, Inc. Nonstatutory Stock Option Plan. This Addendum shall apply to any person who is granted an Option under the 1997 Summit Design, Inc. Nonstatutory Stock Option Plan (the "Plan") and is an employee or consultant of Summit Design (EDA) Ltd. and is a resident of the State of Israel, or is otherwise subject to the laws of the State of Israel (such persons are referred to collectively hereinafter as the "Israelis"). The Summit Design, Inc. Option Agreements delivered to the Israelis pursuant to the Options granted to the Israelis (each an "Israeli Option") shall contain certain terms and conditions as is required by applicable Israeli law or approved by the Company, including, but not limited to the following: (a) The Common Stock issuable upon exercise of an Israeli Option that is not yet vested shall be held in escrow and trust in Israel for the benefit of the Company and the applicable Israeli Optionee as required by Israeli law. (b) To the fullest extent possible, all terms and conditions necessary to qualify each Israeli Option intended by the Company to be taxed as the Israeli equivalent of a Nonstatutory Option, to be so taxed by the State of Israel. (c) All applicable foreign currency control requirements of any Israeli governmental entity. -10- EX-99.4 11 f82332exv99w4.txt EXHIBIT 99.4 EXHIBIT 99.4 VIEWLOGIC SYSTEMS, INC. 1998 STOCK INCENTIVE PLAN 1. PURPOSE The purpose of this 1998 Stock Incentive Plan (the "Plan") of Viewlogic Systems, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any of the Company's present or future subsidiary corporations as defined in Section 424 (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code") and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a significant interest, as determined by the Board of Directors of the Company (the "Board"). 2. ELIGIBILITY All of the Company's employees, officers, directors, consultants and advisors (and any individuals who have accepted an offer for employment) are eligible to be granted options, restricted stock awards, or other stock-based awards (each, an "Award") under the Plan. Each person who has been granted an Award under the Plan shall be deemed a "Participant". 3. ADMINISTRATION, DELEGATION (a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith. (b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to make Awards and exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the maximum number of shares subject to Awards and the maximum number of shares for any one Participant to be made by such executive officers. 1 (c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). All references in the Plan to the "Board" shall mean the Board or a Committee of the Board or the executive officer referred to in Section 3(b) to the extent that the Board's powers or authority under the Plan have been delegated to such Committee or executive officer. 4. STOCK AVAILABLE FOR AWARDS (a) NUMBER OF SHARES. Subject to adjustment under Section 8 hereof, Awards may be made under the Plan for up to 6,655,574 shares (the "Authorized Shares") of common stock, $0.001 par value per share, of the Company (the "Common Stock"), which number of Authorized Shares shall automatically increase by five percent of the original number of Authorized Shares (as adjusted pursuant to Section 8 hereof) annually, for the Plan Term (as defined in Section 10(c) hereof), on the anniversary of the adoption of the Plan by the Board. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options (as hereinafter defined), to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. (b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, for Awards granted after the Common Stock is registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the maximum number of shares of Common Stock with respect to which an Award may be granted to any Participant under the Plan shall be 1,300,000 per calendar year. The per-Participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162 (m) of the Code. 5. STOCK OPTIONS (a) GENERAL. The Board may grant options to purchase Common Stock (each, an "Option") and determine the number of shares of Common Stock to be covered by each option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock Option". (b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an "incentive stock option" as defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock Option is not an Incentive Stock Option. (c) EXERCISE PRICE. The Board shall establish the exercise price at the time each option is granted and specify it in the applicable option agreement. 2 (d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement. (e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. (f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may, in its sole discretion, otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; (3) when the Common Stock is registered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board in good faith ("Fair Market Value"), which Common Stock was owned by the Participant at least six months prior to such delivery; (4) to the extent permitted by the Board, in its sole discretion by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or (5) by any combination of the above permitted forms of payment. 6. RESTRICTED STOCK (a) GRANTS. The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (each, a "Restricted Stock Award"). (b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to 3 the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 7. OTHER STOCK-BASED AWARDS The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights. 8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS (a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the number and class of securities and exercise price per share subject to each outstanding option, (iv) the repurchase price per share subject to each outstanding Restricted Stock Award, and (v) the terms of each other outstanding Award shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is necessary and appropriate. If this Section 8(a) applies and Section 8(c) also applies to any event, Section 8(c) shall be applicable to such event, and this Section 8(a) shall not be applicable. (b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or dissolution of the Company, the Board shall upon written notice to the Participants provide that all then unexercised options will (i) become exercisable in full as of a specified time at least 10 business days prior to the effective date of such liquidation or dissolution and (ii) terminate effective upon such liquidation or dissolution, except to the extent exercised before such effective date. The Board may specify the effect of a liquidation or dissolution on any Restricted Stock Award or other Award granted under the Plan at the time of the grant of such Award. (c) ACQUISITION EVENTS (1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which the Common Stock is converted into or exchanged for the right to receive cash, securities or other property or (b) any exchange of shares of the Company for cash, securities or other property pursuant to a statutory share exchange transaction. (2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the occurrence of an Acquisition Event, or the execution by the Company of any agreement with respect to an Acquisition Event, the Board shall provide that all outstanding 4 Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof). For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Acquisition Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Acquisition Event, the consideration (whether cash, securities or other property) received as a result of the Acquisition Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Acquisition Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Acquisition Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Acquisition Event. Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, then the Board shall, upon written notice to the Participants, provide that all then unexercised options will become exercisable in full as of a specified time prior to the Acquisition Event and will terminate immediately prior to the consummation of such Acquisition Event, except to the extent exercised by the Participants before the consummation of such Acquisition Event; provided, however, that in the event of an Acquisition Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition Price"), then the Board may instead provide that all outstanding options shall terminate upon consummation of such Acquisition Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options. (3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS. Upon the occurrence of an Acquisition Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company's successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Acquisition Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. (4) CONSEQUENCES OF AN ACQUISITION EVENT ON OTHER AWARDS. The Board shall specify the effect of an Acquisition Event on any other Award granted under the Plan at the time of the grant of such Award. 9. GENERAL PROVISIONS APPLICABLE TO AWARDS (a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or 5 otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. (b) DOCUMENTATION. Each Award shall be evidenced by a written instrument in such form as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. (c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. (d) TERMINATION OF STATUS. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. (e) WITHHOLDING. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (h) ACCELERATION. The Board may at any time provide that any Options shall become immediately exercisable in full or in part, that any Restricted Stock Awards shall be free 6 of restrictions in full or in part or that any other Awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. 10. MISCELLANEOUS (a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the date on which it is adopted by the Board, but no Award granted to a Participant designated by the Board as subject to Section 162 (m) of the Code by the Board shall become exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been approved by the Company's stockholders to the extent stockholder approval is required by Section 162(m) in the manner required under Section 162 (m) (including the vote required under Section 162(m)). No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Awards previously granted may extend beyond that date (the "Plan Term"). (d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that to the extent required by Section 162 (m) of the Code, no Award granted to a Participant designated as subject to Section 162 (m) by the Board after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award (to the extent that such amendment to the Plan was required to grant such Award to a particular Participant), unless and until such amendment shall have been approved by the Company's stockholders as required by Section 162 (m) (including the vote required under Section 162(m)). 7 (e) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. Adopted by the Board of Directors on October 2, 1998 Approved by the sole Stockholder on October 2, 1998 8 VIEWLOGIC SYSTEMS, INC. AMENDMENT NO. 1 TO 1998 STOCK INCENTIVE PLAN The following amendments to the 1998 Stock Incentive Plan (the "Plan") of Viewlogic Systems, Inc., a Delaware corporation, are hereby effected: 1. Section 5(c) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (c) EXERCISE PRICE. The Board shall establish the exercise price at the time each option is granted and specify it in the applicable option agreement; PROVIDED, THAT, no Option shall have an exercise price of less than (i) 85% of the Fair Market Value of a share of Common Stock on the date of grant, or (ii) in the case of an Option granted to a Participant who is, at the time of the grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of outstanding stock of the Company (a A10% Stockholder@), 110% of the Fair Market Value of a share of Common Stock on the date of grant. 2. Section 5(d) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; PROVIDED, THAT, (i) Options granted to Participants who are not officers or directors of, or consultants to, the Company shall become exercisable at least as rapidly as 20% per year over the five-year period commencing on the date of grant and (ii) no Option shall have a term in excess of ten years from the date of grant. 3. Section 6(b) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any; PROVIDED, THAT, the issue price of any shares of Common Stock subject to a Restricted Stock Award shall not be less than (i) 85% of the Fair Market Value of a share of Common Stock on the date of grant, or (ii) in the- case of a Restricted Stock Award granted to a 10% Stockholder, 100% of the Fair Market Value of a share of Common Stock on the date of grant. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the 9 Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 4. Section 7 of the Plan is deleted in its entirety and the following is substituted in lieu thereof: 7. OTHER STOCK-BASED AWARDS The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights; PROVIDED, THAT, the price of any shares of Common Stock subject to any such other stock-based Award or upon which any such other stock-based Award is based, shall not be less than (i) 85% of the Fair Market Value of a share of Common Stock on the date of grant, or (ii) in the case of an other stock-based Award granted to a 10% Stockholder, 100% of the Fair Market Value of a share of Common Stock on the date of grant. 5. Section 9(a) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (a) NONTRANSFERABILITY OF AWARDS. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. 6. Section 9(d) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (d) TERMINATION OF STATUS. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under such Award; PROVIDED, THAT, at the minimum, following the termination of employment, an Option shall remain exercisable for at least (i) six months, if such termination is a result of disability or death, or (ii) 30 days, if such termination is for any reason other than disability, death or cause. Notwithstanding the foregoing, in no event shall any extension of an Option under this Section 9(d) permit the exercise of such option subsequent to the date of such Option's expiration pursuant to its terms or the terms of Section 5(d) hereof. 10 7. The following Section 9(i) is added to the Plan and inserted therein immediately subsequent to Section 9(h) of the Plan: (h) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any shares of Common Stock issued pursuant to Awards shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board may determine. Such restrictions shall be set forth in the applicable Award and shall apply in addition to any restrictions that may apply to holders of shares of Common Stock generally. In the case of a Participant who is not an officer or a director of, or a consultant to, the Company, any right, upon termination of the Participant's employment or other status with the Company, to repurchase at the original purchase price (if any) shares of Common Stock issued to such Participant pursuant to an Award shall lapse at least as rapidly as 20% per year of the five-year period commencing on the date of grant of such Award. Any such right may be exercised only within 90 days after the termination of the Participant's employment or other status with the Company (or, in the case of Common Stock issued upon the exercise of Options after the date of termination, within 90 days after the date of exercise) for cash or for cancellation of indebtedness incurred in purchasing such shares of Common Stock. 8. The following Section 9(j) is added to the Plan and inserted therein immediately subsequent to Section 9(i) of the Plan: (j) FINANCIAL REPORTS. Each year, the Company shall furnish to each Participant who is holding an outstanding Award or who is a stockholder of the Company its balance sheet and income statement, unless such Participant is a key employee of the Company whose duties with the Company assure him access to equivalent information. Such balance sheet and income statement need not be audited. 9. Section 10(c) of the Plan is deleted in its entirety and the following is substituted in lieu thereof: (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the date on which it is adopted by the Board, but no Award granted to a Participant designated by the Board as subject to Section 162 (m) of the Code shall become exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been approved by the Company's stockholders to the extent stockholder approval is required by Section 162 (m) in the manner required under Section 162 (m) (including the vote required under Section 162(m)). In the event that the Company's stockholders fail to approve the Plan within 12 months after its adoption by the Board, any grants of Awards that have already occurred shall be rescinded, and no additional Awards shall be granted thereafter under the Plan. No Awards shall be granted under the Plan and the Plan shall automatically terminate ten years after the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved 11 by the Company's stockholders (the APlan Term@), but Awards previously granted may extend beyond that date . Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Plan. This Amendment No. 1 to 1998 Stock Incentive Plan shall be effective upon and as of the date of its adoption by the Board. Adopted by the Board of Directors on November 23, 1998 12 EX-99.5 12 f82332exv99w5.txt EXHIBIT 99.5 EXHIBIT 99.5 TRANSCENDENT DESIGN TECHNOLOGY, INC. STOCK OPTION PLAN 1. PURPOSE The purposes of the Transcendent Design Technology, Inc. Stock Option Plan are to assist Transcendent Design Technology, Inc. in attracting, motivating and retaining key employees, directors and consultants, and to provide incentives that will further its development and success and will unify the interests of key employees, directors, consultants and shareholders through increased employee and director stock ownership. 2. DEFINITIONS For purposes of this Plan. "BOARD" means the Board of Directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMITTEE" means the Stock Option Committee appointed pursuant to Section 13 of this Plan. "COMPANY" means Transcendent Design Technology, Inc., a Delaware corporation. "CONSULTANT" means any person who is performing services for the Company as an independent contractor. "DIRECTOR" means any person who is a member of the Board. "EMPLOYEE" means any person who is an employee of the Company or of any Parent Corporation or Subsidiary Corporation. "INCENTIVE STOCK OPTION" means an option that is designated by the Committee as an "incentive stock option" within the meaning of Code Section 422. "NONSTATUTORY OPTION" means an Option that is designated by the Committee as such or that is not designated by the Committee as an Incentive Stock Option. "OPTION" means an option granted under this Plan to purchase shares of Stock. An "Option" may be either an Incentive Stock Option or a Nonstatutory Option. "PARENT CORPORATION" shall have the meaning set forth in Code Section 424(e). "PARTICIPANT" means a person to whom an option is granted under this Plan. "PERMANENT DISABILITY" means permanent and total disability within the meaning of Code Section 22(e)(3), which reads, in pertinent part, as follows: An individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. "PLAN" means this Transcendent Design Technology, Inc. Stock Option Plan. "RETIREMENT" means normal retirement of an Employee under policies established by his or her employer. "STOCK" means the Non-Voting Common Stock of the Company. Unless the context expressly indicates otherwise, "shares" means shares of Stock. "SUBSIDIARY CORPORATION" shall have the meaning set forth in Code Section 424(f). "TEN PERCENT SHAREHOLDER" means an Employee who on the date of grant of the Option owns (within the meaning of Code Section 424(d)) more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary Corporation or any Parent Corporation. 3. SHARES SUBJECT TO PLAN Options may be granted under this Plan to acquire an aggregate of up to 2,000,000 shares of Stock, subject to adjustment as provided in Section 7 of this Plan. If Options terminate, expire or are canceled without having been fully exercised, the number of shares subject to such Options (but only to the extent not exercised prior to termination, expiration or cancellation) may again be subject to Options granted under this Plan. 4. ELIGIBILITY Any key Employee, any key Consultant and any Director shall be eligible to become a Participant and to acquire an Option to purchase Stock. Additional Options may be granted to a Participant while such Participant continues as an Employee, Consultant or Director. The Committee may exclude otherwise eligible persons. 5. GRANT OF OPTIONS The Committee shall, from time to time and in its absolute discretion, determine which Employees are key Employees, which Consultants are key Consultants and which eligible persons shall become Participants. Either Incentive Stock Options or Nonstatutory Options, as 2 determined by the Committee in its absolute discretion, may be granted to Employees, and only Nonstatutory Options may be granted to Directors who are not Employees and to Consultants. The Committee also shall determine the number of shares of Stock to be subject to each option and the price, terms and conditions, consistent with this Plan, of each Option. Without limiting the generality of the preceding paragraph, the Committee may, in its discretion and on such terms as it deems appropriate, require as a condition to the grant of an Option to a Employee, Consultant or Director, that the Employee, Consultant or Director surrender for cancellation some or all of any unexercised options which have been previously granted to the Employee, Consultant or Director. An Option, the grant of which is conditioned upon such surrender, may have an option price lower or higher than the option price of the surrendered Option, may cover the same, or a lesser or greater, number of shares as the surrendered option, may contain such other terms as the Committee deems appropriate and shall be exercisable in accordance with its terms, without regard to the number of shares, price, option period or any other term or condition of the surrendered Option. Notwithstanding any other provision of this Plan, the aggregate fair market value (determined as of the dates of their respective grants) of shares as to which incentive stock options (within the meaning of Code Section 422(b)) granted or assumed by the Company, any Parent Corporation and any Subsidiary Corporation first become exercisable by a Participant in any calendar year shall not exceed $100,000. The excess, if any, shall be treated as Nonstatutory Options. 6. OPTION TERMS Each Option shall be evidenced by a written Stock Option Agreement in a form approved by the Committee. Each Stock Option Agreement shall be executed by the Company and by the Participant receiving the option. Each Option shall be subject to the following terms and conditions and to such other terms and conditions as the Committee may deem appropriate: 6.1 TYPE OF OPTION; NUMBER OF SHARES Each Stock Option Agreement shall indicate whether the Option is an Incentive Stock Option or a Nonstatutory option and shall specify the number of shares of Stock subject to the Option. 6.2 OPTION PRICE The price of the shares subject to each Option shall be determined by the Committee and shall be set forth in the Stock Option Agreement, provided that the price per share shall not be less than the fair market value of such share on the day the Option is granted; and provided further that, in the case of an Incentive Stock Option granted to a Ten Percent Shareholder, the price per share shall not be less than 110% of the fair market value of such share at the time such option is granted. For purposes of this Plan, the fair market value of a share on a given date shall be: (a) if the Stock is traded on one or more securities exchanges, the mean between the high and low sale price of a share on such date on the principal exchange on which the shares are traded 3 or, if no shares were traded on such date, then the next preceding trading day (not more than ten) on which trading occurred; or (b) if the Stock is not traded on a securities exchange but is quoted on NASDAQ or a successor interdealer quotation system, the mean between the high and low sale price (if a National Market System security) or the mean between the representative bid and asked prices (in all other cases) on such date as reported by NASDAQ or such successor quotation system or, if no shares were traded or quoted on such date, then the next preceding day (not more than ten) on which trading or such quotations occurred; or (c) if the Stock is otherwise traded in the over-the-counter market, the mean between the high and low bid quotations on such date; or, if there are no bid quotations on such date, then the next preceding trading day (not more than ten) on which such quotations occurred; or (d) if the Stock is not publicly traded on a securities exchange or traded or quoted in the over-the-counter market or, if traded or quoted, there are no transactions or quotations within the last ten trading days or trading has been halted for extraordinary reasons, the fair market value shall be determined in good faith by the Committee with reference to the rules and principles of valuation set forth in Section 20.2031-2 of the Treasury Regulations (concerning the valuation of stocks and bonds for purposes of Code Section 2031). 6.3 PERIOD OF EXERCISE No Option shall be exercisable in whole or in part after ten years from the date of grant. Notwithstanding the foregoing, no Incentive Stock Option granted to a Ten Percent Shareholder may be exercisable after five years from the date such Option is granted. Subject to the foregoing limitations and Sections 6.5 and 8 of this Plan, Options shall become exercisable at such times and in such installments (which may be cumulative) as the Committee shall provide in each Stock Option Agreement. The Committee may in its absolute discretion, and on such terms and conditions as it considers appropriate, accelerate the times at which an Option may be exercised in whole or in part. 6.4 MANNER AND CONDITIONS OF EXERCISE To exercise an Option or any portion thereof, the Participant or other person then entitled to exercise such Option or portion thereof shall deliver to the Secretary of the Company a notice in writing signed by the Participant or such other person stating that such Option or portion is exercised, specifying the number of shares to be acquired upon exercise and complying with all applicable rules established by the Committee, together with the following: (a) Full payment (in cash or bank cashiers' check) for the shares with respect to which such option or portion is being exercised; or (b) With the consent of the Committee, shares of Stock owned by the Participant, duly endorsed for transfer to the Company, with a fair market value (as determinable under Section 6.2 of this Plan) on the date of exercise equal to the aggregate purchase price of the shares with respect to which such option or portion is being exercised; or 4 (c) With the consent of the Committee, a full recourse promissory note in a form, bearing interest (at a rate at least equal to the minimum rate necessary to avoid imputed interest under the Code) and payable upon such terms as may be prescribed by the Committee; or (d) Any combination of the consideration provided in the foregoing subsections (a), (b) and (c). No such exercise shall be effective unless and until a proper notice and payment have been delivered as provided above. No fractional shares shall be issued under this Plan. In the event that an Option or portion thereof shall be exercised pursuant to Sections 6.5 or 6.6 of this Plan by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option or portion thereof shall be delivered to the Company. The Committee may require, as a condition to the exercise of an option, such representations and covenants as it, in its absolute discretion, deems necessary to effect compliance with the Securities Act of 1933, as amended, any state securities laws or rules and regulations thereunder. The Committee may also require, as a condition to the exercise of an Option, that the Participant execute and deliver a buy-sell agreement or other agreement restricting transfer of shares issued on exercise of an Option and providing the Company with an option to purchase such shares in certain circumstances, in such form as the Committee shall determine in its discretion. The Participant, as a condition to exercising an option, shall also make any arrangements determined by the Committee to be necessary or appropriate to satisfy any federal and state withholding tax obligation resulting from the exercise of an Option, from a disposition described in Section 9 of this Plan or from the termination or partial termination of any restriction applicable to any share acquired on exercise of an Option, including the retention of shares by the Company or the delivery of shares to the Company equal in amount to all or a portion of the withholding tax obligation pursuant to such arrangements as may be established by the Committee. Any shares retained by or delivered to the Company under this Section shall be valued at the date of exercise in the same manner as provided under Section 6.2 of this Plan. To insure that such exercise and any resales are made in compliance with the Securities Act of 1933, as amended, and the Certificate of Incorporation and Bylaws of the Company, the Company may imprint an appropriate legend on certificates representing shares acquired on the exercise of an option and issue appropriate stop-transfer orders to its transfer agents. Any stock certificate evidencing shares of Stock issued pursuant to the exercise of an option shall bear such other legends as the Committee, in the exercise of its absolute discretion, shall require. 6.5 CESSATION OF EMPLOYMENT OR SERVICE AS DIRECTOR OR CONSULTANT If a Participant who is an Employee or a Consultant but is not a Director ceases to be an Employee or a Consultant other than by reason of Retirement, death or Permanent 5 Disability, the Participant shall be permitted to exercise his or her Option, to the extent it was exercisable at the date of cessation, until 60 days after such date, but in no event after its stated expiration date. If a Participant who is a Director but not an Employee ceases to be a Director, other than by reason of death, the Participant shall be permitted to exercise his or her Option, to the extent it was exercisable at the date of cessation, until 60 days after such date, but in no event after its stated expiration date. If a Participant who is an Employee or a Consultant but not a Director ceases to be an Employee or a Consultant because of Retirement, the Participant shall be permitted to exercise his or her option, to the extent it was exercisable at the date of Retirement, until three months after such date, but in no event beyond its stated expiration date. If a Participant who is an Employee or a Consultant but not a Director ceases to be an Employee or a Consultant because of Permanent Disability, the Participant shall be permitted to exercise his or her option, to the extent it was exercisable at the date of cessation of employment, until one year after the date he or she ceases to be an Employee, but in no event after its stated expiration date. If a Participant dies while an Employee, a Consultant or a Director or within three months after (i) ceasing to be an Employee because of Retirement or Permanent Disability, or (ii) ceasing to be a Consultant because of Permanent Disability, his or her option may be exercised by the Participant's estate or any person who acquired the right to exercise the Option by Will or the laws of descent and distribution, to the extent it was exercisable at the date of cessation of employment or cessation of service as a Consultant, until one year after the date of death, but in no event after its stated expiration date. If a Participant who is both an Employee and a Director ceases to be an Employee but remains a Director, or ceases to be a Director but remains an Employee, then all of the Participant's Nonstatutory Options shall remain in effect and, if the Participant ceases to be an Employee, all of the Participant's Incentive Stock Options shall become Nonstatutory Options 30 days after the date of cessation. Transfers of employment between the Company and any Subsidiary Corporation or between Subsidiary Corporations shall not be deemed cessation of employment for purposes of any Option granted hereunder. 6.6 NONTRANSFERABILITY During the lifetime of a Participant, his or her option shall be exercisable only by the Participant and no Option shall be transferable other than by Will or the laws of descent and distribution. No interest of any Participant under this Plan or in any Option shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. 6 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION In the event of any change in the Stock by reason of any stock dividend, recapitalization, split-up, combination or exchange of shares, or by reason of any similar change affecting the Stock (but not the issuance of additional shares, securities convertible into shares or options or rights to acquire shares of Stock or the Company's repurchase of shares), the number and class of shares which thereafter may be acquired on exercise of Options under this Plan and the number and class of shares subject to outstanding Options and the exercise price of each such share shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, Participants. Any such adjustment shall be final and binding on each Participant. 8. MERGER, CONSOLIDATION, ETC. In its absolute discretion, and on such terms and conditions as it deems appropriate, the Committee may provide by the terms of any Option that such Option cannot be exercised after the merger or consolidation of the Company with or into another corporation, the acquisition by another corporation or person of all or substantially all of the Company's assets or the liquidation or dissolution of the Company; and if the Committee so provides, it may, in its absolute discretion and on such terms and conditions as it deems appropriate, also provide, either by the terms of such Option or by a resolution adopted prior to the occurrence of such merger, consolidation, acquisition, liquidation or dissolution, that, for some period of time prior to such event, such Option shall become exercisable as to all shares covered thereby, notwithstanding anything to the contrary in Section 6.3 of this Plan or any installment provisions of such option. 9. DISQUALIFYING DISPOSITIONS If a Participant makes a "disposition" (within the meaning of Code Section 424(c)) of any shares issued upon exercise of an Incentive Stock Option within two years after the date the Incentive Stock Option is granted or within one year after shares are issued to the Participant pursuant to the exercise of the Incentive Stock Option, the Participant shall notify the Committee in writing of such disposition within 20 days thereafter. 10. NO RIGHTS AS A SHAREHOLDER No Participant shall have any rights or privileges as a shareholder with respect to any shares subject to Options prior to the date of issuance to him or her of a certificate for such shares. 11. NO RIGHT TO CONTINUED RELATIONSHIP Neither this Plan nor any Option granted under this Plan shall confer upon any Participant or any other person any right to continued employment, engagement or directorship by or with the Company or any Parent Corporation or Subsidiary Corporation, nor shall it interfere in any way with the right of his or her employer or its shareholders to terminate his or her employment, engagement or directorship at any time for any reason whatsoever, with or without cause. 7 12. COMPLIANCE WITH LAWS AND REGULATIONS This Plan, the grant and exercise of Options under this Plan and the obligation of the Company to sell and deliver shares under Options shall be subject to all applicable federal and state laws, rules and regulations and to any approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificate for shares of Stock either (a) prior to (i) the listing of such shares on any stock exchange on which the Stock may then be listed or inclusion on any interdealer quotation system on which the Stock may be quoted, and (ii) the completion of any registration or qualification of such shares which is required under any federal or state law, or any ruling or regulation of any government body, and which the Company shall, in its sole discretion, determine to be necessary or advisable, or (b) until exemptions from such registration and qualification requirements are established to the reasonable satisfaction of the Company and its counsel. 13. ADMINISTRATION The Board shall appoint a Stock Option Committee consisting of at least one Director to administer this Plan. The Committee member(s) shall serve at the pleasure of the Board. If the Board does not appoint a Committee, the Board shall administer this Plan and shall have the powers and duties granted to the Committee in this Plan. If Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended, no Director shall be appointed to, or shall serve on, the Committee unless he or she shall be a "disinterested person" within the meaning of Rule 16b-3 under such Act as presently in effect or hereafter amended. No Options may be granted to a Committee member during his or her tenure on the Committee. The Committee shall administer this Plan in accordance with its provisions and shall have full authority to interpret this Plan, prescribe, amend and rescind any rules and regulations necessary or appropriate for the administration of this Plan and make such other determinations and take such other action as it deems necessary or advisable, except as otherwise expressly reserved to the Board in this Plan. Without limiting the generality of the preceding sentence, the Committee may, in its discretion, determine that for Option purposes a Participant remains an Employee during all or any portion of a leave of absence approved by the Company. Any interpretation, determination, or other action made or taken by the Committee shall be final and binding upon all Participants. No member of the Committee and no officer of the Company shall be personally liable for any action, determination or interpretation made in good faith with respect to this Plan or any option, and all such persons shall be fully indemnified and protected by the Company, to the full extent that the Company is permitted to provide such indemnification and protection, in respect to any such action, determination or interpretation. 14. EFFECTIVE DATE This Plan shall be effective as of the date of adoption by the Board. 8 15. APPROVAL BY SHAREHOLDERS This Plan will be submitted for the approval by holders of a majority of the shares of stock voting thereon within twelve months after the Board's adoption of this Plan. Options may be granted prior to such shareholder approval, provided that such options shall not be exercisable prior to the time when the Plan is approved by shareholders and, if such approval is not obtained by the end of the twelve-month period, all Options previously granted shall thereupon be canceled and this Plan shall terminate. 16. AMENDMENT AND DISCONTINUANCE The Board may from time to time amend, suspend or discontinue this Plan; provided that, without approval of the holders of a majority of the shares of stock voting thereon, no action of the Board shall (a) increase the number of shares reserved for Options pursuant to Section 3 of this Plan, (b) permit the grant of any Option at a price less than that determined in accordance with Section 6.2 of this Plan, or (c) permit the grant of Options which expire beyond the periods provided for in Section 6.3 of this Plan. Without the written consent of a Participant, no such amendment, suspension or discontinuance of this Plan shall alter or impair any option previously granted to such Participant pursuant to this Plan. 17. TERM Unless terminated earlier pursuant to Section 15 of this Plan, this Plan shall expire on, and no further Options shall be granted pursuant to this Plan on or after, ten years after the date of adoption of this Plan by the Board. 9 EX-99.6 13 f82332exv99w6.txt EXHIBIT 99.6 EXHIBIT 99.6 PADS SOFTWARE, INC. 1998 STOCK OPTION PLAN 1. Purpose The purpose of this 1998 Stock Option Plan (the "Plan") of PADS Software, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and incentives in order to better align the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any present or future subsidiary corporations of PADS Software, Inc. as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code"). 2. Eligibility All of the Company's employees, officers, directors, consultants and advisors are eligible to be granted options ("Options") under the Plan. Any person who has been granted an Option under the Plan shall be deemed a "Participant". 3. Administration, Delegation a. Administration by Board of Directors. The Plan will be administered by the Board of Directors of the Company (the "Board"). The Board shall have authority to grant Options and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable from time to time to interpret and correct the provisions of the Plan and any Option. No member of the Board shall be liable for any action or determination relating to the Plan. All decisions by the Board shall be made in the sole discretion of the Board and shall be final and binding on all persons having or claiming any interest in the Plan or in any Option. b. Delegation to Executive Officers. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to grant Options and exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the maximum number of shares subject to Options and the maximum number of shares for any one Participant to be made by such executive officers. c. Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). If and when the Common Stock, $.008 par value per share, of the Company (the "Common Stock") is registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board shall appoint one such Committee of not less than two members, each member of which shall be an "outside director" within the meaning of Section 162(m) of the Code and a "non-employee director" as defined in Rule 16b-3 promulgated under the Exchange Act. All references in the Plan to the "Board" shall mean a Committee or the Board or the executive officer referred to in Section 3(b) to the extent of such delegation. 4. Stock Available for Options a. Number of Shares. Subject to adjustment under Section 4(b), Options may be granted under the Plan for up to 400,000 shares of Common Stock. If any Option expires or is terminated, surrendered or canceled without having been fully exercised, the unused Common Stock covered by such Option shall again be available for the grant of Options under the Plan, subject, however, in the case of Incentive Stock Options (as defined hereinafter) to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. b. Adjustment to Common Stock. In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan and (ii) the number and class of security and exercise price per share subject to each outstanding Option shall be appropriately adjusted by the Company to the extent the Board shall determine, in good faith, that such an adjustment is necessary and appropriate. If this Section 4(b) applies and Section 6(e)(1) also applies to any event, Section 6(e)(1) shall be applicable to such event, and this Section 4(b) shall not be applicable to such event. 5. Stock Options a. General. The Board may grant Options to purchase Common Stock and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock Option". b. Incentive Stock Options. An Option that the Board intends to be an "incentive stock option" as defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock Option is not an Incentive Stock Option. c. Exercise Price. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable option agreement. d. Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify. e. Exercise of Option. Options may be exercised only by delivery to the Company of a written notice of exercise signed by the proper person together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. f. Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may otherwise provide with respect to an Option, delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds (in cash or by check) to pay the exercise price, or delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company sufficient funds (in cash or by check) to pay the exercise price; (3) to the extent permitted by the Board and explicitly provided in the agreement evidencing the Option (i) by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by the Board in good faith ("Fair Market Value"), which Common Stock was owned by the Participant at least six months prior to such delivery, (ii) by delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (iii) by payment of such other lawful consideration as the Board may determine; or (4) any combination of the above permitted forms of payment. 6. General Provisions Applicable to Options a. Transferability of Options. Except as the Board may otherwise determine or provide with respect to an Option, Options shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to Participant, to the extent relevant in the context, shall include references to authorized transferees. b. Documentation. Each Option under the Plan shall be evidenced by a written instrument in such form as the Board shall determine. Each Option may contain terms and conditions in addition to those set forth in the Plan. c. Board Discretion. The terms of each Option need not be identical, and the Board need not treat Participants uniformly. d. Termination of Status. The Board shall determine the effect on an Option of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or the beneficiary designated by a Participant in the event of the Participant's death (the "Designated Beneficiary") shall be entitled to exercise this Option. In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. e. Acquisition Events. (1) Consequences of Acquisition Events. Upon the occurrence of an Acquisition Event (as defined below), or the execution by the Company of any agreement with respect to an Acquisition Event, outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation or an affiliate thereof (the "Acquiror"), provided that any such Options substituted for Incentive Stock Options shall satisfy, in the determination of the Board, the requirements of Section 424(a) of the Code and the Acquiror has agreed to assume such Options or substitute equivalent options therefor. If the Acquiror does not so agree, then the Board shall take one or more of the following actions with respect to then outstanding Options: (i) upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified date (the "Acceleration Date") prior to the Acquisition Event and will terminate immediately prior to the consummation of such Acquisition Event, except to the extent exercised by the Participants between the Acceleration Date and the consummation of such Acquisition Event; or (ii) in the event of an Acquisition Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition Price"), provide that all outstanding Options shall terminate upon consummation of such Acquisition Event and each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options. An "Acquisition Event" shall mean: (a) any merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such merger or consolidation; (b) any sale of all or substantially all of the assets of the Company; or (c) the complete liquidation of the Company. (2) Assumption of Options Upon Certain Events. The Board may grant Options under the Plan in substitution for options and other stock-based awards held by employees of another corporation who become employees of the Company as a result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of property or stock of the employing corporation. The substitute Options shall be granted on such terms and conditions as the Board considers appropriate in the circumstances. (f) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes required by law to be withheld in connection with such Participant's Option no later than the date of the event creating the tax liability. The Board may allow Participants to satisfy such tax obligations in whole or in part in shares of Common Stock, including shares retained from the Option creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (g) Amendment of Option. The Board may amend, modify or terminate any outstanding Option, including but not limited to substituting therefor another Option, changing the date of exercise or converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (h) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan until (i) all conditions of the Option have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (i) Acceleration. The Board may at any time provide that any Options shall become immediately exercisable in full or in part. 7. Miscellaneous a. No Right To Employment or Other Status. No person shall have any claim or right to be granted an Option, and the grant of an Option shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Option agreement. b. No Rights As Stockholder. Subject to the provisions of the applicable Option agreement, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock issuable upon exercise of an Option until becoming the record holder thereof. c. Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board. No Options shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Options previously granted may extend beyond that date. d. Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no Option granted to a Participant designated as subject to Section 162(m) by the Board after the date of such amendment shall become exercisable to the extent that such amendment to the Plan was required to grant such Option to a particular Participant, unless and until such amendment shall have been approved by the Company's stockholders. e. Governing Law. The provisions of the Plan and all Options granted hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. EX-99.7 14 f82332exv99w7.txt EXHIBIT 99.7 EXHIBIT 99.7 INNOVEDA, INC. AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN 1. Purpose The purpose of this Amended and Restated 2000 Stock Incentive Plan (the "Plan") of Innoveda, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any of the Company's present or future subsidiary corporations as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code") and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a significant interest, as determined by the Board of Directors of the Company (the "Board"). 2. Eligibility All of the Company's employees, officers, directors, consultants and advisors (and any individuals who have accepted an offer for employment) are eligible to be granted options and restricted stock awards (each, an "Award") under the Plan. Each person who has been granted an Award under the Plan shall be deemed a "Participant". 3. Administration and Delegation (a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith. (b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). All references in the Plan to the "Board" shall mean the Board or a Committee of the Board to the extent that the Board's powers or authority under the Plan have been delegated to such Committee. -1- 4. Stock Available for Awards (a) Number of Shares. Subject to adjustment under Section 7, Awards may be made under the Plan for a number of shares of common stock, $0.01 par value per share, of the Company (the "Common Stock") equal to the sum of: (1) 4,500,000 shares of Common Stock; (2) any shares of Common Stock reserved for issuance under each of (i) the Summit Designs, Inc. 1994 Stock Plan, as amended, (ii) the Summit Designs 1997 NonStatutory Stock Option Plan, and (iii) the Viewlogic, Inc. 1998 Stock Incentive Plan, as amended (collectively, the "Prior Plans") that remain available for issuance upon the adoption of this Plan by the Board; and (3) any shares of Common Stock subject to awards under the Prior Plans which awards expire, terminate, or are otherwise surrendered, canceled or forfeited (subject, however, in the case of Incentive Stock Options (as hereinafter defined) to any limitations under the Code); provided, however, that the maximum number of shares of Common Stock reserved for issuance under the Prior Plans that may be issued under this Plan shall be 2,400,000 (the "Authorized Shares"); and provided, further, however, that the number of Authorized Shares shall be increased automatically by 2,000,000 shares of Common Stock annually on the anniversary of the adoption of this Plan by the Board until the expiration of the Plan Term. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options (as hereinafter defined), to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. (b) Per-Participant Limit. Subject to adjustment under Section 7, for Awards granted after the Common Stock is registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 500,000 per calendar year. The per-Participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code ("Section 162(m)"). 5. Stock Options (a) General. The Board may grant options to purchase Common Stock (each, an "Option") and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock Option". -2- (b) Incentive Stock Options. An Option that the Board intends to be an "incentive stock option" as defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock Option is not an Incentive Stock Option. (c) Exercise Price. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable option agreement provided, however, that the exercise price shall not be less than 85% of the fair market value of the Common Stock, as determined by the Board, at the time the Option is granted. (d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement provided, however, that no Option will be granted for a term in excess of 10 years. (e) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may, in its sole discretion, otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding; (3) by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board in good faith ("Fair Market Value"), provided (i) such method of payment is then permitted under applicable law and (ii) such Common Stock was owned by the Participant at least six months prior to such delivery; (4) to the extent permitted by the Board, in its sole discretion by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or (5) by any combination of the above permitted forms of payment. -3- (g) Substitute Options. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Options contained in the other sections of this Section 5. 6. Restricted Stock (a) Grants. The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (each, a "Restricted Stock Award"). (b) Terms and Conditions. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 7. Adjustments for Changes in Common Stock and Certain Other Events (a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the number and class of securities and exercise price per share subject to each outstanding Option, (iv) the repurchase price per share subject to each outstanding Restricted Stock Award, and (v) the terms of each other outstanding Award shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is necessary and appropriate. If this Section 7(a) applies and Section 7(c) also applies to any event, Section 7(c) shall be applicable to such event, and this Section 7(a) shall not be applicable. (b) Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the Company, Options shall be treated as described below in Section 7(c)(2)(b) as if the liquidation or dissolution of the Company were a Reorganization Event and the acquiring or -4- succeeding corporation (or an affiliate thereof) did not agree to assume, or substitute for, the Options. The Board may specify the effect of a liquidation or dissolution on any Restricted Stock Award or other Award granted under the Plan at the time of the grant of such Award. (c) Reorganization Events (1) Definition. A "Reorganization Event" shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which the Common Stock is converted into or exchanged for the right to receive cash, securities or other property or (b) any exchange of shares of the Company for cash, securities or other property pursuant to a share exchange transaction. (2) Consequences of a Reorganization Event on Options. (a) Upon the occurrence of a Reorganization Event, or the execution by the Company of any agreement with respect to a Reorganization Event, the Board shall provide that all outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof). For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event. (b) Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, then the Board shall provide that, (I) each Option shall become exercisable in full as of a specified time prior to the Reorganization Event, as determined by the Board; provided, however, that upon exercise of such Option (x) to the -5- extent that the Option would have been exercisable prior to the Reorganization Event absent this Section 7(c)(2)(b)(I) for shares not subject to restrictions or conditions, the Participant shall receive shares free from all conditions or restrictions, and (y) to the extent that the Option would not have been exercisable absent this Section 7(c)(2)(b)(I), the Participant shall receive shares subject to the Company's right to repurchase such shares at the Option exercise price with such repurchase right lapsing at the same rate as the Option would have become exercisable under the applicable Option agreement; and (II) each Option that was exercisable prior to the Reorganization Event for shares subject to the Company's right to repurchase such shares, shall remain exercisable for shares subject to the Company's right to repurchase such shares at the Option exercise price, with such repurchase right lapsing at the same rate as set forth in the applicable Option agreement; provided, however, that all Options will terminate immediately prior to the consummation of such Reorganization Event, except to the extent exercised by the Participants before the consummation of such Reorganization Event; and provided, further, however, that in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Reorganization Event (the "Acquisition Price"), then the Board may instead provide that all outstanding Options shall terminate upon consummation of such Reorganization Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options. (3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company's successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. 8. General Provisions Applicable to Awards (a) Transferability of Awards. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. -6- (b) Documentation. Each Award shall be evidenced by a written instrument in such form as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. (d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. (e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may, to the extent then permitted under applicable law, satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (f) Amendment of Award. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (h) Acceleration. The Board may at any time provide that any Options shall become immediately exercisable in full or in part, that any shares of Common Stock acquired upon exercise of an Option which shares are subject to the Company's repurchase right shall be free of restrictions in full or in part, and that any Restricted Stock Awards shall be free of restrictions in full or in part. -7- 9. Miscellaneous (a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. (c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board, but no Award granted to a Participant that is intended to comply with Section 162(m) shall become exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been approved by the Company's stockholders to the extent stockholder approval is required by Section 162(m) in the manner required under Section 162(m) (including the vote required under Section 162(m)). No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Awards previously granted may extend beyond that date (the "Plan Term"). (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company's stockholders as required by Section 162(m) (including the vote required under Section 162(m)). (e) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. As Adopted by the Board of Directors on May 16, 2000 and Amended by the board of Directors on May 31, 2000. As Approved by the Stockholders on July 13, 2000 -8- -----END PRIVACY-ENHANCED MESSAGE-----

EX-5.1

                                                                     Exhibit 5.1

                                  June 26, 2002

Mentor Graphics Corporation
8005 SW Boeckman Road
Wilsonville, Oregon  97070-7777

Ladies and Gentlemen:

        I have acted as counsel for Mentor Graphics Corporation, an Oregon
corporation (the "Company"), in connection with the filing of a Registration
Statement on Form S-8 (the "Registration Statement") under the Securities Act of
1933, as amended, covering the issuance by the Company of 1,838,827 shares of
Common Stock, no par value (the "Shares"), of the Company. Pursuant to the
Agreement and Plan of Merger dated as of April 23, 2002, by and among the
Company, Indiana Merger Corporation, a Delaware corporation and wholly-owned
subsidiary of the Company ("Indiana Merger"), and Innoveda, Inc., a Delaware
corporation ("Innoveda"), the Company assumed all outstanding options to
purchase common stock of Innoveda (the "Options") under the Summit Design, Inc.
1994 Stock Plan, Summit Design, Inc. 1996 Director Option Plan, Summit Design,
Inc. 1997 Nonstatutory Stock Option Plan, Viewlogic Systems, Inc. 1998 Stock
Incentive Plan, Transcendent Design Technology, Inc. Stock Option Plan, PADS
Software, Inc. 1998 Stock Option Plan, Innoveda, Inc. 2000 Amended and Restated
2000 Stock Incentive Plan (collectively, the "Plans"), and, upon the
consummation of the merger of Indiana Merger into Innoveda by filing a
certificate of ownership and merger with the Secretary of State of Delaware on
June 5, 2002, the Options became exercisable to purchase Shares. I have reviewed
the corporate actions of the Company in connection with this matter and have
examined those documents, corporate records, and other instruments I deemed
necessary for the purposes of this opinion.

        Based on the foregoing, it is my opinion that:

        1. The Company is a corporation duly organized and validly existing
under the laws of the State of Oregon.

        2. The issuance of the Shares has been duly authorized and, when issued
and sold in accordance with the terms of the Plans, will be legally issued,
fully paid and nonassessable.

        I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

                                           Very truly yours,


                                           /s/ Dean M. Freed
                                           Dean M. Freed
                                           Vice President and General Counsel

EX-23.1

                                                                    Exhibit 23.1

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
Mentor Graphics Corporation:


We consent to incorporation by reference herein of our reports dated May 24,
2002, relating to the consolidated balance sheets of Mentor Graphics Corporation
and subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows and related
schedule for each of the years in the three-year period ended December 31, 2001,
which report appears in the December 31, 2001 annual report on Form 10-K/A of
Mentor Graphics Corporation.

/s/ KPMG LLP

Portland, Oregon
June 25, 2002

EX-23.2

                                                                EXHIBIT 23.2


INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Mentor Graphics Corporation on Form S-8 of our report dated January 28, 2002,
relating to the consolidated financial statements of Innoveda Inc. as of
December 29, 2001 and December 30, 2000 and for each of the three years in the
period ended December 29, 2001, appearing in the Current Report on Form 8-K of
Mentor Graphics Corporation dated May 29, 2002.

/S/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
June 25, 2002

EX-23.3

                                                                    Exhibit 23.3


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8) for the Options assumed by Mentor Graphics Corporation originally granted
under the Summit Design, Inc. 1994 Stock Plan, Summit Design, Inc. 1996 Director
Option Plan, Summit Design, Inc. 1997 Nonstatutory Stock Option Plan, Viewlogic
Systems, Inc. 1998 Stock Incentive Plan, Transcendent Design Technology, Inc.
Stock Option Plan, PADS Software, Inc. 1998 Stock Option Plan and the Innoveda,
Inc. 2000 Amended and Restated 2000 Stock Incentive Plan of our report dated
October 29, 2001 (except for the last six paragraphs of Note 11, as to which the
date is December 14, 2001, and the last paragraph of Note 12, as to which the
date is December 7, 2001), with respect to the consolidated financial statements
of IKOS Systems, Inc. included in the Current Report on Form 8-K/A of Mentor
Graphics Corporation filed with the Securities and Exchange Commission on May
29, 2002 which is incorporated by reference in this Form S-8.


                                                           /s/ Ernst & Young LLP

San Jose, California
June 25, 2002

EX-99.1

                                                                    EXHIBIT 99.1



                              SUMMIT DESIGN, INC.

                                 1994 STOCK PLAN

1.   Purposes of the Plan. The purposes of this Stock Plan are to attract and
     retain the best available personnel for positions of substantial
     responsibility, to provide additional incentive to Employees and
     Consultants of the Company and its Subsidiaries and to promote the success
     of the Company's business. Options granted under the Plan may be incentive
     stock options (as defined under Section 422 of the Code) or non-statutory
     stock options, as determined by the Administrator at the time of grant of
     an option and subject to the applicable provisions of Section 422 of the
     Code, as amended, and the regulations promulgated thereunder.

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

     a. "Administrator" means the Board or any of its Committees appointed
     pursuant to Section 4 of the Plan.

     b. "Board" means the Board of Directors of the Company.

     c. "Code" means the Internal Revenue Code of 1986, as amended.

     d. "Committee" means a Committee appointed by the Board of Directors in
     accordance with Section 4 of the Plan.

     e. "Common Stock" means the Common Stock of the Company.

     f. "Company" means Summit Design, Inc., a Delaware corporation.

     g. "Consultant" means any person who is engaged by the Company or any
     Parent or Subsidiary to render consulting or advisory services and is
     compensated for such services, and any director of the Company whether
     compensated for such services or not.

     h. "Continuous Status as an Employee or Consultant" means that the
     employment or consulting relationship with the Company, any Parent or
     Subsidiary is not interrupted or terminated. Continuous Status as an
     Employee or Consultant shall not be considered interrupted in the case of
     (i) any leave of absence approved by the Company or (ii) transfers between
     locations of the Company or between the Company, its Parent, any
     Subsidiary, or any successor. A leave of absence approved by the Company
     shall include sick leave, military leave, or any other personal leave. For
     purposes of Incentive Stock Options, no such leave may exceed 90 days,
     unless reemployment upon expiration of such leave is guaranteed by statute
     or contract, including Company policies. If reemployment upon expiration of
     a leave of absence approved by the Company is not so guaranteed, on the
     91st day of such leave any Incentive Stock Option held by the Optionee
     shall cease to be treated as an Incentive Stock Option and shall be treated
     for tax purposes as a Nonstatutory Stock Option.

     i. "Disability" means total and permanent disability as defined in Section
     22(e)(3) of the Code.

     j. "Employee" means any person, including officers and directors, employed
     by the Company or any Parent or Subsidiary of the Company. The payment of a
     director's fee by the Company shall not be sufficient to constitute
     "employment" by the Company.

     k. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     l. "Fair Market Value" means, as of any date, the value of Common Stock
     determined as follows:

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

     (ii) If the Common Stock is quoted on the Nasdaq System (but not on the
          National Market System thereof) or if the Market Value of the Common
          Stock cannot be determined under (i) above but the Common Stock is
          regularly quoted by a recognized securities dealer but selling prices
          are not reported, its Fair Market Value shall be the mean between the
          high bid and low asked prices for the Common Stock for the last market
          trading day prior to the time of determination or;




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

     m. "Incentive Stock Option" means an Option intended to qualify as an
     incentive stock option within the meaning of Section 422 of the Code.

     n. "Nonstatutory Stock Option" means an Option not intended to qualify as
     an Incentive Stock Option.

     o. "Officer" means a person who is an officer of the Company within the
     meaning of Section 16 of the Exchange Act and the rules and regulations
     promulgated thereunder.

     p. "Option" means a stock option granted pursuant to the Plan.

     q. "Optioned Stock" means the Common Stock subject to an Option.

     r. "Optionee" means an Employee or Consultant who receives an Option.

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

     t. "Plan" means this 1994 Stock Plan.

     u. "Prior TSSI ISO" means any incentive stock option granted to an employee
     of Test Systems Strategies, Inc. ("TSSI") pursuant to the TSSI 1988
     Incentive Stock Option Plan (the "TSSI Plan") and thereafter substituted
     for by an Incentive Stock Option exercisable for Shares of the Company
     pursuant to the terms of this Plan and of the Agreement and Plan of
     Reorganization dated January 19, 1994 between Summit Design, Inc., TSSI,
     Summit Sub, Inc. and See Technologies Software Environment for Engineers,
     Ltd.

     v. "SEE" means See Technologies Software Environment for Engineers, Ltd.

     w. "Share" means a share of the Common Stock, as adjusted in accordance
     with Section 11 below.

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

3.   Stock Subject to the Plan. Subject to the provisions of Section 12 of the
     Plan, the maximum aggregate number of shares which may be optioned and sold
     under the Plan is 2,322,000 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.

4.   Administration of the Plan.

     (a)  Plan Procedure.

          i.  Administration With Respect to Directors and Officers. With
              respect to grants of Options to Employees who are also officers or
              directors of the Company, the Plan shall be administered by (A)
              the Board if the Board may administer the Plan in compliance with
              Rule 16b-3 promulgated under the Exchange Act or any successor
              thereto ("Rule 16b-3") with respect to a plan intended to qualify
              thereunder as a discretionary plan, or (B) a Committee designated
              by the Board to administer the Plan, which Committee shall be
              constituted in such a manner as to permit the Plan to comply with
              Rule 16b-3 with respect to a plan intended to qualify thereunder
              as a discretionary plan. Once appointed, such Committee shall
              continue to serve in its designated capacity until otherwise
              directed by the Board. From time to time the Board 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, all to the extent permitted by
                Rule 16b-3 with respect to a plan intended to qualify thereunder
                as a discretionary plan.

          ii.   Multiple Administrative Bodies. If permitted by Rule 16b-3, the
                Plan may be administered by different bodies with respect to
                directors, non-director officers and Employees who are neither
                directors nor officers.

          iii.  Administration With Respect to Consultants and Other Employees.
                With respect to grants of Options to Employees or Consultants
                who are neither directors nor officers of the Company, the Plan
                shall be administered by (A) the Board or (B) a Committee
                designated by the Board, which Committee shall be constituted in
                such a manner as to satisfy the legal requirements relating to
                the administration of incentive stock option plans, if any, of
                applicable state corporate and securities laws, of the Code, and
                of any applicable stock exchange (including Nasdaq) (the
                "Applicable Laws"). Once appointed, such Committee shall
                continue to serve in its designated capacity until otherwise
                directed by the Board. From time to time the Board 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, all to the extent permitted by the
                Applicable Laws.

     (b)  Powers of the Administrator. Subject to the provisions of the Plan
          and, in the case of a Committee, the specific duties delegated by the
          Board to such Committee, and subject to the approval of any relevant
          authorities, including the approval, if required, of any stock
          exchange upon which the Common Stock is listed, the Administrator
          shall have the authority, in its discretion:

          (i)    to determine the Fair Market Value of the Common Stock, in
                 accordance with Section 2(l) of the Plan;

          (ii)   to select the Consultants and Employees to whom Options may
                 from time to time be granted hereunder;

          (iii)  to determine whether and to what extent Options or any
                 combination thereof are granted hereunder;

          (iv)   to determine the number of shares of Common Stock to be covered
                 by each such award granted hereunder;

          (v)    to approve forms of agreements for use under the Plan, which
                 forms may differ with respect to individual Optionees;

          (vi)   to determine the terms and conditions, not inconsistent with
                 the terms of the Plan, of any award granted hereunder,
                 including the terms of any right of first refusal of the
                 Company to purchase Shares granted pursuant to the Plan and the
                 terms of any repurchase option of the Company with respect to
                 unvested Shares;

          (vii)  with respect to any Option, to determine whether and under what
                 circumstances an Option may be settled in cash under subsection
                 9(f) instead of Common Stock;

          (viii) to reduce the exercise price of the Option to the then current
                 Fair Market Value if the Fair Market Value of the Common Stock
                 covered by such Option shall have declined since the date the
                 Option was granted; and

          (ix)   to construe and interpret the terms of the Plan and awards
                 granted pursuant to the Plan.

     (c)  Effect of Administrator's Decision. All decisions, determinations and
          interpretations of the Administrator shall be final and binding on all
          Optionees and any other holders of any Options.

(5)  Eligibility.

     (a)  Nonstatutory Stock Options may be granted to Employees and
          Consultants. Incentive Stock Options may be granted only to Employees.
          An Employee or Consultant who has been granted an Option may, if
          otherwise eligible, be granted additional Options.

     (b)  Each Option shall be designated in the written option agreement as
          either an Incentive Stock Option or a Nonstatutory Stock Option.
          However, notwithstanding such designations, to the extent that the
          aggregate Fair Market Value of the Shares with respect to which
          Options designated as Incentive Stock Options are exercisable for the
          first time by any Optionee during any calendar year (under all plans
          of the Company or any Parent or Subsidiary, including Options granted
          in substitution of options granted under the TSSI Plan) exceeds
          $100,000, such excess Options shall be treated as Nonstatutory Stock
          Options.




     (c)  For purposes of Section 5(b), Incentive Stock Options shall be taken
          into account in the order in which they were granted, and the Fair
          Market Value of the Shares shall be determined as of the time the
          Option with respect to such Shares is granted.

     (d)  The Plan shall not confer upon any Optionee any right with respect to
          continuation of employment relationship with the Company, nor shall it
          interfere in any way with his or her right or the Company's right to
          terminate his or her employment relationship at any time, with or
          without cause.

     (e)  The following limitations shall apply to grants of Options to
          Employees:

          (i)    No Employee shall be granted, in any fiscal year of the
                 Company, Options to purchase more than 500,000 Shares.

          (ii)   The foregoing limitation shall be adjusted proportionately in
                 connection with any change in the Company's capitalization as
                 described in Section 11(a).

          (iii)  If an Option is canceled in the same fiscal year of the Company
                 in which it was granted (other than in connection with a
                 transaction described in Section 11), the canceled Option shall
                 be counted against the limit set forth in Section 5(e)(i). For
                 this purpose, if the exercise price of an Option is reduced,
                 the transaction shall be treated as a cancellation of the
                 Option and the grant of a new Option.

6.   Term of Plan. The Plan shall become effective upon the earlier to occur of
     its adoption by the Board of Directors or its approval by the stockholders
     of the Company, as described in Section 17 of the Plan. It shall continue
     in effect for a term of ten (10) years unless sooner terminated under
     Section 13 of the Plan.

7.   Term of Option. The term of each Option shall be the term stated in the
     Option Agreement; provided, however, that the term shall be no more than
     ten (10) years from the date of grant thereof. However, in the case of an
     Incentive Stock Option granted to an Optionee who, at the time the Option
     is granted, owns stock representing more than ten percent (10%) of the
     voting power of all classes of stock of the Company or any Parent or
     Subsidiary, the term of the Option shall be five (5) years from the date of
     grant thereof or such shorter term as may be provided in the Option
     Agreement.

8.   Option Exercise Price and Consideration.

     (a)  The per share exercise price for the Shares to be issued pursuant to
          exercise of an Option shall be such price as is determined by the
          Committee, but shall be subject to the following:

          (i)    In the case of an Incentive Stock Option

                 (A)  granted to an Employee who, at the time of the grant of
                      such Incentive Stock Option, owns stock representing more
                      than ten percent (10%) of the voting power of all classes
                      of stock of the Company or any Parent or Subsidiary, the
                      per Share exercise price shall be no less than 110% of the
                      Fair Market Value per Share on the date of grant.

                 (B)  granted to any other Employee, the per Share exercise
                      price shall be no less than 100% of the Fair Market Value
                      per Share on the date of grant.

          (ii)   In the case of a Nonstatutory Stock Option, the per Share
                 exercise price shall be determined by the Committee.

     (b)  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 Administrator (and, in the case of an Incentive Stock Option,
          shall be determined at the time of grant) and, in the case of a Prior
          TSSI ISO may consist entirely of (1) cash, (2) check, or (3) other
          Shares which (x) in the case of Shares acquired upon exercise of an
          Option, have been owned by the Optionee for more than six months on
          the date of surrender, and (y) have a Fair Market Value on the date of
          surrender equal to the aggregate exercise price of the Shares as to
          which said Option shall be exercised. In the case of all other
          Options, the consideration may consist entirely of (1) cash, (2)
          check, (3) promissory note, (4) other Shares which (x) in the case of
          Shares acquired upon exercise of an Option, have been owned by the
          Optionee for more than six months on the date of surrender, and (y)
          have a Fair Market Value on the date of surrender equal to the
          aggregate exercise price of the Shares as to which said Option shall
          be exercised, (5) delivery of a properly executed exercise notice
          together with such other documentation as the Administrator and the
          broker, if applicable, shall require to effect an exercise of the
          Option and delivery to the Company of the sale or loan proceeds
          required to pay the exercise price, or (6) any combination of the
          foregoing methods of payment. 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.



9.   Exercise of Option.

     (a)  Procedure for Exercise; Rights as a Stockholder. Any Nonstatutory
          Option and, subject to the $100,000 limitation of Section 5(b) on the
          exercisability of Incentive Stock Options in any one year, any
          Incentive Stock Option granted hereunder shall be exercisable 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(b) 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. The Company shall issue (or cause to be issued) such stock
          certificate promptly upon exercise of the Option. No adjustment shall
          be made for a dividend or other right for which the record date is
          prior to the date the stock certificate is issued, except as provided
          in Section 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.

     (b)  Termination of Employment or Consulting Relationship. In the event of
          termination of an Optionee's Continuous Status as an Employee or
          Consultant with the Company, such Optionee may within sixty (60) days
          after the date of such termination (but in no event later than the
          expiration date of the term of such Option as set forth in the Option
          Agreement), exercise his or her Option to the extent that Optionee was
          entitled to exercise it at the date of such termination. To the extent
          that Optionee was not entitled to exercise the Option at the date of
          such termination, or if Optionee does not exercise such Option to the
          extent so entitled within the time specified herein, the Option shall
          terminate. Notwithstanding the above provisions of this Section 9(b),
          in the event of an Optionee's change of status from Consultant to
          Employee, an Optionee's Nonstatutory Stock Option shall not
          automatically terminate solely as a result of such change of status.
          In addition, in the case of an Option other than a Prior TSSI ISO, in
          the event of an Optionee's change of status from Employee to
          Consultant, an Employee's Incentive Stock Option shall not
          automatically terminate but shall cease to be treated as an Incentive
          Stock Option and shall be treated for tax purposes as a Nonstatutory
          Stock Option on the ninety-first (91st) day following such change of
          status.

     (c)  Disability of Optionee. In the event that an Optionee's Continuous
          Status as an Employee or Consultant terminates as a result of the
          Optionee's Disability, the Optionee may exercise his or her Option at
          any time within twelve (12) months from the date of such termination,
          but only to the extent that the Optionee was entitled to exercise it
          at the date of such termination (but in no event later than the
          expiration of the term of such Option as set forth in the Option
          Agreement). If, at the date of termination, the Optionee is not
          entitled to exercise his or her entire Option, the Shares covered by
          the unexercisable portion of the Option shall revert to the Plan. If,
          after termination, the Optionee does not exercise his or her Option
          within the time specified herein, the Option shall terminate, and the
          Shares covered by such Option shall revert to the Plan.

     (d)  Death of Optionee. In the event of the death of an Optionee, the
          Option may be exercised at any time within twelve (12) months
          following the date of death (but in no event later than the expiration
          of the term of such Option as set forth in the Option Agreement), by
          the Optionee's estate or by a person who acquired the right to
          exercise the Option by bequest or inheritance, but only to the extent
          that the Optionee was entitled to exercise the Option at the date of
          death. If, at the time of death, the Optionee was not entitled to
          exercise his or her entire Option, the Shares covered by the
          unexercisable portion of the Option shall immediately revert to the
          Plan. If, after death, the Optionee's estate or a person who acquired
          the right to exercise the Option by bequest or inheritance does not
          exercise the Option within the time specified herein, the Option shall
          terminate, and the Shares covered by such Option shall revert to the
          Plan.

     (e)  Rule 16b-3. Options granted to persons subject to Section 16(b) of the
          Exchange Act must comply with Rule 16b-3 and shall contain such
          additional conditions or restrictions as may be required thereunder to
          qualify for the maximum exemption from Section 16 of the Exchange Act
          with respect to Plan transactions.

     (f)  Buyout Provisions. The Administrator may at any time offer to buy out
          for a payment in cash or Shares, an Option previously granted, based
          on such terms and conditions as the Administrator shall establish and
          communicate to the Optionee at the time that such offer is made.

10.  Non-Transferability of Options. Options 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.

11.  Adjustments Upon Changes in Capitalization or Merger.

     (a)  Changes in Capitalization. Subject to any required action by the
          stockholders of the Company, the number of shares of Common Stock
          covered by each outstanding Option, and the number of shares of Common
          Stock 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 of Common Stock 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, reverse stock split, stock dividend, combination or
          reclassification of the Common Stock, or any other increase 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 adjustment 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.

     (b)  Dissolution or Liquidation. In the event of the proposed dissolution
          or liquidation of the Company, the Administrator shall notify each
          Optionee as soon as practicable prior to the effective date of such
          proposed transaction. The Optionee shall have the right to exercise
          his or her Option until ten (10) days prior to such transaction as to
          all of the Optioned Stock covered thereby. In addition, any Company
          repurchase option applicable to Shares shall lapse as to all such
          Shares, provided such transaction takes place at the time and in the
          manner contemplated. To the extent it has not been previously
          exercised, the Option will terminate immediately prior to the
          consummation of such proposed action.

     (c)  Merger or Asset Sale. In the event of a merger of the Company with or
          into another corporation, or the sale of substantially all of the
          assets of the Company:

          (i)  Options. Each Option shall be assumed or an equivalent Option
               shall be substituted by such successor corporation (including as
               a "Successor" any purchaser of substantially all of the assets of
               the Company) or a parent or subsidiary of such successor
               corporation. In the event that the successor corporation or a
               parent or subsidiary of such successor corporation does not agree
               to assume the Option or to substitute an equivalent option, the
               Administrator shall, as soon as practicable prior to the
               effective date of such transaction, provide for the Optionee to
               have the right to exercise the Option as to all or a portion of
               the Optioned Stock, including Shares that would not otherwise be
               exercisable. In such event the Administrator shall notify the
               Optionee as soon as practicable prior to the effective date of
               such transaction that the Option shall be fully exercisable for a
               period of ten (10) days from the date of such notice, and the
               Option shall terminate upon the expiration of such period. For
               the purposes of this paragraph, the Option shall be considered
               assumed if, following the merger, the Option confers the right to
               purchase, for each Share of Optioned Stock subject to the Option
               immediately prior to the merger, the consideration (whether
               stock, cash, or other securities or property) received in the
               merger by holders of Common Stock for each Share held on the
               effective date of the transaction (and if holders were offered a
               choice of consideration, the type of consideration chosen by the
               holders of a majority of the outstanding Shares); provided,
               however, that if such consideration received in the merger was
               not solely common stock of the successor corporation or its
               Parent, the Administrator may, with the consent of the successor
               corporation, provide for the consideration to be received upon
               the exercise of the Option, for each Share of Optioned Stock
               subject to the Option, to be solely common stock of the successor
               corporation or its Parent equal in fair market value to the per
               share consideration received by holders of Common Stock in the
               merger.

          (ii) Shares Subject to Repurchase Option. Any Shares subject to a
               repurchase option of the Company shall be exchanged for the
               consideration (whether stock, cash, or other securities or
               property) received in the merger or asset sale by the holders of
               Common Stock for each Share held on the effective date of the
               transaction, as described in the preceding paragraph. If the
               Optionee receives shares of stock of the successor corporation or
               a parent or subsidiary of such successor corporation in exchange
               for Shares subject to a repurchase option, such exchanged shares
               shall continue to be subject to the repurchase option as provided
               in the Restricted Stock Purchase Agreement.

12.  Time of Granting Options. The date of grant of an Option shall, for all
     purposes, be the date on which the Administrator makes the determination
     granting such Option, or such other date as is determined by the Board.
     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 at any time amend, alter,
          suspend or discontinue the Plan, but no amendment, alteration,
          suspension or discontinuation shall be made which would impair the
          rights of any Optionee under any grant theretofore made, without his
          or her consent. In addition, to the extent necessary and desirable to
          comply with Rule 16b-3 under the Exchange Act or with Section 422 of
          the Code (or any other applicable law or regulation, including the
          requirements of Nasdaq or an established stock exchange), the Company
          shall obtain stockholder approval of any Plan amendment in such a
          manner and to such a degree as required.

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

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

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.

     The 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.  Agreements. Options shall be evidenced by written agreements in such form
     as the Administrator shall approve from time to time.

17.  Stockholder Approval. Continuance of the Plan shall be subject to approval
     by the stockholders of the Company within twelve (12) months before or
     after the date the Plan is adopted. Such stockholder approval shall be
     obtained in the degree and manner required under applicable state and
     federal law and the rules of any stock exchange upon which the Common Stock
     is listed.

18.  Addendum to the 1994 Summit Design, Inc. Stock Plan. This Addendum shall
     apply to any person who is granted an Option under the 1994 Summit Design,
     Inc. Stock Plan (the "Plan") and is an employee or consultant of SEE and is
     a resident of the State of Israel, or is otherwise subject to the laws of
     the State of Israel (such persons are referred to collectively hereinafter
     as the "Israelis").

     The Summit Design, Inc. Option Agreements and Restricted Stock Purchase
     Agreements delivered to the Israelis pursuant to the Options granted to the
     Israelis (each an "Israeli Option") shall contain certain terms and
     conditions as is required by applicable Israeli law or approved by the
     Company, including, but not limited to the following:

1)   Each Israeli Option granted to an Israeli on or before January 31, 1994
     shall be immediately exercisable for 25% of the shares subject to such
     Option, with the remaining Shares to vest equally on a monthly basis over a
     three year period beginning on January 1, 1994. Such vesting schedule may
     be accelerated by the Administrator of the Plan and shall be accelerated in
     accordance with any employment agreement an Israeli may have with the
     Company.

2)   The Common Stock issuable upon exercise of an Israeli Option that is not
     yet vested shall be held in escrow and trust in Israel for the benefit of
     the Company and the applicable Israeli Optionee as required by Israeli law
     and according to the terms and conditions of such Israeli Optionee's
     Restricted Stock Purchase Agreement.




3)   To the fullest extent possible, all terms and conditions necessary to
     qualify each Israeli Option intended by the Company to be taxed as the
     Israeli equivalent of an Incentive Stock Option or Nonstatutory Option, as
     the case may be, to be so taxed by the State of Israel.

4)   All applicable foreign currency control requirements of any Israeli
     governmental entity.

EX-99.2

                                                                    EXHIBIT 99.2



                               SUMMIT DESIGN, INC.

                            1996 DIRECTOR OPTION PLAN

        1. Purposes of the Plan. The purposes of this 1996 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

           All options granted hereunder shall be nonstatutory stock options.

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

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

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

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

           (d) "Company" means Summit Design, Inc., a Delaware corporation.

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

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

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

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

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

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




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

               (iv) The Fair Market Value of a Share of Common Stock on the
effective date of this Plan shall be the price to the public of the Common Stock
as set forth in the final prospectus included within the Registration Statement
on Form S-1 filed with the Securities and Exchange Commission for the initial
public offering of the Common Stock.

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

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

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

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

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

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

           (o) "Plan" means this 1996 Director Option Plan.

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

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

        3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 150,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.

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

        4. Administration and Grants of Options under the Plan.

           (a) Procedure for Grants. The provisions set forth in this Section
4(a) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. All grants




                                      -2-


of Options to Outside Directors under this Plan shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following
provisions:

               (i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.

               (ii) Each Outside Director shall be automatically granted an
Option (the "First Option") to purchase a number of Shares determined as follows
on the later to occur of (A) the effective date of this Plan or (B) the date on
which such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy:

                    (A) If granted on the effective date of this Plan, 7,500
Shares;

                    (B) If granted on the date the person first becomes an
Outside Director, 10,000 Shares.

                    The above notwithstanding, no Employee Director who ceases
to be an Employee but who remains a Director shall receive a First Option.

               (iii) Each Outside Director shall be automatically granted an
Option to purchase 10,000 Shares (a "Subsequent Option") each year on the date
of the Company's Annual Meeting of Stockholders, provided he or she is then an
Outside Director and if, as of such date, he or she shall have served on the
Board for at least the preceding six (6) months.

               (iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any exercise of an Option granted before the Company has obtained
stockholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 16 hereof.

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

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

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

                   (C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.

                   (D) subject to Section 10 hereof, the First Option shall
become exercisable according to the following schedule, provided that the
Optionee continues to serve as a Director on such date:




                                      -3-


                       (a) If granted on the effective date of this Plan, the
First Option shall vest in full one business day prior to the date of the first
Annual Meeting of the Stockholders of the Company held thereafter;

                       (b) If granted after the effective date of this Plan, the
First Option shall vest in full on the first anniversary of the date of grant.

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

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

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

                    (C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.

                    (D) subject to Section 10 hereof, the Subsequent Option
shall become exercisable in full on the earlier of (i) the first anniversary of
the date of grant, or (ii) one business day prior to the date of the Company's
first Annual Meeting of the Stockholders following the date of grant, provided
in each case that the Optionee continues to serve as a Director on such date.

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

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

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

        6. Term of Plan. The Plan shall become effective on the date of the
final prospectus with respect to the IPO. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.




                                      -4-


        7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.

        8. Exercise of Option.

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

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

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

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

           (b) Rule 16b-3. Options granted to Outside Directors must comply with
the applicable provisions of Rule 16b-3 promulgated under the Exchange Act or
any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify Plan transactions, and
other transactions by Outside Directors that otherwise could be matched with
Plan transactions, for the maximum exemption from Section 16 of the Exchange
Act.

           (c) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or




                                      -5-


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

           (d) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but
only within twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

           (e) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

        9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

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

            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock




                                      -6-


of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares subject to an Option.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

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

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

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

        11. Amendment and Termination of the Plan.

            (a) Amendment and Termination. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to




                                      -7-


comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.

            (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.

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

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

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

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

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

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

        16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.




                                      -8-

EX-99.3

                                                                    EXHIBIT 99.3



                               SUMMIT DESIGN, INC.

                       1997 NONSTATUTORY STOCK OPTION PLAN

        1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option
Plan are:

           -   to attract and retain the best available personnel for positions
               of substantial responsibility,

           -   to provide additional incentive to Employees, Directors and
               Consultants, and

           -   to promote the success of the Company's business.

             Options granted under the Plan will be nonstatutory stock options.

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

           (a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

           (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

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

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

           (e) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.

           (f) "Common Stock" means the Common Stock of the Company.

           (g) "Company" means Summit Design, Inc., a Delaware corporation.

           (h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity, and any
director of the Company whether compensated for such services or not.

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




           (j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

           (k) "Employee" means any person, including Officers, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

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

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

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

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

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

           (n) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.

           (o) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

           (p) "Option" means a nonstatutory stock option granted pursuant to
the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.




                                      -2-

           (q) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

           (r) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.

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

           (t) "Optionee" means the holder of an outstanding Option granted
under the Plan.

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

           (v) "Plan" means this 1997 Nonstatutory Stock Option Plan.

           (w) "Service Provider" means an Employee, Consultant or Director.

           (x) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

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

        3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 250,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

           If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).

        4. Administration of the Plan.

           (a) Administration. The Plan shall be administered by (i) the Board
or (ii) a Committee, which committee shall be constituted to satisfy Applicable
Laws.

           (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               (i) to determine the Fair Market Value of the Common Stock;

               (ii) to select the Service Providers to whom Options may be
granted hereunder;




                                      -3-


               (iii) to determine whether and to what extent Options are granted
hereunder;

               (iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

               (vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               (viii) to institute an Option Exchange Program;

               (ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

               (x) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (xi) to modify or amend each Option (subject to Section 14(b) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;

               (xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;

               (xiii) to determine the terms and restrictions applicable to
Options;

               (xiv) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and




                                      -4-


               (xv) to make all other determinations deemed necessary or
advisable for administering the Plan.

           (c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

        5. Eligibility. Options may be granted to Service Providers; provided,
however, that notwithstanding anything to the contrary contained in the Plan, no
greater than 25,000 Options may be granted to Directors and persons considered
to be "officers" by the Nasdaq Stock Market.

        6. Limitation. Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

        7. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for ten (10) years, unless sooner
terminated under Section 14 of the Plan.

        8. Term of Option. The term of each Option shall be stated in the Option
Agreement.

        9. Option Exercise Price and Consideration.

           (a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator.

           (b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

           (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:

               (i) cash;

               (ii) check;

               (iii) promissory note;

               (iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and




                                      -5-


(B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised;

               (v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price;

               (vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or

               (vii) any combination of the foregoing methods of payment.

        10. Exercise of Option.

            (a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.

                An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), 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.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.

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

            (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for sixty (60) days following the Optionee's termination. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the




                                      -6-


Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan. Notwithstanding the above provisions of this Section
10(b), in the event of an Optionee's change of status from Employee to
Consultant or Consultant to Employee, an Optionee's Option shall not
automatically terminate solely as a result of such change of status.

            (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

            (e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

        11. Non-Transferability of Options . Unless determined otherwise by the
Administrator, an 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. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

        12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.




                                      -7-


            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock 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 of Common Stock 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, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase 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 adjustment 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.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Optionee shall have the right to exercise his or her Option
until ten (10) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, any Company repurchase option applicable to any Shares
purchased upon exercise of an Option shall lapse as to all such Shares, provided
the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

            (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of ten (10) days from the date of such notice, and the
Option shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option shall be considered assumed if, following the merger
or sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock, immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor




                                      -8-


corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.

        13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

        14. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

            (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.

        15. Conditions Upon Issuance of Shares.

            (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

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

        16. Inability to Obtain Authority. The 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.

        17. 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.




                                      -9-


        18. Addendum to the 1997 Summit Design, Inc. Nonstatutory Stock Option
Plan. This Addendum shall apply to any person who is granted an Option under the
1997 Summit Design, Inc. Nonstatutory Stock Option Plan (the "Plan") and is an
employee or consultant of Summit Design (EDA) Ltd. and is a resident of the
State of Israel, or is otherwise subject to the laws of the State of Israel
(such persons are referred to collectively hereinafter as the "Israelis").

            The Summit Design, Inc. Option Agreements delivered to the Israelis
pursuant to the Options granted to the Israelis (each an "Israeli Option") shall
contain certain terms and conditions as is required by applicable Israeli law or
approved by the Company, including, but not limited to the following:

            (a) The Common Stock issuable upon exercise of an Israeli Option
that is not yet vested shall be held in escrow and trust in Israel for the
benefit of the Company and the applicable Israeli Optionee as required by
Israeli law.

            (b) To the fullest extent possible, all terms and conditions
necessary to qualify each Israeli Option intended by the Company to be taxed as
the Israeli equivalent of a Nonstatutory Option, to be so taxed by the State of
Israel.

            (c) All applicable foreign currency control requirements of any
Israeli governmental entity.




                                      -10-

EX-99.4

                                                                    EXHIBIT 99.4


                             VIEWLOGIC SYSTEMS, INC.

                            1998 STOCK INCENTIVE PLAN

1.      PURPOSE

        The purpose of this 1998 Stock Incentive Plan (the "Plan") of Viewlogic
Systems, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future subsidiary corporations as defined in
Section 424 (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").

2.      ELIGIBILITY

        All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".

3.      ADMINISTRATION, DELEGATION

        (a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered
by the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

        (b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.




                                       1


        (c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.

4.      STOCK AVAILABLE FOR AWARDS

        (a) NUMBER OF SHARES. Subject to adjustment under Section 8 hereof,
Awards may be made under the Plan for up to 6,655,574 shares (the "Authorized
Shares") of common stock, $0.001 par value per share, of the Company (the
"Common Stock"), which number of Authorized Shares shall automatically increase
by five percent of the original number of Authorized Shares (as adjusted
pursuant to Section 8 hereof) annually, for the Plan Term (as defined in Section
10(c) hereof), on the anniversary of the adoption of the Plan by the Board. If
any Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part or results in any Common
Stock not being issued, the unused Common Stock covered by such Award shall
again be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.

        (b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, for
Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the maximum number of
shares of Common Stock with respect to which an Award may be granted to any
Participant under the Plan shall be 1,300,000 per calendar year. The
per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162 (m) of the Code.

5.      STOCK OPTIONS

        (a) GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

        (b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

        (c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each option is granted and specify it in the applicable option agreement.




                                       2


        (d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

        (e) EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.

        (f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of
an option granted under the Plan shall be paid for as follows:

            (1) in cash or by check, payable to the order of the Company;

            (2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;

            (3) when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as determined by (or in a manner approved by) the Board in good
faith ("Fair Market Value"), which Common Stock was owned by the Participant at
least six months prior to such delivery;

            (4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or

            (5) by any combination of the above permitted forms of payment.

6.      RESTRICTED STOCK

        (a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

        (b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to




                                       3


the Participant or if the Participant has died, to the beneficiary designated,
in a manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.

7.      OTHER STOCK-BASED AWARDS

        The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.

8.      ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS

        (a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.

        (b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation
or dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.

        (c) ACQUISITION EVENTS

            (1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a statutory share exchange
transaction.

            (2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding




                                       4


Options shall be assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof). For purposes
hereof, an Option shall be considered to be assumed if, following consummation
of the Acquisition Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately prior to the
consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Stock for each share of Common Stock held immediately prior to
the consummation of the Acquisition Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding corporation,
provide for the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Acquisition Event.

        Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised options will become exercisable
in full as of a specified time prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the Participants before the consummation of such Acquisition
Event; provided, however, that in the event of an Acquisition Event under the
terms of which holders of Common Stock will receive upon consummation thereof a
cash payment for each share of Common Stock surrendered pursuant to such
Acquisition Event (the "Acquisition Price"), then the Board may instead provide
that all outstanding options shall terminate upon consummation of such
Acquisition Event and that each Participant shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options.

            (3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was converted into or exchanged for
pursuant to such Acquisition Event in the same manner and to the same extent as
they applied to the Common Stock subject to such Restricted Stock Award.

            (4) CONSEQUENCES OF AN ACQUISITION EVENT ON OTHER AWARDS. The Board
shall specify the effect of an Acquisition Event on any other Award granted
under the Plan at the time of the grant of such Award.

9.      GENERAL PROVISIONS APPLICABLE TO AWARDS

        (a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or




                                       5


otherwise encumbered by the person to whom they are granted, either voluntarily
or by operation of law, except by will or the laws of descent and distribution,
and, during the life of the Participant, shall be exercisable only by the
Participant. References to a Participant, to the extent relevant in the context,
shall include references to authorized transferees.

        (b) DOCUMENTATION. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.

        (c) BOARD DISCRETION. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.

        (d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

        (e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value. The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to a Participant.

        (f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

        (g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

        (h) ACCELERATION. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free




                                       6


of restrictions in full or in part or that any other Awards may become
exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

10.     MISCELLANEOUS

        (a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

        (b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

        (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant designated by the Board as subject to Section 162 (m) of the Code by
the Board shall become exercisable, vested or realizable, as applicable to such
Award, unless and until the Plan has been approved by the Company's stockholders
to the extent stockholder approval is required by Section 162(m) in the manner
required under Section 162 (m) (including the vote required under Section
162(m)). No Awards shall be granted under the Plan after the completion of ten
years from the earlier of (i) the date on which the Plan was adopted by the
Board or (ii) the date the Plan was approved by the Company's stockholders, but
Awards previously granted may extend beyond that date (the "Plan Term").

        (d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162 (m) of the Code, no Award granted to a Participant designated as
subject to Section 162 (m) by the Board after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award (to the
extent that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders as required by Section 162 (m) (including
the vote required under Section 162(m)).




                                       7


        (e) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.



                             Adopted by the Board of Directors
                             on October 2, 1998

                             Approved by the sole Stockholder
                             on October 2, 1998




                                        8



                             VIEWLOGIC SYSTEMS, INC.

                               AMENDMENT NO. 1 TO

                            1998 STOCK INCENTIVE PLAN

        The following amendments to the 1998 Stock Incentive Plan (the "Plan")
of Viewlogic Systems, Inc., a Delaware corporation, are hereby effected:

        1. Section 5(c) of the Plan is deleted in its entirety and the following
is substituted in lieu thereof:

               (c) EXERCISE PRICE. The Board shall establish the exercise price
           at the time each option is granted and specify it in the applicable
           option agreement; PROVIDED, THAT, no Option shall have an exercise
           price of less than (i) 85% of the Fair Market Value of a share of
           Common Stock on the date of grant, or (ii) in the case of an Option
           granted to a Participant who is, at the time of the grant of such
           option, the owner of stock possessing more than 10% of the total
           combined voting power of all classes of outstanding stock of the
           Company (a A10% Stockholder@), 110% of the Fair Market Value of a
           share of Common Stock on the date of grant.

        2. Section 5(d) of the Plan is deleted in its entirety and the following
is substituted in lieu thereof:

               (d) DURATION OF OPTIONS. Each Option shall be exercisable at such
           times and subject to such terms and conditions as the Board may
           specify in the applicable option agreement; PROVIDED, THAT, (i)
           Options granted to Participants who are not officers or directors of,
           or consultants to, the Company shall become exercisable at least as
           rapidly as 20% per year over the five-year period commencing on the
           date of grant and (ii) no Option shall have a term in excess of ten
           years from the date of grant.

        3. Section 6(b) of the Plan is deleted in its entirety and the following
is substituted in lieu thereof:

               (b) TERMS AND CONDITIONS. The Board shall determine the terms and
           conditions of any such Restricted Stock Award, including the
           conditions for repurchase (or forfeiture) and the issue price, if
           any; PROVIDED, THAT, the issue price of any shares of Common Stock
           subject to a Restricted Stock Award shall not be less than (i) 85% of
           the Fair Market Value of a share of Common Stock on the date of
           grant, or (ii) in the- case of a Restricted Stock Award granted to a
           10% Stockholder, 100% of the Fair Market Value of a share of Common
           Stock on the date of grant. Any stock certificates issued in respect
           of a Restricted Stock Award shall be registered in the name of the
           Participant and, unless otherwise determined by the Board, deposited
           by the Participant, together with a stock power endorsed in blank,
           with the Company (or its designee). At the expiration of the
           applicable restriction periods, the Company (or such designee) shall
           deliver the certificates no longer subject to such restrictions to
           the




                                       9


           Participant or if the Participant has died, to the beneficiary
           designated, in a manner determined by the Board, by a Participant to
           receive amounts due or exercise rights of the Participant in the
           event of the Participant's death (the "Designated Beneficiary"). In
           the absence of an effective designation by a Participant, Designated
           Beneficiary shall mean the Participant's estate.

        4. Section 7 of the Plan is deleted in its entirety and the following is
substituted in lieu thereof:

           7.  OTHER STOCK-BASED AWARDS

               The Board shall have the right to grant other Awards based upon
           the Common Stock having such terms and conditions as the Board may
           determine, including the grant of shares based upon certain
           conditions, the grant of securities convertible into Common Stock and
           the grant of stock appreciation rights; PROVIDED, THAT, the price of
           any shares of Common Stock subject to any such other stock-based
           Award or upon which any such other stock-based Award is based, shall
           not be less than (i) 85% of the Fair Market Value of a share of
           Common Stock on the date of grant, or (ii) in the case of an other
           stock-based Award granted to a 10% Stockholder, 100% of the Fair
           Market Value of a share of Common Stock on the date of grant.

        5. Section 9(a) of the Plan is deleted in its entirety and the following
is substituted in lieu thereof:

               (a) NONTRANSFERABILITY OF AWARDS. Awards shall not be sold,
           assigned, transferred, pledged or otherwise encumbered by the person
           to whom they are granted, either voluntarily or by operation of law,
           except by will or the laws of descent and distribution, and, during
           the life of the Participant, shall be exercisable only by the
           Participant. References to a Participant, to the extent relevant in
           the context, shall include references to authorized transferees.

        6. Section 9(d) of the Plan is deleted in its entirety and the following
is substituted in lieu thereof:

               (d) TERMINATION OF STATUS. The Board shall determine the effect
           on an Award of the disability, death, retirement, authorized leave of
           absence or other change in the employment or other status of a
           Participant and the extent to which, and the period during which, the
           Participant, the Participant's legal representative, conservator,
           guardian or Designated Beneficiary may exercise rights under such
           Award; PROVIDED, THAT, at the minimum, following the termination of
           employment, an Option shall remain exercisable for at least (i) six
           months, if such termination is a result of disability or death, or
           (ii) 30 days, if such termination is for any reason other than
           disability, death or cause. Notwithstanding the foregoing, in no
           event shall any extension of an Option under this Section 9(d) permit
           the exercise of such option subsequent to the date of such Option's
           expiration pursuant to its terms or the terms of Section 5(d) hereof.




                                       10


        7. The following Section 9(i) is added to the Plan and inserted therein
immediately subsequent to Section 9(h) of the Plan:

               (h) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any
           shares of Common Stock issued pursuant to Awards shall be subject to
           such special forfeiture conditions, rights of repurchase, rights of
           first refusal and other transfer restrictions as the Board may
           determine. Such restrictions shall be set forth in the applicable
           Award and shall apply in addition to any restrictions that may apply
           to holders of shares of Common Stock generally. In the case of a
           Participant who is not an officer or a director of, or a consultant
           to, the Company, any right, upon termination of the Participant's
           employment or other status with the Company, to repurchase at the
           original purchase price (if any) shares of Common Stock issued to
           such Participant pursuant to an Award shall lapse at least as rapidly
           as 20% per year of the five-year period commencing on the date of
           grant of such Award. Any such right may be exercised only within 90
           days after the termination of the Participant's employment or other
           status with the Company (or, in the case of Common Stock issued upon
           the exercise of Options after the date of termination, within 90 days
           after the date of exercise) for cash or for cancellation of
           indebtedness incurred in purchasing such shares of Common Stock.

        8. The following Section 9(j) is added to the Plan and inserted therein
immediately subsequent to Section 9(i) of the Plan:

               (j) FINANCIAL REPORTS. Each year, the Company shall furnish to
           each Participant who is holding an outstanding Award or who is a
           stockholder of the Company its balance sheet and income statement,
           unless such Participant is a key employee of the Company whose duties
           with the Company assure him access to equivalent information. Such
           balance sheet and income statement need not be audited.

        9. Section 10(c) of the Plan is deleted in its entirety and the
following is substituted in lieu thereof:

               (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become
           effective on the date on which it is adopted by the Board, but no
           Award granted to a Participant designated by the Board as subject to
           Section 162 (m) of the Code shall become exercisable, vested or
           realizable, as applicable to such Award, unless and until the Plan
           has been approved by the Company's stockholders to the extent
           stockholder approval is required by Section 162 (m) in the manner
           required under Section 162 (m) (including the vote required under
           Section 162(m)). In the event that the Company's stockholders fail to
           approve the Plan within 12 months after its adoption by the Board,
           any grants of Awards that have already occurred shall be rescinded,
           and no additional Awards shall be granted thereafter under the Plan.
           No Awards shall be granted under the Plan and the Plan shall
           automatically terminate ten years after the earlier of (i) the date
           on which the Plan was adopted by the Board or (ii) the date the Plan
           was approved




                                       11


           by the Company's stockholders (the APlan Term@), but Awards
           previously granted may extend beyond that date .

        Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Plan.

        This Amendment No. 1 to 1998 Stock Incentive Plan shall be effective
upon and as of the date of its adoption by the Board.



                              Adopted by the Board of Directors
                              on November 23, 1998





                                       12

EX-99.5

                                                                    EXHIBIT 99.5



                      TRANSCENDENT DESIGN TECHNOLOGY, INC.
                                STOCK OPTION PLAN


        1. PURPOSE

           The purposes of the Transcendent Design Technology, Inc. Stock Option
Plan are to assist Transcendent Design Technology, Inc. in attracting,
motivating and retaining key employees, directors and consultants, and to
provide incentives that will further its development and success and will unify
the interests of key employees, directors, consultants and shareholders through
increased employee and director stock ownership.

        2. DEFINITIONS

           For purposes of this Plan.

           "BOARD" means the Board of Directors of the Company.

           "CODE" means the Internal Revenue Code of 1986, as amended.

           "COMMITTEE" means the Stock Option Committee appointed pursuant to
           Section 13 of this Plan.

           "COMPANY" means Transcendent Design Technology, Inc., a Delaware
           corporation.

           "CONSULTANT" means any person who is performing services for the
           Company as an independent contractor.

           "DIRECTOR" means any person who is a member of the Board.

           "EMPLOYEE" means any person who is an employee of the Company or of
           any Parent Corporation or Subsidiary Corporation.

           "INCENTIVE STOCK OPTION" means an option that is designated by the
           Committee as an "incentive stock option" within the meaning of Code
           Section 422.

           "NONSTATUTORY OPTION" means an Option that is designated by the
           Committee as such or that is not designated by the Committee as an
           Incentive Stock Option.

           "OPTION" means an option granted under this Plan to purchase shares
           of Stock. An "Option" may be either an Incentive Stock Option or a
           Nonstatutory Option.

           "PARENT CORPORATION" shall have the meaning set forth in Code Section
           424(e).




           "PARTICIPANT" means a person to whom an option is granted under this
           Plan.

           "PERMANENT DISABILITY" means permanent and total disability within
           the meaning of Code Section 22(e)(3), which reads, in pertinent part,
           as follows:

                  An individual is permanently and totally disabled if he is
                  unable to engage in any substantial gainful activity by reason
                  of any medically determinable physical or mental impairment
                  which can be expected to result in death or which has lasted
                  or can be expected to last for a continuous period of not less
                  than 12 months.

           "PLAN" means this Transcendent Design Technology, Inc. Stock Option
           Plan.

           "RETIREMENT" means normal retirement of an Employee under policies
           established by his or her employer.

           "STOCK" means the Non-Voting Common Stock of the Company. Unless the
           context expressly indicates otherwise, "shares" means shares of
           Stock.

           "SUBSIDIARY CORPORATION" shall have the meaning set forth in Code
           Section 424(f).

           "TEN PERCENT SHAREHOLDER" means an Employee who on the date of grant
           of the Option owns (within the meaning of Code Section 424(d)) more
           than 10% of the total combined voting power of all classes of stock
           of the Company, any Subsidiary Corporation or any Parent Corporation.

        3. SHARES SUBJECT TO PLAN

           Options may be granted under this Plan to acquire an aggregate of up
to 2,000,000 shares of Stock, subject to adjustment as provided in Section 7 of
this Plan. If Options terminate, expire or are canceled without having been
fully exercised, the number of shares subject to such Options (but only to the
extent not exercised prior to termination, expiration or cancellation) may again
be subject to Options granted under this Plan.

        4. ELIGIBILITY

           Any key Employee, any key Consultant and any Director shall be
eligible to become a Participant and to acquire an Option to purchase Stock.
Additional Options may be granted to a Participant while such Participant
continues as an Employee, Consultant or Director. The Committee may exclude
otherwise eligible persons.

        5. GRANT OF OPTIONS

           The Committee shall, from time to time and in its absolute
discretion, determine which Employees are key Employees, which Consultants are
key Consultants and which eligible persons shall become Participants. Either
Incentive Stock Options or Nonstatutory Options, as




                                       2


determined by the Committee in its absolute discretion, may be granted to
Employees, and only Nonstatutory Options may be granted to Directors who are not
Employees and to Consultants. The Committee also shall determine the number of
shares of Stock to be subject to each option and the price, terms and
conditions, consistent with this Plan, of each Option.

           Without limiting the generality of the preceding paragraph, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition to the grant of an Option to a Employee, Consultant or
Director, that the Employee, Consultant or Director surrender for cancellation
some or all of any unexercised options which have been previously granted to the
Employee, Consultant or Director. An Option, the grant of which is conditioned
upon such surrender, may have an option price lower or higher than the option
price of the surrendered Option, may cover the same, or a lesser or greater,
number of shares as the surrendered option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, option period or any other
term or condition of the surrendered Option.

           Notwithstanding any other provision of this Plan, the aggregate fair
market value (determined as of the dates of their respective grants) of shares
as to which incentive stock options (within the meaning of Code Section 422(b))
granted or assumed by the Company, any Parent Corporation and any Subsidiary
Corporation first become exercisable by a Participant in any calendar year shall
not exceed $100,000. The excess, if any, shall be treated as Nonstatutory
Options.

        6. OPTION TERMS

           Each Option shall be evidenced by a written Stock Option Agreement in
a form approved by the Committee. Each Stock Option Agreement shall be executed
by the Company and by the Participant receiving the option. Each Option shall be
subject to the following terms and conditions and to such other terms and
conditions as the Committee may deem appropriate:

           6.1 TYPE OF OPTION; NUMBER OF SHARES

           Each Stock Option Agreement shall indicate whether the Option is an
Incentive Stock Option or a Nonstatutory option and shall specify the number of
shares of Stock subject to the Option.

           6.2 OPTION PRICE

           The price of the shares subject to each Option shall be determined by
the Committee and shall be set forth in the Stock Option Agreement, provided
that the price per share shall not be less than the fair market value of such
share on the day the Option is granted; and provided further that, in the case
of an Incentive Stock Option granted to a Ten Percent Shareholder, the price per
share shall not be less than 110% of the fair market value of such share at the
time such option is granted.

           For purposes of this Plan, the fair market value of a share on a
given date shall be: (a) if the Stock is traded on one or more securities
exchanges, the mean between the high and low sale price of a share on such date
on the principal exchange on which the shares are traded




                                       3


or, if no shares were traded on such date, then the next preceding trading day
(not more than ten) on which trading occurred; or (b) if the Stock is not traded
on a securities exchange but is quoted on NASDAQ or a successor interdealer
quotation system, the mean between the high and low sale price (if a National
Market System security) or the mean between the representative bid and asked
prices (in all other cases) on such date as reported by NASDAQ or such successor
quotation system or, if no shares were traded or quoted on such date, then the
next preceding day (not more than ten) on which trading or such quotations
occurred; or (c) if the Stock is otherwise traded in the over-the-counter
market, the mean between the high and low bid quotations on such date; or, if
there are no bid quotations on such date, then the next preceding trading day
(not more than ten) on which such quotations occurred; or (d) if the Stock is
not publicly traded on a securities exchange or traded or quoted in the
over-the-counter market or, if traded or quoted, there are no transactions or
quotations within the last ten trading days or trading has been halted for
extraordinary reasons, the fair market value shall be determined in good faith
by the Committee with reference to the rules and principles of valuation set
forth in Section 20.2031-2 of the Treasury Regulations (concerning the valuation
of stocks and bonds for purposes of Code Section 2031).

           6.3 PERIOD OF EXERCISE

           No Option shall be exercisable in whole or in part after ten years
from the date of grant. Notwithstanding the foregoing, no Incentive Stock Option
granted to a Ten Percent Shareholder may be exercisable after five years from
the date such Option is granted. Subject to the foregoing limitations and
Sections 6.5 and 8 of this Plan, Options shall become exercisable at such times
and in such installments (which may be cumulative) as the Committee shall
provide in each Stock Option Agreement.

           The Committee may in its absolute discretion, and on such terms and
conditions as it considers appropriate, accelerate the times at which an Option
may be exercised in whole or in part.

           6.4 MANNER AND CONDITIONS OF EXERCISE

           To exercise an Option or any portion thereof, the Participant or
other person then entitled to exercise such Option or portion thereof shall
deliver to the Secretary of the Company a notice in writing signed by the
Participant or such other person stating that such Option or portion is
exercised, specifying the number of shares to be acquired upon exercise and
complying with all applicable rules established by the Committee, together with
the following:

               (a) Full payment (in cash or bank cashiers' check) for the shares
           with respect to which such option or portion is being exercised; or

               (b) With the consent of the Committee, shares of Stock owned by
           the Participant, duly endorsed for transfer to the Company, with a
           fair market value (as determinable under Section 6.2 of this Plan) on
           the date of exercise equal to the aggregate purchase price of the
           shares with respect to which such option or portion is being
           exercised; or




                                       4


               (c) With the consent of the Committee, a full recourse promissory
           note in a form, bearing interest (at a rate at least equal to the
           minimum rate necessary to avoid imputed interest under the Code) and
           payable upon such terms as may be prescribed by the Committee; or

               (d) Any combination of the consideration provided in the
           foregoing subsections (a), (b) and (c).

No such exercise shall be effective unless and until a proper notice and payment
have been delivered as provided above. No fractional shares shall be issued
under this Plan.

           In the event that an Option or portion thereof shall be exercised
pursuant to Sections 6.5 or 6.6 of this Plan by any person or persons other than
the Participant, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof shall be delivered to the Company.

           The Committee may require, as a condition to the exercise of an
option, such representations and covenants as it, in its absolute discretion,
deems necessary to effect compliance with the Securities Act of 1933, as
amended, any state securities laws or rules and regulations thereunder. The
Committee may also require, as a condition to the exercise of an Option, that
the Participant execute and deliver a buy-sell agreement or other agreement
restricting transfer of shares issued on exercise of an Option and providing the
Company with an option to purchase such shares in certain circumstances, in such
form as the Committee shall determine in its discretion.

           The Participant, as a condition to exercising an option, shall also
make any arrangements determined by the Committee to be necessary or appropriate
to satisfy any federal and state withholding tax obligation resulting from the
exercise of an Option, from a disposition described in Section 9 of this Plan or
from the termination or partial termination of any restriction applicable to any
share acquired on exercise of an Option, including the retention of shares by
the Company or the delivery of shares to the Company equal in amount to all or a
portion of the withholding tax obligation pursuant to such arrangements as may
be established by the Committee. Any shares retained by or delivered to the
Company under this Section shall be valued at the date of exercise in the same
manner as provided under Section 6.2 of this Plan.

           To insure that such exercise and any resales are made in compliance
with the Securities Act of 1933, as amended, and the Certificate of
Incorporation and Bylaws of the Company, the Company may imprint an appropriate
legend on certificates representing shares acquired on the exercise of an option
and issue appropriate stop-transfer orders to its transfer agents. Any stock
certificate evidencing shares of Stock issued pursuant to the exercise of an
option shall bear such other legends as the Committee, in the exercise of its
absolute discretion, shall require.

           6.5 CESSATION OF EMPLOYMENT OR SERVICE AS DIRECTOR OR CONSULTANT

           If a Participant who is an Employee or a Consultant but is not a
Director ceases to be an Employee or a Consultant other than by reason of
Retirement, death or Permanent




                                       5


Disability, the Participant shall be permitted to exercise his or her Option, to
the extent it was exercisable at the date of cessation, until 60 days after such
date, but in no event after its stated expiration date.

           If a Participant who is a Director but not an Employee ceases to be a
Director, other than by reason of death, the Participant shall be permitted to
exercise his or her Option, to the extent it was exercisable at the date of
cessation, until 60 days after such date, but in no event after its stated
expiration date.

           If a Participant who is an Employee or a Consultant but not a
Director ceases to be an Employee or a Consultant because of Retirement, the
Participant shall be permitted to exercise his or her option, to the extent it
was exercisable at the date of Retirement, until three months after such date,
but in no event beyond its stated expiration date.

           If a Participant who is an Employee or a Consultant but not a
Director ceases to be an Employee or a Consultant because of Permanent
Disability, the Participant shall be permitted to exercise his or her option, to
the extent it was exercisable at the date of cessation of employment, until one
year after the date he or she ceases to be an Employee, but in no event after
its stated expiration date.

           If a Participant dies while an Employee, a Consultant or a Director
or within three months after (i) ceasing to be an Employee because of Retirement
or Permanent Disability, or (ii) ceasing to be a Consultant because of Permanent
Disability, his or her option may be exercised by the Participant's estate or
any person who acquired the right to exercise the Option by Will or the laws of
descent and distribution, to the extent it was exercisable at the date of
cessation of employment or cessation of service as a Consultant, until one year
after the date of death, but in no event after its stated expiration date.

           If a Participant who is both an Employee and a Director ceases to be
an Employee but remains a Director, or ceases to be a Director but remains an
Employee, then all of the Participant's Nonstatutory Options shall remain in
effect and, if the Participant ceases to be an Employee, all of the
Participant's Incentive Stock Options shall become Nonstatutory Options 30 days
after the date of cessation.

           Transfers of employment between the Company and any Subsidiary
Corporation or between Subsidiary Corporations shall not be deemed cessation of
employment for purposes of any Option granted hereunder.

           6.6 NONTRANSFERABILITY

           During the lifetime of a Participant, his or her option shall be
exercisable only by the Participant and no Option shall be transferable other
than by Will or the laws of descent and distribution. No interest of any
Participant under this Plan or in any Option shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process.




                                       6


         7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

            In the event of any change in the Stock by reason of any stock
dividend, recapitalization, split-up, combination or exchange of shares, or by
reason of any similar change affecting the Stock (but not the issuance of
additional shares, securities convertible into shares or options or rights to
acquire shares of Stock or the Company's repurchase of shares), the number and
class of shares which thereafter may be acquired on exercise of Options under
this Plan and the number and class of shares subject to outstanding Options and
the exercise price of each such share shall be appropriately adjusted consistent
with such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
Participants. Any such adjustment shall be final and binding on each
Participant.

         8. MERGER, CONSOLIDATION, ETC.

            In its absolute discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide by the terms of any Option that
such Option cannot be exercised after the merger or consolidation of the Company
with or into another corporation, the acquisition by another corporation or
person of all or substantially all of the Company's assets or the liquidation or
dissolution of the Company; and if the Committee so provides, it may, in its
absolute discretion and on such terms and conditions as it deems appropriate,
also provide, either by the terms of such Option or by a resolution adopted
prior to the occurrence of such merger, consolidation, acquisition, liquidation
or dissolution, that, for some period of time prior to such event, such Option
shall become exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in Section 6.3 of this Plan or any installment
provisions of such option.

         9. DISQUALIFYING DISPOSITIONS

            If a Participant makes a "disposition" (within the meaning of Code
Section 424(c)) of any shares issued upon exercise of an Incentive Stock Option
within two years after the date the Incentive Stock Option is granted or within
one year after shares are issued to the Participant pursuant to the exercise of
the Incentive Stock Option, the Participant shall notify the Committee in
writing of such disposition within 20 days thereafter.

        10. NO RIGHTS AS A SHAREHOLDER

            No Participant shall have any rights or privileges as a shareholder
with respect to any shares subject to Options prior to the date of issuance to
him or her of a certificate for such shares.

        11. NO RIGHT TO CONTINUED RELATIONSHIP

            Neither this Plan nor any Option granted under this Plan shall
confer upon any Participant or any other person any right to continued
employment, engagement or directorship by or with the Company or any Parent
Corporation or Subsidiary Corporation, nor shall it interfere in any way with
the right of his or her employer or its shareholders to terminate his or her
employment, engagement or directorship at any time for any reason whatsoever,
with or without cause.




                                       7


        12. COMPLIANCE WITH LAWS AND REGULATIONS

            This Plan, the grant and exercise of Options under this Plan and the
obligation of the Company to sell and deliver shares under Options shall be
subject to all applicable federal and state laws, rules and regulations and to
any approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificate for shares of
Stock either (a) prior to (i) the listing of such shares on any stock exchange
on which the Stock may then be listed or inclusion on any interdealer quotation
system on which the Stock may be quoted, and (ii) the completion of any
registration or qualification of such shares which is required under any federal
or state law, or any ruling or regulation of any government body, and which the
Company shall, in its sole discretion, determine to be necessary or advisable,
or (b) until exemptions from such registration and qualification requirements
are established to the reasonable satisfaction of the Company and its counsel.

        13. ADMINISTRATION

            The Board shall appoint a Stock Option Committee consisting of at
least one Director to administer this Plan. The Committee member(s) shall serve
at the pleasure of the Board. If the Board does not appoint a Committee, the
Board shall administer this Plan and shall have the powers and duties granted to
the Committee in this Plan.

            If Stock is registered under Section 12 of the Securities Exchange
Act of 1934, as amended, no Director shall be appointed to, or shall serve on,
the Committee unless he or she shall be a "disinterested person" within the
meaning of Rule 16b-3 under such Act as presently in effect or hereafter
amended. No Options may be granted to a Committee member during his or her
tenure on the Committee.

            The Committee shall administer this Plan in accordance with its
provisions and shall have full authority to interpret this Plan, prescribe,
amend and rescind any rules and regulations necessary or appropriate for the
administration of this Plan and make such other determinations and take such
other action as it deems necessary or advisable, except as otherwise expressly
reserved to the Board in this Plan. Without limiting the generality of the
preceding sentence, the Committee may, in its discretion, determine that for
Option purposes a Participant remains an Employee during all or any portion of a
leave of absence approved by the Company. Any interpretation, determination, or
other action made or taken by the Committee shall be final and binding upon all
Participants.

            No member of the Committee and no officer of the Company shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan or any option, and all such persons shall be
fully indemnified and protected by the Company, to the full extent that the
Company is permitted to provide such indemnification and protection, in respect
to any such action, determination or interpretation.

        14. EFFECTIVE DATE

            This Plan shall be effective as of the date of adoption by the
Board.




                                       8


        15. APPROVAL BY SHAREHOLDERS

            This Plan will be submitted for the approval by holders of a
majority of the shares of stock voting thereon within twelve months after the
Board's adoption of this Plan. Options may be granted prior to such shareholder
approval, provided that such options shall not be exercisable prior to the time
when the Plan is approved by shareholders and, if such approval is not obtained
by the end of the twelve-month period, all Options previously granted shall
thereupon be canceled and this Plan shall terminate.

        16. AMENDMENT AND DISCONTINUANCE

            The Board may from time to time amend, suspend or discontinue this
Plan; provided that, without approval of the holders of a majority of the shares
of stock voting thereon, no action of the Board shall (a) increase the number of
shares reserved for Options pursuant to Section 3 of this Plan, (b) permit the
grant of any Option at a price less than that determined in accordance with
Section 6.2 of this Plan, or (c) permit the grant of Options which expire beyond
the periods provided for in Section 6.3 of this Plan. Without the written
consent of a Participant, no such amendment, suspension or discontinuance of
this Plan shall alter or impair any option previously granted to such
Participant pursuant to this Plan.

        17. TERM

            Unless terminated earlier pursuant to Section 15 of this Plan, this
Plan shall expire on, and no further Options shall be granted pursuant to this
Plan on or after, ten years after the date of adoption of this Plan by the
Board.




                                       9

EX-99.6

                                                                    EXHIBIT 99.6



                              PADS SOFTWARE, INC.

                             1998 STOCK OPTION PLAN


1.      Purpose

The purpose of this 1998 Stock Option Plan (the "Plan") of PADS Software, Inc.,
a Delaware corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
incentives in order to better align the interests of such persons with those of
the Company's stockholders. Except where the context otherwise requires, the
term "Company" shall include any present or future subsidiary corporations of
PADS Software, Inc. as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").

2.      Eligibility

All of the Company's employees, officers, directors, consultants and advisors
are eligible to be granted options ("Options") under the Plan. Any person who
has been granted an Option under the Plan shall be deemed a "Participant".

3.      Administration, Delegation

        a. Administration by Board of Directors. The Plan will be administered
by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Options and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable
from time to time to interpret and correct the provisions of the Plan and any
Option. No member of the Board shall be liable for any action or determination
relating to the Plan. All decisions by the Board shall be made in the sole
discretion of the Board and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Option.

        b. Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to grant Options and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Options and the maximum number of shares for any one
Participant to be made by such executive officers.

        c. Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the Common
Stock, $.008 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Board shall appoint one such Committee of not less than two members,
each member of which shall be an "outside director" within the meaning of
Section 162(m) of the Code and a "non-employee director" as defined in Rule
16b-3 promulgated under the Exchange Act. All references in the Plan to the
"Board" shall mean a Committee or the Board or the executive officer referred to
in Section 3(b) to the extent of such delegation.




4.      Stock Available for Options

        a. Number of Shares. Subject to adjustment under Section 4(b), Options
may be granted under the Plan for up to 400,000 shares of Common Stock. If any
Option expires or is terminated, surrendered or canceled without having been
fully exercised, the unused Common Stock covered by such Option shall again be
available for the grant of Options under the Plan, subject, however, in the case
of Incentive Stock Options (as defined hereinafter) to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

        b. Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan and (ii) the number and class of security and exercise price per
share subject to each outstanding Option shall be appropriately adjusted by the
Company to the extent the Board shall determine, in good faith, that such an
adjustment is necessary and appropriate. If this Section 4(b) applies and
Section 6(e)(1) also applies to any event, Section 6(e)(1) shall be applicable
to such event, and this Section 4(b) shall not be applicable to such event.

5.      Stock Options

        a. General. The Board may grant Options to purchase Common Stock and
determine the number of shares of Common Stock to be covered by each Option, the
exercise price of each Option and the conditions and limitations applicable to
the exercise of each Option, including conditions relating to applicable federal
or state securities laws, as it considers necessary or advisable. An Option
which is not intended to be an Incentive Stock Option (as hereinafter defined)
shall be designated a "Nonstatutory Stock Option".

        b. Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

        c. Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.

        d. Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify.

        e. Exercise of Option. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

        f. Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

           (1) in cash or by check, payable to the order of the Company;

           (2) except as the Board may otherwise provide with respect to an
Option, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds (in cash
or by check) to pay the exercise price, or delivery by the Participant to the
Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company sufficient funds (in cash
or by check) to pay the exercise price;




           (3) to the extent permitted by the Board and explicitly provided in
the agreement evidencing the Option (i) by delivery of shares of Common Stock
owned by the Participant valued at their fair market value as determined by the
Board in good faith ("Fair Market Value"), which Common Stock was owned by the
Participant at least six months prior to such delivery, (ii) by delivery of a
promissory note of the Participant to the Company on terms determined by the
Board, or (iii) by payment of such other lawful consideration as the Board may
determine; or

               (4)    any combination of the above permitted forms of payment.

6.      General Provisions Applicable to Options

        a. Transferability of Options. Except as the Board may otherwise
determine or provide with respect to an Option, Options shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the life of the Participant,
shall be exercisable only by the Participant. References to Participant, to the
extent relevant in the context, shall include references to authorized
transferees.

        b. Documentation. Each Option under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Option may
contain terms and conditions in addition to those set forth in the Plan.

        c. Board Discretion. The terms of each Option need not be identical, and
the Board need not treat Participants uniformly.

        d. Termination of Status. The Board shall determine the effect on an
Option of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or the beneficiary designated by a
Participant in the event of the Participant's death (the "Designated
Beneficiary") shall be entitled to exercise this Option. In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

        e. Acquisition Events.

           (1) Consequences of Acquisition Events. Upon the occurrence of an
Acquisition Event (as defined below), or the execution by the Company of any
agreement with respect to an Acquisition Event, outstanding Options shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation or an affiliate thereof (the "Acquiror"), provided that
any such Options substituted for Incentive Stock Options shall satisfy, in the
determination of the Board, the requirements of Section 424(a) of the Code and
the Acquiror has agreed to assume such Options or substitute equivalent options
therefor. If the Acquiror does not so agree, then the Board shall take one or
more of the following actions with respect to then outstanding Options: (i) upon
written notice to the Participants, provide that all then unexercised Options
will become exercisable in full as of a specified date (the "Acceleration Date")
prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by the
Participants between the Acceleration Date and the consummation of such
Acquisition Event; or (ii) in the event of an Acquisition Event under the terms
of which holders of Common Stock will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered pursuant to such Acquisition
Event (the "Acquisition Price"), provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price multiplied by the number of shares of Common
Stock subject to such outstanding Options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.

An "Acquisition Event" shall mean: (a) any merger or consolidation which results
in the voting securities of the Company outstanding immediately prior thereto
representing immediately thereafter (either by




remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 50% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (b) any sale of all
or substantially all of the assets of the Company; or (c) the complete
liquidation of the Company.

            (2) Assumption of Options Upon Certain Events. The Board may grant
Options under the Plan in substitution for options and other stock-based awards
held by employees of another corporation who become employees of the Company as
a result of a merger or consolidation of the employing corporation with the
Company or the acquisition by the Company of property or stock of the employing
corporation. The substitute Options shall be granted on such terms and
conditions as the Board considers appropriate in the circumstances.

        (f) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld in connection with such Participant's Option no later than the
date of the event creating the tax liability. The Board may allow Participants
to satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Option creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

        (g) Amendment of Option. The Board may amend, modify or terminate any
outstanding Option, including but not limited to substituting therefor another
Option, changing the date of exercise or converting an Incentive Stock Option to
a Nonstatutory Stock Option, provided that the Participant's consent to such
action shall be required unless the Board determines that the action, taking
into account any related action, would not materially and adversely affect the
Participant.

        (h) Conditions on Delivery of Stock. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan until (i) all
conditions of the Option have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

        (i) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part.

7.      Miscellaneous

        a. No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Option, and the grant of an Option shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Option agreement.

        b. No Rights As Stockholder. Subject to the provisions of the applicable
Option agreement, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock issuable upon
exercise of an Option until becoming the record holder thereof.

        c. Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board. No Options shall be granted under
the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved
by the Company's stockholders, but Options previously granted may extend beyond
that date.




        d. Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no Option granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable to the extent that such amendment to
the Plan was required to grant such Option to a particular Participant, unless
and until such amendment shall have been approved by the Company's stockholders.

        e. Governing Law. The provisions of the Plan and all Options granted
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

EX-99.7

                                                                    EXHIBIT 99.7



                                 INNOVEDA, INC.

                 AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN


1.      Purpose

        The purpose of this Amended and Restated 2000 Stock Incentive Plan (the
"Plan") of Innoveda, Inc., a Delaware corporation (the "Company"), is to advance
the interests of the Company's stockholders by enhancing the Company's ability
to attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future subsidiary corporations as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").

2.      Eligibility

        All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options and restricted stock awards (each, an "Award")
under the Plan. Each person who has been granted an Award under the Plan shall
be deemed a "Participant".

3.      Administration and Delegation

        (a) Administration by Board of Directors. The Plan will be administered
by the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

        (b) Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.




                                      -1-


4.      Stock Available for Awards

        (a) Number of Shares. Subject to adjustment under Section 7, Awards may
be made under the Plan for a number of shares of common stock, $0.01 par value
per share, of the Company (the "Common Stock") equal to the sum of:

            (1) 4,500,000 shares of Common Stock;

            (2) any shares of Common Stock reserved for issuance under each of
(i) the Summit Designs, Inc. 1994 Stock Plan, as amended, (ii) the Summit
Designs 1997 NonStatutory Stock Option Plan, and (iii) the Viewlogic, Inc. 1998
Stock Incentive Plan, as amended (collectively, the "Prior Plans") that remain
available for issuance upon the adoption of this Plan by the Board; and

            (3) any shares of Common Stock subject to awards under the Prior
Plans which awards expire, terminate, or are otherwise surrendered, canceled or
forfeited (subject, however, in the case of Incentive Stock Options (as
hereinafter defined) to any limitations under the Code);

provided, however, that the maximum number of shares of Common Stock reserved
for issuance under the Prior Plans that may be issued under this Plan shall be
2,400,000 (the "Authorized Shares"); and provided, further, however, that the
number of Authorized Shares shall be increased automatically by 2,000,000 shares
of Common Stock annually on the anniversary of the adoption of this Plan by the
Board until the expiration of the Plan Term. If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.

        (b) Per-Participant Limit. Subject to adjustment under Section 7, for
Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the maximum number of
shares of Common Stock with respect to which Awards may be granted to any
Participant under the Plan shall be 500,000 per calendar year. The
per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code ("Section 162(m)").

5.      Stock Options

        (a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".




                                      -2-


        (b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

        (c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement
provided, however, that the exercise price shall not be less than 85% of the
fair market value of the Common Stock, as determined by the Board, at the time
the Option is granted.

        (d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement provided, however, that no Option will be granted
for a term in excess of 10 years.

        (e) Exercise of Option. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.

        (f) Payment Upon Exercise. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:

            (1) in cash or by check, payable to the order of the Company;

            (2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding or (ii) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price and
any required tax withholding;

            (3) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), provided (i) such method of
payment is then permitted under applicable law and (ii) such Common Stock was
owned by the Participant at least six months prior to such delivery;

            (4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or

            (5) by any combination of the above permitted forms of payment.




                                      -3-


        (g) Substitute Options. In connection with a merger or consolidation of
an entity with the Company or the acquisition by the Company of property or
stock of an entity, the Board may grant Options in substitution for any options
or other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.

6.      Restricted Stock

        (a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

        (b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

7.      Adjustments for Changes in Common Stock and Certain Other Events

        (a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 7(a)
applies and Section 7(c) also applies to any event, Section 7(c) shall be
applicable to such event, and this Section 7(a) shall not be applicable.

        (b) Liquidation or Dissolution. In the event of a proposed liquidation
or dissolution of the Company, Options shall be treated as described below in
Section 7(c)(2)(b) as if the liquidation or dissolution of the Company were a
Reorganization Event and the acquiring or




                                      -4-


succeeding corporation (or an affiliate thereof) did not agree to assume, or
substitute for, the Options. The Board may specify the effect of a liquidation
or dissolution on any Restricted Stock Award or other Award granted under the
Plan at the time of the grant of such Award.

        (c) Reorganization Events

            (1) Definition. A "Reorganization Event" shall mean: (a) any merger
or consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a share exchange transaction.

            (2) Consequences of a Reorganization Event on Options.

                (a)   Upon the occurrence of a Reorganization Event, or the
                      execution by the Company of any agreement with respect to
                      a Reorganization Event, the Board shall provide that all
                      outstanding Options shall be assumed, or equivalent
                      options shall be substituted, by the acquiring or
                      succeeding corporation (or an affiliate thereof). For
                      purposes hereof, an Option shall be considered to be
                      assumed if, following consummation of the Reorganization
                      Event, the Option confers the right to purchase, for each
                      share of Common Stock subject to the Option immediately
                      prior to the consummation of the Reorganization Event, the
                      consideration (whether cash, securities or other property)
                      received as a result of the Reorganization Event by
                      holders of Common Stock for each share of Common Stock
                      held immediately prior to the consummation of the
                      Reorganization Event (and if holders were offered a choice
                      of consideration, the type of consideration chosen by the
                      holders of a majority of the outstanding shares of Common
                      Stock); provided, however, that if the consideration
                      received as a result of the Reorganization Event is not
                      solely common stock of the acquiring or succeeding
                      corporation (or an affiliate thereof), the Company may,
                      with the consent of the acquiring or succeeding
                      corporation, provide for the consideration to be received
                      upon the exercise of Options to consist solely of common
                      stock of the acquiring or succeeding corporation (or an
                      affiliate thereof) equivalent in fair market value to the
                      per share consideration received by holders of outstanding
                      shares of Common Stock as a result of the Reorganization
                      Event.

                (b)   Notwithstanding the foregoing, if the acquiring or
                      succeeding corporation (or an affiliate thereof) does not
                      agree to assume, or substitute for, such Options, then the
                      Board shall provide that, (I) each Option shall become
                      exercisable in full as of a specified time prior to the
                      Reorganization Event, as determined by the Board;
                      provided, however, that upon exercise of such Option (x)
                      to the




                                      -5-


                      extent that the Option would have been exercisable prior
                      to the Reorganization Event absent this Section
                      7(c)(2)(b)(I) for shares not subject to restrictions or
                      conditions, the Participant shall receive shares free from
                      all conditions or restrictions, and (y) to the extent that
                      the Option would not have been exercisable absent this
                      Section 7(c)(2)(b)(I), the Participant shall receive
                      shares subject to the Company's right to repurchase such
                      shares at the Option exercise price with such repurchase
                      right lapsing at the same rate as the Option would have
                      become exercisable under the applicable Option agreement;
                      and (II) each Option that was exercisable prior to the
                      Reorganization Event for shares subject to the Company's
                      right to repurchase such shares, shall remain exercisable
                      for shares subject to the Company's right to repurchase
                      such shares at the Option exercise price, with such
                      repurchase right lapsing at the same rate as set forth in
                      the applicable Option agreement; provided, however, that
                      all Options will terminate immediately prior to the
                      consummation of such Reorganization Event, except to the
                      extent exercised by the Participants before the
                      consummation of such Reorganization Event; and provided,
                      further, however, that in the event of a Reorganization
                      Event under the terms of which holders of Common Stock
                      will receive upon consummation thereof a cash payment for
                      each share of Common Stock surrendered pursuant to such
                      Reorganization Event (the "Acquisition Price"), then the
                      Board may instead provide that all outstanding Options
                      shall terminate upon consummation of such Reorganization
                      Event and that each Participant shall receive, in exchange
                      therefor, a cash payment equal to the amount (if any) by
                      which (A) the Acquisition Price multiplied by the number
                      of shares of Common Stock subject to such outstanding
                      Options (whether or not then exercisable), exceeds (B) the
                      aggregate exercise price of such Options.

            (3) Consequences of a Reorganization Event on Restricted Stock
Awards. Upon the occurrence of a Reorganization Event, the repurchase and other
rights of the Company under each outstanding Restricted Stock Award shall inure
to the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Reorganization Event in the same manner and to
the same extent as they applied to the Common Stock subject to such Restricted
Stock Award.

8.      General Provisions Applicable to Awards

        (a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.




                                      -6-


        (b) Documentation. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.

        (c) Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.

        (d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

        (e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

        (f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

        (g) Conditions on Delivery of Stock. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

        (h) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any shares of
Common Stock acquired upon exercise of an Option which shares are subject to the
Company's repurchase right shall be free of restrictions in full or in part, and
that any Restricted Stock Awards shall be free of restrictions in full or in
part.




                                      -7-


9.      Miscellaneous

        (a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

        (b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

        (c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders to the extent
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date (the "Plan Term").

        (d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).

        (e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

As Adopted by the Board of Directors on May 16, 2000 and Amended by the board of
Directors on May 31, 2000.
As Approved by the Stockholders on July 13, 2000




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