SYNOPSYS INC, S-8, 1998-12-14

SYNOPSYS INC
S-8, 1998-12-14
PREPACKAGED SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1998

REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8/S-3
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR RESALE BY MEANS OF A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933

SYNOPSYS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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<S> <C>
DELAWARE 56-1546236
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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700 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

EVEREST DESIGN AUTOMATION INC. 1997 STOCK OPTION/STOCK ISSUANCE PLAN
FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENTS
EVEREST DESIGN AUTOMATION INC. NON-STATUTORY STOCK OPTIONS
(FULL TITLE OF THE PLAN)

AART J. DE GEUS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYNOPSYS, INC.
700 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(650) 962-5000
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPY TO:
THOMAS C. DEFILIPPS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300

CALCULATION OF REGISTRATION FEE

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MAXIMUM PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE PRICE REGISTRATION FEE
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Common Stock, $0.01 par value
Issued under Restricted Stock Purchase
Agree-
ments of Everest Design Automation
Inc. .................................. 441,180 shares(3) $52.6875(2) $23,244,671.25 $6,462.02
Issued under the Everest Design
Automation Inc. 1997 Stock Option/Stock
Issuance Plan.......................... 152,654 shares(3) $52.6875(2) $ 8,042,957.63 $2,235.94
Issued under Everest Design Automation
Inc. Non-Statutory Stock Options....... 22,059 shares $52.6875(2) $ 1,162,233.56 $ 323.10
To be issued under the Everest Design
Automation Inc. 1997 Stock Option/Stock
Issuance Plan.......................... 111,357 shares(3) $ 4.3200(4) $ 481,062.24 $ 133.74
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Total............................. 727,250 shares $32,930,924.68 $9,154.80
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(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this Registration Statement has been broken
down into four subtotals.

(2) Computed in accordance with Rule 457(h) under the Securities Act. Such
computation is based on the average of the high and low prices reported on
the Nasdaq National Market on December 10, 1998.

(3) Certain of such shares are subject to vesting.

(4) Computed in accordance with Rules 457(h) and 457(i) under the Securities
Act. Such computation is based on the weighted average exercise price of
$0.29 per share covering authorized but unissued shares under Everest Design
Automation Inc.'s 1997 Stock Option/Stock Issuance Plan.
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PROSPECTUS

Synopsys, Inc.
700 East Middlefield Road
Mountain View, CA 94043
Telephone Number: (650) 962-5000

727,250 SHARES

LOGO

COMMON STOCK

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These shares may be offered and sold from time to time by certain
stockholders of the Company identified in this prospectus. See "Selling
Stockholders." The selling stockholders acquired the shares on November 20, 1998
in connection with the acquisition by Synopsys, Inc. ("Synopsys") of Everest
Design Automation Inc. ("Everest") pursuant to an Agreement of Merger and Plan
of Reorganization by and among Synopsys, Tenzing Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Synopsys, and Everest,
dated as of October 26, 1998 (the "Merger Agreement").

The selling stockholders will receive all of the net proceeds from the sale
of the shares. These stockholders will pay all underwriting discounts and
selling commissions, if any, applicable to the sale of the shares. Synopsys will
not receive any proceeds from the sale of the shares.

YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3 OF THIS
PROSPECTUS BEFORE PURCHASING ANY OF THE COMMON STOCK.

Synopsys' common stock is quoted on the Nasdaq National Market under the
symbol "SNPS." On December 10, 1998, the last reported sale of the common stock
was $51.625 per share.

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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.

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December 14, 1998
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TABLE OF CONTENTS

PROSPECTUS

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PAGE
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Synopsys, Inc............................................... 3
Risk Factors................................................ 3
Where to Find More Information About Synopsys............... 7
Information Incorporated by Reference....................... 7
Selling Stockholders........................................ 9
Plan of Distribution........................................ 10
Indemnification of Directors and Officers................... 12
</TABLE>

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, shares of Synopsys common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate as of the date of this prospectus, regardless of the time
of delivery of this prospectus or any sale of the shares.

In this prospectus, unless indicated otherwise, "Synopsys," the "Company,"
"we," "us" and "our" refer to Synopsys, Inc. and its subsidiaries.

FORWARD LOOKING INFORMATION

This prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of
the Exchange Act of 1934 (the "Exchange Act"). Our actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below. In addition, please review the sections
captioned "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our annual report on Form 10-K for the fiscal year
ended September 30, 1997, and our quarterly reports on form 10-Q for the
quarters ended July 4, 1998, April 4, 1998 and January 3, 1998, which reports
are incorporated herein by reference and such section of any subsequently filed
Exchange Act reports. In connection with forward-looking statements which appear
in these disclosures, prospective purchasers of the shares offered hereby should
carefully consider the factors set forth in this prospectus under "Risk
Factors."

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SYNOPSYS, INC.

Synopsys develops, markets, and supports electronic design automation
("EDA") products for designers of integrated circuits ("ICs") and electronic
systems. Synopsys offers a range of design tools, verification tools and
systems, design reuse products and physical design tools intended to improve
designers' productivity by offering improved time to market, reduced development
and manufacturing costs, and enhanced design quality of results when compared to
earlier generations of EDA products. Synopsys also provides training, support
and consulting services for its customers.

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. The risk factors set forth herein reflect those
risks known to management as of the date of this prospectus and which management
believes could be material to our business, operating results and financial
condition. Additional risks and uncertainties not presently known to us or that
we currently deem immaterial may also impair our business operations. Such risk
factors may change over time and may differ materially from those set forth
herein. Prospective investors are cautioned to review, in addition to these risk
factors, the risk factors contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in our most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q as well as the
additional information contained in such reports and our other reports and
filings with the Securities and Exchange Commission.

If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and you may lose
all or part of your investment.

This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in such forward-looking statement as a result of a variety of factors, including
those set forth in the following risk factors or elsewhere in, or incorporated
by reference into, this prospectus.

POTENTIAL EARNINGS FLUCTUATIONS

We attempt to plan our business to achieve quarter-to-quarter revenue and
earnings growth. Achieving predictable revenue and earnings growth is difficult.
Quarterly revenue and earnings are affected by many factors, including customer
product demand, product license terms, the size of our backlog, and the timing
of revenue recognition on products and services sold. The following factors
could affect our revenues and earnings per share in a particular quarter or over
several quarterly or annual periods:

- Our orders are seasonal. Historically, our first fiscal quarter ending
December 31 is our weakest, and may have a book-to-bill ratio below one.

- Our products are complex, and before buying them potential customers
spend a great deal of time reviewing and testing them. This is
particularly true if they are new customers or current customers
purchasing a new product or switching from a competitor's product. The
sales cycle does not necessarily match quarterly periods, and if by the
end of any quarter our sales force has not sold enough new licenses, our
orders and revenues could be substantially reduced.

- Like many companies in the software industry, we receive a
disproportionate volume of orders in the last week of a quarter, and
recognize a disproportionate amount of revenue in the last week of a
quarter. In addition, the proportion of our business attributable to our
largest customers is increasing. As a result, if any order, and
especially a large order, is delayed beyond the end of a fiscal period,
our orders and revenue for that period could be substantially reduced.

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- The accounting rules we are required to follow only permit us to
recognize revenue when certain criteria are met. Orders for certain of
the Company's products and services, including certain time-based product
licenses, consulting services, and software support, yield revenue (or a
significant portion thereof) over multiple quarters (often extending
beyond the current fiscal year) or upon completion of performance rather
than at the time of sale. In addition, in negotiating a purchase order
with a customer, we may agree to terms that have the effect of requiring
deferral of revenue in whole or in part. As a result, it may be difficult
for us to convert orders, particularly those received late in a quarter,
or backlog, to revenue in any given quarter. It is therefore possible for
the Company to fall short in its revenue and/or earnings plan for a given
quarter even while orders and backlog remain on plan.

COMPETITION

The EDA industry is highly competitive. We compete against other EDA
vendors, and with customers' internally developed design tools and internal
design capabilities, for a share of the overall EDA budgets of our customers.
Our competitors include companies that offer a broad range of products and
services, such as Cadence Design Systems, Inc. ("Cadence"), Mentor Graphics,
Inc. ("Mentor") and Avant! Corporation ("Avant!"), as well as companies,
including numerous start-up companies, that offer products focused on a discrete
phase of the IC design process. In order to remain successful against such
competition, we must continue to enhance our current products and bring to
market new products that address the increasingly sophisticated needs of our
customers on a timely and cost-effective basis. We also will have to expand our
ability to offer consulting services. The failure to enhance existing products,
develop and/or acquire new products or to expand our ability to offer such
services would have a material adverse effect on our business, financial
condition and results of operations.

Technology advances and customer requirements are fueling a change in the
nature of competition among EDA vendors. Increasingly, EDA companies compete on
the basis of "design flows" involving a broad range of products (including both
logic and physical design tools) and services rather than on the basis of
individual "point" tools performing a discrete phase of the design process. No
single EDA company currently offers its customers industry-leading products in a
complete design flow. We offer a wide range of logic design tools but currently
offer a relatively limited range of physical design tools. In November 1998 we
acquired Everest, a private company developing physical design software. We will
need to develop or acquire additional physical design tools in order to offer a
complete design flow. We are also attempting to expand our capacity to offer
professional services, but for the foreseeable future will continue to have less
capacity than Cadence to provide such services. The market for physical design
tools is dominated by Cadence and Avant!, both of which are attempting to
complete their design flows. Cadence recently acquired Ambit Design Systems, a
private company offering synthesis and other logic design products, as well as
certain physical design verification products from Lucent Technologies, both of
which will increase the direct competition between Synopsys and Cadence. In
addition, Cadence's acquisition of logic design products may lead to reductions
in purchases of our logic design software by Cadence, which was one of Synopsys'
ten largest customers in fiscal 1998. Avant! also recently acquired a private
company offering logic synthesis software, which will increase the direct
competition between Synopsys and Avant!.

SUCCESS OF NON-SYNTHESIS PRODUCTS

Historically, much of the Company's growth has been attributable to the
strength of its logic synthesis products. Opportunities for growth in market
share in this area are limited, and synthesis revenues are expected to grow more
slowly than our target for overall revenue growth. Synthesis and related "design
creation" products account for approximately 45-50% of our revenue. As a result,
in order to meet our revenue plan, non-synthesis design creation products, high
level verification products and deep submicron products and our services
business will have to grow faster than our overall revenue growth target.

Our PrimeTime timing analysis, Formality formal verification, Module
Compiler datapath synthesis and VCS Verilog simulation products are expected to
be among the most important contributors to product revenue growth. These
products have achieved initial customer acceptance, but we will only derive
significant revenue from these products if they are accepted by a broad range of
customers. Product success is difficult to
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predict. The introduction of new products and growth of a market for such
products cannot be assured in a highly competitive environment like EDA. In the
past we, like all companies, have had products that despite initial successes,
have failed to meet our revenue expectations. Expanding our capacity to offer
consulting services and our revenues derived therefrom will require us to
recruit, hire and train a large number of talented people, and to implement
management controls on bidding and executing on services engagements. The
consulting business is significantly different than the software business,
however, and as indicated by recent layoffs announced by Cadence in its service
business, increasing consulting orders and revenue while maintaining an adequate
level of profit can be difficult. There can be no assurance that the Company
will be successful in expanding revenues from existing or new products at the
desired rate or expanding its services business, and the failure to do so would
have a material adverse effect on the Company's business, financial condition
and results of operations.

INTEGRATION OF ACQUIRED BUSINESSES

We have acquired or merged with a number of companies in recent years,
including EPIC Design Technology, Inc., Viewlogic Systems, Inc., Systems Science
Inc. and Everest, and as part of our efforts to expand our product and services
offerings we may acquire additional companies in the future. In addition to
direct costs, acquisitions pose a number of risks, including potential dilution
of earnings per share, problems of integrating the acquired products and
employees into our business, the failure to realize expected synergies or cost
savings, the drain on management time for acquisition-related activities,
possible adverse effects on customer buying patterns due to uncertainties
resulting from an acquisition, and assumption of unknown liabilities. While we
attempt to review proposed acquisitions carefully and negotiate terms that are
favorable to the Company, there is no assurance that any individual acquisition
will have the projected effect on the Company's performance.

DEPENDENCE ON SEMICONDUCTOR AND ELECTRONICS BUSINESSES

Our business has benefited from the rapid worldwide growth of the
semiconductor industry. Purchases of our products are largely dependent upon the
commencement of new design projects by semiconductor manufacturers and their
customers. The outlook for the semiconductor industry for the remainder of
calendar year 1998 and 1999 is uncertain, owing in part to adverse economic
conditions in Asia and to potential slowing of growth in the United States. A
number of the Company's customers have announced layoffs of their employees or
the suspension of investment plans, and although the Company has not seen a
significant drop-off in demand from these customers, their EDA budgets could be
reduced, alone or as part of overall expense control efforts. In addition, there
have been a number of mergers in the semiconductor and systems industries, which
may reduce the aggregate level of purchases of our products and services by the
merged companies. Slower growth in the semiconductor and systems industries, a
reduced number of design starts, tightening of customers' operating budgets or
continued consolidation among the Company's customers may have a material
adverse effect on our business, financial condition and results of operations.

INTERNATIONAL EXPOSURE

In fiscal 1998, international revenue accounted for 39% of our revenue,
after accounting for 41% and 42% of our revenue in fiscal 1997 and 1996,
respectively. We expect that international revenue will continue to account for
a significant portion of our revenue in the future. As a result, the Company's
performance may be negatively affected by changes in foreign currency exchange
rates and changes in regional or worldwide economic or political conditions. In
particular:

- Revenue from sales in Japan during fiscal 1998 was adversely affected by
the weakness of the yen against the dollar, overall weakness in the
Japanese economy and the deferral of investments in semiconductor
facilities and technology by Japanese companies. Continued weakness of
the Japanese economy during fiscal 1999 is likely to adversely affect
revenue from Japan during the year. The yen has recently strengthened,
but the exchange rate for fiscal 1999 remains subject to unpredictable
fluctuations. Renewed weakness of the yen could adversely affect revenue
from Japan during fiscal 1999.
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- Significant declines in the value of the Korean won during fiscal 1998,
and the subsequent economic crisis had a significant adverse affect on
our business in Korea during the year, and is likely to continue to
affect our orders and revenue from Korea in fiscal 1999. Declines in the
currencies of other countries in the Asia Pacific region, particularly
Taiwan, have also negatively affected the Company's sales in the region.
Continued instability in Asian currency markets and weaknesses in Asian
economies would continue to have an adverse effect on our orders and
revenues from the Asia Pacific region.

RISKS OF JOINT DEVELOPMENT

In February 1996, we entered into a six-year joint development and license
agreement with IBM, pursuant to which the two companies agreed to develop
certain new products. Joint development of products is subject to risks and
uncertainties over and above those affecting internal development. During fiscal
year 1997, the first joint product resulting from the alliance, PrimeTime, was
introduced, and the parties agreed to terminate efforts to develop a product in
one of the product areas covered by the Agreement. A second joint product is
expected to be introduced in January 1999, and development of the fourth product
to be developed under the agreement has been suspended. Synopsys and IBM are
currently discussing the future of the alliance. There can be no assurance that
joint development will continue, or that the products developed by the alliance
will be successful.

NEED TO RECRUIT AND RETAIN KEY PERSONNEL

Our success is dependent on technical and other contributions of key
employees. We participate in a dynamic industry, with significant start-up
activity, and our headquarters is in Silicon Valley, where skilled technical,
sales and management employees are in high demand. There is a limited number of
qualified EDA engineers, and the competition for such individuals is intense.
Experience at Synopsys is highly valued in the EDA industry, and our employees
are recruited aggressively by our competitors and by start-up companies. Our
salaries are competitive in the market, but under certain circumstances,
start-up companies can offer more attractive stock option packages. As a result,
we have experienced, and may continue to experience, significant employee
turnover. In addition, there can be no assurance that we can continue to recruit
and retain key personnel. Failure to successfully recruit and retain such
personnel could have a material adverse effect on our business, financial
condition and results of operations.

POISON PILL PROVISIONS

The Company has adopted a number of provisions that could have
anti-takeover effects. The Board of Directors has adopted a Preferred Shares
Rights Plan, commonly referred to as a "poison pill." In addition, the Board of
Directors has the authority, without further action by its stockholders, to fix
the rights and preferences of, and issue shares of, authorized but undesignated
shares of Preferred Stock. This provision and other provisions of the Company's
Restated Certificate of Incorporation and Bylaws and the Delaware General
Corporation Law may have the effect of deterring hostile takeovers or delaying
or preventing changes in control or management of the Company, including
transactions in which the stockholders of the Company might otherwise receive a
premium for their shares over then current market prices.

YEAR 2000

Synopsys presently believes that we will not experience significant
operational problems arising from the Year 2000 problem (i.e., the inability of
certain computer programs to correctly process date information on or after
January 1, 2000). However, if unforeseen Year 2000 issues arise with respect to
Synopsys products, one or more important customers experiences Year 2000-related
problems that interferes with their purchases of Synopsys products, or we are
not able to identify and fix Year 2000 problems relating to the computer systems
and software we rely on to run our business, we may experience a disruption in
our business, which could have a material adverse impact on our business,
financial condition and results of operations.

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CHANGES IN FINANCIAL ACCOUNTING STANDARDS

We prepare our financial statements in conformity with generally accepted
accounting principles ("GAAP"). GAAP are subject to interpretation by the
American Institute of Certified Public Accountants ("AICPA"), the Securities and
Exchange Commission (the "SEC") and various bodies formed to interpret and
create appropriate accounting policies. A change in these policies can have a
significant effect on our reported results, and may even affect our reporting of
transactions completed before a change is announced. Accounting policies
affecting many other aspects of our business, including rules relating to
software revenue recognition, purchase and pooling-of-interests accounting for
business combinations, employee stock purchase plans and stock option grants
have recently been revised or are under review by one or more groups. Changes to
these rules, or the questioning of current practices, may have a significant
adverse affect on our reported financial results or in the way we conduct our
business.

In addition, the preparation of financial statements in conformity with
GAAP requires us to make estimates and assumptions that affect the recorded
amounts of assets and liabilities, disclosure of those assets and liabilities at
the date of the financial statements and the recorded amounts of expenses during
the reporting period. A change in the facts and circumstances surrounding these
estimates could result in a change to the estimates and impact future operating
results.

WHERE TO FIND MORE INFORMATION ABOUT SYNOPSYS

We file special reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's Web site at
http://www.sec.gov.

This prospectus contains information concerning the Company and the sale of
its Common Stock by the Selling Stockholders, but does not contain all the
information set forth in the Registration Statement on Form S-8/S-3 (the
"Registration Statement") which the Company has filed with the SEC under the
Securities Act of 1933, as amended (the "Securities Act"). Statements made in
this Prospectus as to the contents of any referenced contract, agreement or
other document are not necessarily complete, and such statement shall be deemed
qualified in its entirety by reference thereto. The Registration Statement,
including various exhibits, may be obtained upon payment of the fee prescribed
by the SEC, or may be examined without charge at the SEC's office in Washington,
D.C.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents that we have previously filed with the SEC or
documents that we will file with the SEC in the future. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supercede
this information. We incorporate by reference the documents listed below, and
any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, until the selling stockholders sell all the shares. This
prospectus is part of a Registration Statement we filed with the SEC. The
documents we incorporate by reference are:

(1) Synopsys's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;

(2) Synopsys's Quarterly Report on Form 10-Q for the quarter ended July 4,
1998;

(3) Synopsys's Quarterly Report on Form 10-Q for the quarter ended April 4,
1998;

(4) Synopsys's Quarterly Report on Form 10-Q for the quarter ended January
3, 1998;

(5) Synopsys's Current Report on Form 8-K dated November 16, 1998 relating
to fourth quarter results;

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(6) Synopsys's Current Report on Form 8-K dated December 19, 1997 for the
acquisition of Viewlogic Systems, Inc.; and

(7) The description of the Synopsys's Common Stock contained in the
Company's Registration Statement on Form 8-A, No. 000-19807, filed on
January 24, 1992.

We also incorporate by reference all documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities registered have been sold or which deregisters all securities then
remaining unsold.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Synopsys, Inc., 700 East Middlefield
Road, Mountain View, California 94043; the telephone number is (650) 962-5000.

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SELLING STOCKHOLDERS

None of the Selling Stockholders is an executive officer or director of
Synopsys, and none of the Selling Stockholders beneficially owns, individually
or in the aggregate, more than 1% of the outstanding Common Stock of Synopsys
prior to this offering. In addition, except as set forth below, all of the
shares of Common Stock beneficially owned by the Selling Stockholders were
issued upon exercise of stock options or direct stock issuances granted under
the Everest Design Automation Inc. 1997 Stock Option/Stock Issuance Plan (the
"Plan"). Beneficial ownership calculations are determined in accordance with the
Rules of the SEC and are based on 68,193,820 shares outstanding as of August 8,
1998 as adjusted to reflect the issuance of 1,392,399 shares of Common Stock in
connection with the acquisition of Everest pursuant to the Merger Agreement (the
"Acquisition"); in computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock that are
presently exercisable or that will become exercisable within 60 days of November
20, 1998 are deemed outstanding for such person, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. The following table shows the names of the Selling Stockholders and the
number of shares of Common Stock to be sold by them pursuant to this Prospectus.

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NUMBER OF SHARES
NAME(1) BEING OFFERED(2)
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Robi Dutta(3)............................................... 220,590
Pravin Madhani(4)........................................... 220,590
Other Former Shareholders of Everest*....................... 174,713

TOTAL....................................................... 615,893
</TABLE>

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* Consists of 16 employees and consultants of Everest who own an aggregate of
684,320 shares, constituting less than 1% of the outstanding shares of Common
Stock of Synopsys.

(1) Synopsys issued such shares pursuant to the conversion of shares of the
Common Stock of Everest ("Everest Common Stock") into shares of the Common
Stock of Synopsys in connection with the Acquisition. Prior to the
Acquisition, Everest had issued such stock under employee equity incentive
restricted stock purchase agreements. Unless otherwise noted, each of these
Selling Stockholders who were parties to the Everest restricted stock
purchase agreements are currently employees of Synopsys.

(2) The number of shares offered pursuant to this offering does not include
certain shares held in escrow by Synopsys pursuant to the terms of the
merger agreement in connection with the Acquisition.

(3) Mr. Dutta was issued 245,100 shares of Common Stock pursuant to the
conversion of his shares of Everest Common Stock into shares of Common Stock
of Synopsys in connection with the Acquisition. Prior to the Acquisition,
Mr. Dutta was issued shares of Everest Common Stock pursuant to a Founder's
Restricted Stock Purchase Agreement.

(4) Mr. Madhani was issued 245,100 shares of Common Stock pursuant to the
conversion of his shares of Everest Common Stock into shares of Common Stock
of Synopsys in connection with the Acquisition. Prior to the Acquisition,
Mr. Madhani was issued shares of Everest Common Stock pursuant to a
Founder's Restricted Stock Purchase Agreement.

PLAN OF DISTRIBUTION

Synopsys has been advised by the Selling Stockholders that they intend to
sell all or a portion of the shares offered hereby from time to time in the
Nasdaq National Market and that sales will be made at prices prevailing in the
Nasdaq National Market at the times of such sales. As used herein, "Selling
Stockholders" includes donees and pledgees selling shares received from a
Selling Stockholder after the date of this Prospectus. The Selling Stockholders
may also make private sales directly or through a broker or brokers, who may act
as agent or as principal. Further, the Selling Stockholders may choose to
dispose of the shares offered hereby by gift to a third party or as a donation
to a charitable or other non-profit entity. In connection with any

9
<PAGE> 11

sales, the Selling Stockholders and any brokers participating in such sales may
be deemed to be underwriters within the meaning of the Securities Act.

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if such broker acts as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Stockholders. Broker-dealers may
agree with the Selling Stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.

Synopsys has advised the Selling Stockholders that Regulation M promulgated
under the Exchange Act may apply to sales in the market and has informed them of
the possible need for delivery of copies of this Prospectus. The Selling
Stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and, if any such
broker-dealers purchase shares as principal, any profits received on the resale
of such shares, may be deemed to be underwriting discounts and commissions under
the Securities Act.

Upon Synopsys's being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholders, the commissions paid or
discounts or concessions allowed by the Selling Stockholders to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.

Any securities covered by this Prospectus which qualify for sale pursuant
to Rules 144 and 701 under the Securities Act may be sold under Rule 144 rather
than pursuant to this Prospectus. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated), including any person
who may be deemed to be an "affiliate" of Synopsys, is entitled to sell within
any three month period "restricted shares" beneficially owned by him or her in
an amount that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock or (ii) the average weekly trading volume in shares of
Common Stock during the four calendar weeks preceding such sale, provided that
at least one year has elapsed since such shares were acquired from Synopsys or
an affiliate of Synopsys. Sales are also subject to certain requirements as to
the manner of sale, notice and availability of current public information
regarding Synopsys. However, a person who has not been an "affiliate" of
Synopsys at any time within three months prior to the sale is entitled to sell
his or her shares without regard to the volume limitations or other requirements
of Rule 144, provided that at least one year has elapsed since such shares were
acquired from Synopsys or an affiliate of Synopsys. In general, under Rule 701
as currently in effect, any employee, consultant or advisor of Synopsys who
purchases shares from Synopsys in connection with a compensatory stock or option
plan or other written agreement related to compensation is eligible to resell
such shares in reliance on Rule 144, but without compliance with certain
restrictions contained in Rule 144.

There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereunder.

10
<PAGE> 12

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

Article X of Synopsys's Restated Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware Law.

Article VII of Synopsys's Bylaws provides for the indemnification of
officers, directors and third parties to the fullest extent permissible under
Delaware Law, which provisions are deemed to be a contract between Synopsys and
each director and officer who serves in such capacity while such bylaw is in
effect.

Synopsys has entered into indemnification agreements with its directors and
executive officers, in addition to the indemnification provided for in the
Registrant's Bylaws, and intends to enter into indemnification agreements with
any new directors and executive officers in the future.

Insofar as indemnification by Synopsys for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Synopsys pursuant to the provisions referenced in Prospectus or otherwise,
Synopsys 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 Synopsys of expenses
incurred or paid by a director, officer, or controlling person of Synopsys 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 hereunder, Synopsys 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.

11
<PAGE> 13

SYNOPSYS, INC.
REGISTRATION STATEMENT ON FORM S-8

PART II

INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Commission:

(1) Synopsys's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;

(2) Synopsys's Quarterly Report on Form 10-Q for the quarter ended July 4,
1998;

(3) Synopsys's Quarterly Report on Form 10-Q for the quarter ended April 4,
1998;

(4) Synopsys's Quarterly Report on Form 10-Q for the quarter ended January
3, 1998;

(5) Synopsys's Current Report on Form 8-K dated November 16, 1998 relating
to fourth quarter results;

(6) Synopsys's Current Report on Form 8-K dated December 19, 1997 for the
acquisition of Viewlogic Systems, Inc.; and

(7) The description of the Synopsys's Common Stock contained in the
Company's Registration Statement on Form 8-A, No. 000-19807, filed on
January 24, 1992.

All documents subsequently filed by Synopsys pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities registered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article X of Synopsys's Restated Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware Law.

II-1
<PAGE> 14

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

The issuance of the shares being offered by the Form S-3 resale prospectus
were deemed to be exempt from registration under the Securities Act in reliance
on Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving a public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under such Rule 701. The recipients of securities in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions. All recipients had adequate access, through their
relationship with Synopsys, to information about Synopsys.

ITEM 8. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
5.1 Opinion of counsel as to legality of securities being
registered.
10.1 Everest Design Automation Inc. 1997 Stock Option/Stock
Issuance Plan.
10.2 Form of Stock Option Agreement under Everest Design
Automation 1997 Stock Option/Stock Issuance Plan.
10.3 Form of Everest Design Automation Inc. Founder's Restricted
Stock Agreement.
10.4 Form of Everest Design Automation Inc. Non-Statutory Option
Agreement.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Independent Auditors' Consent.
23.3 Independent Accountants' Consent.
24.1 Power of Attorney (see page II-4).
</TABLE>

ITEM 9. UNDERTAKINGS.

A. Synopsys hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information 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. Synopsys hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Synopsys'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.

II-2
<PAGE> 15

C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Synopsys
pursuant to law, Synopsys's Certificate of Incorporation, Bylaws or
indemnification agreements, Synopsys has been informed 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 Synopsys of
expenses incurred or paid by a director, officer or controlling person of
Synopsys in a successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered hereunder, Synopsys will, unless in the opinion of
its counsel the matter has already been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question of 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.

II-3
<PAGE> 16

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/S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on this 14th day
of December, 1998.

SYNOPSYS, INC.

By: /s/ AART J. DE GEUS
------------------------------------
Aart J. de Geus
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Aart J. de Geus and David Sugishita, and
each of them, as his or her attorney-in-fact, with full power of substitution in
each, for him or her in any and all capacities to sign any amendments to this
Registration Statement on Form S-8/S-3, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact, or his substitutes, may 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 below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ AART J. DE GEUS Chief Executive Officer December 14 1998
- -------------------------------------------------------- (Principal Executive
Aart J. de Geus Officer) and Chairman of
the Board of Directors

/s/ CHI-FOON CHAN President, Chief Operating December 14, 1998
- -------------------------------------------------------- Officer and Director
Chi-Foon Chan

/s/ WILLIAM W. LATTIN Executive Vice President December 14, 1998
- -------------------------------------------------------- and Director
William W. Lattin

/s/ DEBORAH COLEMAN Director December 14, 1998
- --------------------------------------------------------
Deborah Coleman

/s/ HARVEY C. JONES, JR. Director December 14, 1998
- --------------------------------------------------------
Harvey C. Jones, Jr.

/s/ A. RICHARD NEWTON Director December 14, 1998
- --------------------------------------------------------
A. Richard Newton

/s/ STEVEN C. WALSKE Director December 14, 1998
- --------------------------------------------------------
Steven C. Walske

/s/ DAVID SUGISHITA Chief Financial Officer December 14, 1998
- -------------------------------------------------------- (Principal Financial
David Sugishita Officer)
</TABLE>

II-4
<PAGE> 17

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

EXHIBITS
------------------------

REGISTRATION STATEMENT ON FORM S-8/S-3

SYNOPSYS, INC.

DECEMBER 14, 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 18

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<C> <S> <C>
5.1 Opinion of counsel as to legality of securities being
registered.
10.1 Everest Design Automation Inc. 1997 Stock Option/Stock
Issuance Plan.
10.2 Form of Stock Option Agreement under Everest Design
Automation 1997 Stock Option/Stock Issuance Plan.
10.3 Form of Everest Design Automation Inc. Founder's Restricted
Stock Agreement.
10.4 Form of Everest Design Automation Inc. Non-Statutory Stock
Option Agreement.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Independent Auditors' Consent.
23.3 Independent Accountants' Consent.
24.1 Power of Attorney (see page II-4).
</TABLE>

<PAGE> 1
EXHIBIT 5.1

December 14, 1997

Synopsys, Inc.
700 East Middlefield Road
Mountain View, California 94043

RE: REGISTRATION STATEMENT ON FORM S-8/S-3

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8/S-3 to be filed
by you with the Securities and Exchange Commission on December 14, 1998 (as such
may thereafter be amended or supplemented, the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 727,250 shares of your Common Stock, $0.01 par value (the "Shares"), of which
152,654 have been issued under the Everest Design Automation Inc. 1997 Stock
Option/Stock Issuance Plan (the "Plan"), 111,357 will be issued pursuant to
options granted under the Plan, 22,059 have been issued under certain Everest
Design Automation Inc. Non-Statutory Stock Option Agreements, and 441,180 have
been issued under certain Everest Design Automation Inc. Founder's Restricted
Stock Agreements. As your legal counsel, we have examined the proceedings taken,
and are familiar with the proceedings proposed to be taken, by you in
connection with the sale and issuance of the Shares.

It is our opinion that, upon completion of the proceedings being taken
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, the Shares, when issued and sold in the manner described in the
Registration Statement and in accordance with the resolutions adopted by the
Board of Directors of Synopsys, will be legally and validly issued, fully paid
and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE> 1
EXHIBIT 10.1

EVEREST DESIGN AUTOMATION INC.

1997 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE.

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1997 Stock Option/Stock Issuance Plan is intended to promote the interests
of Everest Design Automation Inc., a California corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.

Capitalized terms herein shall have the meanings assigned to such terms in the
attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into two (2) separate equity programs:

(i) the Option Grant Program under which eligible persons may,
at the discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock, and

(ii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of Common
Stock directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary).

B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

B. The Plan Administrator shall have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of,

<PAGE> 2

the Plan and any outstanding options or stock issuances thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan or any option or
stock issuance thereunder.

IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are as follows:

(i) Employees,

(ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).

B. The Plan Administrator shall have full authority to determine, (i)
with respect to the grants under the Option Grant Program, which eligible
persons are to receive the option grants, the time or times when those grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory
Option, the time or times when each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares and the maximum term for which
the option is to remain outstanding, and (ii) with respect to stock issuances
under the Stock Issuance Program, which eligible persons are to receive such
stock issuances, the time or times when those issuances are to be made, the
number of shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration to be paid by the
Participant for such shares.

C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 3,000,000
shares.

B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of

-2-
<PAGE> 3

Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants or direct
stock issuances under the Plan.

C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive. In no event shall any such
adjustments be made in connection with the conversion of one or more outstanding
shares of the Corporation's preferred stock into shares of Common Stock.

-3-
<PAGE> 4

ARTICLE TWO.

OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by
the Plan Administrator; provided, however, that each such document shall comply
with the terms specified below. Each document evidencing an Incentive Option
shall, in addition, be subject to the provisions of the Plan applicable to such
options.

A. Exercise Price.

1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:

(i) The exercise price per share shall not be less than
eighty-five percent (85%) of the Fair Market Value per share of Common Stock on
the option grant date.

(ii) If the person to whom the option is granted is a
10% Shareholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date.

2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Four
and the documents evidencing the option, be payable in cash or check made
payable to the Corporation. Should the Common Stock be registered under Section
12(g) of the 1934 Act at the time the option is exercised, then the exercise
price may also be paid as follows:

(i) in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or

(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (B) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.

<PAGE> 5

Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.

C. Effect of Termination of Service.

1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

(i) Should the Optionee cease to remain in Service for
any reason other than death, Disability or Misconduct, then the Optionee shall
have a period of at least (30) days following the date of such cessation of
Service during which to exercise each outstanding option held by such Optionee.

(ii) Should Optionee's Service terminate by reason of
Disability, then the Optionee shall have a period of at least six (6) months
following the date of such cessation of Service during which to exercise each
outstanding option held by such Optionee.

(iii) If the Optionee dies while holding an
outstanding option, then the personal representative of his or her estate or the
person or persons to whom the option is transferred pursuant to the Optionee's
will or the laws of inheritance shall have a period of at least six (6) months
following the date of the Optionee's death to exercise such option.

(iv) Under no circumstances, however, shall any such
option be exercisable after the specified expiration of the option term.

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

(vi) Should Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall terminate
immediately and cease to remain outstanding.

-5-

<PAGE> 6

2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

(i) extend the period of time for which the option is
to remain exercisable following Optionee's cessation of Service or death from
the limited period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or

(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such option is exercisable at the time
of the Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested under the option
had the Optionee continued in Service.

D. Shareholder Rights. The holder of an option shall have no shareholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.

E. Repurchase of Unvested Shares. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right. The Plan Administrator may not impose a vesting schedule upon
the option grant or any shares of Common Stock subject to that option which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant date.
However, such limitation shall not be applicable to any option grants made to
individuals who are officers of the Corporation, non-employee Board members or
independent consultants.

F. First Refusal Rights. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Plan. Such right of first refusal shall be exercisable in accordance with the
terms established by the Plan Administrator and set forth in the document
evidencing such right.

G. Limited Transferability of Options. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.

-6-

<PAGE> 7

H. Withholding. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of any options granted under the Plan shall be subject
to the satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except
as modified by the provisions of this Section II, all the provisions of the Plan
shall be applicable to Incentive Options. Options which are specifically
designated as Non-Statutory Options shall not be subject to the terms of this
Section II.

A. Eligibility. Incentive Options may only be granted to Employees.

B. Exercise Price. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

C. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

D. 10% Shareholder. If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.

III. CORPORATE TRANSACTION

A. In the event of any Corporate Transaction, each outstanding option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with such Corporate
Transaction.

B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full in the event of a Corporate Transaction, except to the
extent: (i) those repurchase rights are assigned to the successor corporation
(or parent thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.

C. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and

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<PAGE> 8

class of securities which would have been issuable to the Optionee in the
consummation of such Corporate Transaction, had the option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to (i) the number and class of securities available for issuance
under the Plan following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.

D. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that all or a portion of
the shares subject to that option will automatically vest on an accelerated
basis should the Optionee's Service terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of a Corporate Transaction in which the option is
assumed and the repurchase rights applicable to those shares do not otherwise
terminate. Any such option shall remain exercisable for the vested option shares
until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the outstanding repurchase rights with respect to any or all
shares held by the Optionee at the time of such Involuntary Termination shall
immediately terminate on an accelerated basis, and the shares subject to those
terminated rights shall accordingly vest.

E. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

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

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected option holders, the cancellation
of any or all outstanding options under the Plan and to grant in substitution
therefor new options covering the same or different number of shares of Common
Stock but with an exercise price per share based on the Fair Market Value per
share of Common Stock on the new option grant date.

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<PAGE> 9

ARTICLE THREE.

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below.

A. Purchase Price.

1. The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Shareholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.

2. Subject to the provisions of Section I of Article Four, shares
of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the Corporation (or
any Parent or Subsidiary).

B. Vesting Provisions.

1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.

2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be

<PAGE> 10

issued subject to (i) the same vesting requirements applicable to the
Participant's unvested shares of Common Stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.

3. The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further shareholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.

C. First Refusal Rights. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.

II. CORPORATE TRANSACTION

A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction. However, to the extent the successor corporation (or parent
thereof) does not accept such assignment, all outstanding repurchase rights
under the Stock Issuance Program shall terminate automatically, and the shares
of Common Stock subject to those terminated rights shall immediately vest in
full.

B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that all or a portion of those rights shall
automatically terminate on an accelerated basis, and the shares of Common Stock
subject to those terminated rights shall immediately vest, in the event the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Corporate Transaction in which those
repurchase rights are assigned to the successor corporation (or parent thereof).

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<PAGE> 11

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion, be held in escrow
by the Corporation until the Participant's interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

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<PAGE> 12

ARTICLE FOUR.

MISCELLANEOUS

I. FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option
exercise price or the purchase price for shares issued to such person under the
Plan by delivering a full-recourse, interest-bearing promissory note payable in
one or more installments and secured by the purchased shares. However, any
promissory note delivered by a consultant must be secured by collateral in
addition to the purchased shares of Common Stock. In no event shall the maximum
credit available to the Optionee or Participant exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased
shares plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

II. EFFECTIVE DATE AND TERM OF PLAN

A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's shareholders. If
such shareholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.

B. The Plan shall terminate upon the earliest of (i) the expiration of
the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options and
unvested stock issuances outstanding at that time under the Plan shall continue
to have full force and effect in accordance with the provisions of the documents
evidencing such options or issuances.

III. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or

<PAGE> 13

modification. In addition, certain amendments may require shareholder approval
pursuant to applicable laws and regulations.

B. Options may be granted under the Option Grant Program and shares may
be issued under the Stock Issuance Program which are in each instance in excess
of the number of shares of Common Stock then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be
held in escrow until there is obtained shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such shareholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.

IV. USE OF PROCEEDS

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

V. WITHHOLDING

The Corporation's obligation to deliver shares of Common Stock upon the exercise
of any options or upon the issuance or vesting of any shares issued under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.

VI. REGULATORY APPROVALS

The implementation of the Plan, the granting of any options under the Plan and
the issuance of any shares of Common Stock (i) upon the exercise of any option
or (ii) under the Stock Issuance Program shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it and the shares
of Common Stock issued pursuant to it.

VII. NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's Service at any time for any reason, with or without cause.

VIII. FINANCIAL REPORTS

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<PAGE> 14

The Corporation shall deliver a balance sheet and an income statement at least
annually to each individual holding an outstanding option under the Plan, unless
such individual is a key Employee whose duties in connection with the
Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.

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<PAGE> 15

APPENDIX

The following definitions shall be in effect under the Plan:

A. BOARD shall mean the Corporation's Board of Directors.

B. CODE shall mean the Internal Revenue Code of 1986, as amended.

C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or

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

F. CORPORATION shall mean Everest Design Automation Inc., a California
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Everest Design Automation Inc. which shall by
appropriate action adopt the Plan.

G. DISABILITY shall mean the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.

H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

I. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.

J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

A-1
<PAGE> 16

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.

(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate.

K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

L. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:

(1) such individual's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or

(2) such individual's voluntary resignation following
(A) a change in Optionee's position with the Corporation (or
Parent or Subsidiary employing Optionee) which materially
reduces his or her level of responsibility, (B) a reduction in
his or her level of compensation (including base salary, fringe
benefits and target bonus under in any corporate-performance
based bonus or incentive programs) by more than fifteen percent
(15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the
Corporation without Optionee's consent.

M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the

A-2

<PAGE> 17

Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

O. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

P. OPTION GRANT PROGRAM shall mean the option grant program in effect
under the Plan.

Q. OPTIONEE shall mean any person to whom an option is granted under the
Plan.

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

S. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

T. PLAN shall mean the Corporation's 1997 Stock Option/Stock Issuance
Plan, as set forth in this document.

U. PLAN ADMINISTRATOR shall mean either the Board or the Committee
acting in its capacity as administrator of the Plan.

V. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.

W. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

X. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

Y. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.

A-3
<PAGE> 18

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

AA. 10% SHAREHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

A-4

<PAGE> 1
EXHIBIT 10.2

EVEREST DESIGN AUTOMATION INC.

STOCK OPTION AGREEMENT

RECITALS

I. The Board has adopted the Plan for the purpose of retaining the services of
selected Employees, non-employee members of the Board or the board of directors
of any Parent or Subsidiary and consultants and other independent advisors in
the service of the Corporation (or any Parent or Subsidiary).

A. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.

B. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.

2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. During Optionee's lifetime, this
option shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death.

4. DATES OF EXERCISE. This option shall become exercisable for
the Option Shares in one or more installments as specified in the Grant Notice.
As the option becomes exercisable for such installments, those installments
shall accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

5. CESSATION OF SERVICE. The option term specified in Paragraph
2 shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

(a) Should Optionee cease to remain in Service for any
reason (other than death, Disability or Misconduct) while this option is
outstanding, then Optionee shall have a period

<PAGE> 2

of forty-five (45) days (commencing with the date of such cessation of Service)
during which to exercise this option, but in no event shall this option be
exercisable at any time after the Expiration Date.

(b) Should Optionee die while this option is
outstanding, then the personal representative of Optionee's estate or the person
or persons to whom the option is transferred pursuant to Optionee's will or in
accordance with the laws of inheritance shall have the right to exercise this
option. Such right shall lapse, and this option shall cease to be outstanding,
upon the earlier of (i) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (ii) the Expiration Date.

(c) Should Optionee cease Service by reason of
Disability while this option is outstanding, then Optionee shall have a period
of six (6) months (commencing with the date of such cessation of Service) during
which to exercise this option. In no event shall this option be exercisable at
any time after the Expiration Date.

Note: Exercise of this option on a date later than three (3)
months following cessation of Service due to Disability will
result in loss of favorable Incentive Option treatment, unless
such Disability constitutes Permanent Disability. In the event
that Incentive Option treatment is not available, this option
will be taxed as a Non-Statutory Option upon exercise.

(d) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more than
the number of Option Shares in which Optionee is, at the time of Optionee's
cessation of Service, vested pursuant to the Vesting Schedule specified in the
Grant Notice. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not been
exercised. To the extent Optionee is not vested in the Option Shares at the time
of Optionee's cessation of Service, this option shall immediately terminate and
cease to be outstanding with respect to those shares.

(e) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and cease to remain
outstanding.

6. SPECIAL TERMINATION OF OPTION.

(a) In the event of a Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or parent thereof in connection with such Corporate
Transaction.

(b) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to

<PAGE> 3

such Corporate Transaction, and appropriate adjustments shall also be made to
the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(c) This option may also become exercisable upon an
accelerated basis in accordance with the terms and conditions of any special
addendum attached to this Agreement.

(d) This Agreement shall not in any way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

8. SHAREHOLDER RIGHTS. The holder of this option shall not have
any shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

9. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:

(i) Execute and deliver to the Corporation a
Purchase Agreement for the Option Shares for which the option is
exercised.

(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:

(A) cash or check made payable to the
Corporation; or

(B) a promissory note payable to the
Corporation, but only to the extent authorized by the Plan Administrator
in accordance with Paragraph 14.

Should the Common Stock be registered under Section 12(g) of the
1934 Act at the time the option is exercised, then the Exercise Price
may also be paid as follows:

(C) in shares of Common Stock held by
Optionee (or any other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or

3
<PAGE> 4

(D) to the extent the option is
exercised for vested Option Shares, through a special sale and
remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate Exercise Price payable for the purchased
shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of
such exercise and (b) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.

Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise
Price must accompany the Purchase Agreement delivered to the Corporation
in connection with the option exercise.

(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.

(iv) Execute and deliver to the Corporation such
written representations as may be requested by the Corporation in order
for it to comply with the applicable requirements of Federal and state
securities laws.

(v) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state and local income and
employment tax withholding requirements applicable to the option
exercise.

(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.

10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF
THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.

11. COMPLIANCE WITH LAWS AND REGULATIONS.

(a) The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the

<PAGE> 5

Nasdaq National Market, if applicable) on which the Common Stock may be listed
for trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain approval
from any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.

12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.

13. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

14. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse,
interest-bearing promissory note secured by those Option Shares. The payment
schedule in effect for any such promissory note shall be established by the Plan
Administrator in its sole discretion.

15. CONSTRUCTION. This Agreement and the option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.

16. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.

17. SHAREHOLDER APPROVAL. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the shareholders, then
this option shall be void with respect to such excess shares, unless shareholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

5
<PAGE> 6

18. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the
event this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:

(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is exercised
for one or more Option Shares: (i) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability.

(b) This option shall not become exercisable in the
calendar year in which granted if (and to the extent) the aggregate Fair Market
Value (determined at the Grant Date) of the Common Stock for which this option
would otherwise first become exercisable in such calendar year would, when added
to the aggregate value (determined as of the respective date or dates of grant)
of the Common Stock and any other securities for which one or more other
Incentive Options granted to Optionee prior to the Grant Date (whether under the
Plan or any other option plan of the Corporation or any Parent or Subsidiary)
first become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. To the extent the exercisability
of this option is deferred by reason of the foregoing limitation, the deferred
portion shall become exercisable in the first calendar year or years thereafter
in which the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph
18(b) would not be contravened, but such deferral shall in all events end
immediately prior to the effective date of a Corporate Transaction in which this
option is not to be assumed, whereupon the option shall become immediately
exercisable as a Non-Statutory Option for the deferred portion of the Option
Shares.

(c) Should Optionee hold, in addition to this option,
one or more other options to purchase Common Stock which become exercisable for
the first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.

6
<PAGE> 7

APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or

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

G. DISABILITY shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

I. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.

J. EXERCISE PRICE shall mean the exercise price payable per Option Share
as specified in the Grant Notice.

A-1

<PAGE> 8

K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.

L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.

M. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.

N. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

P. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).

A-2

<PAGE> 9

Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

S. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option.

T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

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

V. PLAN shall mean the Corporation's 1997 Stock Option/Stock Issuance
Plan.

W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.

X. PURCHASE AGREEMENT shall mean the stock purchase agreement in
substantially the form of Exhibit B to the Grant Notice.

Y. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.

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

BB. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

A-3

<PAGE> 1
EXHIBIT 10.3

EVEREST DESIGN AUTOMATION INC.

FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENT

<PAGE> 2

TABLE OF CONTENTS

PAGE
----

<S> <C>
I. PURCHASE OF SHARES.......................................................................1

1.1 Purchase and Payment..............................................................1
1.2 Delivery of Certificates..........................................................1
1.3 Shareholder Rights................................................................1

II. SECURITIES LAW COMPLIANCE................................................................1

2.1 Exemption from Registration.......................................................1
2.2 Purchaser's Representations and Warranties........................................1
2.3 Disposition of Shares.............................................................3
2.4 Restrictive Legends...............................................................4
2.5 CALIFORNIA SECURITIES LAWS........................................................4

III. SPECIAL TAX ELECTION.....................................................................4

3.1 Section 83(b) Election............................................................4
3.2 Section 83(b) Election Acknowledgement............................................5
3.3 Valuation of Common Stock.........................................................5

IV. TRANSFER RESTRICTIONS....................................................................5

4.1 Definition of Owner...............................................................5
4.2 Restriction on Transfer...........................................................6
4.3 Transferee Obligations............................................................6
4.4 Market Stand-Off Provisions.......................................................6

V. REPURCHASE RIGHT.........................................................................7

5.1 Grant.............................................................................7
5.2 Exercise of the Repurchase Right..................................................7
5.3 Termination of the Repurchase Right/Vesting.......................................7
5.4 Fractional Shares.................................................................7
5.5 Additional Shares or Substituted Securities.......................................8
5.6 Corporate Transaction.............................................................8
5.7 Death/Disability..................................................................9
5.8 Assignment........................................................................9

VI. RIGHT OF FIRST REFUSAL..................................................................10

6.1 Grant............................................................................10
6.2 Notice of Intended Disposition...................................................10
6.3 Exercise of Right................................................................10
6.4 Non-Exercise of Right............................................................10
6.5 Partial Exercise of Right........................................................11
6.6 Recapitalization/Corporate Transaction...........................................11
6.7 Lapse............................................................................11

i
</TABLE>
<PAGE> 3

TABLE OF CONTENTS
(CONTINUED)
PAGE
----

<S> <C>
VII. ESCROW FOR UNVESTED SHARES..............................................................12

7.1 Deposit..........................................................................12
7.2 Recapitalization.................................................................12
7.3 Release/Surrender................................................................12

VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION.................................................13

8.1 Grant............................................................................13
8.2 Notice of Decree or Agreement....................................................13
8.3 Exercise of Special Purchase Right...............................................13
8.4 Lapse............................................................................14

IX. GENERAL PROVISIONS......................................................................14

9.1 Assignment.......................................................................14
9.2 Definitions......................................................................14
9.3 No Waiver........................................................................15
9.4 Notices..........................................................................15
9.5 Cancellation of Shares...........................................................15

X. MISCELLANEOUS PROVISIONS................................................................16

10.1 Purchaser Undertaking............................................................16
10.2 Agreement is Entire Contract.....................................................16
10.3 Governing Law....................................................................16
10.4 Counterparts.....................................................................16
10.5 Successors and Assigns...........................................................16
10.6 Power of Attorney................................................................16
10.7 Severability.....................................................................17
10.8 No Construction as Employment Agreement..........................................17
10.9 Conflict Waiver..................................................................17

ii
</TABLE>

<PAGE> 4

EVEREST DESIGN AUTOMATION INC.

FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENT

THIS FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENT is made as of this
____ day of _____, _____, by and between Everest Design Automation Inc., a
California corporation (the "Company") and _____________ (the "Purchaser").

I. PURCHASE OF SHARES

1.1 PURCHASE AND PAYMENT. Subject to the terms hereof, Purchaser hereby
purchases, and the Company hereby sells to Purchaser, _____________________
shares of the Company's Common Stock (the "Shares") at the purchase price of
___________ per share (the "Purchase Price"). Concurrently with the delivery of
this Agreement to the Company, Purchaser shall pay the aggregate Purchase Price
for the Shares and shall deliver a duly-executed blank Assignment Separate from
Certificate (in the form attached hereto as Exhibit C) with respect to the
Shares.

1.2 DELIVERY OF CERTIFICATES. A copy of a certificate representing the
Shares purchased hereunder shall be delivered to Purchaser upon the execution of
this Agreement, provided, however, that all Unvested Shares (as such term is
defined herein) shall be represented by the original certificate held in escrow
by the Secretary of the Company as provided in Article VII of this Agreement.

1.3 SHAREHOLDER RIGHTS. Until such time as the Company actually
exercises its Repurchase Right, First Refusal Right or Special Purchase Right
under this Agreement, Purchaser or any successor in interest shall have all the
rights of a shareholder (including voting and dividend rights) with respect to
the Shares including the Shares held in escrow under Article VII subject,
however, to the transfer restrictions of Article ______.

II. SECURITIES LAW COMPLIANCE

2.1 EXEMPTION FROM REGISTRATION. The Shares have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are
accordingly being issued to Purchaser in reliance upon the exemption from such
registration provided by Rule 701 of the Securities and Exchange Commission
("SEC") for stock issuances under compensatory benefit plans such as the
compensation agreement of even date herewith.

2.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
confirms:

(a) Purchase for Own Account for Investment. Purchaser is
purchasing the Shares for Purchaser's own account for investment
purposes only and not with a view to, or for sale in connection with, a
distribution of the Shares within the meaning of the 1933 Act. Purchaser
has no present intention of selling or otherwise disposing of all or any
portion of the Shares.

-1-

<PAGE> 5

(b) Access to Information. Purchaser has had access to all
information regarding the Company and its present and prospective
business, assets, liabilities and financial condition that Purchaser
reasonably considers important in making the decision to purchase the
Shares.

(c) Understanding of Risks. Purchaser is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares
and the restrictions on transferability of the Shares (e.g., that
Purchaser may not be able to sell or dispose of the Shares or use them
as collateral for loans); (iv) the qualifications and backgrounds of the
management of the Company; and (v) the tax consequences of investment in
the Shares.

(d) Purchaser's Qualifications. Purchaser has a preexisting
personal or business relationship with the Company and/or certain of its
officers and/or directors of a nature and duration sufficient to make
Purchaser aware of the character, business acumen and general business
and financial circumstances of the Company and/or such officers and
directors. By reason of Purchaser's business or financial experience,
Purchaser is capable of evaluating the merits and risks of this
investment, has the ability to protect Purchaser's own interests in this
transaction and is financially capable of bearing a total loss of this
investment.

(e) No General Solicitation. At no time was Purchaser presented
with or solicited by any publicly issued or circulated newspaper, mail,
radio, television or other form of general advertising or solicitation
in connection with the offer, sale and purchase of the Shares.

(f) Compliance with Securities Laws. Purchaser understands and
acknowledges that, in reliance upon the representations and warranties
made by Purchaser herein, the Shares are not being registered with the
SEC under the 1933 Act or being qualified under the California Corporate
Securities Law of 1968, as amended (the "Law"), but instead are being
issued under an exemption or exemptions from the registration and
qualification requirements of the 1933 Act and the Law which impose
certain restrictions on Purchaser's ability to transfer the Shares.

(g) Restrictions on Transfer. Purchaser understands that
Purchaser may not transfer any Shares unless such Shares are registered
under the 1933 Act or qualified under the Law or unless, in the opinion
of counsel to the Company, exemptions from such registration and
qualification requirements are available. Purchaser understands that
only the Company may file a registration or qualification statement with
the SEC or the California Commissioner of Corporations and that the
Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to
transfer all or any of the Shares in the amounts or at the times
proposed by Purchaser.

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<PAGE> 6

(h) Rule 144. In addition, Purchaser has been advised that SEC
Rule 144 promulgated under the 1933 Act, which permits certain limited
sales of unregistered securities, is not presently available with
respect to the Shares and, in any event, requires that the Shares be
held for a minimum of one year, and in certain cases two years, after
they have been purchased and paid for (within the meaning of Rule 144),
before they may be resold under Rule 144. Purchaser understands that
Rule 144 may indefinitely restrict transfer of the Shares so long as
Purchaser remains an "affiliate" of the Company and "current public
information" about the Company (as defined in Rule 144) is not publicly
available.

(i) Rule 701. The Shares will become freely tradeable by
non-affiliates under SEC Rule 701 promulgated under the 1933 Act,
subject to limited conditions regarding the method of sale, 90 days
after the first sale of common stock of the Company to the general
public pursuant to a registration statement filed with and declared
effective by the SEC, subject to the lengthier market standoff agreement
contained in this Agreement or any other agreement entered into by
Purchaser, provided, however, that affiliates must comply with the
provisions (other than the holding period requirements) of Rule 144.

2.3 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser shall
make no disposition of the Shares unless and until there is compliance with all
of the following requirements:

(a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions
of the proposed disposition.

(b) Purchaser shall have complied with all requirements of this
Agreement applicable to the disposition of the Shares.

(c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that (i)
the proposed disposition does not require registration of the Shares
under the 1933 Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or for
compliance with an exemption from registration available under the 1933
Act (including Rule 144) has been taken.

(d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any
transfer restrictions applicable to the Shares pursuant to the
provisions of Article IV.

The Company shall not be required (i) to transfer on its books
any Shares which have been sold or transferred in violation of the provisions of
this Article _____ or (ii) to treat as the owner of the Shares, or otherwise to
accord voting or dividend rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.

-3-
<PAGE> 7

2.4 RESTRICTIVE LEGENDS. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares may be endorsed
with restrictive legends, including one or more of the following legends:

(a) "The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The shares may
not be sold or offered for sale in the absence of (1) an effective
registration statement for the shares under such Act, (2) a `no action'
letter of the Securities and Exchange Commission with respect to such
sale or offer, or (3) satisfactory assurances to the Company that
registration under such Act is not required with respect to such sale or
offer."

(b) "The shares represented by this certificate may not be sold,
assigned, transferred, encumbered, or in any manner disposed of except
in conformity with the terms of a written agreement between the Company
and the registered holder of the shares and spouse, if applicable (or
the predecessor in interest to the shares). Such agreement grants
certain repurchase rights, rights of first refusal and/or special
purchase rights to the Company (or its assignees) upon the sale,
assignment, transfer, encumbrance or other disposition of the Company's
shares or upon termination of service with the Company. The Company will
upon written request furnish a copy of such agreement to the holder
hereof without charge."

(c) If required by the authorities of any state in connection
with the issuance of the Shares, the legend or legends required by such
state authorities shall also be endorsed on all such certificates.

(d) Any other legend or legends required under any agreement
entered into by the Company, the Purchaser and third parties relating to
the issuance and sale of Preferred Stock of the Company.

2.5 CALIFORNIA SECURITIES LAWS. "THE SALE OF THE SHARES HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND
THE ISSUANCE OF SUCH SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE
OF SUCH SHARES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UNLESS THE SALE IS SO EXEMPT.

III. SPECIAL TAX ELECTION

3.1 SECTION 83(b) ELECTION. Purchaser understands that under Section 83
of the Internal Revenue Code of 1986, as amended (the "Code"), the excess of the
fair market value of the Shares on the date any forfeiture restrictions
applicable to the Shares lapse over the Purchase Price paid for the Shares will
be reportable as ordinary income at that time. For this purpose, the term
"forfeiture restrictions" includes the right of the Company to repurchase a
portion of the Shares pursuant to the

-4-
<PAGE> 8

Repurchase Right provided under Article ______ of this Agreement. Purchaser
understands, however, that Purchaser may elect to be taxed at the time such
Shares are acquired hereunder, rather than when and as such Shares cease to be
subject to such forfeiture restrictions, by filing an election under Section
83(b) of the Code with the Internal Revenue Service WITHIN THIRTY (30) DAYS
AFTER THE DATE OF THIS AGREEMENT. Even if the fair market value of the Shares at
the date of this Agreement equals the Purchase Price paid (and thus no tax is
payable), the election must be made to avoid adverse tax consequences in the
future. The form for making this election is attached as Exhibit A hereto.
Purchaser understands that failure to make this filing within the thirty (30)
day period will result in the recognition of ordinary income by Purchaser as the
forfeiture restrictions lapse.

3.2 SECTION 83(b) ELECTION ACKNOWLEDGEMENT. PURCHASER ACKNOWLEDGES THAT
IT IS PURCHASER'S SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY
ELECTION UNDER SECTION 83(B), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS BEHALF.

3.3 VALUATION OF COMMON STOCK. Purchaser understands that the Shares
have been valued by the Board of Directors and that the Company believes this
valuation represents a fair attempt at reaching an accurate appraisal of their
worth; Purchaser understands, however, that the Company can give no assurances
that such price is in fact the fair market value of the Shares and that it is
possible that, with the benefit of hindsight, the Internal Revenue Service would
successfully assert that the value of the Shares on the date of purchase is
substantially greater than so determined.

If the Internal Revenue Service were to succeed in a tax
determination that the Shares received had value greater than that upon which
the transaction was based, the additional value would constitute ordinary income
as of the date of its receipt. The additional taxes (and interest) due would be
payable by Purchaser, and there is no provision for the Company to reimburse
Purchaser for that tax liability, and Purchaser assumes all responsibility for
such potential tax liability. In the event that such additional value would
represent more than twenty-five (25) percent of Purchaser's gross income for the
year in which the value of the Shares was taxable, the Internal Revenue Service
would have six years from the due date for filing the return (or the actual
filing date of the return if filed thereafter) within which to assess Purchaser
the additional tax and interest which would then be due.

The Company would have the benefit, in any such transaction, if a
determination was made prior to the three year statute of limitations period
affecting the Company, of an increase in its deduction for compensation paid,
which would offset its operating profits, or, if not profitable, would create
net operating loss carry forward arising from operations in that year.

IV. TRANSFER RESTRICTIONS

4.1 DEFINITION OF OWNER. For purposes of Articles ______, VI, VIII, IX and X,
the term "Owner" shall include Purchaser and all subsequent holders of the
Shares.

-5-
<PAGE> 9
4.2 RESTRICTION ON TRANSFER. Owner shall not transfer, assign, encumber
or otherwise dispose of any of the Shares which are subject to the Company's
Repurchase Right under Article ______ below. In addition, shares which are
released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise made the subject of disposition in contravention of the
Company's First Refusal Right under Article VI. Such restrictions on transfer,
however, shall not be applicable to: (i) any gratuitous transfer of the Shares
to any spouse or member of Founder's immediate family (including adopted
children), or to a custodian, trustee (including a trustee of a voting trust),
executor or other fiduciary for the account of his spouse or members of his
immediate family, or to a trust for himself, or a charitable remainder trust,
provided and only if Owner obtains the Company's prior written consent to such
transfer; (ii) a transfer of title to the Shares effected pursuant to Owner's
will or the laws of intestate succession; (iii) a transfer to the Company in
pledge as security for any purchase-money indebtedness incurred by Owner in
connection with the acquisition of the Shares; or (iv) up to fifteen percent
(15%) of the Shares, provided that, in each case, each such transferee or
assignee, prior to the completion of the sale, transfer or assignment shall have
executed documents assuming the obligations of the Founder under this Agreement
with respect to the transferred securities.

4.3 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to whom
the Shares are transferred by means of one of the permitted transfers specified
in paragraph 4.2 must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Company that such person is bound by the
provisions of this Agreement and that the transferred shares are subject to (i)
the Company's Repurchase Right, the Company's First Refusal Right and the
Company's Special Purchase Right granted under this Agreement and (ii) the
market stand-off provisions of paragraph ______, to the same extent such Shares
would be so subject if retained by Owner.

4.4 MARKET STAND-OFF PROVISIONS.

(a) In connection with the first underwritten public offering by
the Company of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, Owner shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for
the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to,
any Shares without the prior written consent of the Company and its
underwriters. Such limitations shall be in effect for such period of
time from and after the effective date of such registration statement as
may be requested by the Company or its underwriters; provided, however,
that in no event shall such period exceed one hundred-eighty (180) days.

(b) In the event of any stock dividend, stock split,
recapitalization or other change affecting the Company's outstanding
Common Stock effected without receipt of consideration, then any new,
substituted or additional securities distributed with respect to the
Shares shall be immediately subject to the provisions of this paragraph
______, to the same extent the Shares are at such time covered by such
provisions.

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<PAGE> 10

(c) In order to enforce the limitations of this paragraph
______, the Company may impose stop-transfer instructions with respect
to the Shares until the end of the applicable stand-off period.

V. REPURCHASE RIGHT

5.1 GRANT. The Company is hereby granted the right (the "Repurchase
Right"), exercisable at any time during the sixty (60)-day period following the
date Purchaser for any reason ceases to be a Service Provider (as such term is
defined below) to the Company, to repurchase at the Purchase Price all or (at
the discretion of the Company) any portion of the Shares in which Purchaser has
not acquired a vested interest in accordance with the vesting provisions of
paragraph ______ hereof and Exhibit B hereto (such shares to be hereinafter
called the "Unvested Shares"). For purposes of this Agreement, Purchaser shall
be deemed to be a "Service Provider" to the Company for so long as Purchaser
performs services on at least a periodic basis for the Company in the capacity
as an employee of, or an independent consultant or advisor to, the Company or
any parent, subsidiary or affiliate of the Company pursuant to an agreement.

5.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to Purchaser prior to the expiration of
the applicable sixty (60)-day period specified in paragraph ______ hereof. The
notice shall indicate the number of Unvested Shares to be repurchased and the
date on which the repurchase is to be effected, such date to be not more than
thirty (30) days after the date of notice. The Company shall, concurrently with
the receipt of the stock certificates from escrow in accordance with paragraph
______ hereof, pay to Purchaser in cash or cash equivalents an amount equal to
the purchase price originally paid by Purchaser for the Unvested Shares which
are to be repurchased by the Company.

5.3 TERMINATION OF THE REPURCHASE RIGHT/VESTING. The Repurchase Right
shall terminate and Purchaser's interest shall vest with respect to any Unvested
Shares for which the Company has not timely exercised its Repurchase Right
pursuant to paragraph ______ of this Agreement. The Repurchase Right shall lapse
and cease to be exercisable, and Purchaser's interest shall vest, with respect
to any and all Shares in accordance with the schedule set forth on Exhibit B
attached hereto, or as otherwise set forth in Sections 5.6 and 5.7 below.
Accordingly, subject to the terms of this Agreement, as, and provided that the
Purchaser continues as a Service Provider, the Purchaser shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to, the Shares in
accordance with the schedule as set forth in Exhibit B or as otherwise set forth
in Sections 5.6 and 5.7 below. All Shares as to which the Repurchase Right
lapses shall, however, continue to be subject to: (1) the First Refusal Right of
Article VI, (2) the market stand-off provisions of paragraph 4.4. and (3) the
Special Purchase Right of Article VIII. The vesting provisions of this paragraph
5.3 (together with Exhibit B) shall be subject to the provisions of paragraph
5.6 of this Agreement.

5.4 FRACTIONAL SHARES. No fractional shares shall be repurchased by the
Company. Accordingly, should the Repurchase Right extend to a fractional share
(in accordance with the vesting computation provisions of paragraph ______
hereof) at the time Purchaser ceases to be a

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<PAGE> 11

Service Provider, then such fractional share shall be added to any fractional
share in which Purchaser is at such time vested in order to make one whole
vested share no longer subject to the Repurchase Right.

5.5 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of any
stock dividend, stock split, recapitalization, or other change affecting the
Company's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted, or additional securities or other
property which is by reason of any such transaction distributed with respect to
the Shares shall be immediately subject to the Repurchase Right, but only to the
extent the Shares are at the time covered by such right. Appropriate adjustments
to reflect the distribution of such securities or property shall be made to the
number of Shares hereunder and to the price per share to be paid upon the
exercise of the Repurchase Right in order to reflect the effect of any such
transaction upon the Company's capital structure; provided, however, that the
aggregate repurchase price shall remain the same.

5.6 CORPORATE TRANSACTION. In the event of any of the following
transactions (a "Corporate Transaction"):

(a) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Company is incorporated; or

(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or

(c) any merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred in a single transaction or a series of related
transactions to holders different from those who held the stock of the
Company immediately prior to such merger,

and Purchaser either (i) is not offered full-time employment with the Company or
its successor immediately following the Corporate Transaction or (ii) is offered
full-time employment with the Company or its successor at the Corporate
Transaction date, but is subsequently Terminated Without Cause (as defined
below) by the Company or its successor after the consummation date of the
Corporate Transaction, then the Company's Repurchase Right shall automatically
lapse as to the lesser of the remaining Unvested Shares as of Purchaser's
termination date or 25% of the Shares (i.e., 375,000 additional Shares or such
lesser number as remains Unvested, in either case together with the Shares that
have already vested), and Purchaser shall also acquire a vested interest in such
375,000 additional Shares (or such lesser number as remains Unvested). Under no
circumstances shall Purchaser acquire a vested interest in shares of the
Company's Common Stock in excess of the Shares (as adjusted for stock splits,
stock dividends and the like). "Termination Without Cause" shall mean, without
Purchaser's express written consent: (i) the hiring or any executive officer in
replacement of Purchaser; (ii) a reassignment that materially adversely affects
Purchaser's position with the Company (or any successor), responsibilities,
duties or status as in effect immediately prior

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<PAGE> 12

to such reassignment; (iii) a reduction by the Company (or its successor) in the
compensation and benefits of the Purchaser as in effect immediately prior to
such reduction unless such reduction is authorized by the Board of Directors and
is proportionate to the reduction made to the compensation and benefits of all
employees of the Company (or its successor) with positions, responsibilities,
duties and status comparable to Purchaser's; or (iv) the relocation of Purchaser
to a facility or a location more than 40 miles from Purchaser's then principal
place of employment.

5.7 DEATH/DISABILITY.

(a) Should Purchaser die during the term that any of the Shares
remain subject to the Company's Repurchase Right, then at the time of
death, the Company's Repurchase Right shall lapse with respect to, and
Purchaser shall acquire a vested interest in, the lesser of the
remaining Unvested Shares as of the date of death or an additional
375,000 shares, over and above any portion of the Shares which have
already vested. Under no circumstances shall Purchaser acquire a vested
interest in shares of the Company's Common Stock in excess of the Shares
(as adjusted for stock splits, stock dividends and the like). The
personal representative of Purchaser's estate or the person or persons
to whom such vested Shares shall be transferred pursuant to Purchaser's
will or in accordance with the law of descent and distribution shall
have the right to receive all such vested Shares, including those vested
on the basis of Purchaser's service to the Company and those vested on
the basis of acceleration.

(b) Should Purchaser become permanently disabled and cease by
reason thereof to be a Service Provider at any time during the term that
any of the Shares remain subject to the Company's Repurchase Right, then
at the time of disability, the Company's Repurchase Right shall lapse
with respect to, and Purchaser shall acquire a vested interest in, the
lesser or the remaining Unvested Shares as of the date of disability or
an additional 375,000 Shares, over and above any portion of the Shares
which have already vested. Under no circumstances shall Purchaser
acquire a vested interest in shares of the Company's Common Stock in
excess of the Shares (as adjusted for stock splits, stock dividends and
the like). Purchaser shall be deemed to be permanently disabled if
Purchaser is, by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration
of not fewer than twelve (12) consecutive months, unable to perform his
usual duties for the Company or the parent or subsidiary corporation
retaining his services.

5.8 ASSIGNMENT. The Company may assign its Repurchase Right under this
Article ______ to any person or entity selected by the Company's Board of
Directors, including (without limitation) one or more shareholders of the
Company, provided that the Repurchase Right shall not extend beyond the sixty
(60)-day period described in paragraph ______ hereof. In the event that the
Company and such assignees do not elect to exercise the Repurchase Right as to
all of the Unvested Shares subject thereto, the Repurchase Right shall expire as
to all shares which the Company and such assignees have not elected to purchase.

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<PAGE> 13

VI. RIGHT OF FIRST REFUSAL

6.1 GRANT. The Company is hereby granted the right of first refusal (the
"First Refusal Right"), exercisable in connection with any proposed transfer of
the Shares. For purposes of this Article VI, the term "transfer" shall include
any sale, assignment, pledge, encumbrance or other disposition for value of the
Shares intended to be made by the Owner, but shall not include any of the
permitted transfers under paragraph 4.2.

6.2 NOTICE OF INTENDED DISPOSITION. In the event the Owner desires to
accept a bona fide third-party offer for any or all of the Shares (the shares
subject to such offer to be hereinafter called the "Target Shares"), Owner shall
promptly (i) deliver to the Corporate Secretary of the Company written notice
(the "Disposition Notice") of the terms and conditions of the offer, including
the purchase price and the identity of the third-party offeror and (ii) provide
satisfactory proof that the disposition of the Target Shares to such third-party
offeror would not be in contravention of the provisions set forth in Articles II
and IV of this Agreement.

6.3 EXERCISE OF RIGHT. The Company (or its assignees) shall, for a
period of twenty-five (25) days following receipt of the Disposition Notice,
have the right to repurchase any or all of the Target Shares specified in the
Disposition Notice upon substantially the same terms and conditions specified
therein. Such right shall be exercisable by delivery of written notice (the
"Exercise Notice") to Owner prior to the expiration of the twenty-five (25) day
exercise period. If such right is exercised with respect to all the Target
Shares specified in the Disposition Notice, then the Company (or its assignees)
shall effect the repurchase of the Target Shares, including payment of the
purchase price, not more than five (5) business days after delivery of the
Exercise Notice; and at such time Owner shall deliver to the Company the
certificates representing the Target Shares to be repurchased, each certificate
to be properly endorsed for transfer. To the extent any of the Target Shares are
vested but are, at the time, still held in escrow under Article VII, the
certificates for such shares shall automatically be released from escrow and
delivered to the Company for purchase.

6.4 NON-EXERCISE OF RIGHT. In the event the Exercise Notice is not given
to Owner within twenty-five (25) days following the date of the Company's
receipt of the Disposition Notice, Owner shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms and
conditions (including the purchase price) no more favorable to such third-party
offeror than those specified in the Disposition Notice; provided, however, that
any such sale or disposition must not be effected in contravention of the
provisions of Article II of this Agreement. To the extent any of the Target
Shares are at the time held in escrow under Article VII, the certificates for
such shares shall automatically be released from escrow and surrendered to the
Owner. The acquired shares shall remain subject to (i) the securities law
restrictions under Article II, (ii) the Company's First Refusal Right under this
Article VI, (iii) the Transfer Restrictions of Article 4, including but not
limited to the market stand-off provisions of paragraph 4.4 and (iv) the
Company's Special Purchase Right under Article VIII. In the event Owner does not
effect such sale or disposition of the Target Shares within the specified thirty
(30) day period, the Company's First Refusal Right shall continue to be

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<PAGE> 14

applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph ______.

6.5 PARTIAL EXERCISE OF RIGHT. In the event the Company (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Company
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:

(a) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of paragraph 6.4, as if the Company did
not exercise the First Refusal Right hereunder; or

(b) sale to the Company (or its assignees) of the portion of the
Target Shares which the Company (or its assignees) has elected to
purchase, such sale to be effected in substantial conformity with the
provisions of this Agreement.

Failure of Owner to deliver timely notification to the Company
under this paragraph 6.5 shall be deemed to be an election by Owner to sell the
Target Shares pursuant to alternative (a) above.

6.6 RECAPITALIZATION/CORPORATE TRANSACTION.

(a) In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Company's
outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or
other property which is by reason of such transaction distributed with
respect to the Shares shall be immediately subject to the Company's
First Refusal Right hereunder.

(b) In the event of a Corporate Transaction, the Company's First
Refusal Right shall remain in full force and effect and shall apply to
the new capital stock or other property received in exchange for the
Shares in consummation of the Corporate Transaction.

6.7 LAPSE. The First Refusal Right under this Article VI shall lapse and
cease to have effect upon the earliest to occur of (i) the first date on which
shares of the Company's Common Stock are held of record by more than five
hundred (500) persons, (ii) a determination is made by the Company's Board of
Directors that a public market exists for the outstanding shares of the
Company's Common Stock, or (iii) a firm commitment underwritten public offering
pursuant to an effective registration statement under the 1933 Act, covering the
offer and sale of the Company's Common Stock sufficient to cause an automatic
conversion of the preferred stock into Common Stock pursuant to the Company's
then existing Articles of Incorporation. However, the market stand-off
provisions of paragraph 4.4 shall continue to remain in full force and effect
following the lapse of the First Refusal Right hereunder.

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<PAGE> 15

VII. ESCROW FOR UNVESTED SHARES

7.1 DEPOSIT. Upon issuance, the certificate for the Unvested Shares
shall be deposited in escrow with the Secretary of the Company to be held in
accordance with the provisions of this Article VII. Such deposited certificate
shall be accompanied by a duly executed Assignment Separate from Certificate in
the form of Exhibit C attached hereto. The deposited certificate, together with
any other assets or securities from time to time deposited with the Company
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificate (or other assets and securities) shall be
released or otherwise surrendered for cancellation in accordance with paragraph
7.3 of this Agreement.

7.2 RECAPITALIZATION. Any cash dividends on the Shares (or other
securities at the time held in escrow) shall be paid directly to Purchaser and
shall not be held in escrow. However, in the event of any stock dividend, stock
split, recapitalization, or other change affecting the Company's outstanding
Common Stock as a class effected without receipt of consideration or in the
event of a Corporate Transaction any new, substituted, or additional securities
or other property which is by reason of such event distributed with respect to
the Shares shall be immediately delivered to the Company to be held in escrow
under this Article VII, but only to the extent the Shares are at the time
subject to the escrow requirements of paragraph 7.1.

7.3 RELEASE/SURRENDER. The Unvested Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Company for repurchase and cancellation:

(a) Should the Company (or its assignees) elect to exercise the
Repurchase Right under Article ______ with respect to any Unvested
Shares, then the escrowed certificates for such Unvested Shares
(together with any other assets or securities issued with respect
thereto) shall be delivered to the Company for cancellation,
concurrently with the payment to Purchaser, in cash or cash equivalent,
of an amount equal to the aggregate Purchase Price for such Unvested
Shares, and Purchaser shall cease to have any further rights or claims
with respect to such Unvested Shares (or other assets or securities).

(b) Should the Company (or its assignees) elect to exercise its
First Refusal Right under Article VI with respect to any vested Target
Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall, concurrently with the payment of
the paragraph 6.3 purchase price for such Target Shares to the
Purchaser, be surrendered to the Company, and the Purchaser shall cease
to have any further rights or claims with respect to such Target Shares
(or other assets or securities).

(c) Should the Company (or its assignees) elect not to exercise
its First Refusal Right under Article VI with respect to any vested
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other

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<PAGE> 16

assets or securities attributable thereto) shall be surrendered to the
Purchaser for disposition in accordance with the provisions of paragraph
6.4.

(d) As the interest of Purchaser in the Shares (or any other
assets or securities issued with respect thereto) vests in accordance
with the provisions of Article ______, the certificates for such vested
shares (as well as all other vested assets and securities) shall be
released from escrow and delivered to Purchaser upon the request of
Purchaser, but no more frequently than every six (6) months.

(e) Upon any earlier termination of the Company's Repurchase
Right in accordance with the applicable provisions of Article V, the
Shares (or other assets or securities) at the time held in escrow
hereunder shall promptly be released to the Purchaser as fully-vested
shares or other property.

(f) All Shares (or other assets or securities) released from
escrow in accordance with the provisions of subparagraphs (c), (d) and
(e) above shall nevertheless remain subject to all other restrictions
applicable thereto, including without limitation (i) the securities law
restrictions under Article II, (ii) the Company's First Refusal Right
under Article VI, (iii) the Transfer Restrictions of Article IV,
including but not limited to the market stand-off provisions of
paragraph 4.4 and (iv) the Company's Special Purchase Right under
Article VIII.

VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION

8.1 GRANT. In connection with the dissolution of the Owner's marriage or
the legal separation of the Owner and the Owner's spouse, the Company shall have
the right (the "Special Purchase Right"), exercisable at any time during the
thirty (30)-day period following the Company's receipt of the required
Dissolution Notice under paragraph 8.2, to purchase from the Owner's spouse, in
accordance with the provisions of paragraph 8.3, all or any portion of the
Shares which would otherwise be awarded to such spouse in settlement of any
community property or other marital property rights such spouse may have in such
shares.

8.2 NOTICE OF DECREE OR AGREEMENT. The Owner shall promptly provide the
Secretary of the Company with written notice (the "Dissolution Notice") of (i)
the entry of any judicial decree or order resolving the property rights of the
Owner and the Owner's spouse in connection with their marital dissolution or
legal separation or (ii) the execution of any contract or agreement relating to
the distribution or division of such property rights. The Dissolution Notice
shall be accompanied by a copy of the actual decree of dissolution or settlement
agreement between the Owner and the Owner's spouse which provides for the award
to the spouse of one or more of the Shares in settlement of any community
property or other marital property rights such spouse may have in such shares.

8.3 EXERCISE OF SPECIAL PURCHASE RIGHT. The Special Purchase Right shall
be exercisable by delivery of a Purchase Notice to the Owner and the Owner's
spouse within thirty (30)

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<PAGE> 17

days after the Company's receipt of the Dissolution Notice. The Purchase Notice
shall indicate the number of shares to be purchased by the Company, the date
such purchase is to be effected (such date to be not less than five (5) business
days, nor more than fifteen (15) business days, after the date of the Purchase
Notice), and the fair market value to be paid for such Shares. The Owner (or the
Owner's spouse, to the extent such spouse has physical possession of the Shares)
shall, prior to the close of business on the date specified for the purchase,
deliver to the Corporate Secretary of the Company the certificates representing
the shares to be purchased, and each certificate shall be properly endorsed for
transfer. To the extent any of the shares to be purchased by the Company are at
the time held in escrow under Article VII, the certificates for such shares
shall be promptly delivered out of escrow to the Company. The Company shall,
concurrently with the receipt of the stock certificates, pay to the Owner's
spouse (in cash or cash equivalents) an amount equal to the fair market value
specified for such shares in the Purchase Notice.

If the Owner's spouse does not agree with the fair market value
specified for the shares in the Purchase Notice, then the spouse shall promptly
notify the Company in writing of such disagreement and the fair market value of
such shares shall thereupon be determined by an appraiser of recognized standing
selected by the Company and the spouse. If they cannot agree on an appraiser
within twenty (20) days after the date of the Purchase Notice, each shall select
an appraiser of recognized standing, and the two appraisers shall designate a
third appraiser of recognized standing whose appraisal shall be determinative of
such value. The cost of the appraisal shall be shared equally by the Company and
the Owner's spouse. The closing shall then be held on the fifth business day
following the completion of such appraisal; provided, however, that if the
appraised value is more than twenty-five percent (25%) greater than the fair
market value specified for the shares in the Purchase Notice, the Company shall
have the right, exercisable prior to the expiration of such fifteen (15)
business-day period, to rescind the exercise of the Special Purchase Right and
thereby revoke its election to purchase the shares awarded to the spouse.

8.4 LAPSE. The Special Purchase Right under this Article VIII shall
lapse and cease to have effect upon the earlier to occur of (i) the first date
on which the First Refusal Right under Article VI lapses or (ii) the expiration
of the thirty (30)-day exercise period specified in paragraph 8.3, to the extent
the Special Purchase Right is not timely exercised in accordance with such
paragraph.

IX. GENERAL PROVISIONS

9.1 ASSIGNMENT. The Company may assign its Repurchase Right under
Article V, its First Refusal Right under Article VI and/or its Special Purchase
Right under Article VIII to any person or entity selected by the Company's Board
of Directors, including (without limitation) one or more shareholders of the
Company.

9.2 DEFINITIONS. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Company:

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<PAGE> 18

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

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

9.3 NO WAIVER. The failure of the Company (or its assignees) in any
instance to exercise the Repurchase Right granted under Article ______, or the
failure of the Company (or its assignees) in any instance to exercise the First
Refusal Right granted under Article VI, or the failure of the Company (or its
assignees) in any instance to exercise the Special Purchase Right granted under
Article VIII, shall not constitute a waiver of any other repurchase rights,
rights of first refusal and/or special purchase rights that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Company and the Owner or the Owner's spouse. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature.

9.4 NOTICES. Any notice required in connection with (i) the Repurchase
Right, Special Purchase Right or the First Refusal Right or (ii) the disposition
of any Shares covered thereby shall be given in writing and shall be deemed
effective upon personal delivery or upon deposit in the United States mail,
registered or certified, postage prepaid and addressed to the party entitled to
such notice at the address indicated below such party's signature line on this
Agreement or at such other address as such party may designate by ten (10) days
advance written notice under this paragraph 9.4 to all other parties to this
Agreement.

9.5 CANCELLATION OF SHARES. If the Company (or its assignees) shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be repurchased in accordance with
the provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Company (or its assignees) shall be deemed the owner and holder of such shares,
whether or not the certificates therefor have been delivered as required by this
Agreement.

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<PAGE> 19

X. MISCELLANEOUS PROVISIONS

10.1 PURCHASER UNDERTAKING. Purchaser hereby agrees to take whatever
additional action and execute whatever additional documents the Company may in
its judgment deem necessary or advisable in order to carry out or effect one or
more of the obligations or restrictions imposed on either Purchaser or the
Shares pursuant to the express provisions of this Agreement.

In particular, but without limitation, the Purchaser hereby agrees,
concurrently with the execution of this Agreement, to deliver two (2) duly
executed blank Assignment Separate from Certificate forms (in substantially the
form attached hereto as Exhibit C).

10.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement (and consulting
agreement attached hereto) constitutes the entire contract between the parties
hereto with regard to the subject matter hereof. Purchaser acknowledges that
this Agreement supersedes all previous understandings, written or oral, with
respect to the subject matter hereof.

10.3 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State without resort to
that State's conflict-of-laws rules.

10.4 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Company and its successors and
assigns and Owner and Owner's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law or otherwise, whether
or not any such person shall have become a party to this Agreement and have
agreed in writing to join herein and be bound by the terms and conditions
hereof.

10.6 POWER OF ATTORNEY. Purchaser's spouse hereby appoints Purchaser his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of the Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement. Purchaser's spouse further gives and grants unto Purchaser as
his or her attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with full power
of substitution and revocation, hereby ratifying and confirming all that
Purchaser shall lawfully do and cause to be done by virtue of this power of
attorney.

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10.7 SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be illegal, invalid or unenforceable, such provisions shall be limited or
eliminated to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect.

10.8 NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Purchaser any right to be retained in the
employ of the Company.

10.9 CONFLICT WAIVER. Each of the parties to this Agreement understands
that Brobeck, Phleger & Harrison LLP is serving as counsel to the Company in
connection with the purchase and sale of the Common Stock and the transactions
contemplated thereby, and that discussion of such transactions with Purchaser
and the other founders of the Company (collectively, the "Founders") could be
construed to create a conflict of interest. By executing this Agreement, the
parties hereto acknowledge the potential conflict of interest and waive the
right to claim any conflict of interest at a later date. Furthermore, by
executing this Agreement, the parties acknowledge that if a conflict of interest
exists and any litigation arises between the Founders and the Company as a
result of the purchase and sale of the Common Stock, Brobeck, Phleger & Harrison
LLP would represent the Company. The Purchaser also represents and warrants that
he has had the opportunity to seek independent counsel in his review of this and
all related Agreements.

[Remainder of Page Intentionally Blank]

-17-

<PAGE> 21

[Signature Page to Founder's Restricted Stock Purchase Agreement]

IN WITNESS WHEREOF, the parties have executed this Founder's Restricted
Stock Purchase Agreement on the day and year first indicated above.

EVEREST DESIGN AUTOMATION INC.

By:
--------------------------
Address:
------------------------------

------------------------------

Purchaser(1)

------------------------------

Address:
------------------------------

------------------------------

The undersigned spouse of Purchaser has read and hereby approves
the foregoing Founder's Restricted Stock Purchase Agreement. In consideration of
the Company's granting the Purchaser the right to acquire the Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including
(specifically) the right of the Company (or its assignees) to purchase any and
all interest or right the undersigned may otherwise have in such shares pursuant
to community property laws or other marital property rights.

Purchaser's Spouse

-----------------------------

- --------
(1) I have received, completed, executed and retained the I.R.C.
Section 83(b) election that was attached hereto as Exhibit A. I understand that
I, and not the Company, will be responsible for completing the form and filing
the election with the appropriate office of the federal and state tax
authorities and that if such filing is not completed within thirty (30) days
after the date of this Agreement, I will forfeit the significant tax benefits of
Section 83(b). I understand further that such filing should be made by
registered or certified mail, return receipt requested, and that I must retain
two (2) copies of the completed form for filing with my state and federal tax
returns the current tax year and an additional copy for my records.

<PAGE> 22

EXHIBIT A

83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:
--------------------------------------
Address:
-----------------------------------

Taxpayer Ident. No.:
-----------------------
Taxable Year:
------------------------------

(2) The property with respect to which the election is being made is
___________ shares of the Common Stock of Everest Design Automation Inc.

(3) The property was issued on _____________.

(4) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if taxpayer's service relationship with the issuer ceases. The
repurchase right lapses in installments, 25% upon the end of one (1)
year after ______________ and the remaining 75% in a series of equal
monthly installments over the three (3)-year period thereafter, until
taxpayer is fully vested. The Company's repurchase right shall lapse in
certain, predetermined portions upon the occurrence of other specified
events.

(5) The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will
never lapse) is _____________ per share.

(6) The amount paid for such property is ______________ per share.

(7) A copy of this statement was furnished to Everest Design Automation Inc.
to which taxpayer rendered the services underlying the transfer of
property.

(8) This statement is executed as of: ________________.

- --------------------------------------------------------------------------------
Taxpayer Spouse (if any)

This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within thirty (30) days after the execution date of the Restricted Stock
Purchase Agreement.

<PAGE> 23

EXHIBIT B

EVEREST DESIGN AUTOMATION INC.

VESTING SCHEDULE

The Company's Repurchase Right shall lapse and Purchaser shall acquire a
vested interest with respect to the Shares in installments as follows: the first
25% of the Shares shall vest upon the completion of one (1) full year of
continuous service to the Company, starting from _____________, and the
remaining 75% of the Shares shall vest in a series of equal monthly installments
of ___________ shares over the three (3)-year period of continuous service to
the Company thereafter, such that all of the Shares shall be fully vested in
four full (4) years from _______________. Except as otherwise provided for in
Article V of this Agreement, in no event shall any additional Shares vest after
Purchaser ceases to be a Service Provider to the Company.

<PAGE> 24

EXHIBIT C

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________________ (_______) shares of
the Common Stock of Everest Design Automation Inc. (the "Company") standing in
the undersigned's name on the books of the Company represented by Certificate
No. herewith and does hereby irrevocably constitute and appoint Attorney to
transfer such Common Stock on the books of the within named Company with full
power of substitution in the premises.

Dated:
---------------------

--------------------------------------
(Signature)

--------------------------------------
(Printed Name)

--------------------------------------
(Spouse's Signature, if applicable)

--------------------------------------
(Printed Name)

Instruction: Please do not fill in any blanks (including the date) other than
the signature line.

<PAGE> 25

EXHIBIT C

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________________________________________________ (______) shares of the
Common Stock of Everest Design Automation Inc. (the "Company") standing in the
undersigned's name on the books of the Company represented by Certificate No.
herewith and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer such Common Stock on the books of
the within named Company with full power of substitution in the premises.

Dated:
-----------------------

--------------------------------------
(Signature)

--------------------------------------
(Printed Name)

--------------------------------------
(Spouse's Signature, if applicable)

--------------------------------------
(Printed Name)

Instruction: Please do not fill in any blanks (including the date) other than
the signature line.

<PAGE> 26

COMPENSATION AGREEMENT

This Compensation Agreement dated as of the _____day of ________, ____
by and between Everest Design Automation Inc., a California corporation (the
"Company"), and ________________ (the "Employee").

WITNESSETH

Whereas, in order to induce Employee to continue in the employ of the
Company, the Company has determined and agreed to sell shares of the Company's
Common Stock pursuant to this Agreement and that certain Founders Restricted
Stock Purchase Agreement of even date herewith (the "Purchase Agreement");

NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:

1. Employee shall hereby purchase ______________ shares of the
Company's Common Stock (the "Shares") upon the terms and conditions set forth in
the Purchase Agreement.

2. The Company and Employee acknowledge and agree that the Shares
were granted as compensation for services and not for any capital-raising
purposes or in connection with any capital-raising activities.

3. This agreement is intended to constitute a written compensation
contract within the meaning of Rule 701 of the Securities Act of 1933, as
amended.

4. Nothing herein or in the Purchase Agreement is intended to impair
the right of the Company or Employee to terminate Employee's service with the
Company at any time in accordance with applicable law.

<PAGE> 27

IN WITNESS WHEREOF, the parties hereto have executed this Compensation
Agreement as of the date first above written.

EVEREST DESIGN AUTOMATION INC.

By:
--------------------------------------

Title:
-----------------------------------

Address:
----------------------------------

-----------------------------------------

EMPLOYEE

-----------------------------------------

Address:
----------------------------------

-----------------------------------------

<PAGE> 1
EXHIBIT 10.4

EVEREST DESIGN AUTOMATION INC.
STOCK PURCHASE AGREEMENT

AGREEMENT made this______ day of _______________, 199__, by
and between Everest Design Automation Inc., a California corporation, and
_________________, Optionee.

All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.

I. EXERCISE OF OPTION

1. Exercise. Optionee hereby purchases shares of Common Stock
(the "Purchased shares") pursuant to that certain option (the "Option") granted
Optionee on __________, 199_ (the "Grant Date") to purchase up to __________
shares of Common Stock (the "Option Shares") at the exercise price of $____ per
share (the "Exercise Price").

2. Payment. Concurrently with the delivery of this Agreement
to the Corporation, Optionee shall pay the Exercise Price for the Purchased
Shares in accordance with the provisions of the Option Agreement and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise, together with a duly-executed blank Assignment
Separate from Certificate (in the form attached hereto as Exhibit I)
with respect to the Purchased Shares.

3. Shareholder Rights. Until such time as the Corporation
exercises the Repurchase Right or the First Refusal Right, Optionee (or any
successor in interest) shall have all the rights of a shareholder (including
voting, dividend and liquidation rights) with respect to the Purchased Shares,
subject, however, to the transfer restrictions of Articles B and C.

A. SECURITIES LAW COMPLIANCE

1. Restricted Securities. The Purchased Shares have not been
registered under the 1933 Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for stock
issuances under compensatory benefit agreements, such as the Compensation
Agreement. Optionee hereby confirms that Optionee has been informed that the
Purchased Shares are restricted securities under the 1933 Act and may not be
resold or transferred unless the Purchased Shares are first registered under the
Federal securities laws or unless an exemption from such registration is
available. Accordingly, Optionee hereby acknowledges that Optionee is prepared
to hold the Purchased Shares for an indefinite period and that Optionee is aware
that SEC Rule 144 issued under the 1933 Act which exempts certain resales of
unrestricted securities is not presently available to exempt the resale of the
Purchased Shares from the registration requirements of the 1933 Act.

2. Representations and Warranties of Optionee. Optionee hereby
represents and warrants that:

<PAGE> 2

(i) The Purchased Shares are being acquired for
investment purposes only for the Optionee's own account, and not with a
view to the resale or distribution of all or any part of the Purchased
Shares. Optionee is prepared to hold the Purchased Shares for an
indefinite period and has no present intention of selling, granting any
participation in, or otherwise distributing any of the Purchased
Shares. Optionee does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant a participating
interest in, any of the Purchased Shares.

(ii) Optionee has been furnished with, and has had
access to, such information as he considers necessary or appropriate
for deciding whether to invest in the Purchased Shares, and Optionee
has had an opportunity to ask questions and receive answers from the
Corporation regarding the terms and conditions of the issuance of the
Purchased Shares.

(iii) Optionee is able to fend for himself in the
transactions contemplated by this Agreement, can bear the economic risk
of investment in the Purchased Shares and has such knowledge and
experience in financial or business matters to be capable of evaluating
the merits and risks of the investment in the Purchased Shares.

3. Restrictions on Disposition of Purchased Shares. Optionee
shall make no disposition of the Purchased Shares (other than a Permitted
Transfer) unless and until there is compliance with all of the following
requirements:

(i) Optionee shall have provided the Corporation with
a written summary of the terms and conditions of the proposed
disposition.

(ii) Optionee shall have complied with all
requirements of this Agreement applicable to the disposition of the
Purchased Shares.

(iii) Optionee shall have provided the Corporation
with written assurances, in form and substance satisfactory to the
Corporation, that (a) the proposed disposition does not require
registration of the Purchased Shares under the 1933 Act or (b) all
appropriate action necessary for compliance with the registration
requirements of the 1933 Act or any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.

The Corporation shall not be required (i) to transfer on its
books any Purchased Shares which have been sold or transferred in violation of
the provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.

4. Restrictive Legends. The stock certificates for the
Purchased Shares shall be endorsed with one or more of the following restrictive
legends:

"The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares may not be
sold or offered for sale in the absence of (a) an

2.
<PAGE> 3

effective registration statement for the shares under such Act, (b) a
"no action" letter of the Securities and Exchange Commission with
respect to such sale or offer or (c) satisfactory assurances to the
Corporation that registration under such Act is not required with
respect to such sale or offer."

"The shares represented by this certificate are
subject to certain repurchase rights and rights of first refusal
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in
conformity with the terms of a written agreement dated, 199 between the
Corporation and the registered holder of the shares (or the predecessor
in interest to the shares). A copy of such agreement is maintained at
the Corporation's principal corporate offices."

5. Condition of Issuance. THE SALE OF THE PURCHASED SHARES HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, AND THE ISSUANCE OF SUCH SHARES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE OF SUCH SHARES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UNLESS THE SALE IS SO EXEMPT.

B. TRANSFER RESTRICTIONS

1. Restriction on Transfer. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right. In addition,
Purchased Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise disposed of in contravention of
the First Refusal Right or the Market Stand-Off.

2. Transferee Obligations. Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of a
Permitted Transfer must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that such person is bound by
the provisions of this Agreement and that the transferred shares are subject to
(i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market
Stand-Off, to the same extent such shares would be so subject if retained by
Optionee.

3. Market Stand-Off.

(a) In connection with any underwritten public
offering by the Corporation of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Corporation's
initial public offering, Owner shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any Purchased Shares without the prior written
consent of the Corporation or its underwriters. Such restriction (the "Market
Stand-Off") shall be in effect for such period of time from and after the
effective date of the final prospectus for

3.
<PAGE> 4

the offering as may be requested by the Corporation or such underwriters. In
no event, however, shall such period exceed one hundred eighty (180) days and
the Market Stand-Off shall in all events terminate two (2) years after the
effective date of the Corporation's initial public offering.

(b) Owner shall be subject to the Market Stand-Off
provided and only if the officers and directors of the Corporation are also
subject to similar restrictions.

(c) Any new, substituted or additional securities
which are by reason of any Recapitalization or Reorganization distributed with
respect to the Purchased Shares shall be immediately subject to the Market
Stand-Off, to the same extent the Purchased Shares are at such time covered by
such provisions.

(d) In order to enforce the Market Stand-Off, the
Corporation may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.

C. REPURCHASE RIGHT

1. Grant. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date Optionee ceases for any reason to remain in Service, to
repurchase at the Exercise Price any or all of the Purchased Shares in which
Optionee is not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those shares or the
provisions of Paragraph D.6 of this Agreement (such shares to be hereinafter
referred to as the "Unvested Shares").

2. Exercise of Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Exercise Price previously paid for the
Unvested Shares which are to be repurchased from Owner.

3. Termination of Repurchase Right. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall, however, remain subject to
the First Refusal Right and the Market Stand-Off.

4. Aggregate Vesting Limitation. If the Option is exercised in
more than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number

<PAGE> 5

of Purchased Shares as to which Optionee shall be deemed to have a fully-vested
interest under this Agreement and all Prior Purchase Agreements shall not exceed
in the aggregate the number of Option Shares in which Optionee would otherwise
at the time be vested, in accordance with the Vesting Schedule, had all the
Purchased Shares (including those acquired under the Prior Purchase Agreements)
been acquired exclusively under this Agreement.

5. Recapitalization. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the Repurchase Right and
any escrow requirements hereunder, but only to the extent the Purchased Shares
are at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of Purchased Shares subject to this Agreement and to the price per share
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the same.

6. Corporate Transaction.

(a) Upon the occurrence of a Corporate Transaction,
to the extent outstanding, the Repurchase Right shall be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction. However, to the extent the successor corporation (or parent
thereof) does not accept such assignment, the Repurchase Right shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full.

(b) To the extent the Repurchase Right remains in
effect following a Corporate Transaction, such right shall apply to any new
securities or other property (including any cash payments) received in exchange
for the Purchased Shares in consummation of the Corporate Transaction, but only
to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Corporate
Transaction upon the Corporation's capital structure; provided, however, that
the aggregate purchase price shall remain the same. The new securities or other
property (including any cash payments) issued or distributed with respect to the
Purchased Shares in consummation of the Corporate Transaction shall be
immediately deposited in escrow with the Corporation (or the successor entity)
and shall not be released from escrow until Optionee vests in such securities or
other property in accordance with the same Vesting Schedule in effect for the
Purchased Shares.

(c) The Repurchase Right may also be subject to
termination in whole or in part on an accelerated basis, and the Purchased
Shares subject to immediate vesting, in accordance with any special Addendum
attached to this Agreement.

D. RIGHT OF FIRST REFUSAL

1. Grant. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which

<PAGE> 6

Optionee has vested in accordance with the provisions of the Vesting Schedule.
For purposes of this Article E, the term "transfer" shall include any sale,
assignment, pledge, encumbrance or other disposition of the Purchased Shares
intended to be made by Owner, but shall not include any Permitted Transfer.

2. Notice of Intended Disposition. In the event any Owner of
Purchased Shares in which Optionee has vested desires to accept a bona fide
third-party offer for the transfer of any or all of such shares (the Purchased
Shares subject to such offer to be hereinafter referred to as the "Target
Shares"), Owner shall promptly (i) deliver to the Corporation written notice
(the "Disposition Notice") of the terms of the offer, including the purchase
price and the identity of the third-party offeror, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party offeror
would not be in contravention of the provisions set forth in Articles B and C.

3. Exercise of the First Refusal Right. The Corporation shall,
for a period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares subject to
the Disposition Notice upon the same terms as those specified therein or upon
such other terms (not materially different from those specified in the
Disposition Notice) to which Owner consents. Such right shall be exercisable by
delivery of written notice (the "Exercise Notice") to Owner prior to the
expiration of the twenty-five (25)-day exercise period. If such right is
exercised with respect to all the Target Shares, then the Corporation shall
effect the repurchase of such shares, including payment of the purchase price,
not more than five (5) business days after delivery of the Exercise Notice; and
at such time the certificates representing the Target Shares shall be delivered
to the Corporation.

Should the purchase price specified in the Disposition Notice
be payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If Owner and the Corporation
cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by Owner and the Corporation or, if they cannot
agree on an appraiser within twenty (20) days after the Corporation's receipt of
the Disposition Notice, each shall select an appraiser of recognized standing
and the two (2) appraisers shall designate a third appraiser of recognized
standing, whose appraisal shall be determinative of such value. The cost of such
appraisal shall be shared equally by Owner and the Corporation. The closing
shall then be held on the later of (i) the fifth (5th) business day following
delivery of the Exercise Notice or (ii) the fifth (5th) business day after such
valuation shall have been made.

4. Non-Exercise of the First Refusal Right. In the event the
Exercise Notice is not given to Owner prior to the expiration of the twenty-five
(25)-day exercise period, Owner shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms (including
the purchase price) no more favorable to such third-party offeror than those
specified in the Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the provisions of Articles
B and C. The third-party offeror shall acquire the Target Shares free and clear
of the

<PAGE> 7

Repurchase Right and the First Refusal Right, but the acquired shares shall
remain subject to the provisions of Article B and Paragraph C.3. In the event
Owner does not effect such sale or disposition of the Target Shares within the
specified thirty (30)-day period, the First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses.

5. Partial Exercise of the First Refusal Right. In the event
the Corporation makes a timely exercise of the First Refusal Right with respect
to a portion, but not all, of the Target Shares specified in the Disposition
Notice, Owner shall have the option, exercisable by written notice to the
Corporation delivered within five (5) business days after Owner's receipt of the
Exercise Notice, to effect the sale of the Target Shares pursuant to either of
the following alternatives:

(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of Paragraph E.4, as if the
Corporation did not exercise the First Refusal Right; or

(ii) sale to the Corporation of the portion of the Target
Shares which the Corporation has elected to purchase, such sale to be
effected in substantial conformity with the provisions of Paragraph
E.3. The First Refusal Right shall continue to be applicable to any
subsequent disposition of the remaining Target Shares until such right
lapses.

Owner's failure to deliver timely notification to the
Corporation shall be deemed to be an election by Owner to sell the Target Shares
pursuant to alternative (i) above.

6. Recapitalization/Reorganization.

(a) Any new, substituted or additional securities or
other property which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately subject to the First
Refusal Right, but only to the extent the Purchased Shares are at the time
covered by such right.

(b) In the event of a Reorganization, the First
Refusal Right shall remain in full
force and effect and shall apply to the new capital stock or other property
received in exchange for the Purchased Shares in consummation of the
Reorganization, but only to the extent the Purchased Shares are at the time
covered by such right.

7. Lapse. The First Refusal Right shall lapse upon the
earliest to occur of (i) the first date on which shares of the Common Stock are
held of record by more than five hundred (500) persons, (ii) a determination is
made by the Board that a public market exists for the outstanding shares of
Common Stock or (iii) a firm commitment underwritten public offering, pursuant
to an effective registration statement under the 1933 Act, covering the offer
and sale of the Common Stock in the aggregate amount of at least ten million
dollars ($10,000,000). However, the Market Stand-Off shall continue to remain in
full force and effect following the lapse of the First Refusal Right.

E. SPECIAL TAX ELECTION

7.
<PAGE> 8

The acquisition of the Purchased Shares may result in adverse
tax consequences which may be avoided or mitigated by filing an election under
Code Section 83(b). Such election must be filed within thirty (30) days after
the date of this Agreement. A description of the tax consequences applicable to
the acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b)
ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.

F. GENERAL PROVISIONS

1. Assignment. The Corporation may assign the Repurchase Right
and/or the First Refusal Right to any person or entity selected by the Board,
including (without limitation) one or more shareholders of the Corporation.

2. No Employment or Service Contract. Nothing in this
Agreement shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.

3. Notices. Any notice required to be given under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this Agreement or at such
other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.

4. No Waiver. The failure of the Corporation in any instance
to exercise the Repurchase Right or the First Refusal Right shall not constitute
a waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and Optionee. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature.

5. Cancellation of Shares. If the Corporation shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such shares shall be
deemed purchased in accordance with the applicable provisions

8.
<PAGE> 9

hereof, and the Corporation shall be deemed the owner and holder of such shares,
whether or not the certificates therefor have been delivered as required by this
Agreement.

G. MISCELLANEOUS PROVISIONS

1. Optionee Undertaking. Optionee hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either Optionee or the
Purchased Shares pursuant to the provisions of this Agreement.

2. Agreement is Entire Contract. This Agreement constitutes
the entire contract between the parties hereto with regard to the subject matter
hereof.

3. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California without resort
to that State's conflict-of-laws rules.

4. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

5. Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and upon Optionee, Optionee's permitted assigns and the
legal representatives, heirs and legatees of Optionee's estate, whether or not
any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first indicated above.

EVEREST DESIGN AUTOMATION INC.

By: _____________________________

Title: __________________________

Address: ________________________

________________________

_________________________________
OPTIONEE

Address: ________________________

________________________

9.
<PAGE> 10

SPOUSAL ACKNOWLEDGMENT

The undersigned spouse of Optionee has read and hereby
approves the foregoing Stock Purchase Agreement. In consideration of the
Corporation's granting Optionee the right to acquire the Purchased Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms of such Agreement, including (without
limitation) the right of the Corporation (or its assigns) to purchase any
Purchased Shares in which Optionee is not vested at time of his or her cessation
of Service.

_________________________________
OPTIONEE'S SPOUSE

Address: ________________________

_________________________________

<PAGE> 11

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED hereby sell(s), assign(s) and transfer(s)
unto Everest Design Automation Inc. (the "Corporation"), () shares of the Common
Stock of the Corporation standing in his or her name on the books of the
Corporation represented by Certificate No. herewith and do(es) hereby
irrevocably constitute and appoint Attorney to transfer the said stock on the
books of the Corporation with full power of substitution in the premises.

Dated:_____________________

Signature _____________________________

Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.

<PAGE> 12

EXHIBIT II

FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(b) TAX ELECTION

II. Federal Income Tax Consequences and Section 83(b) Election For Exercise of
Non-Statutory Option. If the Purchased Shares are acquired pursuant to the
exercise of a Non-Statutory Option, as specified in the Grant Notice, then under
Code Section 83, the excess of the Fair Market Value of the Purchased Shares on
the date any forfeiture restrictions applicable to such shares lapse over the
Exercise Price paid for such shares will be reportable as ordinary income on the
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. However, Optionee may elect under Code Section 83(b) to be
taxed at the time the Purchased Shares are acquired, rather than when and as
such Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30) days
after the date of the Agreement. Even if the Fair Market Value of the Purchased
Shares on the date of the Agreement equals the Exercise Price paid (and thus no
tax is payable), the election must be made to avoid adverse tax consequences in
the future. The form for making this election is attached as part of this
exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY
PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE
FORFEITURE RESTRICTIONS LAPSE.

III. Federal Income Tax Consequences and Conditional Section 83(b) Election For
Exercise of Incentive Option. If the Purchased Shares are acquired pursuant to
the exercise of an Incentive Option, as specified in the Grant Notice, then the
following tax principles shall be applicable to the Purchased Shares:

(i) For regular tax purposes, no taxable income will
be recognized at the time the Option is exercised.

(ii) The excess of (a) the Fair Market Value of the
Purchased Shares on the date the Option is exercised or (if later) on
the date any forfeiture restrictions applicable to the Purchased Shares
lapse over (b) the Exercise Price paid for the Purchased Shares will be
includible in Optionee's taxable income for alternative minimum tax
purposes.

(iii) If Optionee makes a disqualifying disposition
of the Purchased Shares, then Optionee will recognize ordinary income
in the year of such disposition equal in amount to the excess of (a)
the Fair Market Value of the Purchased Shares on the date the Option is
exercised or (if later) on the date any forfeiture restrictions
applicable to the Purchased Shares lapse over (b) the Exercise Price
paid for the Purchased Shares. Any additional gain recognized upon the
disqualifying disposition will be either short-term or long-term
capital gain depending upon the period for which the Purchased Shares
are held prior to the disposition.

(iv) For purposes of the foregoing, the term
"forfeiture restrictions" will include the right of the Corporation to
repurchase the Purchased Shares pursuant to the

<PAGE> 13

Repurchase Right. The term "disqualifying disposition" means any sale
or other disposition1/ of the Purchased Shares within two (2) years
after the Grant Date or within one (1) year after the exercise date of
the Option.

(v) In the absence of final Treasury Regulations
relating to Incentive Options, it is not certain whether Optionee may,
in connection with the exercise of the Option for any Purchased Shares
at the time subject to forfeiture restrictions, file a protective
election under Code Section 83(b) which would limit (a) Optionee's
alternative minimum taxable income upon exercise and (b) Optionee's
ordinary income upon a disqualifying disposition to the excess of the
Fair Market Value of the Purchased Shares on the date the Option is
exercised over the Exercise Price paid for the Purchased Shares.
Accordingly, such election if properly filed will only be allowed to
the extent the final Treasury Regulations permit such a protective
election. Page 2 of the attached form for making the election should be
filed with any election made in connection with the exercise of an
Incentive Option.

- --------

1/ Generally, a disposition of shares purchased under an Incentive Option
includes any transfer of legal title, including a transfer by sale, exchange or
gift, but does not include a transfer to the Optionee's spouse, a transfer into
joint ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax free
exchanges permitted under the Code.

<PAGE> 14

SECTION 83(b) ELECTION

This statement is being made under Section 83(b) of the
Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:
Address:
Taxpayer Ident. No.:

(2) The property with respect to which the election is being
made is _______ shares of the common stock of Everest Design Automation
Inc.

(3) The property was issued on, 199__.

(4) The taxable year in which the election is being made is the calendar
year 199__.

(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of
installments over a two-year period ending on _________, 199__.

(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $_______ per share.

(7) The amount paid for such property is $____ per share.

(8) A copy of this statement was furnished to Everest Design Automation
Inc. for whom taxpayer rendered the services underlying the transfer of
property.

(9) This statement is executed on, 199__.

- ------------------------------------ -------------------------------------
Spouse (if any) Taxpayer

This election must be filed with the Internal Revenue Service Center
with which taxpayer files his or her Federal income tax returns and must be made
within thirty (30) days after the execution date of the Stock Purchase
Agreement. This filing should be made by registered or certified mail, return
receipt requested. Optionee must retain two (2) copies of the completed form for
filing with his or her Federal and state tax returns for the current tax year
and an additional copy for his or her records.

<PAGE> 15

The property described in the above Section 83(b) election is
comprised of shares of common stock acquired pursuant to the exercise of an
incentive stock option under Section 422 of the Internal Revenue Code (the
"Code"). Accordingly, it is the intent of the Taxpayer to utilize this election
to achieve the following tax results:

1. The purpose of this election is to have the alternative
minimum taxable income attributable to the purchased shares measured by the
amount by which the fair market value of such shares at the time of their
transfer to the Taxpayer exceeds the purchase price paid for the shares. In the
absence of this election, such alternative minimum taxable income would be
measured by the spread between the fair market value of the purchased shares and
the purchase price which exists on the various lapse dates in effect for the
forfeiture restrictions applicable to such shares. The election is to be
effective to the full extent permitted under the Code.

2. Section 421(a)(1) of the Code expressly excludes from
income any excess of the fair market value of the purchased shares over the
amount paid for such shares. Accordingly, this election is also intended to be
effective in the event there is a "disqualifying disposition" of the shares,
within the meaning of Section 421(b) of the Code, which would otherwise render
the provisions of Section 83(a) of the Code applicable at that time.
Consequently, the Taxpayer hereby elects to have the amount of disqualifying
disposition income measured by the excess of the fair market value of the
purchased shares on the date of transfer to the Taxpayer over the amount paid
for such shares. Since Section 421(a) presently applies to the shares which are
the subject of this Section 83(b) election, no taxable income is actually
recognized for regular tax purposes at this time, and no income taxes are
payable, by the Taxpayer as a result of this election.

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.

2.
<PAGE> 16

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Purchase Agreement.

B. Board shall mean the Corporation's Board of Directors.

C. Code shall mean the Internal Revenue Code of 1986, as amended.

D. Common Stock shall mean the Corporation's common stock.

E. Compensation Agreement shall mean the compensation agreement entered
into on _________, 199__ between the Corporation and Optionee.

F. Corporate Transaction shall mean either of the following
shareholder-approved transactions:

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

G. Corporation shall mean Everest Design Automation Inc., a California
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Everest Design Automation Inc.

H. Disposition Notice shall have the meaning assigned to such term in
Paragraph E.2.

I. Exercise Notice shall have the meaning assigned to such term in
Paragraph E.3.

J. Exercise Price shall have the meaning assigned to such term in
Paragraph A.1.

K. Fair Market Value of a share of Common Stock on any relevant date,
prior to the initial public offering of the Common Stock, shall be determined by
the Board after taking into account such factors as it shall deem appropriate.

L. First Refusal Right shall mean the right granted to the Corporation
in accordance with Article E.

M. Grant Date shall have the meaning assigned to such term in Paragraph
A.1.

A-1

<PAGE> 17

N. Grant Notice shall mean the Notice of Grant of Stock Option pursuant
to which Optionee has been informed of the basic terms of the Option.

O. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.

P. Market Stand-Off shall mean the market stand-off restriction
specified in Paragraph C.3.

Q. 1933 Act shall mean the Securities Act of 1933, as amended.

R. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.

S. Option shall have the meaning assigned to such term in Paragraph
A.1.

T. Option Agreement shall mean all agreements and other documents
evidencing the Option.

U. Optionee shall mean the person to whom the Option is granted.

V. Owner shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.

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

X. Permitted Transfer shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.

Y. Prior Purchase Agreement shall have the meaning assigned to such
term in Paragraph D.4.

Z. Purchased Shares shall have the meaning assigned to such term in
Paragraph A.1.

AA. Recapitalization shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.

A-2

<PAGE> 18

BB. Reorganization shall mean any of the following transactions:

(i) a merger or consolidation in which the Corporation is not
the surviving entity,

(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,

(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to a person or persons
different from the persons holding those securities immediately prior
to the merger, or

(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.

CC. Repurchase Right shall mean the right granted to the Corporation in
accordance with Article D.

DD. SEC shall mean the Securities and Exchange Commission.

EE. Service shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.

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

GG. Target Shares shall have the meaning assigned to such term in
Paragraph E.2.

HH. Vesting Schedule shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

II. Unvested Shares shall have the meaning assigned to such term in
Paragraph D.1.

A-3

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Synopsys, Inc.

We consent to incorporation by reference in the registration statement dated on
or about December 14, 1998, on Form S-8/S-3 of Synopsys, Inc. of our report
dated October 17, 1997, relating to the consolidated balance sheets of Synopsys,
Inc. and subsidiaries as of September 30, 1997, and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended September 30, 1997, which report
appears in the September 30, 1997 annual report of Form 10-K of Synopsys, Inc.

/S/ KPMG PEAT MARWICK LLP

Mountain View, California
December 11, 1998

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the incorporation by reference in the Registration Statement of
Synopsys, Inc. on Form S-8/S-3 of our report dated October 11, 1996 (relating to
the consolidated financial statements of EPIC Design Technology, Inc. not
presented separately therein), appearing in and incorporated by reference in the
Annual Report of Form 10-K of Synopsys, Inc. for year ended September 30, 1997.

DELOITTE & TOUCHE LLP

San Jose, California
December 11, 1998