SYNOPSYS INC, S-8, 1999-08-02

SYNOPSYS INC
S-8, 1999-08-02
PREPACKAGED SOFTWARE

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<PAGE> 1
As filed with the Securities and Exchange Commission on August 2, 1999
Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933

SYNOPSYS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
Delaware 56-1546236
- ------------------------ ---------------------------------------
(State of incorporation) (I.R.S. Employer Identification Number)
</TABLE>

700 East Middlefield Road
Mountain View, CA 94043-4033
(Address, including zip code, of Registrant's principal executive offices)

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

STANZA SYSTEMS, INC. 1998 STOCK PLAN
1998 NONSTATUTORY STOCK OPTION PLAN

(Full titles of the plans)

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

AART J. DE GEUS
Chief Executive Officer
SYNOPSYS, INC.
700 East Middlefield Road
Mountain View, CA 94043-4033
(650) 962-5000
(Name, address, including zip code, 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, California 94303
(650) 493-9300

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to to be Price Offering Registration
be Registered Registered (1) Per Share Price Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value
To be issued under:
- ------------------------------------------------------------------------------------------------------------------------------------
Stanza Systems, Inc. 1998 Stock Plan 20,648 $1.38(2) $28,494.24 $7.92
- ------------------------------------------------------------------------------------------------------------------------------------
1998 Nonstatutory Stock Option Plan 1,332,780 $55.1875(3) $73,552,796.25 $20,447.68
- ------------------------------------------------------------------------------------------------------------------------------------

Totals 1,353,428 shares $73,581,290.49 $20,455.60
====================================================================================================================================
</TABLE>

(1) For the sole purpose of calculation of the registration fee, the number of
shares to be registered under this registration statement has been broken
down into two subtotals.

(2) Computed in accordance with Rule 457(h) of the Securities Act of 1933, as
amended (the "Securities Act"). Such computation is based on the exercise
price of $1.38 share covering shares granted under the Stanza Systems, Inc.
1998 Stock Plan.

(3) Computed in accordance with Rule 457(h) and Rule 457(c) of the Securities
Act. The estimated exercise price of $55.1875 was computed in accordance
with Rule 457(c) by averaging the high and low prices of the Company's
Common Stock as reported on The Nasdaq National Market on July 26, 1999.

<PAGE> 2

PART II

Information Required in the Registration Statement

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

Synopsys, Inc. (the "Company") hereby incorporates by reference in this
registration statement the following documents:

(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 filed pursuant to Section 13 of the Securities Exchange Act
of 1934 (the "Exchange Act").

(b) The Company's Current Report on Form 8-K regarding a change in the
Company's fiscal year and its financial results for the quarter ended July 3,
1999, filed on July 23, 1999 pursuant to Section 13 of the Exchange Act.

(c) The Company's Quarterly Reports on Form 10-Q for the quarters ended
April 3, 1999 and January 2, 1999, filed pursuant to Section 13 of the Exchange
Act.

(d) The Company's Current Report on Form 8-K regarding its financial
results for the quarter ended April 3, 1999, filed on April 23, 1999 pursuant to
Section 13 of the Exchange Act.

(e) The Company's Current Report on Form 8-K regarding its financial
results for the quarter ended December 31, 1998, filed on January 25, 1999
pursuant to Section 13 of the Exchange Act.

(f) The description of the Company's Common Stock as set forth in the
Registration Statement filed by the Company on Form 8-A on October 31, 1997
pursuant to Section 12(g) of the Exchange Act and any amendments or reports
filed with the Securities and Exchange Commission for the purpose of updating
such description.

(g) The description of the Company's Common Stock as set forth in the
Registration Statement filed by the Company on Form 8-A on January 24, 1992
pursuant to Section 12(g) of the Exchange Act and any amendments or reports
filed with the Securities and Exchange Commission for the purpose of updating
such description.

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 to this registration statement which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

The class of securities to be offered is registered under Section 12 of the
Exchange Act.

II-1
<PAGE> 3

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Delaware law authorizes corporations to eliminate the personal liability of
directors to corporations and their stockholders for monetary damage for breach
or alleged breach of the directors' "duty of care." While the relevant statute
does not change directors' duty of care, it enables corporations to limit
available relief to equitable remedies such as injunction or rescission. The
statute has no effect on directors' duty of loyalty, acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law,
illegal payment of dividends and approval of any transaction from which a
director derives an improper personal benefit.

The Company has adopted provisions in its Certificate of Incorporation
which eliminate the personal liability of its directors to the Company and its
stockholders for monetary damages for breach or alleged breach of their duty of
care. The Bylaws of the Company provide for indemnification of its directors,
officers, employees and agents to the full extent permitted by the General
Corporation Law of the State of Delaware (the "DGCL"), the Company's state of
incorporation, including those circumstances in which indemnification would
otherwise be discretionary under the DGCL. Section 145 of the DGCL provides for
indemnification in terms sufficiently broad to indemnify such individuals, under
certain circumstances, for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act of 1933.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not applicable.

ITEM 8. EXHIBITS.

See Index to Exhibits.

ITEM 9. UNDERTAKINGS.

(a) Rule 415 Offering. The undersigned registrant hereby undertakes:

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

II-2

<PAGE> 4

(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) Filing incorporating subsequent Exchange Act documents by reference.

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

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

II-3

<PAGE> 5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on August 2,
1999.

SYNOPSYS, INC.

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

II-4

<PAGE> 6

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose signature
appears below constitutes and appoints Aart J. de Geus and David M. Sugishita,
and each of them, as his or her true and lawful attorney-in-fact, with full
power of substitution, for him or her in any and all capacities, to sign any
amendments (including post-effective amendments) to this Registration Statement
on Form S-8, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Aart J. de Geus Chief Executive Officer and Chairman of the August 2, 1999
- ---------------------------------- Board of Directors (Principal Executive Officer)
Aart J. de Geus

/s/ Chi-Foon Chan President, Chief Operating Officer and Director August 2, 1999
- ----------------------------------
Chi-Foon Chan

/s/ William W. Lattin Executive Vice President and Director August 2, 1999
- ----------------------------------
William W. Lattin

/s/ Andy D. Bryant Director August 2, 1999
- ----------------------------------
Andy D. Bryant

/s/ Deborah A. Coleman Director August 2, 1999
- ----------------------------------
Deborah A. Coleman

/s/ Harvey C. Jones, Jr. Director August 2, 1999
- ----------------------------------
Harvey C. Jones, Jr.

/s/ A. Richard Newton Director August 2, 1999
- ----------------------------------
A. Richard Newton

/s/ Sasson Somekh Director August 2, 1999
- ----------------------------------
Sasson Somekh

/s/ Steven C. Walske Director August 2, 1999
- ----------------------------------
Steven C. Walske

/s/ David M. Sugishita Senior Vice President, Finance and Operations, August 2, 1999
- ---------------------------------- and Chief Financial Officer (Principal
David M. Sugishita Financial and Accounting Officer)
</TABLE>

II-5

<PAGE> 7

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -----------------------------------------------------------------------
<S> <C>
5.1 Opinion of counsel as to legality of securities being registered

10.1 1998 Nonstatutory Stock Option Plan, as amended

10.2 Stanza Systems, Inc. 1998 Stock Plan and form of Agreement thereunder

23.1 Consent of KPMG LLP

23.2 Consent of Deloitte & Touche LLP

23.2 Consent of Counsel (included in Exhibit 5.1)

24.1 Power of Attorney (see page II-5)
</TABLE>

<PAGE> 1
Exhibit 5.1

August 2, 1999

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

Re: Registration Statement on Form S-8

Gentlemen:

We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about August 2, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, for an aggregate of 1,353,428 of your
Common Shares under the Stanza Systems, Inc. 1998 Stock Plan and the 1998
Nonstatutory Stock Option Plan. Such shares of Common Stock are referred to
herein as the "Shares," and such plans are referred to herein as the "Plans." As
your counsel in connection with this transaction, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the issuance and sale of the Shares pursuant to the
Plans.

It is our opinion that, when issued and sold in the manner described in the
Plans and pursuant to the agreements which accompany each grant under the Plans,
the Shares will be legally and validly issued, fully-paid and non-assessable.

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 and any amendments thereto.

Very truly yours,

/s/ Wilson Sonsini Goodrich & Rosati
--------------------------------------
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE> 1
Exhibit 10.1

SYNOPSYS, INC.

1998 NONSTATUTORY STOCK OPTION PLAN
(Amended July 27, 1999)

ARTICLE ONE

GENERAL

I. PURPOSE OF THE PLAN

A. This 1998 Nonstatutory Stock Option Plan (the "Plan") is intended to
promote the interests of Synopsys, Inc., a Delaware corporation (the
"Corporation"), by providing (i) key employees (excluding officers and
directors) of the Corporation (or its parent or subsidiary corporations) who
contribute to the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations) and (ii) consultants and other
independent advisors who provide valuable services to the Corporation (or its
parent or subsidiary corporations) 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 (or its
parent or subsidiary corporations).

B. For purposes of the Plan, the following provisions shall be applicable
in determining the parent and subsidiary corporations of the Corporation:

Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such 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.

Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, 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.

II. ADMINISTRATION OF THE PLAN

A. Administrator. The Plan shall be administered by (i) the Board of
Directors (the "Board"), or (ii) a committee of Directors appointed by the
Board, which committee shall be constituted to satisfy applicable laws (in
either case, the "Administrator"). The Board at any time may terminate the
authority delegated to any committee of the Board pursuant to this Section II(A)
and revest in the Board the administration of the Plan.

<PAGE> 2

B. Powers of the Administrator. In particular and without limitation, the
Administrator, subject to the terms of the Plan, shall have the authority, in
its discretion to:

(i) select the employees and consultants to whom Options may be
granted;

(ii) determine whether and to what extent Options are to be granted
under the Plan;

(iii) determine the number of shares to be covered by each Option
granted under the Plan; and

(iv) determine the terms and conditions of any Option granted under
the Plan and any related loans to be made by the Company, based upon factors
determined by the Administrator.

C. Administrator Determinations Binding. The Administrator may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, may interpret the terms and
provisions of the Plan, any Option and any Option agreement and may otherwise
supervise the administration of the Plan. Any determination made by the
Administrator pursuant to the provisions of the Plan with respect to any Option
shall be made in its sole discretion at the time of the grant of the Option or,
unless in contravention of any express term of the Plan or Option, at any later
time. All decisions made by the Administrator under the Plan shall be binding on
all persons, including the Company and Plan participants. No member of the
Administrator shall be liable for any action that he or she has in good faith
taken or failed to take with respect to this Plan or any Option.

III. ELIGIBILITY

The persons eligible to receive option grants (the "Optionee(s)") are as
follows:

(i) key employees of the Corporation (or its parent or subsidiary
corporations) who render services which contribute to the management, growth and
financial success of the Corporation (or its parent or subsidiary corporations);

(ii) those consultants or other independent advisors who provide
valuable services to the Corporation (or its parent or subsidiary corporations.

IV. STOCK SUBJECT TO THE PLAN

A. Shares of the Corporation's common stock (the "Common Stock") shall be
available for issuance under the Plan and shall be drawn from either the
Corporation's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the
open market. The maximum number of shares of

<PAGE> 3

Common Stock which may be issued over the term of the Plan shall not exceed the
sum of 4,449,516 shares.

B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grant under the Plan. Shares issued under the Plan shall not be available
for subsequent option grant under the Plan. In addition, should the exercise
price of an outstanding option under the Plan be paid with shares of Common
Stock, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.

C. In the event any change is made to the Common Stock issuable under the
Plan 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 the number and/or class of securities and price per
share in effect under each outstanding option under the Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options.

The adjustments determined by the Administrator shall be final, binding and
conclusive.

D. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Administrator.

ARTICLE TWO

OPTION GRANTS

I. TERMS AND CONDITIONS OF OPTIONS

Options granted pursuant to the Plan shall be authorized by action of the
Administrator and will be nonstatutory options. Each granted option shall be
evidenced by one or more instruments in the form approved by the Administrator;
provided, however, that each such instrument shall comply with the terms and
conditions specified below.

A. Option Price.

(1) The option price per share shall be fixed by the Administrator.
In no event, however, shall it be less than one hundred percent (100%) of the
fair market value per share of Common Stock on the date of the option grant.

<PAGE> 4

(2) The option price shall become immediately due upon exercise of
the option and, subject to the instrument evidencing the grant, shall be payable
in one of the following alternative forms specified below:

(a) full payment in cash or check drawn to the Corporation's
order;

(b) full payment in shares of Common Stock held for at least six
(6) months and valued at fair market value on the Exercise Date (as such term is
defined below);

(c) full payment in a combination of shares of Common Stock held
for at least six (6) months and valued at fair market value on the Exercise Date
and cash or check; or

(d) full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (i) shall provide irrevocable written
instructions 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 option price payable for the purchased shares plus all applicable
Federal and State income and employment taxes required to be withheld by the
Corporation in connection with such purchase and (ii) shall provide written
directives to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.

For purposes of this subparagraph (2), the Exercise Date shall be the date
on which written notice of the option exercise is delivered to the Corporation.
Except to the extent the sale and remittance procedure is utilized in connection
with the exercise of the option, payment of the option price for the purchased
shares must accompany such notice.

(3) The fair market value per share of Common Stock on any relevant
date under the Plan shall be determined in accordance with the following
provisions:

(a) If the Common Stock is not at the time listed or admitted to
trading on any national stock exchange but is traded on the Nasdaq National
Market, 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 System or any
successor system. If there is no reported closing selling price for the Common
Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of fair
market value.

(b) If the Common Stock is at the time listed or admitted to
trading on any national 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 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 reported sale of Common

<PAGE> 5

Stock on such exchange on the date in question, then the fair market value shall
be the closing selling price on the exchange on the last preceding date for
which such quotation exists.

B. Term and Exercise of Options. Each option shall be exercisable at such
time or times and during such period as is determined by the Administrator and
set forth in the stock option agreement evidencing the grant; provided that at
least 75% of the options granted hereunder shall become exercisable ratably over
a four year period from the date of grant, with the vesting interval (i.e.,
monthly, quarterly, etc.) and any period prior to the commencement of vesting
determined in each case by the Plan Administrator. No such option, however,
shall have a maximum term in excess of ten (10) years from the grant date. An
option may not be exercised for a fraction of a share. During the lifetime of
the Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or transferable by the Optionee otherwise than by will or by the
laws of descent and distribution following the Optionee's death.

C. Termination of Service.

(1) Except to the extent otherwise provided pursuant to Section III
of this Article Two, the following provisions shall govern the exercise period
applicable to any outstanding options under the Plan which are held by the
Optionee at the time of his or her cessation of Service or death.

(a) Should the Optionee cease Service for any reason (including
death or permanent disability as defined in Section 22(e)(3) of the Internal
Revenue Code) while holding one or more outstanding options under the Plan, then
none of those options shall (except to the extent otherwise provided pursuant to
Section III of this Article Two) remain exercisable beyond the limited
post-Service period designated by the Administrator at the time of the option
grant and set forth in the option agreement.

(b) Any option granted to an Optionee under the Plan and
exercisable in whole or in part on the date of the Optionee's death may be
subsequently exercised, by the personal representative of the Optionee's estate
or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution,
provided and only if such exercise occurs prior to the earlier of (i) the
expiration of the period designated by the Administrator at the time of the
option grant and set forth in the option agreement, which may be any period from
one month to three years measured from the date of the Optionee's death, or (ii)
the specified expiration date of the option term. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.

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

(d) During the limited post-Service exercise period, the option
may not be exercised for more than the number of shares for which the option is
exercisable on the date of the Optionee's cessation of Service. Upon the
expiration of such limited exercise period or (if

<PAGE> 6

earlier) upon the expiration of the option term, the option shall terminate and
cease to be exercisable. However, upon the Optionee's cessation of Service, each
outstanding option at the time held by the Optionee shall immediately terminate
and cease to be outstanding with respect to any shares for which the option is
not otherwise at that time exercisable or in which the Optionee is not otherwise
vested.

(e) Should (i) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee make any unauthorized
use or disclosure of confidential information or trade secrets of the
Corporation or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to be exercisable.

(2) The Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the Optionee under this
Article Two to be exercised, during the limited period of exercisability
provided under subparagraph (1) above, not only with respect to the number of
shares for which each such option is exercisable at the time of the Optionee's
cessation of Service but also with respect to one or more subsequent
installments for which the option would otherwise have become exercisable had
such cessation of Service not occurred.

(3) For purposes of the foregoing provisions of this Section I (and
for all other purposes under the Plan):

(a) The Optionee shall (except to the extent otherwise
specifically provided in the applicable option agreement) be deemed to remain in
the Service of the Corporation for so long as such individual renders services
on a periodic basis to the Corporation (or any parent or subsidiary corporation)
in the capacity of an Employee, a non-employee member of the Board or an
independent consultant or advisor.

(b) The Optionee shall be considered to be an Employee for so
long as he or she remains in the employ of the Corporation or one or more parent
or subsidiary corporations, subject to the control and direction of the employer
entity not only as to the work to be performed but also as to the manner and
method of performance.

D. Stockholder Rights. An Optionee shall have no stockholder rights with
respect to any shares covered by the option until such individual shall have
exercised the option, paid the option price for the purchased shares and been
issued a stock certificate for such shares.

V. CORPORATE TRANSACTIONS/CHANGES IN CONTROL

A. In the event of any of the following stockholder-approved transactions
to which the Corporation is a party (a "Corporate Transaction"):

<PAGE> 7

(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Corporation's incorporation,

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

(iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger, then the exercisability of each option outstanding under
the Plan shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option under this Article Two
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, to be assumed by the successor corporation or
parent thereof or replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, (ii) such option
is to be replaced by a comparable cash incentive program of the successor
corporation based on the option spread at the time of the Corporate Transaction,
or (iii) the acceleration of such option is subject to other limitations imposed
by the Administrator at the time of the option grant. The determination of
comparability under clause (i) or (ii) above shall be made by the Administrator,
and its determination shall be final, binding and conclusive.

B. Immediately after the consummation of the Corporate Transaction, all
outstanding options under the Plan shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.

C. Each outstanding option under the Plan which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall
remain the same. In addition, the maximum number and/or class of securities
available for issuance under the Plan and the total number and/or class of
securities for which stock options may be granted to any one participant in the
Plan shall be appropriately adjusted following the consummation of the Corporate
Transaction to reflect the effect of such transaction upon the Corporation's
capital structure.

D. 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

<PAGE> 8

or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

E. The Administrator shall have the discretionary authority, exercisable
at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two upon the occurrence of a Change in
Control. Alternatively, the Administrator shall have full power and authority to
condition any such option acceleration upon the subsequent termination of the
Optionee's Service within a specified period following the Change in Control.

F. For purposes of this Section II, a Change in Control shall be deemed
to occur in the event:

(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or

(ii) there is a change in the composition of the Board over a period
of twenty-four (24) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board.

G. Any options accelerated in connection with the Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.

VI. EXTENSION OF EXERCISE PERIOD

The Administrator shall have full power and authority to extend the period
of time for which any option granted under this Article Two is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under Section I of this Article Two to such greater
period of time as the Administrator shall deem appropriate; provided, however,
that in no event shall such option be exercisable after the specified expiration
date of the option term.

<PAGE> 9

ARTICLE THREE

MISCELLANEOUS

I. [Intentionally omitted.]

II. AMENDMENT OF THE PLAN AND OPTIONS

A. The Board has complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification may adversely affect the rights and obligations of an Optionee with
respect to options at the time outstanding under the Plan, unless the Optionee
consents to such amendment.

III. TERM OF PLAN

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

IV. USE OF PROCEEDS

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

V. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any option under the
Plan and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder 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 Common Stock
issued pursuant to it.

B. No shares of Common Stock or other assets shall be issued or delivered
under this Plan unless and until there shall have been compliance with all
applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.

VI. NO EMPLOYMENT/SERVICE RIGHTS

Neither the action of the Company in establishing the Plan, nor any action
taken by the Administrator hereunder, nor any provision of the Plan shall be
construed so as to grant any individual the right to remain in the employ or
service of the Corporation (or any parent or

<PAGE> 10

subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.

VII. MISCELLANEOUS PROVISIONS

A. The right to acquire Common Stock or other assets under the Plan may
not be assigned, encumbered or otherwise transferred by any Optionee.

B. The provisions of the Plan shall be governed by the laws of the State
of California, as such laws are applied to contracts entered into and performed
in such State.

C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.

<PAGE> 1
EXHIBIT 10.2

STANZA SYSTEMS, INC.

1998 STOCK PLAN

1. Purposes of the Plan. The purposes of the Stanza Systems, Inc. 1998
Stock Plan (the "Plan") are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive to
employees, directors and consultants and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options or
nonstatutory stock options, as determined by the Administrator at the time of
grant. Stock purchase rights may also be granted under the Plan.

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

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

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

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

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

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

(g) "Company" means Stanza Systems, Inc., a California corporation.

(h) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services to such
entity.

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

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

(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any

<PAGE> 2

successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.

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

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

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

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

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

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

(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

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

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

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

(s) "Option Exchange Program" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.

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<PAGE> 3

(t) "Optioned Stock" means the Common Stock subject to an Option or
a Stock Purchase Right.

(u) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

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

(w) "Plan" means this 1998 Stock Plan.

(x) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.

(y) "Section 16(b) " means Section 16(b) of the Securities Exchange
Act of 1934, as amended.

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

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

(bb) "Stock Purchase Right" means a right to purchase Common Stock
pursuant to Section 11 below.

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

3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 1,700,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

4. Administration of the Plan.

(a) Administrator. The Plan shall be administered by the Board or a
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.

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<PAGE> 4

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

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;

(iii) to determine the number of Shares to be covered by each
such award granted hereunder;

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

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

(vi) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(e) instead of Common Stock;

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

(viii) to initiate an Option Exchange Program;

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

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

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

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<PAGE> 5

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

5. Eligibility.

(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate such
relationship at any time, with or without cause.

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

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

8. Option Exercise Price and Consideration.

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

(i) In the case of an Incentive Stock Option

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

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<PAGE> 6

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

(ii) In the case of a Nonstatutory Stock Option

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

(2) granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.

(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.

(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

9. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or

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<PAGE> 7

receive dividends or any other rights as a shareholder shall exist with respect
to the Shares, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.

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

(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for ninety (90) days
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least one hundred eighty (180) days) to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least one hundred eighty (180) days) to the extent that
the Option is vested on the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement) by
the Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance. In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, at the time of death, the Optionee is
not vested as to the entire Option, the Shares covered by the unvested portion
of the Option shall immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

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<PAGE> 8

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

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

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The terms of the offer shall comply in all
respects with Section 260.140.42 of Title 10 of the California Code of
Regulations. The offer shall be accepted by execution of a Restricted Stock
purchase agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the date of
purchase.

(c) Other Provisions. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.

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

(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for

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<PAGE> 9

issuance under the Plan but as to which no Options or Stock Purchase Rights have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Purchase Right, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company. The conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen

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<PAGE> 10

by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option or Stock Purchase Right, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Service Provider to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

14. Amendment and Termination of the Plan.

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

(b) Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

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

15. Conditions Upon Issuance of Shares.

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

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

16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any

-10-
<PAGE> 11

liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

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

18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.

19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

-11-

<PAGE> 12

STANZA SYSTEMS, INC.

1998 STOCK PLAN

STOCK OPTION AGREEMENT

NOTICE OF GRANT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.

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

The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Stock Option Agreement, as follows:

Grant Number

Date of Grant

Vesting Commencement Date

Exercise Price per Share

Total Number of Shares Granted

Total Exercise Price

Type of Option: Incentive Stock Option

Nonstatutory Stock Option

Term/Expiration Date

Vesting Schedule:

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

25% of the Shares subject to the Option shall vest on the one year
anniversary of the Vesting Commencement Date, and 1/48 of the Shares subject to
the Option shall vest on the first day of each month thereafter.

<PAGE> 13

Termination Period:

This option may be exercised for three (3) months after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.

II. AGREEMENT

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

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

2. Exercise of Option.

(a) Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the [Exercise Notice])
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.

No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

3. Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.

2
<PAGE> 14

4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

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

(a) cash or check;

(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or

(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

6. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

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

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

9. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

3
<PAGE> 15

(a) Exercise of ISO. If this Option qualifies as an ISO, there will
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

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

(c) Disposition of Shares. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.

(d) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

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

11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER

4
<PAGE> 16

ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS
A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

OPTIONEE: Stanza Systems, Inc.

- ---------------------------------- ----------------------------------
Signature By

- ---------------------------------- ----------------------------------
Print Name Title

Residence Address:

<PAGE> 17

EXHIBIT A

1998 STOCK PLAN

EXERCISE NOTICE

Stanza Systems, Inc.
10062 Miller Avenue, Suite 220
Cupertino, CA 95014

Attention: [Secretary]

1. Exercise of Option. Effective as of today, ___________, 19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase _________ shares of the Common Stock (the "Shares") of Stanza
Systems, Inc. (the "Company") under and pursuant to the 1998 Stock Plan
(the "Plan") and the Stock Option Agreement dated June 30, 1998 (the
"Option Agreement").

2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option
Agreement.

3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Shares shall be issued to the Optionee as soon as
practicable after the Option is exercised. No adjustment shall be made
for a dividend or other right for which the record date is prior to the
date of issuance except as provided in Section 12 of the Plan.

5. Company's Right of First Refusal. Before any Shares held by Optionee
or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by
gift or operation of law), the Company or its assignee(s) shall have a
right of first refusal to purchase the Shares on the terms and
conditions set forth in this Section (the "Right of First Refusal").

a. Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice")
stating: (i) the Holder's bona fide intention to sell or
otherwise transfer such Shares; (ii) the name of each proposed
purchaser or other transferee ("Proposed Transferee"); (iii)
the number of Shares to be transferred to each Proposed
Transferee; and (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the
Shares (the "Offered Price"), and the Holder shall offer the
Shares at the Offered Price to the Company or its assignee(s).

6
<PAGE> 18
b. Exercise of Right of First Refusal. At any time within
thirty (30) days after receipt of the Notice, the Company
and/or its assignee(s) may, by giving written notice to the
Holder, elect to purchase all, but not less than all, of the
Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.

c. Purchase Price. The purchase price ("Purchase Price") for
the Shares purchased by the Company or its assignee(s) under
this Section shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith.

d. Payment. Payment of the Purchase Price shall be made, at
the option of the Company or its assignee(s), in cash (by
check), by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice
or in the manner and at the times set forth in the Notice.

e. Holder's Right to Transfer. If all of the Shares proposed
in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as
provided in this Section, then the Holder may sell or
otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such
sale or other transfer is consummated within 120 days after
the date of the Notice, that any such sale or other transfer
is effected in accordance with any applicable securities laws
and that the Proposed Transferee agrees in writing that the
provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares
described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to
the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held
by the Holder may be sold or otherwise transferred.

f. Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the
transfer of any or all of the Shares during the Optionee's
lifetime or on the Optionee's death by will or intestacy to
the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the
provisions of this Section. "Immediate Family" as used herein
shall mean spouse, lineal descendant or antecedent, father,
mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Section, and
there shall be no further transfer of such Shares except in
accordance with the terms of this Section.

g. Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares upon the first sale
of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effec-

7
<PAGE> 19

tive by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

6. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has
consulted with any tax consultants Optionee deems advisable in
connection with the purchase or disposition of the Shares and that
Optionee is not relying on the Company for any tax advice.

7. Restrictive Legends and Stop-Transfer Orders.

a. Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or
by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL
HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF
FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

b. Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop transfer" instructions
to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate
notations to the same effect in its own records.

c. Refusal to Transfer. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of
this Agreement or (ii) to treat as owner of such Shares or to
accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been so
transferred.

8
<PAGE> 20
8. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of
the Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.

9. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Administrator shall be
final and binding on all parties.

10. Governing Law; Severability. This Agreement shall be governed by and
constructed in accordance with the laws of the State of California
excluding that body of law pertaining to conflicts of law. Should any
provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless
remain effective and shall remain enforceable.

11. Entire Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a
writing signed by the Company and Optionee.

<PAGE> 21

Submitted by: Accepted by:

OPTIONEE: Stanza Systems, Inc.

- ---------------------------------- ----------------------------------
Signature By

- ---------------------------------- ----------------------------------
Print Name Its

Address: Address:

- ---------------------------------- 10062 Miller Avenue, Suite 220

- ---------------------------------- Cupertino, CA 95014

----------------------------------
Date Received

10
<PAGE> 22

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY: Stanza Systems, Inc.

SECURITY: COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to Stanza Systems, Inc. (the "Company") the following:

a. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities.
Optionee is acquiring these Securities for investment for Optionee's
own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").

b. Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of Optionee's investment intent as expressed
herein. In this connection, Optionee understands that, in the view of
the Securities and Exchange Commission, the statutory basis for such
exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for
the minimum capital gains period specified under tax statutes, for a
deferred sale, for or until an increase or decrease in the market price
of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities
must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Optionee further acknowledges and understands that the Company is under
no obligation to register the Securities. Optionee understands that the
certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of
counsel satisfactory to the Company and any other legend required under
applicable state securities laws.

11
<PAGE> 23
c. Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions. Rule 701 provides that if the
issuer qualifies under Rule 701 at the time of the grant of the Option
to the Optionee, the exercise will be exempt from registration under
the Securities Act. In the event the Company becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of
certain of the conditions specified by Rule 144, including: (1) the
resale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the
case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified
in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of
grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

d. Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the
Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rules 144 or 701
will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will
be available in such event.

Signature of Optionee:

______________________________________

Date: ________________________, 19___

<PAGE> 1

Exhibit 23.1

CONSENT OF KPMG LLP

The Board of Directors
Synopsys, Inc.

We consent to the incorporation herein of our reports dated October 26, 1998,
relating to the consolidated balance sheets of Synopsys, Inc. and subsidiaries
as of September 30, 1998 and 1997, 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, 1998, and the related consolidated
financial statement schedule, which reports appear in the September 30, 1998,
Annual Report on Form 10-K of Synopsys, Inc.

/s/ KPMG LLP
- ---------------------------
KPMG LLP

Mountain View, California
July 30, 1999

<PAGE> 1

Exhibit 23.2

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the incorporation by reference in this Registration Statement of
Synopsys, Inc. on Form S-8 of our report dated October 11, 1996 (relating to the
consolidated financial statements of EPIC Design Technology, Inc. not presented
separately therein), appearing in the Annual Report on Form 10-K of Synopsys,
Inc. for the year ended September 30, 1998.

/s/ Deloitte & Touche LLP
- ---------------------------
DELOITTE & TOUCHE LLP

San Jose, California
July 30, 1999