exv10w93







Exhibit 10.93




CADENCE DESIGN SYSTEMS, INC.

EMPLOYMENT AGREEMENT

WITH LIP-BU TAN




     THIS AGREEMENT (this “Agreement”), is made effective as of January 8, 2009 (the “Effective
Date”), between CADENCE DESIGN SYSTEMS, INC., a Delaware corporation (the “Company”), and LIP-BU
TAN (“Executive”).



     WHEREAS, Executive is currently a member of the Board of Directors and a member of the Interim
Office of the Chief Executive; and



     WHEREAS, the Company and Executive wish to enter into an employment agreement pursuant to
which Executive will serve as the President and Chief Executive Officer of the Company on the terms
and conditions as set forth herein.



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



1. TERM AND DUTIES.




     1.1 EFFECTIVE DATE. The Executive hereby accepts employment pursuant to the terms and
provisions of this Agreement as of the Effective Date. Executive shall be employed on an at-will
basis, meaning that either Executive or the Company may terminate Executive’s employment at any
time, with or without Cause (as defined in Section 4.2 hereof), in the manner specified herein.



     1.2 SERVICES.



          (a) Executive shall have the title of President and Chief Executive Officer. Executive’s
duties will be assigned to Executive by the Board of Directors of the Company (the “Board”).
Executive shall report directly to the Board.



          (b) Executive shall be required to comply with all applicable Company policies and procedures,
as such shall be adopted, modified or otherwise established by the Company from time to time.



     1.3 NO CONFLICTING SERVICES. During his employment with the Company, Executive agrees to
devote his productive time and best efforts to the performance of Executive’s duties hereunder.
Executive further agrees, as a condition to the performance by the Company of each and all of its
obligations hereunder, that so long as Executive is employed by the Company, he will not directly
or indirectly render services of any nature to, otherwise become employed by, serve on the board of
directors of, or otherwise participate or engage in any other business, except that the Company
acknowledges that: (w) Executive will continue to serve as Chairman and as employee of, or provide
services to, Walden International, its affiliated venture funds and their managing entities, as in
existence on or after the Effective Date, including without limitation those funds previously
disclosed to the Company (collectively, “Walden”); (x) Walden may pursue, or Executive as an
executive thereof may assist Walden in pursuing, its investment activities in entities other than
the Company; (y) Executive may serve as a non-



 









 







employee member of the board of directors of up to two (2) public companies other than the
Company, provided that the Company acknowledges that Executive currently serves as a director of
five (5) public companies other than the Company and shall have until March 31, 2009 to satisfy the
requirement that he serve as a director of not more than two (2) public companies other than the
Company; and (z) Executive may have outside personal investments and involvement with appropriate
community activities, and may devote a reasonable amount of time to such matters; provided,
however, that all activities undertaken in accordance with clauses (w) — (z) above shall in no
manner interfere with or derogate from Executive’s work for the Company, and he at all times shall
comply with the Company’s Code of Business Conduct.



     1.4 OFFICE. The Company shall maintain an office for Executive at the Company’s corporate
headquarters, which currently are located in San Jose, California.



2. COMPENSATION.




     The Company shall pay to Executive, and Executive shall accept as full consideration for his
services hereunder, compensation consisting of the following:



     2.1 BASE SALARY. As of the Effective Date, the Company shall pay Executive a base salary of
Six Hundred Thousand Dollars ($600,000) per year (“Base Salary”), payable in installments in
accordance with the Company’s customary payroll practices, less such deductions and withholdings
required by law or authorized by Executive. The Board of Directors of the Company (the “Board”) or
the Compensation Committee of the Board (the “Compensation Committee”) shall review the amount of
the Base Salary from time to time, but no less frequently than annually.



     2.2 BONUS. Executive shall participate in the Company’s Senior Executive Bonus Plan or its
successor (the “Bonus Plan”) at an annual target bonus of one hundred percent (100%) of Executive’s
Base Salary (the “Target Bonus”) pursuant to the terms of such Bonus Plan (the criteria for earning
a bonus thereunder are set annually by the Compensation Committee). The Board or the Compensation
Committee shall review the amount of the Target Bonus from time to time, but no less frequently
than annually.



     2.3 EQUITY GRANTS. Executive has previously been granted stock options by the Company which
remain in full force and effect in accordance with the terms of the stock option agreements
documenting such grants. As a signing bonus, on the Effective Date Executive shall receive a grant
of options with respect to 900,000 shares of common stock of the Company, and a grant of incentive
stock with respect to 300,000 shares of common stock of the Company, each of which shall commence
vesting on the Effective Date. Executive shall be eligible to receive additional grants of either
restricted stock, incentive stock or stock options, or a combination thereof, as the Compensation
Committee may determine from time to time. All stock options shall be granted at not less than one
hundred percent (100%) of the fair market value of the Company’s common stock on the date of grant.
The foregoing grants and any other equity awards that Executive receives during his first year of
service as Chief Executive Officer shall continue to vest after he ceases being Chief Executive
Officer for the lesser of (A) the number of full months he served as Chief Executive Officer, or
(B) eighteen (18) months after he ceases being Chief Executive Officer, provided (i) Executive
voluntarily terminates his employment



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other than a Constructive Termination (as defined in Section 4.3 hereof) and (ii) such continued
vesting shall continue only for so long as he continues to serve as an employee, director or
consultant and otherwise of the Company. Such vesting shall be otherwise in accordance with the
Company’s vesting policy for grants to executive officers of the Company in effect on the date of
the grant by the Compensation Committee, and shall contain such other terms and conditions as shall
be set forth in the agreement documenting the grant.



     2.4 INDEMNIFICATION. In the event Executive is made, or threatened to be made, a party to any
legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or
was a director or officer of the Company or serves or served any other corporation, limited
liability company, partnership, joint venture or other entity in any capacity at the Company’s
request, Executive shall be indemnified by the Company, and the Company shall pay Executive’s
related expenses when and as incurred, all to the fullest extent not prohibited by law, as more
fully described in and subject to the terms of the form of Indemnity Agreement between the Company
and Executive dated July 29, 2008.



3. EXPENSES AND BENEFITS.




     3.1 REASONABLE AND NECESSARY BUSINESS EXPENSES. In addition to the compensation provided for
in Section 2 hereof, the Company shall reimburse Executive for all reasonable, customary and
necessary expenses incurred in the performance of Executive’s duties hereunder. Executive shall
first account for such expenses by submitting a statement itemizing such expenses prepared in
accordance with the policy set by the Company for reimbursement of such expenses. The amount,
nature and extent of reimbursement for such expenses shall always be subject to the control,
supervision and direction of the Chief Financial Officer, and/or its General Counsel, and the
Board.



     3.2 BENEFITS. During Executive’s full-time employment with the Company, pursuant to this
Agreement:



          (a) Executive shall be eligible to participate in the Company’s standard U.S. health
insurance, life insurance and disability insurance plans, as such plans may be modified from time
to time; and



          (b) Executive shall be eligible to participate in the Company’s qualified and non-qualified
retirement and other deferred compensation programs pursuant to their terms, as such programs may
be modified from time to time.



     3.3 SARBANES-OXLEY ACT LOAN PROHIBITION. To the extent that any Company benefit, program,
practice, arrangement, or any term of this Agreement would or might otherwise result in the
Company’s extension of a credit arrangement to Executive not permissible under the Sarbanes-Oxley
Act of 2002 (a “Loan”), the Company will use reasonable efforts to provide Executive with a
substitute for such Loan, which is lawful and of at least equal value. If this cannot be done, or
if doing so would be significantly more expensive to the Company than making a Loan, then the
Company need not make or maintain a Loan or provide a substitute for it.



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4. TERMINATION OF EMPLOYMENT.




     4.1 GENERAL. Executive’s employment by the Company under this Agreement shall terminate
immediately upon delivery to Executive of written notice of termination by the Company subject to
any cure period specified below, upon the Company’s receipt of written notice of termination by
Executive at least thirty (30) days before the specified effective date of such termination, or
upon Executive’s death or Permanent Disability (as defined in Section 4.4 hereof). In the event of
such termination, except where Executive is terminated for Cause (as defined in Section 4.2 hereof)
or as the result of a Permanent Disability or death, or where Executive voluntarily terminates his
employment other than a Constructive Termination, and upon execution by Executive at or about the
effective date of such termination of the Executive Transition and Release Agreement, in the form
attached hereto as Exhibit A (the “Transition Agreement”), the Company shall provide
Executive with the benefits as set forth in the Transition Agreement.



     4.2 DEFINITION OF CAUSE. For purposes of this Agreement, “Cause” shall be deemed to mean (1)
Executive’s gross misconduct or fraud in the performance of his duties under this Agreement; (2)
Executive’s conviction or guilty plea or plea of nolo contendere with respect to any felony or act
of moral turpitude; (3) Executive’s engaging in any material act of theft or material
misappropriation of company property in connection with his employment; (4) Executive’s material
breach of this Agreement, after written notice delivered to Executive identifying such breach and
his failure to cure such breach, if curable, within thirty (30) days following delivery of such
notice; (5) Executive’s material breach of the Proprietary Information Agreement (as defined in
Section 8 hereof) and, where such breach is curable, if such breach is not cured within thirty (30)
days following delivery of written notice thereof from the Company; (6) Executive’s material
failure/refusal to perform his assigned duties, and, where such failure/refusal is curable, if such
failure/refusal is not cured within thirty (30) days following delivery of written notice thereof
from the Company; or (7) Executive’s material breach of the Company’s Code of Business Conduct as
such code may be revised from time to time, and, where such breach is curable, if such breach is
not cured within thirty (30) days following delivery of written notice thereof from the Company.



     4.3 CONSTRUCTIVE TERMINATION. Notwithstanding anything in this Section 4 to the contrary,
Executive may, upon at least thirty (30) days’ written notice to the Company, voluntarily end his
employment upon or within ninety (90) days following the occurrence of an event constituting a
Constructive Termination and be eligible to receive the benefits set forth in the Transition
Agreement in exchange for executing and delivering that agreement in accordance with Section 9.3
hereof. For purposes of this Agreement, “Constructive Termination” shall mean:



          (a) Executive’s removal from his position as Chief Executive Officer of the Company or any
other material adverse change, without Executive’s written consent, in Executive’s authority,
duties, title of Chief Executive Officer or reporting relationship to the Board causing Executive’s
position to be of materially less stature or responsibility, after written notice delivered to the
Company of such change and the Company’s failure to cure such change, if curable, within thirty
(30) days following delivery of such notice; provided, however, that such a material adverse change
shall be deemed to occur if Executive no longer serves as the Chief



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Executive Officer of the parent company following a Change in Control (as defined in Section 4.5
hereof), unless Executive consents in writing to such change;



          (b) a reduction, without Executive’s written consent, in Executive’s Base Salary in effect on
the Effective Date (or such higher level as may be in effect in the future) by more than ten
percent (10%) or a reduction by more than ten percent (10%) in Executive’s stated Target Bonus in
effect on the Effective Date (or such greater Target Bonus amount as may be in effect in the
future) under the Bonus Plan;



          (c) a relocation of Executive’s principal place of employment by more than thirty (30) miles,
unless Executive consents in writing to such relocation;



          (d) any material breach by the Company of any provision of this Agreement, after written
notice delivered to the Company of such breach and the Company’s failure to cure such breach, if
curable, within thirty (30) days following delivery of such notice;



          (e) any failure by the Company to obtain the written assumption of this Agreement by any
successor to the Company; or



          (f) in the event Executive, prior to a Change in Control (as defined in Section 4.5 hereof),
is identified as an executive officer of the Company for purposes of the rules promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and following a
Change in Control in which the Company or any successor remains a publicly traded entity, Executive
is not identified as an executive officer for purposes of Section 16 of the Exchange Act at any
time within one (1) year after the Change in Control.



     In the event of an event or circumstance constituting Constructive Termination, the Company
may notify Executive at any time prior to expiration of the cure period that it will not cure the
circumstance, in which case the cure period shall end immediately upon such notification.



     4.4 PERMANENT DISABILITY. For purposes of this Agreement, “Permanent Disability” shall mean
any medically determinable physical or mental impairment that can reasonably be expected to result
in death or that has lasted or can reasonably be expected to last for a continuous period of not
less than twelve (12) months and that renders Executive unable to perform effectively all of the
essential functions of his position pursuant to this Agreement, with or without reasonable
accommodation.



     4.5 CHANGE IN CONTROL.



          (a) Should there occur a Change in Control (as defined below) and if within three (3) months
prior to or thirteen (13) months following the Change in Control either (i) Executive’s employment
under this Agreement is terminated without Cause or (ii) Executive resigns his employment as a
result of an event constituting a Constructive Termination, then, in exchange for executing and
delivering the Transition Agreement, and subject to the terms of the Transition Agreement except as
otherwise provided in this Section 4.5(a), Executive shall be



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entitled to all of the benefits set forth therein, except that (1) in addition to the amount
of the payment described in paragraph 5(a) of the Transition Agreement, Executive shall be entitled
to
an additional amount equal to fifty percent (50%) of Executive’s annual Base Salary at the highest
annual Base Salary rate in effect at any time during the term of this Agreement (the “Highest Base
Salary”), which amount shall be paid at the same time as the payment under such paragraph 5(a); (2)
in addition to the amount of the payment described in paragraph 6(a) of the Transition Agreement,
Executive shall be entitled to an additional amount equal to fifty percent (50%) of Executive’s
Highest Base Salary; and (3) in lieu of the acceleration described in paragraph 4(a) of the form of
Transition Agreement attached hereto, all unvested equity compensation awards (including stock
options, restricted stock, and restricted stock units) that are outstanding and held by Executive
on the Transition Commencement Date shall immediately vest and become exercisable in full on the
Transition Commencement Date, provided, that, if Executive’s termination of employment without
Cause or by reason of Constructive Termination occurs within three months prior to a Change in
Control, any unvested equity compensation awards that do not vest on the Transition Commencement
Date shall vest in full immediately prior to the effective time of the Change in Control. Any
acceleration of vesting pursuant to this Section 4.5(a) shall have no effect on any other
provisions of the equity compensation awards or the plans governing such awards.



          (b) For purposes of this Section 4.5, a Change in Control shall be deemed to occur upon the
consummation of any one of the following events:




	 	(i)	 	any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the total voting
power represented by the Company’s then outstanding voting securities
or any “person” acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person)
ownership of securities of the Company representing thirty percent
(30%) or more of the total voting power; or
	 
	 	(ii)	 	during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
and any new director whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or




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	 	(iii)	 	the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80%
of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or
	 
	 	(iv)	 	the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company (in one transaction or a
series of transactions) of all or substantially all of the
Company’s assets.





     4.6 TERMINATION FOR CAUSE, VOLUNTARY TERMINATION, OR TERMINATION ON ACCOUNT OF DEATH OR
PERMANENT DISABILITY.



          (a) In the event Executive’s employment is terminated for Cause or Executive voluntarily
terminates his employment with the Company other than in connection with a Constructive
Termination, then Executive will be paid only (i) any earned but unpaid Base Salary and any
outstanding expense reimbursements submitted and approved pursuant to Section 3.1 hereof, (ii)
other unpaid vested amounts or benefits under the Company compensation, incentive and benefit plans
in which Executive participates, in each case under this clause (ii) as of the effective date of
such termination and (iii) only in the case Executive voluntarily terminates his employment with
the Company other than in connection with a Constructive Termination, the continued vesting
specified in Section 2.3; and



          (b) In the event Executive’s employment is terminated on account of death or Permanent
Disability, then, in addition to all amounts payable pursuant to Section 4.6(a)(i) and (ii), upon
execution by Executive or Executive’s representative or a representative of Executive’s estate, as
soon as reasonably practicable but in no event later than one hundred eighty (180) days following
the date of Executive’s termination of employment, of the Release Agreement, in the form attached
hereto as Exhibit B, and such Release Agreement becoming effective, the Company shall
provide Executive or his estate, as the case may be, the following benefits to which Executive
would not otherwise be entitled: (i) all unvested equity compensation awards (including stock
options, restricted stock and restricted stock units) outstanding and held by Executive on the date
of his termination that would have vested over the twelve (12) months following the date of
termination had Executive continued in employment under his Employment Agreement during that period
shall immediately vest and become exercisable in full on the date of such termination, such equity
compensation awards and all previously vested equity compensation awards shall remain exercisable
for twenty-four (24) months from the date of such termination (but not later than the expiration of
the term of the applicable equity compensation award), and there shall be no further vesting of any
equity compensation awards thereafter; provided that this acceleration will have no effect on any
other provisions of the awards; and (ii) solely in the event of termination on account of Permanent
Disability, if Executive elects to



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continue coverage under Cadence’s medical, dental and vision insurance plans pursuant to
COBRA, Cadence will pay Executive’s COBRA premiums for twelve (12) months following such
termination. In the event that Executive performs full-time or part-time employment or consulting
services during the 12-month period following his termination on account of Permanent Disability
without the written consent of the Company, then all equity compensation awards, the vesting of
which had been accelerated pursuant to the preceding sentence shall be forfeited and Executive
shall return to the Company all stock, obtained or on which restrictions terminated upon such
vesting and the proceeds from the sale of any such stock, and all stock, net of exercise price,
obtained upon the exercise of options that vested pursuant to the preceding sentence and the
proceeds, net of exercise price, from the sale of any such stock.



          (c) In the event Executive’s employment is terminated for Cause, or on account of death or
Permanent Disability, or Executive voluntarily terminates his employment with the Company other
than in connection with a Constructive Termination, Executive shall not become a party to the
Transition Agreement and shall not be bound by any of the terms and provisions thereof.



5. EXCISE TAX.




     In the event that any benefits payable to Executive pursuant to the Transition Agreement
(“Termination Benefits”) (i) constitute “parachute payments” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions,
and (ii) but for this Section 5 would be subject to the excise tax imposed by Section 4999 of the
Code, or any comparable successor provisions (the “Excise Tax”), then Executive’s Termination
Benefits shall be either (a) provided to Executive in full, or (b) provided to Executive as to such
lesser extent which would result in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, when taking into account applicable federal, state, local and
foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the
receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding
that all or some portion of such benefits may be taxable under the Excise Tax and Executive shall
have no right to Termination Benefits in excess of the amount so determined. Unless the Company
and Executive otherwise agree in writing, any determination required under this Section 5 shall be
made in writing in good faith by a nationally recognized accounting firm selected by the Company
(the “Accountants”). In the event of a reduction of benefits hereunder, benefits shall be reduced
in the order which results in the greatest economic benefit to Executive. For purposes of making
the calculations required by this Section 5, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code, and other applicable legal authority. The Company and
Executive shall furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section 5. The Company shall bear
the cost of all fees the Accountants charge in connection with any calculations contemplated by
this Section 5.



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6. DISPUTE RESOLUTION.




          (a) Each of the parties expressly agrees that, to the extent permitted by applicable law and
to the extent that the enforceability of this Agreement is not thereby impaired, any and all
disputes, controversies or claims between Executive and the Company arising under this Agreement,
except those arising under Section 6(d) hereof or under the Proprietary Information Agreement (as
defined in Section 8 hereof), shall be determined exclusively by final and binding arbitration
before a single arbitrator in accordance with the Arbitration Rules and Procedures of Judicial
Arbitration & Mediation Services, Inc. (“JAMS”), or successor rules then in effect, and that
judgment upon the award of the arbitrator may be rendered in any court of competent jurisdiction.
This includes, without limitation, any and all disputes, controversies, and/or claims arising out
of or concerning Executive’s employment by the Company or the termination of his employment or this
Agreement, and includes, without limitation, claims by Executive against directors, officers or
employees of the Company, whether arising under theories of liability or damages based on contract,
tort or statute, to the full extent permitted by law. As a material part of this agreement to
arbitrate claims, the parties expressly waive all rights to a jury trial in court on all statutory
or other claims. This Section 6 does not purport to limit either party’s ability to recover any
remedies provided for by statute, including attorneys’ fees.



          (b) The arbitration shall be held in the San Jose, California metropolitan area, and shall be
administered by JAMS or, in the event JAMS does not then conduct arbitration proceedings, a
similarly reputable arbitration administrator. Under such proceeding, the parties shall select a
mutually acceptable, neutral arbitrator from among the JAMS panel of arbitrators. Except as
provided herein, the Federal Arbitration Act shall govern the interpretation and enforcement of
such arbitration proceeding. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the State of California, or federal law, if California law is
preempted, and the arbitrator is without jurisdiction to apply any different substantive law. The
parties agree that they will be allowed to engage in adequate discovery, the scope of which will be
determined by the arbitrator, consistent with the nature of the claims in dispute. The arbitrator
shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by
any party and shall apply the standards governing such motions under the Federal Rules of Civil
Procedure. The arbitrator shall render an award that shall include a written statement of opinion
setting forth the arbitrator’s findings of fact and conclusions of law. Judgment upon the award
may be entered in any court having jurisdiction thereof. The parties intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly as possible.



          (c) The Company shall be responsible for payment of the arbitrator’s fees as well as all
administrative fees associated with the arbitration. The parties shall be responsible for their
own attorneys’ fees and costs (including expert fees and costs), except that if any party prevails
on a statutory claim that entitles the prevailing party to reasonable attorneys’ fees (with or
without expert fees) as part of the costs, the arbitrator may award reasonable attorneys’ fees
(with or without expert fees) to the prevailing party in accord with such statute.



          (d) The parties agree, however, that damages would be an inadequate remedy for the Company in
the event of a breach or threatened breach of Section 1.3 of this Agreement or any provision of the
Proprietary Information Agreement (as defined in Section 8 hereof).



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 In the event of any such breach or threatened breach, Cadence may, either with or without
pursuing any potential damage remedies, obtain from a court of competent jurisdiction, and enforce,
an injunction prohibiting Executive from violating Section 1.3 of this Agreement or any provision
of the Proprietary Information Agreement (as defined in Section 8 hereof) and requiring Executive
to comply with the terms of those agreements.



7. COOPERATION WITH THE COMPANY AFTER TERMINATION OF THE EMPLOYMENT PERIOD.




     Following his termination of full-time employment for any reason (other than death), Executive
shall provide the Company with reasonable cooperation in all matters relating to the winding up of
his pending work on behalf of the Company and the orderly transfer of any such pending work to
other employees of the Company as may be designated by the Company. Such cooperation shall be
provided by Executive at mutually-convenient times. Executive also agrees to participate as a
witness in any litigation or regulatory proceeding to which the Company or any of its affiliates is
a party at the request of the Company upon delivery to Executive of reasonable advance notice.
With respect to the cooperation/participation described in the preceding sentences, the Company
will reimburse Executive for all reasonable and documented expenses incurred by Executive in the
course of such cooperation/participation. Furthermore, Executive agrees to return to the Company
all property of the Company, including all hard and soft copies of records, documents, materials
and files relating to confidential, proprietary or sensitive company information in his possession
or control, as well as all other company-owned property in his possession or control, at the time
of the termination of his full-time employment, except to the extent that the Company determines
that retention of any of such property is necessary, desirable or convenient in order to permit
Executive to satisfy his obligations under this Section 7 or under the Transition Agreement, after
which time Executive shall promptly return all such retained company property.



8. PROPRIETARY INFORMATION AGREEMENT.




     The Executive has, before the Effective Date, executed and delivered to the Company an
Employee Proprietary Information and Inventions Agreement dated December 1, 2008 (the “Proprietary
Information Agreement”).



9. GENERAL.




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



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



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     9.3 NOTICES. All notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be considered effective either (a) upon personal
service, or (b) upon delivery by facsimile and depositing such notice in the U.S. Mail, postage
prepaid, return receipt requested and, if addressed to the Company, in care of the General Counsel
at the Company’s principal corporate address, and, if addressed to Executive, at his most recent
address shown on the Company’s corporate records or at any other address that Executive may specify
in any appropriate notice to the Company, or (c) upon only depositing such notice in the U.S. Mail
as described in clause (b) of this paragraph, or (d) upon delivery by email, if addressed to the
Company to generalcounsel@cadence.com and if addressed to Executive to such email address
as Executive may specify by notice to the Company.



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



     9.5 ENTIRE AGREEMENT. The parties hereto acknowledge that each has read this Agreement,
understands it, and agrees to be bound by its terms. The parties further agree that this
Agreement, the exhibits to this Agreement, any existing equity compensation award agreements
between the parties, and the documents, plans and policies referred to in this Agreement (which are
hereby incorporated herein by reference) constitute the complete and exclusive statement of the
agreement between the parties and supersedes all proposals (oral or written), understandings,
agreements, representations, conditions, covenants, and all other communications between the
parties relating to the subject matter hereof. Notwithstanding the foregoing, Executive agrees to
adhere to all Company policies and procedures generally applicable to all Cadence employees except
to the extent that such policies and procedures are inconsistent with the terms and conditions of
this Agreement.



     9.6 GOVERNING LAW. This Agreement shall be governed by the laws of the State of California,
without regard to its conflict of laws principles.



     9.7 ASSIGNMENT AND SUCCESSORS. The Company shall have the right to assign its rights and
obligations under this Agreement to an entity that, directly or indirectly, acquires all or
substantially all of the assets of the Company. The rights and obligations of the Company under
this Agreement shall inure to the benefit and shall be binding upon the successors and assigns of
the Company. Executive shall not have any right to assign his obligations under this Agreement and
shall only be entitled to assign his rights under this Agreement upon his death, to his estate or
designated beneficiary, or as otherwise agreed to by the Company.



     9.8 AMENDMENTS. This Agreement, and the terms and conditions of the matters addressed in this
Agreement, may only be amended in writing executed both by the Executive and the Chairman of the
Board and/or the General Counsel of the Company.



     9.9 TERMINATION AND SURVIVAL OF CERTAIN PROVISIONS. This Agreement shall terminate upon the
termination of Executive’s full-time employment for any reason; provided, however, that the
following provisions of this Agreement shall survive its



11









 







termination: Executive’s obligations under Section 7 hereof; the Company’s obligations to
provide compensation earned through the termination of the employment relationship plus all
reimbursements to which Executive is entitled, under Sections 2 and 3 hereof; the Company’s
obligations and Executive’s obligations under Section 5 hereof; the Company’s obligations and
Executive’s obligations enumerated in the Transition Agreement, if applicable; the Company’s
obligation to indemnify Executive pursuant to Section 2.4 hereof and the referenced Indemnity
Agreement; the dispute resolution provisions of Section 6 hereof; and, to the extent applicable,
this Section 9.



     9.10 FORMER EMPLOYERS. Executive represents and warrants to the Company, that he is not
subject to any employment, confidentiality or other agreement or restriction that would prevent him
from fully satisfying his duties under this Agreement or that would be violated if he did so.
Without the Company’s prior written approval, Executive will not:



          (a) disclose any proprietary information belonging to a former employer or other entity
without its written permission;



          (b) contact any former employer’s customers or employees to solicit their business or
employment on behalf of the Company in violation of Executive’s existing obligations to his former
employer; or



          (c) distribute announcements about or otherwise publicize Executive’s employment with the
Company.



     Executive shall indemnify and hold the Company harmless from any liabilities, including
reasonable defense costs, it may incur because he is alleged to have broken any of these promises
or improperly revealed or used such proprietary information or to have threatened to do so, or if a
former employer challenges Executive’s entering into this Agreement or rendering services pursuant
to it.



     9.11 DEPARTMENT OF HOMELAND SECURITY VERIFICATION REQUIREMENT. If Executive has not already
done so, he will timely file all documents required by the Department of Homeland Security to
verify his identity and his lawful employment in the United States. Notwithstanding any other
provision of this Agreement, if Executive fails to meet any such requirements promptly after
receiving a written request from the Company to do so, his employment will terminate immediately
upon notice from the Company and he will not be entitled to any compensation from the Company of
any type.



     9.12 HEADINGS. The headings of the several sections and paragraphs of this Agreement are
inserted solely for the convenience of reference and are not a part of and are not intended to
govern, limit or aid in the construction of any term or provision hereof.



     9.13 TAXES AND OTHER WITHHOLDINGS. Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable hereunder all federal, state, local and foreign taxes and
other amounts that are required to be withheld by applicable laws or regulations, and the
withholding of any amount shall be treated as payment thereof for purposes of determining whether
Executive has been paid amounts to which he is entitled.



12









 





     9.14 TAX MATTERS. Notwithstanding anything in this Agreement or the Transition Agreement to
the contrary, to the extent that the Company in good faith determines that any payment resulting
from Executive’s termination of employment provided for in this Agreement or the Transition
Agreement constitutes a “deferral of compensation” and that the Executive is a “specified
employee,” both within the meaning of Section 409A of the Code, no such amounts shall be payable to
Executive pursuant to this Agreement or the Transition Agreement prior to the earliest of (a)
Executive’s death following the Termination Date (as such term is defined in the Transition
Agreement) or (b) the date that is six months following the date of Executive’s “separation from
service” with the Company (within the meaning of Section 409A of the Code). In addition, with
regard to any provision herein or in the Transition Agreement that provides for reimbursement of
costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code, (i) the
right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for
another benefit, (ii) the amount of expenses eligible for reimbursement or in-kind benefits
provided during any taxable year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii)
shall not be deemed to be violated with regard to expenses reimbursed under any arrangement covered
by Section 105(b) of the Code solely because such expenses are subject to a limit related to the
period the arrangement is in effect and (iii) such payments shall be made on or before the last day
of Executive’s taxable year following the taxable year in which the expense occurred.



     IN WITNESS WHEREOF, the parties have executed this Agreement on this 8th day of January 2009.



	 	 	 	 	 	 	 	 	 
	CADENCE DESIGN SYSTEMS, INC.	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ James J. Cowie
	 	 	 	/s/ Lip-Bu Tan
	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	James J. Cowie
	 	 	 	Lip-Bu Tan	 	 
	 

	 	Senior Vice President and General Counsel	 	 	 	 	 	 







13









 








EXHIBIT A




EXECUTIVE TRANSITION AND RELEASE AGREEMENT




 









 








EXECUTIVE TRANSITION AND RELEASE AGREEMENT




     This Executive Transition and Release Agreement (this “Agreement”) is entered into between
Lip-Bu Tan (“Executive”) and Cadence Design Systems, Inc. (“Cadence” or the “Company”).



     1. TRANSITION COMMENCEMENT DATE. As of                      (the “Transition Commencement Date”),
Executive will no longer hold the position of President and Chief Executive Officer and will be
relieved of all of Executive’s authority and responsibilities in that position. Executive will be
paid (a) any earned but unpaid base salary for his services as an officer of the Company prior to
the Transition Commencement Date and any outstanding expense reimbursements submitted and approved
pursuant to Section 3.1 of Executive’s Employment Agreement with the Company dated as of January
[_], 2009 (the “Employment Agreement”); and (b) other unpaid vested amounts or benefits under the
compensation, incentive and benefit plans of the Company in which Executive participates, in each
case under this clause (b) as of the Transition Commencement Date. The payment of the foregoing
amounts shall be made to Executive by no later than the next regular payroll date following the
Transition Commencement Date. As of the first day of the month following the Transition
Commencement Date, Executive will no longer participate in Cadence’s medical, dental, and vision
insurance plans (unless Executive elects to continue coverage pursuant to COBRA), and will not be
eligible for a bonus for any services rendered after that date.



     2. TRANSITION PERIOD. The period from the Transition Commencement Date to the date when
Executive’s employment with Cadence under this Agreement terminates (the “Termination Date”) is
called the “Transition Period” in this Agreement. Executive’s Termination Date will be the
earliest to occur of:



          a. the date on which Executive resigns from all employment with Cadence;



          b. the date on which Cadence terminates Executive’s employment due to a material breach by
Executive of Executive’s duties or obligations under this Agreement after written notice delivered
to Executive identifying such breach and his failure to cure such breach, if curable, within thirty
(30) days following delivery of such notice; and



          c. one year from the Transition Commencement Date.



     3. DUTIES AND OBLIGATIONS DURING THE TRANSITION PERIOD AND AFTERWARDS.



          a. During the Transition Period, Executive will assume the position of                     . In
this position, Executive will render those services requested by Cadence’s                     
on an as-needed basis at mutually-convenient times. Executive’s time rendering those services
shall not exceed twenty (20) hours per month. Except as otherwise provided in paragraph 3(b) of
this Agreement, Executive’s obligations hereunder will not preclude Executive from accepting and
holding full-time employment elsewhere. Neither party expects that Executive will resume
employment with Cadence in the future at a level that exceeds the level set forth in this Section
3(a) and it is the parties’ intent that Executive



1









 







will have experienced a “separation from service” as defined in Section 409A of the Code as of
the Transition Commencement Date.



          b. As a Cadence                     , as well as other positions Executive may
have held with Cadence, Executive has obtained extensive and valuable knowledge and information
concerning Cadence’s business (including confidential information relating to Cadence and its
operations, intellectual property, assets, contracts, customers, personnel, plans, marketing plans,
research and development plans and prospects). Executive acknowledges and agrees that it would be
virtually impossible for Executive to work as an employee, consultant or advisor in any business in
which Cadence engages on the Transition Commencement Date, including the electronic design
automation (“EDA”) industry, without inevitably disclosing confidential and proprietary information
belonging to Cadence. Accordingly, during the Transition Period, Executive will not, directly or
indirectly, provide services, whether as an employee, consultant, independent contractor, agent,
sole proprietor, partner, joint venturer, corporate officer or director, on behalf of any
corporation, limited liability company, partnership, or other entity or person or successor thereto
that (i) is engaged in any business in which Cadence or any of its affiliates is engaged on the
Transition Commencement Date or has been engaged at any time during the 12-month period immediately
preceding the Transition Commencement Date, whether in the EDA industry or otherwise, anywhere in
the world (a “Cadence Business”), or (ii) produces, markets, distributes or sells any products,
directly or indirectly through intermediaries, that are competitive with Cadence or any of its
affiliates. As used in this paragraph, the term “EDA industry” means the research, design or
development of electronic design automation software, electronic design verification, emulation
hardware and related products, such products containing hardware, software and both hardware and/or
software products, designs or solutions for, and all intellectual property embodied in the
foregoing, or in commercial electronic design and/or maintenance services, such services including
all intellectual property embodied in the foregoing. If, during the Transition Period, Executive
receives an offer of employment or consulting from any person or entity that engages in whole or in
part in a Cadence Business, then Executive must first obtain written approval from Cadence’s CEO
before accepting said offer. Nothing herein contained shall be deemed to preclude (x) Executive
from continuing to serve as Chairman and an employee of, or providing services to, Walden
International or any of its affiliated venture funds or their managing entities, as in existence on
or after the Transition Commencement Date (collectively, “Walden”), or (y) limit the ability of
Walden to pursue, or Executive as an executive thereof from assisting Walden in pursuing, its
investment activities in entities other than the Company.



          c. During the Transition Period, Executive will be prohibited, to the fullest extent allowed
by applicable law, and except with the written advance approval of Cadence’s CEO (or his
successor(s)), from voluntarily or involuntarily, for any reason whatsoever, directly or
indirectly, individually or on behalf of persons or entities not now parties to this Agreement: (i)
encouraging, inducing, attempting to induce, recruiting, attempting to recruit, soliciting or
attempting to solicit or participating in any way in hiring or retaining for employment, contractor
or consulting opportunities anyone who is employed at that time, or was employed during the
previous one year, by Cadence or any Cadence affiliate; (ii) interfering or attempting to interfere
with the relationship or prospective relationship of Cadence or any Cadence affiliate with any
former, present or future client, customer, joint venture partner, or financial backer of Cadence
or any Cadence affiliate; or (iii) soliciting, diverting or accepting business, in any line or area
of



2









 







business engaged in by Cadence or any Cadence affiliate, from any former or present client,
customer or joint venture partner of Cadence or any Cadence affiliate (other than on behalf of
Cadence), except that Executive may solicit or accept business, in a line of business engaged in by
Cadence or a Cadence affiliate, from a former or present client, if and only if Executive had
previously provided consulting services in such line of business, to such client, prior to ever
being employed by Cadence, but in no event may Executive violate paragraph 3(b) hereof. The
restrictions contained in subparagraph (i) of this paragraph 3(c) shall also be in effect for a
period of one year following the Termination Date. This paragraph 3(c) does not alter any of the
obligations the Executive may have under the Employee Proprietary Information and Inventions
Agreement, dated as of December 1, 2008.



          d. Executive will fully cooperate with Cadence in all matters relating to his employment,
including the winding up of work performed in Executive’s prior position and the orderly transition
of such work to other Cadence employees.



          e. Executive will not make any statement, written or oral, that disparages Cadence or any of
its affiliates, or any of Cadence’s or its affiliates’ products, services, policies, business
practices, employees, executives, officers, or directors, past, present or future. Similarly,
Cadence agrees to instruct its executive officers and members of the Company’s Board of Directors
not to make any statement, written or oral, that disparages Executive. The restrictions described
in this paragraph shall not apply to any truthful statements made in response to a subpoena or
other compulsory legal process.



          f. Notwithstanding paragraph 10 hereof, the parties agree that damages would be an inadequate
remedy for Cadence in the event of a breach or threatened breach by Executive of paragraph 3(b) or
3(c), or for Cadence or Executive in the event of a breach or threatened breach of paragraph 3(e).
In the event of any such breach or threatened breach, the non-breaching party may, either with or
without pursuing any potential damage remedies, obtain from a court of competent jurisdiction, and
enforce, an injunction prohibiting the other party from violating this Agreement and requiring the
other party to comply with the terms of this Agreement.



     4. TRANSITION COMPENSATION AND BENEFITS. In consideration of Executive’s execution of the
release of claims in this Agreement and as compensation for Executive’s services during the
Transition Period, Cadence will provide the following payments and benefits to Executive (to which
Executive would not otherwise be entitled), after Executive has returned to the Company all hard
and soft copies of records, documents, materials and files in his possession or control, which
contain or relate to confidential, proprietary or sensitive information obtained by Executive in
conjunction with his employment with the Company, as well as all other Company-owned property,
except to the extent retained pursuant to Section 7 of the Employment Agreement:



          a. all of the unvested equity compensation awards (including stock options, restricted stock
and restricted stock units) that are not performance-based within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), that are outstanding and held by
Executive on the Transition Commencement Date and that would have vested over the eighteen (18)
months following the Transition Commencement Date had



3









 







Executive continued to serve as an executive of the Company pursuant to his Employment
Agreement, shall immediately vest and become exercisable in full on the Effective Date of this
Agreement, and there shall be no further vesting of those equity compensation awards during or
after the Transition Period, notwithstanding any provision in any equity compensation award to the
contrary, except as otherwise provided by paragraph 7 hereof. Provided Executive continues in
employment under this Agreement through the end of the applicable performance period, unvested
equity compensation awards that are performance-based within the meaning of Section 162(m) of the
Code and that are outstanding and held by Executive on the Transition Commencement Date shall
continue to vest though the end of the applicable performance period provided any such performance
period ends within eighteen (18) months following the Transition Commencement Date, but only to the
extent justified by the satisfaction of the performance goals prescribed for such equity awards.
Upon the conclusion of the performance period, such awards shall immediately vest to the extent
they would have vested over the eighteen (18) months following the Transition Commencement Date had
Executive continued to serve as an executive of the Company pursuant to his Employment Agreement,
and there shall be no further vesting of such awards during or after the Transition Period except
as otherwise provided by paragraph 7 hereof. Any acceleration pursuant to this paragraph 4(a) will
have no effect on any other provisions of the stock awards;



          b. Executive’s employment pursuant to this Agreement shall be considered a continuation of
employee status and continuous service for all purposes under any equity compensation awards
previously granted to Executive by the Company and outstanding on the Transition Commencement Date;
and



          c. if Executive elects to continue coverage under Cadence’s medical, dental, and vision
insurance plans pursuant to COBRA following the Transition Commencement Date, Cadence will pay
Executive’s COBRA premiums during the Transition Period.


Except as so provided or as otherwise set forth in paragraphs 5 and 7 hereof, Executive will
receive no other compensation or benefits from Cadence in consideration of Executive’s services
during the Transition Period (except for such compensation as may be approved for his continued
service as a member of the Board of Directors of Cadence).




     5. FIRST TERMINATION PAYMENT AND BENEFITS. Provided that Executive does not resign from
employment with Cadence under this Agreement and Cadence does not terminate Executive’s employment
with Cadence pursuant to paragraph 2(b) due to a material breach by Executive of Executive’s duties
under this Agreement, and in consideration for, and subject to, Executive’s execution and
acceptance of and adherence to this Agreement and Executive’s further execution and delivery of a
Release of Claims in the form of Attachment 1 hereto on a date that is at least six months after
the Transition Commencement Date, and as compensation for Executive’s services during the
Transition Period, Cadence will provide to Executive the following termination payment, to which
Executive would not otherwise be entitled, in each case, so long as the revocation period of the
Release of Claims (as defined in that document) has expired prior to the date of payment:



          a. a lump-sum payment of $                     [amount equal to 100% of Executive’s annual Base Salary at
the highest rate in effect during Executive’s employment with the



4









 







Company], less applicable tax deductions and withholdings, payable on the thirtieth (30th) day
following the date that is six months after the Transition Commencement Date; and



          b. for a period of six months, a monthly salary of $4,000 less applicable tax withholdings and
deductions, payable in accordance with Cadence’s regular payroll schedule, commencing on the first
pay date that is more than thirty (30) days following the date that is six months after the
Transition Commencement Date.



     6. SECOND TERMINATION PAYMENT AND BENEFITS; REFUND OF PAYMENTS.



          a. Provided that Executive does not resign from employment with Cadence under this Agreement
and Cadence does not terminate Executive’s employment with Cadence pursuant to paragraph 2(b) due
to a material breach by Executive of Executive’s duties under this Agreement, on the thirtieth
(30th) day following the Termination Date, and in consideration for, and subject to, Executive’s
execution and acceptance of and adherence to this Agreement and Executive’s further execution of a
Release of Claims in the form of Attachment 2 to this Agreement, Cadence will provide to Executive
the following termination payment, to which Executive would not otherwise be entitled, so long as
the revocation period of the Release of Claims (as defined in that document) has expired prior to
the date of payment:



               i. a lump-sum payment of $                     [amount equal to 100% of Executive’s annual Base Salary at
the highest rate in effect during Executive’s employment with the Company], less applicable tax
deductions and withholdings.



          b. If the Company should terminate Executive’s employment with the Company due to a breach by
Executive of Executive’s duties or obligations under this Agreement, Executive shall promptly
refund to the Company any and all amounts theretofore paid to Executive pursuant to paragraph 5(a),
with interest on any such amount of eight percent per annum, compounded monthly.



          c. Notwithstanding anything in this Agreement to the contrary, to the extent that the Company
in good faith determines that any payment resulting from Executive’s termination of employment
provided for in this Agreement constitutes a “deferral of compensation” and that Executive is a
“specified employee”, both within the meaning of Section 409A of the Code, no such amounts shall be
payable to Executive pursuant to the Agreement prior to the earlier of (1) Executive’s death
following the Transition Commencement Date or (2) the date that is six months following the date of
Executive’s “separation from service” with the Company (within the meaning of Section 409A of the
Code).



     7. CHANGE IN CONTROL. If this Agreement is executed by Executive in connection with his
termination without Cause (as defined in the Employment Agreement) or Constructive Termination (as
defined in the Employment Agreement) occurring within thirteen (13) months following a Change in
Control (as defined in the Employment Agreement) or if a Change in Control occurs within three (3)
months following his termination without Cause or Constructive Termination, in which case the
Company shall promptly notify Executive of the occurrence of such Change in Control, then:



5









 





          a. Section 4.5(a)(3) of the Employment Agreement shall apply in lieu of paragraph 4(a) of this
Agreement; and



          b. Sections 4.5(a)(1) and 4.5(a)(2) of the Employment Agreement shall apply addition to
paragraphs 5(a) and 6(a) of this Agreement.


For the avoidance of doubt, if this Agreement has already been executed by Executive and Cadence
and within three (3) months following the Transition Commencement Date a Change in Control occurs
(a “Post-Termination Timely Change in Control”), then paragraphs 7(a) and 7(b) of this Agreement
shall take effect immediately upon the effectiveness of the Post-Termination Timely Change in
Control.




     8. GENERAL RELEASE OF CLAIMS.



          a. Executive hereby irrevocably, fully and finally releases Cadence, its parent, subsidiaries,
affiliates, directors, officers, agents and employees (“Releasees”) from all causes of action,
claims, suits, demands or other obligations or liabilities, whether known or unknown, suspected or
unsuspected, that Executive ever had or now has as of the time that Executive signs this Agreement
which relate to his hiring, his employment with the Company, the termination of his employment with
the Company and claims asserted in shareholder derivative actions or shareholder class actions
against the Company and its officers and Board of Directors, to the extent those derivative or
class actions relate to the period during which Executive was employed by the Company. The claims
released include, but are not limited to, any claims arising from or related to Executive’s
employment with Cadence, such as claims arising under (as amended) Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1974, the
Americans with Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the California
Fair Employment and Housing Act, the California Labor Code, the Employee Retirement Income Security
Act of 1974 (except for any vested right Executive has to benefits under an ERISA plan), the state
and federal Worker Adjustment and Retraining Notification Act, and the California Business and
Professions Code; any other local, state, federal, or foreign law governing employment; and the
common law of contract and tort. In no event, however, shall any claims, causes of action, suits,
demands or other obligations or liabilities be released pursuant to the foregoing if and to the
extent they relate to:



               i. any amounts or benefits to which Executive is or becomes entitled pursuant to the
provisions of this Agreement or pursuant to the provisions designated in Section 9.9 of the
Employment Agreement to survive the termination of Executive’s full-time employment;



               ii. claims for workers’ compensation benefits under any of the Company’s workers’ compensation
insurance policies or funds;



               iii. claims related to Executive’s COBRA rights;



               iv. any rights that Executive has or may have to be indemnified by Cadence pursuant to any
contract, statute, or common law principle; and



6









 





               v. any other rights or claims that Executive has or may have that cannot, as a matter of law,
be waived.



          b. Executive represents and warrants that he has not filed any claim, charge or complaint
against any of the Releasees based upon any of the matters released above.



          c. Executive acknowledges that the payments provided in this Agreement constitute adequate
consideration for the release set forth in this paragraph 8.



          d. Executive intends that this release of claims cover all claims described above, whether or
not known to Executive. Executive further recognizes the risk that, subsequent to the execution of
this Agreement, Executive may incur loss, damage or injury which Executive attributes to the claims
encompassed by this release. Executive expressly assumes this risk by signing this Agreement and
voluntarily and specifically waives any rights conferred by California Civil Code section 1542
which provides as follows:




A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor.



          e. Executive represents and warrants that there has been no assignment or other transfer of
any interest in any claim by Executive that is covered by this release.



     9. REVIEW OF AGREEMENT; REVOCATION OF ACCEPTANCE. Executive has been given at least 21 days
in which to review and consider this Agreement, although Executive is free to accept this Agreement
anytime within that 21-day period. Executive is advised to consult with an attorney about the
Agreement. If Executive accepts this Agreement, Executive will have an additional 7 days from the
date that Executive signs this Agreement to revoke that acceptance, which Executive may effect by
means of a written notice sent to the CEO. If this 7-day period expires without a timely
revocation, this Agreement will become final and effective on the eighth day following the date of
Executive’s signature, which eighth day will be the “Effective Date” of this Agreement.



     10. ARBITRATION. Subject to paragraph 3(f) hereof, all claims, disputes, questions, or
controversies arising out of or relating to this Agreement, including without limitation the
construction or application of any of the terms, provisions, or conditions of this Agreement, will
be resolved exclusively in final and binding arbitration in accordance with the Arbitration Rules
and Procedures, or successor rules then in effect, of Judicial Arbitration & Mediation Services,
Inc. (“JAMS”). The arbitration will be held in the San Jose, California, metropolitan area, and
will be conducted and administered by JAMS or, in the event JAMS does not then conduct arbitration
proceedings, a similarly reputable arbitration administrator. Executive and Cadence will select a
mutually acceptable, neutral arbitrator from among the JAMS panel of arbitrators. Except as
provided by this Agreement, the Federal Arbitration Act will govern the administration of the
arbitration proceedings. The arbitrator will apply the substantive law (and the law of remedies,
if applicable) of the State of California, or federal law, if California law is preempted, and the
arbitrator is without jurisdiction to apply any different



7









 







substantive law. Executive and Cadence will each be allowed to engage in adequate discovery,
the scope of which will be determined by the arbitrator consistent with the nature of the claim[s]
in dispute. The arbitrator will have the authority to entertain a motion to dismiss and/or a
motion for summary judgment by any party and will apply the standards governing such motions under
the Federal Rules of Civil Procedure. The arbitrator will render a written award and supporting
opinion that will set forth the arbitrator’s findings of fact and conclusions of law. Judgment
upon the award may be entered in any court of competent jurisdiction. Cadence will pay the
arbitrator’s fees, as well as all administrative fees, associated with the arbitration. Each party
will be responsible for paying its own attorneys’ fees and costs (including expert witness fees and
costs, if any). However, in the event a party prevails at arbitration on a statutory claim that
entitles the prevailing party to reasonable attorneys’ fees as part of the costs, then the
arbitrator may award those fees to the prevailing party in accordance with that statute.



     11. NO ADMISSION OF LIABILITY. Nothing in this Agreement will constitute or be construed in
any way as an admission of any liability or wrongdoing whatsoever by Cadence or Executive.



     12. INTEGRATED AGREEMENT. This Agreement is intended by the parties to be a complete and
final expression of their rights and duties respecting the subject matter of this Agreement.
Except as expressly provided herein, nothing in this Agreement is intended to negate Executive’s
agreement to abide by Cadence’s policies while serving as a Cadence employee, including but not
limited to Cadence’s Employee Handbook, Sexual Harassment Policy and Code of Business Conduct, or
Executive’s continuing obligations under Executive’s Employee Proprietary Information and
Inventions Agreement, or any other agreement governing the disclosure and/or use of proprietary
information, which Executive signed while working with Cadence or its predecessors; nor to waive
any of Executive’s obligations under state and federal trade secret laws.



     13. FULL SATISFACTION OF COMPENSATION OBLIGATIONS; ADEQUATE CONSIDERATION. Executive agrees
that the payments and benefits provided herein satisfy in full all obligations of Cadence to
Executive arising out of or in connection with Executive’s employment through the Termination Date,
including, without limitation, all compensation, salary, bonuses, reimbursement of expenses, and
benefits.



     14. TAXES AND OTHER WITHHOLDINGS. Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable hereunder all federal, state, local and foreign taxes and
other amounts that are required to be withheld by applicable laws or regulations, and the
withholding of any amount shall be treated as payment thereof for purposes of determining whether
Executive has been paid amounts to which he is entitled.



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



8









 






     16. MODIFICATION. This Agreement may not be modified unless such modification is embodied in
writing, signed by the party against whom the modification is to be enforced. Notwithstanding
anything herein or in the Employment Agreement to the contrary, the Company may, in its sole
discretion, amend this Agreement (which amendment shall be effective upon its adoption or at such
other time designated by the Company) at any time prior to a Change in Control as may be necessary
to avoid the imposition of the additional tax under Section 409A(a)(1)(B) of the Code; provided,
however, that any such amendment shall not materially reduce the benefits provided to Executive
pursuant to this Agreement without the Executive’s consent.



     17. ASSIGNMENT AND SUCCESSORS. Cadence shall have the right to assign its rights and
obligations under this Agreement to an entity that, directly or indirectly, acquires all or
substantially all of the assets of Cadence. The rights and obligations of Cadence under this
Agreement shall inure to the benefit and shall be binding upon the successors and assigns of
Cadence. Executive shall not have any right to assign his obligations under this Agreement and
shall only be entitled to assign his rights under this Agreement upon his death, solely to the
extent permitted by this Agreement, or as otherwise agreed to by Cadence.



     18. SEVERABILITY. In the event that any part of this Agreement is found to be void or
unenforceable, all other provisions of the Agreement will remain in full force and effect.



     19. GOVERNING LAW. This Agreement will be governed and enforced in accordance with the laws
of the State of California, without regard to its conflict of laws principles.



EXECUTION OF AGREEMENT




     The parties execute this Agreement to evidence their acceptance of it.



	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Dated:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LIP-BU TAN	 	 	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 







9









 








ATTACHMENT 1




RELEASE OF CLAIMS




     1. For valuable consideration, I irrevocably, fully and finally release Cadence, its parent,
subsidiaries, affiliates, directors, officers, agents and employees (“Releasees”) from all causes
of action, claims, suits, demands or other obligations or liabilities, whether known or unknown,
suspected or unsuspected, that I ever had or now have as of the time that I sign this Agreement
which relate to my hiring or employment with the Company, the termination of my employment with the
Company and claims asserted in shareholder derivative actions or shareholder class actions against
the Company and its officers and Board of Directors, to the extent those derivative or class
actions relate to the period during my employment with the Company. The claims released include,
but are not limited to, any claims arising from or related to my employment with Cadence, such as
claims arising under (as amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act of 1974, the Americans with Disabilities Act, the
Equal Pay Act, the Fair Labor Standards Act, the California Fair Employment and Housing Act, the
California Labor Code, the Employee Retirement Income and Security Act of 1974 (except for any
vested right I have to benefits under an ERISA plan), the state and federal Worker Adjustment and
Retraining Notification Act, and the California Business and Professions Code; any other local,
state, federal, or foreign law governing employment; and the common law of contract and tort. In
no event, however, shall any claims, causes of action, suits, demands or other obligations or
liabilities be released pursuant to the foregoing if and to the extent they relate to:



          i. any amounts or benefits which I am or become entitled to receive pursuant to the provisions
of my Executive Transition and Release Agreement with Cadence or pursuant to the provisions
designated in Section 9.9 of my Employment Agreement with Cadence to survive the termination of my
full-time employment;



          ii. claims for workers’ compensation benefits under any of the Company’s workers’ compensation
insurance policies or funds;



          iii. claims related to my COBRA rights;



          iv. any rights that I have or may have to be indemnified by Cadence pursuant to any contract,
statute, or common law principle; and



          v. any other rights or claims that I have or may have that cannot, as a matter of law, be
waived.



     2. I intend that this Release cover all claims described above, whether or not known to me. I
further recognize the risk that, subsequent to the execution of this Release, I may incur loss,
damage or injury which I attribute to the claims encompassed by this Release. I expressly assume
this risk by signing this Release and voluntarily and specifically waive any rights conferred by
California Civil Code section 1542 which provides as follows:




A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if



1









 







known by him or her must have materially affected his or her settlement with the
debtor.



     3. I represent and warrant that there has been no assignment or other transfer of any interest
in any claim by me that is covered by this Release.



     4. I acknowledge that Cadence has given me 21 days in which to consider this Release and
advised me to consult an attorney about it. I further acknowledge that once I execute this
Release, I will have an additional 7 days in which to revoke my acceptance of this Release by means
of a written notice of revocation given to the General Counsel and the executive overseeing Human
Resources. This Release will not be final and effective until the expiration of this revocation
period.



	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Sign Name	 	 







2









 








ATTACHMENT 2




RELEASE OF CLAIMS




     1. For valuable consideration, I irrevocably, fully and finally release Cadence, its parent,
subsidiaries, affiliates, directors, officers, agents and employees (“Releasees”) from all causes
of action, claims, suits, demands or other obligations or liabilities, whether known or unknown,
suspected or unsuspected, that I ever had or now have as of the time that I sign this Agreement
which relate to my hiring or employment with the Company, the termination of my employment with the
Company and claims asserted in shareholder derivative actions or shareholder class actions against
the Company and its officers and Board of Directors, to the extent those derivative or class
actions relate to the period during my employment with the Company. The claims released include,
but are not limited to, any claims arising from or related to my employment with Cadence, such as
claims arising under (as amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act of 1974, the Americans with Disabilities Act, the
Equal Pay Act, the Fair Labor Standards Act, the California Fair Employment and Housing Act, the
California Labor Code, the Employee Retirement Income and Security Act of 1974 (except for any
vested right I have to benefits under an ERISA plan), the state and federal Worker Adjustment and
Retraining Notification Act, and the California Business and Professions Code; any other local,
state, federal, or foreign law governing employment; and the common law of contract and tort. In
no event, however, shall any claims, causes of action, suits, demands or other obligations or
liabilities be released pursuant to the foregoing if and to the extent they relate to:



          i. any amounts or benefits which I am or become entitled to receive pursuant to the provisions
of my Executive Transition and Release Agreement with Cadence or pursuant to the provisions
designated in Section 9.9 of my Employment Agreement with Cadence to survive the termination of my
full-time employment;



          ii. claims for workers’ compensation benefits under any of the Company’s workers’ compensation
insurance policies or funds;



          iii. claims related to my COBRA rights;



          iv. any rights that I have or may have to be indemnified by Cadence pursuant to any contract,
statute, or common law principle; and



          v. any other rights or claims that I have or may have that cannot, as a matter of law, be
waived.



     2. I intend that this Release cover all claims described above, whether or not known to me. I
further recognize the risk that, subsequent to the execution of this Release, I may incur loss,
damage or injury which I attribute to the claims encompassed by this Release. I expressly assume
this risk by signing this Release and voluntarily and specifically waive any rights conferred by
California Civil Code section 1542 which provides as follows:




A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if



1









 







known by him or her must have materially affected his or her settlement with the
debtor.



     3. I represent and warrant that there has been no assignment or other transfer of any interest
in any claim by me that is covered by this Release.



     4. I acknowledge that Cadence has given me 21 days in which to consider this Release and
advised me to consult an attorney about it. I further acknowledge that once I execute this
Release, I will have an additional 7 days in which to revoke my acceptance of this Release by
means of a written notice of revocation given to the General Counsel and the executive overseeing
Human Resources. This Release will not be final and effective until the expiration of this
revocation period.



	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Sign Name	 	 







2









 








EXHIBIT B




RELEASE AGREEMENT




(DEATH or PERMANENT DISABILITY)




 









 





RELEASE AGREEMENT




     1. GENERAL RELEASE OF CLAIMS.



     a. Lip-Bu Tan or, in the event of his incapacity due to Permanent Disability as defined in his
Employment Agreement, his legal representative acting on his behalf, or, in the event of his death,
his estate (all of which are hereafter referred to as “Executive” as the context requires), hereby
irrevocably, fully and finally releases Cadence, its parent, subsidiaries, affiliates, directors,
officers, agents and employees (“Releasees”) from all causes of action, claims, suits, demands or
other obligations or liabilities, whether known or unknown, suspected or unsuspected, that
Executive ever had or now has as of the time that Executive signs this Release Agreement which
relate to his hiring or his employment with the Company, the termination of his employment with the
Company, and claims asserted in shareholder derivative actions or shareholder class actions against
the Company and its officers and Board of Directors, to the extent those derivative or class
actions relate to the period during which Executive was employed by the Company. The claims
released include, but are not limited to, any claims arising from or related to Executive’s
employment with Cadence, such as claims arising under (as amended) Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1974, the
Americans with Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the California
Fair Employment and Housing Act, the California Labor Code, the Employee Retirement Income Security
Act of 1974 (except for any vested right Executive has to benefits under an ERISA plan), the state
and federal Worker Adjustment and Retraining Notification Act, and the California Business and
Professions Code; any other local, state, federal, or foreign law governing employment; and the
common law of contract and tort. In no event, however, shall any claims, causes of action, suits,
demands or other obligations or liabilities be released pursuant to the foregoing if and to the
extent they relate to:



          i. any amounts or benefits which Executive is or becomes entitled to receive pursuant to the
provisions of this Release Agreement, pursuant to Section 4.6(b) of Executive’s Employment
Agreement with Cadence, or pursuant to the provisions designated in Section 9.9 of that agreement
to survive the termination of Executive’s full-time employment;



          ii. claims for workers’ compensation benefits under any of the Company’s workers’ compensation
insurance policies or funds;



          iii. claims related to Executive’s COBRA rights;



          iv. any rights that Executive has or may have to be indemnified by Cadence pursuant to any
contract, statute, or common law principle; and



          v. any other rights or claims that Executive has or may have that cannot, as a matter of law,
be waived.



     b. Executive represents and warrants that he has not filed any claim, charge or complaint
against any of the Releasees based upon any of the matters released above.



1









 





     c. Executive acknowledges that the payments and benefits described in paragraph 1(a)(i)
constitute adequate consideration for this release.



     d. Executive intends that this release of claims cover all claims, whether or not known to
Executive. Executive further recognizes the risk that, subsequent to the execution of this Release
Agreement, Executive may incur loss, damage or injury which Executive attributes to the claims
encompassed by this release. Executive expressly assumes this risk by signing this Release
Agreement and voluntarily and specifically waives any rights conferred by California Civil Code
section 1542 which provides as follows:



     A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if known
by him or her must have materially affected his or her settlement with the debtor.



     e. Executive represents and warrants that there has been no assignment or other transfer of
any interest in any claim by Executive that is covered by this release.



     f. The undersigned represents that he is the individual executive, his legal representative or
the executor or administrator of his estate, and that he or it is authorized to bind the individual
executive or his estate, as applicable.



     2. REVIEW OF RELEASE AGREEMENT; REVOCATION OF ACCEPTANCE. Executive has been given at least
21 days in which to review and consider this Release Agreement, although Executive is free to
accept this Release Agreement anytime within that 21-day period. Executive is advised to consult
with an attorney about the Release Agreement. If Executive accepts this Release Agreement,
Executive will have an additional 7 days from the date that Executive signs this Release Agreement
to revoke that acceptance, which Executive may effect by means of a written notice sent to the CEO.
If this 7-day period expires without a timely revocation, this Release Agreement will become final
and effective on the eighth day following the date of Executive’s signature, which eighth day will
be the “Effective Date” of this Release Agreement.



     The undersigned has executed this Release Agreement on this       day of                     ,      .



 
	 	 	 	 	 
	 	 	
 	 




2