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-
                                                                   EXHIBIT 10.79
                                   TERM SHEET

DATE: May 18, 2004

RE: Employment Agreement - Lavi Lev

CATEGORY                                TERMS

ANNUAL BASE SALARY:                     -     $450,000

ANNUAL BONUS FOR 2004:                  -     $450,000 to be paid at the same
                                              times and in the same relative
                                              percentages as per the Senior
                                              Executive Bonus Plan

ANNUAL TARGET BONUS BEYOND 2004:        -     $450,000- under the terms of the
                                              Cadence Senior Executive Bonus
                                              Plan, based on criteria set
                                              annually by the Compensation
                                              Committee (currently operating
                                              margin, revenue, net product
                                              bookings and individual
                                              performance)

EQUITY GRANTS/OPTIONS:                  -     Subject to shareholder approval
                                              and Executive remaining employed,
                                              an award of 250,000 incentive
                                              shares, vesting over 3 years
                                              according to the following
                                              schedule: December 15, 2004
                                              (41,667 shares), June 15, 2005
                                              (41,667 shares), December 15, 2005
                                              (41,667 shares), June 15, 2006
                                              (41,667 shares), December 15, 2006
                                              (41,667 shares) and June 15, 2007
                                              (41,667 shares)

                                        -     In the event that the shareholders
                                              of the Company fail to approve
                                              Proposal 2 at the June 15, 2004
                                              Annual Meeting, the Company and
                                              Executive shall negotiate in good
                                              faith to provide Executive
                                              incentives consistent with this
                                              Term Sheet in alternative forms of
                                              compensation

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SEPARATION AGREEMENT                    -     In exchange for a release of
                                              claims:

(TERMINATION WITHOUT CAUSE,                   -     12 months Annual Base Salary
CONSTRUCTIVE TERMINATION,                           (at the commencement of
RESIGNATION WITH EFFECTIVE                          employment transition
TERMINATION DATE BETWEEN                            period) and Annual Target
DECEMBER 15 AND DECEMBER 31,                        Bonus (at the conclusion of
2004, OR TERMINATION WITHIN                         the employment transition
13 MONTHS AFTER CHANGE IN                           period)
CONTROL)
                                              -     Continued vesting of options
                                                    and restricted stock for up
                                                    to 12 months (Executive is
                                                    available to consult -- up
                                                    to 20 hours per month)

                                              -     Paid COBRA coverage for 12
                                                    months

                                        -     Non-compete during 12-month
                                              Transition Period in EDA industry
                                              unless prior consent of Company
                                              obtained; such consent not to be
                                              unreasonably withheld. Executive
                                              to acknowledge reasonableness of
                                              Company's withholding of consent
                                              with respect to Synopsis, Mentor,
                                              Magma, Monterey Design, PDF
                                              Solutions and up to 5 other
                                              companies named by the Board of
                                              Directors or the most current list
                                              of competitors identified in the
                                              Company's SEC filings

                                        -     Non-solicit of employees for 2
                                              years

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CHANGE IN CONTROL BENEFITS:             -     Same as above plus accelerated
                                              vesting of all stock options and
                                              restricted stock upon termination
                                              without cause or constructive
                                              termination

OTHER:                                  -     During Executive's employment,
                                              Executive to participate in
                                              Cadence's health, life, disability
                                              insurance programs for
                                              self/family; retirement and
                                              non-qualified deferred
                                              compensation plans

                                        -     Executive commits to remaining
                                              employed with Cadence at least
                                              through December 15, 2004

                                        -     Indemnification by Company to
                                              maximum extent allowed by law

                                        -     Arbitration provision governing
                                              all aspects of Executive's
                                              employment, except IP-related
                                              issues and non-compete,
                                              non-solicit and non-disparagement
                                              provisions

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                          CADENCE DESIGN SYSTEMS, INC.
                              EMPLOYMENT AGREEMENT
                                  WITH LAVI LEV

      THIS AGREEMENT (this "Agreement") is made effective as of May 24, 2004
(the "Effective Date"), between CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation (the "Company"), and LAVI LEV ("Executive").

      WHEREAS, Executive is currently employed by the Company as Executive Vice
President and General Manager; and

      WHEREAS, the Company and Executive wish to enter into a formal employment
agreement 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 Company hereby employs Executive and Executive
hereby accepts employment pursuant to the terms and provisions of this Agreement
commencing on the Effective Date. Executive has been employed and shall continue
to 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 continue to have the title of Executive Vice
President and General Manager. Executive's duties will be assigned to Executive
by the Company's Chief Executive Officer ("CEO"), or such other persons as may
be specified by the CEO.

            (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.

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      1.3   SERVICES TO BE EXCLUSIVE. During his employment with the Company,
Executive agrees to devote his full 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 or receiving
compensation or any other consideration from 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 without the CEO's prior written consent. Nothing herein contained
shall be deemed to preclude Executive from having outside personal investments
and involvement with appropriate community activities, or from devoting a
reasonable amount of time to such matters, provided that they shall in no manner
interfere with or derogate from Executive's work for the Company.

      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 the Services, compensation consisting of the following:

      2.1   BASE SALARY. The Company shall initially pay Executive a base salary
of Four Hundred Fifty Thousand Dollars ($450,000) 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 Four
Hundred Fifty Thousand Dollars ($450,000) (the "Target Bonus") pursuant to the
terms

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of such Bonus Plan (the criteria for earning a bonus thereunder are set annually
by the Compensation Committee). For fiscal 2004, so long as Executive remains
employed by the Company as Executive Vice President and General Manager through
December 15, 2004, Executive shall be guaranteed a bonus of Four Hundred Fifty
Thousand Dollars ($450,000), to be paid at the times and in the manner as set
forth in the Bonus Plan. 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. In addition to the grant described above,
Executive shall be eligible to receive additional grants of either restricted
stock or stock options or both as the Compensation Committee may determine from
time to time. All stock options shall be granted at one hundred percent (100%)
of the fair market value of the Company's common stock on the date of grant. Any
awards shall vest in accordance with the Company's vesting policy for additional
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 or other person which is at least
fifty percent (50%) or more owned by the Company or controlled by the Company in
any capacity at the Company's request, Executive shall be indemnified by the
Company, and the Company shall pay Executive's related expenses when and as
incurred, all to the fullest extent not prohibited by law, as more fully
described in that Indemnification Agreement between

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the Company and Executive dated as of January 1, 2003, and attached hereto as
Exhibit A.

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 signed 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 CEO, Chief
Financial Officer and the Board, or such other persons as may be specified from
time to time by the CEO.

      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

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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.

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, upon the Company's receipt of written notice of
termination by Executive within 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 that (i) the Company terminates
Executive's employment, 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 (ii) where Executive voluntarily terminates his employment in
connection with a Constructive Termination (as defined in Section 4.3 hereof),
or (iii) where Executive voluntarily terminates his employment, for any reason,
with an effective date between December 15, 2004 and December 30, 2004, the
Company shall provide Executive with the benefits as set forth in the Executive
Transition and Release Agreement, in the form attached hereto as Exhibit B
("Transition Agreement") upon execution by Executive at or about the effective
date of such termination of 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 of such breach and 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

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<PAGE>

Section 8 hereof); (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, 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.

      4.3   CONSTRUCTIVE TERMINATION. Notwithstanding anything in this Section 4
to the contrary, Executive may, upon 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)   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;

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

            (c)   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; or

            (d)   any failure by the Company to obtain the written assumption of
this Agreement by any successor to the Company.

                                        6
<PAGE>

      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 the
Services pursuant to this Agreement.

      4.5   CHANGE IN CONTROL.

            (a)   Should there occur a Change in Control (as defined below) and
if within ninety (90) days prior to, or thirteen (13) months following, the
Change in Control either (i) Executive is terminated without Cause or (ii)
Executive resigns his employment as a result of an event constituting a
Constructive Termination, then, in exchange for signing the Transition
Agreement, Executive shall be entitled to all of the benefits set forth therein,
except that Section 4(b) of the Transition Agreement will be replaced by the
following provision: "all outstanding stock options granted and restricted stock
issued by the Company to the Executive prior to the Change in Control (as
defined in Section 4.5 of Executive's Employment Agreement) shall have their
vesting fully accelerated so as to be 100% vested as of the Effective Date of
this Agreement. This acceleration will have no effect on any other provisions of
the plans governing the stock options and restricted stock."

            (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 Exchange Act) becomes the "beneficial
                        owner" (as defined in Rule 13d-3 of the Exchange Act),
                        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;

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                  (ii)  except pursuant to the exception applicable to clause
                        (iii) below, a change in the composition of the Board
                        occurring within a two-year period, as a result of which
                        fewer than a majority of the directors are Incumbent
                        Directors ("Incumbent Directors" means directors who
                        either (i) are directors of the Company as of the
                        Effective Date, or (ii) are elected, or nominated for
                        election, to the Board with the affirmative votes of at
                        least a majority of the Incumbent Directors at the time
                        of such election or nomination, but will not include an
                        individual whose election or nomination is in connection
                        with an actual or threatened proxy contest relating to
                        the election of directors to the Board);

                  (iii) the consummation of a merger or consolidation of the
                        Company with any other corporation, other than a merger
                        or consolidation in which-the holders of the Company's
                        outstanding voting securities immediately prior to such
                        merger or consolidation receive, in exchange for their
                        voting securities of the Company in consummation of such
                        merger or consolidation, securities possessing at least
                        fifty percent (50%) of the total voting power
                        represented by the outstanding voting securities of the
                        surviving entity (or parent thereof) immediately after
                        such merger or consolidation; or

                  (iv)  the consummation of the sale or disposition by the
                        Company of all or substantially all the Company's
                        assets.

      4.6   TERMINATION FOR CAUSE, ON ACCOUNT OF DEATH, PERMANENT DISABILITY, OR
VOLUNTARY TERMINATION. In the event Executive's employment is terminated for
Cause, or on account of death or Permanent Disability, or Executive

                                        8

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voluntarily terminates his employment with the Company, except if Executive
voluntarily terminates his employment for any reason with an effective date
between December 15, 2004 and December 30, 2004, then Executive will be paid
only (a) any earned but unpaid base salary and any outstanding expense
reimbursements submitted and approved pursuant to Section 3.1 hereof, and (b)
other unpaid vested amounts or benefits under Company compensation, incentive
and benefit plans, in each case as of the effective date of such termination.

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 hereunder 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. 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, Executive shall be given the choice of which
benefits to reduce. If Executive does not provide written identification to the
Company of which benefits he chooses to reduce within ten (10) days after
written notice of the Accountants' determination, and

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Executive has not disputed the Accountants' determination, then the Company
shall select the benefits to be reduced. For purposes of making the calculations
required by this Section 5, 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 all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5.

      If, notwithstanding any reduction described in this Section 5, the IRS
determines that Executive is liable for the Excise Tax as a result of the
receipt of any Termination Benefits, then Executive shall be obligated to pay
back to the Company, within thirty (30) days after a final IRS determination or
in the event that Executive challenges the final IRS determination, a final
judicial determination, a portion of the Termination Benefits equal to the
"Repayment Amount." The Repayment Amount shall be the smallest such amount, if
any, as shall be required to be paid to the Company so that Executive's net
after-tax proceeds with respect to the Termination Benefits (after taking into
account the payment of the Excise Tax and all other applicable taxes imposed on
such benefits) shall be maximized. The Repayment Amount shall be zero if a
Repayment Amount of more than zero would not result in Executive's net after-tax
proceeds with respect to the Termination Benefits being maximized. If the Excise
Tax is not eliminated pursuant to this paragraph, Executive shall pay the Excise
Tax.

      Notwithstanding any other provision of this Section 5, if (1) there is a
reduction in the payment of the Termination Benefits as described in this
Section 5, (2) the IRS later determines that Executive is liable for the Excise
Tax, the payment of which would result in the maximization of Executive's net
after-tax proceeds (calculated as if

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Executive's benefits had not previously been reduced), and (3) Executive pays
the Excise Tax, then the Company shall pay to Executive those Termination
Benefits which were reduced pursuant to this subsection as soon as
administratively possible after Executive pays the Excise Tax so that
Executive's net after-tax proceeds with respect to the payment of the
Termination Benefits are maximized.

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 (as opposed to the
Transition 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 JAMS Arbitration Rules and Procedures, 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

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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 a 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). 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

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<PAGE>

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 cooperate with the Company 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 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 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 retention of any of such property is
necessary or 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.

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<PAGE>

8.    PROPRIETARY INFORMATION AGREEMENT.

      Executive shall, on the Effective Date, execute and deliver to the Company
an Employee Proprietary Information and Inventions Agreement, in the form
attached hereto as Exhibit C (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.

      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 which 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.

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      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 constitutes one and the same instrument and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.

      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
stock option 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 (including, but not limited to, the Executive
Retention Agreement signed by Executive on or about July 1, 2003),
representations, conditions, covenants, and all other communications between the
parties relating to the subject matter hereof; provided, however, that the
Employee Invention and Confidential Information Agreement signed by Executive on
or about December 8, 2000 and Executive's agreement, made prior to the Effective
Date of this Agreement, to abide by the Company's policies, including but not
limited to the Company's Employee Handbook, Sexual Harassment Policy and Code of
Business Conduct, remain in full force and effect and govern Executive's conduct
from the date of execution of such agreements until the Effective Date 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

                                       15

<PAGE>

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 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 General Counsel or CEO 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 termination: Executive's obligations under Section 7 hereof, the
Company's obligations to provide compensation earned through the termination of
the employment relationship 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 Indemnification Agreement, the dispute
resolution provisions of Section 6 hereof and, to the extent applicable, this
Section 9.

      9.10  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.

      9.11  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

                                       16

<PAGE>

and are not intended to govern, limit or aid in the construction of any term or
provision hereof.

      9.12  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.

                                       17

<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement on this 24th
day of May, 2004.

CADENCE DESIGN SYSTEMS, INC.                    EXECUTIVE

By: /s/ R.L. Smith McKeithen                    /s/ Lavi Lev
    ------------------------------              --------------------------------
    R.L. Smith McKeithen Lavi Lev               Lavi Lev

Title: Sr. VP & General Counsel

                                       18

<PAGE>

                                    EXHIBIT A

                            INDEMNIFICATION AGREEMENT

<PAGE>

                               INDEMNITY AGREEMENT

      This Indemnity Agreement (this "Agreement"), dated as of January 1, 2003,
is made by and between Cadence Design Systems, Inc., a Delaware corporation (the
"Company"), and Lavi Lev, Executive Vice President of the Company (the
"Indemnitee").

                                    RECITALS

      A.    The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, due
to increased exposure to litigation costs and risks resulting from their service
to such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;

      B.    The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take;

      C.    Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so substantial (whether or not the case is meritorious), that
the defense and/or settlement of such litigation is often beyond the personal
resources of officers and directors;

      D.    The Company believes that it is unfair for its directors and
officers and the directors and officers of its subsidiaries to assume the risk
of large judgments and other expenses that may be incurred in cases in which the
director or officer received no personal profit and in cases where the director
or officer was not culpable;

      E.    The Company recognizes that the issues in controversy in litigation
against a director or officer of a corporation such as the Company or a
subsidiary of the Company are often related to the knowledge, motives and intent
of such director or officer, that the Indemnitee is usually the only witness
with knowledge of the essential facts and exculpating circumstances regarding
such matters and that the long period of time which usually elapses before the
trial or other disposition of such litigation often extends beyond the time that
the director or officer can reasonably recall such matters; and may extend
beyond the normal time for retirement for such director or officer with the
result that the Indemnitee, after retirement or in the event of the Indemnitee's
death, the Indemnitee's spouse, heirs, executors or administrators, may be faced
with limited ability and undue hardship in maintaining an adequate defense,
which may discourage such a director or officer from serving in that position;

      F.    Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company and its subsidiaries and to encourage such individuals to take the
business risks necessary for the success of the Company

<PAGE>

and its subsidiaries, it is necessary for the Company to contractually indemnify
its officers and directors and the officers and directors of its subsidiaries,
and to assume for itself maximum liability for claims against such persons in
connection with their service;

      G.    The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company and/or the
subsidiaries of the Company, free from undue concern for claims for damages
arising out of or related to such services to the Company and/or the
subsidiaries of the Company; and

      H.    The Indemnitee is willing to serve, or to continue to serve, the
Company and/or the subsidiaries of the Company that the Indemnitee is furnished
the indemnity provided for herein.

                                    AGREEMENT

      NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

      1.    Definitions.

            (a)   Covered Person. For purposes of this Agreement, a "covered
person" shall include the Indemnitee and any heir, executor, administrator or
other legal representative of the Indemnitee following the Indemnitee's death or
incapacity.

            (b)   Expenses. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement,
Section 145 of the Delaware General Corporation Law or otherwise.

            (c)   Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, legislative, investigative or any other
type whatsoever, and including any of the foregoing commenced by or on behalf of
the Company, derivatively or otherwise.

            (d)   Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, and one or more other subsidiaries,
or by one or more other subsidiaries.

      2.    Agreement to Serve. The Indemnitee agrees to serve and/or continue
to serve the Company and/or its subsidiaries in the Indemnitee's present
capacity, so long as the Indemnitee is duly appointed or elected or until such
time as the Indemnitee tenders a written resignation; provided, however, that
nothing contained in this Agreement is intended to create any right to continued
employment by Indemnitee.

                                        2
<PAGE>

      3.    Maintenance of Liability Insurance.

            (a)   The Company hereby covenants and agrees that so long as the
Indemnitee shall continue to serve as an officer or director of the Company or
any of its subsidiaries, and thereafter so long as the Indemnitee shall be
subject to any possible proceeding by reason of such service, the Company,
subject to Section 3(b), shall use reasonable efforts to obtain and maintain in
full force and effect directors' and officers' liability insurance ("D&O
Insurance") in reasonable amounts from established and reputable insurers.

            (b)   Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.

      4.    Mandatory Indemnification.

            (a)   Right to Indemnification. In the event a covered person was or
is made a party or is threatened to be made a party to or is involved in any
proceeding, by reason of the fact that the Indemnitee is or was a director,
officer or employee of the Company (including any subsidiary or affiliate
thereof or any constituent corporation or any of the foregoing absorbed in any
merger) or is or was serving at the request of the Company (including such
subsidiary, affiliate or constituent corporation) as a director, officer or
employee of another corporation, or of a partnership, joint venture, trust or
other entity, including service with respect to employee benefit plans, such
person shall be indemnified and held harmless by the Company to the fullest
extent permitted by applicable law, against all expenses, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
and other taxes and penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
indemnification shall continue after the Indemnitee has ceased to serve in such
capacity and shall inure to the benefit of the Indemnitee's heirs, executors and
administrators; provided, however, that except for a proceeding pursuant to
Section 7, the Company shall indemnify any such person in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Company.

            (b)   Exception for Amounts Covered by Insurance. Notwithstanding
the foregoing, the Company shall not be obligated to indemnify a covered person
for expenses or liabilities of any type whatsoever (including, but not limited
to, judgments, fines, forfeitures, attorneys' fees, ERISA excise taxes or
penalties, and amounts paid in settlement) which have been paid directly to such
person by D&O Insurance.

            (c)   Partial Indemnification. If a covered person is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, forfeitures, attorneys' fees, ERISA excise
taxes or penalties, and amounts paid in settlement) incurred by the Indemnitee
in the investigation, defense, settlement or appeal of a proceeding,

                                        3
<PAGE>

but is not entitled, however, to indemnification for all of the total amount
thereof, the Company shall nevertheless indemnify such person for such total
amount except as to the portion thereof to which the Indemnitee is not entitled.

      5.    Mandatory Advancement of Expenses. The Company shall pay all
expenses incurred by a covered person, or in defending any such proceeding as
they are incurred in advance of its final disposition; provided, however, that
if the Delaware General Corporation Law then so requires, the payment of such
expenses incurred in advance of the final disposition of such proceeding shall
be made only upon delivery to the Company of an undertaking, by or on behalf of
such covered person, to repay all amounts so advanced if it should be determined
ultimately that such person is not entitled to the payment of such expenses by
the Company.

      6.    Notice and Other Indemnification Procedures.

            (a)   Promptly after receipt by a covered person of notice of the
commencement of or the threat of commencement of any proceeding, such person
shall, if such person believes that indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.

            (b)   If, at the time of the receipt of a notice of the commencement
of a proceeding, the Company has D&O Insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the covered person, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

            (c)   In the event the Company shall be obligated to advance the
expenses for any proceeding against the covered person, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the covered person (such approval not to be unreasonably
withheld or delayed), upon the delivery to the covered person of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by the covered person and the retention of such counsel by the Company,
the Company will not be liable to the covered person under this agreement for
any fees of counsel subsequently incurred by the covered person with respect to
the same proceeding, provided that (i) the covered person shall have the right
to employ separate counsel in any such proceeding at the covered person's
expense; and (ii) if (A) the employment of counsel by the covered person has
been previously authorized by the Company, (B) the Company shall not, in fact,
have employed counsel to assume the defense of such proceeding, or (C) it is
determined by legal counsel for the Company and the Indemnitee that a conflict
of interest exists requiring the Indemnitee to retain separate counsel, the fees
and expenses of the covered person's counsel shall be at the expense of the
Company.

      7.    Right of Indemnitee to Bring Suit. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Company within
sixty days after a written claim has been received by the Company, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the covered person may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim. If

                                        4
<PAGE>

successful in whole or in part in any such suit, or in a suit brought by the
Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the covered person shall be entitled to be paid also the expense of
prosecuting or defending such suit. In any suit brought by a covered person to
enforce a right to indemnification hereunder (but not in a suit brought by a
covered person to enforce a right to an advancement of expenses) it shall be a
defense that indemnification is not permitted by applicable law. Further, in any
suit by the Company to recover an advancement of expenses pursuant to the terms
of an undertaking, the Company shall be entitled to recover such expenses upon a
final adjudication that indemnification is not permitted by applicable law.
Neither the failure of the Company (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the covered
person is proper in the circumstances, nor an actual determination by the
Company (including its Board of Directors, independent legal counsel or its
stockholders) that indemnification is not proper, shall create a presumption
that the covered person is not entitled to indemnification or, in the case of
such a suit brought by a covered person, be a defense to such suit. In any suit
brought by a covered person to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Company to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of proving that
the covered person is not entitled to be indemnified, or to such advancement of
expenses, shall be on the Company.

      8.    Limitation of Actions and Release of Claims. No proceeding shall be
brought and no cause of action shall be asserted by or on behalf of the Company
or any subsidiary against the Indemnitee, the Indemnitee's spouse, heirs,
estate, executors or administrators after the expiration of one year from the
act or omission of the Indemnitee upon which such proceeding is based; however,
in a case where the Indemnitee fraudulently conceals the facts underlying such
cause of action, no proceeding shall be brought and no cause of action shall be
asserted after the expiration of one year from the earlier of (i) the date the
Company or any subsidiary of the Company discovers such facts, or (ii) the date
the Company of any subsidiary of the Company could have discovered such facts by
the exercise of reasonable diligence. Any claim or cause of action of the
Company or any subsidiary of the Company, including claims predicated upon the
negligent act or omission of the Indemnitee, shall be extinguished and deemed
released unless asserted by filing of a legal action within such period. This
Section 8 shall not apply to any cause of action which has accrued on the date
hereof and of which the Indemnitee is aware on the date hereof, but as to which
the Company has no actual knowledge apart from the Indemnitee's knowledge.

      9.    Non-exclusivity. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee or any covered person may have under any
provision of law, the Company's Certificate of Incorporation or Bylaws, the vote
of the Company's shareholders or disinterested directors, other agreements, or
otherwise, both as to action in the Indemnitee's official capacity and to action
in another capacity while occupying the Indemnitee's position as an officer,
director or employee of the Company, and the Indemnitee's right hereunder shall
continue after the Indemnitee has ceased to so act and shall inure to the
benefit of any heir, executor, administrator or other legal representative of
the Indemnitee.

                                        5
<PAGE>

      10.   Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.

      11.   Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, (i)
the validity, legality and enforceability of the remaining provisions of the
Agreement (including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to Section 10
hereof.

      12.   Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

      13.   Successors and Assigns. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto.

      14.   Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) upon
receipt, if delivered by hand, or (ii) on the third business day after the
mailing date, if mailed by certified or registered mail with postage prepaid.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.

      15.   Governing Law. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
with Delaware.

      16.   Consent to Jurisdiction. The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement.

                                        6
<PAGE>

      The parties hereto have entered into this Indemnity Agreement effective as
of the date first above written.

                           CADENCE DESIGN SYSTEMS, INC.

                           By: R.L. Smith McKeithen
                               -----------------------------------

                               R.L. Smith McKeithen
                               Sr. Vice President, General Counsel and Secretary
                               2655 Seely Avenue
                               San Jose, CA 95134

                           INDEMNITEE

                           /s/ Lavi Lev
                           ---------------------------------------
                           Name: Lavi Lev

                           Address: 21771 HEBER WAY
                                    SARITOGA, CA 95070
f
                              7
<PAGE>

                                    EXHIBIT B

                   EXECUTIVE TRANSITION AND RELEASE AGREEMENT

<PAGE>

                   EXECUTIVE TRANSITION AND RELEASE AGREEMENT

      This Executive Transition and Release Agreement (this "Agreement") is
entered into between Lavi Lev ("Executive") and Cadence Design Systems, Inc.
("Cadence" or the "Company").

      1.    TRANSITION COMMENCEMENT DATE. As of <<Transition Commencement Date>>
(the "Transition Commencement Date"), Executive will no longer hold the position
of Executive Vice President and General Manager and will be relieved of all of
Executive's authority and responsibilities in that position. Executive will be
paid all accrued salary for his services as Executive Vice President and General
Manager to the Transition Commencement Date by not later than the following
regular payroll date. 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 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 breach by Executive of Executive's duties or
                  obligations under this Agreement; and

            c.    one year from the Transition Commencement Date; if, however,
                  that year concludes on or before December 15, 2005, then it is
                  agreed that the period shall end on December 16, 2005.

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

            a.    During the Transition Period, Executive will assume the
position of <<New Position Title>>. In this position, Executive will render
those services requested by Cadence's <<Management Representative>> on an
as-needed basis. Executive's time rendering those services is not expected to
exceed twenty (20) hours per week but is expected to consume 20 hours per month.

            b.    As a Cadence Executive Vice President and General Manager, 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

<PAGE>

the electronic design automation ("EDA") industry (as defined below) without
inevitably disclosing confidential and proprietary information belonging to
Cadence. Accordingly, during the Transition Period, Executive will not, without
the prior written consent of Cadence, directly or indirectly, provide services,
whether as an employee, consultant, independent contractor, agent, sole
proprietor, partner, joint venture, corporate officer or director, on behalf of
any corporation, limited liability company, partnership, or other entity or
person that (i) is engaged in the EDA industry, (ii) directly competes against
Cadence or any of its existing or future affiliates in the EDA industry anywhere
in the world, or (iii) produces, markets, distributes or sells any products,
directly or indirectly through intermediaries, that are competitive with EDA
industry products produced, marketed, sold or distributed by Cadence. Such prior
written consent shall not be unreasonably withheld by Cadence; provided,
however, that such consent may be in all cases withheld with respect to the
companies listed in Exhibit A attached hereto and up to five (5) other companies
as may be designated by the Board of Directors of Cadence from time to time and
delivered to Executive prior to the Company's termination of his employment (or,
in the event Executive terminates his employment, prior to the date on which
Executive has notified the Company of his decision to terminate such employment)
or are named as a competitor of Cadence in the most recent applicable document
filed by Cadence before the Transition Commencement Date with the Securities and
Exchange Commission that contains such information.

            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.

            c.    During the Transition Period, Executive will be prohibited, to
the full 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, soliciting or attempting to solicit
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 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)

                                        2
<PAGE>

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
Agreement, dated as of May 24, 2004.

            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. 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 and
compensation for Executive's services during the Transition Period, Cadence will
provide the following to Executive:

            a.    a monthly salary of $2,000 less applicable tax withholdings
                  and deductions, payable in accordance with Cadence's regular
                  payroll schedule;

            b.    continued vesting of stock options and restricted stock
                  granted to Executive prior to the Termination Date, provided
                  that Executive has executed all necessary stock option and
                  restricted stock agreements on or before <<Stock Option
                  Agreement Execution Date>>, and with the understanding that
                  upon Executive's Termination Date, all vested options may be
                  exercised in accordance with the applicable stock option
                  agreement, any unvested options will expire, and any unvested
                  restricted stock will be forfeited;

            c.    if Executive elects to continue coverage under Cadence's
                  medical, dental, and vision insurance plans pursuant to COBRA
                  following

                                        3
<PAGE>

                  the Transition Commencement Date, Cadence will pay Executive's
                  COBRA premiums during the Transition Period; and

            d.    continued access to Cadence voicemail.

Except as so provided, Executive will receive no other compensation or benefits
from Cadence in consideration of Executive's services during the Transition
Period.

      5.    FIRST TERMINATION PAYMENT AND BENEFITS. Provided that Executive does
not resign from employment with Cadence and Cadence does not terminate
Executive's employment with Cadence due to a breach by Executive of Executive's
duties under this Agreement, and in consideration for Executive's acceptance of
this Agreement and Executive's further execution and delivery of a Release of
Claims in the form of Attachment 1 hereto, Cadence will provide to Executive
within ten business days after the Effective Date (as defined in paragraph 9
hereof) of this Agreement and after Executive has returned to the Company 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, the following termination
payment to which Executive would not otherwise be entitled:

         a.       a lump-sum payment of one year's base salary at the highest
                  rate in effect during Executive's employment as Executive Vice
                  President and General Manager, less applicable tax deductions
                  and withholdings.

      6.    SECOND TERMINATION PAYMENT AND BENEFITS. Provided that Executive
does not resign from employment with Cadence and Cadence does not terminate
Executive's employment with Cadence due to a breach by Executive of Executive's
duties under this Agreement, upon the Termination Date, and in consideration for
Executive's acceptance of 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 within ten business days after the expiration of the
revocation period of the Release of Claims (as defined in that document) the
following termination payment to which Executive would not otherwise be
entitled:

         a.       a lump-sum payment of one year's target bonus at the highest
                  rate in effect during Executive's employment as Executive Vice
                  President and General Manager, less applicable tax deductions
                  and withholdings.

      7.    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

                                        4
<PAGE>

derivative or class actions relate to the period during which Executive served
as Executive Vice President and General Manager. 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 and
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 to 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; and

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

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

            c.    Executive acknowledges that the payments provided in this
Agreement constitute adequate consideration for the release set forth in this
paragraph 7.

            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 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 favor which if known by him must have
      materially affected his settlement with the debtor.

                                        5
<PAGE>

            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.

      8.    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 or General
Counsel. 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.

      9.    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, as applicable, and the arbitrator is
without jurisdiction to apply any different 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.

      10.   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.

                                        6
<PAGE>

      11.   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.

      12.   FULL SATISFACTION OF COMPENSATION OBLIGATIONS; ADEQUATE
CONSIDERATION. Executive agrees that the payments and benefits provided herein
are in full satisfaction of 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.

      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.

      14.   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.

      15.   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.

      16.   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.

                                        7
<PAGE>

      17.   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.

      18.   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.

                                        8
<PAGE>

                             EXECUTION OF AGREEMENT

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

Dated: ____________________________.         Dated: ___________________________.

Lavi Lev                                     CADENCE DESIGN SYSTEMS, INC.

____________________________________         By: _______________________________
                                                        <<HRVP_Name>>
                                                        <<HRVP_ Title_1>>

                                        9
<PAGE>

                                  ATTACHMENT 1

                                RELEASE OF CLAIMS

            1.    For valuable consideration, I irrevocably, fully and finally
release Cadence Design Systems, Inc. ("Cadence"), its parent, subsidiaries,
affiliates, directors, officers, agents and employees 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 Release which relate to my hiring, my employment with Cadence,
the termination of my employment with Cadence and claims asserted in shareholder
derivative actions or shareholder class actions against Cadence and its officers
and Board of Directors, to the extent those derivative or class actions relate
to the period during which I served as Executive Vice President and General
Manager. 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. This Release is not intended to, and does
not, encompass any right to compensation or benefits that I have under my
Executive Transition and Release Agreement with Cadence. 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 I am or become entitled
to 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 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; and

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

      2.    I intend that this Release cover all claims, whether or not known to
me. I further recognize the risk that, subsequent to the execution of this
Agreement, 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:

<PAGE>

      A general release does not extend to claims which the creditor does not
      know or suspect to exist in his favor which if known by him must have
      materially affected his 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 ______________. This Release will not be final and effective
until the expiration of this revocation period.

Dated: ____________________                _____________________________________
                                                        Print Name
                                           _____________________________________
                                                        Sign Name

                                       12
<PAGE>

                                  ATTACHMENT 2

                                RELEASE OF CLAIMS

            1.    For valuable consideration, I irrevocably, fully and finally
release Cadence Design Systems, Inc. ("Cadence"), its parent, subsidiaries,
affiliates, directors, officers, agents and employees 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 Release which relate to my hiring, my employment with Cadence,
the termination of my employment with Cadence and claims asserted in shareholder
derivative actions or shareholder class actions against Cadence and its officers
and Board of Directors, to the extent those derivative or class actions relate
to the period during which I served as Executive Vice President and General
Manager. 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. This Release is not intended to, and does
not, encompass any right to compensation or benefits that I have under my
Executive Transition and Release Agreement with Cadence. 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 I am or become entitled
to 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 my COBRA rights; and

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

      2.    I intend that this Release cover all claims, whether or not known to
me. I further recognize the risk that, subsequent to the execution of this
Agreement, 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:

<PAGE>

      A general release does not extend to claims which the creditor does not
      know or suspect to exist in his favor which if known by him must have
      materially affected his 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 ______________. This Release will not be final and effective
until the expiration of this revocation period.

Dated: ____________________.               _____________________________________
                                                       Print Name
                                           _____________________________________
                                                       Sign Name

                                       14
<PAGE>

                                    EXHIBIT C

            EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

<PAGE>

            AMENDMENT TO THE CADENCE DESIGN SYSTEMS, INC. EMPLOYMENT
                             AGREEMENT WITH LAVI LEV

      The following provision is substituted for the existing Paragraph 2 in the
Executive Transition and Release Agreement, which is attached to the Cadence
Design Systems, Inc. Employment Agreement with Lavi Lev ("Employment
Agreement"):

      2.    TRANSITION PERIOD. The period from the Transition Commencement Date
to the date when Executive's employment with Cadence 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 breach by Executive of Executive's duties or
                  obligations under this Agreement; and

            c.    one year from the Transition Commencement Date; if, however,
                  that year concludes on or before February 1, 2006, then it is
                  agreed that the period shall end on February 2, 2006.

      Except as expressly provided by this amendment, the Employment Agreement
and its exhibits remain in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment to the
Employment Agreement on this 24th day of June, 2004.

CADENCE DESIGN SYSTEMS, INC.                        EXECUTIVE

By: /s/ R.L. Smith McKeithen                        /s/ lavi Lev
    ---------------------------------------         ---------------------------
    R.L. Smith McKeithen                            Lavi Lev

Title: Sr. VP & General Counsel