exv10w05






Exhibit 10.05




CADENCE DESIGN SYSTEMS, INC.

EMPLOYMENT AGREEMENT

WITH MICHAEL J. FISTER




     THIS AGREEMENT (this “Agreement”) dated July 29, 2008 (the “Effective Date”), between CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation (the “Company”), and Michael J. Fister (“Executive”)
supercedes any previous employment agreement between the parties.



     WHEREAS, the Company is engaged in the electronic design automation software business; and



     WHEREAS, the Company desires to obtain the continued services of Executive as President and
Chief Executive Officer, and Executive desires to continue to perform such services for the
Company, on the terms and conditions as set forth herein.



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



1. TERM AND DUTIES.




     1.1 EFFECTIVE DATE. The Company hereby continues to employ Executive and Executive hereby accepts continued
employment pursuant to the terms and provisions of this Agreement as of the Effective Date.
Executive 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 have the title President and Chief Executive Officer (“CEO”). Executive’s
duties will be assigned to Executive from time to time by the Board of Directors of the Company
(the “Board”). Executive shall report directly to the Board.




          (b) During his employment with the Company as CEO, the Company shall recommend Executive’s
membership on the Board to the Board’s Corporate Governance and Nominating Committee.




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




     1.3 NO CONFLICTING SERVICES. During his employment with the Company, Executive agrees to devote his productive time and
best efforts to the performance of Executive’s duties hereunder. Executive further
agrees, as a condition to the performance by the Company of each and all of its obligations
hereunder, that so long as Executive is employed by the Company as CEO pursuant to the terms of
this Agreement, he will not directly or indirectly render services of any nature to, otherwise
become employed by, serve on the board of directors of, or otherwise













 







participate or engage in any
other business except as expressly authorized under the Company’s Code of Business Conduct.
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 and that they comply with the Company’s Code of Business
Conduct.



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



2. COMPENSATION.




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



     2.1 BASE SALARY. As of the Effective Date, the Company shall pay Executive a base salary of One Million
Dollars ($1,000,000) 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 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. Any increase approved during the first four (4) months of the Company’s fiscal year
shall become retroactively effective as of the beginning of such fiscal year, and any increase
approved thereafter shall become effective on the date determined by the Board or the Compensation
Committee, as appropriate.



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



     2.3 EQUITY GRANTS. Executive shall be eligible to receive 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 not less than 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



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corporation, limited liability company,
partnership, joint venture or other entity 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 and subject
to the terms of the form of Indemnity Agreement 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 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 Company’s
Chief Financial Officer, and/or its General Counsel, and the Board.



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



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




          (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; and




          (c) Executive shall be eligible to participate in any other benefit plan or arrangement
implemented for other executive officers of the Company for which he satisfies the same eligibility
requirements applicable to those executive officers.




     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.



4. TERMINATION OF EMPLOYMENT.




     4.1 GENERAL. Executive’s employment by the Company as CEO 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 at least thirty (30) days before
the specified effective date of such termination, or upon Executive’s death or Permanent Disability
(as defined in Section 4.4 hereof); provided, however, that only five (5) business days’ written
notice, but subject to any cure provision, shall be required under this Section 4.1 in connection
with Executive’s voluntary termination of his



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employment in connection with a Constructive
Termination (as defined in Section 4.3 hereof). In the event of such termination, except where
Executive is terminated for Cause (as defined in Section 4.2 hereof) or as the result of a
Permanent Disability or death, or where Executive voluntarily terminates his employment for any
reason other than in connection with a Constructive Termination, and upon execution by Executive at
or about the effective date of such termination of the Executive Transition and Release Agreement,
in the form attached hereto as Exhibit B (the “Transition Agreement”), the Company shall provide
Executive with the benefits set forth in the Transition Agreement.



     4.2 DEFINITION OF CAUSE. For purposes of this Agreement, “Cause” shall be limited to (1) Executive’s gross
misconduct or fraud in the performance of his services hereunder; (2) Executive’s conviction or
guilty plea or plea of nolo contendere with respect to any felony other than vicarious liability
solely as a result of his position as Chief Executive Officer; (3) Executive’s engaging in any
material act of theft or other material misappropriation of company property in connection with his
employment; (4) Executive’s material breach of this Agreement after written notice delivered to
Executive identifying such breach and his failure to cure such breach, if curable, within thirty
(30) days following delivery of such notice; (5) Executive’s material breach of the Proprietary
Information Agreement (as defined in Section 8 hereof) 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; (6) Executive’s material failure/refusal to perform his assigned
duties after written notice delivered to Executive identifying such failure/refusal and his failure
to cure such failure/refusal, if curable, within thirty (30) days following delivery of such
notice; 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. In no event may the Company terminate Executive’s employment for Cause unless and
until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of at least a majority of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice to Executive and an
opportunity for Executive, together with Executive’s counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was culpable for the conduct
constituting “Cause” and specifying the particulars thereof.



     4.3 CONSTRUCTIVE TERMINATION. Notwithstanding anything in this Section 4 to the contrary, Executive may voluntarily end
his employment as CEO and President of the Company in the event one or more of the circumstances or
events of “Constructive Termination” set forth below occurs, provided that he shall provide five
(5) days’ written notice to the Company, subject to any cure provisions set forth below, of the
circumstance(s) or event(s), delivered upon or within ninety (90) days following the occurrence of
the event or circumstance constituting a Constructive Termination. Upon a Constructive
Termination, he will be eligible for 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 material adverse change, without Executive’s written consent, in Executive’s authority,
duties, title or reporting relationship to the Board causing Executive’s




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position to be of
materially less stature or responsibility, after written notice delivered to the Company of such
change and the Company’s failure to cure such change, if curable, within thirty (30) days following
delivery of such notice; provided, however, that such a material adverse change shall not be deemed
to occur if Executive continues to serve as the Chief Executive Officer of the Company or its
successor entity, regardless of whether the Company or its successor entity is a publicly traded
company;




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




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




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




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




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



     4.4 PERMANENT DISABILITY. For purposes of this Agreement, “Permanent Disability” shall mean any medically
determinable physical or mental impairment that can reasonably be expected to result in death or
that has lasted or can reasonably be expected to last for a continuous period of not less than
twelve (12) months and renders Executive unable to perform effectively all of the material and
substantial duties of President and Chief Executive Officer pursuant to this Agreement.



     4.5 CHANGE IN CONTROL.



          (a) Should there occur a Change in Control (as defined below) and if within three (3) months
prior to or thirteen (13) months following the Change in Control either (i) Executive’s employment
under this Agreement is terminated without Cause or (ii) Executive terminates his employment
pursuant to this Agreement as a result of an event constituting a Constructive Termination, then,
in exchange for executing and delivering the Transition Agreement, Executive shall be entitled to
all of the benefits set forth therein, except that (1) the amount of the payment described in
paragraph 5(a)(i) of the Transition Agreement shall equal three hundred seventy five percent (375%)
of Executive’s Base Salary at the highest level in effect at any time during the term of this
Agreement (the “Highest Base Salary”), in lieu of the amount described in paragraph 5(a)(i) of the
form of Transition Agreement attached hereto, (2) the amount of the payments described in paragraph
5(a)(ii) of the Transition Agreement shall




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equal) one hundred twenty five percent (125%) of
Executive’s Highest Base Salary, in lieu of the amount described in paragraph 5(a)(ii) of the form
of Transition Agreement attached hereto; and (3) in lieu of the acceleration described in paragraph
4(b) of the form of Transition Agreement attached hereto, all unvested equity compensation awards
(including stock options, restricted stock and restricted stock units) that are outstanding and
held by Executive on the Transition Commencement Date shall immediately vest and become exercisable
in full on the Transition Commencement Date; provided, that, if Executive’s termination of
employment without Cause or by reason of Constructive Termination occurs within three months prior
to a Change in Control, any unvested equity compensation awards that do not vest on the Transition
Commencement Date shall vest in full immediately prior to the effective time of the Change in
Control. Any acceleration of vesting pursuant to this Section 4.5(a) shall have no effect on any
other provisions of the equity compensation awards or the plans governing such awards.




          (b) For purposes of this Section 4.5, a Change in Control shall be deemed to have occurred if:





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




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	 	 	 	least 80%
of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or






	 	(iv)	 	the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company’s assets.






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





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




          (b) In the event Executive’s employment is terminated on account of death or Permanent
Disability, then, in addition to all amounts payable pursuant to Section 4.6(a), upon execution by
Executive or Executive’s representative or a representative of Executive’s estate, as
soon as reasonably practicable but in no event later than one hundred eighty (180) days
following the date of Executive’s termination of employment, of the Release Agreement, in the form
attached hereto as Exhibit C, and such Release Agreement becoming effective, the Company shall
provide Executive or his estate, as the case may be, the following benefits to which Executive
would not otherwise be entitled: (i) all unvested equity compensation awards (including stock
options, restricted stock and restricted stock units) outstanding and held by Executive on the date
of his termination that would have vested over the twelve (12) months following the date of
termination had Executive continued in employment under his Employment Agreement during that period
shall immediately vest and become exercisable in full on the date of such termination, such equity
compensation awards and all previously vested equity, compensation awards shall remain exercisable
for twenty-four (24) months from the date of such termination (but not later than the expiration of
the term of the applicable equity compensation award), and there shall be no further vesting of any
equity compensation awards thereafter; provided that this acceleration will have no effect on any
other provisions of the equity compensation awards; and (ii) solely in the event of termination on
account of Permanent Disability, if Executive elects to continue coverage under Cadence’s medical,
dental and vision insurance plans pursuant to COBRA, Cadence will pay Executive’s COBRA premiums
for twelve (12) months following such termination. In the event that Executive performs full-time
or part-time employment or consulting services during the 12-month period following his termination
on account of Permanent Disability without the written consent of the Company, then all equity
compensation awards the vesting of which had been accelerated pursuant to the preceding sentence
shall be forfeited and Executive shall return to the Company all stock obtained or on which
restrictions terminated upon such vesting and the proceeds from the sale of




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any such stock, and all
stock, net of exercise price, obtained upon the exercise of options that vested pursuant to the
preceding sentence and the proceeds, net of exercise price, from the sale of any such stock.




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




5. EXCISE TAX.




     In the event that any benefits payable to Executive pursuant to the Transition Agreement or
this Agreement (“Termination Benefits”) (i) constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable
successor provisions, and (ii) but for this Section 5 would be subject to the excise tax imposed by
Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then
Executive’s Termination Benefits shall be either (a) provided to Executive in full, or (b) provided
to Executive as to such lesser extent which would result in no portion of such benefits being
subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable
federal, state, local and foreign income and employment taxes, the Excise Tax, and any other
applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest
amount of benefits, notwithstanding that all or some portion of such benefits may be subject to 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’s Termination Benefits shall be reduced in the order
specified in the letter agreement attached to this Agreement as Exhibit D. 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 Internal Revenue Service
(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 with respect to the Termination Benefits
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 payment) shall
be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a
Repayment Amount of more than zero would not result in



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Executive’s net after-tax proceeds with
respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated
pursuant to this paragraph, Executive shall pay the Excise Tax and shall not be obligated to
surrender any Termination Benefits.



     Notwithstanding any other provision of this Section 5, if (1) there is a reduction in the
payment of 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 Executive’s Termination 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 Section 5 in the reverse
order of the reduction set forth in Exhibit D 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
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 Sections 6(d) and 9.10 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 as
CEO or the termination of Executive’s employment as CEO or this Agreement, and includes, without
limitation, claims by Executive against directors, officers or employees of the Company, whether
arising under theories of liability or damages based on contract, tort or statute, to the full
extent permitted by law. As a material part of this agreement to arbitrate claims, the parties
expressly waive all rights to a jury trial in court on all statutory or other claims. This
Section 6 does not purport to limit either party’s ability to recover any remedies provided for by
statute, including attorneys’ fees.




          (b) The arbitration shall be held in the San Jose, California metropolitan area, and shall be
administered by JAMS or, in the event JAMS does not then conduct arbitration proceedings, a
similarly reputable arbitration administrator. Under such proceeding, the parties shall select a
mutually acceptable, neutral arbitrator from among the JAMS panel of arbitrators. Except as
provided herein, the Federal Arbitration Act shall govern the interpretation and enforcement of
such arbitration proceeding. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the State of California, or federal law, if California law is
preempted, and the arbitrator is without jurisdiction to apply any different substantive law. The
parties agree that they will be allowed to engage in adequate discovery, the scope of which will he
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




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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 as provided in Section 9.14
hereof.




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




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




     Following the termination of his 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 or any of its affiliates is
a party at the request of the Company upon delivery to Executive of reasonable advance notice and
the Company’s written obligation to reimburse Executive for all reasonable and documented expenses
incurred in connection therewith. Furthermore, Executive agrees to return to the Company all
property of the Company, including all hard and soft copies of records, documents, materials and
files relating to confidential, proprietary or sensitive company information in his possession or
control, as well as all other company-owned property in his possession or control, at the time of
the termination of his full-time employment, except to the extent that the Company determines that
retention of any of such property is necessary, desirable or convenient in order to permit
Executive to satisfy his obligations under this Section 7 or under the Transition Agreement. after
which time Executive shall promptly return all such retained company property.



8. PROPRIETARY INFORMATION AGREEMENT.




     The Executive’s Employee Proprietary Information and Inventions Agreement was executed on
May 12, 2004 in the form attached hereto as Exhibit D (the “Proprietary Information Agreement”).



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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
must be in writing and shall be considered effective either (a) upon personal service or (b) upon
delivery by facsimile and depositing such notice in the U.S. Mail, postage prepaid, return receipt
requested and, if addressed to the Company, in care of the General Counsel at the Company’s
principal corporate address, and, if addressed to Executive, at his most recent address shown on
the Company’s corporate records or at any other address that Executive may specify by notice to the
Company, or (c) three (3) days after depositing such notice in the U.S. Mail as
described in clause (b) of this paragraph, or (d) upon delivery by email, if addressed to the
Company to generalcounsel@cadence.com and if addressed to Executive to such email address
as Executive may specify by notice to the Company.



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



     9.5 ENTIRE AGREEMENT. The parties hereto acknowledge that each has read this Agreement, understands it, and
agrees to be bound by its terms. The parties further agree that this Agreement, the exhibits to
this Agreement, any existing equity compensation award agreements between the parties, and the
documents, plans and policies referred to in this Agreement (which are hereby incorporated herein
by reference) constitute the complete and exclusive statement of the agreement between the parties
and supersedes all proposals (oral or written), understandings, agreements, representations,
conditions, covenants, and all other communications between the parties relating to the subject
matter hereof; provided, however, that the Proprietary Information Agreement, 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, as amended from time to time, 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.



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



     9.8 AMENDMENTS. This Agreement, and the terms and conditions of the matters addressed in this Agreement,
may only be amended in writing executed both by the Executive and the Chairman of the Board and/or
the General Counsel of the Company; provided however that any amendment to this Agreement or the
Transition Agreement that constitutes a subsequent deferral
of deferred compensation under Section 409A (as defined below) shall be done in a manner that
conforms with the requirements of such statute, and payment of amounts constituting deferred
compensation payable hereunder or under the Transition Agreement may be accelerated only in
accordance with Treas. Reg §1.409A-3(j)(4).



     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: the Company’s and Executive’s obligations under Section 7 hereof; the Company’s
obligations to provide compensation earned through the termination of the employment relationship,
plus all reimbursements to which Executive is entitled, under Sections 2 and 3 hereof; the
Company’s and Executive’s obligations under Section 5 hereof; the Company’s and Executive’s
obligations enumerated in Section 4 hereof and in the Transition Agreement, if applicable; the
Company’s obligation to indemnify Executive pursuant to Section 2.4 hereof and the referenced
Indemnity Agreement; the dispute resolution provisions of Section 6 hereof; and, to the extent
applicable, this Section 9.



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




	 	(a)	 	disclose any proprietary information belonging to a former
employer or other entity without its written permission;
	 
	 	(b)	 	contact any former employer’s customers or employees to solicit
their business or employment on behalf of the Company in violation of
Executive’s existing obligations to his former employer; or
	 
	 	(c)	 	distribute announcements about or otherwise publicize
Executive’s employment with the Company.





     Executive shall indemnify and hold the Company harmless from any liabilities, including
reasonable defense costs, it may incur because he is alleged to have broken any of these promises



12









 







or improperly revealed or used such proprietary information or to have threatened to do so, or if a
former employer challenges Executive’s entering into this Agreement or rendering services pursuant
to it.



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



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



     9.13 REIMBURSEMENT OF EXECUTIVE’S ATTORNEYS’ FEES. The Company shall reimburse, as promptly as practicable after its receipt of documentation
therefor, all of Executive’s reasonable and documented attorneys’ fees and expenses in connection
with the negotiation, and execution and delivery of, this Agreement and the exhibits attached
hereto.



     9.14 ATTORNEYS’ FEES. In the event of any dispute, controversy, claim, litigation or arbitration arising out of
or concerning Executive’s employment by the Company as CEO or the termination of Executive’s
employment as CEO or this Agreement, the prevailing party on the preponderance of issues resolved
in any such dispute, controversy, claim, litigation or arbitration shall be entitled to reasonable
attorneys’ fees (excluding expert fees and costs).



     9.15 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.



     9.16 TAX MATTERS. Notwithstanding anything in this Agreement or the Transition Agreement to the contrary, if
Executive is a “specified employee” within the meaning of Section 409A of the Code and any final
regulations and guidance promulgated thereunder (collectively “Section 409A”) at the time of
Executive’s “separation from service” (as defined under Section 409A) that is not as a result of
his death, and the severance payable to Executive, if any, pursuant to this Agreement, when
considered together with any other severance payments or separation benefits may be considered
deferred compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”), then no portion of the Deferred Compensation Separation Benefits may be made within the
first six (6) months following Executive’s separation from service. All Deferred Compensation
Separation Benefits will be payable in accordance with the payment schedule applicable to each
payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following
his separation of service but prior to the six (6) month anniversary of the date thereof, then any
payments delayed



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in accordance with this paragraph will be payable in a lump sum as soon as
administratively practicable after the date of Executive’s death and all
other Deferred Compensation Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit. It is the intent of this Agreement to comply with
the requirements of Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities
herein will be interpreted to so comply. Each payment of Deferred Compensation Separation Benefits
that is scheduled to be made on a different date hereunder or under the Transition Agreement is
designed as a separate payment and will not collectively he treated as a single payment.



     IN WITNESS WHEREOF, the parties have executed this Agreement on this 29th day of July, 2008.



	 	 	 	 	 	 	 
	CADENCE DESIGN SYSTEMS, INC.	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 
	By:

	 	/s/ James J. Cowie
	 	 	 	/s/ Michael J. Fister
	 

	 	 
	 	 	 	 
	 

	 	James J. Cowie
	 	 	 	Michael J. Fister
	 

	 	Sr. VP & General Counsel	 	 	 	 







14









 








EXHIBIT A




INDEMNITY AGREEMENT




 









 





INDEMNITY AGREEMENT




     This Indemnity Agreement (this “Agreement”), dated as of July 29, 2008, is made by and between
Cadence Design Systems, Inc., a Delaware corporation (the “Company”), and Michael J. Fister,
President and Chief Executive Officer 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 and indemnification, due to increased exposure to litigation costs and risks resulting
from their service to such corporations;



     B. 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;



     C. The Company believes that its directors and officers and the directors and officers of its
subsidiaries should be able to serve as such, and in such other capacities as the Company may
request, as the case may be, free from undue concern about the risk of large judgments and other
expenses that may be incurred as a result of the good faith performance of their duties to the
Company or its subsidiaries;



     D. The Company recognizes that the long period of time that may elapse before the trial or
other disposition of legal proceedings 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
lndemnitee’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
director or officer from serving in that position;



     E. 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 directors and certain officers of the Company and its subsidiaries and to encourage such
individuals to take the business risks necessary for the success of the Company and its
subsidiaries, it is necessary, and in the best interests of the Company and its stockholders, for
the Company to contractually indemnify such individuals, and to assume for itself maximum liability
for claims against such persons in connection with their service;



     F. The Company desires and has requested the Indemnitee to serve or continue to serve as a
director and/or an 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



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



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AGREEMENT




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



     1. Definitions.



          (a) Change in Control. For purposes of this Agreement, a “change in control” shall be
deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the
Company representing 20% or more of the total voting power represented by the Company’s then
outstanding voting securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new director whose election by the
Board or nomination for election by the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding immediately after such
merger or consolidation; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the Company’s assets.




          (b) 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.




          (c) Disinterested Directors. For purposes of this Agreement, “disinterested
directors” mean any director of the Company who is not or was not a party to the proceeding in
respect of which indemnification is being sought by a covered person.




          (d) Expenses. For purposes of this Agreement, “expenses” include 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 a
covered person in connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement under this Agreement,
Section 145 of the Delaware General Corporation Law or otherwise.




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          (e) Independent Legal Counsel. For purposes of this Agreement, “independent legal
counsel” means a law firm or a member of a law firm that neither is presently nor in the past five
years has been retained to represent (i) the Company or a covered person in any matter material to
either such party, or (ii) any other party to the proceeding giving rise to a claim for
indemnification or advancement hereunder. “Independent legal counsel” shall not include any person
who, under the applicable standards of professional conduct then prevailing, would have a conflict
of interest in representing either the Company or the covered person in an action to determine such
covered person’s right to indemnification or advancement under this Agreement.




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




          (g) 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 or other form of service for the Company or its subsidiaries by Indemnitee.



     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, employee or agent of the Company (including




3









 




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, employee or agent 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 and the Company’s Bylaws, against all
expenses, liability and loss (including, without limitation, attorneys’ fees, judgments, fines,
forfeitures, ERISA excise and other taxes and penalties, and amounts paid or to be paid in
settlement) actually and 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, administrators and other legal
representatives; 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.




          (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, attorneys’ fees, judgments, fines, forfeitures,
ERISA excise and other taxes and penalties, and amounts paid or to be paid in settlement) which
have been paid directly to such person or a third party on the covered person’s behalf by D&O
Insurance.




          (c) Partial Indemnification; Successful Defense. 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, attorneys’ fees,
judgments, fines, forfeitures, ERISA excise and other taxes and penalties, and amounts paid or to
be paid in settlement) incurred by the covered person in the investigation, defense, settlement or
appeal of a proceeding, but not entitled, however, to indemnification for the total amount thereof,
the Company shall nevertheless indemnify such person for such total amount. except as to the
portion thereof to which the covered person is not entitled by applicable law, the Company’s Bylaws
or this Agreement. Notwithstanding any other provision of this Agreement, to the extent that a
covered person has been successful, on the merits or otherwise, in whole or in part, in the defense
of a proceeding, or in the defense of any claim, issue or matter therein, including, without
limitation, the dismissal of any action without prejudice, the covered person shall be indemnified
against the total amount of any expenses actually and reasonably incurred or suffered by such
person in connection therewith.




     5. Mandatory Advancement of Expenses. The Company shall pay all expenses incurred by
a covered person in advance of the final disposition of a proceeding as they are incurred;
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 he 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, after a final adjudication
(including all appeals), that such person is not entitled to the payment of such expenses by the
Company.



4









 





     6. Notice and Procedures for Obtaining Indemnification and Advancement.



          (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
or advancement with respect thereto may be sought from the Company under this Agreement, notify the
Company of the commencement or threat of commencement thereof; provided, however, that the failure
to notify the Company shall not relieve the Company of any liability it may have to such covered
person under this Agreement.




          (b) Upon written request by a covered person for indemnification pursuant to Section 4(a), the
entitlement of such covered person to indemnification, to the extent not provided pursuant to the
terms of this Agreement, shall be determined and such indemnification shall be paid in full within
sixty (60) days after a written request for indemnification has been received by the Company. Such
request shall include documentation or information which is necessary for such determination and
which is reasonably available to the covered person. Upon making a request for indemnification, a
covered person shall be presumed to be entitled to indemnification hereunder and the Company shall
have the burden of proving that the covered person is not entitled to be indemnified. If the
person or persons empowered to make such determination pursuant to Section 6(c) fail to make the
requested determination with respect to indemnification within sixty (60) days after a written
request for indemnification has been received by the Company, a requisite determination of
entitlement to indemnification shall be deemed to have been made and the covered person shall be
absolutely entitled to such indemnification, absent actual and material fraud in the request for
indemnification.




          (c) The determination of entitlement to indemnification pursuant to Section 6(b) shall be made
by the following person or persons who shall be empowered to make such determination: (i) the
Board, by a majority vote of disinterested directors, whether or not such majority constitutes a
quorum; (ii) a committee of disinterested directors designated by a majority vote of such
directors, whether or not such majority constitutes a quorum; (iii) if there are no disinterested
directors, or if the disinterested directors so direct, by independent legal counsel in a written
opinion to the Board, a copy of which shall be delivered to the covered person; or (iv) the
stockholders of the Company. If a change in control has occurred and results in individuals who
were directors prior to the circumstances giving rise to the change in control ceasing for any
reason to constitute a majority of the Board, such determination shall be made by independent legal
counsel of a reputable national law firm in a written opinion, and such independent counsel shall
render its written opinion to the Company and to the covered person. The Company agrees to pay the
reasonable fees of such independent legal counsel and to indemnify fully such independent legal
counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss and
damages arising out of or relating to this Agreement or the engagement of such independent legal
counsel pursuant hereto. The independent legal counsel shall be selected by the Board and approved
by the covered person; provided, however, that if a change in control has occurred, such
independent legal counsel shall be selected by the covered person and approved by the Company (such
approval not to be unreasonably withheld or delayed).




          (d) Expenses incurred by a covered person in advance of the final disposition of a proceeding
shall be paid by the Company at the request of the covered person, each such




5









 




payment of expenses to be made within twenty (20) days after a written request for such
payment has been received by the Company. Such request shall reasonably evidence the expenses
incurred by the covered person and, to the extent required pursuant to Section 5, shall include or
be accompanied by an undertaking by or on behalf of such covered person, to repay all amounts so
advanced if it should be determined ultimately, after a final adjudication (including all appeals),
that such person is not entitled to the payment of such expenses by the Company.




          (e) Any expenses incurred by a covered person in connection with a request for indemnification
or advancement of expenses hereunder, under any other agreement, any provision of the Company’s
Bylaws or any D&O insurance, shall be borne by the Company.




          (f) 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.




          (g) 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 shall 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 covered person that a conflict of
interest exists requiring the covered person to retain separate counsel, the fees and expenses of
the covered person’s counsel shall be at the expense of the Company. If the Company has assumed
the defense of a proceeding, the Company shall not be liable to indemnify a covered person under
this Agreement for any amounts paid in settlement of any proceeding effected without the Company’s
written consent; provided, however, that if a change in control has occurred, the Company shall be
liable for indemnification for amounts paid in settlement if independent legal counsel has approved
the settlement. The Company shall not settle any proceeding in any manner that would impose any
penalty or limitation on, or disclosure obligation with respect to, a covered person without the
covered person’s written consent. Neither the Company nor a covered person shall unreasonably
withhold or delay its consent to any proposed settlement.




     7. Right of Covered Person to Bring Suit. If (a) indemnification is not paid in full
by the Company within sixty (60) days after a written request for indemnification has been received
by the Company pursuant to Section 6(b); (b) a determination is made pursuant to Section 6(c) that
a covered person is not entitled to indemnification; or (c) a written request for an advancement of
expenses is not paid in full by the Company within twenty (20) days after a



6









 







written request for such payment has been received by the Company pursuant to Section 6(d),
the covered person may at any time thereafter bring suit against the Company to recover the unpaid
amount of any claim for indemnification or advancement. If 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 (including all appeals) by asserting that indemnification is not permitted by
applicable law. Neither the failure of the Company (including the Board, a committee thereof,
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
because the Indemnitee has met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Company (including the Board, a committee
thereof, independent legal counsel or its stockholders) that the Indemnitee has not met the
applicable standard of conduct, 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. If a determination is made or deemed to have been made pursuant to the terms of Section 6
that a covered person is entitled to indemnification, the Company shall be bound by such
determination and shall be precluded from asserting that such determination has not been made or
that the procedure by which such determination was made is not valid, binding and enforceable. 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 of its subsidiaries 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 (a) the date the Company or any subsidiary of the
Company discovers such facts, or (b) the date the Company or 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 or any of its subsidiaries 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



7









 







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 disinterested directors or
stockholders, other agreements, or otherwise, both as to acts or omissions in the Indemnitee’s
official capacity and to acts or omissions in another capacity while occupying the Indemnitee’s
position as an officer, director or employee of the Company and/or its subsidiaries, and the
Indemnitee’s right hereunder shall continue after the Indemnitee has ceased to serve the Company or
any of its subsidiaries and shall inure to the benefit of any heir, executor, administrator or
other legal representative of the Indemnitee. Notwithstanding the foregoing, this Agreement shall
supersede and replace any prior indemnification agreements entered into between the Company and the
Indemnitee, and any such prior agreements shall be terminated upon execution of this Agreement.



     10. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification and advancement 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, (a) 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 (b) 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 (a) upon receipt, if delivered by
hand, or (b) 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 within Delaware.



8









 





     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.



[Remainder of Page Left Intentionally Blank]




9









 








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



	 	 	 	 	 	 	 
	 	 	CADENCE DESIGN SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

James J. Cowie
	 	 
	 

	 	Title:
	 	Senior Vice President


and General Counsel	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	2655 Seely Avenue, Building 5	 	 
	 

	 	 	 	San Jose, California 95134	 	 
	 

	 	 	 	Attention: Office of the General Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	INDEMNITEE	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Michael J. Fister
	 	 
	 

	 	Title:	 	 	 	 
	 
	 

	 	Address:	 	 	 	 







10









 








EXHIBIT B




EXECUTIVE TRANSITION AND RELEASE AGREEMENT




 









 





EXECUTIVE TRANSITION AND RELEASE AGREEMENT




     This Executive Transition and Release Agreement (this “Agreement”) is entered into between
Michael J. Fister (“Executive”) and Cadence Design Systems, Inc., a Delaware corporation (“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 President and Chief Executive
Officer (“CEO”) and will be relieved of all of Executive’s authority and responsibilities in those
positions. Executive will be paid (a) any earned but unpaid base salary for his services as CEO
prior to the Transition Commencement Date and any outstanding expense reimbursements submitted and
approved pursuant to Section 3.1 of Executive’s Employment Agreement with the Company dated as of
[                    , 2008] (the “Employment Agreement”); and (b) other unpaid vested amounts or benefits
under the compensation, incentive and benefit plans of the Company in which Executive participates,
in each case under this clause (b) as of the Transition Commencement Date. The payment of the
foregoing amounts shall be made to Executive by not later than the next regular payroll date
following the Transition Commencement Date. As of the first day of the month following the
Transition Commencement Date, Executive will no longer participate in Cadence’s medical, dental,
and vision insurance plans (unless Executive elects to continue coverage pursuant to COBRA ). and
will not be eligible for a bonus for any services rendered after that date.



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



     a. the date on which Executive provides Cadence with his written resignation from his
employment with Cadence pursuant to this Agreement;



     b. the date on which Cadence terminates Executive’s employment due to a material breach by
Executive of his duties or obligations under paragraph 3(b), 3(c) or 3(e) of this Agreement, after
written notice delivered to Executive identifying such breach and his failure to cure such breach,
if curable, within thirty (30) days following delivery of such notice; or



     (c) one year from the Transition Commencement Date.



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



     a. During the Transition Period, Executive will assume the position of ((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 month. Executive shall not be required to perform those services
on the Company’s premises and shall instead be permitted to perform those services at a location
determined by Executive. Except as otherwise provided in paragraph



1









 




3(h) of this Agreement, Executive’s obligations hereunder will not preclude Executive from
accepting and holding full-time employment elsewhere. Neither party expects that Executive will
resume employment with Cadence in the future at a level that exceeds the level set forth in this
Section 3(a) and it is the parties’ intent that Executive will have experienced a “separation from
service” as defined under Section 409A of the Code as of the Transition Commencement Date.




     b. As a Cadence ((New position)), 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 he virtually
impossible for Executive to work as an employee, consultant or advisor in any business in which
Cadence engages on the Transition Commencement Date, including the electronic design automation
(“EDA”) industry, without inevitably disclosing confidential and proprietary information belonging
to Cadence. Accordingly, during the Transition Period, Executive will not, directly or indirectly,
provide services, whether as an employee, consultant, independent contractor, agent, sole
proprietor, partner, joint venturer, corporate officer or director, on behalf of any corporation,
limited liability company, partnership, or other entity or person or successor thereto that (i) is
engaged in any business in which Cadence or any of its affiliates is engaged on the Transition
Commencement Date or has been engaged at any time during the 12-month period immediately preceding
the Transition Commencement Date, whether in the EDA industry or otherwise, anywhere in the world
(a “Cadence Business”), or (ii) produces, markets, distributes or sells any products, directly or
indirectly through intermediaries, that are competitive with Cadence or any of its affiliates. As
used in this paragraph, the term “EDA industry” means the research, design or development of
electronic design automation software, electronic design verification, emulation hardware and
related products, such products containing hardware, software and both hardware and/or software
products, designs or solutions for, and all intellectual property embodied in the foregoing, or in
commercial electronic design and/or maintenance services, such services including all intellectual
property embodied in the foregoing. If Executive receives an offer of employment or consulting
from any person or entity that engages in whole or in part in a Cadence Business during the
Transition Period, then Executive must first obtain written approval from Cadence’s then
Chairperson of the Board before accepting said offer.



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



2









 







customer or joint venture partner of Cadence or any Cadence affiliate (other than on behalf of
Cadence). The restrictions contained in subparagraph (i) of this paragraph 3(c) shall also be in
effect for a period of one year following the Transition Termination Date. This paragraph 3(c)
does not alter any of the obligations the Executive may have under the Employee Proprietary
Information and Inventions Agreement, dated as of May 12, 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 and of
its affiliates, or any of Cadence’s or its affiliates’ products, services, policies, business
practices, employees, executives, officers or directors, past, present or future. Similarly,
Cadence agrees to instruct its executive officers and members of the 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 9 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 for Executive’s execution and
delivery of an effective release of claims as set forth in this Agreement and as compensation for
Executive’s services during the Transition Period, Cadence will provide the following payments and
benefits to Executive (to which Executive would not otherwise be entitled), after Executive has
returned to the Company all hard and soft copies of records, documents, materials and files
relating to confidential, proprietary or sensitive company information in his possession or control
during his period of employment as CEO, as well as all other Company-owned property then in his
possession, except to the extent retained pursuant to Section 7 of the Employment Agreement:



     a. provided that Executive does not resign from employment with Cadence under this Agreement
and Cadence does not terminate Executive’s employment with Cadence due to a breach by Executive of
Executive’s duties under this Agreement, a monthly salary commencing on the first pay date
following the date that is six months after the Transition Commencement Date of $4,000 less
applicable tax withholdings and deductions, payable for a period of six months, in accordance with
Cadence’s regular payroll schedule;



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



3









 







vested over the twenty-four (24) months following the date of termination had Executive
continued to serve as CEO under his Employment Agreement during that period shall immediately vest
and become exercisable in full on the Effective Date of this Agreement, and there shall be no
further vesting of those equity compensation awards during or after the Transition Period except as
otherwise provided by paragraph 6 hereof. Provided Executive continues in employment under this
Agreement through the end of the applicable performance period, unvested equity compensation awards
that are performance-based within the meaning of Section 162(m) of the Code and that are
outstanding and held by Executive on the Transition Commencement Date shall continue to vest
through the end of the applicable performance period, but only to the extent justified by the
satisfaction of the performance goals prescribed for such equity awards. Upon the conclusion of
the performance period, such awards shall immediately vest to the extent they would have vested
over the twenty-four (24) months following the date of termination had Executive continued to serve
as an executive of the Company pursuant to his Employment Agreement, and there shall be no further
vesting of such awards during or after the Transition Period except as otherwise provided by
paragraph 6 hereof. Any acceleration pursuant to this paragraph 4(b) will have no effect on any
other provisions of the stock awards;



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



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



     Except as so provided or as otherwise set forth in paragraph 6 hereof, Executive will receive
no other compensation or benefits from Cadence in consideration of Executive’s services during the
Transition Period.



     5. TERMINATION PAYMENTS AND BENEFITS; REFUND OF PAYMENTS.



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



          i. a lump-sum payment of $                     [amount equal to 300% of Executive’s annual Base Salary
at the highest rate in effect during Executive’s employment with




4









 




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




          ii. commencing on the first payroll date coincident with or following the Initial Payment Date
and continuing on each payroll date thereafter until the Transition Termination Date, $                    
[amount equal to 100% of Executive’s annual Base Salary at the highest rate in effect during
Executive’s employment as CEO], less applicable tax deductions and withholdings, payable in equal
pro rata installments on each such payroll date, provided that the final payment shall be
contingent upon Executive’s further execution and delivery of an effective Release of Claims in the
form of Attachment 2 to this Agreement and the expiration of the revocation period of the Release
of Claims (as defined in that document); provided, further, that the Company shall have no further
obligation to make any monthly installments after the Transition Termination Date should such date
occur pursuant to paragraph 2(a) or 2(b) hereof, and provided, further, if the Transition
Termination Date should occur pursuant to paragraph 2(b) hereof, Executive shall promptly refund to
the Company any and all amounts theretofore paid to Executive pursuant to paragraphs 5(a)(i) and
5(a)(ii) hereof, with interest on any such amounts of eight percent per annum, compounded monthly.




     b. Notwithstanding anything in this Agreement to the contrary, Section 9.16 of the Employment
Agreement is hereby incorporated by reference in its entirety.



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



     a. The amount of vesting acceleration set forth in Section 4.5(a)(3) of the Employment
Agreement shall apply in lieu of the amount of vesting acceleration set forth in paragraph 4(h) of
this Agreement; and



     b. The amount of cash set forth in Sections 4.5(a)(1) and 4.5(a)(2) of the Employment
Agreement shall apply in lieu of the amounts set forth, respectively, in paragraphs 5(a)(i) and
5(a)(ii) of this Agreement.



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



     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



5









 







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



          i. any amounts or benefits to which Executive is or becomes entitled pursuant to the
provisions of this Agreement (including, without limitation, paragraphs 1, 4. 5 and 6 hereof) or
pursuant to the provisions designated in Section 9.9 of the Employment Agreement to survive the
termination of Executive’s full-time employment as CEO;




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




          iii. claims related to Executive’s COBRA rights;




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




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




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



     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 subject to this release,
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:



6









 






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



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



     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
at any time 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 both the General Counsel and the Senior Vice President of Human
Resources of Cadence. 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. Except as expressly set forth in paragraph 3(g) hereof, all claims, disputes,
questions, or controversies arising out of or relating to this Agreement, including without
limitation the construction or application of any of the terms, provisions, or conditions of this
Agreement, will be resolved exclusively in final and binding arbitration in accordance with the
Arbitration Rules and Procedures, or successor rules then in effect, of Judicial Arbitration &
Mediation Services, Inc. (“JAMS”). The arbitration will be held in the San Jose, California,
metropolitan area, and will be conducted and administered by JAMS, or in the event JAMS does not
then conduct arbitration proceedings, a similarly reputable arbitration administrator. Executive
and Cadence will select a mutually acceptable, neutral arbitrator from among the JAMS panel of
arbitrators. Except as provided by this Agreement, the Federal Arbitration Act will govern the
administration of the arbitration proceedings. The arbitrator will apply the substantive law (and
the law of remedies, if applicable) of the State of California, or federal law, if California law
is preempted, and the arbitrator is without jurisdiction to apply any different 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 clan-nisi 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 he responsible for
paying its own attorneys’ fees and costs (including expert witness fees and costs, if any), except
as provided in paragraph 13 hereof.



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



7









 





     11. INTEGRATED AGREEMENT. This Agreement, together with the provisions designated in
Section 9.9 of the Employment Agreement to survive the termination of Executive’s full-time
employment as CEO, 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, together with any payments or benefits to which
Executive is or may become entitled pursuant to the provisions of the Employment Agreement that
survive the termination of Executive’s full-time employment as CEO pursuant to Section 9.9 of the
Employment Agreement, are in full satisfaction of all obligations of Cadence to Executive arising
out of or in connection with Executive’s employment through the Transition Termination Date,
including, without limitation, all compensation, salary, bonuses, reimbursement of expenses, and
benefits.



     13. ATTORNEYS’ FEES. In the event of any dispute, controversy, claim, litigation or
arbitration arising out of or concerning Executive’s employment by Cadence or the termination of
Executive’s employment or this Agreement, the prevailing party on the preponderance of the issues
resolved in any such dispute, controversy, claim, litigation or arbitration shall be entitled to
reasonable attorneys’ fees (excluding expert fees and costs).



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



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



     16. MODIFICATION. This Agreement may not be modified unless such modification is embodied in
writing, signed by the party against whom the modification is to be enforced; provided however that
any amendment to this Agreement that constitutes a subsequent deferral of deferred compensation
under Section 409A shall be done in a manner that conforms with the requirements of such statute,
and payment of amounts constituting deferred



8









 







compensation payable hereunder may be accelerated only in accordance with Treas. Reg
§1.409A-3(j)(4).



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



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



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



EXECUTION OF AGREEMENT



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




	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	Dated:	 	 
	 
	 	 	 	 	 	 	 	 
	Michael J. Fister	 	 	 	CADENCE DESIGN SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 


	 	 	 	 	 	 

Name
	 	 
	 

	 	 	 	 	 	Title	 	 







9









 








ATTACHMENT 1




RELEASE OF CLAIMS




          1. For valuable consideration, I irrevocably, fully and finally release Cadence, its parent,
subsidiaries, affiliates, directors, officers, agents and employees (“Releasees”) from all causes
of action, claims, suits, demands or other obligations or liabilities, whether known or unknown,
suspected or unsuspected, that I ever had or now have as of the time that I sign this Agreement
which relate to my hiring, my employment with the Company, the termination of my employment with
the Company and claims asserted in shareholder derivative actions or shareholder class actions
against the Company and its officers and Board of Directors, to the extent those derivative or
class actions relate to the period during my employment with the Company. The claims released
include, but are not limited to, any claims arising from or related to Executive’s employment with
Cadence, such as claims arising under (as amended) Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1974, the Americans with
Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the California Fair Employment
and Housing Act, the California Labor Code, the Employee Retirement Income Security Act of 1974
(except for any vested right Executive has to benefits under an ERISA plan), the state and federal
Worker Adjustment and Retraining Notification Act, and the California Business and Professions
Code; any other local, state, federal, or foreign law governing employment; and the common law of
contract and tort. This Release is not intended to, and does not, encompass any right to
compensation or benefits that I ha\ e 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;



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



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



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



1









 






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



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



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



Dated:




	 	 	 	 	 
	 

	 	 

Print Name
	 	 
	 
	 	 	 	 
	 

	 	 

Sign Name
	 	 







2









 








ATTACHMENT 2




RELEASE OF CLAIMS




          1. For valuable consideration, I irrevocably, fully and finally release Cadence, its parent,
subsidiaries, affiliates, directors, officers, agents and employees (“Releasees”) from all causes
of action, claims, suits, demands or other obligations or liabilities, whether known or unknown,
suspected or unsuspected, that I ever had or now have as of the time that I sign this Agreement
which relate to my hiring, my employment with the Company, the termination of my employment with
the Company and claims asserted in shareholder derivative actions or shareholder class actions
against the Company and its officers and Board of Directors, to the extent those derivative or
class actions relate to the period during my employment with the Company. The claims released
include, but are not limited to, any claims arising from or related to Executive’s employment with
Cadence, such as claims arising under (as amended) Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1974, the Americans with
Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the California Fair Employment
and Housing Act, the California Labor Code, the Employee Retirement Income Security Act of 1974
(except for any vested right Executive has to benefits under an ERISA plan), the state and federal
Worker Adjustment and Retraining Notification Act, and the California Business and Professions
Code; any other local, state, federal, or foreign law governing employment; and the common law of
contract and tort. 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;



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



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



     2. I intend that this Release cover all claims, 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:



1









 






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



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



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



Dated:




	 	 	 	 	 
	 

	 	 

Print Name
	 	 
	 
	 	 	 	 
	 

	 	 

Sign Name
	 	 







2









 








EXHIBIT C




RELEASE AGREEMENT




(DEATH or PERMANENT DISABILITY)




 









 





RELEASE AGREEMENT




     1. GENERAL RELEASE OF CLAIMS.



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




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



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



               iii. claims related to Executive’s COBRA rights;



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



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



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




1









 








          c. Executive acknowledges that the payments provided in his Employment Agreement constitute
adequate consideration for this release.




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





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



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




          f. For purposes of this Release Agreement, the term “Executive” shall apply to (i) the
individual executive if the Release Agreement is executed by the individual executive or by his
legal representative acting on his behalf, or (ii) the individual executive’s estate, as the
context requires.




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




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



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



 




2









 





EXHIBIT D




LETTER REGARDING EXCISE TAX





 









 








[                    ] [__], 2008




Michael J. Fister

[Address]




Dear Michael:



In connection with the employment agreement between you and Cadence Design Systems, Inc. (the
“Company”) dated concurrently with this letter (the “Agreement”), pursuant to which
a portion of the Termination Benefits you may receive under the Agreement and the Transition
Agreement may be reduced pursuant to Section 5 of the Agreement in order to avoid the imposition of
an Excise Tax in connection with a Change in Control, you and the Company hereby agree that the
order of any reductions shall be as follows:



(a) first, Termination Benefits payable in the form of cash the payment of which are contingent
on future events shall be reduced first,



(b) second, Termination Benefits payable in the form of cash that are not contingent shall be
reduced next.



(c) third, Termination Benefits consisting of accelerated vesting of property shall be reduced
last.



provided that in each case if you are entitled to multiple payments of benefits within a
particular category described in (a) – (c), such payments within a particular category shall be
reduced in proportion to the amounts thereof, as reasonably determined by the Accountants.



You agree and acknowledge that this letter agreement serves as your written identification of the
ordering of benefits reduction for purposes of Section 5 of the Agreement. You and the Company
further agree that notwithstanding anything to the contrary in the Agreement, the order of
reductions in your Termination Benefits as set forth above may only be amended in a manner that
complies with the subsequent deferral election rules of Code Section 409A(a)(4)(C).



In addition, you and the Company agree that in the event you pay the Excise Tax and are entitled to
receive the Termination Benefits which were previously reduced, the Company shall pay to yore such
benefits in the reverse order of the reductions as set forth in (a) – (c) above.




1









 







Capitalized terms not defined in this letter agreement shall have the meanings ascribed in the
Agreement.




	 	 	 	 	 
	 	Very truly yours



Cadence Design Systems, Inc.

 	 
	 	By:  	 	 
	 	 	James J. Cowie 	 
	 	 	Sr. VP & General Counsel 	 
	 



	 	 	 
	ACCEPTED AND AGREED
	 	 
	 
	 	 
	Michael J. Fister
	 	 
	 
	 	 
	 

Signature

	 	 
	 
	 	 
	 

Date

	 	 







2









 








EXHIBIT E




EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT




 









 





CADENCE DESIGN SYSTEMS, INC.




EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

(to be signed in conjunction with Employment Agreement)




     In consideration of my employment or continued employment by Cadence Design Systems, Inc. or
one of its subsidiaries (the “Company”), and the compensation now and hereafter paid to me, I
hereby agree as follows:



1. NONDISCLOSURE




          1.1 Recognition of Company’s Rights; Nondisclosure. At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish
any of the Company’s Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or unless an officer of the
Company expressly authorizes such in writing. I will obtain Company’s written approval before
publishing or submitting for publication any material (written, verbal, or otherwise) that relates
to my work at Company and / or incorporates any Proprietary Information. I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information and recognize that all
Proprietary Information shall be the sole property of the Company and its assigns.




          1.2 Proprietary Information. The term “Proprietary Information” shall mean any and all
confidential and/or proprietary knowledge, data or information of, or acquired by, the Company. By
way of illustration but not limitation, “Proprietary Information” includes (a) information relating
to products, processes, know-how, designs, drawings, concepts, test data, formulas, methods,
compositions, ideas, algorithms, techniques, developmental or experimental work, improvements and
discoveries, (hereinafter collectively referred to as “Inventions”); (b) information regarding
plans for research, development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c)
information regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am free to use
information which is generally known in the trade or industry, which is not gained as result of a
breach of this Agreement, and my own, skill, knowledge, know-how and experience to whatever extent
and in whichever way I wish.



          1.3 Third Party Information. I understand, in addition, that the Company has received and in the
future will receive from third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and will not disclose
to anyone (other than Company personnel who need to know such information in connection with their
work for the Company) or use, except in connection with my work for the Company, Third Party
Information unless expressly authorized by an officer of the Company in writing.




          1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the
Company I will not improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom I have an obligation of confidentiality,
and I will not bring onto the premises of the Company any unpublished documents or any property
belonging to my former employer or any other person to whom I have an obligation of confidentiality
unless consented to in writing by that former employer or person. I will use in the performance of
my duties only information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or otherwise legally in
the public domain, or which is otherwise provided or developed by the Company.




2. ASSIGNMENT OF INVENTIONS




          2.1 Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent,
copyright, mask work and other intellectual property rights throughout the world.




          2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the
commencement of my employment with the Company are excluded from the scope of this Agreement. To
preclude any possible uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that 1 have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced to practice prior
to the commencement of my employment with the Company, that




1









 




I consider to be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement (collectively referred to as “Prior Inventions”). If disclosure
of any such Prior Invention(s) would cause me to violate any prior confidentiality agreement, I
understand that I am not to list such Prior Invention(s) in Exhibit B, but am only to disclose a
cursory name for each such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason. A space is provided
on Exhibit B for such purpose. If no such disclosure is attached, I represent that there are no
Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior
Invention into a Company product, process or machine, the Company is hereby granted and shall have
a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense
through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior
Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be
incorporated, Prior Inventions in any Company Inventions without the Company’s prior written
consent.




          2.3 Assignment of Inventions. Subject to Sections 2.4 and 2.6, I hereby assign and agree to
assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice
or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest
in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived or reduced to
practice or learned by me, either alone or jointly with others, during the period of my employment
with the Company. Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as “Company Inventions.”




          2.4 Nonassignable Inventions. This Agreement does not apply to an Invention which qualifies
fully as a Nonassignable Invention under Section 2870 of the California Labor Code (hereinafter
“Section 2870”). I have reviewed the notification on Exhibit A (Limited Exclusion Notification)
and agree that my signature thereon acknowledges receipt of the notification.




          2.5 Obligation to Keep Company Informed. During the period of my employment, I will promptly
disclose to the Company fully and in writing all Inventions authored, conceived or reduced to
practice by me, either alone or jointly with others, particularly if I commercialize an idea that
the Company decided not to pursue. In addition, I will promptly disclose to the Company all patent
applications filed by me or on my behalf during my employment. At the time of each such
disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for
protection under Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any confidential information
disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify
fully for protection under the provisions of Section 2870.




          2.6 Government or Third Party. I also agree to assign all my right, title and interest in and
to any particular Invention to a third party, including without limitation the United States, as
directed by the Company.




          2.7 Works for Hire. I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17 U.S.C. Section
101).




          2.8 Enforcement of Proprietary Rights. During; and after my employment with the Company, I
will assist the Company in every proper way to obtain, and from time to time enforce, United States
and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that
end I will execute, verify and deliver such documents and perform such other acts (including
appearances as a witness) as the Company may reasonably request for use in applying for, obtaining,
perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment
thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with respect to Proprietary
Rights relating to such Company Inventions in any and all countries shall continue beyond the
termination of my employment, but the Company shall compensate me at a reasonable rate after my
termination for the time actually spent by me at the Company’s request on such assistance.



In the event the Company is unable for any reason. after reasonable effort to secure my signature
on any document needed in connection with the actions specified in the preceding paragraph, I
hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other lawfully permitted acts
to further the purposes of the preceding paragraph with the same legal


 









 






force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all
claims, of any nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.



3. RECORDS. I agree to keep and maintain adequate and current records (in the form of notes,
sketches, drawings and in any other form that may be required by the Company) of all Proprietary
Information developed by me and all Inventions made by me during the period of my employment at the
Company, which records shall be available to and remain the sole property of the Company at all
times.



4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company as Chief
Executive Officer I will not, without the Company’s express written consent, engage in any
employment or business activity which is competitive with, or would otherwise conflict with, my
employment by the Company; provided, however, that nothing herein supersedes my rights and
obligations under the Transition Agreement (as defined in my Employment Agreement with the Company,
effective as of May 12, 2004), if applicable.



5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this Agreement shall confer any
right with respect to continuation of employment by the Company, nor shall it interfere in any way
with my right or the Company’s right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand that, other than the
Company’s Senior Vice President of Organizational Development and Human Resources, no manager,
supervisor, employee or any other representative or agent of the Company has the authority to enter
into an agreement to the contrary. I further understand that an agreement to the contrary by the
Senior Vice President of Organizational Development and Human Resources is not valid unless it has
been approved by the Company’s Board of Directors and is in writing.



6. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement,
and of my duties as an employee of the Company, does not and will not breach any agreement to keep
in confidence information acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.



7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of the Company, I will
deliver to the Company any and all drawings, notebooks, notes, memoranda, source code,
specifications, devices, formulas, records, manuals, reports and documents, together with all
copies thereof, and any other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my possession, custody or
control. Further, upon termination of employment I also will return any and all Company property
or equipment in my possession, custody or control. Prior to leaving, I will cooperate with the
Company in completing and signing the Company’s agreement regarding termination.



8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no expectation of privacy in
the voicemail and electronic mail provided to me by the Company or in any property situated on the
Company’s premises and/or owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property, including voicemail and
electronic mail, is subject to inspection by Company personnel at any time.



9. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at
the address specified below or at such other address as the party shall specify in writing. Such
notice shall be deemed given upon personal delivery to the appropriate address or if sent by
certified or registered mail, three (3) days after the date of mailing.



10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of the Company, I hereby
consent to the notification of my new employer of my rights and obligations under this Agreement.



11. GENERAL PROVISIONS.




     11.1 Governing Laws, Consent to Personal Jurisdiction. This Agreement will be governed by and
construed according to the laws of the State of California; as such laws are applied to agreements
entered into and to be performed entirely within California between California residents.



     11.2 Severability. In the event any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of



 









 







the provisions contained in this Agreement shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be construed by limiting
and reducing it, so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.



     11.3 Survival. The provisions of this Agreement shall survive the termination of my
employment and the assignment of this Agreement by the Company to any successor in interest or
other assignee.



     11.4 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of
any preceding or succeeding breach. No waiver by the Company of any right under this Agreement
shall be construed as a wavier of any other right. the Company shall not be required to give notice
to enforce strict adherence to all terms of this Agreement.



     11.5 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall
apply to any time during which I was previously employed, or am in the future employed, by the
Company as a consultant if no other agreement governs nondisclosure and assignment of inventions
during such period. This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes all prior discussions between us, except
that the Cadence Code of Conduct and my offer letter, both of which I signed, are incorporated
herein. No modification of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.



     This Agreement shall be effective as of the first day of my employment with the Company,
namely:



     I HAVE READ THIS AGREEMENT CAREFULLY AND IN ITS ENTIRETY. I UNDERSTAND ITS TERMS. I HAVE
COMPLETELY AND ACCURATELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.



	 	 	 
	Dated:
	 	 
	 
	 	 
	Signature
	 	 
	 
	 

Michael J. Fister

	 	 






ACCEPTED AND AGREED TO:




CADENCE DESIGN SYSTEMS, INC.




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 






Address: 2655 Seely Avenue, San Jose, CA 95134




 









 








EXHIBIT A




LIMITED EXCLUSION NOTIFICATION




          THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor Code that the
foregoing Agreement between you and the Company does not require you to assign or offer to assign
to the Company any invention that you developed entirely on your own time without using the
Company’s equipment, supplies, facilities or trade secret information except for those inventions
that either:




          (1) Relate at the time of conception or reduction to practice of the invention to the
Company’s business, or actual or demonstrably anticipated research or development of the Company;




          (2) Result from any work performed by you for the Company.




          To the extent a provision in the foregoing Agreement purports to require you to assign an
invention otherwise excluded from the preceding paragraph, the provision is against the public
policy of this state and is unenforceable.




          This limited exclusion does not apply to any patent or invention covered by a contract between
the Company and the United States or any of its agencies requiring full title to such patent or
invention to be in the United States.




          I ACKNOWLEDGE RECEIPT of a copy of this notification.




	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

(printed name of employee)
	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 







 









 








EXHIBIT B




	 	 	 
	TO:

	 	Cadence Design Systems, Inc.
	 
	 	 
	FROM:
	 	 
	 
	 	 
	DATE:
	 	 
	 
	 	 
	SUBJECT: Previous Inventions








          1. Except as listed in Section 2 below, the following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by [Company] (the “Company”) that have
been made or conceived or first reduced to practice by me alone or jointly with others prior to my
engagement by the Company:




	 	 	 	 	 
	          o
	 	No inventions or improvements.	 	 
	 	 	 	 	 
	          o
	 	See below:	 	 
	 	 	 	 	 
	 	 	 

	 	 
	 	 	 	 	 
	 	 	 

	 	 
	 	 	 	 	 
	 	 	 

	 	 
	 	 	 	 	 
	          o
	 	Additional sheets attached.	 	 






          2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1
above with respect to inventions or improvements generally listed below, the proprietary rights and
duty of confidentiality with respect to which I owe to the following party(ies);




	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	 
	 	 	 	 	 	 
	1.

	 	 
	 	 
	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 





	 	 	 	 	 
	          o 
	 	Additional sheets attached.