Document:

exv10w06

Exhibit 10.06

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 October 15, 2008 (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 effective May 12, 2004
and amended thereafter from time to time (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 Consultant. In this
position, Executive will render those services requested by Cadence’s Board of Directors or Chief
Executive Officer 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 3(b)

 

 

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

     b. As President and Chief Executive Officer and Director of Cadence, as well as other
positions Executive may have held with Cadence, Executive has obtained extensive and valuable
knowledge and information concerning Cadence’s business (including confidential information
relating to Cadence and its operations, intellectual property, assets, contracts, customers,
personnel, plans, marketing plans, research and development plans and prospects). Executive
acknowledges and agrees that it would be virtually impossible for Executive to work as an employee,
consultant or advisor in any business in which Cadence engages on the Transition Commencement Date,
including the electronic design automation (“EDA”) industry, without inevitably disclosing
confidential and proprietary information belonging to Cadence. Accordingly, during the Transition
Period, Executive will not, directly or indirectly, provide services, whether as an employee,
consultant, independent contractor, agent, sole proprietor, partner, joint venturer, corporate
officer or director, on behalf of any corporation, limited liability company, partnership, or other
entity or person or successor thereto that (i) is engaged in any business in which Cadence or any
of its affiliates is engaged on the Transition Commencement Date or has been engaged at any time
during the 12-month period immediately preceding the Transition Commencement Date, whether in the
EDA industry or otherwise, anywhere in the world (a “Cadence Business”), or (ii) produces, markets,
distributes or sells any products, directly or indirectly through intermediaries, that are
competitive with Cadence or any of its affiliates. As used in this paragraph, the term “EDA
industry” means the research, design or development of electronic design automation software,
electronic design verification, emulation hardware and related products, such products containing
hardware, software and both hardware and/or software products, designs or solutions for, and all
intellectual property embodied in the foregoing, or in commercial electronic design and/or
maintenance services, such services including all intellectual property embodied in the foregoing.
If 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,
customer or joint venture partner of Cadence or any Cadence affiliate (other than on behalf of

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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 any of
its affiliates, or any of Cadence’s or its affiliates’ products, services, policies, business
practices, employees, executives, officers or directors, past, present or future. Similarly,
Cadence agrees to instruct its executive officers and members of the 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 vested over the twenty-four (24)
months following the date of termination had Executive

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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 three million dollars ($3,000,000), 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

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          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, one million
dollars ($1,000,000), 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(b) 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 6(a) and 6(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 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

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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:

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.

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     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 claim( s] in dispute. The
arbitrator will have the authority to entertain a motion to dismiss and/or a motion for summary
judgment by any party and will apply the standards governing such motions under the Federal Rules
of Civil Procedure. The arbitrator will render a written award and supporting opinion that will
set forth the arbitrator’s findings of fact and conclusions of law. Judgment upon the award may be
entered in any court of competent jurisdiction. Cadence will pay the arbitrator’s fees, as well as
all administrative fees, associated with the arbitration. Each party will be responsible for
paying its own attorneys’ fees and costs (including expert witness fees and costs, if any), except
as provided in paragraph 13 hereof.

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

     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

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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 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

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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: October 14, 2008 	
/s/ Michael J. Fister
 	 
	 	Michael J. Fister 	 

	 	 	 	 	 
	Dated: October 14, 2008 	CADENCE DESIGN SYSTEMS, INC.

 	 
	 	By:  	/s/ James J. Cowie
 	 
	 	 	James J. Cowie 	 
	 	 	Sr. Vice President & General Counsel 	 

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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 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

               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, 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:

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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	 	 

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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 coworkers’
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, 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:

12

 

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	 	 

13exv10w07

Exhibit 10.07

CADENCE DESIGN SYSTEMS, INC.

EMPLOYMENT AGREEMENT

WITH WILLIAM PORTER

     THIS AGREEMENT (this “Agreement”), made effective as of July 29, 2008 (the “Effective Date”),
between CADENCE DESIGN SYSTEMS, INC., a Delaware corporation (the “Company”), and WILLIAM PORTER
(“Executive”), supersedes any previous employment agreement between the parties.

     WHEREAS, Executive is currently employed by the Company as Executive Vice President and Chief
Administrative Officer; and

     WHEREAS, the Company and Executive wish to enter into a formal employment agreement on the
terms and conditions as set forth herein.

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

1. TERM AND DUTIES.

     1.1 EFFECTIVE DATE. The Company hereby 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 has been employed and shall continue to be employed on an at-will basis,
meaning that either Executive or the Company may terminate Executive’s employment at any time, with
or without Cause (as defined in Section 4.2 hereof), in the manner specified herein.

     1.2 SERVICES.

          (a) Executive shall continue to have the title of Executive Vice President and Chief
Administrative Officer. Executive’s duties will be assigned to Executive by the Company’s Chief
Executive Officer (“CEO”), or such other persons as may be specified by the CEO.

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

     1.3 NO CONFLICTING SERVICES. During his employment with the Company, Executive agrees to
devote his full productive time and best efforts to the performance of Executive’s duties
hereunder. Executive further agrees, as a condition to the performance by the Company of each and
all of its obligations hereunder, that so long as Executive is employed by the Company or receiving
compensation or any other consideration from the Company, he will not directly or indirectly render
services of any nature to, otherwise become employed by, serve on the board of directors of, or
otherwise participate or engage in any other business 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
Four Hundred Fifty Thousand Dollars ($450,000) per year (“Base Salary”), payable in installments in
accordance with the Company’s customary payroll practices, less such deductions and withholdings
required by law or authorized by Executive. The Board of Directors of the Company (the “Board”) or
the Compensation Committee of the Board (the “Compensation Committee”) shall review the amount of
the Base Salary from time to time, but no less frequently than annually.

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

     2.3 EQUITY GRANTS. Executive has previously been granted stock options by the Company which
remain in full force and effect in accordance with the terms of the stock option agreements
documenting such grants. Executive shall be eligible to receive additional grants of either
restricted stock or stock options, or both, as the Compensation Committee may determine from time
to time. All stock options shall be granted at 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 corporation, limited
liability company, partnership, joint venture or other entity in any capacity at the Company’s
request, Executive shall be indemnified by the Company, and the Company shall pay Executive’s
related expenses when and as incurred, all to the fullest extent not prohibited by law, as more
fully described in and subject to the terms of the form of Indemnity Agreement attached hereto as
Exhibit A.

2

 

3. EXPENSES AND BENEFITS.

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

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

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

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

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

4. TERMINATION OF EMPLOYMENT.

     4.1 GENERAL. Executive’s employment by the Company under this Agreement shall terminate
immediately upon delivery to Executive of written notice of termination by the Company subject to
any cure period specified below, upon the Company’s receipt of written notice of termination by
Executive at least thirty (30) days before the specified effective date of such termination, or
upon Executive’s death or Permanent Disability (as defined in Section 4.4 hereof). In the event of
such termination, except where Executive is terminated for Cause (as defined in Section 4.2 hereof)
or as the result of a Permanent Disability or death, or where Executive voluntarily terminates his
employment other than a Constructive Termination (as defined in Section 4.3 hereof), 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 as set forth in the Transition
Agreement.

3

 

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

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

          (a) a material adverse change, without Executive’s written consent, in Executive’s authority,
duties or title causing Executive’s position to be of materially less stature or responsibility,
after written notice delivered to the Company of such change and the Company’s failure to cure such
change, if curable, within thirty (30) days following delivery of such notice:

          (b) any change, without Executive’s written consent, to Executive’s reporting structure
causing Executive to no longer report to the CEO of the Company, 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;

          (c) 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;

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

4

 

          (e) 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;

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

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

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

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

     4.5 CHANGE IN CONTROL.

          (a) Should there occur a Change in Control (as defined below) and if within three (3) months
prior to or thirteen (13) months following the Change in Control either (i) Executive’s employment
under this Agreement is terminated without Cause or (ii) Executive resigns his employment as a
result of an event constituting a Constructive Termination, then, in exchange for executing and
delivering the Transition Agreement, and subject to the terms of the Transition Agreement except as
otherwise provided in this Section 4.5(a), Executive shall be entitled to all of the benefits set
forth therein, except that (1) in addition to the amount of the payment described in paragraph 5(a)
of the Transition Agreement, Executive shall be entitled to an additional amount equal to fifty
percent (50%) of Executive’s annual Base Salary at the highest annual Base Salary rate in effect at
any time during the term of this Agreement (the “Highest Base Salary”), which amount shall be paid
at the same time as the payment under such paragraph 5(a); (2) in addition to the amount of the
payment described in paragraph 6(a) of the Transition Agreement, Executive shall be entitled to an
additional amount equal to fifty percent (50%) of Executive’s Highest Base Salary; and (3) in lieu
of the acceleration described in paragraph 4(a) of the form of Transition Agreement attached
hereto, all unvested equity compensation awards (including stock options, restricted stock, and
restricted stock units) that are outstanding and held by Executive on the Transition Commencement
Date shall immediately vest and become exercisable in full on the Transition Commencement Date,
provided, that, if Executive’s termination of employment without Cause or by reason of Constructive
Termination

5

 

occurs within three months prior to a Change in Control, any unvested equity compensation
awards that do not vest on the Transition Commencement Date shall vest in full immediately prior to
the effective time of the Change in Control. Any acceleration of vesting pursuant to this
Section 4.5(a) shall have no effect on any other provisions of the equity compensation awards or
the plans governing such awards.

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

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

6

 

	 	 	 	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 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 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

7

 

become a party to the Transition Agreement and shall not be bound by any of the terms and
provisions thereof.

5. EXCISE TAX.

     In the event that any benefits payable to Executive pursuant to the Transition Agreement
(“Termination Benefits”) (i) constitute “parachute payments” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions,
and (ii) but for this Section 5 would be subject to the excise tax imposed by Section 4999 of the
Code, or any comparable successor provisions (the “Excise Tax”), then Executive’s Termination
Benefits hereunder shall be either (a) provided to Executive in full, or (b) provided to Executive
as to such lesser extent which would result in no portion of such benefits being subject to the
Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state,
local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes,
results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax and
Executive shall have no right to Termination Benefits in excess of the amount so determined.
Unless the Company and Executive otherwise agree in writing, any determination required under this
Section 5 shall be made in writing in good faith by a nationally recognized accounting firm
selected by the Company (the “Accountants”). In the event of a reduction of benefits hereunder,
Executive shall be given the choice of which benefits to reduce. If Executive does not provide
written identification to the Company of which benefits he chooses to reduce within ten (10) days
after written notice of the Accountants’ determination, and Executive has not disputed the
Accountants’ determination, then the Company shall select the benefits to be reduced. For purposes
of making the calculations required by this Section 5, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code, and other applicable legal authority. The
Company and Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this Section 5. The
Company shall bear the cost of all fees the Accountants charge in connection with any calculations
contemplated by this Section 5.

6. DISPUTE RESOLUTION.

          (a) Each of the parties expressly agrees that, to the extent permitted by applicable law and
to the extent that the enforceability of this Agreement is not thereby impaired, any and all
disputes, controversies or claims between Executive and the Company arising under this Agreement,
except those arising under Section 6(d) hereof or under the Proprietary Information Agreement (as
defined in Section 8 hereof), shall be determined exclusively by final and binding arbitration
before a single arbitrator in accordance with the JAMS Arbitration Rules and Procedures, or
successor rules then in effect, and that judgment upon the award of the arbitrator may be rendered
in any court of competent jurisdiction. This includes, without limitation, any and all disputes,
controversies, and/or claims arising out of or concerning Executive’s employment by the Company or
the termination of his employment or this Agreement, and includes, without limitation, claims by
Executive against directors, officers or employees of the Company, whether arising under theories
of liability or damages based on contract, tort or statute, to the full extent permitted by law.
As a material part of this agreement

8

 

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 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 he valid, enforceable, irrevocable and construed as broadly as possible.

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

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

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

     Following his termination of full-time employment for any reason (other than death), Executive
shall provide the Company with reasonable cooperation in all matters relating to the winding up of
his pending work on behalf of the Company and the orderly transfer of any such pending work to
other employees of the Company as may be designated by the Company. Such cooperation shall be
provided by Executive at mutually-convenient times. Executive also agrees to participate as a
witness in any litigation or regulatory proceeding to which the Company or any of its affiliates is
a party at the request of the Company upon delivery to Executive of

9

 

reasonable advance notice. With respect to the cooperation/participation described in the
preceding sentences, the Company will reimburse Executive for all reasonable and documented
expenses incurred by Executive in the course of such cooperation/participation. Furthermore,
Executive agrees to return to the Company all property of the Company, including all hard and soft
copies of records, documents, materials and files relating to confidential, proprietary or
sensitive company information in his possession or control, as well as all other company-owned
property in his possession or control, at the time of the termination of his full-time employment,
except to the extent that the Company determines that retention of any of such property is
necessary, desirable or convenient in order to permit Executive to satisfy his obligations under
this Section 7 or under the Transition Agreement, after which time Executive shall promptly return
all such retained company property.

8. PROPRIETARY INFORMATION AGREEMENT.

     The Executive’s Employee Proprietary Information and Inventions Agreement was executed on
December 30, 2004 in the form attached hereto as Exhibit D (the “Proprietary Information
Agreement”).

9. GENERAL.

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

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

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

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

10

 

     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.

     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 CEO of the
Company.

     9.9 TERMINATION AND SURVIVAL OF CERTAIN PROVISIONS. This Agreement shall terminate upon the
termination of Executive’s full-time employment for any reason; provided, however, that the
following provisions of this Agreement shall survive its termination: Executive’s obligations
under Section 7 hereof; the Company’s obligations to provide compensation earned through the
termination of the employment relationship plus all reimbursements to which Executive is entitled,
under Sections 2 and 3 hereof; the Company’s obligations and Executive’s obligations under
Section 5 hereof; the Company’s obligations and Executive’s obligations enumerated in the
Transition Agreement, if applicable; the Company’s obligation to indemnify Executive pursuant to
Section 2.4 hereof and the referenced Indemnity Agreement; the dispute resolution provisions of
Section 6 hereof; and, to the extent applicable, this Section 9.

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

11

 

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

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

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

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

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

     9.14 TAX MATTERS. Notwithstanding anything in this Agreement or the Transition Agreement to
the contrary, to the extent that the Company in good faith determines that any payment resulting
from Executive’s termination of employment provided for in this Agreement or the Transition
Agreement constitutes a “deferral of compensation” and that the Executive is a “specified
employee,” both within the meaning of Section 409A of the Code, no such amounts shall be payable to
Executive pursuant to this Agreement or the Transition Agreement prior to the earliest of
(a) Executive’s death following the Termination Date (as such term is defined in the Transition
Agreement) or (b) the date that is six months following the date of Executive’s “separation from
service” with the Company (within the meaning of Section 409A of the Code). In addition, with
regard to any provision herein or in the Transition Agreement that provides for reimbursement of
costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code, (i) the
right to reimbursement or in-kind benefits shall not be subject to liquidation or

12

 

exchange for another benefit, (ii) the amount of expenses eligible for reimbursement or
in-kind benefits provided during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the
foregoing clause (ii) shall not be deemed to be violated with regard to expenses reimbursed under
any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a
limit related to the period the arrangement is in effect and (iii) such payments shall be made on
or before the last day of Executive’s taxable year following the taxable year in which the expense
occurred.

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

	 	 	 	 	 	 	 	 	 
	CADENCE DESIGN SYSTEMS, INC.	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Michael J. Fister
 

Michael J. Fister
	 	 	 	/s/ William Porter
 

William Porter
	 	 
	 

	 	President and Chief
Executive Officer	 	 	 	 	 	 

13

 

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 William Porter, Executive
Vice President and Chief Administrative 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 he 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
Indemnitee’s death, the Indemnitee’s spouse, heirs, executors or administrators, may be faced with
limited ability and undue hardship in maintaining an adequate defense, which may discourage such
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.

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     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

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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.

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     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]

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     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:
	 	 

William Porter
	 	 
	 

	 	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
William Porter (“Executive”) and Cadence Design Systems, Inc. (“Cadence” or the “Company”).

     1. TRANSITION COMMENCEMENT DATE. As of <<Transition Commencement Date>> (the
“Transition Commencement Date”), Executive will no longer hold the position of Executive Vice
President and Chief Administrative Officer and will be relieved of all of Executive’s authority and
responsibilities in that position. Executive will be paid (a) any earned but unpaid base salary
for his services as an officer of the Company prior to the Transition Commencement Date and any
outstanding expense reimbursements submitted and approved pursuant to Section 3.1 of Executive’s
Employment Agreement with the Company dated as of [                    , 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
no later than the next regular payroll date following the Transition Commencement Date. As of the
first day of the month following the Transition Commencement Date, Executive will no longer
participate in Cadence’s medical, dental, and vision insurance plans (unless Executive elects to
continue coverage pursuant to COBRA), and will not be eligible for a bonus for any services
rendered after that date.

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

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

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

          c. one year from the Transition Commencement Date.

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

          a. During the Transition Period, Executive will assume the position of<<New Position
Title>>. In this position, Executive will render those services requested by Cadence’s
<<Management Representative» on an as-needed basis at mutually-convenient times. Executive’s
time rendering those services shall not exceed twenty (20) hours per month. Except as otherwise
provided in paragraph 3(b) of this Agreement, Executive’s obligations hereunder will not preclude
Executive from accepting and holding full-time employment elsewhere.

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

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by Cadence or a Cadence affiliate, from a former or present client, if and only if Executive
had previously provided consulting services in such line of business, to such client, prior to ever
being employed by Cadence, but in no event may Executive violate paragraph 3(b) hereof. The
restrictions contained in subparagraph (i) of this paragraph 3(c) shall also be in effect for a
period of one year following the Termination Date. This paragraph 3(c) does not alter any of the
obligations the Executive may have under the Employee Proprietary Information and Inventions
Agreement, dated as of December 30, 2004.

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

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

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

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

          a. all of the unvested equity compensation awards (including stock options, restricted stock
and restricted stock units) that are not performance-based within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), that are outstanding and held by
Executive on the Transition Commencement Date and that would have vested over the twelve (12)
months following the Transition Commencement Date had Executive continued to serve as an executive
of the Company pursuant to his Employment Agreement, shall immediately vest and become exercisable
in full on the Effective Date of this Agreement, and there shall be no further vesting of those
equity compensation awards during or after the

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Transition Period, notwithstanding any provision in any equity compensation award to the
contrary, except as otherwise provided by paragraph 7 hereof. Provided Executive continues in
employment under this Agreement through the end of the applicable performance period, unvested
equity compensation awards that are performance-based within the meaning of Section 162(m) of the
Code and that are outstanding and held by Executive on the Transition Commencement Date shall
continue to vest though the end of the applicable performance period provided any such performance
period ends within twelve (12) months following the Transition Commencement Date, but only to the
extent justified by the satisfaction of the performance goals prescribed for such equity awards.
Upon the conclusion of the performance period, such awards shall immediately vest to the extent
they would have vested over the twelve (12) months following the Transition Commencement Date, had
Executive continued to serve as an executive of the Company pursuant to his Employment Agreement,
and there shall be no further vesting of such awards during or after the Transition Period except
as otherwise provided by paragraph 7 hereof. Any acceleration pursuant to this paragraph 4(a) will
have no effect on any other provisions of the stock awards;

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

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

Except as so provided or as otherwise set forth in paragraphs 5 and 7 hereof, Executive will
receive no other compensation or benefits from Cadence in consideration of Executive’s services
during the Transition Period.

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

          a. a lump-sum payment of $                     [amount equal to 100% of Executive’s annual Base Salary at
the highest rate in effect during Executive’s employment with the Company], less applicable tax
deductions and withholdings, payable on the thirtieth (30th) day following the date that is six
months after the Transition Commencement Date; and

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

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

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

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

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

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

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

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

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

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

     8. GENERAL RELEASE OF CLAIMS.

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

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

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

               iii. claims related to Executive’s COBRA rights;

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

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

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

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

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

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

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

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

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

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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). However, in the event a party prevails at arbitration on a statutory claim that
entitles the prevailing party to reasonable attorneys’ fees as part of the costs, then the
arbitrator may award those fees to the prevailing party in accordance with that statute.

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

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

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

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

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

     16. MODIFICATION. This Agreement may not be modified unless such modification is embodied in
writing, signed by the party against whom the modification is to be enforced. Notwithstanding
anything herein or in the Employment Agreement to the contrary, the

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Company may, in its sole discretion, amend this Agreement (which amendment shall be effective
upon its adoption or at such other time designated by the Company) at any time prior to a Change in
Control as may be necessary to avoid the imposition of the additional tax under Section
409A(a)(1)(B) of the Code; provided, however, that any such amendment shall not materially reduce
the benefits provided to Executive pursuant to this Agreement without the Executive’s consent.

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

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

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

EXECUTION OF AGREEMENT

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

	 	 	 	 	 
	Dated:	 	Dated:
	 
	 	 	 	 
	WILLIAM PORTER	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 

9

 

ATTACHMENT 1

RELEASE OF CLAIMS

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

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

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

               iii. claims related to my COBRA rights;

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

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

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

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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

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ATTACHMENT 2

RELEASE OF CLAIMS

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

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

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

               iii. claims related to my COBRA rights;

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

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

     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

 

EXHIBIT C

RELEASE AGREEMENT

(DEATH or PERMANENT DISABILITY)

3

 

EXECUTIVE TRANSITION AND RELEASE AGREEMENT

     1. GENERAL RELEASE OF CLAIMS.

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

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

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

	               iii.	 	claims related to Executive’s COBRA rights;

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

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

1

 

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

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

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

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

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

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

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

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

 

2

 

EXHIBIT D

EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

3

 

CADENCE DESIGN SYSTEMS, INC.

EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

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

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) unless: (a) such disclosure,
use or publication may be required in connection with my work for the Company; or (b) an officer of
the Company provides advance written authorization for such disclosure, use or publication. I will
obtain the advance written authorization of an officer of the Company before publishing or
submitting for publication any material (written, spoken, or otherwise) that relates to my work at
the Company and/or incorporates any Proprietary Information. I understand 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 belonging to the Company. By way of
illustration but not limitation, “Proprietary Information” includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, circuits, test data, formulas, methods,
compositions, algorithms, techniques, developmental or experimental work, improvements, unpublished
patent applications, source code 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; (c) customer and vendor lists, contacts, plans, and agreements with
customers, vendors, and others; (d) program and product designs, specifications; and (e) personnel
and contact lists, organization charts and all confidential employee data, including without
limitation information regarding the skills, expertise and compensation of Cadence personnel.

     1.3 Third Party Information. I understand that the Company has in its possession, and will
continue to receive, confidential or proprietary information belonging to third parties (“Third
Party Information”), which the Company is obligated to keep confidential and to use only for
certain prescribed purposes. During my employment with the Company and continuing thereafter, I
will hold all Third Party Information in the strictest confidence and will not disclose it to
anyone (other than Company personnel who need to know such information in connection with their
work for the Company) or use it for any purpose (except in connection with my work for the
Company), without the advance written authorization of an officer of the Company.

     1.4 No Improper Use of Information of Prior Employers and Others. During my employment with
the Company I will not improperly use or disclose any confidential information or trade secrets of
any former employer or any other person to whom I have an obligation of confidentiality. In
addition, I will not bring any unpublished documents or any property belonging to my former
employer or any other person to whom I have an obligation of confidentiality onto the Company’s
premises without first obtaining and providing to my manager written authorization from that former
employer or person. I will use in the performance of my duties only information that is: (a)
generally known and used by persons with training and
experience comparable to my own; (b) common knowledge in the industry or otherwise legally in the
public domain; or (c) otherwise provided or developed by the Company.

2. ASSIGNMENT OF INVENTIONS

     2.1 Inventions and Proprietary Rights. The term “Proprietary Rights” shall mean all
trade secret, patent, copyright, mask work and other intellectual property rights throughout the
world. The term “Inventions” is defined in Section 1.2 above. The term “Company Inventions”
shall mean all Inventions, and all Proprietary Rights with respect to Inventions, that I have,
directly or indirectly, alone or jointly with others, made, authored, conceived, developed
or reduced to practice during my employment with the Company and for one (1) year thereafter, as
well as any and all patent applications filed by me or by a third party based on such Inventions.

     2.2 Assignment of Inventions. I hereby assign to the Company, or to a third party as directed
by the Company, all my rights, title and interest in and to any and all Company Inventions.

1

 

     2.3 Prior Inventions and Non-employment Inventions. As an exception to Section 2.2, I
understand that I am not required to assign, and do not hereby assign, under this Agreement:

     (a) any Invention to the extent it was created by me prior to the commencement of my
employment with the Company (each a “Prior Invention”), or

     (b) any Invention that does not relate to the Company’s business (or actual or demonstrably
anticipated research and development) and does not result from any work I perform for the Company,
to the extent that I develop such Invention entirely on my own time without using the Company’s
equipment, supplies, facilities or Proprietary Information (each a “Non-employment
Invention”). To preclude any possible uncertainty, I have set forth on Exhibit B attached
hereto a complete list of all 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. I agree that I will
not incorporate, or permit to be incorporated, Prior Inventions or Non-employment Inventions in any
work I do for the Company without the advance written authorization of an officer of the
Company. If, in the course of my employment with the Company, I do, in violation of this section,
incorporate a Prior Invention or a Non-employment Invention into work I do for the Company, I
hereby grant the Company, and will take all reasonable actions necessary to assist the Company in
obtaining, 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 Inventions and Non-employment Inventions.

     2.4 Obligation to Keep Company Informed. I agree to promptly disclose to the Company fully and
in writing all Company Inventions. In addition, I agree to promptly disclose to the Company all
patent applications filed by me or on my behalf during my employment, or after if based on a
Company Invention. At the time of each such disclosure, I will advise the Company in writing of any
Inventions that I believe fully qualify as Non-employment Inventions and I will provide the Company
with a written account of all of the evidence necessary to substantiate my belief.

     2.5 Obligations of Confidentiality. The Company agrees to keep in confidence and 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 Non-employment
Inventions, except as reasonably necessary to exercise any licenses I may grant to the Company
regarding such Non-employment Inventions. I agree to keep in confidence and not use for any purpose
other than the performance of my duties to the Company, or disclose to third parties without the
Company’s consent, any Proprietary Information or Company Inventions.

     2.6 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.

     (a) 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, Proprietary Rights relating to Company Inventions in
any and all countries and jurisdictions. To that end I will execute, verify and deliver such
documents, appear as a witness, and perform other acts as the Company may reasonably request in
connection with applying for, obtaining, perfecting, evidencing, defending, sustaining and
enforcing its Proprietary Rights and the assignment thereof. In addition, I will execute, verify
and deliver assignments of Proprietary Rights to the Company or its designee. My obligation to
assist the Company with respect to Proprietary Rights relating to Company Inventions in any and all
countries shall continue beyond the termination of my employment.

     (b) 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. This appointment is coupled with an interest to act
for and on 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.

     (c) 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.

2

 

3. RECORDS. I agree to keep and maintain adequate and current records (in the form of notes,
sketches, drawings, electronic files, and in any other form that may be required by the Company) of
all Proprietary Information developed by me and all Company Inventions (the “Company
Records”). I agree not to keep copies of the Company Records in locations outside the Company
unless necessary to fulfill my duties to the Company, and then only upon obtaining prior written
approval from my manager. I agree that the Company Records are the sole property of the Company and
I agree to make Company Records available to the Company at all times.

4. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of the Company, I will deliver
to either my manager or the Company’s legal department:

(a) all drawings, notebooks, notes, memoranda, source code, specifications, devices, formulas,
records, manuals, reports and documents, together with all copies thereof in my possession, custody
or control;

(b) all Company Records and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information in my possession, custody or control, and

(c) all Company property or Company equipment in my possession, custody or control. Prior to
leaving, I will cooperate with the Company in completing and signing the Company’s Exit
Acknowledgement form.

5. ADDITIONAL ACTIVITIES. I agree that during my employment with the Company I will not engage in
any employment outside the Company nor will I engage in any business activity, which is competitive
with or would otherwise conflict with my employment with the Company, without first obtaining the
prior written approval of the Office of the General Counsel. A form for obtaining such approval is
available to me through the Company’s Intranet.

6. NO SOLICITATION. I agree that during the term of my employment with the Company, and for a
period of one (1) year following the date of my termination of employment with the Company, I will
not: (a) solicit or recruit, for my own benefit or on behalf of any entity, any person who is at
that time an employee of the Company or who has been employed by the Company for any period of time
during the previous three (3) months, nor shall I induce or encourage any such person to leave the
employ of the Company; or (b) solicit the business of any client or customer of the Company with
whom I had a relationship while employed with the Company or whom I know as a result of my
employment with the Company.

7. NO CONFLICTING OBLIGATION. I represent that I owe no obligations, of confidentiality or
otherwise, to any third party that could:

(a) prevent me from performing the duties of my job with the Company; or

(b) prevent me from fully complying with the terms of this Agreement.

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

9. AT-WILL EMPLOYMENT. I understand and agree the Company is an at-will employer and 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
further understand that only a written agreement signed by the executive in charge of Human
Resources can alter the at-will nature of my employment with the Company.

10. NOTICES. Any notices required or permitted by this Agreement shall be given to the Company at
its San Jose, California headquarters’ address, and to me at the address specified beneath my
signature below, unless either party specifies in writing its preference to receive notices
relating to this Agreement at another address. 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.

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

3

 

12. GENERAL PROVISIONS.

     12.1 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.
Alternatively, if my last place of employment with the Company is in a location outside of
California, then Sections 5 and 6 of this Agreement shall be governed by and construed by the laws
of that State. I hereby expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there against me by Company
arising from or related to this Agreement.

     12.2 Severability. In the event any of the provisions contained in this Agreement are, for any
reason, 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 of the provisions contained in this Agreement are for any reason held to
be excessively broad as to duration, geographic scope, activity or subject, such provisions shall
be construed by limiting the duration, geographic scope, activity or subject only to the extent
necessary to render them enforceable and compatible with applicable law.

     12.3 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.

     12.4 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.

     12.5 Entire Agreement. This Agreement, together with the Cadence Code of Business Conduct and
my offer letter, both of which I have signed, and both of which are incorporated herein, constitute
the complete and exclusive agreement of the parties with respect to the subject matter hereof and
supersedes all prior discussions between us. 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 Company’s General Counsel. 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 UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT
EXHIBIT B TO THIS AGREEMENT.

Dated:

                                                            

Signature

                                                            

(Printed Name)

                                                            

(Address)

                                                            

(Address)

                                                            

(Address)

4

 

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;
or

     (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:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name of Employee:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	          (printed name of employee)	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	WITNESSED BY:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Signatures of Witness

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(printed name of witness)

	 	 	 	 	 	 

 

 

EXHIBIT B

	 	 	 	 	 
	TO:

	 	Cadence Design Systems, Inc.	 	 
	 
	 	 	 	 
	FROM:
	 	 	 	 
	 

	 	 

(Print name of employee)
	 	 
	 
	 	 	 	 
	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 Cadence Design Systems, Inc. (the
“Company”) that have been made or conceived or first reduced to practice by me alone or jointly
with others prior to my employment or consulting relationship with by the Company [CHECK THE
APPLICABLE BOXE(S)]:

	 	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) [CHECK THE
APPLICABLE BOXE(S)];

	 	o	 	Not applicable.

	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	1.

	 	 
	 	 
	 	 
	 

	 	 
	 	 
	 	 
	 
	2.

	 	 
	 	 
	 	 
	 

	 	 
	 	 
	 	 
	 
	3.

	 	 
	 	 
	 	 
	 

	 	 
	 	 
	 	 

	 	o	 	Additional sheets attached.

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name of Employee:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	          (printed name of employee)	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:

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