Document:

exv10w01

EXHIBIT
10.01

EXECUTIVE TRANSITION AND RELEASE AGREEMENT

     This Executive Transition and Release Agreement (this “Agreement”) is entered into between
Kevin S. Palatnik (“Executive”) and Cadence Design Systems, Inc. (“Cadence” or the “Company”).

     1. RESIGNATION. Effective as of November 1, 2010, or such later date (no later than November
15, 2010) as mutually agreed between Executive and Cadence (such date, the “Effective Date”),
Executive hereby resigns his positions as Senior Vice President and Chief Financial Officer of
Cadence and, after the Effective Date, Executive will be relieved of all of Executive’s authority
and responsibilities in those positions and all other positions that Executive may hold as an
officer of Cadence or any of its subsidiaries or affiliates, after which Executive shall be
employed by Cadence solely as a non-executive employee, as an advisor to the Chief Financial
Officer.

     2. TRANSITION COMMENCEMENT DATE. From the Effective Date until February 28, 2011 (the
“Initial Period”), Executive shall remain a full-time employee of Cadence; provided, however, that
(i) if Executive desires to accept full-time employment with a third party that is not engaged in a
Cadence Business or the EDA Industry (each, as hereinafter defined), Cadence shall not unreasonably
withhold or delay its consent to same, and (ii) if Cadence grants such consent and Executive
accepts such full-time employment, then Executive’s employment with Cadence during the remainder of
the Initial Period shall change to a part-time basis. Effective as of March 1, 2011 (the
“Transition Commencement Date”), Executive, to the extent he has not already transitioned into
part-time status, shall become a part-time employee of Cadence. 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 July 29, 2008, as
amended by the First Amendment dated as of May 13, 2009 and the Second Amendment dated as of March
31, 2010 (as amended, 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, or, if sooner, the first date that Executive no longer meets the
eligibility requirements under the terms of Cadence’s medical, dental, and vision insurance plans,
Executive will no longer participate in Cadence’s medical, dental, and vision insurance plans
(unless Executive elects to continue coverage pursuant to COBRA). In addition, Executive will not
be eligible for a bonus for any services rendered after January 1, 2011.

 

 

     3. TRANSITION PERIOD. The period from the Effective 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. February 28, 2012.

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

          a. During the Initial Period, Executive shall assist Cadence in the smooth transition of his
duties and responsibilities to his successor and will render such services as Cadence’s Chief
Executive Officer and/or Chief Financial Officer may reasonably request during normal business
hours. During the period from the Transition Commencement Date until the Termination Date,
Executive will render such services as reasonably requested by Cadence’s Chief Financial Officer on
an as-needed basis at mutually-convenient times. From and after the Transition Commencement Date,
Executive’s time rendering the services described herein shall not exceed twenty (20) hours per
month. Except as otherwise provided in paragraph 4(b) of this Agreement, from and after the
Transition Commencement Date (or such earlier date as mutually agreed by Executive and Cadence),
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 paragraph 4(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. In the course of his work 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 EDAIndustry (as hereinafter defined), 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

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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 Agreement, the term “EDA Industry” means the research, design or
development of electronic design automation software, electronic design verification, emulation
hardware and related products, such products containing hardware, software and both hardware and/or
software products, designs or solutions for, and all intellectual property embodied in the
foregoing, or in commercial electronic design and/or maintenance services, such services including
all intellectual property embodied in the foregoing. If, during the Transition Period, Executive
receives an offer of employment or consulting from any person or entity that engages in whole or in
part in a Cadence Business, then Executive must first obtain written approval from Cadence’s CEO
before accepting said offer.

          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 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 4(b) hereof. The
restrictions contained in subparagraph (i) of this paragraph 4(c) shall also be in effect for a
period of one year following the Termination Date. This paragraph 4(c) does not alter any of the
obligations the Executive may have under the Employee Proprietary Information and Inventions
Agreement, dated as of May 8, 2001.

          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 11 hereof, the parties agree that damages would be an inadequate
remedy for Cadence in the event of a breach or threatened breach by Executive

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of paragraph 4(b) or 4(c), or for Cadence or Executive in the event of a breach or threatened
breach of paragraph 4(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.

     5. TRANSITION COMPENSATION AND BENEFITS. In consideration of Executive’s execution of the
release of claims in this Agreement and in Attachment 1 and as compensation for Executive’s
services during the Initial Period and the Transition Period, Cadence will provide the following
payments and benefits to Executive (to which Executive would not otherwise be entitled), so long as
Executive returns to the Company, on the earlier of the Transition Commencement Date or the date
the Executive ceases to serve as a full-time employee of 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. During the Initial Period, Executive shall continue to receive his base salary, and shall
remain eligible to receive bonus compensation for calendar year 2010; provided, however, that in
the event Executive’s employment transitions from full-time to part-time prior to the Transition
Commencement Date, from and after such transition to part-time status (i) Executive’s base salary
shall be pro-rated based on the number of hours per week actually worked by Executive and (ii) if
such transition occurs before December 31, 2010, Executive’s bonus for the second half of 2010
shall be based on his eligible earnings for the period, which would consist of his base salary
earned during the period plus any payments earned under paragraph 5(a)(i) above.

          b. Effective as of the Transition Commencement Date, so long as the Executive executes and
delivers a Release of Claims in the form of Attachment 1 hereto no more than ten (10) days before
the Transition Commencement Date and such Release of Claims has become irrevocable in accordance
with its terms on or prior to the Transition Commencement Date, 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 Transition Commencement
Date of this Agreement, and there shall be no further vesting of those equity compensation awards
during or after the Transition Period, notwithstanding any provision in any equity compensation
award to the contrary, except as otherwise provided by paragraph 8 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

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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 8 hereof. Any
acceleration pursuant to this paragraph 5(b) will have no effect on any other provisions of the
stock awards.

          c. Executive’s employment pursuant to this Agreement (whether full-time or part-time) 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
Effective Date.

          d. If Executive elects to continue coverage under Cadence’s medical, dental, and vision
insurance plans pursuant to COBRA following the Transition Commencement Date (or such earlier date
when Executive ceases to be eligible for coverage under Cadence’s medical, dental, and vision
insurance plans), Cadence will pay Executive’s COBRA premiums during the Transition Period;
provided, however, that Cadence’s payment of such COBRA premiums shall cease upon Executive
becoming eligible for coverage under similar benefit plans made available by a subsequent employer.

Except as so provided or as otherwise set forth in paragraphs 6, 7 and 8 hereof, Executive will
receive no other compensation or benefits from Cadence in consideration of Executive’s services
during the Transition Period.

     6. 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 3(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 execution and delivery of a Release
of Claims in the form of Attachment 1 as set forth in paragraph 5(b), and as compensation for
Executive’s services during the Transition Period from and after the Transition Commencement Date,
Cadence will provide to Executive the following termination payment, to which Executive would not
otherwise be entitled, in each case, so long as the Release of Claims has become irrevocable in
accordance with its terms prior to the date of payment:

          a. a lump-sum payment of $450,000.00, less applicable tax deductions and withholdings, payable
on the thirtieth (30th) day following the date that is six months after the Transition Commencement
Date; and

          b. for a period of six months, a monthly salary of $4,000.00 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.

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     7. 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 3(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 on the Termination Date, Cadence
will provide to Executive the following termination payment, to which Executive would not otherwise
be entitled, so long as the Release of Claims has become irrevocable in accordance with its terms
prior to the date of payment:

               i. a lump-sum payment of $337,500.00, 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 6(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 portion of the payments provided for in this Agreement resulting
from Executive’s termination of employment 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).

     8. CHANGE IN CONTROL. If a Change in Control (as defined in the Employment Agreement) occurs
within three (3) months following the Effective Date, 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 5(b) of this Agreement; and (b) Sections
4.5(a)(1) and 4.5(a)(2) of the Employment Agreement shall apply in addition to paragraphs 6(a) and
7(a) of this Agreement.

     9. 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

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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.

          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 9.

          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.

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     10. 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.

     11. ARBITRATION. Subject to paragraph 4(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 for summary judgment by any party and
will apply the standards governing such motions under the Federal Rules of Civil Procedure. The
arbitrator will render a written award and supporting opinion that will set forth the arbitrator’s
findings of fact and conclusions of law. Judgment upon the award may be entered in any court of
competent jurisdiction. Cadence will pay the arbitrator’s fees, as well as all administrative fees,
associated with the arbitration. Each party will be responsible for paying its own attorneys’ fees
and costs (including expert witness fees and costs, if any). However, in the event a party prevails
at arbitration on a statutory claim that entitles the prevailing party to reasonable attorneys’
fees as part of the costs, then the arbitrator may award those fees to the prevailing party in
accordance with that statute.

     12. 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.

     13. INTEGRATED AGREEMENT. This Agreement is intended by the parties to be a complete and
final expression of their rights and duties respecting the subject matter of this Agreement. Except
as expressly provided herein, nothing in this Agreement is intended to negate Executive’s agreement
to abide by Cadence’s policies while serving as a Cadence employee, including but not limited to
Cadence’s Employee Handbook, Sexual Harassment Policy and Code of Business Conduct, or Executive’s
continuing obligations under Executive’s Employee Proprietary Information and Inventions Agreement,
or any other agreement governing the disclosure and/or use of proprietary information, which
Executive signed while working with

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Cadence or its predecessors; nor to waive any of Executive’s obligations under state and
federal trade secret laws.

     14. 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.

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

     16. 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.

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

     18. 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.

     19. 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.

     20. 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.

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EXECUTION OF AGREEMENT

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

	 	 	 	 	 	 	 
	Dated: September 24, 2010.	 	Dated: September 24, 2010.
	 
	KEVIN S. PALATNIK	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 	 	 
	/s/ Kevin S. Palatnik
 

	 	By:
	 	/s/ Christina R. Jones
 

	 	 
	 

	 	 	 	Christina R. Jones	 	 
	 

	 	 	 	Sr. Vice President -	 	 
	 

	 	 	 	Global Human Resources	 	 

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

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

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

               iii. claims related to my COBRA rights;

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

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

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

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

 

 

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.

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

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

 

 

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 	 
	 	 	 
	 

2exv10w02

Exhibit 10.02

September 21, 2010

Dear Geoff,

On behalf of Cadence Design Systems, Inc. (“Cadence”), I am pleased to offer you the position of
Senior Vice President and Chief Financial Officer, reporting to me. Your compensation will include
an annualized base salary of $350,000. As a Senior Vice President, you will be eligible to earn an
incentive bonus targeted at 75% of your annualized base salary upon achievement of corporate and
individual performance goals in accordance with the terms of Cadence’s annual Executive Key
Contributor Bonus Plan. In addition, you will be issued an option to purchase 200,000 shares of
Cadence Design Systems Common Stock and issued an Incentive Stock Award of 40,000 shares of Cadence
Common Stock, subject to approval of each by the Compensation Committee of the Board of Directors.

Cadence offers a comprehensive Employee Benefits package including a 401(k) plan and a
non-qualified deferred compensation plan (“NQDC”) for executives. We also provide a wide variety
of health and welfare benefits. Under this plan, you will be able to choose from several different
options in each benefit area including Medical, Dental, Vision, Life and Disability Insurance.
Additional details on all of these benefits can be found in your “Benefits Year-Round User Guide”
and will be discussed in depth at your New Employee Orientation.

Please understand that Cadence is an at-will employer as described in the attached “Employment
Terms,” and that this offer is contingent upon successfully passing of the Cadence background
verification and upon your execution of the Employee Proprietary Information and Inventions
Agreement.

Offers of employment remain open for a short period of time; unless otherwise notified, this offer
will expire on September 24, 2010.

Geoff, I am very excited to have you join my Executive Management Team and for you to help drive
the Company’s success.

Sincerely,

/s/ Lip-Bu Tan

Lip-Bu Tan

President & Chief Executive Officer

Cadence Design Systems, Inc. 2655 Seely Avenue            San Jose, CA 95134

Phone: 408-943-1234 World Wide Web: www.cadence.com

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