Cadence Design Systems, Inc. Non-Qualified Stock Option Agreement 1995 Directors Stock Incentive Plan

Grant No. ______

______________________ (the “Optionee”):

Cadence Design Systems, Inc. (the “Company”), pursuant to its 1995 Directors Stock Incentive Plan (the “Plan”) has on ____________ granted to you, the Optionee named above, an option (this “Option”) to purchase shares of the common stock of the Company (“Common Stock”). This Option is not intended to qualify and will not be treated as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

The grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation by the Company's Non-Employee Directors (as defined in the Plan).

The details of your Option are as follows:

1.    The total number of shares of Common Stock subject to this Option is ______. Subject to the limitations contained herein, this Option shall be exercisable in accordance with the Plan.

2.    The exercise price of this Option is $____ per share, which shall be equal to one hundred percent (100%) of the Fair Market Value (as defined in the Plan) of the Common Stock subject to the Option on the date of grant.

3.    Subject to the limitations contained herein, all shares will vest (become exercisable) on

______________; provided, however, that you have, during the period from the grant date to such vesting date, continuously served as a member of the Company's Board of Directors, whereupon the shares subject to this Option shall become fully exercisable.

4.    (a)    This Option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company), together with the aggregate exercise price, to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, and together with such additional documents as the Company may then require pursuant to Section 6 of the Plan. This Option may not be exercised for any number of shares which would require the issuance of anything other than whole shares.

5.    Any notices provided for in this Option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company.

6.    This Option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this Option, including without limitation the provisions of section 6 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Option and those of the Plan, the provisions of the Plan shall control.

Dated:

                            

By: _____________________________________

    

1995 Directors Stock Incentive Plan

The undersigned Optionee:

(a)    Acknowledges receipt of the foregoing Option and the attachment referenced therein and understands that all rights and liabilities with respect to this Option are set forth in this option agreement and the Plan;

(b)    Acknowledges that as of the date of grant of this Option, it sets forth the entire understanding between the undersigned Optionee and the Company and its affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the options and any other stock awards previously granted and delivered to the undersigned under stock award plans of the Company, and (ii) the following agreements only: