SC TO-C

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

(Rule 14d-100)

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

MENTOR GRAPHICS CORPORATION

(Name of Subject Company (Issuer) and Filing Person (Offeror))

Options to Purchase Common Stock, No Par Value	587200106
(Title of Classes of Securities)	(CUSIP Number of Class of Securities (Underlying Common Stock))

Dean M. Freed

Vice President and General Counsel

Mentor Graphics Corporation

8005 S.W. Boeckman Road

Wilsonville, Oregon 97070

(503) 685-7000

(Name, address, and telephone number of person authorized to receive notices and communications on behalf of Filing Persons)

Copies To:

Danielle Benderly

Perkins Coie LLP

1120 N.W. Couch Street, Tenth Floor

Portland, OR 97209

Telephone: (503) 727-2000

CALCULATION OF FILING FEE

Transaction Valuation*	Amount of Filing Fee*
Not Applicable*	Not applicable*

* Pursuant to General Instruction D to Schedule TO, no filing fee is required for pre-commencement communications.

¨ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

Amount Previously Paid:	N/A	Filing Party:	N/A
Form of Registration No.:	N/A	Date Filed:	N/A

x Check the box if the filing relates solely to preliminary communications made before the commencement of the tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

¨ third party tender offer subject to Rule 14d-1

x issuer tender offer subject to Rule 13e-4

¨ going private transaction subject to Rule 13e-3

¨ amendment to Schedule 13D under Rule 13d-2

Check the following box if the filing is a final amendment reporting the results of the tender offer:   ¨

Attached are (i) Mentor Graphics Corporation’s (the “Company”) Notice of Special Meeting of Shareholders and Definitive Proxy Statement for the Special Meeting of Shareholders (“Special Meeting”) to be held on December 14, 2009 (the “Proxy Statement”), which contains a proposal submitted to the Company’s shareholders to approve amendments to the Company’s 1982 Stock Option Plan to permit a one-time voluntary stock option exchange program (the “Option Exchange”); (ii) a communication sent by our Chairman of the Board and Chief Executive Officer to our employees regarding the submission of the proposal for approval by the Company’s shareholders to amend our 1982 Stock Option Plan to permit the Option Exchange (“Employee Communication”); and (iii) frequently asked questions, sent to our employees regarding the proposed Option Exchange (“Employee FAQs”). The Proxy Materials, Employee Communication and Employee FAQs do not constitute an offer to holders of our outstanding stock options to exchange those options. The Option Exchange will only be commenced, if at all, if we receive the requisite shareholder approval at our Special Meeting.

The tender offer described in the Proxy Materials, Employee Communication and Employee FAQs has not yet commenced. At the time the Option Exchange has commenced, the Company will provide option holders who are eligible to participate in the Option Exchange with written materials explaining the precise terms and timing of the Option Exchange, free of charge. Persons who are eligible to participate in the Option Exchange should read these written materials carefully when they become available because they will contain important information about the Option Exchange. The Company will also file these written materials with the Securities and Exchange Commission as part of a tender offer statement upon the commencement of the Option Exchange. The Company’s stockholders and option holders will be able to obtain these written materials and other documents filed by the Company with the Securities and Exchange Commission free of charge from the Securities and Exchange Commission’s website at www.sec.gov or the Company’s website at www.mentor.com/company/investor_relations/filings/index.cfm.

Item 12. Exhibits.

Exhibit No.	Document
99.1	Notice of Special Meeting of Shareholders and Proxy Statement for the Special Meeting of Shareholders (incorporated by reference to the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on November 12, 2009).
99.2	Employee Communication, dated November 12, 2009.
99.3	Employee Frequently Asked Questions, dated November 12, 2009.

EX-99.2

Exhibit 99.2

I am pleased to announce that a proposal to amend the Mentor Graphics Corporation 1982 Stock Option Plan to permit a one-time, voluntary stock option exchange program (“Option Exchange”) for our eligible employees will be submitted to the company’s shareholders for their approval at a Special Meeting of Shareholders scheduled for December 14, 2009.

We have historically granted stock options as a component of our compensation programs because we believe stock options encourage our employees to act as owners, which helps align their interests with those of shareholders and encourages them to act in the shareholders’ interests and share in our success. Like many companies, we have experienced a decline in our stock price as a result of the global financial and economic crisis. As a result, many of our employees hold stock options that have exercise prices that exceed the current market price of our common stock.

If we receive shareholder approval, the Option Exchange will allow us to give eligible employees a one-time opportunity to exchange certain outstanding stock options for a lesser amount of new restricted stock units (RSUs). Our executives who are subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and members of our Board of Directors will be excluded from participating in the Option Exchange.

More information about the Option Exchange and RSUs is provided in the attached Frequently Asked Questions (“FAQ”), including:

• who will be eligible to participate;

• which stock options might qualify;

• how the exchange of certain stock options will work;

• vesting schedule of the new RSUs; and

• when the Option Exchange may take place.

Additional information about the proposed Option Exchange is available in our proxy statement filed with the Securities and Exchange Commission (“SEC”) on November 12, 2009. For access to the proxy statement, please visit http://www.mentor.com/company/investor_relations/ or www.sec.gov. Unfortunately, due to SEC regulations, we cannot provide further written information regarding the option exchange unless the text is also filed with the Securities and Exchange Commission; therefore, we will not communicate any additional information at this time.

If we receive the necessary approval of the shareholders and the Compensation Committee of our Board of Directors, we will send additional detailed information about the terms of the Option Exchange to eligible employees at the time the Option Exchange begins.

Wally

EX-99.3

Exhibit 99.3

Mentor Graphics Corporation

STOCK OPTION EXCHANGE PROGRAM

FREQUENTLY ASKED QUESTIONS (FAQ)

November 12, 2009

General Information

The following Frequently Asked Questions (“FAQ”) were prepared to address common questions that you may have about the proposed stock option exchange program (the “Option Exchange”). Mentor Graphics Corporation (“Mentor Graphics”) will solicit shareholder approval of the Option Exchange at its Special Meeting of Shareholders scheduled for December 14, 2009.

The information in this FAQ is based on the information contained in our proxy statement filed with the Securities and Exchange Commission (“SEC”) on November 12, 2009. Additional information about the proposed Option Exchange is available in our proxy statement. For access to the proxy statement, please visit http://www.mentor.com/company/investor_relations/ or www.sec.gov. Due to SEC regulations, Mentor Graphics cannot offer advice about participation in the Option Exchange.

Frequently Asked Questions

1. What is a stock option?

A stock option is a right to buy a share of Mentor Graphics common stock on or after the vesting date at a set exercise price.

2. What is a restricted stock unit or “RSU”?

A restricted stock unit or RSU is a right to receive a share of Mentor Graphics common stock on the vesting date without paying any purchase price.

3. What is the Option Exchange?

The Option Exchange is a voluntary, one-time opportunity for eligible employees to surrender outstanding stock options with exercise prices higher than the current market price of Mentor Graphics common stock in exchange for RSUs.

4. Who is eligible to participate in the Option Exchange?

If implemented, the Option Exchange will be open to all employees of Mentor Graphics and any of its majority-owned subsidiaries who hold options (except in jurisdictions where including these employees would have tax, regulatory or other implications that are inconsistent with Mentor Graphics’ compensation policies and practices). The Option Exchange will not be available to our executives who are subject to the provisions of Section 16 of the Securities Exchange Act of 1934 or members of our Board of Directors.

5. What happens if I leave Mentor Graphics before the Option Exchange begins?

If you are not employed by Mentor Graphics or one of its majority-owned subsidiaries for any reason (including layoff, termination, or voluntary resignation) on the date the Option Exchange commences, you will not be eligible to participate. Former employees will retain outstanding options in accordance with the options’ current terms and conditions, and will be able to exercise any vested options during a limited period of time following termination of employment in accordance with the options’ terms.

6. Which options will be eligible for exchange under the Option Exchange?

Eligible employees will be able to elect to participate in the Option Exchange and surrender options that:

• have an exercise price higher than the 52-week high trading price of our common stock on the NASDAQ Global Select Market as of the date the Option Exchange commences;

• have not been granted within the 12-month period preceding the date the Option Exchange commences; and

• will not expire during the 6-month period immediately following completion of the Option Exchange.

7. When will the Option Exchange take place?

If Mentor Graphics’ shareholders and the Compensation Committee of our Board of Directors approve the Option Exchange, Mentor Graphics intends to commence the Option Exchange within six months after the Special Meeting of Shareholders scheduled for December 14, 2009.

8. If I participate in the Option Exchange, how many RSUs will I receive?

The exchange ratios (that is, how many current options an employee must surrender in order to receive one new RSU) will be based on the value of the current options as determined using the Black-Scholes option pricing model, an industry standard option pricing model. The actual exchange ratios will be determined by the Compensation Committee of our Board of Directors prior to the time the Option Exchange commences.

9. My eligible stock options are already vested. Will my new RSUs also be fully vested?

No. All new RSUs granted in exchange for fully vested stock options will be subject to a new vesting schedule.

10. What will the vesting schedule for the new RSUs be?

RSUs granted in exchange for fully vested options will vest over two years (50% vesting on each anniversary of the RSU grant date). RSUs granted in exchange for stock options that are not fully vested will vest over three years (33% vesting on each anniversary of the RSU grant date).

11. If I elect to participate, when will I receive my new RSU grant?

The new RSU grant date will be the next business day after the close of the Option Exchange.

12. Will I have to pay anything for the stock when the RSUs vest?

No. On each RSU vesting date, you will receive one share of Mentor Graphics common stock per RSU and you will not have to pay anything to receive that share

13. Do I have to participate in the Option Exchange?

Participation in the Option Exchange will be completely voluntary. If you choose not to participate, you will keep all of your currently outstanding stock options.

14. If I choose to participate in the Option Exchange, do I have to exchange all of my eligible stock option grants?

No. Under the Option Exchange, you will be able to exchange stock options on a grant-by-grant basis. This means that you may choose to exchange some eligible grants, and choose not to exchange others, but if you choose to exchange a grant you must exchange the whole grant—no partial grant exchanges will be allowed.

15. Will I be required to give up all of my rights under the exchanged stock options?

Yes. On the date the Option Exchange is completed, the stock options you surrender will be cancelled and you will no longer have any rights under those surrendered stock options.

16. What happens if I elect to participate and leave Mentor Graphics before the Option Exchange is completed?

If you elected to participate in the Option Exchange and your employment ends for any reason before the Option Exchange is completed, even if you have elected to participate and tendered your options for exchange, your tender will automatically be withdrawn and you will not participate in the Option Exchange.

17. What happens if I elect to participate and my employment terminates after I have received the new RSU grant?

The terms and conditions for the new RSUs will govern your rights to exercise upon your termination of employment. New RSUs replacing surrendered options that were fully vested at the time they were surrendered for cancellation will vest in equal annual increments over the two years following their grant date. New RSUs replacing surrendered options that were not fully vested at the time they were surrendered for cancellation will vest in equal annual increments over the three years following their grant date. If your employment terminates before your new RSUs are fully vested, the unvested portion of the new RSUs will terminate immediately on the date your employment terminates.

18. Will I owe taxes if I participate in the Option Exchange?

Generally, the exchange of eligible stock options should be treated as a non-taxable exchange and no income should be recognized upon the cancellation of the surrendered stock options or the issuance of the RSUs for U.S. federal income tax purposes. The tax consequences for participating international employees may differ from the U.S. federal income tax consequences and in some instances are not entirely certain. We will provide additional information about taxes for international employees if we implement the Option Exchange. It is recommended that you consult your own accountant, tax advisor or financial advisor for additional information about your personal tax situation.

We have not commenced the Option Exchange to which this communication pertains and will not do so unless we receive the requisite shareholder approval at our Special Meeting of Shareholders scheduled for December 14, 2009. Even if the requisite shareholder approval is obtained, we may still decide later not to implement the Option Exchange. Mentor Graphics will file a Tender Offer Statement on Schedule TO with the SEC upon the commencement of the Option Exchange. Persons who may be eligible to participate in the Option Exchange should read the Tender Offer Statement on Schedule TO, when available, including the offer to exchange and other related materials, when those materials become available because they will contain important information about the Option Exchange. Mentor Graphics’ shareholders and option holders will be able to obtain these written materials and other documents filed by Mentor Graphics with the SEC free of charge from the SEC’s website at www.sec.gov.