S-8

As filed with the Securities and Exchange Commission on June 21, 2004

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
Under
The Securities Act of 1933

CADENCE DESIGN SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization) 77-0148231
(I.R.S. Employer Identification No.)

2655 Seely Avenue, Building 5
San Jose, California 95134

(Address of Principal Executive Offices) (Zip Code)

Amended and Restated Employee Stock Purchase Plan

(Full title of the Plan)

R.L. Smith McKeithen, Esq.
Senior Vice President, General Counsel and Secretary
Cadence Design Systems, Inc.
2655 Seely Avenue, Building 5, San Jose, California 95134
(Name and Address of Agent for Service)
(408) 943-1234
(Telephone number, including area code, of agent for service)

Copies to:
Gregory J. Conklin, Esq.
Gibson, Dunn & Crutcher LLP
One Montgomery Street, 31st Floor
San Francisco, California 94104
(415) 393-8200

CALCULATION OF REGISTRATION FEE

Title of Securities		Proposed Maximum		Proposed Maximum		Amount of
to be Registered (1)	Amount to be Registered (2)	Offering Price per Share (3)		Aggregate Offering Price (3)		Registration Fee (3)
Common Stock, par value $0.01 per share	9,000,000 shares	$	13.98	$	125,820,000	$	15,941.40

(1) Includes, with respect to each share of Common Stock, Rights granted pursuant to the Registrant’s Amended and Restated Rights Agreement, dated as of February 1, 2000, between the Registrant and Mellon Investor Services, LLC, as Rights Agent. Until a triggering event thereunder, the Rights trade with, and cannot be separated from, the Common Stock.

(2) This Registration Statement shall also cover any additional shares of Common Stock which become issuable under the Amended and Restated Employee Stock Purchase Plan by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of the outstanding shares of Cadence Design Systems, Inc. Common Stock.

(3) Calculated solely for purposes of calculating the amount of the registration fee under Rule 457(c) of the Securities Act of 1933, as amended. The price per share and aggregate offering price are based upon the average of the high and low sales price of the Registrant’s Common Stock on June 14, 2004, as reported on the New York Stock Exchange.

TABLE OF CONTENTS

EXHIBIT 5.1

EXHIBIT 23.1

EXHIBIT 23.2

EXHIBIT 99.1

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
PURSUANT TO GENERAL INSTRUCTION E OF FORM S-8

     This Registration Statement on Form S-8 is filed by Cadence Design Systems, Inc., a Delaware corporation (the “Registrant”), relating to 9,000,000 shares of its common stock, par value $0.01 per share (the “Common Stock”), issuable to eligible employees of the Registrant under the Registrant’s Amended and Restated Employee Stock Purchase Plan (the “Plan”). On September 30, 1991, June 4, 1992, May 31, 1994, August 29, 1997 and December 6, 2002, the Registrant filed with the Securities and Exchange Commission registration statements on Form S-8 (Registration No. 33-43025, No. 33-48371, No. 33-53913, No. 333-34599 and No. 333-101693, respectively) (the “Prior Registration Statements”) relating to shares of Common Stock issuable to eligible employees and consultants of the Registrant and its affiliates under the Plan. The Prior Registration Statements are currently effective. This Registration Statement relates to securities of the same class as those to which the Prior Registration Statements relate and is submitted in accordance with Section E of the General Instructions to Form S-8 regarding Registration of Additional Securities.

     The Registrant hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the “Commission”):

(a)	The Registrant’s Registration Statements on Form S-8 (File Nos. 33-43025, 33-48371, 33-53913, 333-34599 and 333-101693) filed on September 30, 1991, June 4, 1992, May 31, 1994, August 29, 1997 and December 6, 2002, respectively;
(b)	The Registrant’s Annual Report on Form 10-K for the fiscal year ended January 3, 2004, including all material incorporated by reference therein;
(c)	The Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 3, 2004;
(d)	The Registrant’s Current Reports on Form 8-K filed with the Commission on April 22, 2004 and May 12, 2004;
(e)	The description of the Registrant’s Common Stock to be offered hereby contained in the Registrant’s Registration Statement on Form 8-A filed with the Commission on August 29, 1990; and
(f)	The description of the Registrant’s Preferred Share Purchase Rights set forth in Exhibit 4.02 to the Registrant’s Annual Report on Form 10-K405 filed with the Commission on March 27, 2000.

     All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents, provided, however, that the Registrant is not incorporating any information furnished under either Item 9 or Item 12 of any current report on Form 8-K.

     Any document, and any statement contained in a document, incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein, or in any other subsequently filed document that also is incorporated or deemed to be incorporated by reference herein, modifies or supersedes such document or statement. Any such document or statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Subject to the foregoing, all information appearing in this Registration Statement is qualified in its entirety by the information appearing in the documents incorporated by reference.

1

Exhibit
Number	Exhibit
5.1	Opinion and consent of Gibson, Dunn & Crutcher LLP.
23.1	Independent Auditors’ Consent.
23.2	Consent of Arthur Andersen LLP, Independent Public Accountants.
23.3	Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1).
24.1	Power of Attorney (included on the signature pages to this Registration Statement on Form S-8).
99.1	Amended and Restated Employee Stock Purchase Plan

2

EXPLANATORY NOTE REGARDING FINANCIAL STATEMENTS
INCORPORATED BY REFERENCE INTO THIS
REGISTRATION STATEMENT

     On March 22, 2002, the Registrant announced that it had appointed KPMG LLP to replace Arthur Andersen LLP (“Andersen”) as the Registrant’s independent auditors. The Registrant’s consolidated balance sheet as of December 29, 2001, and the related consolidated statements of operations, stockholders’ equity and cash flows for the fiscal year ended December 29, 2001, incorporated by reference in this Registration Statement have been audited by Andersen, as stated in its report dated March 11, 2002, which is incorporated by reference herein. After reasonable efforts, the Registrant has been unable to obtain Andersen’s consent to the incorporation by reference into this registration statement of its report with respect to these financial statements. Under these circumstances, Rule 437a under the Securities Act of 1933, as amended (the “1933 Act”), permits the Registrant to file this registration statement without a written consent from Andersen. The absence of such consent may limit recovery by investors on certain claims. In particular, and without limitation, investors will not be able to assert claims against Andersen under Section 11 of the 1933 Act for any untrue statement of a material fact contained in the financial statements audited by Andersen or any omission of a material fact required to be stated therein. In addition, the ability of Andersen to satisfy any claims (including claims arising from Andersen’s provision of auditing and other services to the Registrant) may be limited as a practical matter due to the fact that Andersen is no longer a going concern.

3

SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on this 21st day of June, 2004.

CADENCE DESIGN SYSTEMS, INC.
By:	/s/ Michael J. Fister
	Michael J. Fister
	President and Chief Executive Officer

4

POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Fister, William Porter and R.L. Smith McKeithen, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Michael J. Fister Michael J. Fister	President and Chief Executive Officer (Principal Executive Officer)	June 21, 2004
/s/ William Porter William Porter	Senior Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	June 21, 2004
/s/ H. Raymond Bingham H. Raymond Bingham	Chairman of the Board of Directors	June 21, 2004
Susan L. Bostrom	Director
/s/ Donald L. Lucas Donald L. Lucas	Director	June 21, 2004
/s/ Dr. Alberto Sangiovanni-Vincentelli Dr. Alberto Sangiovanni-Vincentelli	Director	June 21, 2004
/s/ George M. Scalise George M. Scalise	Director	June 21, 2004
/s/ Dr. John B. Shoven Dr. John B. Shoven	Director	June 21, 2004
/s/ Roger S. Siboni Roger S. Siboni	Director	June 21, 2004
/s/ Lip-Bu Tan Lip-Bu Tan	Director	June 21, 2004

5

EXHIBIT INDEX

Exhibit
Number	Exhibit
5.1	Opinion and consent of Gibson, Dunn & Crutcher LLP.
23.1	Independent Auditors’ Consent.
23.2	Consent of Arthur Andersen LLP, Independent Public Accountants.
23.3	Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1).
24.1	Power of Attorney (included on the signature pages to this Registration Statement on Form S-8).
99.1	Amended and Restated Employee Stock Purchase Plan

6

EX-5.1

                                                                     EXHIBIT 5.1

                   [Letterhead of Gibson, Dunn & Crutcher LLP]


                                  June 21, 2004


Cadence Design Systems, Inc.
2655 Seely Avenue, Building 5
San Jose, CA 95134

     Re:  REGISTRATION STATEMENT ON FORM S-8 OF CADENCE DESIGN SYSTEMS, INC.

Ladies and Gentlemen:

          We refer to the registration statement on Form S-8 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), filed by Cadence Design Systems, Inc., a Delaware corporation (the
"Company"), with respect to the proposed offering by the Company of up to
9,000,000 shares (the "Shares") of its common stock, $0.01 par value per share
(the "Common Stock"), subject to issuance by the Company under its Amended and
Restated Employee Stock Purchase Plan (the "Plan").

          We have examined the originals or certified copies of such corporate
records, certificates of officers of the Company and/or public officials and
such other documents, and have made such other factual and legal investigations,
as we deemed relevant and necessary as the basis for the opinions set forth
below. In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as conformed or
photostatic copies and the authenticity of the originals of such copies.

          Based on our examination mentioned above, subject to the assumptions
stated above and relying on the statements of fact contained in the documents
that we have examined, we are of the opinion that (i) the issuance by the
Company of the Shares has been duly authorized and (ii) when issued in
accordance with the terms of the Plan, the Shares will be duly and validly
issued, fully paid and non-assessable shares of Common Stock.

          We are admitted to practice in the State of California, and are not
admitted to practice in the State of Delaware. However, for the limited purpose
of our opinions set forth above, we are generally familiar with the General
Corporation Law of the State of Delaware (the "DGCL") as presently in effect and
have made such inquiries as we consider necessary to render this opinion with
respect to a Delaware corporation. This opinion letter is limited to the DGCL,
as it presently exists and to the facts as they presently exist. We express no
opinion with respect to the effect or applicability of the laws of any other
jurisdiction. We assume no obligation to revise or supplement this opinion
letter should the laws of such jurisdictions be changed after the date hereof by
legislative action, judicial decision or otherwise.

          We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Securities and
Exchange Commission.



                                Very truly yours,

                                /s/ GIBSON, DUNN & CRUTCHER LLP

EX-23.1

                                                                    EXHIBIT 23.1

                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Cadence Design Systems, Inc.:

We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Cadence Design Systems, Inc. to be filed on or about June 15, 2004,
of our report dated March 24, 2004, relating to the consolidated balance sheets
of Cadence Design Systems, Inc. and subsidiaries as of January 3, 2004 and
December 28, 2002, and the consolidated statements of operations, stockholders'
equity and comprehensive income, and cash flows for the years then ended, and
the Fiscal 2003 and Fiscal 2002 financial statement schedules, which report
appears in the January 3, 2004 annual report on Form 10-K of Cadence Design
Systems, Inc.

Our report dated March 24, 2004, contains an explanatory paragraph that states
that the Company's consolidated balance sheet as of December 28, 2002, and the
related consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows for the year then ended, have been
restated.

Our report also refers to our audit of the adjustments and revised disclosures
that were applied to restate the Company's Fiscal 2001 consolidated financial
statements as more fully described in Note 2 to the consolidated financial
statements. However, we were not engaged to audit, review, or apply any
procedures to the Fiscal 2001 consolidated financial statements of Cadence
Design Systems, Inc., other than with respect to such adjustments and revised
disclosures.

In addition, our report refers to the Company's adoption of Statement of
Financial Accounting Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, on
January 1, 2002.

/s/ KPMG LLP

Mountain View, California
June 14, 2004

EX-23.2

                                                                    EXHIBIT 23.2

         CONSENT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS


The Registrant was unable to obtain the written consent of Arthur Andersen LLP
to incorporate by reference its report dated March 11, 2002. See Explanatory
Note.

EX-99.1

                                                                    Exhibit 99.1


                          CADENCE DESIGN SYSTEMS, INC.
                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN



1.   PURPOSE.

     (A)  The Plan initially was established effective as of January 30, 1990
(the "Initial Plan") and has been amended subsequently from time to time. The
Initial Plan hereby is amended and restated in its entirety as the Amended and
Restated Employee Stock Purchase Plan effective as of the date of its adoption.
The terms of the Initial Plan shall remain in effect and apply to all Rights
granted pursuant to the Initial Plan.

     (B)  The purpose of the Plan is to provide a means by which Employees of
the Company and certain designated Affiliates may be given an opportunity to
purchase Shares of the Company.

     (C)  The Company, by means of the Plan, seeks to retain the services of
such Employees, to secure and retain the services of new Employees and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.

     (D)  The Company intends that the Rights to purchase Shares granted under
the Plan be considered options issued under an "employee stock purchase plan,"
as that term is defined in Section 423(b) of the Code.

2.   DEFINITIONS.

     (A)  "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.

     (B)  "BOARD" means the Board of Directors of the Company.

     (C)  "CODE" means the United States Internal Revenue Code of 1986, as
amended.

     (D)  "COMMITTEE" means a committee of the Board appointed by the Board in
accordance with subsection 3(c) of the Plan.

     (E)  "COMPANY" means Cadence Design Systems, Inc., a Delaware corporation.

     (F)  "DIRECTOR" means a member of the Board.

     (G)  "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements set
forth in the Offering Memorandum for eligibility to participate in the Offering.



     (H)  "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate of the Company. Neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
"employment" by the Company or the Affiliate.

     (I)  "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights
intended to be options issued under an "employee stock purchase plan," as that
term is defined in Section 423(b) of the Code.

     (J)  "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended.

     (K)  "FAIR MARKET VALUE" means the value of a security, as determined in
good faith by the Board. If the security is listed on the New York Stock
Exchange or any other established stock exchange or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of the
security shall be the closing sales price (rounded up where necessary to the
nearest whole cent) for such security (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or, in the event that the
security is traded on more than one such exchange or market, the exchange or
market with the greatest volume of trading in the relevant security of the
Company) on the trading day occurring on or closest to the relevant
determination date, as reported in THE WALL STREET JOURNAL or such other source
as the Board deems reliable, and on the date as determined more precisely in the
Offering Memorandum.

     (L)  "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.

     (M)  "OFFERING" means the grant of Rights to purchase Shares under the Plan
to Eligible Employees.

     (N)  "OFFERING DATE" means a date selected by the Board for an Offering to
commence.

     (O)  "OFFERING MEMORANDUM" means a memorandum describing the terms of the
then current or otherwise relevant Offering.

     (P)  "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an


                                       2


"affiliated corporation" for services in any capacity other than as a Director,
or (ii) is otherwise considered an "outside director" for purposes of Section
162(m) of the Code.

     (Q)  "PARTICIPANT" means an Eligible Employee who holds an outstanding
Right granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Right granted under the Plan.

     (R)  "PLAN" means this Amended and Restated Employee Stock Purchase Plan.

     (S)  "PURCHASE DATE" means one or more dates established by the Board
during an Offering on which Rights granted under the Plan shall be exercised and
purchases of Shares carried out in accordance with such Offering.

     (T)  "RIGHT" means an option to purchase Shares granted pursuant to the
Plan.

     (U)  "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.

     (V)  "SECURITIES ACT" means the United States Securities Act of 1933, as
amended.

     (W)  "SHARE" means a share of the common stock of the Company.

3.   ADMINISTRATION.

     (A)  The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c). Whether
or not the Board has delegated administration, the Board shall have the final
power to determine all questions of policy and expediency that may arise in the
administration of the Plan.

     (B)  The Board (or the Committee) shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

          (I)  To determine when and how Rights to purchase Shares shall be
granted and the provisions of each Offering of such Rights (which need not be
identical).

          (II) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.

          (III) To construe and interpret the Plan and Rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.

          (IV) To amend the Plan as provided in Section 14.


                                        3


          (V)  Generally, to exercise such powers and to perform such acts as it
deems necessary or expedient to promote the best interests of the Company and
its Affiliates and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.

     (C)  The Board may delegate administration of the Plan to a Committee of
the Board composed of two (2) or more members, all of the members of which
Committee may be, in the discretion of the Board, Non-Employee Directors and/or
Outside Directors. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee of two (2) or more Outside Directors any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or such a subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.

4.   SHARES SUBJECT TO THE PLAN.

     (A)  Subject to the provisions of Section 13 relating to adjustments upon
changes in securities, the Shares that may be sold pursuant to Rights granted
under the Plan shall not exceed in the aggregate Thirty Eight Million Five
Hundred Thousand (38,500,000) Shares. If any Right granted under the Plan shall
for any reason terminate without having been exercised, the Shares not purchased
under such Right shall again become available for the Plan.

     (B)  The Shares subject to the Plan may be unissued Shares or Shares that
have been bought on the open market at prevailing market prices or otherwise.

5.   GRANT OF RIGHTS; OFFERING.

     (A)  The Board may from time to time grant or provide for the grant of
Rights to purchase Shares of the Company under the Plan to Eligible Employees in
an Offering on one or more Offering Dates selected by the Board. Each Offering
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all Employees granted Rights to purchase Shares under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the Offering Memorandum or otherwise) the period during
which the Offering shall be effective, which period shall not exceed
twenty-seven (27) months beginning with the Offering Date, and the substance of
the provisions contained in Sections 6 through 9, inclusive.

     (B)  If a Participant has more than one Right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (i) each agreement or notice delivered by that Participant will be
deemed to apply to all of his or her Rights under the Plan, and (ii) an
earlier-granted Right (or a Right with a lower exercise price, if two Rights
have identical grant dates) will be exercised to the fullest possible extent
before a later-granted Right


                                       4


(or a Right with a higher exercise price if two Rights have identical grant
dates) will be exercised.

6.   ELIGIBILITY.

     (A)  Rights may be granted only to Employees of the Company or, as the
Board may designate as provided in subsection 3(b), to Employees of an
Affiliate. Except as provided in subsection 6(b), an Employee shall not be
eligible to be granted Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Affiliate, as the case may
be, for such continuous period preceding such grant as the Board may require,
but in no event shall the required period of continuous employment be equal to
or greater than two (2) years.

     (B)  The Board may provide that each person who, during the course of an
Offering, first becomes an Eligible Employee will, on a date or dates specified
in the Offering which coincides with the day on which such person becomes an
Eligible Employee or which occurs thereafter, receive a Right under that
Offering, which Right shall thereafter be deemed to be a part of that Offering.
Such Right shall have the same characteristics as any Rights originally granted
under that Offering, as described herein, except that:

          (I)  the date on which such Right is granted shall be the "Offering
Date" of such Right for all purposes, including determination of the exercise
price of such Right;

          (II) the period of the Offering with respect to such Right shall begin
on its Offering Date and end coincident with the end of such Offering; and

          (III) the Board may provide that if such person first becomes an
Eligible Employee within a specified period of time before the end of the
Offering, he or she will not receive any Right under that Offering.

     (C)  No Employee shall be eligible for the grant of any Rights under the
Plan if, immediately after any such Rights are granted, such Employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subsection 6(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such Employee.

     (D)  An Eligible Employee may be granted Rights under the Plan only if such
Rights, together with any other Rights granted under all Employee Stock Purchase
Plans of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such Eligible Employee's rights to purchase Shares of
the Company or any Affiliate to accrue at a rate which exceeds twenty five
thousand dollars ($25,000) of the fair market value of such Shares (determined
at the time such Rights are granted) for each calendar year in which such Rights
are outstanding at any time.


                                       5


     (E)  The Board may provide in an Offering that Employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.

7.   RIGHTS; PURCHASE PRICE.

     (A)  On each Offering Date, each Eligible Employee, pursuant to an Offering
made under the Plan, shall be granted the Right to purchase up to the number of
Shares purchasable either:

          (I)  with a percentage designated by the Board not exceeding fifteen
percent (15%) of such Employee's Earnings (as defined by the Board in each
Offering) during the period which begins on the Offering Date (or such later
date as the Board determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no later than the end of the
Offering; or

          (II) with a maximum dollar amount designated by the Board that, as the
Board determines for a particular Offering, (1) shall be withheld, in whole or
in part, from such Employee's Earnings (as defined by the Board in each
Offering) during the period which begins on the Offering Date (or such later
date as the Board determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no later than the end of the
Offering and/or (2) shall be contributed, in whole or in part, by such Employee
during such period.

     (B)  The Board shall establish one or more Purchase Dates during an
Offering on which Rights granted under the Plan shall be exercised and purchases
of Shares carried out in accordance with such Offering.

     (C)  In connection with each Offering made under the Plan, the Board may
specify a maximum amount of Shares that may be purchased by any Participant as
well as a maximum aggregate amount of Shares that may be purchased by all
Participants pursuant to such Offering. In addition, in connection with each
Offering that contains more than one Purchase Date, the Board may specify a
maximum aggregate amount of Shares which may be purchased by all Participants on
any given Purchase Date under the Offering. If the aggregate purchase of Shares
upon exercise of Rights granted under the Offering would exceed any such maximum
aggregate amount, the Board shall make a pro rata allocation of the Shares
available in as nearly a uniform manner as shall be practicable and as it shall
deem to be equitable.

     (D)  The purchase price of Shares acquired pursuant to Rights granted under
the Plan shall be not less than the lesser of:

          (I)  an amount equal to eighty-five percent (85%) of the fair market
value of the Shares on the Offering Date; or

          (II) an amount equal to eighty-five percent (85%) of the fair market
value of the Shares on the Purchase Date.


                                        6


8.   PARTICIPATION; WITHDRAWAL; TERMINATION.

     (A)  An Eligible Employee may become a Participant in the Plan pursuant to
an Offering by delivering a participation agreement to the Company within the
time specified in the Offering Memorandum, in such form as the Company provides.
Each such agreement shall authorize payroll deductions of up to the maximum
percentage specified by the Board of such Employee's Earnings during the
Offering (as defined in each Offering). The payroll deductions made for each
Participant shall be credited to a bookkeeping account for such Participant
under the Plan and either may be deposited with the general funds of the Company
or may be deposited in a separate account in the name of, and for the benefit
of, such Participant with a financial institution designated by the Company. To
the extent provided in the Offering, a Participant may reduce (including to
zero) or increase such payroll deductions. To the extent provided in the
Offering, a Participant may begin such payroll deductions after the beginning of
the Offering. A Participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the Participant
has not already had the maximum permitted amount withheld during the Offering.

     (B)  At any time during an Offering, a Participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board in the Offering. Upon such withdrawal from the Offering by
a Participant, the Company shall distribute to such Participant all of his or
her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire Shares for the Participant) under the
Offering, without interest unless otherwise specified in the Offering, and such
Participant's interest in that Offering shall be automatically terminated. A
Participant's withdrawal from an Offering will have no effect upon such
Participant's eligibility to participate in any other Offerings under the Plan
but such Participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.

     (C)  Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating Employee's employment with the
Company and its designated Affiliates for any reason (subject to any
post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of his
or her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire Shares for the terminated Employee) under
the Offering, without interest unless otherwise specified in the Offering. If
the accumulated payroll deductions have been deposited with the Company's
general funds, then the distribution shall be made from the general funds of the
Company, without interest. If the accumulated payroll deductions have been
deposited in a separate account with a financial institution as provided in
subsection 8(a), then the distribution shall be made from the separate account,
without interest unless otherwise specified in the Offering.

     (D)  Rights granted under the Plan shall not be transferable by a
Participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in Section 15 and, otherwise during his
or her lifetime, shall be exercisable only by the person to whom such Rights are
granted.

                                       7


9.   EXERCISE.

     (A)  On each Purchase Date specified therefor in the relevant Offering,
each Participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of Shares up to the maximum amount of Shares
permitted pursuant to the terms of the Plan and the applicable Offering, at the
purchase price specified in the Offering. No fractional Shares shall be issued
upon the exercise of Rights granted under the Plan unless specifically provided
for in the Offering and permitted by law.

     (B)  Unless otherwise specifically provided in the Offering, the amount, if
any, of accumulated payroll deductions remaining in any Participant's account
after the purchase of Shares that is equal to the amount required to purchase
one or more whole Shares on the final Purchase Date of the Offering shall be
distributed in full to the Participant at the end of the Offering, without
interest. If the accumulated payroll deductions have been deposited with the
Company's general funds, then the distribution shall be made from the general
funds of the Company, without interest. If the accumulated payroll deductions
have been deposited in a separate account with a financial institution as
provided in subsection 8(a), then the distribution shall be made from the
separate account, without interest unless otherwise specified in the Offering.

     (C)  The amount, if any, of accumulated payroll deductions remaining in any
Participant's account after the purchase of Shares that is less than the amount
required to purchase one whole Share on the final Purchase Date of the Offering
shall be carried forward, without interest, into the next Offering.

     (D)  No Rights granted under the Plan may be exercised to any extent unless
the Shares to be issued upon such exercise under the Plan (including Rights
granted thereunder) are covered by an effective registration statement pursuant
to the Securities Act and the Plan is in material compliance with all applicable
state, foreign and other securities and other laws applicable to the Plan. If on
a Purchase Date in any Offering hereunder the Plan is not so registered or in
such compliance, no Rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than twelve
(12) months and the Purchase Date shall in no event be more than twenty-seven
(27) months from the Offering Date. If, on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered and in such compliance, no Rights granted under the Plan or any
Offering shall be exercised and all payroll deductions accumulated during the
Offering (reduced to the extent, if any, such deductions have been used to
acquire Shares) shall be distributed to the Participants, without interest
unless otherwise specified in the Offering. If the accumulated payroll
deductions have been deposited with the Company's general funds, then the
distribution shall be made from the general funds of the Company, without
interest. If the accumulated payroll deductions have been deposited in a
separate account with a financial institution as provided in subsection 8(a),
then the distribution shall be made from the separate account, without interest
unless otherwise specified in the Offering.

                                       8


10.  COVENANTS OF THE COMPANY.

     (A)  During the terms of the Rights granted under the Plan, the Company
shall ensure that the amount of Shares required to satisfy such Rights are
available.

     (B)  The Company shall seek to obtain from each federal, state, foreign or
other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell Shares upon exercise of the
Rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Shares under the Plan, the Company shall be relieved from any liability for
failure to issue and sell Shares upon exercise of such Rights unless and until
such authority is obtained.

11.  USE OF PROCEEDS FROM SHARES.

     Proceeds from the sale of Shares pursuant to Rights granted under the Plan
shall constitute general funds of the Company.

12.  RIGHTS AS A STOCKHOLDER AND EMPLOYEE.

     (A)  A Participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, Shares subject to Rights granted
under the Plan unless and until the Participant's Shares acquired upon exercise
of Rights under the Plan are recorded in the books of the Company.

     (B)  Neither the Plan nor the grant of any Right thereunder shall confer
any right on any Employee to remain in the employ of the Company or any
Affiliate or restrict the right of the Company or any Affiliate to terminate
such Employee's employment.

13.  ADJUSTMENTS UPON CHANGES IN SECURITIES.

     (A)  Subject to any required action by the stockholders of the Company, the
number of Shares covered by each Right under the Plan that has not yet been
exercised and the number of Shares that have been authorized for issuance under
the Plan but have not yet been placed under a Right (collectively, the
"Reserves"), as well as the price per Share covered by each Right under the Plan
that has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock split
or the payment of stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to a Right.

     (B)  In the event of the proposed dissolution or liquidation of the
Company, any and all Offerings shall terminate immediately prior to the
consummation of such proposed action,

                                       9


unless otherwise provided by the Board. The Board may, in the exercise of its
sole discretion in such instances, declare that the Rights under the Plan shall
terminate as of a date fixed by the Board and give each Participant the right to
exercise his or her Right. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation or a parent or subsidiary of such successor
corporation when the Company is not the surviving corporation, any and all
Offerings shall terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, and in lieu of assumption or
substitution of the Rights, provide that each Participant shall have the right
to exercise his or her Right. If the Board makes a Right exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Participant that the Right shall be fully exercisable for a
period of twenty (20) days from the date of such notice (or such other period of
time as the Board shall determine), and the Right shall terminate upon the
expiration of such period.

     (C)  The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per Share covered by each outstanding Right, in the event that the Company
effects one or more reorganizations, recapitalizations, rights offering, or
other increases or reductions of outstanding Shares, and in the event of the
Company being consolidated with or merged into any other corporation.

14.  AMENDMENT OF THE PLAN.

     (A)  The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in securities and except as to minor amendments to benefit the administration of
the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the
Company or any Affiliate, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code, Rule 16b-3
under the Exchange Act or any Nasdaq or other securities exchange listing
requirements. Currently under the Code, stockholder approval within twelve (12)
months before or after the adoption of the amendment is required where the
amendment will:

          (I)  Increase the amount of Shares reserved for Rights under the Plan;

          (II) Modify the provisions as to eligibility for participation in the
Plan to the extent such modification requires stockholder approval in order for
the Plan to obtain employee stock purchase plan treatment under Section 423 of
the Code; or

          (III) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code.

     (B)  It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder

                                       10


relating to Employee Stock Purchase Plans and/or to bring the Plan and/or Rights
granted under it into compliance therewith.

     (C)  Rights and obligations under any Rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan without the consent
of the person to whom such Rights were granted, or except as necessary to comply
with any laws or governmental regulations, or except as necessary to ensure that
the Plan and/or Rights granted under the Plan comply with the requirements of
Section 423 of the Code.

15.  DESIGNATION OF BENEFICIARY.

     (A)  A Participant may file a written designation of a beneficiary who is
to receive any Shares and/or cash, if any, from the Participant's account under
the Plan in the event of such Participant's death subsequent to the end of an
Offering but prior to delivery to the Participant of such Shares and cash. In
addition, a Participant may file a written designation of a beneficiary who is
to receive any cash from the Participant's account under the Plan in the event
of such Participant's death during an Offering.

     (B)  The Participant may change such designation of beneficiary at any time
by written notice. In the event of the death of a Participant and in the absence
of a beneficiary validly designated under the Plan who is living at the time of
such Participant's death, the Company shall deliver such Shares and/or cash to
the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such Shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

16.  TERMINATION OR SUSPENSION OF THE PLAN.

     (A)  The Board in its discretion may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the time that all of
the Shares subject to the Plan's reserve, as increased and/or adjusted from time
to time, have been issued under the terms of the Plan. No Rights may be granted
under the Plan while the Plan is suspended or after it is terminated.

     (B)  Rights and obligations under any Rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except as
expressly provided in the Plan or with the consent of the person to whom such
Rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
Rights granted under the Plan comply with the requirements of Section 423 of the
Code.

17.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective upon adoption by the Board.

                                       11


18.  REORGANIZATION OF CADENCE DESIGN FOUNDRY BUSINESS.

     Nothing in this Plan shall be construed to restrict the ability of the
Company to effect the transactions, amendments and termination described in
Section A.2. of that certain Plan of Reorganization for Cadence Design Foundry
Business, adopted by the Board on October 30, 2002, and the Plan shall hereby
deemed to be amended in accordance therewith; provided that such transactions
shall be effected in a manner consistent with applicable law.





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