Document:

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                                                                   EXHIBIT 10.10

                       MASTER CORPORATE SERVICES AGREEMENT

                                  BY AND AMONG

                          CADENCE DESIGN SYSTEMS, INC.,

                             CADENCE HOLDINGS, INC.,

                                   TALITY, LP

                                       AND

                               TALITY CORPORATION

                                   DATED AS OF

                                __________, 2000

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               PAGE
<S>                                                                             <C>
ARTICLE I  DEFINITIONS...........................................................2
        Section 1.1   Additional Services........................................2
        Section 1.2   Corporate Service Schedule.................................2
        Section 1.3   Impracticability...........................................2
        Section 1.4   Party......................................................2
        Section 1.5   Separation Agreement.......................................2
        Section 1.6   Service(s).................................................2
        Section 1.7   Software...................................................2

ARTICLE II  CORPORATE SERVICE SCHEDULES..........................................2
        Section 2.1   Execution of Schedules.....................................2
        Section 2.2   Schedule Contents..........................................2

ARTICLE III  SERVICES............................................................3
        Section 3.1   Services Generally.........................................3
        Section 3.2   Service Boundaries.........................................3
        Section 3.3   Impracticability...........................................3
        Section 3.4   Additional Resources.......................................3
        Section 3.5   Additional Services........................................3

ARTICLE IV  TERM & TERMINATION...................................................4
        Section 4.1   Term.......................................................4
        Section 4.2   Termination................................................4
        Section 4.3   Survival...................................................4
        Section 4.4   User Ids, Passwords and Other Access.......................4

ARTICLE V  COMPENSATION..........................................................4
        Section 5.1   Charges For Services.......................................4
        Section 5.2   Payment Terms..............................................5
        Section 5.3   Error Correction; True-Ups; Accounting.....................5
        Section 5.4   Pricing Adjustments........................................5

ARTICLE VI  GENERAL OBLIGATIONS; STANDARD OF CARE................................6
        Section 6.1   Performance Metrics........................................6
        Section 6.2   Disclaimer Of Warranties...................................6
        Section 6.3   Transitional Nature Of Services; Changes...................6
        Section 6.4   Responsibility For Errors; Delays..........................6
        Section 6.5   Good Faith Cooperation; Consents...........................6
        Section 6.6   Alternatives...............................................7

ARTICLE VII  RELATIONSHIP AMONG THE PARTIES......................................7

ARTICLE VIII  SUBCONTRACTORS.....................................................7
</TABLE>

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<TABLE>
<S>                                                                             <C>
ARTICLE IX  INTELLECTUAL PROPERTY................................................7
        Section 9.1   Allocation Of Rights By Ancillary Agreements...............7
        Section 9.2   Existing Ownership Rights Unaffected.......................7

ARTICLE X  CONFIDENTIALITY.......................................................8

ARTICLE XI  LIMITATION OF LIABILITY..............................................8

ARTICLE XII  FORCE MAJEURE.......................................................8

ARTICLE XIII  MISCELLANEOUS......................................................8
        Section 13.1  Incorporation by Reference.................................8
        Section 13.2  Conflicting Agreements.....................................8
</TABLE>

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<PAGE>   4

                       MASTER CORPORATE SERVICES AGREEMENT

        THIS MASTER CORPORATE SERVICES AGREEMENT (this "Agreement"), dated and
effective as of _______, 2000, among Cadence Design Systems, Inc., a Delaware
corporation (together with its Subsidiaries, "Cadence"), Cadence Holdings, Inc.,
a Delaware corporation ("Holdings"), Tality, LP, a Delaware limited partnership
(the "Partnership") and Tality Corporation, a Delaware corporation ("Tality").
Capitalized terms used herein and not defined elsewhere herein shall have the
meaning ascribed to them in Article I or in the Separation Agreement (as defined
below).

                                    RECITALS

        WHEREAS, Holdings currently owns approximately 98% of the issued and
outstanding shares of the capital stock of Tality;

        WHEREAS, Tality is the sole general partner of, and owns both a general
and limited partnership interest in, the Partnership;

        WHEREAS, each of the Boards of Directors of Cadence, Tality and Holdings
determined that it would be appropriate and desirable for Cadence to transfer
(or cause to be transferred) to the Partnership, on behalf of Holdings, and for
the Partnership to receive and assume, directly or indirectly, as a contribution
from Holdings, certain assets and liabilities of Cadence associated with the
Tality Business;

        WHEREAS, Cadence, Tality and Holdings are parties to that certain Master
Separation Agreement, dated as of July 14, 2000, as amended or restated (the
"Separation Agreement"), pursuant to which Cadence, Tality, Holdings and the
Partnership have agreed, subject to certain conditions, to the legal separation
of the Tality Business from Cadence's other businesses and to have the
Partnership and its Subsidiaries own and operate the entire Tality Business; and

        WHEREAS, all conditions to the Separation have been satisfied or waived,
and Cadence, Holdings, the Partnership and Tality now desire to execute and
deliver this Master Corporate Services Agreement to set forth certain
arrangements regarding the provision of services between Cadence, on the one
hand, and Tality and the Partnership, on the other.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                       1
<PAGE>   5

                                    ARTICLE I

                                   DEFINITIONS

        For purposes of this Agreement, the following capitalized terms shall
have the meanings assigned to them below:

        Section 1.1 "Additional Services" shall have the meaning set forth in
Section 3.5.

        Section 1.2 "Corporate Service Schedule" means a corporate service
schedule in the form attached hereto.

        Section 1.3 "Impracticability" shall have the meaning set forth in
Section 3.3.

        Section 1.4 "Party" means Cadence or Holdings, on the one hand, and
Tality or the Partnership, on the other, and members of the Cadence Group or the
Tality Group, as applicable.

        Section 1.5 "Separation Agreement" has the meaning set forth in the
recitals.

        Section 1.6 "Service(s)" shall have the meaning set forth in Section
3.1.

        Section 1.7 "Software" means a Service Provider's software program(s),
in object code only, listed and described in the relevant Corporate Service
Schedule.

                                   ARTICLE II

                           CORPORATE SERVICE SCHEDULES

        Section 2.1 Execution of Schedules. This Agreement shall govern
individual corporate services as requested by Tality or the Partnership and
provided by Cadence or requested by Cadence and provided by the Partnership, the
details of which are set forth in the Corporate Service Schedules attached to
this Agreement. Each Service shall be covered by this Agreement upon execution
of a Corporate Service Schedule. Each Corporate Service Schedule executed by the
parties hereto shall be incorporated by reference and become an integral part of
this Agreement as if fully set forth herein.

        Section 2.2 Schedule Contents. For each Service, the Parties shall set
forth, among other things, (a) the time period during which the Service shall be
provided if different from the term of this Agreement determined pursuant to
Article IV; (b) a summary of the Service to be provided; (c) a description of
the Service; (d) the cost methodology to be employed (including an estimated
total charge), if any, for the Service and any other terms applicable thereto on
the Corporate Service Schedule. Obligations regarding each Corporate Service
Schedule shall be effective upon execution and delivery thereof.

                                       2
<PAGE>   6

                                   ARTICLE III

                                    SERVICES

        Section 3.1 Services Generally. Except as otherwise provided herein,
during the term hereof, Cadence or the Partnership, as applicable (each, a
"Service Provider"), shall provide or cause to be provided to Tality, the
Partnership or Cadence, as applicable (each, a "Service Recipient"), the
activities and services described in the Corporate Service Schedule(s) attached
hereto. Each activity or service described on a Corporate Service Schedule shall
be referred to herein as a "Service." Collectively, the services described on
all the Corporate Service Schedules (including Additional Services) shall be
referred to herein as "Services."

        Section 3.2 Service Boundaries. Except as provided in a Corporate
Service Schedule for a specific Service: (i) the Service Providers shall be
required to provide their respective Services in substantially the same manner
as such Services are being provided immediately prior to the date hereof, unless
Cadence and the Partnership agree otherwise; and (ii) the Services shall be
available only for purposes of (A) if Tality or the Partnership is the Service
Recipient, conducting the business of the Partnership in substantially the same
manner as it was conducted prior to the date hereof, unless Cadence and the
Partnership agree otherwise, or (B) if Cadence is the Service Recipient,
conducting the business of Cadence in substantially the same manner as it was
conducted prior to the date hereof, unless Cadence and the Partnership agree
otherwise.

        Section 3.3 Impracticability. No Service Provider shall be required to
provide any Service to the extent the performance of such Service becomes
impracticable as a result of a cause or causes outside the reasonable control of
the Service Provider, including unfeasible technological requirements, or to the
extent the performance of such Service would require the Service Provider to
violate any Applicable Law or would result in the breach of any software license
or other contract to which the Service Provider is a party or by which it or any
of its assets and properties is bound ("Impracticability").

        Section 3.4 Additional Resources. Except as provided in a Corporate
Service Schedule for a specific Service, in providing the Services, the Service
Providers shall not be obligated to: (i) hire any additional employees; (ii)
maintain the employment of any specific employee; (iii) purchase, lease or
license any additional equipment or software; or (iv) pay any costs related to
the transfer or conversion of the Service Recipient's data to the Service
Recipient or any alternative supplier of Services.

        Section 3.5 Additional Services. From time to time during the term
hereof, the Parties may identify additional services that the Parties may agree
to provide to each other in accordance with the terms of this Agreement (the
"Additional Services"). Accordingly, the Parties shall execute additional
Corporate Service Schedules for such Additional Services pursuant to Article II.
The Parties may agree in writing on Additional Services during the term of this
Agreement.

                                       3
<PAGE>   7

                                   ARTICLE IV

                               TERM & TERMINATION

        Section 4.1 Term. The term of this Agreement shall commence on the date
hereof and shall remain in effect until two (2) years after the date hereof (the
"Expiration Date"), unless earlier terminated under Section 4.2. This Agreement
may be extended by the parties in writing, either in whole or with respect to
one or more of the Services; provided, however, that any such extension shall
only apply to the Services for which the Agreement was extended. The parties
shall be deemed to have extended this Agreement with respect to a specific
Service if the Corporate Service Schedule for such Service specifies a
completion date beyond the aforementioned Expiration Date. The parties may agree
on an earlier expiration date respecting a specific Service by specifying such
date on the Corporate Service Schedule for that Service. Services shall be
provided up to and including the date set forth in the applicable Corporate
Service Schedule, subject to earlier termination as provided herein.

        Section 4.2 Termination. A Party may terminate this Agreement with
respect to any one or more of the Services provided to the Party hereunder, for
any reason or for no reason, at any time upon six (6) months prior written
notice to the other Party. The Parties may terminate this Agreement, by mutual
consent, with respect to any one or more of the Services provided hereunder
without notice. In addition, subject to Section 4.4 of the Separation Agreement,
either Party may terminate this Agreement with respect to a specific Service if
the other Party materially breaches a material provision with regard to that
particular Service and does not cure such breach (or does not take reasonable
steps required under the circumstances to cure such breach going forward) within
sixty (60) days after being given notice of the breach; provided, however, that
the non-terminating Party may request that the Parties engage in a dispute
resolution negotiation as specified in Section 4.4 of the Separation Agreement
prior to termination for breach.

        Section 4.3 Survival. Those Sections of this Agreement that, by their
nature, are intended to survive termination shall survive in accordance with
their terms. Notwithstanding the foregoing, in the event of any termination with
respect to one or more, but less than all Services, this Agreement shall
continue in full force and effect with respect to any Services not terminated
hereby.

        Section 4.4 User Ids, Passwords and Other Access. The Parties shall use
good faith efforts at the termination or expiration of this Agreement or any
specific Service hereto to ensure that all applicable user IDs and passwords or
other means of access to sites, systems and information are canceled or returned
to the other Party as applicable.

                                    ARTICLE V

                                  COMPENSATION

        Section 5.1 Charges For Services. Each Service Recipient shall pay the
Service Provider of the relevant Service the charges determined in accordance
with the pricing methodology set forth on the Corporate Service Schedules for
each of the Services listed therein,

                                       4
<PAGE>   8

as adjusted, from time to time, in accordance with the procedures set forth in
Sections 5.3 and 5.4. Such fees shall include the direct costs, as determined
using the process described in such Corporate Service Schedule, and indirect
costs of providing the Services. The Parties shall discuss in good faith any
situation in which the actual charge for a Service is reasonably expected to
exceed the estimated charge, if any, set forth on a Corporate Service Schedule
for a particular Service; provided, however, that the incurrence of charges in
excess of any such estimate shall not justify stopping the provision of, or
payment for, Services under this Agreement.

        Section 5.2 Payment Terms. Each Service Provider shall bill the relevant
Service Recipients quarterly for all charges accrued for Services to such
Service Recipients during the quarter pursuant to the budgeted amounts set forth
in each Corporate Service Schedule to this Agreement (the "Quarterly Invoice");
provided, however, that to the extent such charges exceed one hundred ten
percent (110%) of the estimated quarterly costs stated in the relevant Corporate
Service Schedule, the excess amount shall be included in the Quarterly Invoice
for the following quarter. The Quarterly Invoices shall be accompanied by
reasonable documentation or other reasonable explanation supporting such
charges. Each Service Recipient shall pay the relevant Service Provider the
amount of the Quarterly Invoices (the "Quarterly Payments") for all Services
provided to the Service Recipient within thirty (30) days after receipt of an
invoice therefore. Late payments shall bear interest at the lesser of twelve
percent (12%) and the maximum rate allowed by law.

        Section 5.3 Error Correction; True-Ups; Accounting. Unless otherwise
agreed by Cadence and the Partnership, no later than forty-five (45) days
following the end of each quarter, representatives of each of Cadence and the
Partnership shall meet to reconcile the Quarterly Payments made during the prior
quarter with the actual costs incurred by the Service Providers during such
period. If a Service Provider's actual costs were in excess of the amount of
Quarterly Payments for such period, the Service Recipient shall transfer to the
Service Provider the difference in immediately available funds no later than
thirty (30) days following the end of such period. If a Service Provider's
actual cash payments were less than the amount of Quarterly Payments for such
period, the Service Provider shall transfer to the Service Recipient the
difference in immediately available funds no later than thirty (30) days
following the end of such period.

        Section 5.4 Pricing Adjustments. In the event of a tax audit adjustment
relating to the pricing of any or all Services provided pursuant to this
Agreement in which it is determined by a taxing authority that any of the
charges, individually or in combination, did not result in an arm's-length
payment, as determined under internationally accepted arm's-length standards,
then the parties, including any subcontractor providing Services hereunder, may
agree to make corresponding adjustments to the charges in question for such
period to the extent necessary to achieve arm's-length pricing. Any adjustment
made pursuant to this Section 5.4 at any time during the term of this Agreement
or after termination of this Agreement and shall be reflected in the parties'
books and records, and the resulting underpayment or overpayment shall create,
respectively, an obligation to be paid in the manner specified in Section 5.2 or
shall create a credit against amounts owed under this Agreement, as the case may
be.

                                       5
<PAGE>   9

                                   ARTICLE VI

                      GENERAL OBLIGATIONS; STANDARD OF CARE

        Section 6.1 Performance Metrics. Subject to Section 3.4 and any other
terms of this Agreement, each Service Provider shall use all commercially
reasonable efforts to maintain sufficient resources to perform its obligations
hereunder. Specific performance metrics for a Service Provider for a specific
Service may be set forth in the corresponding Corporate Service Schedule. Where
none is set forth, the Service Provider shall use reasonable efforts to provide
Services in accordance with the policies, procedures and practices in effect
before the date hereof and shall exercise the same care and skill as it
exercises in performing similar services for itself.

        Section 6.2 Disclaimer Of Warranties. THE PARTIES MAKE NO WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
SERVICES, SOFTWARE OR OTHER DELIVERABLES PROVIDED BY IT HEREUNDER.

        Section 6.3 Transitional Nature Of Services; Changes. The parties
acknowledge the transitional nature of the Services and that a Service Provider
may make changes from time to time in the manner of performing its Services if
such Service Provider is making similar changes in performing similar services
for itself and if the Service Provider furnishes to the Service Recipient sixty
(60) days written notice regarding such changes.

        Section 6.4 Responsibility For Errors; Delays. Each Service Provider's
sole responsibility to its Service Recipients:

            (a) for errors or omissions in Services, shall be to furnish correct
information, payment and/or adjustment in the Services, at no additional cost or
expense to the Service Recipients, as appropriate; provided, however, that each
Service Recipient must promptly advise its Service Provider of any such error or
omission of which it becomes aware after having used reasonable efforts to
detect any such errors or omissions in accordance with the standard of care set
forth in Section 6.1; and

            (b) for failure to deliver any Service because of Impracticability,
shall be to use reasonable efforts, subject to Section 3.3, to make the Services
available and/or to resume performing the Services as promptly as reasonably
practicable.

        Section 6.5 Good Faith Cooperation; Consents. The parties shall
cooperate in good faith with each other in all matters relating to the provision
and receipt of Services. Such cooperation shall include exchanging information,
performing true-ups and adjustments, and obtaining all third party consents,
licenses, sublicenses or approvals necessary to permit each party to perform its
obligations hereunder (including rights to use third party software needed for
the performance of Services). The costs of obtaining any such third party
consents, licenses, sublicenses or approvals shall be borne by the relevant
Service Recipient. Each of the parties shall maintain, in accordance with its
standard document retention procedures, documentation supporting the information
relevant to cost calculations contained in the Corporate Service

                                       6
<PAGE>   10

Schedules and cooperate with each other in making such information available as
needed in the event of a tax audit, whether in the United States or any other
country.

        Section 6.6 Alternatives. If a Service Provider reasonably believes it
is unable to provide any Service because of a failure to obtain necessary
consents, licenses, sublicenses or approvals pursuant to Section 6.5 or because
of Impracticability, the parties shall cooperate to determine the best
alternative approach. Until such alternative approach is found or the problem
otherwise resolved to the satisfaction of the parties, the Service Provider
shall use reasonable efforts, subject to Section 3.3 and Section 3.4, to
continue providing the Service. To the extent an agreed upon alternative
approach increases the cost of such Service Provider performing such Service
above that which is included in the Service Provider's charge for the Service in
question, the Service Recipient shall fully bear such increase unless they
otherwise agree in writing.

                                   ARTICLE VII

                         RELATIONSHIP AMONG THE PARTIES

        The relationship between the Cadence Parties, on the one hand, and the
Tality Parties, on the other hand, established under this Agreement is that of
independent contractors, and neither Party is, or shall be construed to be, an
employee, agent, partner or joint venturer of or with the other. Each Service
Provider shall be solely responsible for any employment-related taxes, insurance
premiums or other employment benefits respecting its performance of Services
under this Agreement. The Service Recipients agree to grant the Service
Providers' personnel access to sites, systems and information as necessary for
the Service Providers to perform their obligations hereunder.

                                  ARTICLE VIII

                                 SUBCONTRACTORS

        In its sole discretion, a Service Provider may engage a subcontractor to
perform all or any portion of the Service Provider's duties under this
Agreement; provided, however that any such subcontractor agrees in writing to be
bound by confidentiality obligations at least as protective as the terms of the
Master Confidentiality Agreement; and provided further that in such event the
Service Provider shall remain responsible for the performance of such
subcontracted Service.

                                   ARTICLE IX

                              INTELLECTUAL PROPERTY

        Section 9.1 Allocation Of Rights By Ancillary Agreements. This Agreement
and the performance of this Agreement shall not affect the ownership of any
intellectual property or rights thereto allocated in the Ancillary Agreements
(including the Master Intellectual Property Agreement).

        Section 9.2 Existing Ownership Rights Unaffected. Neither Party shall
gain, by virtue of this Agreement, any rights of ownership of copyrights,
patents, trade secrets, trademarks or any other intellectual property rights
owned by the other.

                                       7
<PAGE>   11

                                    ARTICLE X

                                 CONFIDENTIALITY

        The terms of the Master Confidentiality Agreement shall apply to any
Confidential Information (as defined therein) which is the subject matter of
this Agreement or that may be obtained in the course of performing the Services.

                                   ARTICLE XI

                             LIMITATION OF LIABILITY

        NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOSS OF
DATA, LOSS OF USE, COST OF COVER, BUSINESS INTERRUPTION OR OTHER SPECIAL,
INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, UNDER
ANY THEORY OF LIABILITY, ARISING FROM THE PERFORMANCE OF, OR RELATING TO, THIS
AGREEMENT.

                                   ARTICLE XII

                                  FORCE MAJEURE

        Service Providers shall be excused for any failure or delay in
performing any of their obligations under this Agreement, if such failure or
delay is caused by Force Majeure. For purposes hereof, "Force Majeure" means any
act of God or the public enemy, any accident, explosion, fire, storm,
earthquake, flood, or any other circumstance or event beyond the reasonable
control of the party relying upon such circumstance or event.

                                  ARTICLE XIII

                                  MISCELLANEOUS

        Section 13.1 Incorporation by Reference. Section 4.4 and all of the
provisions of Article V (except for Section 5.13 thereof) of the Separation
Agreement are incorporated into and made a part of this Agreement, as if fully
set forth herein.

        Section 13.2 Conflicting Agreements. In the event of any irreconcilable
conflict between this Agreement and the Separation Agreement, other Ancillary
Agreement (including the Master Intellectual Property Agreement) or other
agreement executed in connection herewith or therewith, the provisions of such
other agreement shall prevail to the extent that they specifically address the
subject matter of the conflict.

                                       8
<PAGE>   12

        WHEREFORE, the parties have executed and delivered this Agreement
effective as of the date first set forth above.

CADENCE DESIGN SYSTEMS, INC.                  TALITY, LP

By:                                           By:  TALITY CORPORATION,
   -----------------------------
Name:                                              AS GENERAL PARTNER
    ----------------------------
Title:                                             By:
      --------------------------                      --------------------------
                                                   Name:
                                                        ------------------------
                                                   Title:
                                                         -----------------------

CADENCE HOLDINGS, INC.                        TALITY CORPORATION,

By:                                           By:
   -----------------------------                 -----------------------------
Name:                                         Name:
    ----------------------------                  ----------------------------
Title:                                        Title:
      --------------------------                    --------------------------

                                       9<PAGE>   1
                                                                   EXHIBIT 10.13

                 INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

                                  BY AND AMONG

                          CADENCE DESIGN SYSTEMS, INC.,

                             CADENCE HOLDINGS, INC.,

                                   TALITY, LP

                                       AND

                               TALITY CORPORATION

                                   DATED AS OF

                              ______________, 2000

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>
ARTICLE I  DEFINITIONS..............................................................2
        Section 1.1   Action........................................................2
        Section 1.2   Assets........................................................2
        Section 1.3   Assignment Agreement..........................................2
        Section 1.4   Cadence Business..............................................2
        Section 1.5   Cadence Facilities............................................2
        Section 1.6   Cadence Indemnitees...........................................2
        Section 1.7   Cadence Taxes.................................................2
        Section 1.8   Coverage Amount...............................................2
        Section 1.9   Environmental Actions.........................................2
        Section 1.10  Environmental Conditions......................................2
        Section 1.11  Environmental Laws............................................2
        Section 1.12  Foreign Transfer Agreement....................................3
        Section 1.13  Group Tax Return..............................................3
        Section 1.14  Hazardous Materials...........................................3
        Section 1.15  Indemnitee....................................................3
        Section 1.16  Insurance Policies............................................3
        Section 1.17  Insurance Proceeds............................................3
        Section 1.18  Insurance Transition Period...................................3
        Section 1.19  IPO Liabilities...............................................3
        Section 1.20  Liabilities...................................................3
        Section 1.21  Party  .......................................................3
        Section 1.22  Release.......................................................3
        Section 1.23  Shared Cadence Percentage.....................................3
        Section 1.24  Shared Tality Percentage......................................3
        Section 1.25  Shared Percentage.............................................3
        Section 1.26  Straddle Period...............................................4
        Section 1.27  Straddle Period Tax Return....................................4
        Section 1.28  Tality Contracts..............................................4
        Section 1.29  Tality Covered Parties........................................4
        Section 1.30  Tality Facilities.............................................4
        Section 1.31  Tality Indemnitees............................................4
        Section 1.32  Tality Liabilities............................................4
        Section 1.33  Tality Taxes..................................................4
        Section 1.34  Tax or Taxes..................................................4
        Section 1.35  Tax Returns...................................................4
        Section 1.36  Termination Date..............................................4
        Section 1.37  Third Party Claim.............................................4

ARTICLE II  MUTUAL RELEASES; INDEMNIFICATION........................................4
        Section 2.1   Release of Pre-Closing Claims.................................4
        Section 2.2   Indemnification by Tality.....................................6
</TABLE>

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                                TABLE OF CONTENTS
                                  (Continued)
<TABLE>
<CAPTION>
                                                                                   PAGE
<S>                                                                                <C>
        Section 2.3   Indemnification by Cadence....................................6
        Section 2.4   Indemnification With Respect to Environmental Actions and
                      Conditions....................................................7
        Section 2.5   Reductions for Insurance Proceeds and Other Recoveries........8
        Section 2.6   Procedures for Defense, Settlement and Indemnification of
                      Third Party Claims............................................8
        Section 2.7   Additional Matters............................................9
        Section 2.8   Survival of Indemnities......................................10

ARTICLE III  INSURANCE MATTERS.....................................................11
        Section 3.1   Tality Insurance Coverage During the Transition Period.......11
        Section 3.2   Cooperation and Agreement Not to Release Carriers............11
        Section 3.3   Tality Insurance Coverage After the Insurance Transition
                      Period.......................................................12
        Section 3.4   Responsibilities for Deductibles and/or Self-insured
                      Obligations..................................................12
        Section 3.5   Procedures With Respect to Insured Tality Liabilities........12
        Section 3.6   Insufficient Limits of Liability for Architect Liabilities
                      and Tality Liabilities.......................................13
        Section 3.7   Cooperation..................................................13
        Section 3.8   No Assignment or Waiver......................................13
        Section 3.9   No Liability.................................................14
        Section 3.10  Additional or Alternate Insurance............................14
        Section 3.11  Further Agreements...........................................14
        Section 3.12  Matters Governed by Employee Matters Agreement...............14

ARTICLE IV  TAX MATTERS............................................................14
        Section 4.1   Liability for Taxes..........................................14
        Section 4.2   Tax Returns..................................................15
        Section 4.3   Tax Refunds..................................................15
        Section 4.4   Tax Contest Provisions.......................................16
        Section 4.5   Tax Information and Cooperation..............................16
        Section 4.6   Redeterminations of Tax Liability............................17
        Section 4.7   Status of Tality Group Member as Member of One or More Tax
                      Groups.......................................................17

ARTICLE V  MISCELLANEOUS...........................................................18
        Section 5.1   Incorporation by Reference...................................18
        Section 5.2   Conflicting Agreements.......................................18
</TABLE>

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<PAGE>   4

                 INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

        THIS INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT (this "Agreement")
is entered into and effective as of _________, 2000 by and among Cadence Design
Systems, Inc., a Delaware corporation ("Cadence"), Cadence Holdings, Inc., a
Delaware corporation ("Holdings"), Tality, LP, a Delaware limited partnership
(the "Partnership"), and Tality Corporation, a Delaware corporation ("Tality").
Capitalized terms used herein and not otherwise defined elsewhere herein shall
have the meanings ascribed to them in Article I or in the Separation Agreement
(defined below).

                                    RECITALS

        WHEREAS, Holdings currently owns approximately 98% of the issued and
outstanding shares of the capital stock of Tality;

        WHEREAS, Tality is the sole general partner of, and owns both a general
and limited partnership interest in, the Partnership;

        WHEREAS, each of the Boards of Directors of Cadence, Tality and Holdings
determined that it would be appropriate and desirable for Cadence to transfer
(or cause to be transferred) to the Partnership, on behalf of Holdings, and for
the Partnership to receive and assume, directly or indirectly, as a contribution
from Holdings, certain assets and liabilities of Cadence associated with the
Tality Business;

        WHEREAS, Cadence, Tality and Holdings are parties to that certain Master
Separation Agreement, dated as of July 14, 2000, as amended or restated (the
"Separation Agreement"), pursuant to which Cadence, Tality, Holdings and the
Partnership have agreed, subject to certain conditions, to the legal separation
of the Tality Business from Cadence's other businesses and to have the
Partnership and its Subsidiaries own and operate the entire Tality Business; and

        WHEREAS, all conditions to the Separation have been satisfied or waived,
and Cadence, Holdings, the Partnership and Tality desire to set forth certain
agreements regarding indemnification and insurance.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                       1
<PAGE>   5

                                    ARTICLE I

                                   DEFINITIONS

        For purposes of this Agreement, the following capitalized terms shall
have the meanings assigned to them below.

        Section 1.1 "Action" has the meaning set forth in the Assignment
Agreement.

        Section 1.2 "Assets" has the meaning set forth in the Assignment
Agreement.

        Section 1.3 "Assignment Agreement" means that certain General Assignment
and Assumption Agreement entered into by and among Cadence, Holdings, Tality and
the Partnership as of the date hereof.

        Section 1.4 "Cadence Business" means any business of Cadence other than
the Tality Business.

        Section 1.5 "Cadence Facilities" means all of the real property and
improvements thereon owned or occupied at any time by any member of the Cadence
Group, for purposes of conducting the Cadence Business, excluding the Tality
Facilities.

        Section 1.6 "Cadence Indemnitees" means Cadence, each member of the
Cadence Group and each of their respective directors, officers, employees,
agents and representatives.

        Section 1.7 "Cadence Taxes" has the meaning set forth on Schedule 4.1.

        Section 1.8 "Coverage Amount" has the meaning set forth in Section
3.6(a).

        Section 1.9 "Environmental Actions" means any notice, claim, act, cause
of action, order, decree or investigation by any Person (including any
Governmental Authority) alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, damage to flora or fauna caused by Environmental
Conditions, real property damages, personal injuries or penalties) arising out
of, based on or resulting from the Release of or exposure of any individual to
any Hazardous Materials.

        Section 1.10 "Environmental Conditions" means the presence in the
environment, including the soil, groundwater, surface water or ambient air, of
any Hazardous Material at a level which exceeds any applicable standard or
threshold under any Environmental Law or otherwise requires investigation or
remediation (including investigation, study, health or risk assessment,
monitoring, removal, treatment or transport) under any applicable Environmental
Laws.

        Section 1.11 "Environmental Laws" means all laws and regulations of any
Governmental Authority with jurisdiction that relate to the protection of the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) including laws and regulations relating to the Release of
Hazardous Materials, or otherwise relating to the

                                       2
<PAGE>   6

treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.

        Section 1.12 "Foreign Transfer Agreement" has the meaning set forth in
the Assignment Agreement.

        Section 1.13 "Group Tax Return" means any Tax Return of a Tax Filing
Group (as defined in Section 4.7).

        Section 1.14 "Hazardous Materials" means chemicals, pollutants,
contaminants, wastes, toxic substances, radioactive and biological materials,
hazardous substances, petroleum and petroleum products or any fraction thereof.

        Section 1.15 "Indemnitee" has the meaning set forth in Section 2.5.

        Section 1.16 "Insurance Policies" has the meaning set forth in the
Assignment Agreement.

        Section 1.17 "Insurance Proceeds" has the meaning set forth in the
Assignment Agreement.

        Section 1.18 "Insurance Transition Period" has the meaning set forth in
Section 3.1(a).

        Section 1.19 "IPO Liabilities" means any Liabilities relating to,
arising out of or resulting from any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, with respect to all information contained in the Registration
Statement or any preliminary, final or supplemental prospectus forming a part of
the Registration Statement.

        Section 1.20 "Liabilities" has the meaning set forth in the Assignment
Agreement.

        Section 1.21 "Party" means Cadence or Holdings, on the one hand, and
Tality or the Partnership, on the other, and members of the Cadence Group or the
Tality Group, as applicable.

        Section 1.22 "Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata.

        Section 1.23 "Shared Cadence Percentage" means eighty percent (80%).

        Section 1.24 "Shared Tality Percentage" means twenty percent (20%).

        Section 1.25 "Shared Percentage" means the Shared Tality Percentage or
the Shared Cadence Percentage, as the case may be.

                                       3
<PAGE>   7

        Section 1.26 "Straddle Period" means any Tax period that includes but
does not end on the Separation Date.

        Section 1.27 "Straddle Period Tax Return" means any Tax Return with
respect to a Straddle Period.

        Section 1.28 "Tality Contracts" has the meaning set forth in the
Assignment Agreement.

        Section 1.29 "Tality Covered Parties" has the meaning set forth in
Section 3.1(a).

        Section 1.30 "Tality Facilities" means all of those facilities to be
transferred to Tality on the Separation Date as set forth on Schedule 1 to the
Real Estate Matters Agreement.

        Section 1.31 "Tality Indemnitees" means Tality, each member of the
Tality Group and each of their respective directors, officers, employees, agents
and representatives.

        Section 1.32 "Tality Liabilities" has the meaning set forth in the
Assignment Agreement.

        Section 1.33 "Tality Taxes" has the meaning set forth on Schedule 4.1.

        Section 1.34 "Tax" or "Taxes" means any foreign or U.S. federal, state,
local or municipal income, alternative or add-on minimum, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, value added
or any other tax, custom, tariff, impost, levy, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount related thereto, imposed by any
governmental authority or any subdivision, agency, commission or authority
thereof, or any quasi-governmental or private body having jurisdiction over the
assessment, determination, collection or other imposition of the foregoing.

        Section 1.35 "Tax Returns" means returns, reports, and information
statements with respect to Taxes required to be filed with the Internal Revenue
Service or any other federal, foreign, state, or provincial taxing authority,
including, without limitation, consolidated, combined and unitary tax returns.

        Section 1.36 "Termination Date" has the meaning set forth in Section
3.1(a).

        Section 1.37 "Third Party Claim" has the meaning set forth in Section
2.6(a).

                                   ARTICLE II

                        MUTUAL RELEASES; INDEMNIFICATION

        Section 2.1 Release of Pre-Separation Claims.

                                       4
<PAGE>   8

            (a) Tality Release. Except as provided in Section 2.1(d) and
Schedule 2.1, effective as of the date hereof, Tality does hereby, for itself
and as agent for each member of the Tality Group (including as general partner
of the Partnership), remise, release and forever discharge each and all of the
Cadence Indemnitees from any and all Liabilities whatsoever, whether at law or
in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the date hereof, including in connection with the
transactions and all other activities to implement any aspect of the Separation
and the IPO.

            (b) Cadence Release. Except as provided in Section 2.1(d) and
Schedule 2.1, effective as of the date hereof, Cadence does hereby, for itself
and as agent for each member of the Cadence Group, remise, release and forever
discharge each and all of the Tality Indemnitees from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the date hereof, including in
connection with the transactions and all other activities to implement any
aspect of the Separation and the IPO.

            (c) Waiver of Section 1542. Each party waives the benefits of
Section 1542 of the Civil Code of the State of California, and, to the extent
applicable, any comparable statute or other law of any other jurisdiction to the
extent such section or other laws may apply to this Agreement. Civil Code
Section 1542 provides:

                      "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                      CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                      THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
                      MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                      DEBTOR."

            (d) No Impairment. Nothing contained in Section 2.1(a) or (b) shall
impair any right of any Person to enforce the Separation Agreement, any Foreign
Transfer Agreement or any Ancillary Agreement (including this Agreement), in
each case in accordance with its terms.

            (e) No Actions as to Released Claims. Tality agrees, for itself and
as agent for each member of the Tality Group (including as a general partner of
the Partnership), not to make any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against Cadence or any other member of the Cadence Group, or
any other Person released pursuant to Section 2.1(a), with respect to any
Liabilities released pursuant to Section 2.1(a). Cadence agrees, for itself and
as agent for each member of the Cadence Group, not to make any claim or demand,
or commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Tality or any member of the Tality
Group, or any other Person released pursuant to Section 2.1(b), with respect to
any Liabilities released pursuant to Section 2.1(b).

                                       5
<PAGE>   9

            (f) Further Instruments. At any time, promptly upon the request of
the other party, each party hereto shall cause each member of, in the case of
Cadence, the Cadence Group, and in the case of Tality, the Tality Group to
execute and deliver releases reflecting the provisions hereof.

        Section 2.2 Indemnification by Tality. Except as otherwise provided in
this Agreement, Tality shall, for itself and as agent for each other member of
the Tality Group (including as general partner of the Partnership), indemnify,
defend (or, where applicable, pay the defense costs for) and hold harmless each
and all of the Cadence Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon one or more of the Cadence Indemnitees, or
which are imposed upon one or more of the Cadence Indemnitees, and that relate
to, arise out of or result from any of the following (without duplication):

               (i)    the Tality Business, any Tality Liability or any Tality
                      Contract;

               (ii)   any breach by Tality or any other member of the Tality
                      Group of the Separation Agreement or any of the Ancillary
                      Agreements (including this Agreement);

               (iii)  any IPO Liabilities;

               (iv)   the litigation matters set forth on Schedule 2.2(iv);

               (v)    any decrease in the purchase price pursuant to Section
                      2.2(b) of the Asset Purchase Agreement by and among
                      Cadence Design Systems, Inc., Cadence Design Systems
                      Limited, and Symbionics Group Limited dated as of
                      ________, 2000; and

               (vi)   any decrease in the purchase price pursuant to Section
                      2.2(b) of the Asset Purchase Agreement by and among
                      Cadence Design Systems (Canada) Limited and Tality
                      Canada Corporation dated as of _______, 2000.

        If any member of the Tality Group makes a payment to any of the Cadence
Indemnitees hereunder, such Cadence Indemnitee subsequently diminishes the
Liability on account of which such payment was made, either directly or through
a third-party recovery, Cadence shall promptly repay (or shall cause an Cadence
Indemnitee to promptly repay) such member of the Tality Group the amount by
which the payment made by such member of the Tality Group exceeds the actual
cost of the associated indemnified Liability. This Section 2.2 shall not apply
to any Liability indemnified pursuant to Section 2.4.

        Section 2.3 Indemnification by Cadence. Except as otherwise provided in
this Agreement, Cadence shall, for itself and as agent for each other member of
the Cadence Group, indemnify, defend (or, where applicable, pay the defense
costs for) and hold harmless each and all of the Tality Indemnitees from and
against any and all Liabilities that any third party seeks to impose upon one or
more of the Tality Indemnitees, or which are imposed upon one or more of the
Tality Indemnitees, and that relate to, arise out of or result from any of the
following (without duplication):

                                       6
<PAGE>   10

               (i)    the Cadence Business or any Liability of the Cadence Group
                      other than the Tality Liabilities;

               (ii)   any breach by Cadence or any other member of the Cadence
                      Group of the Separation Agreement or any of the Ancillary
                      Agreements (including this Agreement);

               (iii)  any increase in the purchase price pursuant to Section
                      2.2(b) of the Asset Purchase Agreement by and among
                      Cadence Design Systems, Inc., Cadence Design Systems
                      Limited, and Symbionics Group Limited dated as of
                      ________, 2000; and

               (iv)   any increase in the purchase price pursuant to Section
                      2.2(b) of the Asset Purchase Agreement by and among
                      Cadence Design Systems (Canada) Limited and Tality Canada
                      corporation dated as of _______, 2000.

        If any member of the Cadence Group makes a payment to any of the Tality
Indemnitees hereunder, and such Tality Indemnitee subsequently diminishes the
Liability on account of which such payment was made, either directly or through
a third-party recovery, Tality shall promptly repay (or shall cause a Tality
Indemnitee to promptly repay) such member of the Cadence Group the amount by
which the payment made by such member of the Cadence Group exceeds the actual
cost of the indemnified Liability. This Section 2.3 shall not apply to any
Liability indemnified pursuant to Section 2.4.

        Section 2.4 Indemnification With Respect to Environmental Actions and
Conditions.

            (a) Indemnification by Tality. Tality shall, for itself and as agent
for each member of the Tality Group (including as general partner of the
Partnership), indemnify, defend and hold harmless each and all of the Cadence
Indemnitees from and against any and all (i) Environmental Actions relating to,
arising out of or resulting from operations of the Tality Business or (ii)
Environmental Conditions existing on, under, about or in the vicinity of any of
the Tality Facilities, including any Release of Hazardous Materials that
migrates to any of the Tality Facilities (except to the extent that such
Environmental Conditions relate to, arise out of or result from the operations
of the Cadence Business).

            (b) Indemnification by Cadence. Cadence shall, for itself and as
agent for each other member of the Cadence Group, indemnify, defend and hold
harmless each and all of the Tality Indemnitees from and against any and all (i)
Environmental Actions relating to, arising out of or resulting from operations
of the Cadence Business or (ii) Environmental Conditions existing on, under,
about or in the vicinity of any of the Cadence Facilities, including any Release
of Hazardous Materials that migrates to any of the Cadence Facilities (except to
the extent that such Environmental Conditions relate to, arise out of or result
from the operations of the Tality Business).

            (c) Agreement Regarding Payments to Indemnitee. If an Indemnifying
Party makes any payment to or on behalf of an Indemnitee with respect to an
Environmental Action for which the Indemnifying Party is obligated to indemnify
under this Section 2.4, and the

                                       7
<PAGE>   11

Indemnitee subsequently receives any payment from a third party on account of
the same financial obligation covered by the payment made by the Indemnifying
Party for that Environmental Action or otherwise diminishes the financial
obligation, the Indemnitee shall promptly repay the Indemnifying Party the
amount by which the payment made by the Indemnifying Party, exceeds the actual
cost of the financial obligation.

        Section 2.5 Reductions for Insurance Proceeds and Other Recoveries. The
amount that any party hereto or any other member of the Cadence Group or Tality
Group, as the case may be (an "Indemnifying Party"), is or may be required to
pay to any other Person pursuant to Section 2.2, 2.3 or 2.4, as applicable (an
"Indemnitee"), shall be reduced (retroactively or prospectively) by any
Insurance Proceeds or other amounts actually recovered from third parties by or
on behalf of such Indemnitee in respect of the related loss. The existence of a
claim by an Indemnitee for monies from an insurer or against a third party in
respect of any indemnifiable loss shall not, however, delay any payment pursuant
to the indemnification provisions contained herein and otherwise determined to
be due and owing by an Indemnifying Party. Rather, the Indemnifying Party shall
make payment in full of the amount determined to be due and owing by it against
an assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the Indemnitee for Insurance Proceeds or against such third party.
Notwithstanding any other provision of this Agreement, it is the intention of
the parties hereto that no insurer or any other third party shall be (i)
entitled to a benefit it would not be entitled to receive in the absence of the
foregoing indemnification provisions or (ii) relieved of the responsibility to
pay any claims for which it is obligated. If an Indemnitee has received the
payment required by this Agreement from an Indemnifying Party in respect of any
indemnifiable loss and later receives Insurance Proceeds or other amounts in
respect of such indemnifiable loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of the Indemnifying
Party or Indemnifying Parties and shall pay to it or them, as promptly as
practicable after receipt thereof, a sum equal to the amount of such Insurance
Proceeds or other amounts received, up to the aggregate amount of any payments
received from the Indemnifying Party pursuant to this Agreement in respect of
such indemnifiable loss (or, if there is more than one Indemnifying Party, the
Indemnitee shall pay each Indemnifying Party, its proportionate share (based on
payments received from the Indemnifying Parties) of such Insurance Proceeds).

        Section 2.6 Procedures for Defense, Settlement and Indemnification of
Third Party Claims.

            (a) Notice of Claims. If an Indemnitee shall receive notice or
otherwise learn of the assertion by a Person (including any Governmental
Authority) who is not a member of the Cadence Group or the Tality Group of any
claim or of the commencement by any such Person of any Action (any such claim or
Action, a "Third Party Claim") with respect to which an Indemnifying Party may
be obligated to provide indemnification to such Indemnitee pursuant to Section
2.2, 2.3 or 2.4, or the Separation Agreement or any Ancillary Agreement
(including this Agreement), Cadence and Tality (as applicable) shall ensure that
such Indemnitee shall give such Indemnifying Party written notice thereof
promptly and in any event within 30 days after becoming aware of such Third
Party Claim. Any such notice shall describe the Third Party Claim in reasonable
detail. Notwithstanding the foregoing, the delay or failure of any Indemnitee or
other Person to give notice as provided in this Section 2.6(a) shall not relieve
the related Indemnifying Party of its obligations under this Article II, except
to the extent that such

                                       8
<PAGE>   12

Indemnifying Party is actually and substantially prejudiced by such delay or
failure to give notice.

            (b) Defense By Indemnifying Party. An Indemnifying Party shall
manage the defense of and, subject to subsection (e) below, may settle or
compromise any Third Party Claim (except Third Party Claims related to the
litigation matters set forth on Schedule 2.2(iv), the defense of which shall be
managed by Cadence and, subject to subsection (e) below, Cadence may settle or
comprise such Third Party Claims). Within 30 days after the receipt of notice
from an Indemnitee in accordance with Section 2.6(a) (or sooner, if the nature
of such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee that the Indemnifying Party is assuming responsibility for managing
the defense of such Third Party Claim. The Indemnifying Party shall be solely
responsible for the fees, costs and expenses of the defense. The Indemnified
Party shall cooperate with and provide reasonable assistance to the Indemnifying
Party, where requested by the Indemnifying Party, in respect of such defense.

            (c) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it shall assume responsibility as provided in Section
2.6(b), such Indemnitee may manage the defense of such Third Party Claim;
provided, however, that the Indemnifying Party shall reimburse all such
reasonable fees, costs and expenses, including attorney's and other professional
fees and expenses, in the event it is ultimately determined that the
Indemnifying Party is obligated to indemnify the Indemnitee with respect to such
Third Party Claim.

            (d) No Settlement By Indemnitee Without Consent. Unless the
Indemnifying Party has failed to manage the defense of the Third Party Claim in
accordance with the terms of this Agreement, no Indemnitee may settle or
compromise any Third Party Claim without the consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed, it being understood
that it is not unreasonable to withhold consent where a full release in favor of
the Indemnifying Party is not obtained.

            (e) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding any provision of this Section 2.6, no Party ( shall consent to
entry of any judgment or enter into any settlement of a Third Party Claim
without the consent of the other Party (such consent not to be unreasonably
withheld or delayed) if the effect of such judgment or settlement is to (A)
permit any injunction, declaratory judgment, other order or other nonmonetary
relief to be entered, directly or indirectly, against the other Party; (B)
affect the other Party in a material fashion due to the allocation of
Liabilities and related indemnities set forth in the Separation Agreement, this
Agreement or any other Ancillary Agreement; (C) cause the other Party to incur
any obligations of performance to which it does not consent in writing; or (D)
cause the other Party to convey or otherwise grant licenses to its intellectual
property or royalties derived therefrom. It is expressly understood among the
Parties that it is not unreasonable for a Party to withhold its consent where a
full release in favor of the Party whose consent is sought has not been
obtained.

        Section 2.7 Additional Matters.

                                       9
<PAGE>   13

            (a) Cooperation in Defense and Settlement. With respect to any Third
Party Claim that implicates one or more members of the Tality Group (including
as general partner or the Partnership) and one or more members of the Cadence
Group in a material fashion due to the allocation of Liabilities,
responsibilities for management of defense and related indemnities set forth in
the Separation Agreement, this Agreement or any of the other Ancillary
Agreements, or where the other Party, on reasonable cause in reflection of its
own interest, seeks to participate actively in the defense of a Third Party
Claim for which it is the Indemnitee and the other Party is the Indemnifying
Party, the Parties agree to cooperate fully and maintain a joint defense (in a
manner that shall preserve the attorney-client privilege with respect thereto)
so as to minimize such Liabilities and defense costs associated therewith.
Except as the Parties otherwise may mutually agree, where both Parties hereto
participate in the defense of a Third Party Claim, the responsibility for
managing the defense shall be as allocated by Section 2.6(b) and (c) of this
Agreement. The Party that is not responsible for managing the defense of such
Third Party Claims shall, upon its reasonable request, be consulted with respect
to significant matters relating thereto and may, if it deems necessary or
helpful, and at its own expense, assume an active role in the defense of such
claims and associate separate counsel for such purpose, subject to a continuing
duty to coordinate reasonably with the Party managing the defense.

            (b) Substitution. In the event of an Action involving potential
indemnification obligations pursuant to this Agreement in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article II shall not be altered.

            (c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.

        Section 2.8 Survival of Indemnities. Subject to Section 1.3, the rights
and obligations of the members of the Cadence Group and Tality Group under this
Article II shall survive the sale or other transfer by any of the members of the
Cadence Group or the Tality Group of any Assets or businesses or the assignment
by it of any Liabilities or the sale by any member of the Cadence Group or the
Tality Group of the capital stock or other equity interests of any Subsidiary to
any Person.

                                       10
<PAGE>   14

                                   ARTICLE III

                                INSURANCE MATTERS

        Section 3.1 Tality Insurance Coverage During the Transition Period.

            (a) Maintain Comparable Insurance. Throughout the period (the
"Insurance Transition Period") beginning on the Separation Date and ending on
the date that is the earlier of (A) one (1) year after the Separation Date (or
upon the mutual consent of Cadence and the Partnership) and (B) the date on
which coverage is canceled following the giving of notice as provided in this
Section 3.1(a) (the "Termination Date"), Cadence shall, subject to insurance
market conditions and other factors beyond its control, maintain policies of
insurance, including for the benefit of the Tality Group (inclusive of Tality or
any of its Subsidiaries, directors, officers, employees or other covered parties
(collectively, the "Tality Covered Parties")) which are comparable to those
maintained for such purposes by Cadence immediately prior to the Separation
Date; provided, however, that (i) if Cadence determines that, due to
circumstances beyond its authority or control (A) the amount or scope of such
coverage shall be reduced by actions of insurance carrier(s) to a level that is
eighty percent (80%) or less than the level of coverage in existence immediately
prior to the Insurance Transition Period or (B) insurance carrier(s) come to
require that the retention or deductible level applicable to such coverage, if
any, shall be increased to a level that is twenty percent (20%) or more than the
levels in existence immediately prior to the Insurance Transition Period,
Cadence shall give the Partnership notice of such determination as promptly as
practicable (a "Coverage Determination"), and (ii) Tality and the Partnership
shall be solely responsible for the maintenance of director and officer
liability insurance in relation to the directors and officers of Tality. Upon
notice of a Coverage Determination, and subject to any time limitation placed
upon Cadence by an insurance carrier whose actions have prompted the giving of
such notice, the Partnership shall be entitled to no less than sixty (60) days
to evaluate its options regarding continuance of coverage hereunder. Cadence
shall cooperate to assist in such evaluation, and the Partnership, in its sole
discretion, may instruct Cadence to cause to be cancelled the Partnership's
interest in all or any portion of such coverage as of any day within such 60 day
period. Should the Partnership not respond to such notice, Cadence shall
maintain such coverage for the benefit of the Partnership as it reasonably deems
appropriate, provided that it may accept reduced coverage in order to avoid a
material increase in policy expense. Except as so provided, in no case may
Cadence, without the express consent of the Partnership, cancel or cause to be
canceled, or reduce the amount or scope of, insurance coverage during the
Insurance Transition Period.

            (b) Reimbursement for Premiums. The Partnership shall promptly pay
or reimburse Cadence, as the case may be, for premium expenses, and Tality
Covered Parties shall promptly pay or reimburse Cadence for any costs and
expenses which Cadence may incur in connection with the insurance coverages
maintained pursuant to this Section 3.1, including to any subsequent premium
adjustments. All payments and reimbursements by the Partnership and Tality
Covered Parties to Cadence shall be made within thirty (30) days after the
Partnership's receipt of an invoice from Cadence.

        Section 3.2 Cooperation and Agreement Not to Release Carriers. Each of
Cadence and the Partnership shall share such information as is reasonably
necessary in order to permit the

                                       11
<PAGE>   15

other to manage and conduct its insurance matters in an orderly fashion. Each of
Cadence and the Partnership, at the request of the other, shall cooperate with
and use commercially reasonable efforts to assist the other in recoveries for
claims made under any insurance policy for the benefit of any insured party, and
neither Cadence nor the Partnership, nor any of member of the Cadence Group or
the Tality Group, shall take any action which would intentionally jeopardize or
otherwise interfere with either party's ability to collect any proceeds payable
pursuant to any insurance policy. Except as otherwise contemplated by the
Separation Agreement, this Agreement or any other Ancillary Agreement, after the
Separation Date, neither Cadence nor the Partnership shall (and shall ensure
that no member of the Cadence Group or the Tality Group, respectively, shall),
without the consent of the other, provide any insurance carrier with a release,
or amend, modify or waive any rights under any such policy or agreement, if such
release, amendment, modification or waiver would adversely affect any rights or
potential rights of the other party or any member of, in the case the other
party is Cadence, the Cadence Group, and in the case the other party is the
Partnership, the Tality Group thereunder. However, nothing in this Section 3.2
shall (A) preclude any member of either the Cadence Group or the Tality Group
from presenting any claim or from exhausting any policy limit; (B) require any
member of either the Cadence Group or the Tality Group to pay any premium or
other amount or to incur any Liability; or (C) require any member of either the
Cadence Group or the Tality Group to renew, extend or continue any policy in
force.

        Section 3.3 Tality Insurance Coverage After the Insurance Transition
Period. From and after the Termination Date, the Partnership shall be
responsible for obtaining and maintaining, at its sole expense, insurance
programs for its risk of loss and such insurance arrangements shall be separate
and apart from Cadence's insurance programs. Notwithstanding the foregoing,
Cadence, upon the request of the Partnership, shall cooperate with and use
commercially reasonable efforts to assist the Partnership in the transition to
its own separate insurance programs from and after the Termination Date, and
shall provide the Partnership with any information that is in the possession of
Cadence and is reasonably available and necessary to either obtain insurance
coverages for the Partnership or to assist the Partnership in preventing
unintended self-insurance, in whatever form.

        Section 3.4 Responsibilities for Deductibles and/or Self-insured
Obligations. The Partnership shall reimburse Cadence for all amounts necessary
to exhaust or otherwise satisfy all applicable self-insured retentions, amounts
for fronted policies, deductibles and retrospective premium adjustments and
similar amounts not covered by Insurance Policies in connection with Tality
Liabilities and Insured Tality Liabilities. Any amounts to be reimbursed by the
Partnership shall be paid within ten (10) days after the Partnership's receipt
of notice of the amount due to Cadence.

        Section 3.5 Procedures With Respect to Insured Tality Liabilities.

            (a) Reimbursement. The Partnership shall promptly reimburse, within
ten (10) days after receiving notice thereof, Cadence for all reasonable amounts
incurred by Cadence to pursue insurance recoveries from Insurance Policies for
Insured Tality Liabilities.

            (b) Management of Claims. The defense of claims, suits or actions
giving rise to potential or actual Insured Tality Liabilities shall be managed
(in conjunction with Cadence's

                                       12
<PAGE>   16

insurers, as appropriate) by the party that would have had responsibility for
managing such claims, suits or actions had such Insured Tality Liabilities been
Tality Liabilities, provided, however, that (i) if such party fails to assume
responsibility for managing the claim, suit or action, the other party may
assume this responsibility, and may act to seek an extension of time, or take
other unilateral, commercially reasonable actions, where necessary to protect
the interest of the insured party; provided, further, that the party originally
responsible shall reimburse all such reasonable fees, costs and expenses,
including attorney's and other professional fees, so incurred in the management
of the claim, suit or action; and (ii) with respect to such claims, suits or
actions, in which the party not responsible for management determines, on
reasonable cause in reflection of its own interest, that it wishes to
participate actively in the claim, suit or action, the parties agree to
cooperate fully and maintain a joint defense (in a manner that shall preserve
the attorney-client privilege with respect thereto), and the party that is not
responsible for managing actions shall, upon its reasonable request, be
consulted with respect to significant matters relating thereto and may, if it
deems necessary or helpful, and at its own expense, assume an active role in the
respect to such claims, suits or actions, and associate separate counsel for
such purpose, subject to a continuing duty to coordinate reasonably with the
party managing the claim, suit or action.

        Section 3.6 Insufficient Limits of Liability for Cadence Liabilities and
Tality Liabilities. If there shall be insufficient limits of liability available
under Cadence's Insurance Policies in effect prior to the Termination Date to
cover the Liabilities of Cadence and/or the Partnership that would otherwise be
covered by such Insurance Policies, then to the extent that other insurance is
not available to Cadence and/or Tality for such Liabilities an adjustment shall
be made in accordance with the following procedures:

            (a) Each Party shall be allocated an amount equal to its Shared
Percentage of the lesser of (A) the available limits of liability available
under Cadence's Insurance Policies in effect prior to the Termination Date net
of uncollectible amounts attributable to insurer insolvencies, and (B) the
proceeds received from Cadence's Insurance Policies if the Liabilities are the
subject of disputed coverage claims and, following consultation with each other,
Cadence and/or the Partnership agree to accept less than full policy limits from
Cadence's and the Partnership's insurers (the "Coverage Amount").

            (b) A Party that receives more than its share of the Coverage Amount
(the "Overallocated Party") agrees to reimburse the other Party (the
"Underallocated Party") to the extent that the Liabilities of the Underallocated
Party that would have been covered under such Insurance Policies is less than
the Underallocated Party's share of the Coverage Amount.

            (c) This Section 3.6(a) shall terminate ten (10) years following the
Termination Date.

        Section 3.7 Cooperation. Cadence and the Partnership shall cooperate
with each other in all respects, and they shall execute any additional documents
which are reasonably necessary, to effectuate the provisions of this Article
III.

        Section 3.8 No Assignment or Waiver. This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be

                                       13
<PAGE>   17

construed to waive any right or remedy of any member of the Cadence Group in
respect of any Insurance Policy or any other contract or policy of insurance.

        Section 3.9 No Liability. Tality and the Partnership do hereby, for
themselves, as agents for each other member of the Tality Group, agree that no
member of the Cadence Group or any Cadence Indemnitee shall have any Liability
whatsoever to any member of the Tality Group as a result of the Insurance
Policies and insurance practices of Cadence and its Subsidiaries as in effect at
any time prior to the Termination Date, including as a result of the level or
scope of any such insurance, the creditworthiness of any insurance carrier, the
terms and conditions of any policy, the adequacy or timeliness of any notice to
any insurance carrier with respect to any claim or potential claim or otherwise.

        Section 3.10 Additional or Alternate Insurance. Notwithstanding any
provision of this Agreement, during the Insurance Transition Period Cadence and
the Partnership shall work together to evaluate insurance options and secure
additional or alternate insurance for the Partnership and/or Cadence if desired
and cost effective. Nothing in this Agreement shall be deemed to restrict any
member of the Tality Group from acquiring at its own expense any other insurance
policy in respect of any Liabilities or covering any period; provided, however,
that, if the Partnership elects to acquire other insurance, it must promptly
notify Cadence of its intention to do so and, within thirty (30) days of the
policy date of such new insurance, it must furnish Cadence with a copy of the
policy binder and, when available, a copy of the certificate of insurance, and
such other information concerning the policy as Cadence may reasonably request.

        Section 3.11 Further Agreements. The Parties acknowledge that they
intend to allocate financial obligations without violating any Applicable Law
regarding insurance, self-insurance or other financial responsibility. If it is
determined that any action undertaken pursuant to the Separation Agreement, this
Agreement or any other Ancillary Agreement is violative of any insurance,
self-insurance or related financial responsibility law or regulation, the
parties agree to work together to do whatever is necessary to comply with such
law or regulation while trying to accomplish, as much as possible, the
allocation of financial obligations as intended in the Separation Agreement,
this Agreement and any other Ancillary Agreement.

        Section 3.12 Matters Governed by Employee Matters Agreement. This
Article III shall not apply to any insurance policies that are the subject of
the Employee Matters Agreement.

                                   ARTICLE IV

                                   TAX MATTERS

        Section 4.1 Liability for Taxes.

            (a) Cadence Taxes. Cadence shall be liable for, and shall indemnify,
defend and hold harmless each member of the Tality Group from and against (i)
all Cadence Taxes, and (ii) all losses, liabilities, damages, and reasonable
expenses incurred or sustained by the Tality Group by reason of or in connection
with Cadence Taxes.

            (b) Tality Taxes. Each member of the Tality Group shall be jointly
and severally liable for, and shall indemnify, defend and hold harmless the
Cadence Group from and

                                       14
<PAGE>   18

against (i) all Tality Taxes, and (ii) all losses, liabilities, damages, and
reasonable expenses incurred or sustained by any member of the Cadence Group by
reason of or in connection with Tality Taxes; provided, however, that it is
understood that the Cadence Group shall be liable for any income Taxes imposed
with respect to its allocable share of income of the Partnership.

        Section 4.2 Tax Returns.

            (a) Tax Returns to be Prepared and Filed by Cadence. Cadence will be
responsible for and will cause to be prepared and duly filed (i) all Tax Returns
of the Tality Group (other than Group Tax Returns) to the extent that any member
of the Cadence Group may be liable for the payment of any Tax due with respect
to any such Tax Return, except for any Tax Return pertaining to degrouping under
the applicable provisions of UK law, (ii) all Straddle Period Tax Returns, and
(iii) all Group Tax Returns. All such Tax Returns shall be prepared in a manner
consistent with prior periods to the extent such Tax Returns have been filed in
prior periods. All such Tax Returns that require the payment of material amounts
by the Tality Group shall be submitted to Tality no later than ten days prior to
the due date and filing thereof, and Tality shall have the right to review and
comment thereon (without such submission review or lack thereof affecting the
indemnification obligations of Cadence under this Agreement). Such Tax Returns,
as modified by reasonable comments of Tality (if applicable), shall be filed
with applicable taxing authorities. Cadence shall pay or cause to be paid any
and all Cadence Taxes that are due with respect to such Tax Returns, and the
Tality Group shall pay any Tality Taxes that are due with respect to such Tax
Returns.

            (b) Tax Returns to be Prepared and Filed by the Tality Group. Except
as provided in Section 4.2(a), the Tality Group shall be responsible for and
will cause to be prepared and duly filed all Tax Returns of or with respect to
any member of the Tality Group to the extent that they may be liable for the
payment of any Tax due with respect to any such Tax Return and all Tax Returns
(including information returns) that are required to be filed by the
Partnership. The Tality Group shall pay all Tality Taxes that are due with
respect to such Tax Returns.

            (c) Amended Tax Returns. Without the prior written consent of
Cadence, no member of the Tality Group shall (i) make any election relating to
Taxes or (ii) file any amended Tax Returns or propose or agree to any adjustment
of any item with the Internal Revenue Service or any other taxing authority that
would have the effect of increasing the liability of any member of the Cadence
Group for any Cadence Taxes. Without the prior written consent of Tality, no
member of the Cadence Group shall (i) make any election relating to Taxes or
(ii) file any amended Tax Returns or propose or agree to any adjustment of any
item with the Internal Revenue Service or any other taxing authority that would
have the effect of increasing the liability for any member of the Tality Group
for any Tality Taxes, except to the extent such election is reflected in a Tax
Return filed by Cadence in accordance with Section 4.2(a).

        Section 4.3 Tax Refunds.

            (a) Subject to Section 4.3(b), Cadence and Tality shall be entitled
to any refund of any Cadence Taxes and Tality Taxes, respectively, including
interest received thereon. If either Cadence or Tality elects to make a claim
for refund, the other party shall cooperate fully

                                       15
<PAGE>   19

in connection therewith. Notwithstanding the foregoing, Cadence and Tality shall
not be entitled to make any claim for refund of Cadence Taxes and Tality Taxes,
respectively, if such refund claim would materially adversely affect the Tax
liability of the other party without the prior written consent of the other
party; provided, however, that such consent shall not be unreasonably withheld
or delayed and such consent shall not be necessary to the extent that the party
making the refund claim has indemnified the other party against the effects of
any such claim for refund. The party making a refund claim shall reimburse the
other party for reasonable out-of-pocket expenses incurred in providing such
cooperation.

            (b) If an indemnified party receives a refund or credit of Taxes for
which it has been indemnified pursuant to this Article IV, it shall pay to the
indemnifying party the amount of such refund or credit (including any interest
received thereon), less any Taxes incurred as a result of the receipt thereof,
after taking into account the Tax benefit of the payment).

        Section 4.4 Tax Contest Provisions.

            (a) Whenever any member of the Tality Group receives a notice of any
pending or threatened Tax audit or assessment with respect to Cadence Taxes, it
shall promptly inform Cadence in writing. Whenever any member of the Cadence
Group receives a notice of any pending or threatened Tax audit or assessment
with respect to any Tality Taxes, it shall promptly inform Tality in writing.

            (b) Cadence shall have the right to control, at its own cost, any
proceedings relating to any pending or threatened Tax audit or assessment for
any Cadence Taxes, or any Taxes with respect to a Straddle Period or a Group Tax
Return, and to determine whether and when to settle any such claim, assessment
or dispute. Notwithstanding the foregoing, Tality shall have the right to
participate in the defense of any claim for Taxes with respect to a Straddle
Period or Group Tax Return for which it may have material liability hereunder,
and Cadence shall not be entitled to settle, either administratively or after
the commencement of litigation, any claim for Taxes which would materially
adversely affect the liability of the Tality Group for any Tality Taxes without
the prior written consent of Tality, provided that such consent shall not be
unreasonably withheld or delayed.

            (c) Except as provided in Section 4.4(b), Tality shall have the
right to control, at its cost, any proceedings relating to any pending or
threatened Tax audit or assessment relating to any Tality Taxes and to determine
whether and when to settle any such claim, assessment or dispute.
Notwithstanding the foregoing, Tality shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
which would materially adversely affect the liability of Cadence for any Cadence
Taxes without the prior written consent of Cadence, provided that such consent
shall not be unreasonably withheld or delayed.

        Section 4.5 Tax Information and Cooperation.

            (a) After the Separation, the Cadence Group and the Tality Group
will make available to the other, as reasonably requested, all information,
records or documents relating to

                                       16
<PAGE>   20

liabilities for Tality Taxes and Cadence Taxes, respectively, and shall not
dispose of such information, records or documents prior to six (6) months after
the expiration of any applicable statute of limitations (including extensions
thereof) with respect to the assessment of such Taxes, without first offering
such materials to the other party.

        (b) Each of Cadence and Tality agrees to cooperate fully and to cause
their respective affiliates to cooperate fully and in a timely manner in
connection with the preparation of Tax Returns, preparation of Tax refund
claims, and the conduct of any Tax contest.

        Section 4.6. Redeterminations of Tax Liability.

        If there is a redetermination of Cadence Taxes or Tality Taxes pursuant
to a Final Determination (as defined below), the payments required to be made by
Cadence and Tality pursuant to Sections 4.1 and 4.2 shall be recomputed by
substituting the amount of the Tax liability as so redetermined. Any additional
payment, or any refund, shall be paid no later than three (3) Business Days
before the date that such payment is required to be made to, or the refund is
received from, the relevant Tax authority by reason of such redetermination.
"Final Determination" shall mean (i) a decision, judgment, decree or other order
by any court of competent jurisdiction, which has become final and is either no
longer subject to appeal or for which a determination not to appeal has been
made; (ii) a closing agreement made under Section 7121 of the Code or any
comparable foreign, state, local, municipal or other Taxing statute; (iii) a
final disposition by any Tax authority of a claim for refund; or (iv) any other
written agreement or other state of facts that results in a redetermination of
Taxes for any tax period becoming final and that prohibits such Tax authority
from seeking any further legal or administrative remedies with respect to such
Taxes.

        Section 4.7 Status of Tality Group Member as Member of One or More Tax
Groups.

            (a) Cadence and Tality shall mutually determine whether and for what
periods any member of the Cadence Group, on the one hand, and any member of the
Tality Group, on the other hand, are members of the same "affiliated group" (as
defined in Section 1504 of the Internal Revenue Code of 1986, as amended) or the
same combined, consolidated, unitary or other similar group for state, local or
foreign tax purposes (in each case, a "Tax Filing Group").

            (b) Any dispute regarding the status of a Person as a member of a
Tax Filing Group shall be resolved as follows: With respect to a Tax period all
or any portion of which is included in the financial statements of Cadence and
Tality that are or will be audited by the same firm of certified public
accountants, then a dispute with respect to such period shall be resolved by
that firm. In any other case, the dispute shall be resolved by a firm of
certified public accountants mutually acceptable to Cadence and Tality, and if
the parties are unable to agree on a firm to resolve such dispute, the firm
shall be selected by lot from among four nationally recognized firms of
certified public accountants, two of whom are selected by Cadence and two of
whom are selected by Tality.

            (c) If any member of the Tality Group is included in any Group Tax
Return for any Straddle Period and the Cadence Taxes for the post-Separation
portion of the Straddle Period pertaining to such Group Tax Return are lower
than they would have been in the absence

                                       17
<PAGE>   21

of such inclusion, the Cadence Group shall pay to the Tality Group on the due
date of such return an amount equal to such reduction in Cadence Taxes. For
purposes of the preceding sentence, Cadence Taxes for the post-Separation
portion of the Straddle Period shall be calculated by means of a closing of the
books and records as of the close of the Separation Date, as if such taxable
period ended as of the close of the Separation Date.

            (d) If any member of the Tality Group is included in any Group Tax
Return for any taxable year that begins after the Separation Date and the
cumulative Cadence Taxes pertaining to such Group Tax Return for all taxable
periods following the Separation Date (including the post-Separation portion of
any Straddle Period) are lower than they would have been for such periods in the
absence of such inclusion, the Cadence Group shall pay to the Tality Group on
the due date of such return an amount equal to such reduction in Cadence Taxes,
less amounts previously paid by Cadence under this Paragraph (d).

            Section 4.8 Articles II and III of this Agreement shall not apply to
any matter relating to Taxes. Any matter relating to Taxes shall be covered by
Article IV of this Agreement.

                                    ARTICLE V

                                  MISCELLANEOUS

        Section 5.1 Incorporation by Reference. Section 4.4 and all of the
provisions of Article V (except for Section 5.13 thereof) of the Separation
Agreement are incorporated into and made a part of this Agreement, as if fully
set forth herein.

        Section 5.2 Conflicting Agreements. In the event of any irreconcilable
conflict between this Agreement and the Separation Agreement, any Foreign
Transfer Agreement, any other Ancillary Agreement (including Article III of the
Assignment Agreement) or other agreement executed in connection herewith or
therewith, the provisions of such other agreement shall prevail to the extent
that they specifically address the subject matter of the conflict. Nothing set
forth herein shall restrict or limit any indemnification obligations set forth
in any Foreign Transfer Agreement.

                                       18
<PAGE>   22

        WHEREFORE, the parties have executed and delivered this Agreement
effective as of the date first set forth above.

CADENCE DESIGN SYSTEMS, INC.                  TALITY, LP

By:                                           By:  TALITY CORPORATION,
   -----------------------------
Name:                                              AS GENERAL PARTNER
    ----------------------------
Title:                                             By:
      --------------------------                      --------------------------
                                                   Name:
                                                        ------------------------
                                                   Title:
                                                         -----------------------

CADENCE HOLDINGS, INC.                        TALITY CORPORATION,

By:                                           By:
   -----------------------------                 -----------------------------
Name:                                         Name:
    ----------------------------                  ----------------------------
Title:                                        Title:
      --------------------------                    --------------------------

                                       19

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