Document:

UNITED STATES DISTRICT COURT
                                                  SOUTHERN DISTRICT OF TEXAS
                                                       ENTERED
                                                  APR 25 1990
                                                  JESSE E. CLARK, CLERK
                                                  BY DEPUTY  /S/

                     IN THE UNITED STATES BANKRUPTCY COURT
                       FOR THE SOUTHERN DISTRICT OF TEXAS
                                HOUSTON DIVISION

IN RE:                        ss.
                              ss.
CAMBRIDGE OIL COMPANY,        ss.       CASE NO. 88-01859-H5-11
                              ss.            (CHAPTER 11)
     DEBTOR                   ss.

                            ORDER CONFIRMING DEBTOR'S
                             PLAN OF REORGANIZATION

     At Houston in said District came on for hearing Confirmation of the Plan of
Reorganization of Cambridge Oil Company, Debtor-in-possession,  and Normandy Oil
and Gas  Company,  Inc.,  and its wholly  owned  subsidiary,  Houston  Operating
Company,  Successor to the Debtor under the Plan,  filed on September  1989 (the
"Plan") together with the Disclosure Statement  thereto  previously  approved by
this Court, after hearing on Notice, having been transmitted to all creditors as
evidenced by the Certificate of Service dated April 2, 1990; and

     It having been determined, after hearing that:

     the Plan has been accepted by at: least  two-thirds in amount and more than
one-half in number of: the allowed claims impaired by the Plan; and

     the Plan has been accepted by the creditors whose acceptance is required by
law; and

     the provision of Chapter 11 of the Bankruptcy Code have been complied with;
that the Plan has been proposed in good faith not by any means forbidden by law;
and

     the Plan is fair, equitable and feasible; and

     all payments made or promised by Debtor under the Plan for

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services  of for costs and  expenses  in, or in  connection  with,  the Plan and
incident to the case,  have been fully disclosed to the Court and are reasonable
or, if to be fixed  after  confirmation  of the  Plan,  will be  subject  to the
approval of the Court; and

     due notice of confirmation  hearing was given to the Debtor,  the creditors
and all other parties in interest; it is therefore

     ORDERED that Debtor's Plan of  Reorganization  is hereby  confirmed;  it is
further

     ORDERED that the Debtor pay to the United  States  Trustee the  appropriate
sum required  pursuant to 28 U.S.C.  ss.1930(a)(6)  on the effective date of the
Plan and provide to the United States Trustee an appropriate affidavit including
all disbursements for the relevant period(s); and

     the  provisions  of said Plan shall be binding upon the Debtor and upon all
creditors  whether  or not  such  creditors  are  affected  by the  Plan or have
accepted it or have filed  proofs of claims and whether or not their claims have
been scheduled or allowed or are allowable; and

     subject to the further  directions of the Court,  the Debtor is directed to
comply  with the  provisions  of the Plan and to take  all  steps  necessary  to
consummate  said Plan,  and all  creditors  all parties in  interest  herein are
directed to take all action required for the consummation of said Plan; and

     all  creditors  of  the  Debtor,   the  persons   participating   in  these
proceedings,  and  all  other  persons,  are  hereby  permanently  enjoined  and
restrained from doing any act or taking any action  interfering  with or tending
to interfere with these proceedings

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or with the enforcement or carrying out of the terms and provisions of the Plan,
or with the Orders of this Court relative thereto,  or from asserting,  contrary
to the  provisions of said Plan and of the  Bankruptcy  Code,  any right,  title
interest or claim, including the commencement or prosecution of any action, suit
or proceeding appropriate under the Bankruptcy Code, and such review, if any, in
an appropriate  appellate  court of the United States as may be provided by law;
and

     the property retained by Debtor under  that Plan shall be free and clear of
all claims of  creditors,  whether or not such claims are  provable  and whether
secured or unsecured,  liquidated or unliquidated,  fixed or contingent,  except
such claims as are otherwise expressly provided for in the Plan; and

     all claims for payment of  administrative  expense  incurred to the date of
hearing on the  confirmation  of the Plan  shall be filed not later than  thirty
(30) days from the date of this Order; and

          This Court reserves jurisdiction:

     (a) to entertain such further  proceedings  and to take such further action
as may be necessary and  appropriate in connection with these  proceedings,  the
Plan, the transaction  incident thereto,  and the consummation  thereof, or with
this Order or any further Order of this Court;

     (b) over all matters not as yet  determined  as to which  jurisdiction  was
reserved in any Order previously made and entered by this Court;

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<PAGE>

     (c) over the assets  dealt with in the Plan and over any and all persons to
whom such assets may be transferred or by whom such assets may be retained, over
all parties in interest to these proceedings, for the purpose of determining any
claims asserted against the Debtor;

     (d) over all matters as to which  jurisdiction  is reserved to the Court by
the Plan or by the Bankruptcy Code; and

     (e) to make from time to time such orders amplifying,  extending, limiting,
or otherwise modifying this Order as the Court may deem proper.

        Dated 4-19, 1990

                                             /s/Karen K. Brown
                                             Karen Brown
                                             United States Bankruptcy Judge

A:10268/D18-0A.8

                                       4<PAGE>   1
                                                                    EXHIBIT 10.8

                     MASTER INTELLECTUAL PROPERTY OWNERSHIP
                             AND LICENSE 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......................................................................1

        Section 1.1   Cadence Electronic Design Technology..................................2
        Section 1.2   Cadence PDK Technology................................................2
        Section 1.3   Copyrights............................................................2
        Section 1.4   Derivative Use........................................................2
        Section 1.5   Design Tool Technology................................................2
        Section 1.6   Electronic Design Technology..........................................2
        Section 1.7   Group.................................................................2
        Section 1.8   Intellectual Property Rights..........................................2
        Section 1.9   Internal Use..........................................................3
        Section 1.10  Jointly-Owned PDK Technology..........................................3
        Section 1.11  Marks  ...............................................................3
        Section 1.12  Mask Work Rights......................................................3
        Section 1.13  Methodology Technology................................................3
        Section 1.14  Other Intellectual Property Rights....................................3
        Section 1.15  Party  ...............................................................3
        Section 1.16  Patents...............................................................3
        Section 1.17  PDKs   ...............................................................3
        Section 1.18  Pre-Separation Technology.............................................3
        Section 1.19  Project Alba Methodologies............................................4
        Section 1.20  Project Alba Territory................................................4
        Section 1.21  Retained Intellectual Property Rights.................................4
        Section 1.22  Software..............................................................4
        Section 1.23  Tality Design Tool Technology.........................................4
        Section 1.24  Tality Electronic Design Technology...................................4
        Section 1.25  Tality Marks..........................................................4
        Section 1.26  Tality Methodology Technology.........................................4
        Section 1.27  Tality PDK Technology.................................................4
        Section 1.28  Tality Transferred Technology.........................................4
        Section 1.29  Technology............................................................4
        Section 1.30  Technology Request....................................................5
        Section 1.31  Trade Secrets.........................................................5
        Section 1.32  Transferred Intellectual Property Rights..............................5
        Section 1.33  Transferred Patents...................................................5
        Section 1.34  TWG    ...............................................................5

ARTICLE II  ASSIGNMENT OF TALITY TRANSFERRED TECHNOLOGY AND TALITY MARKS; RIGHTS IN
               JOINTLY-OWNED PDK TECHNOLOGY.................................................5

        Section 2.1   Assignment of Tality Transferred Technology...........................5
        Section 2.2   Assignment of Tality Marks............................................5
</TABLE>

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<PAGE>   3

                                TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                       <C>
        Section 2.3   Assignment of Joint Ownership Interest in Jointly-Owned PDK
                      Technology............................................................5
        Section 2.4   Rights to Jointly-Owned PDK Technology................................6
        Section 2.5   Ownership of Other Intellectual Property Retained by Cadence..........7
        Section 2.6   Further Assurances....................................................7
        Section 2.7   Authorization to Record...............................................8
        Section 2.8   Mistaken Allocations..................................................8
        Section 2.9   Governmental Approvals and Third-Party Approvals......................8
        Section 2.10  Pre-Existing Licenses to Third Parties................................9
        Section 2.11  Assignment Disclaimer.................................................9

ARTICLE III  LICENSE GRANTS; COVENANT NOT TO SUE............................................9

        Section 3.1   Grant of Licenses by Cadence..........................................9
        Section 3.2   Grant of Licenses by the Partnership.................................10
        Section 3.3   No License to Improvements...........................................11
        Section 3.4   No Other Rights......................................................12
        Section 3.5   Mutual Covenant Not to Sue...........................................12
        Section 3.6   Right to Use Independent Contractors.................................12
        Section 3.7   Rights of Subsidiaries...............................................13
        Section 3.8   Third Party Technology...............................................13
        Section 3.9   Disclaimer...........................................................13

ARTICLE IV  CLASSIFICATION AND PROTECTION OF TECHNOLOGY; PROSECUTION AND ENFORCEMENT.......13

        Section 4.1   Classification of Technology; Technology Requests; Technology
                      Working Group........................................................13
        Section 4.2   Protection of Pre-Separation Technology..............................14
        Section 4.3   Confidentiality......................................................15
        Section 4.4   Prosecution and Maintenance..........................................15
        Section 4.5   Enforcement..........................................................15

ARTICLE V  TERM............................................................................16

        Section 5.1   Term.................................................................16
        Section 5.2   No Termination.......................................................16

ARTICLE VI  MISCELLANEOUS..................................................................16

        Section 6.1   Exclusion of Consequential Damages...................................16
        Section 6.2   Incorporation by Reference...........................................16
        Section 6.3   Conflicting Agreements...............................................16
        Section 6.4   Assignment...........................................................16
</TABLE>

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<PAGE>   4

                     MASTER INTELLECTUAL PROPERTY OWNERSHIP
                              AND LICENSE AGREEMENT

        THIS MASTER INTELLECTUAL PROPERTY OWNERSHIP AND LICENSE AGREEMENT (this
"Agreement") is entered into and effective as of ______________, 2000 between
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 (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 Agreement to effectuate the transfer of intellectual property from
Holdings and from Cadence, on behalf of Holdings, to the Partnership and the
granting of the licenses to the Partnership contemplated by the Separation
Agreement.

                                    AGREEMENT

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

                                    ARTICLE I

                                   DEFINITIONS

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

                                       1
<PAGE>   5

        Section 1.1 "Cadence Electronic Design Technology" means any Electronic
Design Technology that was developed by Cadence or a Subsidiary thereof pursuant
to (i) a contract with a third-party customer that was not a customer of the
Tality Business or (ii) research and development work conducted independent of
any Tality Business project or contract.

        Section 1.2 "Cadence PDK Technology" means any PDKs developed solely by
a business or businesses of Cadence or any of its Subsidiaries other than the
Tality Business.

        Section 1.3 "Copyrights" mean (i) any copyright in any original works of
authorship fixed in any tangible medium of expression as set forth in 17 U.S.C.
Section 101 et. seq., whether registered or unregistered, including any
applications for registration thereof, (ii) any corresponding foreign copyrights
under the laws of any jurisdiction, in each case, whether registered or
unregistered, and any applications for registration thereof, and (iii) moral
rights under the laws of any jurisdiction.

        Section 1.4 "Derivative Use" means, with reference to specified
Technology, the right to use such Technology to make any refinement,
enhancement, adaptation, variation, improvement, elaboration or other
modification of such Technology for the purpose or with the effect of preparing
new Technology. "Derivative Use" includes the right to use, execute, display,
perform or reproduce the subject Technology, and the right to modify or prepare
derivative works based on such Technology, but excludes any right to distribute,
license, sublicense, sell or otherwise transfer or make available such
Technology to any third party.

        Section 1.5 "Design Tool Technology" means any Software developed by
Cadence or any of its Subsidiaries prior to the date hereof for the commercial
EDA market, including source level language code, object code and executable
programs.

        Section 1.6 "Electronic Design Technology" means any Technology owned by
Cadence or any of its Subsidiaries and developed prior to date hereof that
consists of the complete or partial set of descriptions and representations of a
system, integrated circuit or embedded software design. Electronic Design
Technology includes the following types of descriptions or representations:
specifications, circuit or system documentation, system architecture
descriptions, behavioral descriptions, mechanical packaging and enclosure
descriptions, RTL descriptions, circuit schematics, gate level netlists, test
vectors and programs, test benches, integrated circuit layouts, packaging
information and embedded software source code. Electronic Design Technology, in
contrast to Methodology Technology, is associated with customer applications,
end uses, and specific electronic products, functions or complete systems.
Notwithstanding the foregoing, Electronic Design Technology shall not include
any PDKs.

        Section 1.7 "Group" means the Cadence Group or the Tality Group as
appropriate.

        Section 1.8 "Intellectual Property Rights" means all rights in, to, or
arising under or out of any (i) Patents; (ii) Copyrights; (iii) Mask Work
Rights; (iv) Trade Secrets; and (v) all other intellectual or industrial
property of any kind or nature, in each case arising under or protected by the
laws of any country anywhere in the world, excluding any rights under or in
respect of Marks.

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<PAGE>   6

        Section 1.9 "Internal Use" means, with reference to specified
Technology, the right to use, execute, display, perform or reproduce such
Technology, but excludes (i) any right to make Derivative Use of such Technology
and (ii) any right to distribute, license, sublicense, sell or otherwise
transfer or make available such Technology to any third party.

        Section 1.10 "Jointly-Owned PDK Technology" means any PDKs that were
co-developed by the Tality Business and other businesses of Cadence or any of
its Subsidiaries, including those set forth on Exhibit A.

        Section 1.11 "Marks" mean fictional business names, trade names, trade
dress rights, registered and unregistered trademarks and service marks and
logos, including any Internet domain names, and applications therefor, and like
intellectual property rights.

        Section 1.12 "Mask Work Rights" means (i) any rights in maskworks, as
defined in 17 U.S.C. Section 901, whether registered or unregistered, including
applications for registration thereof, and (ii) any foreign rights in
semiconductor topologies under the laws of any jurisdiction, whether registered
or unregistered, including applications for registration thereof.

        Section 1.13 "Methodology Technology" means any Technology owned by
Cadence or any of its Subsidiaries and developed prior to the date hereof that
is associated with the practices, methods and utility software used to combine
commercially available EDA tools into a system to perform the design of
electronic systems, circuit design or the design of embedded software.
Methodology Technology, as distinct from Electronic Design Technology, focuses
on the process to be employed in designing new electronic systems, circuits or
embedded software, rather than the end-product or application produced by or
with such Technology. Notwithstanding the foregoing, Methodology Technology
shall not include any PDKs.

        Section 1.14 "Other Transferred Intellectual Property Rights" means all
of the Intellectual Property Rights (other than Patents) of Cadence or any of
its Subsidiaries that protect, cover, or embody any Tality Transferred
Technology.

        Section 1.15 "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 1.16 "Patents" means all classes or types of patents, utility
models and design patents (including originals, divisions, continuations,
continuations-in-part, re-examinations, extensions or reissues), and
applications for these classes or types of patent rights in all countries of the
world (and any patents issuing thereon).

        Section 1.17 "PDKs" means the data and files unique to a fabrication
process, or to a particular customer flow, created by the Tality Business or
another business of Cadence or any of its Subsidiaries prior to the date hereof,
for use with Cadence EDA tools, and used for such purposes, for illustration, as
enabling analog and mixed signal circuit design, layout and verification.

        Section 1.18 "Pre-Separation Technology" has the meaning set forth in
Section 4.1(a).

                                       3
<PAGE>   7

        Section 1.19 "Project Alba Methodologies" means any of the
"Methodologies" as such term is defined under that certain Master Agreement
between Cadence Design Systems Limited and Scottish Enterprise, dated March 24,
1998, as amended.

        Section 1.20 "Project Alba Territory" means the "Territory" as such term
is defined under that certain Master Agreement between Cadence Design Systems
Limited and Scottish Enterprise, dated March 24, 1998, as amended.

        Section 1.21 "Retained Intellectual Property Rights" has the meaning set
forth in Section 2.5.

        Section 1.22 "Software" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, and
(iv) all documentation, including user manuals and training documentation,
relating to any of the foregoing.

        Section 1.23 "Tality Design Tool Technology" means any Design Tool
Technology developed by the Tality Business pursuant to a third-party customer
contract, the terms of which would be violated if the ownership of that Design
Tool Technology were not to be transferred to Tality or the Partnership on the
date hereof.

        Section 1.24 "Tality Electronic Design Technology" means any Electronic
Design Technology other than Cadence Electronic Design Technology.

        Section 1.25 "Tality Marks" means the Marks of Cadence or any of its
Subsidiaries that are identified on Exhibit B and that are to be transferred to
the Partnership in accordance with Section 2.2 hereof.

        Section 1.26 "Tality Methodology Technology" means any Methodology
Technology developed by the Tality Business pursuant to a third-party customer
contract, the terms of which would be violated if the ownership of that
Methodology Technology were not to be transferred to Tality or the Partnership
on the date hereof; provided, however, that the Tality Methodology Technology
shall not include any of the Project Alba Methodologies.

        Section 1.27 "Tality PDK Technology" means all PDKs developed solely by
the Tality Business.

        Section 1.28 "Tality Transferred Technology" means all Tality Design
Tool Technology, Tality Electronic Design Technology, Tality Methodology
Technology, and Tality PDK Technology.

        Section 1.29 "Technology" means Software (in both object code and source
code form), know-how, engineering, production and other designs, inventions,
discoveries, concepts, ideas, methods, processes (including design and
manufacturing processes), drawings, specifications, formulae, data bases and
documentation thereof, technological models, algorithms, behavioral

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<PAGE>   8

models, logic diagrams, schematics, test vectors, technical information,
documentation, websites, data and other Information.

        Section 1.30 "Technology Request" has the meaning set forth in Section
4.1(c).

        Section 1.31 "Trade Secrets" means any Technology and other commercial
or technical Information that derives economic value, actual or potential, from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or use
and is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy and any other Information that is proprietary or
confidential, in each case excluding any rights in respect of any of the
foregoing that comprise or are protected by Copyrights, Mask Work Rights or
Patents.

        Section 1.32 "Transferred Intellectual Property Rights" means the
Transferred Patents and the Other Transferred Intellectual Property Rights.

        Section 1.33 "Transferred Patents" means the Patents listed on Exhibit
C.

        Section 1.34 "TWG" has the meaning set forth in Section 4.1(b).

                                   ARTICLE II

                 ASSIGNMENT OF TALITY TRANSFERRED TECHNOLOGY AND
              TALITY MARKS; RIGHTS IN JOINTLY-OWNED PDK TECHNOLOGY

        Section 2.1 Assignment of Tality Transferred Technology. Cadence, on
behalf of Holdings, hereby assigns, transfers, conveys and delivers, and agrees
to cause each and every applicable member of the Cadence Group to assign,
transfer, convey and deliver to the Partnership and the Partnership hereby
accepts from Cadence, or the applicable member of the Cadence Group, all of the
right, title and interest in and to the Transferred Intellectual Property Rights
of Cadence and the members of the Cadence Group. Cadence, on behalf of Holdings,
further assigns, transfers, conveys and delivers, and agrees to cause each and
every member of the Cadence Group to assign, transfer, convey and deliver to the
Partnership all its (and their) right, title and interest in and to any and all
causes of action and rights of recovery for past infringement or
misappropriation of the Transferred Intellectual Property Rights.

        Section 2.2 Assignment of Tality Marks. Cadence, on behalf of Holdings,
hereby assigns, transfers, conveys and delivers to the Partnership, and agrees
to cause each and every member of the Cadence Group to assign, transfer, convey
and deliver to the Partnership, and the Partnership hereby accepts from Cadence,
or the applicable member of the Cadence Group, all of the right, title and
interest of Cadence, and the members of the Cadence Group, in and to the Tality
Marks, together with all appurtenant goodwill relating thereto.

        Section 2.3 Assignment of Joint Ownership Interest in Jointly-Owned PDK
Technology. Cadence, on behalf of Holdings, hereby assigns, transfers, conveys
and delivers to the Partnership, and agrees to cause each and every member of
the Cadence Group to assign, transfer, convey and deliver to the Partnership,
and the Partnership hereby accepts from Cadence, or the applicable member of the
Cadence Group, an undivided one-half interest (as tenant-in-

                                       5
<PAGE>   9

common) in and to all Intellectual Property Rights (other than Patents) of
Cadence, and the members of the Cadence Group that protect, cover, or embody any
Jointly-Owned PDK Technology.

        Section 2.4 Rights to Jointly-Owned PDK Technology.

        (a) Each of Cadence (and the members of the Cadence Group) and Tality
(and the Members of the Tality Group) has the right to (i) use and exploit the
Jointly-Owned PDK Technology, (ii) license the Jointly-Owned PDK Technology to
third parties on a non-exclusive basis, and (iii) transfer its ownership
interest in any or all Jointly-Owned PDK Technology to any third party, in each
case (x) without restriction (other than, to the extent applicable, the
confidentiality obligations of such Party referred to in Section 4.3), (y)
without the consent of the other Party, and (z) without the obligation to
account to the other Party for profits derived therefrom.

        (b) Should either Cadence (or any member of the Cadence Group) or Tality
(or any member of the Tality Group) (the "Registering Party") desire at any time
to register Copyrights in any Jointly-Owned PDK Technology or seek patent
protection for any Jointly-Owned PDK Technology in any jurisdiction, such Party
shall notify the other Party (the "Non-Registering Party") in writing of its
intent and the reasons therefor. The Non-Registering Party promptly shall
communicate in writing any objections it may have. In the absence of any written
objections within thirty (30) days after the date of its notice, the Registering
Party shall be free to proceed with the desired registration in the name of both
the Partnership and Cadence. In the event of any such objections by the
Non-Registering Party, the parties shall discuss and negotiate reasonably and in
good faith to resolve the objections based on each Party's business objectives
with respect to the relevant item of Jointly-Owned PDK Technology. If the
objections of the Non-Registering Party are not resolved, the Registering Party
shall not be permitted to proceed with the proposed copyright registration or
patent application. If the Non-Registering Party does not timely object to the
copyright registration or patent application proposed by the Registering Party
or if any timely objection of the Non-Registering Party is resolved, the Parties
shall share equally any actual and reasonable out-of-pocket expenses (excluding
the value of the time of either Party's employees) incurred in connection with
any such registration or patent application (including the prosecution of such
patent application), except as the Parties otherwise may agree in connection
with resolving any objections of the Non-Registering Party. The Registering
Party promptly shall provide the Non-Registering Party with copies of each
application and issued registration or issued patent under this Section 2.4(b).

        (c) Should either Party become aware of any actual infringement or
misappropriation of Jointly-Owned PDK Technology, such Party shall communicate
promptly the details to the other Party and the parties will meet and confer
regarding any enforcement action with respect to such Jointly-Owned PDK
Technology. If the Parties decide jointly to bring an action for infringement or
misappropriation of such Jointly-Owned PDK Technology, the parties shall equally
share all actual and reasonable expenses associated therewith (except for the
value of the time of each Party's employees in connection with the action; each
Party shall alone bear its employee expenses) and any resulting damages or
compensation, including any amounts paid in settlement. If the Parties decide
not to jointly bring such an action, either Party or any of its subsidiaries
may, at its own expense (including, as the parties shall agree on a case by case
basis,

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<PAGE>   10

compensation, if any, of the other Party for the value of time of the other
Party's employees as reasonably required in connection with the action), enforce
any Jointly-Owned PDK Technology against any third party infringer or
misappropriating person without the consent of the other Party, subject to the
following: (i) neither Party shall have any obligation to be joined as a party
plaintiff in such action without its prior written consent, which may be granted
or withheld in its sole discretion, regardless of whether such joinder is
required in order to confer jurisdiction in the jurisdiction in which the action
is to be brought; (ii) if either Party brings any such action on its own,
including cases in which the other Party consents to be named as party
plaintiff, the Party bringing the action agrees to defend, indemnify and hold
harmless the other Party for all losses, costs, liabilities and expenses arising
out of or related to the bringing of such action; and (iii) the Party bringing
such action shall not take any action, or make any admissions, that may affect
the validity of any registration for Copyrights in any Jointly-Owned PDK
Technology or the confidentiality of any Trade Secrets embodied in any
Jointly-Owned PDK Technology without the prior written consent of the other
Party. If the enforcing Party or its subsidiaries recovers any damages or
compensation for any action the enforcing Party or the subsidiaries of the
enforcing Party takes hereunder, including any settlement, the enforcing Party
or the subsidiaries of the enforcing Party shall retain one hundred percent
(100%) of such damages. If the Parties cooperate in any such enforcement action,
then any recovery of damages or compensation shall be allocated pursuant to
mutual agreement.

        Section 2.5 Ownership of Other Intellectual Property Retained by
Cadence. All Intellectual Property Rights (other than Patents) of Cadence or any
members of the Cadence Group that protect, cover, or embody (i) Cadence
Electronic Design Technology; (ii) Cadence PDK Technology; (iii) Methodology
Technology other than Tality Methodology Technology; and (iv) Design Tool
Technology other than the Tality Design Tool Technology, and all Patents of
Cadence or any members of the Cadence Group other than the Transferred Patents
(all such Intellectual Property Rights and Patents are referred to collectively
herein as the "Retained Intellectual Property Rights") shall be retained by the
Cadence Group, and the Tality Group shall have no right or license therein
except as expressly set forth in Article III or in a separate written agreement
into which a member of the Cadence Group and a member of the Tality Group may
enter.

        Section 2.6 Further Assurances. Concurrently herewith, Cadence, on
behalf of Holdings, shall, and shall cause each and every member of the Cadence
Group to, execute and deliver to the Partnership assignments in appropriate form
by which Cadence and each such member of the Cadence Group will assign to the
Partnership all of the Transferred Intellectual Property Rights and the Tality
Marks. Promptly upon the request of the Partnership, Cadence, on behalf of
Holdings, further agrees to execute and deliver, and cause each and every member
of the Cadence Group to execute and deliver, such additional documents and take
such other action as may be necessary or desirable to continue, secure, defend,
register, confirm, evidence and otherwise give full effect to and to perfect the
rights of the Partnership under this Agreement, including all such documents
necessary to perfect, affirm, record and maintain title (to the extent provided
herein) in the Partnership, its successor, assigns or other legal
representatives to any and all Transferred Intellectual Property Rights and
Tality Marks, including all documents necessary to register in the name of the
Partnership the assignment of each registered Mark identified on Exhibit B and
each Patent identified on Exhibit C in the appropriate country or countries.

                                       7
<PAGE>   11

        Section 2.7 Authorization to Record. Cadence, within ten (10) days of
the effective date hereof, shall authorize and request that the Commissioner of
Patents or Commissioner of Trademarks of the United States and each official
holding a corresponding position of authority in any country in which Cadence or
a Subsidiary of Cadence owns one or more patent or trademark registrations or
has pending one or more patent or trademark applications to issue and to record
the title of the Partnership as owner of all right, title and interest in and to
the registered Marks identified on Exhibit B and the Patents identified on
Exhibit C.

        Section 2.8 Mistaken Allocations. The Parties acknowledge that there may
exist Intellectual Property Rights that the Parties hereafter discover were,
contrary to the agreements between the parties, by mistake or omission,
transferred or not transferred, as the case may be, to the Partnership. The
Parties hereto shall cooperate in good faith to effect the transfer or
re-transfer of such Intellectual Property Rights to or by the appropriate Party,
in accordance with the procedures specified in Section 4.1, and shall not use
the determination that remedial actions need to be taken to alter the original
intent of the parties hereto with respect to the Intellectual Property Rights to
be transferred to the Partnership. Prior to any such transfer, the Party holding
title to such Intellectual Property Rights shall hold the same in trust for the
other Party.

        Section 2.9 Governmental Approvals and Third-Party Approvals. If and to
the extent that the valid, complete and perfected transfer assignment to the
Partnership of any Transferred Intellectual Property Rights would be a violation
of applicable laws or require any Third-Party Approval or Governmental Approval,
then, unless Cadence shall otherwise determine, the transfer and assignment to
the Partnership of such Intellectual Property Rights shall be automatically
deemed deferred and any such purported transfer and assignment shall be null and
void until such time as all legal impediments are removed and/or such
Third-Party Approval or Governmental Approvals have been obtained. If the
transfer and assignment of any Intellectual Property Rights intended to be
transferred or assigned hereunder is not consummated on the date hereof for any
other reason, then the member of the Cadence Group retaining title to such
Intellectual Property Rights shall thereafter hold the same for the use and
benefit, insofar as reasonably possible, of the Partnership (at the expense of
the Partnership). In addition, such member of the Cadence Group shall take such
other actions as may be reasonably requested by the Partnership in order to
place the Partnership, insofar as reasonably possible, in the same position as
if such Intellectual Property Rights had been transferred as contemplated hereby
and so that all the benefits and burdens relating to such Intellectual Property
Rights, including possession, use, risk of loss, potential for gain, and
dominion, control and command over such Intellectual Property Rights, are to
inure from and after the date hereof to the Partnership. If and when the
Third-Party Approvals and/or Governmental Approvals, the absence of which caused
the deferral of transfer of any Intellectual Property Rights pursuant to this
Section 2.9, are obtained, the transfer of such Intellectual Property Rights
shall be effected in accordance with the terms of this Agreement. The member of
the Cadence Group retaining Intellectual Property Rights shall not be obligated,
in connection with the foregoing, to expend any money unless the necessary funds
are advanced by the Partnership, other than reasonable out-of-pocket expenses,
attorneys' fees and recording or similar fees, all of which shall be promptly
reimbursed by the Partnership.

                                       8
<PAGE>   12

        Section 2.10 Pre-Existing Licenses to Third Parties. The assignments
contemplated by this Article II are subject to all pre-existing licenses and
rights granted by Cadence or any member of the Cadence Group to third parties.

        Section 2.11 Assignment Disclaimer. TALITY AND THE PARTNERSHIP
ACKNOWLEDGE AND AGREE THAT THE FOREGOING ASSIGNMENTS ARE MADE ON AN "AS IS,"
QUITCLAIM BASIS AND THAT NEITHER CADENCE NOR ANY MEMBER OF THE CADENCE GROUP HAS
MADE OR WILL MAKE ANY WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.

                                   ARTICLE III

                       LICENSE GRANTS; COVENANT NOT TO SUE

        Section 3.1 Grant of Licenses by Cadence.

        (a) Subject to any applicable third-party restriction by which Cadence
or any member of the Cadence Group is bound, including any customer-specific
confidentiality obligations, as may apply to any particular Methodology
Technology, Cadence and each and every member of the Cadence Group hereby grant
to the Partnership and each other member of the Tality Group under the Retained
Intellectual Property Rights perpetual, irrevocable, worldwide, non-exclusive,
royalty-free and fully-paid Internal Use and Derivative Use rights with respect
to the Methodology Technology other than the Tality Methodology Technology. The
Partnership shall not grant sublicenses under the license to Methodology
Technology granted under this Section 3.1(a) except upon terms agreeable to and
with the express written consent of Cadence or the member of the Cadence Group,
as applicable; provided, however, that the Partnership may grant sublicenses as
provided in Section 3.6 and under the following circumstances:

           (1) In the event that the Partnership identifies a customer or
               business opportunity involving the development or sale (or other
               commercial exploitation) of Methodology Technology (each, a
               "Methodology Business Opportunity"), then the Partnership shall
               promptly present the Methodology Business Opportunity to Cadence,
               by written notice or mutually agreeable form of electronic
               communication between the respective executives (or their
               designees) assigned for this purpose who are identified on
               Exhibit D (each being a "Designated Business Opportunity
               Contact"), and the Partnership shall provide to Cadence through
               the Designated Business Opportunity Contact, with such notice or
               as soon as practicable thereafter, reasonably available
               information with respect to such Methodology Business
               Opportunity;

           (2) Cadence shall have ten (10) calendar days within which to advise
               the Tality Designated Business Opportunity Contact that it is
               interested in pursuing the Methodology Business Opportunity, and
               to reach agreement with the Partnership on any business terms
               (including commission, participation, license fee or royalty) and
               on technical support (as appropriate and necessary); and should

                                       9
<PAGE>   13

               Cadence decline the opportunity, or fail to respond within such
               period, or be unable to so reach agreement on such business
               terms, then the Partnership may pursue such Methodology Business
               Opportunity and it shall, for such purposes, be deemed to have
               been granted by Cadence and each appropriate Subsidiary thereof
               royalty-free rights to use, practice and exploit the Methodology
               Technology licensed under this Section 3.1(a), including through
               the grant of a sublicense under the license granted under this
               Section 3.1(a), as and to the extent reasonably necessary to
               pursue such Methodology Business Opportunity and provide the
               Technology and services required by the relevant customer in
               connection therewith.

        (b) Subject to any applicable third-party restriction by which Cadence
or any member of the Cadence Group is bound, including any customer-specific
confidentiality obligations, as may apply to any particular PDK Technology,
Cadence and each and every member of the Cadence Group hereby grant to the
Partnership and each other member of the Tality Group under the Retained
Intellectual Property Rights perpetual, irrevocable, worldwide, non-exclusive,
royalty-free and fully-paid (i) Internal Use and Derivative Use rights with
respect to the Cadence PDK Technology and (ii) rights to distribute, sublicense,
sell, offer to sell, import, or otherwise transfer or make available to any
third party any Cadence PDK Technology. In the event of a conflict between this
Agreement and the terms of any third party agreement pursuant to which a PDK
licensed hereunder was created, the terms of the third party agreement shall
control. If the Partnership requests, Cadence and the members of the Cadence
Group, as applicable, shall make a prompt and good-faith effort to assist the
Partnership, at the Partnership's expense, in securing from the applicable third
party any consent or license required to permit any such PDK to be licensed to
the Partnership as contemplated hereby.

        (c) Cadence and each and every member of the Cadence Group hereby grant
to the Partnership and each other member of the Tality Group under the Retained
Intellectual Property Rights, effective on the second anniversary of the date
hereof, perpetual, irrevocable, worldwide, non-exclusive, royalty-free and
fully-paid (i) Internal Use and Derivative Use rights with respect to the
Methodology Technology other than Tality Methodology Technology; and (ii) rights
to distribute, sublicense, sell, offer to sell, import or otherwise transfer or
make available to any third party any such Methodology Technology.

        (d) Notwithstanding anything to the contrary contained in this
Agreement, neither the Partnership nor any other member of the Tality Group
shall be entitled to use the Project Alba Methodologies or to grant any license
or sublicense to the Project Alba Methodologies to any third-party for the use
of the Project Alba Methodologies in relation to education, research or
industrial retraining or to enable any governmental agency economic development
body or other educational establishment to commence a project to establish a
design factory in the Project Alba Territory for research into the use of the
Project Alba Methodologies for the design of system on chip products, including
hardware products.

        Section 3.2 Grant of Licenses by the Partnership.

        (a) The Partnership hereby grants to Cadence and each other member of
the Cadence Group under the Transferred Intellectual Property Rights perpetual,
irrevocable, worldwide, non-

                                       10
<PAGE>   14

exclusive, royalty-free and fully-paid Internal Use rights with respect to
Tality Electronic Design Technology, solely to the extent the same is reasonably
requested or needed by Cadence prior to the second anniversary of the date
hereof. Internal Use rights may be exercised by Cadence and other members of the
Cadence Group pursuant to the license granted in this Section 3.2(a) solely for
the refinement, improvement or elaboration of existing Cadence Design Tool
Technology or Methodology Technology and for the verification or validation of
Design Tool Technology or Methodology Technology. If Cadence or other members of
the Cadence Group intend to exercise any rights under this Section 3.2(a) with
respect to Tality Electronic Design Technology in its possession prior to the
second anniversary of the date hereof, it will give the Partnership prompt
written notice thereof, specifying in such notice the Tality Electronic Design
Technology as to which it intends to exercise such rights and the purpose for
which such rights will be exercised. If Cadence or other members of the Cadence
Group intend to exercise any rights under this Section 3.2(a) with respect to
Tality Electronic Design Technology that is not in its possession prior to the
second anniversary of the date hereof, it will make a Technology Request (as
defined in Section 4.1(c)) and specify in such Technology Request the Tality
Electronic Design Technology as to which it intends to exercise such rights and
the purpose for which such rights will be exercised. Cadence, and other members
of the Cadence Group, will have no rights under this Section 3.2(a) with respect
to any Tality Electronic Design Technology that is not identified in written
notice or Technology Request given by Cadence, or other members of the Cadence
Group, to the Partnership prior to the second anniversary of the date hereof.
Cadence, and other members of the Cadence Group, shall not grant sublicenses
under the license to Tality Electronic Design Technology granted under this
Section 3.2(a) except upon terms agreeable to the Partnership and with the
Partnership's express written consent. Subject to the foregoing, Cadence, and
other members of the Cadence Group, have no rights to Tality Electronic Design
Technology, except as may be granted upon terms agreeable to the Partnership and
with the express written consent of the Partnership.

        (b) Subject to any applicable third-party restriction, including any
customer-specific confidentiality obligations, as may apply to any particular
Tality PDK Technology, the Partnership hereby grants to Cadence and to any
member of the Cadence Group (i) perpetual, irrevocable, worldwide,
non-exclusive, royalty-free and fully-paid Internal Use and Derivative Use
rights to the Tality PDK Technology and (ii) rights to distribute, sublicense,
sell, offer to sell, import, or otherwise transfer or make available to any
third party any Tality PDK Technology. In the event of a conflict between this
Agreement and the terms of any third party agreement pursuant to which a PDK
licensed hereunder was created, the terms of the third party agreement shall
control. If Cadence requests, the Partnership shall make a prompt and good-faith
effort to assist Cadence, at Cadence's expense, in securing from the applicable
third party any consent or license required to permit any such PDK to be
licensed to Cadence as contemplated hereby.

        Section 3.3 No License to Improvements. All improvements, enhancements,
modifications, developments or new Technology or Intellectual Property Rights
first conceived, created, invented, discovered, acquired or made by or for
Cadence or any member of the Cadence Group, on the one hand, or Tality or any
member of the Tality Group, on the other hand, after the date hereof shall be
owned by such Party or member of its Group, as applicable. Nothing herein grants
to either Party (or member of its Group) any license or other rights to any such
improvements, enhancements, modifications, developments or new Technology or

                                       11
<PAGE>   15

Intellectual Property Rights first conceived, created, invented, discovered,
acquired or made by or for the other Party (or member of its Group).

        Section 3.4 No Other Rights. No other rights are granted hereunder, by
implication, estoppel, statute or otherwise, except as expressly provided
herein. Specifically, (i) except as expressly provided herein, nothing in the
licenses granted hereunder or otherwise contained in this Agreement shall
expressly or by implication, estoppel or otherwise give either Party (or member
of its Group) any right to license any Intellectual Property Rights of the other
Party (or member of its Group) to others and (ii) no license or immunity is
granted by either Party (or member of its Group) directly or by implication,
estoppel or otherwise to any third parties acquiring items from the other Party
(or member of its Group) for the combination of such Party's products and
technologies with other items or for the use of such combination.

        Section 3.5 Mutual Covenant Not to Sue. Each of Cadence and each and
every member of the Cadence Group and Tality and each and every member of the
Tality Group covenants and agrees that it shall not Assert any Covered Patent
owned by it against the other Party, or the members of the other Party's Group
or their customers (direct or indirect), distributors (direct or indirect),
agents (direct or indirect) and contractors (direct or indirect) based on an
allegation that the manufacture, use, import, offer for sale or sale of the
products of the other Party (or member of its Group) technologies or services
that existed on the date hereof, including any enhanced or new versions or any
successor products, technologies or services that do not have substantial
additional functionality or features, by the other Party or member of its Group,
or any process or method employed in the manufacture, testing, distribution or
use thereof by the other Party or any member of its Group, constitutes an
infringement, contributory infringement of, or an inducement to infringe, any
such Covered Patents owned by it. This covenant not to sue shall survive any
termination of this Agreement and shall remain in full force and effect until
mutually agreed otherwise by the Parties. For the purposes hereof, (i) "Assert"
means to bring an action of any nature before any legal, judicial, arbitration,
administrative, executive or other type of body or tribunal that has or claims
to have authority to adjudicate such action in whole or in part (examples of
such body or tribunal including, without limitation, United States State and
Federal Courts, the United States International Trade Commission and any foreign
counterparts of any of the foregoing); and (ii) "Covered Patents" means any
Patent owned by a Party or member of its Group with an effective filing date
prior to the fifth anniversary of the date of this Agreement.

        Section 3.6 Right to Use Independent Contractors. Each Party (and
members of its Group) agrees that the other Party (and members of its Group) may
retain, subject to the confidentiality restrictions to which reference is made
in Section 4.3, independent contractors to assist with the design, development,
testing, improvement, maintenance and support of the other Party's products,
technologies and services, and the grant of Internal Use or Derivative Use
rights by such Party shall be deemed to permit such other Party to utilize such
contractors in connection with the exercise of such rights hereunder; provided,
however, that, absent the express written consent of the other Party, a Party
(and members of its Group) shall make no disclosures of any Confidential
Information to independent contractors that are direct competitors of the other
Party.

                                       12
<PAGE>   16

        Section 3.7 Rights of Subsidiaries. The right of a member of the Tality
Group other than the Partnership or a member of the Cadence Group other than
Cadence to exercise the rights licensed under Section 3.1 and Section 3.2,
respectively, is subject to such member agreeing in writing to be bound by the
terms and conditions hereof. A license to a particular member of the Tality
Group or the Cadence Group granted pursuant to Section 3.1 or Section 3.2 shall
terminate upon the date that such member ceases to be a Subsidiary of the
Partnership or Cadence, as the case may be.

        Section 3.8 Third Party Technology. The assignment of any applicable
license agreements with respect to Technology owned by a third party and
licensed to Cadence or any member of the Cadence Group are set forth in a
separate General Assignment and Assumption Agreement between the parties.

        Section 3.9 Disclaimer. EACH PARTY (AND MEMBER OF ITS GROUP) IS
LICENSING TO THE OTHER PARTY (AND MEMBER OF ITS GROUP) SUCH PARTY'S TECHNOLOGY
AND INTELLECTUAL PROPERTY RIGHTS ON AN "AS IS" BASIS AND EACH PARTY HEREBY
DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO SUCH TECHNOLOGY OR
INTELLECTUAL PROPERTY LICENSED BY IT HEREUNDER, INCLUDING WITHOUT LIMITATION,
THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS A
WARRANTY OR REPRESENTATION AS TO THE VALIDITY, ENFORCEABILITY OR SCOPE OF ANY
CLASS OR TYPE OF INTELLECTUAL PROPERTY RIGHTS.

                                   ARTICLE IV

                  CLASSIFICATION AND PROTECTION OF TECHNOLOGY;
                           PROSECUTION AND ENFORCEMENT

        Section 4.1 Classification of Technology; Technology Requests;
Technology Working Group.

        (a) The unilateral, good-faith determination of each Party shall govern
the identification, classification and ownership of all Design Tool Technology,
Electronic Design Technology and Methodology Technology for the purposes of this
Agreement (collectively, "Pre-Separation Technology").

        (b) Promptly after the date hereof, the Parties shall form a Technology
Working Group (the "TWG"), which shall consist of four members, two of whom will
be designated by each Party, to assist in resolving questions of classification,
ownership or rights of use, of Pre-Separation Technology. Each Party may change
its designees on the TWG at any time and from time to time upon written notice
to the other Party.

        (c) Either Cadence or the Partnership may request in writing (each a
"Technology Request") access to Pre-Separation Technology that the requesting
Party believes to be in the possession of the other Party (including the members
of its Group). Either Party also may make

                                       13
<PAGE>   17

a Technology Request in order to resolve an issue of classification, ownership
or license rights as to Technology in its possession or in the possession of the
other Party (including the members of its Group). Each Technology Request may
include, in addition to a request for access (where applicable), a request that
the other Party respond to the requesting Party and state, if requested, its
position regarding the classification, ownership or license rights associated
with the Pre-Separation Technology that is the subject of the Technology
Request. The receiving Party shall promptly and in good faith respond to each
Technology Request made by the requesting Party, and in any case shall respond
within fourteen (14) calendar days after receipt of each Technology Request.
Notwithstanding the foregoing, nothing in this Section 4.1 alters the ownership
or license rights of or with respect to Pre-Separation Technology, as provided
in Article II and Article III hereof.

        (d) A Party making a Technology Request that is not satisfied or
disagrees with, or seeks clarification of, the response to such Technology
Request given by the other Party, or if such Party has not received timely
response from the other Party, shall refer such matter to the TWG, which, acting
by consensus, shall use all commercially reasonable efforts to resolve such
matter in manner consistent with the intent and spirit of this Agreement. The
TWG shall seek to respond to each Technology Request within five (5) business
days after receipt, and each Party shall cooperate in good faith and promptly
and fully respond to any information requests of the TWG. If a request is made
by a Party for expedited treatment of any such matter, the other Party will make
a good faith effort to accommodate an accelerated decision process.

        (e) The resolution recommended by a majority of members of the TWG shall
be binding upon both Parties (and the members of their respective Groups),
subject to the right of either Party to request a review of such resolution
through the internal escalation procedure specified in this Section 4.1(e). A
Party requesting such review may escalate the disputed matter, first, to the
respective Technology Managers appointed for such purpose by the Partnership and
Cadence, who shall meet promptly, review such resolution and determine whether
any adjustment to such resolution is appropriate and, then, if the matter is not
resolved to the satisfaction of each Party and further escalation desired by
either Party, to the respective Product Line Vice-Presidents, or equivalent
position, as identified by each of the Partnership and Cadence, and then, if
further escalation is necessary, to the Chief Executive Officer of each of the
Partnership and Cadence. The foregoing escalation process also shall apply if
the TWG is unable to arrive at a recommended resolution by vote of a majority of
its members within such five (5) business day period. Any such disputes
remaining after this escalation process shall be resolved by binding arbitration
in accordance with the applicable provisions of Section 4.4 of the Separation
Agreement.

        (f) Except as otherwise indicated, the provisions of this Section 4.1
shall expire three (3) years from the date hereof; provided however that each
Party shall continue to comply with the applicable terms of the licenses of
Pre-Separation Technology granted in Article III.

        Section 4.2 Protection of Pre-Separation Technology.

        (a) Each Party (and member of its Group) shall treat all Pre-Separation
Technology owned by the other Party (and members of its Group) as confidential
and take all reasonable measures to protect the secrecy, and avoid the
disclosure or use, of such Pre-Separation

                                       14
<PAGE>   18

Technology, except as expressly permitted under this Agreement or otherwise as
authorized by the written consent of Party owning the Pre-Separation Technology.
Such measures shall include, but not be limited to using at least the degree of
care that the non-owning Party customarily uses to protect its own confidential
information of a similar nature. Each Party agrees to notify the other Party in
writing promptly upon becoming aware of any prohibited disclosure or misuse or
misappropriation of Pre-Separation Technology owned by the other Party. The
obligations of the Parties under this Section 4.2 are supplemental to, and do
not serve to diminish, the obligations of the Parties under the Master
Confidentiality Agreement between the Parties dated the date hereof.

        (b) The Parties agree that it is in their mutual interest to coordinate
means by which Pre-Separation Technology protected under this Agreement is
affixed with an appropriate restrictive legend, or equivalent (for purposes of
Software or other electronic embodiment of Technology), and agree to use the TWG
for the purpose of developing and implementing agreed procedures.

        (c) Within sixty (60) days after the date hereof, the TWG shall consider
and determine whether it is timely and appropriate for both Parties to review
the Pre-Separation Technology in their possession for the purposes of preparing
a formal schedule of such Pre-Separation Technology and evaluating whether and
to what extent patent protection of such Pre-Separation Technology should be
sought.

        Section 4.3 Confidentiality. Subject to Section 4.2(a), the terms of
the Master Confidentiality Agreement, including without limitation Section 2.9
thereof, shall apply to any Highly Confidential or Confidential Information (as
defined therein) which is included in the Pre-Separation Technology that is
assigned or licensed pursuant to this Agreement.

        Section 4.4 Prosecution and Maintenance. Neither Party, in respect of
any Patents owned by it, is under any obligation to the other Party file or
continue the prosecution of any patent application, secure any patent or
maintain any patent in force or otherwise obtain, maintain or protect any
Patent.

        Section 4.5 Enforcement. Neither Party, in respect of any Intellectual
Property Rights owned by it, is under any obligation to the other Party to bring
or prosecute actions or suits against third parties for infringement or
misappropriation of such Intellectual Property Rights or to defend any action or
suit brought by a third party which challenges or concerns the validity of any
of such Intellectual Property rights or which claims that any Pre-Separation
Technology assigned or licensed to the other Party hereunder infringes any
Patent, Copyright, Mask Work Right or other intellectual property right of any
third party or constitutes a misappropriated Trade Secret of any third party.
The Partnership shall not have any right to institute any action or suit against
third parties for infringement or misappropriation of any of the Patents,
Copyrights, Mask Work Rights or Trade Secrets protecting, covering or embodying
the Pre-Separation Technology licensed to the Partnership under Section 3.1 and
Cadence shall not have any right to institute any action or suit against third
parties for infringement or misappropriation of any of the Patents, Copyrights,
Mask Work Rights or Trade Secrets protecting, covering or embodying the
Pre-Separation Technology licensed to Cadence under Section 3.2.

                                       15
<PAGE>   19

                                    ARTICLE V

                                      TERM

        Section 5.1 Term. This Agreement shall commence on the date hereof and
continue in perpetuity; provided that the terms hereof applicable to any Patents
licensed pursuant to Section 3.1 or 3.2 shall not apply to any issued Patent
that has expired or lapsed.

        Section 5.2 No Termination. This Agreement and each license granted
hereunder shall not be terminable by either Party and the rights granted under
this Agreement shall continue in full force and effect, notwithstanding any
material breach of any term hereof by either Party or member of its respective
Group. In the event of a breach of any term of this Agreement by either Party or
member of its Group, the other Party may bring any action against the breaching
Party, subject to the applicable requirements of Section 5.4 of the Separation
Agreement, and may, subject to Section 6.1, seek any and all relief and remedies
other than termination of this Agreement or the licenses granted to the
breaching Party hereunder.

                                   ARTICLE VI

                                  MISCELLANEOUS

        Section 6.1 Exclusion of Consequential Damages. IN NO EVENT SHALL ANY
PARTY OR MEMBER OF ITS GROUP HEREUNDER BE LIABLE TO ANOTHER PARTY OR MEMBER OF
ITS GROUP, FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES

        Section 6.2 Incorporation by Reference. Section 4.4 and all of the
provisions of Article V of the Separation Agreement (except for Sections 5.1,
5.7 and 5.13 thereof) are incorporated into and made a part of this Agreement,
as if fully set forth herein.

        Section 6.3 Conflicting Agreements. In the event of any irreconcilable
conflict between this Agreement and the Separation Agreement, any other
Ancillary 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.

        Section 6.4 Assignment. Neither Party (or member of its Group) may,
directly or indirectly, in whole or in part, whether by operation of law or
otherwise, assign or transfer this Agreement or the rights and obligations of
such Party hereunder, without the other Party's prior written consent, and any
attempted assignment, transfer or delegation without such prior written consent
shall be voidable at the sole option of such other Party; provided however that
(i) no assignment shall limit or affect assigning Party's obligations hereunder;
and (ii) the other Party shall not unreasonably withhold its consent to any
assignment of this Agreement as a whole to a Person that succeeds to all or
substantially all of the business or assets of such Party (it being agreed and
understood that it would not be unreasonable for the other Party to withhold its

                                       16
<PAGE>   20

consent in connection with a proposed sale to or acquisition by a Person that is
a direct competitor of the other Party). Without limiting the foregoing, this
Agreement will be binding upon and inure to the benefit of the Parties and their
permitted successors and assigns.

                                       17
<PAGE>   21

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

CADENCE HOLDINGS, INC.                       TALITY CORPORATION

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

                                       18

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