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EXHIBIT 10.12
MASTER CONFIDENTIALITY AGREEMENT
BY AND AMONG
CADENCE DESIGN SYSTEM, INC.,
CADENCE HOLDINGS, INC.,
TALITY, LP
AND
TALITY CORPORATION
DATED AS OF
_____________, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS...................................................... 4
Section 1.1 Confidential Information................................... 4
Section 1.2 Cadence Group.............................................. 4
Section 1.3 Confidentiality Period..................................... 4
Section 1.4 Disclosing Party........................................... 4
Section 1.5 Highly Confidential Information............................ 4
Section 1.6 Receiving Party............................................ 4
Section 1.7 Tality Group............................................... 5
Section 1.8 Third Party................................................ 5
Section 1.9 Transaction Agreements..................................... 5
ARTICLE II CONFIDENTIALITY................................................. 5
Section 2.1 Confidentiality and Non-Use Obligations.................... 5
Section 2.2 Preservation of Privileged Communications.................. 5
Section 2.3 Disclosure of Sublicensees................................. 5
Section 2.4 Independent Contractors.................................... 5
Section 2.5 Residuals.................................................. 6
Section 2.6 Compelled Disclosure....................................... 6
Section 2.7 No Restriction on Disclosing Party......................... 6
Section 2.8 Third-Party Restrictions................................... 6
Section 2.9 Competitor Controversies................................... 6
ARTICLE III WARRANTY DISCLAIMER............................................ 7
Section 3.1 Warranty Disclaimer........................................ 7
Section 3.2 Indemnity.................................................. 7
ARTICLE IV CONFIDENTIALITY OF TRANSACTION AGREEMENTS....................... 7
ARTICLE V TERM AND TERMINATION............................................. 8
Section 5.1 Term....................................................... 8
Section 5.2 Survival................................................... 8
ARTICLE VI MISCELLANEOUS PROVISIONS........................................ 8
Section 6.1 Incorporation by Reference................................. 8
Section 6.2 Export Restrictions........................................ 8
Section 6.3 No Implied Licenses........................................ 8
Section 6.4 Remedies................................................... 9
Section 6.5 Binding Agreement; No Waiver............................... 9
Section 6.6 Infringement Suits......................................... 9
Section 6.7 Conflicting Agreements..................................... 9
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MASTER CONFIDENTIALITY AGREEMENT
THIS MASTER CONFIDENTIALITY 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
(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, Cadence, on behalf of Holdings, and Holdings have transferred to
the Partnership as a capital contribution, and the Partnership has acquired
through one or more Subsidiaries, certain assets, liabilities and other
obligations relating to the operation of the Tality Business outside of the
United States;
WHEREAS, each of the Boards of Directors of Cadence, Tality Corporation 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 other assets and liabilities of Cadence
associated with the Tality Business (the "Separation");
WHEREAS, Cadence, Tality and Holdings are parties to that certain Master
Separation Agreement, dated as of July 14, 2000, as amended (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 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 provide for the protection of their Confidential
Information (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 "Confidential Information" means all information concerning the
business of the Disclosing Party conveyed to the Receiving Party orally or in
tangible form (including by electronic transmission) that (i) is identified as
being "Confidential" at the time of disclosure; (ii) is marked as
"Confidential," or with a similar legend; or (iii) which, due to the
circumstances surrounding its disclosure or its nature or sensitivity,
reasonably should have been understood by the Receiving Party as intended to be
treated as confidential. Confidential Information of Third Parties that is known
to, in the possession of or acquired by a Receiving Party pursuant to a
relationship with the Disclosing Party shall be deemed the Disclosing Party's
Confidential Information for purposes hereof. Notwithstanding the foregoing,
Confidential Information shall not include information that: (i) was in the
Receiving Party's possession before receipt from the Disclosing Party and was
obtained from a source other than the Disclosing Party and other than through
the existing relationship of the Disclosing Party and the Receiving Party before
the Separation Date; (ii) is or becomes a matter of public knowledge through no
breach by the Receiving Party of this Agreement or any other Transaction
Agreement; (iii) is rightfully received by the Receiving Party from a Third
Party without a duty of confidentiality to the Disclosing Party; or (iv) is
independently conceived of or developed by the Receiving Party.
Section 1.2 "Cadence Group" means Cadence and each of its Subsidiaries
(other than any member of the Tality Group) immediately after the date hereof,
and each Person that becomes a Subsidiary of Cadence after the date hereof
(other than any member of the Tality Group).
Section 1.3 "Confidentiality Period" means, (i) with respect to
Confidential Information that is not Highly Confidential Information, five (5)
years, and (ii) with respect to Highly Confidential Information, in perpetuity.
Section 1.4 "Disclosing Party" means the party (including any member of the
Cadence Group, in the case of Cadence or Holdings, or the Tality Group, in the
case of Tality or the Partnership) owning or disclosing the relevant
Confidential Information.
Section 1.5 "Highly Confidential Information" means Confidential
Information that is (i) source code for products that are commercially released
or for which substantial steps have been taken towards commercialization; (ii)
other Confidential Information which (x) if conveyed in written form, is marked
"HIGHLY CONFIDENTIAL" by the Disclosing Party; or (y) if conveyed in oral form,
is promptly followed by a written notice designating such information as "HIGHLY
CONFIDENTIAL"; and (iii) as to Confidential Information disclosed prior to the
Separation Date, any information which the Receiving Party reasonably should
understand to constitute a "trade secret", as defined under California Civil
Code Section 3426.1, of the Disclosing Party.
Section 1.6 "Receiving Party" means the non-owning party or recipient
(including any member of the Cadence Group, in the case of Cadence or Holdings,
or the Tality Group, in the case Tality or the Partnership) of the relevant
Confidential Information.
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Section 1.7 "Tality Group" means Tality and each of its Subsidiaries
immediately after the date hereof and each Person that becomes a Subsidiary of
Tality after the date hereof.
Section 1.8 "Third Party" means a Person other than a member of the Cadence
Group or the Tality Group.
Section 1.9 "Transaction Agreements" mean the Separation Agreement and the
Ancillary Agreements collectively.
ARTICLE II
CONFIDENTIALITY
Section 2.1 Confidentiality and Non-Use Obligations. During the
Confidentiality Period, the Receiving Party shall (i) maintain the
confidentiality of the Confidential Information of the Disclosing Party by using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use, dissemination or publication of such Confidential
Information as the Receiving Party uses to protect its own confidential
information of a like nature; (ii) not use such Confidential Information in
violation of any use restriction in any Transaction Agreement; and (iii) without
the prior written consent of the Disclosing Party (which consent may be withheld
in its sole and absolute discretion), not disclose or otherwise make available
such Confidential Information to any Third Party, except as expressly permitted
by this Agreement, in any other Transaction Agreement or in any other written
agreement entered into among the parties. Each party hereto agrees to notify the
other party in writing immediately upon becoming aware of any prohibited
disclosure or misuse or misappropriation of Confidential Information by any of
its officers, directors, employees, consultants and agents.
Section 2.2 Preservation of Privileged Communications. In the event of any
claim, controversy, dispute or litigation, or other proceeding in which the
parties hereto conclude they have a common interest, provided that in such
circumstances there exists a good faith basis to conclude that an
attorney-client privilege may exist in respect to attorney-client communications
undertake pursuant to the joint defense or joint prosecution of such claim or
controversy, then, in respect of such attorney-client communications, and for
the related purpose of preserving confidentiality or immunity from discovery of
"attorney work product" materials, the parties shall cooperate as is necessary
to give effect to and preserve the existence of such privilege(s) and
immunities, and shall maintain the confidentiality of communications for such
purposes.
Section 2.3 Disclosure to Sublicensees. The Receiving Party has the right
to disclose to its sublicensees permitted under a Transaction Agreement any of
the Disclosing Party's Confidential Information that comprises a part of the
Disclosing Party's intellectual property that the Receiving Party is expressly
permitted to sublicense to its permitted licensees under such Transaction
Agreement, subject to the sublicensee's agreement in writing to confidentiality
and non-use terms at least as protective of the Disclosing Party as the
provisions of this Agreement.
Section 2.4 Independent Contractors. The Receiving Party has the right to
disclose to any independent contractors, such as a contract manufacturer or
foundry, for example, that have been engaged by the Receiving Party to assist in
the development, enhancement and support of
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the Receiving Party's intellectual property, solely for the benefit of the
Receiving Party, as permitted under any Transaction Agreement, portions of the
Confidential Information as reasonably necessary in the exercise of the
Receiving Party's "have made" rights under any Transaction Agreement, subject to
agreement of the independent contractor, in writing, to accept confidentiality
and non-use terms at least as protective of the Disclosing Party as the
provisions of this Agreement; provided, however, that, absent the express
written consent of the Disclosing Party, the Receiving Party shall make no
disclosures to independent contractors that are direct competitors of the
Disclosing Party.
Section 2.5 Residuals. Subject to the confidentiality restrictions imposed
hereby, the Receiving Party may use Residuals for any purpose whatsoever,
including, use in the development, manufacture, marketing, licensing, sale and
maintenance of any of its products or services; in each case without the payment
of any royalty or other fee or charge; provided, however, that the right to use
Residuals does not confer upon the Receiving Party a license under any patents,
copyrights, mask work rights or other similar intellectual property rights of
the Disclosing Party. For purposes hereof, the term "Residuals" means any
concepts, ideas or techniques of general application that are embodied in the
Disclosing Party's Confidential Information which are retained in the unaided
memory of the Receiving Party's employees who have had access to such
Confidential Information pursuant to the terms hereof. An employee's memory is
unaided if the employee has not intentionally memorized the Confidential
Information for the purpose of retaining and subsequently using or disclosing
such Confidential Information. No party shall have the right or authority to
restrict the position or job to which an employee of the other party is assigned
by reason of the employee's knowledge of Confidential Information of any other
party.
Section 2.6 Compelled Disclosure. If the Receiving Party believes that it
is required by Applicable Law or is under threat of being compelled by a court
or other Governmental Authority to disclose Confidential Information of the
Disclosing Party, it shall (i) give the Disclosing Party prompt written notice
so that the Disclosing Party may, at its sole expense, take steps to oppose such
disclosure or obtain a protective order or its equivalent in respect of such
disclosure; (ii) cooperate with the Disclosing Party in its attempts to oppose
such disclosure; and (iii) take all reasonable steps, consistent with any order
of a Governmental Authority requiring such disclosure, to disclose only so much
Confidential Information as is specifically required to be disclosed by such
order.
Section 2.7 No Restriction on Disclosing Party. Nothing in this Agreement
shall restrict a Disclosing Party from using, disclosing or disseminating its
own Confidential Information in any way.
Section 2.8 Third-Party Restrictions. Nothing in this Agreement supersedes
any restriction imposed by Third Parties on their Confidential Information, and
there is no obligation on a Disclosing Party to conform Third Party agreements
to the terms of this Agreement.
Section 2.9 Competitor Controversies. Notwithstanding any other provision
of this Article II, the Parties acknowledge that inappropriate disclosure of
Confidential Information could cause material competitive injury of a nature not
readily definable or susceptible to correction or redress. Accordingly, Cadence,
for itself and as agent for all members of the Cadence Group, and Tality, for
itself and as agent for all members of the Tality Group, agree to certain
special measures intended to recognize the competitive concerns of the other
Party in respect to matters in controversy as may come into being between third
parties and either Cadence or Tality (or member of their respective Groups).
When either Cadence or Tality receives notice of the assertion of a claim by a
Person who is not a member of the Cadence Group or the Tality Group or of the
commencement by any such Person of any Action (collectively, a "Third Party
Claim"), or where either Cadence or Tality commence an Action against a Third
Party ("Third Party Action") (and, together with "Third Party Claim," for
purposes of this article a "Competitor Controversy"), and where the Person
making such Third Party Claim, or against whom such Third Party Action is
brought, is, or reasonably should be understood to be, a direct competitor of
either Cadence or Tality (or member of their respective Groups), then Cadence or
Tality (as applicable) shall promptly and in writing notify the other Party of
the existence and general nature of the Third Party Claim or Third Party Action.
Within five (5) business days thereafter, the Party to whom such notice was
given (the "Uninvolved Party") may request assurance from the other Party (the
"Involved Party") that the Confidential Information of the Uninvolved Party will
not, as a consequence of the Competitor Controversy, or otherwise, be at risk of
misuse by the Third Party, and the Involved Party shall provide such assurance
as it can within five (5) days after receipt of request. Should the Uninvolved
Party thereafter not be satisfied, in its sole discretion, with the assurance
given, then the Uninvolved Party may demand, and the Involved Party must comply,
that the Involved Party cease immediately to provide any further Confidential
Information to the Third Party involved in the Competitor Controversy, and that
the Involved Party immediately seek to recover, as is reasonably possible, any
Confidential Information of the Uninvolved Party that was or is believed to be
in the possession of such Third Party, and this suspension, of any rights or
licenses as otherwise may exist with respect to such Confidential Information,
shall continue until such time that the Uninvolved Party receives the written
consent of the Involved Party to disclosure of its Confidential Information.
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ARTICLE III
WARRANTY DISCLAIMER
Section 3.1 Warranty Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ALL CONFIDENTIAL INFORMATION IS PROVIDED ON AN "AS IS, WHERE IS" BASIS AND THAT
NO PARTY NOR ANY OF ITS SUBSIDIARIES HAS MADE OR WILL MAKE ANY REPRESENTATION OR
WARRANTY WITH RESPECT THERETO WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.
Section 3.2 Indemnity. The Receiving Party agrees and acknowledges that it
assumes all risks associated with any use by the Receiving Party of any
Confidential Information conveyed to the Receiving Party by the Disclosing
Party. The Receiving Party agrees to indemnify and hold harmless the Disclosing
Party and the Disclosing Party's Affiliates from and against any damages,
losses, liabilities, costs, and expenses (including reasonable attorneys' fees
and disbursements) resulting from any claim, action or proceeding by a Third
Party arising out of or relating to the use of such Confidential Information by
the Receiving Party, including any claim, action or proceeding brought against
the Disclosing Party or any Affiliate thereof based on an allegation that the
use of such Confidential Information by the Receiving Party (a) violates,
infringes, misappropriates or otherwise wrongfully exploits any patent,
copyright, trade secret or other intellectual property right of any Third Party
or (b) breaches or violates any contractual or other obligation owing to such
Third Party. In respect of such Third Party claims, the procedures for
procedures for defense, settlement and indemnification shall be as set forth in
Section 2.6 of the Indemnification And Insurance Matters Agreement which is an
Ancillary Agreement to the Separation Agreement..
ARTICLE IV
CONFIDENTIALITY OF TRANSACTION AGREEMENTS
Each party agrees that those terms and conditions of the Transaction
Agreements for which, in the case of documents filed as exhibits to the
Registration Statement of Tality, "Confidential Treatment" is requested of and
received from the Commission, or, in the case of other Transaction Agreements,
are marked as "Confidential," shall be treated as Confidential Information and
that neither party shall disclose such terms or conditions to any Third Party
without the prior written consent of the other party (which consent may be
withheld in its sole and absolute discretion); provided, however, that each
party may disclose such terms and conditions of such agreements marked as
confidential:
(a) subject to Section 2.2, to legal counsel, accountants and other
professional advisors; provided, however, that the recipient is under a legal or
contractual obligation to maintain confidentiality;
(b) subject to Section 2.6, as required by any Governmental
Authority, or as otherwise required by Applicable Law;
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(c) to banks, investors and other financing sources and the advisors
of such parties; provided, however, that the recipient is under a legal or
contractual obligation to maintain confidentiality;
(d) in connection with the enforcement of this Agreement or any other
Transaction Agreement; provided, however, that the parties shall take all
reasonable steps to cause the sealing of relevant court files and other similar
actions to be taken in such enforcement proceedings consistent with maintaining
the confidentiality of the Confidential Information hereunder; or
(e) in connection with an actual or prospective merger or acquisition
or similar transaction; provided that the Receiving Party, when seeking to make
such disclosure, shall first secure the informed and written consent of the
Disclosing Party, such consent not to be unreasonably withheld or delayed (it
being understood that it is not "unreasonable" for consent to be denied where
disclosure is proposed to a direct competitor of the party from whom consent is
sought).
ARTICLE V
TERM AND TERMINATION
Section 5.1 Term. This Agreement shall remain in full force and effect
unless and until terminated by the mutual written agreement of the parties.
Section 5.2 Survival. Article VI and, with respect to Confidential
Information acquired or disclosed prior to the date of termination, Articles II,
III and IV shall survive any termination of this Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Incorporation by Reference. Section 4.4 and all of the
provisions of Article V of the Separation Agreement (except for Section 5.13
thereof) are incorporated into and made a part of this Agreement, as if fully
set forth herein.
Section 6.2 Export Restrictions. Each party to this Agreement acknowledges
its obligations to control access to and disclosure of technical data under the
U.S. Export Laws and Regulations and agrees to adhere to such laws and
regulations and to obtain, as and when required, any license(s) or permits as
may be required with respect to the transfer, disclosure or sale of any
information as may be subject to such laws and regulations.
Section 6.3 No Implied Licenses. Nothing contained in this Agreement shall
be construed as conferring any rights by implication, estoppel or otherwise,
under any intellectual property right, other than the rights expressly granted
in this Agreement with respect to Confidential Information. This Agreement
imposes no obligation on any party hereto to furnish or disclose to any other
party any technical or other information. The right to use Confidential
Information or to a make a permitted disclosure of it under this Agreement does
not constitute a
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license under any patents, copyrights, mask work rights or other similar
intellectual property rights of the Disclosing Party.
Section 6.4 Remedies. Each Receiving Party acknowledges and agrees that the
Confidential Information of the Disclosing Party constitutes valuable trade
secrets of the Disclosing Party, and that any violation or threatened violation
of this Agreement will cause the Disclosing Party irreparable harm for which its
remedies at law will be inadequate. Therefore, the Receiving Party agrees that
the Disclosing Party shall have the right, in addition to any other remedies, to
obtain the issuance of an ex parte restraining order or injunction in any court
having the capacity to grant such relief to protect trade secrets and restrain
any breach or threatened breach or continuing violation of the Receiving Party's
obligations hereunder.
Section 6.5 Binding Agreement; No Waiver. This Agreement shall be binding
upon and for the benefit of the undersigned parties, their successors and
assigns; provided, however, that Confidential Information may not be transferred
or assigned without the prior written consent of the Disclosing Party, which
consent may be withheld in the Disclosing Party's sole discretion. Failure to
enforce any provision of this Agreement by a party shall not constitute a waiver
of any term hereof by such party.
Section 6.6 Infringement Suits. Neither party hereto shall have any
obligation hereunder to institute any action or suit against Third Parties for
misappropriation of any of its Confidential Information or to defend any action
or suit brought by a Third Party that alleges infringement of any intellectual
property rights by the Receiving Party's authorized use of the Disclosing
Party's Confidential Information.
Section 6.7 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.
WHEREFORE, the parties hereto have executed and delivered this Master
Confidentiality 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:
----------------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
CADENCE HOLDINGS, INC. TALITY, CORPORATION
By: By:
------------------------------------- -----------------------------------
Name: Name:
----------------------------------- ---------------------------------
Title: Title:
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