Document:

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                                                                  Exhibit 10.51

                             TALITY HOLDINGS, INC.

                        2000 DIRECTORS STOCK OPTION PLAN

             AS AMENDED AND RESTATED EFFECTIVE AS OF JULY 26, 2001

1.      PURPOSE

        This Tality Holdings, Inc. 2000 Directors Stock Option Plan (the "Plan")
        represents the amendment and restatement of the Tality Corporation 2000
        Directors Stock Option Plan (the "Former Plan") which, together with all
        options outstanding thereunder, is being assumed by Tality Holdings,
        Inc., a Delaware corporation (the "Company") in accordance with the
        provisions of Section 9 of the Former Plan, as a result of the
        restructuring of Tality Corporation and its affiliates ("Tality")
        pursuant to a series of transactions whereby the assets and liabilities
        of Tality have been assumed, directly or indirectly, by the Company. The
        purpose of the Plan is to advance the interests of the Company by
        enabling it to attract, retain and motivate qualified individuals to
        serve on the Company's Board of Directors and to align the financial
        interests of such individuals with those of the Company's stockholders
        by providing for or increasing their proprietary interest in the
        Company. The stock options granted pursuant to this Plan are not
        qualified under Section 422 of the Internal Revenue Code of 1986, as
        amended (the "Code").

2.      DEFINITIONS

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

        (b) "CALIFORNIA COMMISSIONER" means the Commissioner of Corporations of
the State of California.

        (c) "CALIFORNIA REGULATED PLAN" means this Plan at any time that Awards
and securities underlying Awards are California Regulated Securities and the
Company relies upon the exemption provided by Section 25102(o) of the California
Securities Law (or another exemption imposing comparable requirements) to exempt
the issuance of securities under this Plan from qualification under the
California Securities Law

        (d) "CALIFORNIA REGULATED SECURITIES" means Awards and securities
underlying Awards that are subject to the California Securities Law or the
California Securities Rules.

        (e) "CALIFORNIA SECURITIES LAW" means the California Corporate
Securities Law of 1968, as amended.

        (f) "CALIFORNIA SECURITIES RULES" means the Rules of the California
Commissioner adopted under the California Securities Law.

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                                                                  Exhibit 10.51

        (g) "COMMITTEE" means the Board and/or a committee of the Board acting
pursuant to its authorization to administer this Plan under Section 9.

        (h) "COMMON STOCK" means the Company's Class A Common Stock, as
presently constituted, subject to adjustment as provided in Section 11.

        (i) "FAIR MARKET VALUE" means, as of any date, the mean average of the
high and low prices of the Common Stock for each of the last 20 trading days
prior to the such date on the national securities exchange, national market
system or other trading market on which the Common Stock has the highest average
trading volume; or, in the absence of such market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board; provided, however,
that when appropriate, the Board in determining Fair Market Value of the Common
Stock shall consider such factors as may be required by the California
Securities Law and the California Securities Rules while this Plan is a
California Regulated Plan, and may take into account such other factors as it
may deem appropriate under the circumstances.

        (j) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not at
the time also an employee of the Company or any of its direct or indirect
majority-owned subsidiaries (regardless of whether such subsidiary is organized
as a corporation, partnership or other entity). For purposes of this Plan, the
Chairman of the Board's status as an employee shall be determined by the Board.

        (k) "TEN PERCENT OWNER" means a Participant who owns, directly or by
reason of the applicable attribution rules of Code Section 424(d), more than 10%
of the total combined voting power of all classes of capital stock of the
Company or its parent or subsidiary corporations, if any, as defined in Code
Sections 424(e) and (f).

3.      SHARES SUBJECT TO THE PLAN

        Subject to adjustment as provided in Section 11, the maximum number of
        shares of Common Stock which may be issued pursuant to this Plan shall
        not exceed Six Hundred Seventy-Five Thousand (675,000) Shares issued
        under this Plan may be authorized and unissued shares of Common Stock or
        shares of Common Stock reacquired by the Company. All or any shares of
        Common Stock subject to a stock option which for any reason are not
        issued or are reacquired under the stock option may again be made
        subject to a stock option under the Plan.

4.      PARTICIPANTS

        Any person who is a Non-Employee Director shall be eligible for the
        award of stock options hereunder. Non-Employee Directors who are granted
        stock options hereunder shall be referred to as "Participants."

5.      NON-EMPLOYEE DIRECTOR AWARDS

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                                                                  Exhibit 10.51

        (a) Each person who becomes a Non-Employee Director during any calendar
        year shall, upon election to the Board, automatically be granted an
        option to purchase 50,000 shares of Common Stock. If such person is also
        elected as the Chairman of the Board, such person shall, upon election
        as Chairman of the Board, automatically be granted an additional option
        to purchase 50,000 shares of Common Stock.

        (b) Other than the calendar year in which such person becomes a
        Non-Employee Director, each Non-Employee Director, on July 1 of each
        calendar year, beginning July 1, 2001, shall automatically be granted an
        option to purchase 12,500 shares of Common Stock. In addition, if such
        Non-Employee Director is serving as Chairman of the Board, such
        Non-Employee Director shall automatically be granted an option to
        purchase an additional 12,500 shares of Common Stock.

6.      TERMS AND CONDITIONS OF STOCK OPTIONS

        (a) General Terms and Conditions: Stock options awarded pursuant to the
        Plan need not be identical but each stock option shall be subject to the
        following general terms and conditions:

               (1) Terms and Restrictions Upon Shares: The Board may provide
               that the shares of Common Stock issued upon exercise of a stock
               option shall be subject to such further conditions, restrictions
               or agreements as the Board in its discretion may specify prior to
               the exercise of such stock option, including without limitation,
               deferrals on issuance, conditions on vesting or transferability,
               and forfeiture or repurchase provisions. The Committee may
               establish rules for the deferred delivery of Common Stock upon
               exercise of a stock option with the deferral evidenced by use of
               "Stock Units" equal in number to the number of shares of Common
               Stock whose delivery is so deferred. A "Stock Unit" is a
               bookkeeping entry representing an amount equivalent to the Fair
               Market Value of one share of Common Stock. Stock Units represent
               an unfunded and unsecured obligation of the Corporation except as
               otherwise provided by the Board. Settlement of Stock Units upon
               expiration of the deferral period shall be made in Common Stock
               or otherwise as determined by the Committee. The amount of Common
               Stock, or other settlement medium, to be so distributed may be
               increased by an interest factor or by dividend equivalents. Until
               a Stock Unit is settled, the number of shares of Common Stock
               represented by a Stock Unit shall be subject to adjustment
               pursuant to Section 11.

               (2) Transferability of Option: Unless otherwise specifically
               provided by the Committee and the applicable option agreement,
               each stock option shall be transferable only by will or the laws
               of descent and distribution. Notwithstanding the foregoing, a
               stock option that is a California Regulated Security granted at
               any time that this Plan is a California Regulated Plan may not be
               transferred other than by will or the laws of descent or
               distribution.

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                                                                  Exhibit 10.51

               (3) Vesting: Options granted pursuant to Section 5 shall vest
               over a four-year period, with 25% of the option vesting on the
               first through fourth anniversaries of the date of grant of such
               option.

               (4) Other Terms and Conditions: No holder of a stock option shall
               have any rights as a stockholder with respect to any shares of
               Common Stock subject to a stock option hereunder until said
               shares have been issued. Stock options may also contain such
               other provisions, which shall not be inconsistent with any of the
               foregoing terms, as the Board or the Committee shall deem
               appropriate. The Board may waive conditions to and/or accelerate
               exercisability of a stock option, either automatically upon the
               occurrence of specified events (including in connection with a
               change of control of the Company) or otherwise in its discretion.
               No stock option, however, nor anything contained in the Plan,
               shall confer upon any Participant any right to serve as a
               director of the Company.

        (b) Stock Option Price: The exercise price for each stock option shall
        be established by the Board or under a formula established by the Board.
        The exercise price of each stock option may be greater or lesser than
        100% of the Fair Market Value of the Common Stock subject to the stock
        option as of the date of grant, provided that the exercise price of an
        option that is a California Regulated Security granted while this Plan
        is a California Regulated Plan may not be less than 85% of the Fair
        Market Value of the Common Stock on the date the option is granted. In
        all cases, the exercise price shall not be less than 110% of the Fair
        Market Value of the Common Stock as of the date of grant in the case of
        a stock option granted to a Ten Percent Owner. The exercise price shall
        be payable in cash, by payment under an arrangement with a broker where
        payment is made pursuant to an irrevocable direction to the broker to
        deliver all or part of the proceeds from the sale of the option shares
        to the Company, by the surrender of shares of Common Stock owned by the
        optionholder exercising the option and having a fair market value on the
        date of exercise equal to the exercise price but only if such will not
        result in an accounting charge to the Company, or by any combination of
        the foregoing. In addition, the exercise price shall be payable in such
        other form(s) of consideration as the Committee in its discretion shall
        specify, including without limitation by loan (as described in Section
        10) or by techniques that may result in an accounting charge to the
        Company. For the purposes of determining the fair market value of shares
        of Common Stock surrendered to pay the exercise price of an option,
        "fair market value" shall mean the average of the high and low prices of
        the Common Stock on the last trading day preceding the date of delivery
        of such Common Stock to the Company on the national securities exchange,
        national market system or other trading market on which the Common Stock
        has the highest average trading volume.

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                                                                  Exhibit 10.51

7.      RIGHT OF FIRST REFUSAL.

               (a) Offer of Sale; Notice of Proposed Sale. If at any time a
        Participant desires to sell, transfer or otherwise dispose of any Shares
        or any interest in such Shares, the Participant shall deliver written
        notice of his or her desire to do so (the "Sale Notice") to the Company,
        which Sale Notice must be accompanied by a binding agreement (the
        "Binding Agreement"), which Binding Agreement shall be expressly subject
        to the Participant's compliance with the provisions of this Agreement,
        including this Section 7, with a bona fide purchaser reasonably capable
        of completing such purchase (the "Proposed Transferee"). The Sale Notice
        and Binding Agreement shall specify (i) the name and address of the
        Proposed Transferee(s), (ii) the number of Shares the Participant
        proposes to sell, transfer or otherwise dispose of (referred to herein
        as "Offered Shares"), (iii) the consideration per Offered Share to be
        delivered to the Participant for the proposed sale, transfer or
        disposition and (iv) all other material terms and conditions of the
        proposed transaction.

               (b) Option to Purchase.

                      (i) The Company shall have the option to purchase all or
        any portion of the Offered Shares for the consideration per share and on
        the terms and conditions set forth in the Sale Notice. The Company may
        only exercise such option by delivery of written notice to the
        Participant prior to the date ten (10) days after the date of delivery
        of the Sale Notice.

                      (ii) If the Company delivers written notice of its intent
        to purchase all or any portion of the Offered Shares, then the closing
        of the purchase of the Offered Shares by the Company shall take place at
        the offices of the Company no later than ten (10) days after the
        expiration of the applicable ten (10) day period.

               (c) Form of Consideration. To the extent that the consideration
        proposed to be paid by the Proposed Transferee for the Offered Shares
        consists of property other than cash or a promissory note (the "Non-Cash
        Consideration"), the consideration required to be paid by the Company
        exercising its options under this Section 7 may consist of cash equal to
        the value of the Non-Cash Consideration, as determined in good faith by
        the Company's Chief Executive Officer or Chief Financial Officer.
        Notwithstanding anything to the contrary set forth above, the ten (10)
        day period described in Section 7(b)(i) shall commence when the value of
        the Non-Cash Consideration is determined pursuant to this Section 7(c).

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                                                                  Exhibit 10.51

               (d) Sales to Proposed Transferee. To the extent the Company fails
        (i) to deliver written notice or notices of intent to purchase any of
        the Offered Shares within the ten (10) day period specified in Section
        7(b)(i) or (ii) to close the purchase of the Offered Shares within the
        applicable period specified in Section 7(b)(ii), then the Participant
        may sell, transfer or otherwise dispose of the remaining Offered Shares
        to the Proposed Transferee at any time within fifty (50) days after the
        date of the delivery of the Sale Notice on the terms set forth in the
        Sale Notice and Binding Agreement. Any Offered Shares not sold,
        transferred or otherwise disposed of within the applicable fifty (50)
        day period and any proposed transfer on terms more favorable to the
        Proposed Transferee than those described in the Sale Notice shall
        continue to be subject to all of the requirements of this Section 7 as
        if there had been no prior offer or Sale Notice. Notwithstanding the
        above, the Offered Shares shall not be sold, transferred or otherwise
        disposed of unless such purchaser or acquiror is bound or agrees in
        writing to be bound by the provisions of this Plan and the option
        agreement (and, if the purchaser or acquiror is an entity, such other
        terms reasonably imposed by the Company that are intended to circumvent
        avoidance of these provisions by means of an indirect transfer of the
        Shares), and any such sale, transfer or disposition where such purchaser
        or acquiror is not bound or does not so agree to be bound shall be void.

               (e) Permitted Transfers. Notwithstanding anything to the contrary
        set forth herein, to the extent specifically so provided in the
        applicable stock option agreement, the provisions of this Section 7
        shall not apply to any transfer or distribution by a Participant of
        Shares to: (a) a trust or similar entity directly or indirectly
        controlled by the Participant primarily for estate planning purposes,
        (b) the Participant's heirs, executors, administrators or beneficiaries
        upon the Participant's death, and (c) a spouse, sibling, parent or
        child, or to the spouse, sibling, parent or child of any such persons,
        or to a trust or similar entity of which such persons are the
        beneficiaries for estate planning purposes or domestic relations order
        issued by any court or other governmental or administrative body;
        provided, however, in the case of any such transfer that such transferee
        or distributee agrees in writing to comply with the provisions of this
        Agreement.

               (f) Effect of Not Following Procedures. Any sale, transfer or
        other disposition of Shares not in accordance with the foregoing
        procedures of this Section 7 shall be null and void and of no force or
        effect.

               (g) Termination. The provisions of this Section 7 shall terminate
        upon consummation of an initial public offering of the Company.

8.      LOCK-UP AGREEMENTS

        Each option agreement shall provide that, in connection with any public
        offering by the Company of its equity securities, any shares of Common
        Stock acquired or that may be acquired upon exercise or vesting of a
        stock option may not be sold, offered for sale, encumbered, or otherwise
        disposed of or subjected to any transaction that will involve any sales
        of securities of the Company, without the prior written consent of the
        Company

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                                                                  Exhibit 10.51

        or such underwriter, as the case may be, for a period of 180 days after
        the effective date of the registration statement for such public
        offering. Any attempted transfer in violation of this Section 8 shall be
        null and void.

9.      ADMINISTRATION OF THE PLAN

        The Plan shall be administered by the Board, except that as provided
        herein the Plan may be administered by a Committee of the Board, as
        appointed from time to time by the Board. The Board shall fill vacancies
        on and from time to time may remove or add members to the Committee. The
        Committee shall act pursuant to a majority vote or unanimous written
        consent.

        Subject to the express provisions of this Plan, the Committee shall be
        authorized and empowered to do all things necessary or desirable in
        connection with the administration of this Plan, including, without
        limitation: (a) to prescribe, amend and rescind rules relating to this
        Plan and to define terms not otherwise defined herein; (b) to prescribe
        the form of documentation used to evidence any stock option awarded
        hereunder, including provision for such terms as it considers necessary
        or desirable, not inconsistent with the terms established by the Board;
        (c) to establish and verify the extent of satisfaction of any conditions
        to exercisability applicable to stock options; (d) to determine whether,
        and the extent to which, adjustments are required pursuant to Section 11
        hereof; and (e) to interpret and construe this Plan, any rules and
        regulations under the Plan and the terms and conditions of any stock
        option awarded hereunder, and to make exceptions to any procedural
        provisions in good faith and for the benefit of the Company.
        Notwithstanding any provision of this Plan, the Board may at any time
        limit the authority of the Committee to administer this Plan.

        The Board shall have the authority to establish subplans or other
        arrangements not inconsistent with this Plan which the Board deems
        necessary or advisable to comply with laws or requirements of foreign
        jurisdictions.

        All decisions, determinations and interpretations by the Board or,
        except as to the Board, the Committee, regarding the Plan, any rules and
        regulations under the Plan and the terms and conditions of any stock
        option awarded hereunder, shall be final and binding on all Participants
        and holders of stock options. The Board and the Committee may consider
        such factors as it deems relevant, in its sole and absolute discretion,
        in making such decisions, determinations and interpretations including,
        without limitation, the recommendations or advice of any officer or
        other employee of the Company and such attorneys, consultants and
        accountants as it may select.

10.     LOANS

        The Company may, if authorized by the Board, make loans for the purpose
        of enabling a Participant to exercise stock options and to pay the tax
        liability resulting from a stock option exercise under the Plan. The
        Board shall have full authority to determine the terms and

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                                                                  Exhibit 10.51

        conditions of such loans. Such loans may be secured by the shares of
        Common Stock received upon exercise of such stock option.

11.     ADJUSTMENT OF AND CHANGES IN THE STOCK

        If the outstanding securities of the class then subject to this Plan are
        increased, decreased or exchanged for or converted into cash, property
        or a different number or kind of shares or securities, or if cash,
        property or shares or securities are distributed in respect of such
        outstanding securities, in either case as a result of a reorganization,
        reclassification, dividend (other than a regular cash dividend) or other
        distribution, stock split, reverse stock split, spin-off or the like, or
        if substantially all of the property and assets of the Company are sold,
        then, unless the terms of such transaction shall provide otherwise, the
        maximum number and type of shares or other securities that may be issued
        under this Plan shall be appropriately adjusted. The Committee shall
        determine in its sole discretion the appropriate adjustment to be
        effected pursuant to the immediately preceding sentence. In addition, in
        connection with any such change in the class of securities then subject
        to this Plan, the Committee may make appropriate and proportionate
        adjustments in the number and type of shares or other securities or cash
        or other property that may be acquired pursuant to stock options
        theretofore awarded under this Plan and the exercise price of such stock
        options.

        No right to purchase or receive fractional shares shall result from any
        adjustment in stock options pursuant to this Section 11. In case of any
        such adjustment, the shares subject to the stock option shall be rounded
        up to the nearest whole share of Common Stock.

12.     REGISTRATION, LISTING OR QUALIFICATION OF STOCK

        In the event that the Board or the Committee determines in its
        discretion that the registration, listing or qualification of the shares
        of Common Stock issuable under the Plan on any securities exchange or
        under any applicable law or governmental regulation is necessary as a
        condition to the issuance of such shares under the stock option, the
        stock option shall not be exercisable or exercised in whole or in part
        unless such registration, listing, qualification, consent or approval
        has been unconditionally obtained.

13.     TAXES

        The Board or Committee may make such provisions or impose such
        conditions as it may deem appropriate for the withholding or payment by
        a Participant of any taxes which it determines are necessary or
        appropriate in connection with any issuance of shares under this Plan,
        and the rights of a holder of a stock option in any shares are subject
        to satisfaction of such conditions. The Company shall not be required to
        issue shares of Common Stock or to recognize the disposition of such
        shares until such obligations are satisfied. At the Participant's
        election, any such obligations may be satisfied by having the Company
        withhold a portion of the shares of Common Stock that otherwise would be
        issued to the holder of the stock option upon exercise of the stock
        option or by surrendering to the Company shares of Common Stock
        previously acquired. The Company and any affiliate of

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                                                                  Exhibit 10.51

        the Company shall not be liable to a Participant or any other persons as
        to any tax consequence expected, but not realized, by any Participant or
        other person due to the receipt of any stock options awarded hereunder.

14.     EFFECTIVE DATE, AMENDMENT, AND TERMINATION OF THE PLAN

        The Former Plan became effective upon its approval on September 22, 2000
        by a majority of the outstanding shares of the Company in accordance
        with applicable law. This amended and restated Plan is effective as of
        July 26, 2001. Unless earlier suspended or terminated by the Board, no
        stock options may be awarded after the tenth anniversary of the date the
        Plan is approved by the Company's stockholders. The Board may
        periodically amend the Plan as determined appropriate, without further
        action by the Company's stockholders except to the extent required by
        applicable law. Notwithstanding the foregoing, and subject to adjustment
        pursuant to Section 11, the Plan may not be amended to materially
        increase the number of shares of Common Stock authorized for issuance
        under the Plan, unless any such amendment is approved by the Company's
        stockholders. The Plan may be earlier terminated at such earlier time as
        the Board may determine. Termination and expiration of the Plan will not
        affect the rights and obligations arising under stock options
        theretofore awarded and then in effect.

15.     MISCELLANEOUS

        (a) Provision of Information: The Board in its sole discretion may
        determine what, if any, financial and other information is to be
        provided to Participants and when such financial and other information
        is to be provided after giving consideration to applicable federal and
        state laws, rules and regulations, including, without limitation,
        applicable federal and state securities laws, rules and regulations,
        provided that during such times as this Plan is a California Regulated
        Plan, holders of California Regulated Securities will receive financial
        statements of the Company on an annual basis.

        (b) Governing Law: The Plan shall be governed by the laws of the state
        of Delaware, without giving effect to the principles of the conflicts of
        laws thereof, provided that this will not be construed to apply the
        California Securities Law or the California Securities Rules to
        securities or holders thereof to which the California Securities Law or
        California Securities Rules would not otherwise apply. In the event any
        provision of the Plan shall be held invalid, illegal or unenforceable,
        in whole or in part, for any reason, such determination shall not affect
        the validity, legality or enforceability of any remaining provision,
        portion of provision or the Plan overall, which shall remain in full
        force and effect as if the Plan had been absent the invalid, illegal or
        unenforceable provision or portion thereof.

                                      -9-<PAGE>   1
                                                                   EXHIBIT 10.56

June 28, 2001

Name
Address

        Re:    Agreement to Repurchase Tality Corporation Common Stock

Dear Tality Stockholder:

        Pursuant to that certain Common Stock Purchase Agreement (the "Purchase
Agreement"), dated on or about July 14, 2000, between yourself and Cadence
Design Systems, Inc. ("Cadence"), you purchased [Shares_Purchased] shares of
Class A common stock of Tality Corporation, to be held in the name of [Name]
(the "Shares"). Cadence hereby offers to repurchase the Shares for consideration
of $6.10 per share, which represents the fair market value of each of the Shares
as determined by the Board of Directors of Tality and Cadence and constitutes a
total consideration of $[Total_Purchase_Price] for all of the Shares (the
"Repurchase Price"), which offer is effective only if accepted on or prior to
July 30, 2001, unless the offer is extended.

        By indicating your acceptance of this repurchase offer and signing this
letter agreement and returning it, along with a completed copy of the attached
Substitute Form W-9, or, if you are not a resident of the United States, a Form
W-8 (which will be provided upon request), to Cadence at Cadence Design Systems,
Inc., 2655 Seely Avenue, Building 5, San Jose, California 95134, Attn: Stock
Administration, Fax: (408) 944-7835) no later than July 30, 2001, you hereby
accept Cadence's offer to repurchase the Shares, on the terms and conditions
herein. If you reject this repurchase offer, please indicate your rejection
below and sign this letter agreement and return to Cadence. Once you have
accepted this repurchase offer, you may not withdraw your acceptance.

        If your properly completed acceptance is received by Cadence and the
repurchase is completed within one year of your acquisition of the Shares, any
loss recognized by you on such sale will be treated as a short-term capital
loss. However, if such sale is completed after one year of your acquisition of
the Shares, any such loss will be treated as a long-term capital loss. We urge
you to discuss the tax implications to you with your tax advisor.

        If you do not accept this offer, there will be no change to your
existing Tality Shares. It is anticipated that the Tality entities will undergo
some form of reorganization, but such reorganization, once completed, is not
expect to change the terms of the Tality Shares. Tality Shares that are not
repurchased will not be registered under the Securities Act of 1933, and
therefore will not constitute liquid securities before any initial public
offering of Tality Corporation.

<PAGE>   2

        In connection with your purchase of the Shares, you delivered to Cadence
a secured promissory note (the "Promissory Note") for the purchase price of the
Shares which bears interest at the rate of 6.51% per annum, compounded
semi-annually. As payment of the Repurchase Price, Cadence will reduce the
outstanding amount owed to Cadence by you pursuant to the Promissory Note by the
amount of the Repurchase Price (less any applicable withholding taxes),
resulting in the total amount owed under the Promissory Note to be
$[Total_Balance]. This amount consists of the $[Principal] remaining
principal amount and $[Interest] accrued interest as of the date of this
letter. Additional interest will continue to accrue on any outstanding balance
on and as of the date hereof and will continue to accrue as long as such balance
remains outstanding. Cadence will also release its security interest in the
Shares. Your acceptance of this agreement will amend your Promissory Note to
reduce the amount currently owed under the Promissory Note and to make the
Promissory Note unsecured. The interest rate of the Promissory Note will not
change. You will not receive a new promissory note reflecting these changes.

        In consideration of Cadence's offer to repurchase the Shares, you hereby
release, acquit and forever discharge Cadence, Tality, Tality Canada
Corporation, Tality UK, Ltd. and their respective officers, directors, agents,
servants, employees, attorneys, stockholders, successors, assigns and other
affiliates (the "Releasees") of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages,
indemnities and obligations of every kind and nature, in law, equity or
otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, directly or indirectly arising out of or in any way connected with
the Purchase Agreement, the related Pledge Agreement, the transactions
contemplated by such agreements, stock, stock options, or any other ownership
interests in Tality Corporation, including but not limited to, all such claims
and demands pursuant to any federal, state or local law, statute, or causes of
action under securities law, contract law or tort law; or any related events,
acts or conduct at any time prior to and including the date of execution of this
letter agreement.

        In addition, by signing this letter agreement, you understand and agree
that the release of claims described above includes claims which may be unknown
to you at present, and that you have read and understand Section 1542 of the
California Civil Code, which reads as follows: "A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." You hereby waive and
relinquish any and all rights under Section 1542 with respect to your release of
any unknown or unsuspected claims you might have against the Releasees.

        Promptly after receipt of your properly executed copy of this letter
agreement, the Pledge Agreement dated on or about July 19, 2000 executed by you
in connection with the Purchase Agreement and your Promissory Note will be
terminated and will be of no further force and effect.

        This letter agreement will be governed by and construed in accordance
with the laws of the State of California without regard to conflict of laws
principles thereof.

<PAGE>   3

        You acknowledge that this letter agreement has been prepared on behalf
of Cadence by Gibson, Dunn & Crutcher LLP, counsel to Cadence, and that Gibson,
Dunn & Crutcher LLP does not represent, and is not acting on behalf of you. You
have been provided with an opportunity to consult with your own counsel and tax
advisor with respect to this letter agreement.

                                       3

<PAGE>   4

        Should you have any questions regarding this matter please contact
Elizabeth Villalobos at Cadence, tel: (408) 944-7835 or via email at
lizv@cadence.com. We appreciate your assistance in handling this matter in a
timely fashion.

                                            Very truly yours,

                                            CADENCE DESIGN SYSTEMS, INC.

                                            By:  William Porter
                                            Its: Senior Vice President and
                                                 Chief Financial Officer

[_] I ACCEPT the offer to repurchase Tality common stock and related waiver

[_] I DO NOT accept the offer to repurchase Tality common stock

X ___________________________________    Date: __________________, 2001
Signature

Print Name: _________________________

X ___________________________________    Date: __________________, 2001
Spouse's Signature

Print Name: _________________________

Home Telephone Number (with area code): ________________________________

                                       4

<PAGE>   5

                   SUMMARY OF TERMS OF STOCK REPURCHASE OFFER

             -----------------------------------------------------

               RESPONSE NEEDED BY 12:00 MIDNIGHT, CALIFORNIA TIME,

                 ON JULY 30, 2001, UNLESS THE OFFER IS EXTENDED

             -----------------------------------------------------

        You must check your election and sign and date the Offer Letter, have
your spouse sign and date the Offer Letter and return it, along with a completed
copy of the attached Substitute Form W-9, or if you are not a resident of the
United States, a Form W-8 (which will be provided upon request), to Stock
Administration, Cadence Design Systems, Inc., 2655 Seely Avenue, Building 5, San
Jose, California 95134, Fax: (408) 944-7835, before 12:00 midnight, California
Time, on July 30, 2001, unless the offer is extended. If you have any questions,
please contact Elizabeth Villalobos at Cadence, tel: (408) 944-7835 or via email
at lizv@cadence.com.

             -----------------------------------------------------

        The following description summarizes some of the terms and conditions of
the offer to Repurchase Tality Corporation Class A Common Stock ("Tality
Stock"). Please read the Offer to Repurchase as well because the information in
this summary is not complete.

        WHO CAN PARTICIPATE IN THE REPURCHASE? Any holder of Tality Stock who
purchased such stock from Cadence may sell all of his or her Tality Stock.

        ARE THERE ANY CONDITIONS OF THE REPURCHASE? Any holder of Tality Stock
must transfer his or her Tality Stock on an all-or-nothing basis. Any such
holder must also agree to waive any claims against Cadence, Tality Corporation
and their affiliates relating to the offer and his or her ownership of Tality
Corporation equity. In addition, once a holder of Tality Stock accepts the
offer, this acceptance cannot be revoked.

        WHAT IS THE REPURCHASE PRICE PER SHARE OF THE TALITY STOCK? Cadence will
repurchase shares of Tality Stock at a repurchase price equal to $6.10, the fair
market value of such Tality Stock.

        WHAT DOES THE COMPANY RECOMMEND THAT I DO? Although the Cadence board of
directors or the compensation committee of the board has approved Cadence making
this offer, neither we nor our board of directors (nor any committee of the
board) makes any recommendation as to whether you should accept the Offer to
Repurchase or refrain from making such election. You must make your own decision
whether to elect to accept the Offer to Repurchase Tality Stock. Our board of
directors recognizes that the decision to accept the offer is an individual one
that should be based on a variety of factors and you should consult with your
personal financial and tax advisors if you have questions about your financial
or tax situation.

                                       5

<PAGE>   6

        WHAT HAPPENS TO MY TALITY STOCK IF I ACCEPT THE OFFER? If you accept the
offer, all of your Tality Stock will be cancelled and you will have no further
right or interest in Tality Stock.

        WHAT IS THE U.S. TAX TREATMENT OF RECEIPT OF THE REPURCHASE PRICE FOR
THE TALITY STOCK? If you accept the offer, you will recognize gain or loss equal
to the difference between the amount of cash that you receive and your tax basis
in the shares of Tality Stock that are tendered pursuant to the offer. For a
more detailed discussion, see "The Material U.S. Federal Income Tax
Consequences" contained in the Offer to Repurchase. We recommend that you
consult with your own tax advisor to determine the specific tax consequences to
you of accepting the offer.

        Under U.S. federal income tax law, a stockholder whose tendered shares
of Tality Common Stock are accepted for payment pursuant to the Offer to
Repurchase may be subject to backup withholding at a rate of 31%. To prevent
backup withholding on any payment made to a stockholder pursuant to the Offer to
Repurchase, the stockholder is required to notify Cadence of the stockholder's
current taxpayer identification number ("TIN") by completing the enclosed
Substitute Form W-9, certifying that the TIN provided on that form is correct
(or that such stockholder is awaiting a TIN), and that (i) the stockholder has
not been notified by the Internal Revenue Service that the stockholder is
subject to backup withholding as a result of failure to report all interest or
dividends or (ii) after being so notified, the Internal Revenue Service has
notified the stockholder that the stockholder is no longer subject to backup
withholding. If Cadence is not provided with the correct TIN, such stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service and
payments that are made to such stockholder with respect to the shares of Tality
Common Stock pursuant to the Offer to Repurchase may be subject to backup
withholding.

        Each stockholder is required to give Cadence the TIN (e.g., Social
Security number or employer identification number) of the record holder of the
shares of Tality Common Stock. A stockholder who does not have a TIN may check
the box in Part 3 of the Substitute Form W-9 if such stockholder has applied for
a number or intends to apply for a TIN in the near future. If the box in Part 3
is checked, the stockholder must also complete the "Certificate of Awaiting
Taxpayer Identification Number" below in order to avoid backup withholding. If
the box is checked, payments made will be subject to backup withholding unless
the stockholder has furnished Cadence with his or her TIN by the time payment is
made. A stockholder who checks the box in Part 3 in lieu of furnishing such
stockholder's TIN should furnish Cadence with such stockholder's TIN as soon as
it is received.

        Certain stockholders (including, among others, all corporations and
certain non-U.S. citizens) are not subject to these backup withholding
requirements. To avoid possible erroneous backup withholding, a stockholder who
is exempt from backup withholding should complete the Substitute Form W-9 by
providing his or her correct TIN, signing and dating the form, and writing
exempt on the face of the form. A stockholder who is not a U.S. citizen or who
is a non-U.S. entity should also submit to Cadence a properly completed Form
W-8, Certificate of Foreign Status (which will be provided upon request), signed
under penalty of perjury, attesting to the stockholder's exempt status.
Stockholders are urged to consult their own tax advisors to determine whether
they are exempt from these backup withholding and reporting requirements.

                                       6

<PAGE>   7

        If backup withholding applies, Cadence is required to withhold 31% of
any payments to be made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained by filing a tax
return with the Internal Revenue Service. Cadence cannot refund amounts withheld
by reason of backup withholding.

        WHAT HAPPENS IF I DON'T ACCEPT THE OFFER? If you do not accept the Offer
to Repurchase, you will keep all of your current Tality Stock. It is anticipated
that the Tality entities will undergo some form of reorganization, but upon
completion of the reorganization, such reorganization is not expected to change
the terms of the Tality Stock. Tality Stock that is not Repurchased will not be
registered under the Securities Act of 1933, and therefore will not constitute
liquid securities before any initial public offering of Tality Corporation.

                                       7

<PAGE>   8

-------------------------------------------------------------------------------

                          CADENCE DESIGN SYSTEMS, INC.

-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                   <C>                                      <C>
     SUBSTITUTE       PART 1 - PLEASE PROVIDE YOUR TIN            Social Security Number OR
                      IN THE BOX AT THE RIGHT AND              Employer Identification Number
      FORM W-9        CERTIFY BY SIGNING AND DATING BELOW

                                                               --------------------------
 DEPARTMENT OF THE
      TREASURY
  INTERNAL REVENUE
      SERVICE
                      PART 2 - CERTIFICATION -                       PART 3 -

                      Under penalties of perjury, I certify that:    Awaiting TIN  [X]
                      (1)  The number shown on this form is my
                           correct Taxpayer Identification Number
                           (or I am waiting for a number to be
                           issued to me); and
                      (2)  I am not subject to backup withholding
                           because (a) I am exempt from backup
                           withholding, or (b) I have not been notified by the
                           Internal Revenue Service (the "IRS") that I am
                           subject to backup withholding as a result of a
                           failure to report all interest or dividends, or (c)
                           after being so notified, the IRS has notified me that
                           I am no longer subject to backup withholding.

    REQUEST FOR
      TAXPAYER
   IDENTIFICATION
   NUMBER ("TIN")

                      CERTIFICATION INSTRUCTIONS - You must cross out item (2)
                      above if you have been notified by the IRS that you are
                      subject to backup withholding because of underreporting
                      interest or dividends on your tax return. However, if
                      after being notified by the IRS that you were subject to
                      backup withholding you received another notification from
                      the IRS stating that your are no longer subject to backup
                      withholding, do not cross out such item (2).

                      Signature:
                                 -----------------------------------------------

                      Name:                                Date:
                           ----------------------------          ---------------

                      Address:
                               -------------------------------------------------
                                                  (PLEASE PRINT)
</TABLE>

NOTE:   FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
        WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
        YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
        PART 3 OF SUBSTITUTE FORM W-9.

                                       8

<PAGE>   9
-------------------------------------------------------------------------------

             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

        I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld.

Signature:                                         Date:           , 200[ ]
          -------------------------------------          ----------     ---

-------------------------------------------------------------------------------

                                        9

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