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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., 0000 Xxxxx Xxxxxx, Xxxxxxxx 0, Xxx Xxxx, Xxxxxxxxxx 00000, Attn: Stock
Administration, Fax: (000) 000-0000) 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.
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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.
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You acknowledge that this letter agreement has been prepared on behalf
of Cadence by Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to Cadence, and that Xxxxxx,
Xxxx & Xxxxxxxx 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.
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Should you have any questions regarding this matter please contact
Xxxxxxxxx Xxxxxxxxxx at Cadence, tel: (000) 000-0000 or via email at
xxxx@xxxxxxx.xxx. We appreciate your assistance in handling this matter in a
timely fashion.
Very truly yours,
CADENCE DESIGN SYSTEMS, INC.
By: Xxxxxxx Xxxxxx
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): ________________________________
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SUMMARY OF TERMS OF STOCK REPURCHASE OFFER
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RESPONSE NEEDED BY 12:00 MIDNIGHT, CALIFORNIA TIME,
ON JULY 30, 2001, UNLESS THE OFFER IS EXTENDED
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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., 0000 Xxxxx Xxxxxx, Xxxxxxxx 0, Xxx
Xxxx, Xxxxxxxxxx 00000, Fax: (000) 000-0000, before 12:00 midnight, California
Time, on July 30, 2001, unless the offer is extended. If you have any questions,
please contact Xxxxxxxxx Xxxxxxxxxx at Cadence, tel: (000) 000-0000 or via email
at xxxx@xxxxxxx.xxx.
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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.
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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.
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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.
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CADENCE DESIGN SYSTEMS, INC.
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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
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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:
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Name: Date:
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Address:
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(PLEASE PRINT)
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.
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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[ ]
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