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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 12, 1998
IKOS Systems, Inc.
(Exact name of registrant as specified in charter)
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Delaware 0-18623 77-0100318
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
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19050 Pruneridge Avenue
Cupertino, California 95014
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (408) 255-4567
(Former name or former address, if changed since last report)
This Current Report, including exhibits, contains 52 pages.
The Exhibit Index is located on page 5.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to (i) a Technology Purchase Agreement dated May 12, 1998 (the
"Purchase Agreement") by and between IKOS Systems, Inc., a Delaware corporation
("IKOS" or the "Company"), and Interra, Inc., a Delaware corporation ("Interra")
and (ii) a Consulting Assignment and Technology Use Restriction Agreement (the
"Consulting Agreement") of even date among IKOS and Ajoy Bose and Sunil Jain as
the principals of Interra (together, the "Principals"), IKOS purchased from
Interra certain electronic design automation technology (the "EDA Technology")
and certain other computer-related assets (collectively, the "Assets"). The EDA
Technology purchased by IKOS included tangible and intangible assets and certain
proprietary software and technology in source code and object code form. IKOS
assumed no liabilities or obligations in connection with its purchase of the
Assets. Under the Purchase Agreement, IKOS also granted Interra a non-exclusive,
transferable, worldwide, irrevocable, perpetual, royalty-free, fully-paid, fully
sublicensable right and license in and to the EDA Technology. The license to
Interra is subject to several use restrictions contained in the Purchase
Agreement.
The aggregate consideration paid by IKOS and IKOS India Private Ltd., a
subsidiary of IKOS ("IKOS India") to Interra, the Principals and Delsoft India
Private Ltd., a division of Interra based in India ("Delsoft"), totaled
$8,500,000 (the "Aggregate Consideration"). Of the Aggregate Consideration,
IKOS paid approximately $5,900,000 in cash at the Closing (as defined in the
Purchase Agreement), and $2,550,000 is being held as security for breaches of
representations, warranties and covenants for a period of eighteen months
(the "Holdback"). The Holdback is to be released in one-third increments at each
of the six, twelve and eighteen month anniversaries of the Closing Date and the
Effective Date (as defined in the Purchase Agreement and the Consulting
Agreement, respectively). IKOS may elect to pay all or any part of the Holdback
in IKOS common stock (the "IKOS Common Stock"). In the event that IKOS elects to
pay any part of the Holdback in IKOS Common Stock, it has agreed to file
registration statements covering such shares to be issued.
IKOS India paid the remaining $50,000 of the Aggregate Consideration to
Delsoft for the transfer of certain assets and employees from Delsoft to IKOS
India.
The Closing of the transaction occurred on May 12, 1998.
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A copy of the Purchase Agreement is attached as Exhibit 2.1 and is
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incorporated herein by reference.
A copy of the Consulting Agreement is attached hereto as Exhibit 99.1 and
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is incorporated herein by reference.
ITEM 7. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 Technology Purchase Agreement dated May 12, 1998, by and between
the Company and Interra.
4.1 Registration Rights Agreement dated May 12, 1998 by and between
the Company and Interra.
4.2 Registration Rights Agreement dated May 12, 1998 by and among the
Company and the Principals.
99.1 Consulting, Assignment and Technology Use Restriction Agreement
dated May 12, 1998 by and among the Company and the Principals.
99.2 Press Release dated May 14, 1998.
</TABLE>
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IKOS Systems, Inc.
Date: May 19, 1998 By: /s/ Joseph W. Rockom
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Joseph W. Rockom
Vice President of Finance and
Administration and Chief Finance
Officer and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
----------- ----------- -------------
<S> <C> <C>
2.1 Technology Purchase Agreement dated May 12,
1998, by and between the Company and Interra.
4.1 Registration Rights Agreement dated May 12,
1998 by and between the Company and Interra.
4.2 Registration Rights Agreement dated May 12,
1998 by and among the Company and the Principals.
99.1 Consulting, Assignment and Technology Use
Restriction Agreement dated May 12, 1998 by and
among the Company and the Principals.
99.2 Press Release dated May 14, 1998.
</TABLE>
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EXHIBIT 2.1
TECHNOLOGY PURCHASE AGREEMENT
This Technology Purchase Agreement (the "Agreement") dated May 12, 1998
(the "Effective Date") is entered into by and between Interra, Inc., a Delaware
corporation with a principal place of business at 2001 Gateway Place, Suite 440
W, San Jose, CA 95110 ("Interra") and IKOS Systems, Inc., a Delaware
corporation with a principal place of business at 19050 Pruneridge Avenue,
Cupertino, CA 95014 ("IKOS").
RECITAL
Subject to the terms and conditions of this Agreement, Interra is willing
to sell and IKOS is willing to buy certain tangible and intangible assets and
certain proprietary software products and technology including those software
products and technologies more particularly described on Exhibit A in Source
---------
Code and Object Code form, together with accompanying documentation.
AGREEMENT
NOW THEREFORE, in consideration of the mutual representations and covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Interra and IKOS agree as follows:
1. Definitions.
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1.1. "Business" shall mean the development and manufacture of hardware
and software systems for the verification of integrated circuits.
1.2. "Confidential Information" shall mean any of the following
disclosed by either party (the "Disclosing Party") to the other ("Recipient")
hereunder: (i) the Technology (as defined below) and any related trade secrets,
including but not limited to any information relating to either party's product
plans, designs, costs, prices and names, finances, marketing plans, business
opportunities, personnel, research, development or know-how; and (ii) any
information designated by Disclosing Party as confidential in writing or, if
disclosed orally, reduced to writing within thirty (30) days; provided, however,
that "Confidential Information" shall not include information that: (i) is or
becomes generally known or available by publication, commercial use or otherwise
through no fault of the Recipient; (ii) is known and has been reduced to
tangible form by the Recipient at the time of disclosure and is not subject to
restriction; (iii) is independently developed or learned by the Recipient
without use of Disclosing Party's Confidential Information; (iv) is lawfully
obtained from a third party who has the right to make such disclosure; (v) is
released for publication by Disclosing Party in writing. Confidential
Information may be disclosed in response to a valid order by a court or other
governmental body of the United States or any political subdivision thereof, as
otherwise required by law, or as necessary to establish the rights of either
party under this Agreement, provided that the party
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making such disclosure must use reasonable efforts to have the court or
governmental body order that the information be treated as confidential and
under seal.
1.3. "Derivative Work" shall have the meaning ascribed to it under the
United States Copyright Law Title 17 U.S.C., (S) 101 et. seq.
1.4. "Distributor" shall mean an individual or business entity engaged in
the business of reselling or sublicensing Service Products or Stand Alone
Products under the authority of Interra to other Distributors or End Users.
1.5. "Documentation" shall mean the then current, generally distributed
guides or manuals provided by Interra for use by its customers with the
Technology.
1.6. "End User" shall mean a person or entity purchasing or sublicensing a
product solely for personal or internal use and not for distribution or resale.
1.7. "IKOS' Competitors" 'shall mean direct competitors of IKOS in the
Reserved Field as of the Effective Date of this Agreement as listed on Schedule
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1.6 hereto.
- ---
1.8. "Object Code" shall mean computer software in binary, executable form.
1.9. "Reserved Field" shall mean applications for digital logic simulation,
emulation, and hardware acceleration for the verification of integrated
circuits.
1.10. "Restricted Software" shall mean the "RTL Compiler-Verilog" software
currently in production and the "RTL Compiler-VHDL" software currently under
development by Interra and marked as such in Exhibit A attached hereto.
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1.11. "Service Products" shall mean software technology products intended
for distribution by Interra to End Users which incorporate all or a subset of
the Technology and are only distributed in conjunction with a significant
professional consulting services component to be provided by Interra (other than
standard software industry product support and maintenance for the Service
Products).
1.12. "Source Code" shall mean computer software in human-readable form,
including high-level language program listings, flow charts, schematics and
logic diagrams.
1.13. "Software" shall mean that certain software technology in both Source
Code and Object Code formats as more particularly described in Exhibit A
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attached hereto.
1.14. "Stand Alone Products" shall mean software technology products
intended for distribution by Interra to End Users which incorporate a subset of
the Technology and are distributed without a significant professional consulting
services component, but may include standard software industry product support
and maintenance for the Stand Alone Product.
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1.15. "Technology" shall mean all technology including know-how, design
rules, trade secrets, inventions (whether or not patented or patentable),
algorithms, routines, Software, files, databases, works of authorship,
processes, devices and Documentation thereto.
2. Sale of Technology and Assets.
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On the terms and subject to the conditions of this Agreement and for
the consideration set forth herein, Interra shall at the Closing (as hereinafter
defined), sell, convey, assign, transfer and deliver to IKOS, and IKOS shall
purchase and acquire from Interra, all of Interra's right, title and interest in
the Technology and the assets listed on Schedule 2 hereto (the "Assets").
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Notwithstanding the foregoing, such sale and transfer of the Technology to IKOS
shall not include any rights to receive revenues, license fees, monies related
to the exercise of purchase options, royalties, maintenance fees, support or
related service fees, and any other related consideration to which Interra is
entitled under existing agreements or may acquire under future agreements, all
of which shall belong to Interra. Such right, title and interest in and to the
Technology and Assets shall be sold, conveyed, assigned, transferred and
delivered by Interra to IKOS, by appropriate instruments of transfer, bills of
sale, endorsements, and/or assignments as of the Closing Date (as hereinafter
defined) and shall be free and clear of any and all claims, liabilities, liens
and encumbrances, except as expressly provided herein. The Assets include, but
are not limited to the following:
(a) Technical Information. All technical information, whether tangible or
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intangible, that is used in or related to the Technology, including, but not
limited to: proprietary computer programs in Source Code and Object Code form;
developmental work, if any, in process relating to such computer programs and
enhancements and other modifications; data; designs; schematics; calculations;
drawings; flow charts; functional specifications; test; installation; inspection
instructions; technical, operating and service and maintenance notes and
manuals; hardware reference manuals; user documentation; training materials; and
other data, information and know-how; in each case which are owned by Interra
and are necessary to develop, service, maintain, operate, use, distribute or
test the Technology. A detailed list of such technical information is attached
hereto as Schedule 2(a).
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(b) Intangible and Tangible Personal Property. All intangible and
-----------------------------------------
tangible property of Interra relating to the Assets (whether owned, used,
registered in the name of, or licensed by Interra, or in which Interra otherwise
has an interest), including, but not limited to: patents and patent
applications; copyrights, copyright registrations and applications for
registration; trademarks and service marks and trade and other names (either
registered, common law or registration applied for); trade secrets; inventions;
know-how; processes; manufacturing or marketing procedures; formulae; drawings;
patterns; licenses and permits susceptible of transfer under regulatory agency
rules; and all licenses therefor, together with all ancillary rights thereto,
including the right to sue for damages by reason of past infringement of any
such rights. A detailed list of intangible and tangible personal property is
attached hereto as Schedule 2(b).
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3
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3. Assumption of Liabilities. In connection with the purchase and
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sale of the Assets pursuant to this Agreement, IKOS shall assume no liabilities
or obligations of any nature, whether known or unknown, whether fixed or
contingent, accrued or unaccrued and Interra shall remain solely liable therefor
and shall be obligated to discharge and indemnify and hold IKOS harmless for all
debts, expenses, accounts payable, contracts, commitments, obligations, claims,
suits and other liabilities whatsoever, related to the Technology or Assets,
known or unknown, accrued or not accrued, fixed or contingent or currently
existing.
4. Technology License.
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4.1. License Grant. Subject to the limitations set forth in
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Section 4.5 and Section 15, IKOS hereby grants to Interra a non-exclusive,
transferable, worldwide, irrevocable, perpetual, royalty-free, fully-paid, fully
sublicensable right and license (including the right to grant and authorize
sublicenses) in and to the Technology to make, have made, use, offer for sale,
sell, import, have imported, modify, have modified, market, reproduce in copies,
distribute directly or indirectly and through multiple channels of distribution,
display publicly, perform publicly, make Derivative Works from, adapt or
translate and to otherwise exploit (by any means and in any medium now known or
later invented) the Service Products or Stand Alone Products (the "License");
provided, however, that any such sublicense, sale or transfer of the Technology
shall be limited to the technology use restrictions and termination provisions
set forth in Section 4.5 and Section 15, respectively, below. Subject to the
limitations set forth in Section 4.5 and Section 15, Interra shall have the
right to have each of the foregoing performed by a third party.
The parties agree that the License does not obligate Interra to disclose in
any of its agreements or contracts with third parties, including without
limitation Interra's end user license agreements or customer agreements the
relationship with IKOS pursuant to this Agreement. Interra may market the
Software under its own trademarks and tradenames and has no right or obligation
to use the trademarks or tradenames of IKOS.
4.2. Ownership by IKOS. IKOS will retain all right, title and
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interest in the Technology, including without limitation all copyrights,
patents, trademarks and trade secrets, and any other intellectual property
rights thereto.
4.3. Ownership by Interra. Interra will retain all right, title
--------------------
and interest in any and all developments (including without limitation
modifications and Derivative Works to the Technology) made by or on behalf of
Interra, alone or with third parties, including without limitation all
copyrights, patents, trademarks and trade secrets, and any other intellectual
property rights thereto.
4.4. Enforcement; Cooperation. Each party agrees to execute and
------------------------
deliver to the other party any documents which the other party may reasonably
request to confirm the other party's ownership of its rights hereunder. Each
party will notify the other party of any unauthorized use or infringement by
third parties of any rights of the other party of which it becomes aware and
will cooperate in any action undertaken by the other party with respect to
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such unauthorized use or infringement. Notwithstanding the foregoing, each party
shall use reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the infringement of the rights related to the Technology by others,
and for that purpose each party shall have the right to maintain any action,
suit or proceeding against any person, firm, or corporation so infringing the
rights related to the Technology necessary to prevent such infringement or to
recover damages. The party who brings any action or proceeding against any
person (the "Initiating Party") shall have the right to use the name of the
other party as a party plaintiff, either solely or jointly with the Initiating
Party's name; provided, however, that such suit or suits shall be instituted,
maintained or prosecuted solely at the cost of the Initiating Party, and all
sums that may be recovered in any such suit or suits, whether by decree,
judgment, settlement, or otherwise, shall be the sole and exclusive property of
the Initiating Party.
4.5. Restrictions as to Use. The Technology shall be licensed to
----------------------
Interra as provided for in Section 4.1. Notwithstanding the foregoing, during
the period commencing on the Effective Date of this Agreement and ending three
(3) years thereafter (the "Restricted Period"), Interra may not (i) incorporate
the Technology in Stand Alone Products in the Reserved Field; (ii) incorporate
the Restricted Software in Service Products for license and distribution to or
for IKOS' Competitors for use in the Reserved Field; (iii) sublicense the
Restricted Software to Distributors or End Users who are IKOS' Competitors for
use in the Reserved Field; or (iv) provide services that exclusively rely on
IKOS' products in the Reserved Field to IKOS' customers. Of the restrictions in
the preceding sentence, only the restrictions in subclauses (ii) and (iii) shall
apply to Interra's transferee, assignee, or licensee, and such transferee,
assignee or licensee shall not during the Restricted Period (i) incorporate the
Restricted Software in Stand Alone Products in the Reserved Field or (ii)
provide services that exclusively rely on the Restricted Software in the
Reserved Field to IKOS' Competitors. Interra's obligations under this Section
4.5 shall terminate if IKOS, or any entity deriving title to its goodwill or
shares or pursuant to a change of control, ceases to carry on a like Business
therein.
5. Right of First Refusal. Upon the Closing Date and until the three
----------------------
year anniversary of the Closing Date, IKOS shall have the right of first refusal
with respect to (i) any proposed capital reorganization, merger or consolidation
of Interra's business relating to the Technology (the "EDA Business") with or
into another corporation where the stockholders of Interra prior to such
reorganization, merger or consolidation hold less than fifty percent (50%) of
the outstanding voting securities of the surviving entity after such
reorganization, merger or consolidation, or (ii) the proposed sale of all or
substantially all of Interra's EDA Business to any person other than IKOS (each
a "Proposed Acquisition Event"). Upon such Proposed Acquisition Event, Interra
shall provide to IKOS a summary of principal terms of such Proposed Acquisition
Event, including the proposed purchase price or consideration (an "Acquisition
Notice"). Upon receipt of the Acquisition Notice, IKOS shall provide Interra
with the names of its current top five competitors and Interra will notify IKOS
if the party with which it is engaged in discussions is among such competitors.
Within ten (10) days of receipt of the Acquisition Notice, IKOS shall provide
Interra with written notice of its interest in acquiring the EDA Business, and
thereafter the parties shall negotiate in good faith for a period of up to
twenty (20) days toward an
5
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agreement in principal with respect to IKOS' acquisition of the EDA Business on
terms substantially similar to those in the Acquisition Notice. If within such
thirty (20) day period, the parties do not enter into a definitive acquisition
agreement with the intent to consummate the transaction and obtain any required
governmental and third party consents as soon as possible thereafter, Interra
may proceed with the Proposed Acquisition Event on substantially similar terms
to those stated in the Acquisition Notice and where the proposed purchase price
is not less than 70% of the proposed purchase price stated in the Acquisition
Notice.
6. Closing.
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6.1. Closing Date. The closing of the purchase and sale of the
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Technology and the Assets shall take place on May 12, 1998 (the "Closing") or at
such other date or time as IKOS and Interra may agree (the "Closing Date").
6.2. Interra's Deliveries at Closing. At the Closing, Interra shall
-------------------------------
deliver or cause to be delivered the following to IKOS against delivery of the
items specified in Section 6.3:
(a) A Bill of Sale substantially in the form of Exhibit 6.2(a) for
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the Assets.
(b) Certified resolutions of Interra's Board of Directors and the
shareholders authorizing consummation of the transactions contemplated by this
Agreement.
(c) A compliance certificate in the form of Exhibit 6.2(c).
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(d) A certificate of corporate and tax good standing from the
Delaware Secretary of State Interra as of a date not earlier than five business
days before the Closing.
(e) All third party consents (including without limitation from
contract parties and governmental authorities) necessary for consummation of the
transactions contemplated hereby.
(f) Written confirmation of the termination of (i) the Software
License Agreement dated February 12, 1997 by and between IKOS and Interra,
pursuant to which IKOS licenses from Interra a RTL Compiler - Verilog (the
"Verilog License") and (ii) the Software License Agreement dated October 29,
1997 by and between IKOS and Interra, pursuant to which IKOS licenses from
Interra a RTL Compiler - VHDL (the "VHDL License") in the form of Exhibit
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6.2(f).
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(g) Written confirmation of release of lien of Silicon Valley Bank
against the Technology and the Assets.
(h) A Registration Rights Agreement in the form of Exhibit C.
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6
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(i) Such other documents and instruments as shall be reasonably
requested to effect the transactions contemplated hereby.
Simultaneously with such deliveries, Interra shall take such steps as are
necessary, including electronic transfer, to put IKOS in actual possession and
control of the Assets, FOB IKOS' premises.
6.3. IKOS' Deliveries at Closing. At the Closing, IKOS shall deliver or
---------------------------
cause to be delivered to (or pursuant to the instructions of) Interra the
following against delivery of the items specified in Section 6.2:
(a) Check or wire transfer of immediately available funds of
$3,910,000 minus any rate or other adjustments due to IKOS as set forth in
Schedule 6.3(a).
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(b) Written confirmation of the termination of (i) the Verilog
License and (ii) the VHDL License in the form of Exhibit 6.2(f).
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(c) A Registration Rights Agreement in the form of Exhibit C.
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(d) Such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
7. Consideration.
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7.1. Purchase Price. In consideration for the Assets and Technology to
--------------
be sold by Interra to IKOS and other terms and conditions set forth herein, IKOS
shall pay an aggregate purchase price of $5,950,000 (the "Purchase Price"). Of
the Purchase Price, $3,910,000 in cash will be paid at the Closing and
$2,040,000 in cash and/or IKOS Common Stock will be held as a holdback (the
"Holdback") as security for the covenant contained in Section 13.3 ("Retention")
and as security for indemnification for breaches of representations and
warranties by Interra for a period of eighteen (18) months after the Closing.
7.2. Consultancy Relationship. The parties acknowledge that there is a
------------------------
consultancy relationship between IKOS and Interra for which IKOS pays $45,000
per engineer per year to Interra. At the Closing, Interra shall provide to IKOS
a credit of $17,000 per engineer per year pro rata from January 9, 1998 through
the Closing Date.
8. Holdback. The Holdback shall be payable to Interra either in cash or IKOS
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Common Stock, at IKOS' sole election, and shall be released as follows: (i)
$680,000 on the six (6) month anniversary of the Closing Date; (ii) $680,000 on
the twelve (12) month anniversary of the Closing Date; and $680,000 on the
eighteen (18) month anniversary of the Closing Date (each a "Release Date");
provided, however, that should IKOS elect to pay any portion of the Holdback in
IKOS Common Stock, (i) Interra shall confirm in writing its suitability to
receive such shares by means of an Investor Representation Letter in the form
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attached hereto as Exhibit B; (ii) the IKOS Common Stock shall be listed and
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traded on a national stock exchange; (iii) the average daily trading volume of
the IKOS Common Stock for the 30 days prior to the Release Date shall not be
less than 7,000 shares per day; (iv) the average closing price of the IKOS
Common Stock for the five (5) days prior to, but not including, a Release Date
shall not be less than $5.00 per share; (v) IKOS shall have complied with all of
its filing requirements with the Securities and Exchange Commission for the year
prior to the Release Date; and (vi) the IKOS Common Stock shall be valued at the
average closing price of the IKOS Common Stock for the five (5) business days
prior to, but not including, the Release Date.
9. Purchase Price Allocation. IKOS and Interra agree to allocate the Purchase
-------------------------
Price (and all other capitalizable costs) among the Technology and the Assets
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule set forth on Schedule 9 attached hereto. Neither
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IKOS nor Interra shall take any position for purposes of any federal, state or
local income tax with respect to the allocation of the Purchase Price which is
inconsistent with such allocation.
10. Bulk Sales Law. IKOS and Interra hereby waive compliance with the
--------------
provisions of Article 6 of the Uniform Commercial Code as it is in effect in the
State of California. Notwithstanding the foregoing, nothing herein shall estop
or prevent either IKOS or Interra from asserting, as a bar or defense to any
action or proceeding brought under the Uniform Commercial Code of California
that such code or law is not applicable to the transactions contemplated by this
Agreement.
11. Representation and Warranties of Interra. Interra hereby represents and
----------------------------------------
warrants to IKOS that except as set forth in the Disclosure Schedule (the
"Disclosure Schedule"):
11.1. Organization and Authority. Interra (i) is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and (ii) has all necessary corporate power to own
and lease its properties, to carry on its business as now being conducted and to
enter into and perform this Agreement.
11.2. Authority Relating to this Agreement. The execution and delivery
------------------------------------
of this Agreement and the performance hereunder by Interra has been duly
authorized by all necessary corporate action on the part of Interra and,
assuming execution of this Agreement by IKOS, this Agreement will constitute a
legal, valid and binding obligation of Interra, enforceable against Interra in
accordance with its terms, subject as to enforcement: (i) to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other laws of general
applicability relating to or affecting creditors' rights; and (ii) to general
principles of equity, whether such enforcement is considered in a proceeding in
equity or at law.
11.3. Protection of Intangible Property. All employees and consultants
---------------------------------
who have worked on or contributed to the material development of each of
Interra's trademarks, trade names, copyrights, trade secrets and other
proprietary rights relating to the Software have
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executed a confidentiality and proprietary rights assignment agreement. Section
11.3 of the Disclosure Schedule sets forth a list of all persons or entities to
whom Interra has disclosed any of its confidential proprietary rights relating
to the Software, including without limitation Source Code. None of such
proprietary rights have been used, distributed or otherwise commercially
exploited under circumstances which have caused, or with the passage of time
could cause, the loss of trademark, copyright, trade secret or other proprietary
rights status.
11.4. No Conflict; Consents. The execution and delivery by Interra of this
---------------------
Agreement and all other agreements and instruments to be executed and delivered
in connection herewith or pursuant hereto, and the performance by Interra's
duties and obligations hereunder and of all other acts necessary or appropriate
for the consummation of the transactions contemplated hereunder, will not
violate either of Interra's Articles of Incorporation or Bylaws or any
agreement, understanding, arrangement, judgment, lien, order, statute, rule,
regulation or instrument to which Interra is a party or by which any of them is
bound. Other than any third party consents identified in Section 11.5 of the
Disclosure Schedule (the "Third Party Consents") which will be obtained prior to
the Closing, no consent of any person or entity is required to be obtained for
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby.
11.5. Intellectual Property Rights.
----------------------------
(a) Interra owns all right, title and interest in and to, or valid
licenses for use of, all copyrights, know-how, processes, trade secrets,
trademarks, trade names and other intellectual property rights worldwide used in
or necessary to the Technology (the "Intellectual Property Rights"). The
foregoing representation as it relates to software, inventions, know-how,
processes or other technology owned by third parties (the "Third Party
Technology") is embodied in the Third Party Licenses (defined below), all of
which are valid and enforceable. The Third Party Licenses are in full force and
Interra has not breached any of such licenses. Section 11.5 of the Disclosure
Schedule contains an accurate and complete description of (i) all Intellectual
Property Rights (with separate listings of registered and unregistered
trademarks) owned by Interra and a list of all licenses and other agreements
relating thereto, and (ii) a list of all licenses and other agreements with
third parties which are related to the Technology (the "Third Party Licenses").
Interra's trademarks, trademark registrations or trade name registrations
relating to the Technology, if any, are valid and in full force and effect; and
consummation of the transactions contemplated hereby will not alter or impair
any such rights. None of Interra's copyrighted works have entered the public
domain, except by expiration of their term. No claims have been asserted against
Interra (and Interra is not aware of any claims which are likely to be asserted
against it or which have been asserted against others) by any person challenging
its use, possession, manufacture, sale or distribution of its products under any
Intellectual Property Rights utilized by it (including, without limitation, the
Third Party Licenses) or challenging or questioning the validity or
effectiveness of any Third Party Licenses or other license or agreement relating
thereto. There is no valid basis for any claim of the type specified in the
immediately preceding sentence which could in any material way relate to or
interfere with the
9
<PAGE>
continued manufacture, sale, use, possession, distribution or enhancement by
Interra of its products. No products of Interra, or the use or exploitation of
any Intellectual Property Rights by Interra relating to Interra's products
infringes on the rights of, constitutes misappropriation of, or in any way
involves unfair competition with respect to, any confidential information or
intangible property right of any third person or entity, including without
limitation any patent, trade secret, copyright, trademark or trade name.
(b) Except as disclosed in the Disclosure Schedule, Interra has not
granted any third party any right to manufacture, sell, reproduce, distribute,
market or exploit Interra's products or any adaptations, translations, or
Derivative Works based on Interra's products or any portion thereof. Except with
respect to the rights of third parties to the Third Party Technology, no third
party has any right to manufacture, reproduce, distribute, sell, market or
exploit any works or materials of which any of Interra's products is a
Derivative Work.
(c) All designs, drawings, specifications, Source Code, Object Code,
documentation, flow charts and diagrams incorporating, embodying or reflecting
Interra's products at any stage of development (the "Interra Components") were
written, developed and created solely and exclusively by employees of Interra
without the assistance of any third party or entity or were created by third
parties who assigned ownership of their rights to Interra by means of valid and
enforceable assignment agreements, [copies of which have been delivered to
IKOS]. Interra has at all times used commercially reasonable efforts to treat
the Technology and Interra Components as containing trade secrets and has not
disclosed or otherwise dealt with such items in such a manner as to cause the
loss of such trade secrets by release into the public domain.
(d) No employee or consultant of Interra is in violation of any term of
any employment contract, consulting agreement, patent disclosure agreement,
confidentiality and proprietary rights agreement or any other contract or
agreement relating to the relationship of any such employee with Interra or any
other party or relating to the Intellectual Property Rights, either because of
the nature of the business conducted by Interra or proposed to be conducted by
Interra or as a result of work performed or actions taken by such employee on
behalf of Interra.
(e) No product liability or performance warranty claims which
individually or in the aggregate could exceed $10,000 have been communicated to
or threatened against Interra nor is there any specific situation, set of facts
or occurrence that provides a basis for such claim. To the extent the failure to
do so would adversely affect IKOS' use and enjoyment of the Software, Section
11.5 of the Disclosure Schedule sets forth all bugs known to Interra and any
failure of Interra's products to conform to its specifications, user
documentation or other specifications relating to them.
11.6. Litigation. There is no action, suit or proceeding, claim, arbitration or
----------
investigation pending, or as to which Interra has received any notice of
assertion nor, to Interra's knowledge, is there a reasonable basis to expect
such notice of assertion against Interra which challenges or seeks to prevent,
enjoin, alter or materially delay any of the transactions
10
<PAGE>
contemplated by this Agreement or which could reasonably be anticipated to have
a material adverse effect on Interra or which affects or would affect Interra's
right to operate the Technology or which involves a claim of inoperability,
programming error or other defect in the functioning of the Technology.
11.7. Ownership and Delivery of Assets. Except as set forth in Section
--------------------------------
11.7 of the Disclosure Schedule, Interra has good and marketable title to all of
the Assets and Technology, free and clear of all liens, charges, easements,
security interests, mortgages, conditional sales contracts, equities, rights of
way, covenants, restrictions, title defects, objections, claims or other
encumbrances ("Liens"). No other person, including without limitation,
shareholders, any officer, director, or employee of Interra, will have at the
Closing any direct or indirect interest in any of the Assets. Upon delivery to
IKOS at the Closing of the Bill of Sale and other instruments of conveyance with
respect to the Assets, IKOS will acquire good and valid title to the Assets free
and clear of all Liens.
11.8. Compliance with Law. Interra holds, and has at all times held, all
-------------------
licenses, permits and authorizations relating to the Assets and necessary for
the lawful conduct of its business wherever conducted pursuant to all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over
Interra or over any part of Interra's operations. Interra is in compliance in
all material respects with all applicable laws or decrees with respect to or
affecting the Assets or which could affect IKOS' use and enjoyment of the Assets
subsequent to the Closing Date, including, without limitation, laws, rules and
regulations relating to anticompetitive or unfair pricing or trade practices,
false advertising, consumer protection, export or import controls and
occupational health and safety. Interra is not subject to any order, injunction
or decree issued by any local, state or federal governmental authority or agency
("Governmental Entity") which could impair the ability of
Interra to consummate the transactions contemplated herein or which could
adversely affect IKOS' use and enjoyment of the Assets subsequent to the
Closing.
11.9. Absence of Undisclosed Liabilities. Except as set forth in section
----------------------------------
11.9 of the Disclosure Schedule, Interra has no indebtedness or liability with
respect to the Assets (fixed or contingent, known or unknown, accrued or
unaccrued). Section 11.9 of the Disclosure Schedule sets forth a complete list
of all obligations of Interra relating to the Assets as of the Closing.
11.10. Tax Returns and Payments. To the extent the failure to do so would
------------------------
adversely affect IKOS' use and enjoyment of the Assets, Interra has filed all
tax returns and reports with respect to Interra required by law to be filed
under the laws of any jurisdiction, domestic or foreign, and such returns and
reports have been duly and timely filed, are true, correct and complete in all
respects, and all taxes, fees or other governmental charges of any nature which
were required to have been paid have been paid or provided for. There are no
unpaid taxes and there is no actual or threatened assessment of deficiency or
additional tax or other governmental charge or a basis for such a claim against
Interra. There is no tax audit of
11
<PAGE>
Interra by any taxing or other authority in connection with any of its fiscal
years, there is no such audit currently pending or threatened, and there are no
tax liens on the Assets of Interra other than liens for current taxes not yet
due and payable, nor have any such liens been threatened.
11.11. Brokers and Finders. Neither Interra, its shareholders nor any
-------------------
director, officer, employee or agent of Interra has retained any broker or
finder in connection with the sale of the Technology or the Assets contemplated
by this Agreement. Interra will indemnify and hold IKOS harmless against all
claims for brokers' or finders' fees made or asserted by any party claiming to
have been employed by Interra, its shareholders or any director, officer,
employee or agent of Interra and all costs and expenses (including the
reasonable fees of counsel) of investigating and defending such claims.
11.12. Restrictions on Business Activities. There is no agreement,
-----------------------------------
judgment, injunction, order or decree binding upon Interra or to which Interra
is a party which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Interra relating to
the Assets or any disposition of the Assets by Interra.
11.13. Litigation. There is no action, suit or proceeding, claim,
----------
arbitration or investigation pending, or as to which Interra has received any
notice of assertion nor is there a reasonable basis to expect such notice of
assertion against which relates to the Assets or which challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement or which could reasonably be anticipated to have a material
adverse effect on Interra or which affects or would affect Interra's right to
operate the Assets or which involves a claim of inoperability, programming error
or other defect in the functioning of the Assets.
11.14. Government Approvals; Consents. All consents, approvals or
------------------------------
authorizations of any Governmental Entity which has jurisdiction over the
parties or any other person required to be obtained in connection with the
execution and delivery of this Agreement or the performance of the transactions
contemplated hereby have been obtained.
11.15. Accuracy of Documents and Information. The copies of all
-------------------------------------
instruments, agreements, other documents and written information set forth as,
or referenced in, the schedules or exhibits to this Agreement or specifically
required to be furnished pursuant to this Agreement to IKOS by Interra are
complete and correct in all material respects. No representations or warranties
made by Interra in this Agreement, nor any document, written information,
statement, certificate, schedule or exhibit furnished directly to IKOS pursuant
to this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
not misleading. To Interra's knowledge, there is no fact which materially and
adversely affects Interra, the Assets or the Technology known to Interra which
has not been expressly and fully set forth in this Agreement or the schedules
and exhibits hereto.
12
<PAGE>
12. Representations and Warranties of IKOS. IKOS hereby represents and
--------------------------------------
warrants to Interra that:
12.1. Organization and Authority. IKOS is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. IKOS has all necessary corporate power and authority to enter into and
perform this Agreement.
12.2. Authority Relating to this Agreement. The execution and delivery
------------------------------------
of this Agreement and the performance hereunder by IKOS have been duly
authorized by all necessary corporate action on the part of IKOS and, assuming
execution of this Agreement by Interra, this Agreement will constitute a legal,
valid and binding obligation of IKOS, enforceable against IKOS in accordance
with its terms, subject as to enforcement: (i) to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other laws of general applicability
relating to or affecting creditors' rights; and (ii) to general principles of
equity, whether such enforcement is considered in a proceeding in equity or at
law.
12.3. No Violation of Other Instruments. Neither the execution of this
---------------------------------
Agreement nor the performance hereof by IKOS will: (i) conflict with or result
in the breach or violation of the terms of any decree, judgment, order, law or
regulation of any court or other governmental entity now in effect applicable to
IKOS; (ii) conflict with, or result in, with or without the passage of time or
the giving of notice, any breach of any of the terms, conditions and provisions
of, or constitute a default under, any material indenture, mortgage, lease,
agreement or other instrument to which IKOS is a party or by which it is bound;
or (iii) violate or conflict with any provisions of IKOS' Certificate of
Incorporation or Bylaws.
12.4. Government Approvals; Consents. All consents, approvals or
------------------------------
authorizations of any Governmental Entity which has jurisdiction over the
parties or any other person required to be obtained in connection with the
execution and delivery of this Agreement or the performance of the transactions
contemplated hereby have been obtained.
12.5. Accuracy of Documents and Information. The copies of all
-------------------------------------
instruments, agreements, other documents and written information set forth as,
or referenced in, the schedules or exhibits to this Agreement or specifically
required to be furnished pursuant to this Agreement to Interra by IKOS are
complete and correct in all material respects. No representations or warranties
made by IKOS in this Agreement, nor any document, written information,
statement, financial statement, certificate, schedule or exhibit furnished
directly to Interra pursuant to this Agreement or filed with the Securities and
Exchange Commission contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements or facts contained
herein or therein not misleading.
13. Covenants.
---------
13.1. Required Registration. Should IKOS elect to pay the Holdback, or
---------------------
any portion thereof, in IKOS Common Stock, IKOS shall file on or before each
such Release Date a
13
<PAGE>
registration statement relating to such shares of IKOS Common Stock issuable on
such Release Date. If a valid registration statement is not effective on or
before such Release Date, then IKOS shall pay interest on the portion of the
Holdback scheduled to be released at the rate of 6% APR from such Release Date
up to a maximum of 30 days. If a valid registration statement is not effective
within 30 days after such Release Date (the "Payment Date"), then Interra will
have the right to demand and IKOS will be required to pay the payment plus
interest then due in cash on the Payment Date. With respect to IKOS' obligation
to file registration statements hereunder, Interra's sole and exclusive remedy
shall be the demand of and receipt of payment of the amount(s) due in cash.
13.2. Employment of Delsoft India Private Ltd. ("Delsoft") Engineers.
--------------------------------------------------------------
IKOS India Private Limited, the IKOS subsidiary located in India, shall offer
employment to approximately fifty (50) of Delsoft's engineers in India, at the
salary levels and on other terms and conditions to be determined in IKOS' sole
discretion; provided, however, that such salary levels and other terms and
conditions for such engineers shall not be less favorable than current levels.
The parties expect that the average costs for such engineering resources in
India initially will be no more than approximately $28,000, including overhead,
per engineer per year. IKOS shall have no liability for accrued wages (including
salaries and commissions), severance pay, sick leave or other benefits, or
employee plans of any type or nature on account of Interra's employment of or
termination of such employees.
13.3. Retention. In addition to the conditions specified under Section
---------
19.2 ("Indemnification by Interra"), the release of the Holdback shall be
subject to the condition that the average number of Delsoft engineers employed
by IKOS India Private Limited during any six month period shall not be less than
forty (40) (the "Threshold Number"); provided, however, (i) that IKOS shall
continue an active and competitive compensation program and (ii) that there not
be a substantial change in the operations of IKOS India Private Limited or in
the nature or quality of work assignments of such engineers. This Section 13.3
shall terminate in the event of a change of control of IKOS or IKOS India
Private Limited where the successor company does not continue the operations of
IKOS India Private Limited in a manner substantially similar in practice prior
to the change in control.
13.4. Limitation to the Holdback. The parties agree that in the event
--------------------------
that the average number of engineers fall below the Threshold Number, IKOS shall
not withhold the full amount of the Holdback subject to the Release Date upon
such occurrence. IKOS shall make a good faith assessment as to the direct
damages to IKOS for each engineer that falls below the Threshold Number and
deduct such amount from the Holdback (the "Damages"). The Holdback, minus the
Damages, shall be delivered to Interra on the Release Date. Should Interra
dispute the Damages, the parties shall agree to select an arbitrator to make a
final and binding determination of the Damages in accordance with Section 20.5
herein.
14
<PAGE>
14. Conditions to Closing.
---------------------
14.1. Conditions to Obligations of Interra at Closing. The
-----------------------------------------------
obligations of Interra to close is subject to the fulfillment on or prior to the
Closing of the following conditions, any of which may be waived by Interra
pursuant to the terms of Section 20.1 hereof:
(a) Representations and Warranties Correct. The representations
--------------------------------------
and warranties made by IKOS in Section 12 above shall be true and correct when
made, and shall be true and correct on the Closing Date with the same force and
effect as if they had been made on and as of said date.
(b) Third Party Consents. IKOS shall have obtained any and all
--------------------
Third Party Consents and all governmental or regulatory consents, approvals or
authorizations, permits and waivers, including those required from Indian
authorities, necessary or appropriate for consummation of the transactions
contemplated by the Agreement.
(c) Registration Rights Agreement. IKOS and Interra shall have
-----------------------------
executed and delivered the form of Registration Rights Agreement attached hereto
as Exhibit C.
---------
(d) Consulting, Assignment and Technology Use Restriction
------------------------------------------------------
Agreement. IKOS and Ajoy Bose and Sunil Jain (the "Principals") shall
- ---------
have executed and delivered the form of Consulting, Assignment and Technology
Use Restriction Agreement attached hereto as Exhibit D (the "Consulting
---------
Agreement").
- ---------
14.2. Conditions to Obligations of IKOS at Closing.
--------------------------------------------
(a) Representations and Warranties Correct. The
--------------------------------------
representations and warranties made by Interra in Section 11 above shall be true
and correct when made, and shall be true and correct on the Closing with the
same force and effect as if they had been made on or as of said date.
(b) Third Party Consents. Interra shall have obtained any and
--------------------
all third party consents and all governmental or regulatory consents, approvals
or authorizations, permits and waivers, including those required from Indian
authorities, necessary or appropriate for consummation of the transactions
contemplated by the Agreement.
(c) Registration Rights Agreement. IKOS and Interra shall have
-----------------------------
executed and delivered the form of Registration Rights Agreement attached hereto
as Exhibit C.
---------
(d) Consulting Agreement. IKOS and the Principals shall have
--------------------
executed and delivered the form of Consulting Agreement attached hereto as
Exhibit D.
- ---------
15
<PAGE>
(e) Silicon Valley Bank Lien. Interra shall have obtained a
------------------------
release for any and all third party liens against the Technology and the Assets,
including but not limited to the lien held by Silicon Valley Bank.
15. Termination.
-----------
This Agreement may only be terminated upon Interra's material breach
of the use restriction obligations set forth in Section 4.5 of this Agreement.
The parties agree that termination of this Agreement is a drastic remedy, and
shall not be available as a remedy for defaults or breaches that are less than
material.
(a) IKOS shall provide Interra with thirty (30) days written
notice (the "Notice") of the alleged Material Breach. The parties will then
select an arbitrator agreeable to both parties. Thereafter, the License may only
be terminated or canceled by: the mutual consent of the parties hereto, or upon
an adjudication rendered by the arbitrator that the License is terminated due to
the express finding of a Material Breach. For purposes of this Section 15, the
term, "Material Breach" shall mean:
(1) an incurable material breach of the restrictions as to
use set forth in Section 4.5 of the Agreement by Interra, and
(2) the absence of any adequate remedies under law,
including damages and injunctive relief.
(b) The scope of the termination of the License shall be limited
to the Restricted Software only. Interra shall retain all of its rights under
the License after receipt of the Notice that do not relate to or arise from the
Material Breach. All sublicenses, use or distribution of the Technology
unrelated to the Material Breach shall not be subject to any equitable relief,
including injunctive relief.
(c) IKOS' rights to terminate the License or this Agreement
shall terminate on the three (3) year anniversary of the Closing Date.
16. Nondisclosure of Confidential Information. Each party agrees that it
-----------------------------------------
will not make use of, disseminate, or in any way disclose Confidential
Information to any person, firm or business, except to the extent necessary for
negotiations, discussions, and consultations with personnel or authorized
representatives of each party, and underwriters, and any purpose either party
may hereafter authorize in writing. Furthermore, the existence of any business
negotiations, discussions, consultations or agreements in progress between the
parties shall not be released to any form of public media without the prior
written approval of both parties. Each party agrees that it shall treat all
Confidential Information of the other party with the same degree of care as it
accords to its own Confidential Information and each party represents that it
16
<PAGE>
exercises reasonable care to protect its own Confidential Information. Each
party shall disclose Confidential Information of the other party only to those
of its employees who need to know such information and represents that such
employees have previously agreed, either as a condition of employment or in
order to obtain the Confidential Information, to be bound by terms and
conditions substantially similar to those of this Agreement. Each party will
immediately give notice to the other party of any unauthorized use or disclosure
of the Confidential Information. The party who made the unauthorized use or
disclosure agrees to assist the other party in remedying any such unauthorized
use or disclosure of the Confidential Information.
17. Headings. The headings appearing at the beginning of several sections
--------
contained herein have been inserted for the convenience of the parties, and
shall not be used to determine the construction or interpretation of this
Agreement.
18. Limit of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
------------------
OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES, INCLUDING
ANY LOST PROFITS OR LOST SAVINGS REGARDLESS OF THE LEGAL THEORY ON WHICH A CLAIM
MAY BE BASED, EVEN IF A PARTY OR ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
19. Survival of Representations, Warranties and Covenants; Indemnification.
----------------------------------------------------------------------
19.1. Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties, agreements and covenants of Interra contained in
this Agreement shall survive the Closing Date for a period ending at midnight,
PST, on the eighteen (18) month anniversary of the Closing Date and shall in no
manner be limited by any investigation of the subject matter thereof made by or
on behalf of either party or by the satisfaction of any condition to the
Closing. At the end of such period, all such agreements, covenants,
representations or warranties by Interra shall expire and be of no further force
and effect; provided, however, that Interra will remain liable thereafter to the
extent one or more Claims (as defined in Section 19.2) shall have been asserted
in writing by IKOS on or before the expiration of such period. IKOS'
representations, warranties and covenants contained in this Agreement shall
terminate as of the Closing, unless otherwise specified herein.
19.2. Indemnification by Interra.
--------------------------
(a) Interra will defend, indemnify and hold harmless IKOS from and
against any and all demands, claims, debts, damages, losses and liabilities
(individually a "Claim" or collectively "Claims") which are asserted against,
incurred by or imposed upon IKOS and which constitute, directly result from, or
relate to (i) the inaccuracy of any representation or the breach of any warranty
made in this Agreement or otherwise made in writing and delivered by Interra in
connection with the transactions contemplated hereby; (ii) any failure of
Interra to perform or comply with any covenants and agreements set forth herein
or in any other document executed in connection with the transactions
contemplated hereby and (iii) any liabilities,
17
<PAGE>
obligations or commitments of, and all claims against Interra arising from or
based upon any condition, event or action existing on or occurring before the
Closing related to the Technology or the Assets. The indemnification obligations
set forth herein shall terminate as to any Claim (or any potential Claim by an
appropriate party) not asserted by IKOS in writing prior to midnight, PST, on
the eighteen (18) month anniversary of the Closing. The term "Claim" shall
include, but not be limited to, any claim or action by any claimant, creditor,
interest holder or other party in interest.
(b) The amounts for which IKOS may seek indemnification under this
Section 19 shall extend to, and as used herein the term "Claim" shall include,
reasonable attorneys' fees, reasonable accountants' fees, costs of litigation
and other expenses reasonably incurred by IKOS in the investigation or defense
of any claim asserted against IKOS and any amounts paid in settlement or
compromise of any claim asserted against it, but only to the extent that the
claim asserted is or would have been subject to the provisions of this Section
19.2.
(c) IKOS shall not have the right to be indemnified pursuant to this
Section 19.2 unless and until Claims made hereunder, individually or in
aggregate, exceed $50,000. Interra's obligation to indemnify IKOS hereunder
shall be limited to the amount remaining under the Holdback.
(d) Any payment due to IKOS (or payable to IKOS) pursuant to a Claim
shall be calculated net of any insurance recovery and tax benefits and then paid
in the following order: (i) first by offset against the Holdback, and thereafter
(ii) by bank cashier's check or wire transfer but in no event in excess of the
Holdback. Without limiting the other rights it may have, IKOS may, at its sole
option, by notice to Interra satisfy any amount due to IKOS pursuant to a Claim
by withholding such amount from the Holdback.
(e) IKOS agrees to give Interra prompt written notice of any event or
assertion of which it has knowledge concerning any Claim as to which it may
request indemnification hereunder. Any delay in giving a notice hereunder which
does not materially prejudice Interra shall not affect IKOS' right to
indemnification hereunder. A notice shall state that IKOS has paid or accrued a
Claim, identifying in reasonable detail the nature of the Claim, the date the
Claim was paid or accrued and the nature of the inaccuracy, breach or other
basis for indemnification. Each party will cooperate with the other in
determining the validity of any such Claim. Interra shall make available to IKOS
and its attorneys and accountants all books and records of Interra relating to
the Claim and the parties agree to render to each other such assistance as they
may reasonably require of each other in order to ensure the proper and adequate
defense of such Claim if the Claim relates to a claim asserted by a third party.
If the Claim relates to a claim asserted by a third party, IKOS shall control
the defense or settlement of such Claim, including selection of counsel, and
Interra shall have the right at its expense to participate in the defense of any
such Claim. In no event shall IKOS settle a Claim asserted by a third party
without the prior written approval of Interra, which approval shall not be
unreasonably withheld or delayed (provided that IKOS shall not need the consent
of Interra if they shall fail to
18
<PAGE>
acknowledge responsibility for such Claim or shall fail to cooperate in the
defense of any Claim asserted by a third party.)
(f) The indemnification obligations of Interra under this Section 19
shall continue in full force and effect as to any Claim as to which notice has
been given pursuant to Section 19.2(e) until such Claim has been settled either
by mutual agreement of the parties concerned, by arbitration in accordance with
the provisions of this Agreement or in the event of a Claim resulting from legal
action by a third party, by the final arbitration award or final order, decree
or judgment of a court of competent jurisdiction in the United States of America
(the time for appeal having expired with no appeal having been taken). Any
dispute over a claim under Section 19.2 (a "Contested Claim") shall be settled
by arbitration in accordance with Section 20 of this Agreement. The right of
IKOS to be indemnified under this Section 19.2 shall not limit, reduce or
otherwise affect any other rights and remedies it may have with respect to the
matters indemnified under this Agreement.
20. General Provisions.
------------------
20.1. Waivers and Amendments. No amendment, modification or waiver of
----------------------
the terms of this Agreement shall be binding unless reduced to writing and
signed by both parties.
20.2. Force Majeure. Neither party shall be liable for any loss or
-------------
damage or be deemed to be in breach of this Agreement to the extent that
performance of such party's obligations or attempts to cure any breach under
this Agreement are delayed or prevented as a result of any event or circumstance
beyond its reasonable control, including without limitation, war, invasion, act
of foreign enemy, hostilities, civil war or rebellion (whether war be declared
or not), strike, lockout or other industrial dispute, or act of God; then for
the duration of such contingency, or for a period of sixty (60) days, whichever
is shorter, either party may suspend the term of this Agreement by providing
written notice to the other party to such effect. If the force majeure lasts
more than sixty (60) days, either party may terminate this Agreement by
providing to the other party written notice to such effect.
20.3. Choice of Law. This Agreement will be governed by the laws of the
-------------
State of California without regard to conflicts of law principles. The United
Nations Convention on Contracts for the International Sale of Goods (1980) is
expressly disclaimed.
20.4. Severability. In the event any provision of this Agreement (or
------------
portion thereof) is determined by a court of competent jurisdiction to be
invalid, illegal, or otherwise unenforceable, such provision shall be deemed to
have been deleted from this Agreement, while the remainder of this Agreement
shall remain in full force and effect according to its terms.
20.5. Arbitration. Any claim, dispute, or controversy arising out of
-----------
or in connection with or relating to this Agreement or the breach or alleged
breach thereof will be submitted by the parties to arbitration in Santa Clara
County, California conducted by one arbitrator. Interra and IKOS shall agree on
the arbitrator, provided that if such parties cannot
19
<PAGE>
agree on such arbitrator, either Interra or IKOS can request that Judicial
Arbitration and Mediation Services ("JAMS") select the arbitrator. The
arbitrator shall set a limited time period and establish procedures designed to
reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrator, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The decision of the arbitrator shall be written, shall be in accordance
with JAMS rules, applicable law and with this Agreement, and shall be supported
by written findings of fact and conclusion of law which shall set forth the
basis for the decision of the arbitrator. The decision of the arbitrator as to
the validity and amount of any Claim shall be binding and conclusive upon the
parties to this Agreement. The award rendered by the arbitrators will include
costs of arbitration, reasonable attorneys' fees, and reasonable costs for
expert and other witnesses, and judgment on such award may be entered in any
court having jurisdiction thereof. Nothing in this Agreement will be deemed as
preventing either party from seeking injunctive relief (or any other provisional
remedy) from any court having jurisdiction over the parties and the subject
matter of the dispute.
20.6. Expenses. Except as otherwise expressly provided herein, each
--------
party will pay its own costs and expenses, including legal and accounting
expenses, related to the transactions provided for herein, irrespective of when
incurred.
20.7. Transfer Taxes. Any sales, use and other transfer taxes
--------------
arising out of or incurred in connection with the transactions contemplated by
this Agreement shall be paid by IKOS.
20.8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but both of which when taken together
shall constitute one and the same instrument.
20
<PAGE>
20.9. Notices. In order to be effective, any notice or other
-------
communication required or permitted hereunder must be in writing and may be
transmitted by messenger, delivery service, mail, telex, telegram, telecopy or
cable:
If to Interra: Interra, Inc.
2001 Gateway Place
Suite 440W
San Jose, CA 95110
Attention: Ajoy Bose
With a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Michael J. Danaher, Esq.
If to IKOS: IKOS Systems, Inc.
19050 Pruneridge Ave.
Cupertino, CA 95014
Attention: Joseph W. Rockom
With a copy to: Gray Cary Ware & Freidenrich, LLP
400 Hamilton Avenue
Palo Alto, CA 94301-1825
Attention: James M. Koshland, Esq.
20.10. Assignment. In the event that IKOS or Interra assigns this
----------
Agreement, such assignment or transfer shall not relieve IKOS or Interra or
their successors of any of their rights or obligations hereunder. Assignment or
transfer shall include, but not be limited to, any assignment by operation of
law, or sale or assignment of IKOS' or Interra's rights to the Software and any
change in control of IKOS or Interra.
20.11. Entire Agreement. This Agreement (together with the Exhibits
----------------
hereto) constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede any and all other
agreements, written or oral, that the parties heretofore may have had with
respect to the subject matter herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above set forth.
INTERRA: IKOS:
/s/ Ajoy K. Bose /s/ Joseph W. Rockom
- ---------------------------- --------------------------------
Authorized Signature Authorized Signature
Ajoy K. Bose Joseph W. Rockom
- ---------------------------- --------------------------------
Name (Type or Print) Name (Type or Print)
President and CEO Chief Financial Officer
- ---------------------------- --------------------------------
Title Title
[SIGNATURE PAGE TO TECHNOLOGY PURCHASE AGREEMENT]
<PAGE>
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of May 12, 1998, by
and between IKOS Systems, Inc., a Delaware corporation (the "Company"), and
Interra, Inc., a Delaware corporation ("Interra"), having received the right to
receive shares of IKOS common stock pursuant to the acquisition (the
"Acquisition") by the Company of certain assets of Interra under the Asset
Purchase Agreement dated May 12, 1998 (the "Acquisition Agreement").
RECITAL
Pursuant to the terms of the Acquisition, Interra and the Company desire to
provide for certain registration and other rights all as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Registration Rights.
-------------------
1.1 Definitions. As used in this Agreement, the following terms shall
-----------
have the following respective meanings:
(a) The term "Commission" means the Securities and Exchange
Commission.
(b) The terms "Holder" or "Holders" mean any person or persons to
whom Registrable Securities were originally issued or successors and assignees
under Section 2.3 hereof who hold Registrable Securities.
(c) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing with the SEC a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of the effectiveness of such
registration statement.
(d) The term "Registrable Securities" means (i) all shares of the
Company's common stock issued in connection with the Acquisition; (ii) all
shares of capital stock issued in lieu of any of the stock referred to in clause
(i) in any reorganization, which have not been sold to the public; and (iii) all
shares of capital stock issued in respect of any of the stock referred to in
clauses (i) or (ii) as a result of any stock split, stock dividend,
recapitalization or the like, which have not been sold to the public.
1.2 Required Registration.
---------------------
(i) Obligation of the Company. Should the Company issue
-------------------------
shares of its common stock in connection with the Acquisition on or before each
Release Date
1
<PAGE>
(as defined in the Acquisition Agreement) or as soon as practicable thereafter,
the Company shall (i) prepare and file with the Commission a registration
statement on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate and which form shall be available for the
disposition of the Registrable Securities in accordance with the intended method
or methods of disposition thereof (or amend such initial registration statement
to achieve the same result) and (ii) use its best efforts to cause such
registration statement to be declared effective by the Commission as soon as
possible thereafter, and shall use its best efforts to effect all such other
registrations, qualifications and compliances (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualifications under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the Securities
Act and any other governmental requirements or regulations) as would permit or
facilitate the sale and distribution of all of the Registrable Securities;
provided that the Company shall not be obligated to take any action to effect
such registration, qualification or compliance pursuant to this subsection 1.2
in any particular jurisdiction in which the Company would be required to execute
a general qualification or compliance unless the Company is already subject to
service in such jurisdiction and except as required by the Securities Act.
(b) Shelf Registration. Upon filing any registration pursuant to
------------------
Section 1 herein, the Company shall use its best efforts to keep such
registration effective for at least one hundred eighty (180) days or, if longer,
until all Registrable Securities included therein have been sold by the Holders
thereof.
1.3 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such person within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) by
the Company of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance pursuant to the
Securities Act or any state securities laws, rules or regulations, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable to any such person in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based
<PAGE>
on any untrue statement or omission (or alleged untrue statement or omission),
made in reliance upon and in conformity with written information furnished to
the Company by an instrument duly executed by such Holder, controlling person or
underwriter and stated to be specifically for use therein or the preparation
thereby.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holder,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein or the preparation thereby.
(c) Each party entitled to indemnification under this Section 1.3 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.4 Rule 144 Reporting. With a view to making available to Holders the
------------------
benefits of Rule 144 promulgated by the Commission under the Securities Act, the
Company agrees to use its best efforts to:
<PAGE>
(a) make and keep adequate current public information with respect to
the Company available, as those terms are used in Rule 144 under the Securities
Act, at all times after the Closing Date (as defined in the Acquisition
Agreement);
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and
(c) furnish to Holders promptly upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144 and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as any Holder may
reasonably request in order to permit such Holder to avail itself of any rule or
regulation of the Commission allowing such Holder to sell its Company common
stock without registration.
1.5 Assignment of Registration Rights. The rights to cause the Company to
---------------------------------
register Registrable Securities pursuant to this Section 1 may be assigned by a
Holder to a transferee or assignee of Registrable Securities; provided, however,
that no such transferee or assignee shall be entitled to registration rights
under Sections 1.2 or 1.5 hereof unless it acquires at least twenty-five
thousand (25,000) shares of Registrable Securities (as adjusted for stock splits
and combinations) and the Company shall, within a reasonable time, be furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned. Notwithstanding the foregoing, rights to cause the Company to
register securities may be assigned to any subsidiary, parent, partner or
retired partner of a Holder or any family member or Trust for the benefit of any
Holder.
2. General.
-------
2.1 Waivers and Amendments. With the written consent of the record
----------------------
or beneficial holders of at least a majority of the Registrable Securities, the
obligations of the Company and the rights of the Holders of the Registrable
Securities under this agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such modification, amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities without the consent of all of
the Holders of the Registrable Securities. Upon the effectuation of each such
waiver, consent, agreement of amendment or modification, the Company shall
promptly give written notice thereof to the record holders of the Registrable
Securities who have not previously consented thereto in writing. This Agreement
or any provision hereof may be changed, waived, discharged or terminated only by
a statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this Section 2.1.
<PAGE>
2.2 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
2.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
2.4 Entire Agreement. This Agreement and the other documents delivered
----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof, and this
Agreement shall supersede and cancel all prior agreements between the parties
hereto with regard to the subject matter hereof.
2.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective upon personal
delivery or three (3) business days after mailing by first class mail, postage
prepaid, certified or registered mail, return receipt requested, addressed (a)
if to any Holder, at such Holder's address as set forth in the Company's
records, or at such other address as such Holder shall have furnished to the
Company in writing, or (b) if to the Company, at 19050 Pruneridge Avenue,
Cupertino, CA 95014, or at such other address as the Company shall have
furnished to the Holder in writing.
2.6 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
2.7 Titles and Subtitles. The titles of the sections and subsections of
--------------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the
date first above written.
COMPANY:
IKOS SYSTEMS, INC.
By: /s/ Joseph W. Rockom
------------------------------
Its: Chief Financial Officer
------------------------------
INTERRA:
INTERRA, INC.
By: /s/ Ajoy K. Bose
------------------------------
Its: President and CEO
-----------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of May 12, 1998, by
and between IKOS Systems, Inc., a Delaware corporation (the "Company"), and Ajoy
Bose and Sunil Jain (collectively, the "Principals"), having received the right
to receive shares of IKOS common stock pursuant to that certain CONSULTING,
ASSIGNMENT AND TECHNOLOGY USE RESTRICTION AGREEMENT of even date herewith (the
"Agreement").
RECITAL
Pursuant to the terms of the Agreement, the Company and the Principals
desire to provide for certain registration and other rights all as set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Registration Rights.
-------------------
1.1 Definitions. As used in this Agreement, the following terms shall have
-----------
the following respective meanings:
(a) The term "Commission" means the Securities and Exchange
Commission.
(b) The terms "Holder" or "Holders" mean any person or persons to whom
Registrable Securities were originally issued or successors and assignees under
Section 2.3 hereof who hold Registrable Securities.
(c) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing with the SEC a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of the effectiveness of such
registration statement.
(d) The term "Registrable Securities" means (i) all shares of the
Company's common stock issued in connection with the Agreement; (ii) all shares
of capital stock issued in lieu of any of the stock referred to in clause (i) in
any reorganization, which have not been sold to the public; and (iii) all shares
of capital stock issued in respect of any of the stock referred to in clauses
(i) or (ii) as a result of any stock split, stock dividend, recapitalization or
the like, which have not been sold to the public.
1.2 Required Registration.
---------------------
(i) Obligation of the Company. Should the Company issue shares
-------------------------
of its common stock on or before each Release Date (as defined in the
Agreement) or as
1
<PAGE>
soon as practicable thereafter, the Company shall (i) prepare and file with the
Commission a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the disposition of the Registrable Securities in
accordance with the intended method or methods of disposition thereof (or amend
such initial registration statement to achieve the same result) and (ii) use its
best efforts to cause such registration statement to be declared effective by
the Commission as soon as possible thereafter, and shall use its best efforts to
effect all such other registrations, qualifications and compliances (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualifications under the applicable blue sky or other
state securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements or
regulations) as would permit or facilitate the sale and distribution of all of
the Registrable Securities; provided that the Company shall not be obligated to
take any action to effect such registration, qualification or compliance
pursuant to this subsection 1.2 in any particular jurisdiction in which the
Company would be required to execute a general qualification or compliance
unless the Company is already subject to service in such jurisdiction and except
as required by the Securities Act.
(b) Shelf Registration. Upon filing any registration pursuant to
------------------
Section 1 herein, the Company shall use its best efforts to keep such
registration effective for at least one hundred eighty (180) days or, if longer,
until all Registrable Securities included therein have been sold by the Holders
thereof.
1.3 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such person within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) by
the Company of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance pursuant to the
Securities Act or any state securities laws, rules or regulations, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable to any such person in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission (or alleged untrue statement or omission), made in
reliance
<PAGE>
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein or the preparation thereby.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holder,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein or the preparation thereby.
(c) Each party entitled to indemnification under this Section 1.3 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.4 Rule 144 Reporting. With a view to making available to Holders the
------------------
benefits of Rule 144 promulgated by the Commission under the Securities Act, the
Company agrees to use its best efforts to:
<PAGE>
(a) make and keep adequate current public information with respect to
the Company available, as those terms are used in Rule 144 under the Securities
Act, at all times after the Effective Date (as defined in the Agreement);
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and
(c) furnish to Holders promptly upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144 and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as any Holder may
reasonably request in order to permit such Holder to avail itself of any rule or
regulation of the Commission allowing such Holder to sell its Company common
stock without registration.
1.5 Assignment of Registration Rights. The rights to cause the Company to
---------------------------------
register Registrable Securities pursuant to this Section 1 may be assigned by a
Holder to a transferee or assignee of Registrable Securities; provided, however,
that no such transferee or assignee shall be entitled to registration rights
under Sections 1.2 or 1.5 hereof unless it acquires at least twenty-five
thousand (25,000) shares of Registrable Securities (as adjusted for stock splits
and combinations) and the Company shall, within a reasonable time, be furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned. Notwithstanding the foregoing, rights to cause the Company to register
securities may be assigned to any subsidiary, parent, partner or retired partner
of a Holder or any family member or Trust for the benefit of any Holder.
2. General.
-------
2.1 Waivers and Amendments. With the written consent of the record or
----------------------
beneficial holders of at least a majority of the Registrable Securities, the
obligations of the Company and the rights of the Holders of the Registrable
Securities under this agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such modification, amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities without the consent of all of
the Holders of the Registrable Securities. Upon the effectuation of each such
waiver, consent, agreement of amendment or modification, the Company shall
promptly give written notice thereof to the record holders of the Registrable
Securities who have not previously consented thereto in writing. This Agreement
or any provision hereof may be changed, waived, discharged or terminated only by
a statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this Section 2.1.
<PAGE>
2.2 Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
2.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
2.4 Entire Agreement. This Agreement and the other documents delivered
----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof, and this
Agreement shall supersede and cancel all prior agreements between the parties
hereto with regard to the subject matter hereof.
2.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective upon personal
delivery or three (3) business days after mailing by first class mail, postage
prepaid, certified or registered mail, return receipt requested, addressed (a)
if to any Holder, at such Holder's address as set forth in the Company's
records, or at such other address as such Holder shall have furnished to the
Company in writing, or (b) if to the Company, at 19050 Pruneridge Avenue,
Cupertino, CA 95014, or at such other address as the Company shall have
furnished to the Holder in writing.
2.6 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
2.7 Titles and Subtitles. The titles of the sections and subsections of
--------------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the
date first above written.
COMPANY:
IKOS SYSTEMS, INC.
By: /s/ Joseph W. Rockom
--------------------
Its: Chief Financial Officer
-----------------------
PRINCIPALS:
/s/ Ajoy Bose
-------------------------------
Ajoy Bose
/s/ Sunil Jain
-------------------------------
Sunil Jain
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
EXHIBIT 99.1
CONSULTING, ASSIGNMENT AND
TECHNOLOGY USE RESTRICTION AGREEMENT
This Consulting, Assignment and Technology Use Restriction Agreement (the
"Agreement") is entered into by and between IKOS Systems, Inc., a Delaware
corporation with a principal place of business at 19050 Pruneridge Avenue,
Cupertino, CA 95014 ("IKOS") and Ajoy Bose and Sunil Jain (collectively, the
"Principals") as of May 12, 1998 (the "Effective Date").
RECITALS
A. Pursuant to that certain Technology Purchase Agreement (the "Purchase
Agreement") dated as of an even date between Interra, Inc., a Delaware
corporation ("Interra") and IKOS, Interra will sell and transfer to IKOS certain
proprietary software technologies as further described in Exhibit A of the
---------
Purchase Agreement and the related technology, including know-how, design rules,
trade secrets, inventions (whether or not patentable), algorithms, routines,
files, databases, works of authorship, processes, devices and documentation
thereto (the "Technology") and IKOS will grant Interra rights as to such
Technology.
B. The Principals serve as President and Vice-President, respectively, of
Interra and have substantial knowledge and expertise in the areas of electronic
design automation, video and audio compression and other software and electronic
design businesses, as well as knowledge and expertise in acquiring and
establishing operations in these businesses in India;
C. IKOS and the Principals acknowledge that it would be detrimental to
IKOS if the Principals compete with IKOS following the Closing Date of the
Purchase Agreement.
D. The Principals have certain rights to acquire Delsoft India Private
Ltd., and Indian corporation ("Delsoft") under an agreement dated as of March 5,
1997 (the "Delsoft Agreement") between the Principals and Delsoft; and
E. IKOS desires to acquire the Delsoft Business and to compensate the
Principals for their services as consultants and to obtain their continued
cooperation in the further development of the business organization in India.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
Definitions
-----------
Unless defined herein, defined terms shall have the meaning given to them in
the Purchase
<PAGE>
Agreement.
1.1 "Business" shall mean the development and manufacture of hardware and
software systems for the verification of integrated circuits.
1.2 "Delsoft Business" shall mean the assets related to the EDA business
owned by Delsoft and acquired by IKOS as set forth in that certain Bill of Sale
and Work Force Transfer Agreement between Delsoft and IKOS India Private
Limited.
1.3 "Reserved Field" shall mean applications for digital logic
simulation, emulation, and hardware acceleration for the verification of
integrated circuits.
1.4 "IKOS' Competitors" shall mean direct competitors of IKOS in the
Reserved Field as of the Effective Date of this Agreement as listed on Schedule
1.6 to the Purchase Agreement.
1.5 "Restricted Software" shall mean the "RTL Compiler-Verilog" software
currently in production and the "RTL Compiler-VHDL" software currently under
development by Interra and marked as such on Exhibit A to the Purchase
---------
Agreement.
ARTICLE II
Obligations and Services of the Principals
------------------------------------------
2.1 Acquiring and Establishing India Operations. The Principals have
-------------------------------------------
provided advice and assistance to IKOS in connection with the acquisition and
establishment of business operations in India. Their services have included (i)
advice on how to establish and operate a strategic research and development
business unit in India, (ii) the identification and introduction of a suitable
acquisition target (Delsoft), (iii) the negotiation of an acquisition agreement
between IKOS and Delsoft, (iv) assistance in obtaining regulatory approval in
India for the acquisition, and (v) assistance in attracting and retaining the
approximately 50 highly skilled engineers who work for Delsoft and in
structuring programs to attract and retain future engineers.
2.2 Transfer of Rights. The Principals hereby assign and transfer to IKOS
------------------
pursuant to that certain Delsoft Agreement the rights, obligations and interest
necessary to acquire the Delsoft Business.
2.3 Technology Use Restriction.
--------------------------
(a) The parties understand and agree that this Agreement is entered
into in connection with the Purchase Agreement. The parties further understand
and agree that the Principals are key and significant members of Interra, own a
significant number of shares of Interra and that the consummation of the
Purchase Agreement is contingent upon the parties
<PAGE>
entering into this Agreement, including this technology use restriction
provision. IKOS and the Principals further acknowledge that IKOS and Interra
following the Closing Date of the Purchase Agreement will continue to conduct
their respective businesses. The parties expressly acknowledge and agree that
the technology use restrictions contained in this Agreement are permissible and
enforceable pursuant to the provisions of applicable law.
(b) During the period commencing on the Effective Date of this
Agreement and ending three (3) years thereafter, the Principals may not (i)
incorporate the Technology in Stand Alone Products in the Reserved Field; (ii)
incorporate the Restricted Software in Service Products for license and
distribution to or for IKOS's Competitors for use in the Reserved Field; (iii)
sublicense the Restricted Software to Distributors or End Users who are IKOS'
Competitors for use in the Reserved Field; or (iv) provide services that
exclusively rely on IKOS' products in the Reserved Field to IKOS' customers.
(c) The Principals' obligations under this Section 2.3 shall
terminate if IKOS, or any entity deriving title to its goodwill or shares or
pursuant to a change of control, ceases to carry on a like Business therein.
ARTICLE III
Representations and Warranties and Covenant. The Principals, severally and
-------------------------------------------
not jointly, hereby represent and warrant to IKOS:
3.1 Power. The Principals have complete and unrestricted power and the
-----
unqualified legal right, capacity and authority to execute, deliver and perform
this Agreement, and to sell, convey, assign and transfer the rights to acquire
the Delsoft Business pursuant to the Delsoft Agreement attached hereto as
Exhibit A.
- ---------
3.2 Authority. All authorizations necessary on the part of the Principals
---------
to effect the (i) provision of consulting services, (ii) transfer and assignment
of the rights to acquire the Delsoft Business and (iii) covenant regarding the
technology use restrictions has been or shall have been taken on or before the
Effective Date. The Agreement is a valid and binding obligation of the
Principals, enforceable against the Principals in accordance with its terms
except as limited by applicable bankruptcy, insolvency, moratorium or other
laws of general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies.
3.3. No Conflict. Neither the execution and delivery of this Agreement
-----------
nor compliance by the Principals with any provision hereof will conflict with,
result in a breach or violation or constitute a default under any agreement that
the Principals have with Interra or any other third party. The Principals are
not required to obtain any authorization, consent, approval or waiver from any
governmental authority, Interra, or any other third party.
<PAGE>
3.4 Accuracy of Documents and Information. The copies of all instruments,
-------------------------------------
agreements, other documents and written information set forth as, or referenced
in this Agreement or specifically required to be furnished pursuant to the
Agreeement to IKOS by the Principals are complete and correct in all material
respects. No representations or warranties made by the Principals in this
Agreement, nor any document, written information, or statement furnished
directly to IKOS pursuant to Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained therein not misleading.
3.5 Retention. The average number of Delsoft engineers employed by IKOS
---------
India Private Limited during any six month period shall not be less than forty
(40) (the "Threshold Number"); provided, however (i) that IKOS shall continue an
active and competitive compensation program and (ii) that there not be a
substantial change in the operations of IKOS India Private Limited or in the
nature or quality of work assignments of such engineers. This Section 3.5 shall
terminate in the event of a change in control of IKOS or IKOS India Private
Limited where the successor company does not continue the operations of IKOS
India Private Limited in a manner substantially similar in practice prior to the
change in control.
ARTICLE IV
Payment
-------
4.1 Payment. Subject to Section 4.2, IKOS will pay to the Principals an
-------
aggregate amount of Two Million Five Hundred Thousand dollars ($2,500,000) as
consideration for: (i) a success fee to the acquisition of Delsoft operations
and the establishment of IKOS's Indian research and development operations, (ii)
the transfer to IKOS of the Principals' rights to acquire the Delsoft Business,
and (iii) the acceptance of the restrictions set forth in Section 2.3. Payment
of the Purchase Price, minus the Holdback (as hereinafter defined), will be made
in cash on the Effective Date and will be allocated between the Principals as
follows: Ajoy Bose shall receive One Million Five Hundred Ten Thousand
($1,510,000) and Sunil Jain shall receive Four Hundred Eighty Thousand
($480,000.00).
4.2 Holdback. Of the Purchase Price, Five Hundred Ten Thousand
--------
($510,000.00) will be held as a holdback (the "Holdback") as security for the
technology use restriction covenant in Section 2.3 of Article II and the
representations and warranties and covenant made by the Principals in Article
III, subject to the limitation set forth in Section 4.4, for a period of
eighteen (18) months after the Effective Date. The Holdback shall be payable to
the Principals in cash or IKOS Common Stock at IKOS's sole election, and shall
be released as follows: (i) One Hundred Seventy Thousand ($170,000.00) on the
six (6) month anniversary of the Effective Date; (ii) One Hundred Seventy
Thousand ($170,000.00) on the twelve (12) month anniversary of the Effective
Date; and (iii) One Hundred Seventy Thousand ($170,000.00) on the eighteen (18)
month anniversary of the Effective Date (each, a "Release Date"); provided,
however, that should IKOS elect to pay any portion of the Holdback in IKOS
Common Stock, (i) the Principals
<PAGE>
shall confirm in writing its suitability to receive such shares by means of an
Investor Representation Letter in the form attached hereto as Exhibit B; (ii)
---------
the IKOS Common Stock shall be listed and traded on a national stock exchange;
(iii) the average daily trading volume of the IKOS Common Stock for the 30 days
prior to the Release Date shall not be less than 7,000 shares per day; (iv) the
average closing price of the IKOS Common Stock for the five days prior to, but
not including, the Release Date shall not be less than $5.00 per share; (v) IKOS
shall have complied with all of its filing requirements with the Securities and
Exchange Commission for the year prior to the Release Date; and (vi) the IKOS
Common Stock shall be valued at the average closing price of the IKOS Common
Stock for the five (5) business days prior to, but not including, the Release
Date. The amounts paid upon each Release Date shall be allocated between the
Principals as follows: Ajoy Bose shall receive One Hundred Thirty Thousand
($130,000.00) and Sunil Jain shall receive Forty Thousand ($40,000.00).
4.3 Required Registration. Should IKOS elect to pay the Holdback, or any
---------------------
portion thereof, in IKOS Common Stock, IKOS shall file on or before each such
Release Date a registration statement in the form attached hereto as Exhibit C
---------
relating to such shares of IKOS Common Stock issuable on such Release Date. If
a valid registration statement is not effective on or before such Release Date,
then IKOS shall pay interest on the portion of the Holdback scheduled to be
released at the rate of 6% APR from such Release Date up to a maximum of 30
days. If a valid registration statement is not effective within 30 days after
such Release Date (the "Payment Date"), then the Principals will have the right
to demand and IKOS will be required to pay the payment plus interest then due in
cash on the Payment Date. With respect to IKOS' obligation to file registration
statements hereunder, the Principals' sole and exclusive remedy shall be the
demand of and receipt of payment of the amount(s) due in cash.
4.4 Limitation to the Holdback. The parties agree that in the event that
--------------------------
the average number of engineers fall below the Threshold Number, IKOS shall not
withhold the full amount of the Holdback subject to the Release Date upon such
occurrence. IKOS shall make a good faith assessment as to the direct damages to
IKOS for each engineer that falls below the Threshold Number and deduct such
amount from the Holdback (the "Damages"). The Holdback, minus the Damages,
shall be delivered to the Principals on the Release Date. Should the Principals
dispute the Damages, the parties shall agree to select an arbitrator to make a
final and binding determination of the Damages in accordance with Section 6.5
herein.
ARTICLE V
Survival of Representations, Warranties and Covenants; Indemnification.
----------------------------------------------------------------------
5.1 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties, agreements and covenants of the Principals
contained in this Agreement shall survive the Effective Date for a period ending
at midnight, PST, on the eighteen (18) month anniversary of the Effective Date
and shall in no manner be limited by any investigation of the subject matter
thereof made by or on behalf of either party or by the satisfaction of any
condition to the
<PAGE>
Closing. At the end of such period, all such agreements, covenants,
representations or warranties by the Principals shall expire and be of no
further force and effect; provided, however, that the Principals will remain
liable thereafter to the extent one or more Claims (as defined in Section 19.2)
shall have been asserted in writing by IKOS on or before the expiration of such
period.
5.2 Indemnification by the Principals. The Principals will defend,
---------------------------------
indemnify and hold harmless IKOS from and against any and all demands, claims,
debts, damages, losses and liabilities (individually a "Claim" or collectively
"Claims") which are asserted against, incurred by or imposed upon IKOS and which
constitute, directly result from, or relate to (i) any failure of the Principals
to perform or comply with the covenant in Section 2.3 of Article II set forth
herein or (ii) the inaccuracy of any representation or the breach of any
warranty made in Article III of this Agreement. The indemnification obligations
set forth herein shall terminate as to any Claim (or any potential Claim by an
appropriate party) not asserted by IKOS in writing prior to midnight, PST, on
the eighteen (18) month anniversary of the Effective Date. The term "Claim"
shall include, but not be limited to, any claim or action by any claimant,
creditor, interest holder or other party in interest.
5.3 The amounts for which IKOS may seek indemnification under this Article
V shall extend to, and as used herein the term "Claim" shall include, reasonable
attorneys' fees, reasonable accountants' fees, costs of litigation and other
expenses reasonably incurred by IKOS in the investigation or defense of any
claim asserted against IKOS and any amounts paid in settlement or compromise of
any claim asserted against it, but only to the extent that the claim asserted is
or would have been subject to the provisions of this Section 5.2.
5.4 IKOS shall not have the right to be indemnified pursuant to this
Section 5.2 unless and until Claims made hereunder, individually or in
aggregate, exceed $15,000. The Principals' obligations to indemnify IKOS
hereunder shall be limited to the amount remaining under the Holdback.
5.5 Any payment due to IKOS (or payable to IKOS) pursuant to a Claim shall
be calculated net of any insurance recovery and tax benefits and then paid in
the following order: (i) first by offset against the Holdback, and thereafter
(ii) by bank cashier's check or wire transfer but in no event in excess of the
Holdback. Without limiting the other rights it may have, IKOS may, at its sole
option, by notice to the Principals satisfy any amount due to IKOS pursuant to a
Claim by withholding such amount from the Holdback.
5.6 IKOS agrees to give the Principals prompt written notice of any event
or assertion of which it has knowledge concerning any Claim as to which it may
request indemnification hereunder. Any delay in giving a notice hereunder which
does not materially prejudice the Principals shall not affect IKOS' right to
indemnification hereunder. A notice shall state that IKOS has paid or accrued a
Claim, identifying in reasonable detail the nature of the Claim, the date the
Claim was paid or accrued and the nature of the inaccuracy, breach or other
basis for indemnification. Each party will cooperate with the other in
determining the validity of any such
<PAGE>
Claim. The Principals shall make available to IKOS and its attorneys and
accountants all records relating to the Claim and the parties agree to render to
each other such assistance as they may reasonably require of each other in order
to ensure the proper and adequate defense of such Claim if the Claim relates to
a claim asserted by a third party. If the Claim relates to a claim asserted by a
third party, IKOS shall control the defense or settlement of such Claim,
including selection of counsel, and the Principals shall have the right at its
expense the participate in the defense of any such Claim. In no event shall IKOS
settle a Claim asserted by a third party without the prior written approval of
the Principals, which approval shall not be unreasonably withheld or delayed
(provided the IKOS shall not need the consent of the Principals if they shall
fail to acknowledge responsibility for such Claim or shall fail to cooperate in
the defense of any Claim asserted by a third party.)
5.7 The indemnification obligations of the Principals under this Article
V shall continue in full force and effect as to any Claim as to which notice has
been given pursuant to Section 6.9 until such Claim has been settled either by
mutual agreement of the parties concerned, by arbitration in accordance with the
provisions of this agreement or in the event of a Claim resulting from legal
action by a third party, by the final arbitration award or final order, decree
or judgment of a court of competent jurisdiction in the United States of America
(the time for appeal having expired with no appeal having been take,). The right
of IKOS to be indemnified under this Article V shall not limit, reduce or
otherwise affect any other rights and remedies it may have with respect to the
maters indemnified under this Agreement.
5.8 IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES, INCLUDING ANY LOST
PROFITS OR LOST SAVINGS REGARDLESS OF THE LEGAL THEORY ON WHICH A CLAIM MAY BE
BASED, EVEN IF A PARTY OR ITS REPRESENTATIVE HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
ARTICLE VI
Miscellaneous
-------------
6.1 Savings Clause. If any restrictions set forth in Article II above is
--------------
held to be unreasonable or unenforceable, then the Principals agree, and hereby
submit, to the reduction and limitation of such prohibition to such field of
business or period as shall be deemed reasonable.
6.2 Successors, Assigns. This Agreement shall be binding upon and shall
-------------------
inure to the benefit of IKOS and its successors and assigns.
6.3 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between IKOS and the Principals relating to the transactions contemplated
herein. This Agreement supersedes and replaces any prior verbal or written
agreements between the parties. This
<PAGE>
Agreement may be amended or altered only in a writing signed by the President of
IKOS and the Prinicpals.
6.4 Applicable Law; Severability. This Agreement shall be construed and
----------------------------
interpreted in accordance with the laws of the State of California without
regard to conflicts of laws and principles. Each provision of this Agreement is
severable from the others, and if any provision hereof shall be to any extent
unenforceable it and the other provisions hereof shall continue to be
enforceable to the full extent allowable, as if such offending provision had not
been a part of this Agreement.
6.5 Arbitration. Any claim, dispute, or controversy arising out of or in
-----------
connection with or relating to this Agreement or the breach or alleged breach
thereof will be submitted by the parties to arbitration in Santa Clara County,
California conducted by one arbitrator. The Principals and IKOS shall agree on
the arbitrator, provided that if such parties cannot agree on such arbitrator,
either the Principals or IKOS can request that Judicial Arbitration and
Mediation Services ("JAMS") select the arbitrator. The arbitrator shall set a
limited time period and establish procedures designed to reduce the cost and
time for discovery while allowing the parties an opportunity, adequate in the
sole judgment of the arbitrator, to discover relevant information from the
opposing parties about the subject matter of the dispute. The decision of the
arbitrator shall be written, shall be in accordance with JAMS rules, applicable
law and with this Agreement, and shall be supported by written findings of fact
and conclusion of law which shall set forth the basis for the decision of the
arbitrator. The decision of the arbitrator as to the validity and amount of any
Claim shall be binding and conclusive upon the parties to this Agreement. The
award rendered by the arbitrators will include costs of arbitration, reasonable
attorneys' fees, and reasonable costs for expert and other witnesses, and
judgment on such award may be entered in any court having jurisdiction thereof.
Nothing in this Agreement will be deemed as preventing either party from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the parties and the subject matter of the dispute.
6.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
6.7 Facsimile Signatures. Any signature page delivered by fax machine or
--------------------
telecopy machine shall be binding to the same extent as an original signature
page. Any party who delivers such a signature page agrees to later deliver an
original counterpart to any party which requests it.
6.8 Waivers and Amendments. No amendment, modification or waiver of the
----------------------
terms of this Agreement shall be binding unless reduced to writing and signed by
the IKOS and the Principals.
6.9 Notice. In order to be effective, an notice or other communication
------
required or
<PAGE>
permitted hereunder must be in writing and may be transmitted by messenger,
delivery service, mail, telex, telegram, telecopy or cable:
If to the Principals: Ajoy Bose
12624 Cheverly Court
Saratoga, CA 95070
Sunil Jain
19902 Seagull Way
Saratoga, CA 95070
With a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Michael J. Danaher, Esq.
If to IKOS: IKOS Systems, Inc.
19050 Pruneridge Ave.
Cupertino, CA 95014
With a copy to: Gary Cary Ware & Freidenrich, LLP
400 Hamilton Avenue
Palo Alto, CA 94301-1825
Attn: James M. Koshland, Esq.
[Signature pages follow]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
IKOS SYSTEMS, INC. PRINCIPALS
a Delaware corporation
By: /s/ Joseph W. Rockom /s/ Ajoy Bose
-------------------------- --------------------------
Ajoy Bose
Title: CFO
-----------------------
/s/ Sunil Jain
--------------------------
Sunil Jain
<PAGE>
EXHIBIT 99.2
IKOS ANNOUNCES COMPLETION OF TECHNOLOGY AND R&D EXPERTISE
ACQUISITION AND ESTABLISHMENT A RESEARCH AND DEVELOPMENT
CENTER IN INDIA
May 14, 1998 6:30 AM EDT
CUPERTINO, Calif.--(BUSINESS WIRE)--May 14, 1998--
Software Development Center Substantially Increases IKOS'
Product Development Resources
IKOS Systems, Inc. (NASDAQ:IKOS) today announced it has completed the
acquisition of certain Electronic Design Automation (EDA) technology from
Interra, Inc. (San Jose, Calif.) and the opening of its new research &
development facility at Noida near Delhi.
The acquisition brings key HDL compiler, Intellectual Property (IP) modeling,
and design verification technologies to IKOS. In addition, as part of the
acquisition, approximately 50 highly skilled software development engineers will
transfer from Delsoft, a division of Interra based in Noida, India, to IKOS. As
a result of the formation of IKOS India, Jyotirmoy Daw, formerly CEO of Delsoft,
becomes president of IKOS India, reporting to Robert Hum, senior vice president
of product operations.
The India Center immediately becomes IKOS' largest software development site
outside its Cupertino headquarters, and complements IKOS' other development
centers in California, Massachusetts, Minnesota, and New Jersey.
"I am extremely pleased with the successful completion of the acquisition and
with the synergy of the India and US development teams. Under previous
development contracts, the Delsoft engineers were instrumental in the initial
development phase of new products that IKOS expects to announce over the next
several quarters," said Ramon Nunez, president and chief executive officer of
IKOS.
"I am very enthusiastic about the capabilities the transferring engineers bring
to IKOS. The combination of this expertise, our current product resources and
technologies, and the technology we are acquiring, will enable IKOS to deliver
advanced design verification solutions to tackle critical chip and system
verification challenges. I look forward to our worldwide development resources
providing increasing value to shareholders, employees and our customers."
"Our agreement with IKOS represents a major milestone in the evolution of our
company," said Ajoy Bose, president and CEO of Interra. "We are delighted that
our technology will enable IKOS to bring out new and exciting products. In
addition, with the greater financial resources now at our disposal, Interra is
in a much stronger position as a standalone company to pursue our vision of
providing the software building blocks that we call 'EDA-IP'."
"This acquisition comes as a recognition of key technologies and expertise that
Delsoft has developed over the last three years. The R&D center in India will
now focus on transforming these key technologies into complete products that
will position IKOS in the forefront of the verification market," said Jyotirmoy
Daw, President of IKOS India.
IKOS Systems, Inc. is a technology leader in high-performance design
verification solutions including hardware and software simulation for
language-based design, logic emulation for hardware/software co-verification,
and consulting services. The Company's mission is to help customers realize
their high complexity electronic systems through innovative design verification
solutions.
IKOS supports direct sales operations in North America, UK, France, Germany, and
Japan, and a distribution network throughout Europe and Asia. Corporate
headquarters is in California, IKOS Systems, Inc. 19050
<PAGE>
Pruneridge Ave., Cupertino, Calif., 95014, 408/255-4567. For more information,
visit our corporate website at http://www.ikos.com.
-------------------
Interra, Inc. is a privately-held company providing customizable software
components and services to meet the needs of IC design, system design, and
software development engineers. Interra markets its products through OEM and
technology licensing relationship with EDA and semiconductor vendors.
The company has extensive management and engineering experience in HDL-based
design methodologies and ASIC design. Interra's family of customizable software
components includes fast RTL compilers, HDL analyzers, translators, and
compliance checkers. The company maintains engineering development and services
groups in San Jose, CA and India.
For more information, contact Interra at: 2001 Gateway Place, Suite 440W, San
Jose, CA, 95110, 408/573-1400, 408/573-1430 (FAX), http://www.interrainc.com.
-------------------------
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that such forward-looking statements involve risks and
uncertainties, including, without limitation, the integration of the EDA
technology and R&D expertise from Interra and its affiliate, Delsoft, continued
acceptance and development of the Company's existing and new products, increased
levels of competition for the Company, new products and technological changes,
the Company's dependence upon third-party suppliers, intellectual property
rights and other risks detailed from time-to-time in the Company's periodic
reports filed with the Securities and Exchange Commission.
