Exhibit 99.1
TERMINATION AGREEMENT AND MUTUAL RELEASE
This TERMINATION AGREEMENT AND MUTUAL RELEASE dated as of March 12,
2002 (this "Agreement") is made and entered into by and among Synopsys, Inc., a
Delaware corporation ("Parent"), Oak Merger Corporation, a Delaware corporation
("Merger Sub") and wholly-owned subsidiary of Parent, and IKOS Systems, Inc., a
Delaware corporation (the "Company"). Parent, Merger Sub and the Company are
collectively referred to herein as the "Parties" and each individually as a
"Party." Capitalized terms used but not defined herein shall have the meaning
set forth in the Merger Agreement (as defined below).
Recitals
WHEREAS the Parties entered into an Agreement and Plan of Merger and
Reorganization dated as of July 2, 2001 (as amended, the "Merger Agreement")
pursuant to which, subject to the terms and conditions stated therein, Merger
Sub was to merge with and into the Company and the Company was to continue as
the surviving corporation and a wholly-owned subsidiary of Parent;
WHEREAS contemporaneously with the execution of the Merger Agreement,
Parent, Company and certain stockholders or employees of the Company entered
into Company Voting Agreements (the "Voting Agreements");
WHEREAS on December 7, 2001 Fresno Corporation ("Fresno"), a
wholly-owned subsidiary of Mentor Graphics Corporation ("Mentor"), commenced a
cash tender offer to acquire all of the outstanding shares of the Company's
common stock for $11.00 cash per share (the "Mentor Tender Offer");
WHEREAS on January 16, 2002 as part of the Mentor Tender Offer, Mentor
delivered to the Company a proposed Agreement and Plan of Merger and
Reorganization by and among Mentor, Fresno and the Company providing, among
other things, that Mentor would amend the Mentor Tender Offer to eliminate the
"Termination Fee Condition" and that the Company and Mentor promptly take such
actions as required to cause the dismissal with prejudice of the lawsuits (the
"Deal Related Litigation") currently pending before the Delaware Court of
Chancery and the United States District Court for the District of Delaware
relating to the Merger Agreement and the Mentor Tender Offer (the "Mentor
Proposal"); and
WHEREAS, the Board of Directors of the Company has determined that the
Mentor Proposal constitutes a Superior Proposal and the Company desires to
terminate the Merger Agreement under Section 8.1(g) of the Merger Agreement upon
the terms and conditions of this Agreement and Parent agrees to accept such
termination upon the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, and the
representations, warranties, covenants, and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Termination of Merger Agreement. The Parties agree that this Agreement shall
constitute notice of termination under Section 8.1(g) of the Merger Agreement.
Upon the execution and delivery of this Agreement, the Company shall pay to
Parent the sum of five million five hundred thousand dollars ($5,500,000) by
irrevocable wire transfer of immediately available funds to the account
identified on Schedule A. Effective and contingent upon such payment, the Merger
Agreement shall be terminated and the effects of termination shall be as set
forth in Section 8.2 (other than Section 8.2(b)) of the Merger Agreement.
2. Termination of Voting Agreements. The Parties agree and acknowledge that the
Voting Agreements shall terminate by their terms upon termination of the Merger
Agreement.
3. Releases.
(a) By Parent and Merger Sub. Subject (as a condition subsequent) to the
dismissal with prejudice of the Deal Related Litigation, each of Parent and
Merger Sub, and each of their respective successors and assigns, shall forever
release and discharge the Company and each of its respective successors and
assigns (together with any present and former officers, directors, and other
agents, representatives and advisors including any investment bankers, attorneys
or accountants) (the "Company Releasees") from any and all claims, demands,
liens, actions, suits, causes of action, obligations, controversies, debts,
costs, attorneys' fees, expenses, damages, judgments, orders, and liabilities of
whatever kind or nature at law, in equity, or otherwise, whether now known or
unknown, suspected or unsuspected, liquidated or unliquidated, fixed or
contingent and whether or not concealed or hidden (collectively, "Claims")
relating to or arising out of (i) any action or failure to act or any
misstatement or omission, in each case prior to the execution and delivery of
this Agreement by the Parties, in actual or alleged violation of the Merger
Agreement or the Voting Agreements or in actual or alleged breach of any duty or
obligation in connection therewith or (ii) the termination of the Merger
Agreement; provided, however, that nothing herein shall prevent or limit the
enforcement of rights and obligations (x) under the Merger Agreement which by
the terms of the Merger Agreement survive the termination of the Merger
Agreement or (y) under this Agreement; and provided further that nothing herein
shall be construed to release any of the Company Releasees from any Claim for
breach of any provision of the Confidentiality Agreement which is intended to
survive following an acquisition of the Company by a third party or any of the
provisions of the Merger Agreement (other than Section 8.2(b)) which by the
terms of Section 8.2 of the Merger Agreement survive termination of the Merger
Agreement.
(b) By the Company. The Company, and each of its respective successors and
assigns, hereby forever releases and discharges Parent and Merger Sub and each
of their respective successors and assigns (together with any present and former
officers, directors, and other agents, representatives and advisors including
any investment bankers, attorneys or accountants) (the "Parent Releasees") from
any Claims relating to or arising out of (i) any action or failure to act or any
misstatement or omission, in each case prior to the execution and delivery of
this Agreement by the Parties, in actual or alleged violation of the Merger
Agreement or the Voting Agreements or in actual or alleged breach of any duty or
obligation in connection therewith or (ii) the termination of the Merger
Agreement or the payment of the termination fee in accordance with this
Agreement and Sections 8.1(g) and 8.3 of the Merger Agreement; provided,
however, that nothing herein shall prevent or limit the enforcement of rights
and obligations (x) under the Merger Agreement which by the terms of the Merger
Agreement survive the termination of the Merger Agreement or (y) under this
Agreement; and provided further that nothing herein shall be construed to
release any of the Parent Releasees from any Claim for breach of any provision
of the Confidentiality Agreement which is intended to survive following an
acquisition of the Company by a third party or any of the provisions of the
Merger Agreement (other than Section 8.2(b)) which by the terms of Section 8.2
of the Merger Agreement survive termination of the Merger Agreement.
(c) Waiver of Other Claims. Each of the Parties acknowledges that there is a
possibility that subsequent to the execution of this Agreement, they will
discover facts or incur or suffer claims which were unknown or unsuspected at
the time this Agreement was executed, and which if known by them at that time
may have materially affected their decision to execute this Agreement. Each of
the Parties acknowledges and agrees that by reason of this Agreement, and the
release contained in the preceding paragraphs, they are assuming any risk of
such unknown facts and such unknown and unsuspected claims. Each of the Parties
have been advised of the existence of Section 1542 of the California Civil Code,
which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Notwithstanding such provisions, the releases contained in this Agreement shall
constitute a full release in accordance with its terms. Each of the Parties
knowingly and voluntarily WAIVE the provisions of Section 1542, as well as any
other statute, law, or rule of similar effect, and acknowledge and agree that
this waiver is an essential and material term of this release and the settlement
which leads to it, and without such waiver the settlement would not have been
accepted. This waiver includes, but is not limited to, a waiver of the right to
a claim of fraudulent inducement to enter into this Agreement as to such unknown
facts and such unknown and unsuspected claims, except that it shall not include
misrepresentations as to the representations and warranties contained within
this Agreement. Each of the Parties hereby represent that they have been advised
by their legal counsel, and that they understand and acknowledge the
significance and consequence of this release and of this specific waiver of
Section 1542 and other such laws of other jurisdictions.
4. Cooperation. The Parties shall cooperate with each other to promptly prepare
and file all necessary documentation to withdraw the joint proxy
statement/prospectus filed by the Parties with the SEC in connection with the
Merger Agreement.
5. Representations of the Parent and Merger Sub. Parent and Merger Sub, each
represent that: (a) it is duly organized, validly existing and in good standing
under the laws of the State of Delaware; (b) it has all requisite corporate
power and authority to enter into this Agreement and to take the actions
contemplated hereby; (c) its execution and delivery of this Agreement and the
actions contemplated hereby have been duly authorized by all necessary corporate
action; and (d) this Agreement has been duly executed and delivered and
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms.
6. Representations of the Company. The Company hereby represents that (a) it is
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (b) it has all requisite corporate power and authority to
enter into this Agreement and to take the actions contemplated hereby; (c) its
execution and delivery of this Agreement and the actions contemplated hereby
have been duly authorized by all necessary corporate action; (d) this Agreement
has been duly executed and delivered and constitutes a valid and binding
agreement, enforceable against it in accordance with its terms; and (e)
execution and delivery of this Agreement and compliance with the terms hereof
(including payment of the amount set forth in Section 1 hereof) do not and will
not breach the terms of any agreement to which the Company is a party.
7. Amendment. This Agreement may not be amended except by execution of an
instrument in writing signed on behalf of each of the Parties.
8. Counterparts. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
9. Entire Agreement; Assignment; Parties in Interest. This Agreement (i)
constitutes the entire agreement among the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the Parties with respect to the subject matter hereof;
(ii) shall not be assigned by any Party, whether by operation of law or
otherwise; and (iii) is not intended to, and shall not be construed as,
conferring upon any person other than the Parties any rights or remedies.
10. Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the Parties. The Parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
the laws that might otherwise govern under applicable principles of conflicts of
law. Each of the Parties irrevocably consents to the exclusive jurisdiction and
venue of any court located within the County of New Castle in the State of
Delaware, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
SIGNATURE PAGE TO TERMINATION AGREEMENT AND MUTUAL RELEASE
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have
caused this Termination Agreement and Mutual Release to be executed and
delivered by their respective officers thereunto duly authorized, all as of the
date first written above.
SYNOPSYS, INC.
By: /s/ Steven K. Shevick
Name: Steven K. Shevick
Title: Vice President, Legal and Investor Relations
IKOS SYSTEMS, INC.
By: /s/ Ramon Nunez
Name: Ramon Nunez
Title: President and Chief Executive Officer
OAK MERGER CORPORATION
By: /s/ Steven K. Shevick
Name: Steven K. Shevick
Title: Vice President and Secretary