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                                                                 EXHIBIT 10.26

                                   AGREEMENT

     THIS AGREEMENT (the "Agreement") is made and entered into the 3rd day of
February, 1999, by and between IKOS Systems, Inc., a Delaware Corporation (the
"Company"), and Nader Fathi ("Employee").

     WHEREAS, the Company desires to continue to obtain the benefit of the
services of Employee in connection with the conduct of its business and the
Employee is willing to continue to render such services subject to receipt of
the benefits described in this Agreement.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, the parties agree as follows:

     1. Severance. If within one year of a Transfer of Control (as hereinafter
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defined) (a) Employee's employment with the Company is terminated by the
Company without cause (as herinafter defined) or (b) Employee terminates his
employment with the Company within 60 days of (i) Employee being required to
move his office to a location more than thirty (30) miles from the Company's
principal place of business on the date immediately prior to the Transfer of
Control or (ii) Employee's base salary immediately prior to the Transfer of
Control being reduced, Employee shall continue to receive the base salary
(including commission, if any, based on the prior years average), vacation and
insurance and health benefits he received immediately prior to the Date of
Termination (as hereinafter defined) as if he were continually employed by the
Company for a period of three hundred sixty five (365) days after the Date of
Termination. Employee shall not be entitled to receive any other compensation
or benefits, including, without limitation, additional stock options grants,
bonus or other pay. Existing unvested stock options will vest 100% as of the
date of termination.

     2.   Definitions.
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          (a) Cause Defined. For the purposes hereof, termination for cause will
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include but not be limited to, the following: (1) Employee's violation of or
failure to comply with any of the Company's successors reasonable rules and
regulations, (ii) Employee's failure or inability to perform any reasonable
assigned duties with a reasonable opportunity to cure after written notice of
such failure (unless such failure results from employee's mental or physical
disability), (iii) any act of dishonesty or falsification of records by Employee
relating to Employee's employment or (iv) conviction of Employee for any felony
or a crime involving fraud or embezzlement.

          (b) Date of Termination. For the purpose hereof, in the event the
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Company terminates Employee's employment with the Company, the Date of
Termination shall be the earlier of (i) the date the Board of Directors of the
Company terminates Employee's employment or (ii) the date a senior officer of
the Company terminates Employee's employment. In the event Employee is required
to relocate or Employee's base salary is reduced, as described in paragraph 1
above, and as a result, Employee elects to terminate his employment with the
Company, the "Date of Termination" shall be the date Employee notifies the
Company that he is terminating his employment.

          (c) Ownership Change and Transfer of Control. For purposes hereof, as
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"Ownership Change" shall be deemed to have occurred in the event any of the
following occurs with respect to the Company:


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          (i)   the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company;

          (ii)  a merger or acquisition in which the Company is a party; or

          (iii) the sale, exchange, or transfer of all or substantially all of
the Company's assets (other than a sale, exchange, or transfer to one (1) or
more corporations where the shareholders of the Control Company before such
sale, exchange, or transfer retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the corporation(s)
to which the assets were transferred).

     A.   "Transfer of Control" shall mean an Ownership Change in which the
shareholders of the Company immediately before such Ownership Change do not
retain, directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company. In the event of an Ownership Change or
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), shall assume the
Company's rights and obligations under this Agreement.

     3.   Nothing in this agreement shall affect the Employee's continuing
obligation under the EMPLOYMENT AGREEMENT between the Employee and the company
regarding the handling of proprietary information and inventions.

     4. Waiver or Modification. Any waiver, modification or amendment of any
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provision of this Agreement shall be effective only if in writing in a document
that specifically refers to this Agreement and such document is signed by the
parties against whom enforcement thereof is sought.

     5. Entire Agreement. This Agreement constitutes the full and complete
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understanding and agreement of the parties hereto with respect to the subject
matter covered herein and supersedes all prior oral or written understandings
and agreements with respect thereto.


     6. Severability. If any provision of this Agreement is found to be
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unenforceable in any respect by a court of competent jurisdiction, such
unenforcebility shall not affect the remaining provisions of this Agreement,
but this Agreement shall be construed as if such unenforceable provision had
been limited or modified (consistent with its general intent) to the extent
necessary so that the provision shall be enforceable If it is not possible to
so limit or modify such unenforceable provision, the Agreement shall be
construed as if such unenforceable provision had never been contained herein
and the parties will use their best efforts to substitute an enforceable
provision which implements the purposes and intents and provides the same
economic benefit to the parties as the unenforceable provision.

     7. Notices. Any notice to be given by either party hereunder shall be in
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writing and shall be deemed to have been duly given if delivered or mailed,
certified or registered mail, postage prepaid, as follows to the Company
at: 19050 Pruneridge Avenue, Cupertino, California 95014, Attention: Chief
Executive Officer, and to the Employee at his address as it appears on the
payroll records of the Company; or to such other addresses as may be furnished
to the party by written notice.

     8. Arbitration. Any controversy between the Company and Employee relating
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to this Agreement shall be settled by binding arbitration in Santa Clara county
pursuant to California Arbitration Act contained in Sections 1280 through 1294.2
California Code of Civil Procedure.

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     9. Governing Law. This Agreement shall be governed and construed in
accordance with 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.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.


IKOS SYSTEMS, INC. EMPLOYEE: /s/ Nadir Fathi  2/3/99
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By:  /s/ Ramon A. Nunez
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(Signature)

Title: President, CEO
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