AVANT CORP, S-3, 1997-12-23

AVANT CORP
S-3, 1997-12-23
PREPACKAGED SOFTWARE

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<PAGE>

As filed with the Securities and Exchange Commission on December 23, 1997
Registration No. 333-_______

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________

AVANT! CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 94-3133226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

46871 Bayside Parkway
Fremont, California
94538
(510) 413-8000

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Gerald C. Hsu
Chairman of the Board, President and Chief Executive Officer
Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
(510) 413-8000
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
__________________

Copies to:
Steven M. Spurlock, Esq.
Anthony J. McCusker, Esq.
GUNDERSON DETTMER
STOUGH VILLENEUVE
FRANKLIN & HACHIGIAN, LLP
155 Constitution Drive
Menlo Park, California 94025
(650) 321-2400
__________________

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

- ----------------------------------------------------------------------------------------------------------------------------------
Title of each class of Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Securities to be Registered Amount to be Registered Price per Security(1) Offering Price(1) Registraton Fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0001
par value 522,192 shares $17.063 $8,910,162.10 $2,628.50
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The price of $17.063 per share, which was the average of the high and low
prices of the Common Stock on the Nasdaq National Market on December 19,
1997 is set forth solely for the purpose of calculating the registration
fee in accordance with Rule 457(f)(1) of the Securities Act of 1933, as
amended.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

SUBJECT TO COMPLETION, DATED __________ __, 1998

<PAGE>

522,192 SHARES

AVANT! CORPORATION

COMMON STOCK
_________________

This Prospectus relates to the public offering, which is not being
underwritten, of 522,192 shares (the "Shares") of Common Stock, $0.0001 par
value (the "Common Stock") of Avant! Corporation ("Avant!" or the "Company").

The Shares may be offered by a certain stockholder of the Company (the
"Selling Stockholder") from time to time in transactions on the Nasdaq National
Market, in privately negotiated transactions, or by a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholder may effect such
transactions by selling the Shares to or through broker-dealers and such broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholder" and "Plan of Distribution."

The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholder. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by the Selling Stockholder.

On December 22, 1997, the closing bid price of the Company's Common Stock
on the Nasdaq National Market was $19.125 per share. The Common Stock is
traded on the Nasdaq National Market under the symbol "AVNT."

______________________________

The Selling Stockholder and any broker-dealers or agents that participate
with the Selling Stockholder in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.

______________________________

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.

SEE "RISK FACTORS" ON PAGE 6.

______________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

______________________________

The date of this Prospectus is ______________, 1998

<PAGE>

AVAILABLE INFORMATION

Avant! is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and the following regional offices of the Commission: New York
Regional Office, Seven World Trade Center, 13th Floor, New York, New York
10048; and Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such material
may also be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed
fees. The Commission also makes electronic filings publicly available on the
Internet within 24 hours of acceptance. The Commission's Internet address is
http://www.sec.gov. The Commission web site also contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission. The Common Stock of the Company is
quoted on the Nasdaq National Market. Reports, proxy and information
statements and other information concerning the Company may be inspected at
the National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.

The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments, exhibits and schedules,
referred to as the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act") with the Commission, with respect to
the Shares offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and to which reference is hereby made.
Statements contained in this Prospectus regarding the contents of any
contract or other document to which reference is made are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each
such statement being qualified in its entirety by such reference. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon the
payment of the fees prescribed by the Commission.

INFORMATION INCORPORATED BY REFERENCE

The following documents previously filed by the Company with the Commission
(File No. 0-25864) pursuant to the 1934 Act are hereby incorporated by reference
in this Prospectus and made a part hereof:

1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;

2. The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;

3. The Company's Current Reports on Form 8-K dated April 18, 1996,
September 10, 1997 and September 26, 1997;

4. The Company's Current Report on Form 8-K/A dated November 25, 1997;

5. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the Commission on
April 12, 1995; and

6. Proxy Statement for Annual Meeting of Stockholders held on May 15,
1997.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus but prior to the
termination of the offering to which this Prospectus relates

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<PAGE>

shall be deemed to be incorporated by reference in this Prospectus and to be
a part hereof from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated herein modifies,
supersedes or replaces such statement. Any statement so modified or
superseded shall not be deemed, except as so modified, superseded or
replaced, to constitute a part of this Prospectus.

Upon written or oral request, the Company will provide without charge to
each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
herein). Requests should be submitted in writing or by telephone at (510)
413-8000 to Chief Financial Officer, Avant! Corporation, at the principal
executive offices of the Company, 46871 Bayside Parkway, Fremont, California
94538.

______________________________

This Prospectus includes trademarks of the Company and other corporations.
______________________________

<PAGE>

FORWARD-LOOKING STATEMENTS

THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN,
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE
STATEMENTS CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN THAT
ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE 1934 ACT, INCLUDING
WITHOUT LIMITATION STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS,
INTENTIONS OR STRATEGIES REGARDING THE FUTURE. ALL FORWARD-LOOKING STATEMENTS
INCLUDED IN THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON
THE DATE HEREOF, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN
THIS PROSPECTUS UNDER "RISK FACTORS." IN EVALUATING THE COMPANY'S BUSINESS,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FACTORS SET FORTH IN THIS
PROSPECTUS UNDER "RISK FACTORS" IN ADDITION TO THE OTHER INFORMATION SET FORTH
IN THIS PROSPECTUS AND INCORPORATED BY REFERENCE HEREIN.

<PAGE>

THE COMPANY

Avant! develops, markets and supports integrated circuit design automation
("ICDA") software (also known as electronic design automation or "EDA") for the
physical design of high-density, high-performance integrated circuits ("ICs").
Avant!'s product architecture is designed to solve the problems inherent in
submicron (less than 1.0-micron feature size) and deep submicron (less than
0.5-micron feature size) IC design and to offer improved time-to-market, reduced
development and manufacturing costs and enhanced IC performance when compared to
previous generations of ICDA software. Avant!'s products, Aquarius, Hercules,
Planet, H-spice, Polaris and Star, are designed to be compatible with the most
commonly used ICDA tools and to be easily integrated into the customer's
existing design environment and methodology. Avant! markets its products to
major customer accounts worldwide through its direct sales force, distributors
and manufacturer's representatives and offers comprehensive customer service,
training and support. End users of Avant!'s products include a number of
leading electronics companies, such as, Matsushita, Motorola, National
Semiconductor, Fujitsu, Toshiba, Mitsubishi, Hitachi, Samsung and Sony.
Avant!'s principal executive offices are located at 46871 Bayside Parkway,
Fremont, California 94538, and its telephone number is (510) 413-8000.

RECENT DEVELOPMENTS

LITIGATION DEVELOPMENTS

On December 6, 1995, Cadence Design Systems, Inc. ("Cadence") filed an
action against Avant! and certain of its officers in the United States District
Court for the District of Northern California alleging copyright infringement,
unfair competition, misappropriation of trade secrets, conspiracy, breach of
contract, inducing breach of contract and false advertising.

In addition to actual and punitive damages, which were not quantified by
Cadence, Cadence seeks to enjoin the sale of Avant!'s place and route products
pending trial of the action. On March 18, 1997, the District Court denied
Cadence's motion for a preliminary injunction. Cadence appealled the order
denying a preliminary injunction. On September 23, 1997, the United States
Court of Appeals for the Ninth Circuit overruled the District Court's denial
of Cadence's motion with respect to Avant!'s ArcCell product, a product which
Avant! no longer sells, and held that a preliminary injunction should be
granted against the further sale of the ArcCell product. The Court of Appeals
did not enjoin Avant!'s Aquarius place and route products, but rather
remanded this aspect of Cadence's motion to the District Court for further
consideration. The Court of Appeals stated that, if Avant!'s Aquarius
products are determined to infringe Cadence products, the sale of the
Aquarius products should be enjoined. Avant! requested a rehearing on the
issue, but on November 21, 1997 the Ninth Circuit denied this request. On
December 19, 1997, the District Court stated its intention to enjoin Avant!
from directly or indirectly marketing, selling, licensing, copying or
transferring any work copied or derived from Cadence's Design Framework II,
specifically including, but not limited to, Avant!'s ArcCell, ArcCellBV and
ArcCellXO products. The District Court also stated that it would direct
Avant! to deliver a copy of its order to all present or former customers that
have received copies of any such infringing products and, to the extent it
has a legal right to do so, request that such customers return or destroy any
such products. Avant! also will be directed to furnish to Cadence a list of
any customers that still maintain a functioning copy of such products. At the
December 19, 1997 hearing, the District Court did not rule on Cadence's
request to enjoin the sale, license or support of Avant!'s Aquarius place and
route products.

On April 11, 1997, the Santa Clara County District Attorney's office filed a
criminal complaint alleging felony level offenses against, among others, Avant!
and the following Avant! employees and/or directors, Gerald C. Hsu, President,
Chief Executive Officer and Chairman of the Board of Directors, Y. Eric Cho, a
member of the Board of Directors, Y. Z. Liao, Corporate Fellow, Stephen Wuu, CEO
Staff, Operations, Leigh Huang, Marketing Manager, and Eric Cheng, Research and
Development Manager, for allegedly violating various California Penal Code
sections relating to the theft of trade secrets. Avant! and the individuals have
pleaded not guilty and are awaiting further proceedings. The criminal complaint
could result in criminal fines against Avant!, as well as the potential
incarceration of certain members of its management team.

In March 1993, Meta Software, Inc., which Avant! acquired in October 1996
and which is now a wholly owned subsidiary of Avant! ("Meta"), filed a complaint
in Santa Clara Superior Court against Silvaco Data Systems, Inc. and related
parties (collectively, "Silvaco") seeking monetary damages and injunctive
relief. Meta's complaint alleged, among other things, that Silvaco breached its
representative agreement with Meta by withholding customer payments for products
and services that had been delivered, and by failing to pay royalties on
software that Silvaco sold to others. In August 1995, Meta was awarded $529,828
under the Superior Court's judicial arbitration program. Both parties rejected
the award and requested a trial de novo on the issues involved. In August 1995,
Silvaco filed a cross-complaint against Meta alleging, among other things,
that Meta owes Silvaco royalties and license fees pursuant to a product
development and marketing program and unpaid commissions related to Silvaco's
sale of Meta's products and services under such program. Meta filed an answer
to the cross-complaint denying the allegations contained therein. In July
1996, Silvaco filed a first amended cross-complaint, adding Shawn Hailey,
then the President, Chief Executive Officer and a major shareholder of Meta,
and, until July 1997, the Senior Vice President of Avant!'s Silicon Division,
as a personal defendant, and further alleging defamation, interference with
economic advantage, unfair competition and abuse of process by acts or
statements made by Meta or its agents.

In August 1997, the Superior Court entered a default judgment against Mr.
Hailey for failure to timely answer the complaint. In October 1997, Mr.
Hailey's application for relief from the default judgment was denied. In
August 1997, the Superior Court entered a default judgment against Meta as to
the defamation and interference with economic advantage claims. On October
31, 1997, Meta's application for relief from the default judgment was denied.
On October 28, 1997, Silvaco first presented its theory of damages and a
trial began on November 3, 1997. On November 4, 1997, the Superior Court
dismissed Meta's remaining affirmative claims. On November 5, 1997, the
Superior Court awarded Silvaco $20.0 million in damages against Mr. Hailey
and Meta related to the defamation and interference with economic advantage
claims, and, on November 6, 1997, the Superior Court awarded Silvaco $11.4
million in damages related to the unfair competition claim. On November 12,
1997, the Superior Court awarded nominal damages to Silvaco related to the
product development claim. Silvaco's claims based on the marketing program
and abuse of process were dismissed.

Meta intends to pursue all remedies available to it in connection with
the litigation with Silvaco, including filing an appeal as quickly as
practicable. Meta believes it has substantial appellate issues which could
cause the judgment to be remanded to the trial court for further proceedings.
Should Meta be permitted to participate fully in further trial court
proceedings, Meta believes it would have substantial defenses to Silvaco's
claims. However, there can be no assurance that any such remedies will be
successful. Payment of the damages previously awarded, and damages which may
be awarded in the future, would have a material adverse effect on Avant!'s
business, consolidated financial condition and consolidated results of
operations. See "Risk Factors--Litigation Risk."

ACQUISITIONS

Avant! acquired Compass Design Automation, Inc., a Delaware corporation
("Compass") on September 12, 1997 (the "Compass Acquisition"). Prior to the
Compass Acquisition, Compass was a subsidiary of VLSI Technology, Inc., a
Delaware corporation ("VLSI"). Upon the closing of the Compass Acquisition,
Compass became a wholly owned subsidiary of Avant! and (a) each share of
Compass capital stock owned directly or indirectly by Compass or by any
entity controlled by Compass was canceled and no stock of Avant! or other
consideration was delivered in exchange therefor, (b) the outstanding shares
of Compass preferred stock (other than those shares canceled under (a)), all
of which were owned by VLSI, were canceled and converted into the right to
receive an aggregate of $2,699,174 and 98,552 shares of Avant! common stock,
(c) the shares of Compass common stock owned by VLSI (other than those shares
canceled under (a)) were converted into the right to receive an aggregate of
$11,602,831 and 423,640 shares of Avant!'s common stock, (d) the shares of
Compass common stock not owned by VLSI (other than those shares canceled
under (a)) were converted into the right to receive an aggregate of
$2,447,725 and (e) the unexpired and unexercised vested options to purchase
shares of Compass common stock were converted into the right to receive an
aggregate of $750,270 to the extent exercisable. Avant! accounted for the
Compass Acquisition as a purchase. In the third quarter of 1997, Avant!
incurred an expense of approximately $41.2 million for acquired in-process
research and development costs associated with the Compass Acquisition. See
"Risk Factors--Uncertainty Relating to Integration of Multiple Operations and
Product Lines; Management of Growth" and "--Cost of Integration; Transaction
Expenses."

Avant! has also recently acquired Datalink Far East Ltd., a Taiwan
corporation ("Datalink") pursuant to an asset purchase agreement (the "Datalink
Acquisition"). Avant! will pay $900,000 to acquire Datalink over five
installments at specified times during the next two years.

On September 7, 1997, Avant! entered into an Agreement and Plan of
Reorganization by and among Avant!, Cardinal Merger Corporation, a wholly
owned subsidiary of Avant! ("Merger Sub") and Technology Modeling Associates,
Inc. ("TMA"). If the proposed acquisition of TMA is completed, TMA will
become a wholly owned subsidiary of Avant!. Avant!'s management currently
anticipates that the proposed acquisition of TMA will be completed during
the first fiscal quarter of 1998.

<PAGE>

RISK FACTORS

LITIGATION RISK

Avant! is subject to a number of related litigation matters, including a
civil action brought by Cadence Design Systems, Inc. ("Cadence"), a criminal
complaint filed by the Santa Clara County District Attorney's office against
Avant! and certain of its employees and securities class action claims resulting
from these lawsuits. In addition, default judgments in the aggregate amount of
$31.4 million will be entered against Meta Software, Inc., which Avant! acquired
in October 1996 and which is now a wholly owned subsidiary of Avant! ("Meta").

CADENCE LITIGATION.

On December 6, 1995, Cadence filed an action against Avant! and certain
of its officers in the United States District Court for the District of
Northern California alleging copyright infringement, unfair competition,
misappropriation of trade secrets, conspiracy, breach of contract, inducing
breach of contract and false advertising. The essence of the complaint is
that certain Avant! employees who formerly were Cadence employees
misappropriated and improperly copied source code for certain important
functions of Avant! place and route products from Cadence, and that Avant!
has allegedly competed unfairly by making false statements concerning Cadence
and its products. The action also alleges that Avant! induced certain
individual defendants to breach their agreements of employment and
confidentiality with Cadence. The matter is currently awaiting trial, pending
further pretrial matters. A trial date has not been set. On July 25, 1997, a
federal judge stayed the Cadence civil action pending completion of the
criminal proceedings described below, except for certain documentary and
third-party discovery. Avant! posted a $5.0 million bond pending the
resumption of the civil action.

In addition to actual and punitive damages, which were not quantified by
Cadence, Cadence seeks to enjoin the sale of Avant!'s place and route
products pending trial of the action. On March 18, 1997, the District Court
denied Cadence's motion for a preliminary injunction. Cadence appealed the
order denying a preliminary injunction. On September 23, 1997, the United
States Court of Appeals for the Ninth Circuit overruled the District Court's
denial of Cadence's motion with respect to Avant!'s ArcCell product, a
product that Avant! no longer sells, and held that a preliminary injunction
should be granted against the further sale of the ArcCell product. The Court
of Appeals did not enjoin Avant!'s Aquarius place and route products, but
rather remanded this aspect of Cadence's motion to the District Court for
further consideration. The Court of Appeals stated that, if Avant!'s Aquarius
products are determined to infringe Cadence products, the sale of the
Aquarius products should be enjoined. Avant! requested a rehearing on the
issue, but on November 21, 1997 the Ninth Circuit denied this request. On
December 19, 1997, the District Court stated its intention to enjoin Avant!
from directly or indirectly marketing, selling, licensing, copying or
transferring any work copied or derived from Cadence's Design Framework II,
specifically including, but not limited to, Avant!'s ArcCell, ArcCellBV and
ArcCellXO products. The District Court also stated that it would direct
Avant! to deliver a copy of its order to all present or former customers that
have received copies of any such infringing products and, to the extent it
has a legal right to do so, request that such customers return or destroy any
such products. Avant! also will be directed to furnish to Cadence a list of
any customers that still maintain a functioning copy of such products. At the
December 19, 1997 hearing, the District Court did not rule on Cadence's
request to enjoin the sale, license or support of Avant!'s Aquarius place and
route products from which Avant! derives a significant portion of its total
revenue. The District Court will hold future hearings regarding the Aquarius
products. There can be no assurance that the District Court will not, upon
further consideration, grant a preliminary injunction with respect to the
sale of the Aquarius products, which would have a material adverse effect on
Avant!'s business, financial position and results of operations.

On January 16, 1996, Avant! filed a counterclaim against Cadence alleging
antitrust violations, racketeering, false advertising, defamation, trade
libel, unfair competition, unfair trade practices, negligent and intentional
interference with prospective economic advantage and intentional interference
with contractual relations. On December 19, 1997, Avant! stipulated to
temporarily dismissing its counterclaim in order to file more detailed
allegations. Avant! intends to refile its counterclaim in January 1998.

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<PAGE>

Avant! believes it has defenses to all of Cadence's claims and intends to
defend itself vigorously. If, however, Avant!'s defenses are unsuccessful,
Avant! may ultimately be permanently enjoined from selling certain place and
route products and may be required to pay damages to Cadence. In addition,
upon further consideration by the District Court, Avant! could be
preliminarily enjoined from selling its Aquarius place and route products. In
such event, Avant!'s business, consolidated financial condition and
consolidated results of operations may be materially adversely affected. In
addition, it is likely that an adverse judgment against Avant! would result
in a steep decline in the market price of Avant! Common Stock. Although it is
reasonably possible Avant! may incur a loss upon conclusion of these claims,
an estimate of any loss or range of loss cannot be made, based on information
Avant! presently possesses. There can be no assurance that an adverse
judgment, if granted on any claim would not have a material adverse effect on
Avant!'s business, consolidated financial position or consolidated results of
operations. Furthermore, there can be no assurance that Avant!'s
relationships with its customers will not be adversely affected in the future
as a result of the Cadence litigation.

CRIMINAL COMPLAINT.

The Santa Clara County District Attorney's office also is investigating
the allegations of misappropriation of trade secrets set forth in Cadence's
lawsuit, described above. On April 11, 1997, the Santa Clara County District
Attorney filed a criminal complaint alleging felony level offenses against,
among others, Avant! and the following Avant! employees and/or directors,
Gerald C. Hsu, President, Chief Executive Officer and Chairman of the Board
of Directors, Y. Eric Cho, a member of the Board of Directors, Y. Z. Liao,
Corporate Fellow, Stephen Wuu, CEO Staff, Operations, Leigh Huang, Marketing
Manager and Eric Cheng, Research and Development Manager, for allegedly
violating various California Penal Code sections relating to the theft of
trade secrets. Avant! and the individuals have pleaded not guilty and are
awaiting further proceedings. The criminal complaint could result in criminal
fines against Avant!, as well as the potential incarceration of certain
members of its management team. Such outcomes could result in canceled or
postponed customer orders, increased future expenditures, the loss of
management and other key personnel, additional stockholder litigation, loss
of goodwill and would have other material adverse effects on Avant!'s
business, consolidated financial position or consolidated results of
operations.

SILVACO LITIGATION.

In March 1993, Meta filed a complaint in Santa Clara Superior Court against
Silvaco Data Systems, Inc. and related parties (collectively, "Silvaco") seeking
monetary damages and injunctive relief. Meta's complaint alleged, among other
things, that Silvaco breached its representative agreement with Meta by
withholding customer payments for products and services that had been delivered,
and by failing to pay royalties on software that Silvaco sold to others. In
August 1995, Meta was awarded $529,828 under the Superior Court's judicial
arbitration program. Both parties rejected the award and requested a trial de
novo on the issues involved. In August 1995, Silvaco filed a cross-complaint
against Meta alleging, among other things, that Meta owes Silvaco royalties and
license fees pursuant to a product development and marketing program and unpaid
commissions related to Silvaco's sale of Meta's products and services under such
program. Meta filed an answer to the cross-complaint denying the allegations
contained therein. In July 1996, Silvaco filed a first amended cross-complaint,
adding Shawn Hailey, then the President, Chief

7
<PAGE>
Executive Officer and a major shareholder of Meta, and, until July 1997, the
Senior Vice President of Avant!'s Silicon Division, as a personal defendant, and
further alleging defamation, interference with economic advantage, unfair
competition and abuse of process by acts or statements made by Meta or its
agents.

Meta intends to pursue all remedies available to it in connection with the
litigation with Silvaco, including filing an appeal as quickly as practicable.
Meta believes it has substantial appellate issues which could cause the judgment
to be remanded to the trial court for further proceedings. Should Meta be
permitted to participate fully in further trial court proceedings, Meta believes
it would have substantial defenses to Silvaco's claims. However, there can be no
assurance that any such remedies will be successful. Although it is reasonably
possible Meta will incur a loss in relation to this claim, it is currently
unable to estimate the actual loss or range of loss. Payment of the damages
previously awarded, and damages which may be awarded in the future, would have a
material adverse effect on Avant!'s business, consolidated financial condition
and consolidated results of operations.

SECURITIES CLASS ACTION CLAIMS.

On December 15, 1995, Paul Margetis and Helen Margetis filed in the United
States District Court for the Northern District of California a securities fraud
class action complaint against Avant!. In addition, on December 19, 1995, Fred
Tarca filed in the United States District Court for the Northern District of
California a class action complaint against Avant! for violations of the federal
securities laws. These class action lawsuits allege certain securities law
violations, including omissions and/or misrepresentation of material facts. The
alleged omissions and/or misrepresentations are largely consistent with those
outlined in the Cadence claim described above. In February 1997, plaintiff Tarca
voluntarily dismissed his action and the Margetis plaintiffs were certified as
class representatives in their action. On July 25, 1997, a federal judge stayed
the Margetis action, except for certain documentary and third-party discovery,
pending resolution of the Cadence suit.

On May 30, 1997, Joanne Hoffman filed in the United States District Court
for the Northern District of California a purported class action alleging
securities claims on behalf of purchasers of Avant! Common Stock between March
29, 1996 and April 11, 1997, the date of the filing of the criminal complaints
against Avant! and six of its employees. Plaintiff alleges that Avant! and
various of its officers misled the market as to the likelihood of criminal
charges being filed and as to the validity of the Cadence allegations. Avant!
has moved to dismiss the Hoffman complaint for failure to state a claim, but the
court has not yet heard argument on that motion.

8
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Avant! believes it has defenses to all of the plaintiffs' claims and intends
to defend itself vigorously. There can be no assurance, however, that Avant!'s
defenses will be successful. Although it is reasonably possible Avant! will
incur a loss in relation to these claims, it is currently unable to estimate the
actual loss or range of loss. In the event Avant!'s defenses are unsuccessful,
Avant! may be required to pay damages to the securities class action plaintiffs,
and such a judgment could have a material adverse effect on Avant!'s business,
consolidated financial condition and consolidated results of operations.

LITIGATION COSTS.

The pending litigation and any future litigation against Avant! or its
employees, regardless of the outcome, is expected to result in substantial
costs and expenses to Avant!. For example, during 1996 Avant! incurred and
charged to operations approximately $6.8 million in litigation expenses and
expects to incur approximately $7.5 million in litigation expenses in 1997.
While litigation is inherently unpredictable, Avant! currently expects that
its litigation expenses during 1998 will be at least as much as those
incurred in 1997. Accordingly, any such litigation could have a material
adverse effect on Avant!'s business, operating results or financial
condition. Furthermore, if Avant! is required to satisfy the default
judgments in full in the Silvaco litigation, Avant! could be required to pay
up to $31.4 million in damages, which would have a material adverse effect on
Avant!'s business, consolidated financial condition and consolidated results
of operations.

UNCERTAINTY RELATING TO INTEGRATION OF MULTIPLE OPERATIONS AND PRODUCT LINES;
MANAGEMENT OF GROWTH

In addition to the proposed acquisition of TMA, Avant! has also recently
acquired Compass. The integration of TMA's and Compass' business and
personnel following the TMA and Compass acquisitions present difficult
challenges for Avant!'s management, particularly in light of the increased
time and resources required to effect the combination with these parties.
Upon completion of the proposed TMA Merger, the combined company will be more
complex and diverse than either Avant! or TMA individually, and the
combination and continued operation of their distinct business operations,
together with Compass will be difficult. While Avant!'s management believes
that the combination of Avant!, Compass and TMA can be effected in a manner
that will realize the value of the combined company, the management group has
limited experience in combinations of this complexity or size. Accordingly,
there can be no assurance that the process of effecting these business
combinations can be effectively managed to realize the synergies anticipated
to result therefrom.

Avant! entered into the Agreement and Plan of Reorganization to acquire
TMA, among other reasons, in order to achieve potential benefits from
combining Avant!'s and TMA's respective expertise and product lines for the
physical design of high-density, high-performance ICs. Realization of these
potential benefits will require, among other things, integrating the
companies' (including Compass') respective product offerings and coordinating
the combined company's (including Compass') sales and marketing and research
and development efforts. Avant!, Compass and TMA each have different systems
and procedures in many operational areas that must be rationalized and
integrated. There can be no assurance that such

<PAGE>

integration will be accomplished effectively, expeditiously or efficiently.
The difficulties of such integration may be increased by the necessity of
coordinating geographically separated divisions, integrating personnel with
disparate business backgrounds and combining three different corporate
cultures. The integration of certain operations following the Compass
Acquisition and the proposed TMA acquisition will require the dedication of
management resources that may temporarily distract attention from the
day-to-day business of the combined company. The business of the combined
company may also be disrupted by employee uncertainty and lack of focus
during such integration. In fact, a substantial number of Compass employees
have been terminated by Avant! in an effort to streamline and integrate the
operations of Avant! and Compass. There can also be no assurance that the
combined company will be able to retain all of its key technical, sales and
other key personnel. Failure to effectively accomplish the integration of the
operations of Avant!, Compass and TMA could have a material adverse effect on
Avant!'s business, operating results and financial condition. Moreover,
uncertainty in the marketplace or customer hesitation relating to the Compass
Acquisition and the proposed TMA acquisition could negatively affect Avant!'s
business, operating results and financial condition.

Avant! has experienced periods of rapid growth and expansion that has
placed and will continue to place significant strains upon its management
systems and resources. Avant!'s ability to compete effectively and to manage
future growth, if any, will require Avant! to continue to implement and
improve operational, financial and management information systems on a timely
basis and to expand, train, motivate and manage its work force. There can be
no assurance that Avant!'s personnel, systems, procedures and control will be
adequate to support the combined company's operations.

Avant! has also recently acquired the assets of Datalink Far East Ltd., a
Taiwanese distribution corporation ("Datalink"). Pursuant to an asset purchase
agreement (the "Datalink Acquisition"), Avant! will pay $900,000 to acquire
Datalink over five installments at specified times during the next two years.

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DEPENDENCE UPON KEY PERSONNEL

Avant!'s future operating results depend in significant part upon the
continued service of its key management and technical personnel. Few of
Avant!'s employees are bound by employment or non-competition agreements, and
due to the intense competition for such personnel, as well as the uncertainty
caused by the integration of Avant!'s, Compass' and TMA's businesses, it is
possible that Avant! will be unable to retain such key technical and
managerial personnel. In fact, Avant! terminated a significant number of
Compass employees following the Compass Acquisition thereby adding to any
uncertainty which may be felt by its employees. There are only a limited
number of qualified ICDA engineers, and competition for such individuals is
intense. If Avant! is unable to attract, hire and retain qualified personnel
in the future, the development of new products and the management of an
increasingly complex business would be impaired which would materially
adversely affect Avant!'s business, operating results and financial
condition. Additionally, if the criminal complaint filed relating to the
matters underlying the pending litigation between Avant! and Cadence results
in a loss of Avant! personnel, then Avant!'s business, operating results and
financial condition may be materially adversely affected. See "--Litigation
Risk" and "Business--Employees."

COMPETITION

The ICDA software market in which Avant! competes is intensely competitive
and subject to rapid change. Avant! currently faces competition from major ICDA
vendors, including Cadence, which currently holds a dominant share of the market
for IC physical design software, and Mentor Graphics Corporation ("Mentor"). As
Avant! expands its product offerings to include other library generation tools
and other EDA tools, it will compete increasingly with these EDA vendors. Each
of these major ICDA vendors has a longer operating history, significantly
greater financial, technical and marketing resources, greater name recognition
and a larger installed customer base than Avant!. In addition, each of these
competitors will likely be able to respond more quickly to new or emerging
technologies and changes in customer requirements, and to devote greater
resources to the development, promotion and sale of their products than
Avant!. These companies also have established relationships with current and
potential customers of Avant! and can devote substantial resources aimed at
preventing Avant! from enhancing relationships with existing customers or
establishing relationships with potential customers. Moreover, the industry
in which Avant! competes is undergoing a trend toward consolidation that is
expected to result in large, more financially flexible competitors with a
broad range of product offerings. Further, other companies may develop and
bring new products to the market which could create significant competition
for Avant! and its products. Competition from EDA companies that currently
offer only functional or logic design products and that choose to enter the
physical design market could present particularly formidable competition due
to their relationships with Avant!'s current and potential customers, their
ability to offer a complete integrated IC design solution which Avant! does
not currently offer and their knowledge of the EDA industry.

Avant! also competes with the internal ICDA development groups of its
existing and potential customers, many of whom design and develop customized
design tools for their particular needs and therefore may be reluctant to
purchase products offered by independent vendors, such as Avant!. Furthermore,
because there are relatively low barriers to entry in the software industry,
Avant! expects additional competition from other established and emerging
companies. There can be no assurance that Avant!'s current or potential
competitors will not develop products comparable or superior to those developed
by Avant! or adapt more quickly than Avant! to new technologies, evolving
industry trends or changing customer requirements. Increased competition could
result in price reductions, reduced margins or loss of market share, any of
which could materially and adversely affect Avant!'s business, operating results
or financial condition. In addition, the EDA industry has become increasingly
concentrated in recent years as a result of consolidations, acquisitions and
strategic alliances. Accordingly, it is possible that new competitors or
alliances among competitors could emerge and rapidly acquire significant market
share. Alliances among competitors could present particularly formidable
competition to Avant! by combining their resources. There can be no assurance
that Avant! will be able to compete successfully against current and future
competitors or that competitive pressures faced by Avant! will not have a
material adverse effect on its business, operating results and financial
condition. If Avant! is unable to compete successfully against current and
future competitors, Avant!'s business, operating results and financial
condition will be materially and adversely affected.

Avant!'s competes on the basis of certain factors, including first-to-market
product capabilities, product performance, price, support of industry standards,
ease of use and customer technical support and service. Avant! believes that it
currently competes favorably overall with respect to these factors, particularly
first-to-market product capabilities, technical support and customer service.

In addition, competitors and potential competitors may resort to litigation
as a means of competition. Cadence has initiated litigation against Avant! and
certain of its officers and employees alleging trade secret misappropriation and
other claims. See "Risk Factors--Litigation Risk." There can be no assurance
that competitors of Avant!, in particular Cadence, will not initiate additional
litigation against Avant! and its officers, directors, employees or consultants.
The pending litigation against Avant! and any future litigation against Avant!
or its employees, regardless of the outcome, may result in substantial costs and
expenses to Avant! and significant diversion of effort by Avant!'s technical and
management personnel. Any such litigation could have a material adverse effect
on Avant!'s business, operating results or financial condition. See
"Business-Competition."

<PAGE>

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The quarterly operating results of Avant! have varied, and it is
anticipated that the quarterly operating results of Avant! will vary,
substantially from period to period depending on factors such as the outcome
of the litigation described under "--Litigation Risk", increased competition,
the size, timing and structure of significant licenses, the timing of revenue
recognition under its time-based license agreements, the timing of new or
enhanced product announcements, introductions, or delays in the introductions
of new or enhanced versions of Avant!'s products, changes in pricing policies
by Avant! or its competitors, market acceptance of new and enhanced versions
of Avant!'s products, conditions in the semiconductor industry, the
cancellation of time-based licenses or maintenance agreements, the
unavailability of technology of third parties, the mix of direct and indirect
sales, changes in operating expenses, changes in Avant!'s strategy, seasonal
factors, personnel changes, economic conditions in the Asian markets, the
ability of Avant! to continue to market its products in Asian markets,
foreign currency exchange rates and general economic factors. Due to the
foregoing factors, and particularly the variability of the size, timing and
structure of significant licenses, quarterly revenue and operating results
are difficult to forecast. In particular, Avant! has adopted a flexible
pricing strategy pursuant to which Avant! offers both perpetual and
time-based software licenses to customers, depending on customer requirements
and financial constraints. Because each time-based license may have a
different structure and could be subject to cancellation, future revenue is
unpredictable. Avant!'s expense levels are based, in part, on expectations as
to future revenue levels. Accordingly, net income, if any, may be
disproportionately affected by a reduction in revenue in a quarter because
only a small portion of Avant!'s expenses fluctuate with revenue. If revenue
levels are below expectations, Avant!'s business, operating results and
financial condition are likely to be materially adversely affected. Such
shortfalls in Avant!'s revenue or operating results from levels expected by
public market analysts and investors could have an immediate and significant
material adverse effect on the market price of Avant!'s common stock.
Additionally, Avant! may not learn of such revenue shortfalls or earnings
shortfalls or other failures to meet market expectations for results of
operations until late in a fiscal quarter, which could result in an even more
immediate and material adverse effect on the trading price of the Avant!
common stock. In such event, the market price of Avant!'s common stock would
be materially adversely affected. Due to the foregoing, Avant! believes that
period to period comparisons of their results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance.

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POTENTIAL VOLATILITY OF STOCK PRICE

The market price of the Avant! common stock has fluctuated significantly
in the past and the market price of the shares of Avant! common stock is
likely to be highly volatile and may be significantly affected by many
factors, including, but not limited to, the outcome of outstanding
litigation, actual or anticipated fluctuations in Avant!'s operating results,
announcements of technological innovations and new products by competitors,
new contractual relationships with strategic partners by Avant! or its
competitors, proposed acquisitions by Avant! or competitors and financial
results that fail to meet public market analyst expectations of performance.
In addition, the U.S. equity markets have from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stocks of technology companies. These broad
market fluctuations may materially adversely affect the market price of
Avant! common stock in future periods.

COST OF INTEGRATION; TRANSACTION EXPENSES

Transaction costs relating to the proposed TMA acquisition and the
anticipated combination of certain operations of Avant! and TMA are expected
to result in one-time charges to Avant!'s earnings. Although it will not be
feasible to determine the actual amount of these charges until the
operational and transition plans are completed, Avant!'s management believes
that the aggregate charge will be approximately $6.8 million before taxes,
although such amount may be increased by unanticipated additional expenses
incurred in connection with the such proposed acquisition. This aggregate
charge is expected to include the estimated costs associated with financial
advisory, accounting and legal fees, printing expenses, filing fees and other
merger-related costs. While the exact timing of these expenses cannot be
determined at this time, the management of Avant! anticipates that this
aggregate charge to earnings will be recorded primarily in the quarter ending
March 31, 1998, the quarter in which the proposed TMA acquisition is expected
to be consummated. In addition, in the third quarter of 1997, Avant! incurred
an expense of approximately $41.2 million for acquired in-process research
and development costs associated with the Compass Acquisition.

POTENTIAL DILUTIVE EFFECT TO STOCKHOLDERS

Although Avant! believes that beneficial synergies will result from the
proposed TMA acquisition, there can be no assurance that the combining of
Avant!'s, Compass' and TMA's businesses, even if achieved in an efficient and
effective manner, will result in combined results of operations and financial
condition superior to that which would have been achieved by each company
independently, or as to the period of time required to achieve such result.
In addition, the issuance of Avant! common stock in connection with the
proposed TMA acquisition is likely to have a dilutive effect on Avant!'s
earnings per share and there is no assurance that Avant! stockholders would
not achieve greater returns on investment were Avant! to remain an
independent company.

<PAGE>
SHARES ELIGIBLE FOR PUBLIC SALE

Sales of substantial amounts of Avant! common stock in the public market
after the consummation of the proposed TMA acquisition could materially
adversely affect prevailing market prices of Avant!'s common stock. If the
proposed TMA acquisition is completed, and assuming an Exchange Ratio of
0.662045, the Exchange Ratio as of December 19, 1997, Avant! will issue
approximately 5,376,511 shares of common stock in the TMA acquisition (based
upon 8,121,066 shares of TMA common stock outstanding as of December 19,
1997, but not including shares subject to options to purchase TMA common
stock to be assumed by Avant!). The shares of Avant! common stock to be
issued in the proposed TMA acquisition will be eligible for immediate sale in
the public market, subject to certain limitations under the Securities Act
applicable to affiliates of Avant! and certain agreements to be entered into
by certain affiliates of TMA which prohibit such persons from disposing of
any Avant! common stock during the period immediately following the effective
time of such merger.

LENGTHY SALES CYCLE

Because of the complexity and substantial cost of Avant!'s products,
licensing these products to customers typically involves a significant
technical evaluation and commitment of cash and other resources, with the
attendant delays frequently associated with customers' internal procedures to
approve large expenditures and to evaluate and accept new technologies that
affect key operations. In addition, certain of Avant!'s foreign customers
have lengthy purchasing cycles that may increase the amount of time Avant!
must dedicate to placing its products with these customers. For these and
other reasons, the sales cycle associated with the licensing of Avant!'s
products has been and is expected to continue to be lengthy and subject to a
number of significant risks, including customers' budgetary constraints and
internal acceptance evaluations that are beyond Avant!'s control. Because of
the lengthy sales cycle and the large size of customers' average orders, if
revenue projected from a specific customer for a particular period is not
realized in that period, Avant!'s operating results for that period could be
materially adversely affected.

PRODUCT CONCENTRATION

During each of 1994, 1995 and 1996, Avant! derived substantially all of
its total revenue from the licensing and support of Aquarius, its cell-based
place and route software product, Hercules, its hierarchical physical
verification software product, Star-Hspice, its circuit simulator, Star-Sim
products, its high-capacity circuit simulation and high-accuracy timing
analysis software, and Polaris products, its Verilog simulation product.
Absent any extraordinary results from existing litigation, Avant! currently
expects that these products will continue to account for a significant
portion of its revenue for the foreseeable future. As a result, Avant!'s
business, operating results and financial condition are significantly
dependent upon continued market acceptance of these products. Avant! believes
that a number of factors will be necessary for its products to achieve
continued market acceptance. These factors include performance of Avant!'s
existing products, successful development of advanced features, adaptability
into the user's design environment, Avant!'s technical, managerial, service
and support expertise, and the customer's assessment of Avant!'s financial
resources. A decline in demand for these products as a result of competition,
technological change or other factors would have a material adverse effect on
the business, operating results and financial condition of Avant!. There can
be no assurance that these products will achieve continued market acceptance
or that Avant! will be successful in marketing such products or any new or
enhanced products. Failure to develop or acquire additional products, or to
successfully market such products on a profitable basis, could have a
material adverse effect on Avant!'s business, operating results and financial
condition. See "Business-Products."

Avant! derives a significant portion of its total revenue from the licensing
and support of Aquarius products which are the subject of pending litigation
with Cadence. See "--Litigation Risk."

14
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SUBSTANTIAL DEPENDENCE ON INTERNATIONAL SALES

International revenue, principally to customers in Asia, accounted for
approximately 33%, 32%, 34% and 44% of Avant!'s total revenue in 1994, 1995,
1996 and the first nine months of 1997, respectively. Avant! expects that
international license and service revenue, particularly in Asia, will
continue to account for a significant portion of its total revenue. Avant!'s
international revenue involves a number of risks, including the impact of
possible recessionary environments in economies outside the U.S., longer
receivables collection periods and greater difficulty in accounts receivable
collection, difficulties in staffing and managing foreign operations,
political and economic instability, unexpected changes in regulatory
requirements, reduced protection of intellectual property rights in some
countries and tariffs and other trade barriers. Currency exchange
fluctuations in countries in which Avant! licenses its products could also
materially adversely affect Avant!'s business, operating results and
financial condition by resulting in pricing that is not competitive with
products priced in local currencies. Furthermore, there can be no assurance
that in the future Avant! will be able to continue to price its products and
services internationally in U.S. dollars because of changing sovereign
restrictions on importation and exportation of foreign currencies as well as
other practical considerations. In addition, the laws of certain countries do
not protect Avant!'s products and intellectual property rights to the same
extent as do the laws of the U.S. Accordingly, there can be no assurance that
these factors will not have a material adverse effect on Avant!'s future
international sales and, consequently, on Avant!'s business, operating
results and financial condition. In addition, there can be no assurance that
Avant! will be able to sustain or increase revenue derived from international
licensing and service or that the foregoing factors will not have a material
adverse effect on Avant!'s future international license and service revenue,
and, consequently, on Avant!'s business, operating results and financial
condition.

DEPENDENCE UPON DISTRIBUTORS AND MANUFACTURER'S REPRESENTATIVES

Avant! relies on distributors and manufacturer's representatives ("Third
Party Sellers") for licensing and support of its products in Asia. A
substantial portion of Avant!'s international license and service revenue
results from a limited number of these Third Party Sellers, although Avant!
had no individual customer representing over ten percent of revenue in any of
1994, 1995, 1996, or the first nine months of 1997. In 1997, Avant!
consolidated its Japanese sales channel by forming a distributor
("MainGate"), owned by Avant!, Gerald C. Hsu, Avant!'s Chairman of the Board,
President and Chief Executive Officer, and other parties (including other
Avant! employees and former employees of Avant!'s third party distributors).
There can be no assurance that Avant!'s current Third Party Sellers or
MainGate will choose to or be able to market or service and support Avant!'s
products effectively, that economic conditions or industry demand will not
materially adversely affect these or other Third Party Sellers or that these
Third Party Sellers or MainGate will not devote greater resources to
marketing and supporting products of Avant!'s competitors. Additionally,
because Avant!'s products are used by highly skilled professional engineers,
a Third Party Seller must possess sufficient technical, marketing and sales
resources in order to be effective and must devote these resources to a
lengthy sales cycle, customer training and product service and support. Only
a limited number of Third Party Sellers possess such resources. Accordingly,
the loss of, or a significant reduction in revenue from, one of Avant!'s
Third Party Sellers, or MainGate or any other Third Party Sellers on which
Avant!'s revenues may, in the future, become dependent, could have a material
adverse effect on Avant!'s business, operating results and financial
condition. See "Business--Sales and Marketing."

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NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE

The ICDA industry is characterized by extremely rapid technological
change, frequent new product introductions and enhancements, evolving
industry standards and rapidly changing customer requirements. Avant!'s
future business, operating results and financial condition will depend in
part upon its ability to enhance its current products and to develop and
introduce new products on a timely and cost-effective basis that will keep
pace with technological developments and evolving industry standards and
methodologies, as well as address the increasingly sophisticated needs of
Avant!'s customers. New technologies developed by Avant! or its competitors
could render existing products obsolete. Avant!'s success will depend upon
its ability to enhance existing products and to introduce new products on a
timely and cost-effective basis that meet changing customer requirements.
There can be no assurance that Avant! will be successful in developing new
products or enhancing existing products or that such new or enhanced products
will receive market acceptance. On occasion, Avant! has experienced delays in
the scheduled introductions of new and enhanced products, and there can be no
assurance that it will be able to introduce products on a timely basis in the
future. Delays in the scheduled availability of products, for technological
or other reasons, or a lack of market acceptance of such products, or
Avant!'s failure to accurately anticipate customer demand, would have a
material adverse effect on its business, operating results and financial
condition. See "Business."

DEPENDENCE UPON SEMICONDUCTOR AND ELECTRONICS INDUSTRIES; GENERAL ECONOMIC AND
MARKET CONDITIONS

Avant! is dependent upon the semiconductor and, more generally, the
electronics industries. Each of these industries is characterized by rapid
technological change, short product life cycles, fluctuations in
manufacturing capacity and pricing and gross margin pressures. Segments of
these industries have from time to time experienced significant economic
downturns characterized by decreased product demand, production
over-capacity, price erosion, work slowdowns and layoffs. Over the past few
years, these industries have experienced an extended period of significant
economic growth. There can be no assurance that economic growth in these
industries will continue, and if it does not, any downturn could be
especially severe on Avant!. During such downturns, the number of new IC
design projects often decreases. Because acquisitions of new licenses from
Avant! are largely

<PAGE>

dependent upon the commencement of new design projects, any slowdown in these
industries could have a material adverse effect on Avant!'s business,
operating results and financial condition. Avant!'s business, operating
results and financial condition may in the future reflect substantial
fluctuations from period to period as a consequence of patterns and general
economic conditions in either the semiconductor or electronics industry.

LIMITATIONS ON PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Avant! relies on a combination of patents, trade secrets, copyrights and
trademarks, as well as contractual commitments, to protect its proprietary
rights in its software products. Avant! generally enters into confidentiality
or license agreements with its employees, distributors and customers, and
limits access to and distribution of its software, documentation and other
proprietary information. Despite these precautions, there can be no assurance
that a third party will not copy or otherwise obtain and use Avant!'s
products or technology without authorization, or develop similar technology
independently. In addition, effective patent, copyright and trade secret
protection may be unavailable or limited in certain foreign countries. Avant!
expects that software companies will increasingly be subject to infringement
claims as the number of products and competitors in the industry in which
Avant! currently competes grows and the functionality of products in
different industry segments overlaps. In particular, Avant!'s current
litigation with Cadence involves such infringement claims. Responding to such
claims, regardless of merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require Avant! to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
available, may not be available on terms acceptable to Avant!, which could
have a material adverse effect upon Avant!'s business, operating results and
financial condition. There can be no assurance that infringement claims will
not be asserted against Avant! in the future or that any such claims will not
require Avant! to enter into royalty arrangements or result in costly
litigation, which could materially adversely affect Avant!'s business,
operating results and financial condition. See "--Litigation Risk" and
"Business--Proprietary Rights."

RISK OF PRODUCT DEFECTS

Software products as complex as those offered by Avant! may contain
defects or failures when introduced or when new versions are released. Avant!
has in the past discovered software defects in certain of its products and
may experience delays or lost revenue to correct such defects in the future.
There can be no assurance that, despite testing by Avant!, errors will not be
found in new products or releases after commencement of commercial shipments,
resulting in loss of market share or failure to achieve market acceptance.
Any such occurrence could have a material adverse effect upon Avant!'s
business, operating results and financial condition.

17
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BUSINESS

INTRODUCTION

Avant! resulted from the merger of ArcSys, Inc. and Integrated Silicon
Systems, Inc. on November 27, 1995. Avant! merged with Anagram, Inc. on
September 27, 1996, Meta-Software, Inc. on October 29, 1996, FrontLine Design
Automation, Inc. on November 27, 1996 and acquired Nexsyn Design Technology Inc.
on December 31, 1996. Avant! is a Delaware corporation that develops, markets
and supports software products that assist design engineers in the physical
layout, design, verification, simulation, timing and analysis of ICs.

Avant!'s objective is to establish a significant market position as a
supplier of design software for the ICDA market. To achieve this objective,
Avant! has adopted its mission, which is to provide innovative technology,
products, and business models that enable customers to solve the toughest
problems in deep submicron (less than 0.5-micron feature size) IC design,
improve their productivity and achieve a high return on their investment. To
effect its mission, Avant! has adopted the strategies of maintaining focus on
technological innovation and creating strategic relationships with customers.

RECENT DEVELOPMENTS

LITIGATION DEVELOPMENTS

In addition to actual and punitive damages, which were not quantified by
Cadence, Cadence seeks to enjoin the sale of Avant!'s place and route
products pending trial of the action. On March 18, 1997, the District Court
denied Cadence's motion for a preliminary injunction. Cadence appealled the
order denying a preliminary injunction. On September 23, 1997, the United
States Court of Appeals for the Ninth Circuit overruled the District Court's
denial of Cadence's motion with respect to Avant!'s ArcCell product, a
product which Avant! no longer sells, and held that a preliminary injunction
should be granted against the further sale of the ArcCell product. The Court
of Appeals did not enjoin Avant!'s Aquarius place and route products, but
rather remanded this aspect of Cadence's motion to the District Court for
further consideration. The Court of Appeals stated that, if Avant!'s Aquarius
products are determined to infringe Cadence products, the sale of the
Aquarius products should be enjoined. Avant! requested a rehearing on the
issue, but on November 21, 1997 the Ninth Circuit denied this request. On
December 19, 1997, the District Court stated its intention to enjoin Avant!
from directly or indirectly marketing, selling, licensing, copying or
transferring any work copied or derived from Cadence's Design Framework II,
specifically including, but not limited to, Avant!'s ArcCell, ArcCellBV and
ArcCellXO products. The District Court also stated that it would direct
Avant! to deliver a copy of its order to all present or former customers that
have received copies of any such infringing products and, to the extent it
has a legal right to do so, request that such customers return or destroy any
such products. Avant! also will be directed to furnish to Cadence a list of
any customers that still maintain a functioning copy of such products. At the
December 19, 1997 hearing, the District Court did not rule on Cadence's
request to enjoin the sale, license or support of Avant!'s Aquarius place and
route products.

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Meta alleging, among other things, that Meta owes Silvaco royalties and license
fees pursuant to a product development and marketing program and unpaid
commissions related to Silvaco's sale of Meta's products and services under such
program. Meta filed an answer to the cross-complaint denying the allegations
contained therein. In July 1996, Silvaco filed a first amended cross-complaint,
adding Shawn Hailey, then the President, Chief Executive Officer and a major
shareholder of Meta, and, until July 1997, the Senior Vice President of Avant!'s
Silicon Division, as a personal defendant, and further alleging defamation,
interference with economic advantage, unfair competition and abuse of process by
acts or statements made by Meta or its agents.

ACQUISITIONS

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Compass Acquisition. See "Risk Factors--Uncertainty Relating to Integration of
Multiple Operations and Product Lines; Management of Growth" and "--Cost of
Integration; Transaction Expenses."

PRODUCTS

Avant! products are based on Avant!'s proprietary architecture and
technology, which provide a breadth of automated IC physical design
capabilities. Avant!'s product architecture is designed to solve the problems
inherent in submicron (less than 1.0-micron feature size) and deep submicron
(less than 0.5-micron feature size) IC design and to offer improved time-to-
market, reduced development and manufacturing costs, and enhanced IC performance
when compared to previous generations of ICDA software.

Avant! products are designed to be compatible with the most commonly used
ICDA tools and to be easily integrated into the customer's existing design
environments and methodologies through industry standard interfaces. Avant!'s
products are primarily written in C, run on UNIX workstations such as those from
Sun Microsystems, Inc. and Hewlett-Packard Company, and support industry
standards such as Motiff, Xwindows, GDSII Stream format, EDIF, SDF, SPICE and
Verilog.

Avant!'s Aquarius family of cell-based place and route products includes
Aquarius-BV, Aquarius-XO and Aquarius-GA. All products are based on Avant!'s
patented cell-path timing-driven algorithms which increase circuit performance
and reduce design iterations. Aquarius-BV is used for standard-cell IC designs
with up to three layers of metal, and Aquarius-XO is used for more complex
standard-cell and mixed-block IC designs with up to six layers of metal.
Aquarius-BV and -XO reduce die size and shorten the design cycle by combining
the advantages of over-the-cell channel routing, channel routing and channel
compaction with the flexibility of area-based maze routing.

Avant!'s Aquarius-GA product is an advanced multi-layer place and route
system for gate-array ICs. Aquarius-GA increases gate utilization and minimizes
design congestion by using proprietary congestion-driven placement and routing
algorithms. Aquarius-GA includes many of the same features as Aquarius-BV and
- -XO to improve circuit performance. Aquarius-GA supports embedded designs
through its horizontal integration with Aquarius-BV and -XO.

Avant!'s Planet product complements the Aquarius products and is a physical
floorplanning and analysis solution for accurate prediction of the impact of
physical effects on design performance and routability early in the design
process.

Avant!'s Solar family of products are synthesis-oriented layout refinement
tools designed to optimize the performance and area of ICs to meet new deep
submicron "golden file" needs. Solar is tightly integrated with Avant!'s
Aquarius family of place and route tools.

Avant! believes its Hercules family of design verification software is the
industry's most advanced suite of IC physical verification products. The
Hercules family of products provide geometric and electrical verification
physical design layouts. Hercules' first module for design rule checking ("DRC")
was introduced in January 1992 and is the first hierarchical system offered for
complex submicron design.

Avant!'s Star-Hspice product is the industry-standard circuit simulator that
validates critical paths, performs noise margin analysis and optimizes the
tradeoffs between IC speed and power prior to commencement of fabrication.
Star-Hspice incorporates special analysis features for performance and for yield
optimization, which has become increasingly important in deep submicron chip
design.

Avant!'s Star-Sim family of products are high-capacity circuit simulators
for deep submicron process applications such as graphics, memory, communications
and mixed-signal IC designs. The Star-Sim family

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of products help increase IC performance and reliability and increase designer
productivity by enabling designers to characterize large blocks; to accurately
simulate mixed-signal, dynamic logic and memory circuits where performance,
signal integrity and power analyses are essential; and to reuse high-performance
intellectual property without changing the design process. Star-RC is a
full-chip hierarchical capacitance extractor and a critical net resistance and
capacitance extractor.

All of Avant!'s Star products are tightly integrated with Avant!'s
hierarchical layout and verification tools, Aquarius and Hercules, to provide
efficient, accurate and predictable IC performance.

Avant!'s Polaris family of products utilize innovative Verilog simulation
solutions to ease the simulation, automated design verification and optimization
of IC design. To handle the complexity of large designs, the Polaris family of
products is capable of several levels of design abstraction and uses a variety
of design capture techniques. The products run on Unix and Windows workstation
platforms and are therefore attractive tools for a variety of hardware logic
designers.

During each of 1994, 1995 and 1996, Avant! derived substantially all of
its total revenue from the licensing and support of Aquarius, its cell-based
place and route software product, Hercules, its hierarchical physical
verification software product, Star-Hspice, its circuit simulator, Star-Sim
products, its high-capacity circuit simulation and high-accuracy timing
analysis software, and Polaris products, its Verilog simulation product.
Absent any extraordinary results from existing litigation, Avant! currently
expects that these products will continue to account for a significant
portion of its revenue for the foreseeable future. As a result, Avant!'s
business, operating results and financial condition are significantly
dependent upon continued market acceptance of these products. Avant! believes
that a number of factors will be necessary for its products to achieve
continued market acceptance. These factors include performance of Avant!'s
existing products, successful development of advanced features, adaptability
into the user's design environment, Avant!'s technical, managerial, service
and support expertise, and the customer's assessment of Avant!'s financial
resources. A decline in demand for these products as a result of competition,
technological change or other factors would have a material adverse effect on
the business, operating results and financial condition of Avant!. There can
be no assurance that these products will achieve continued market acceptance
or that Avant! will be successful in marketing such products or any new or
enhanced products. Failure to develop or acquire additional products, or to
successfully market such products on a profitable basis, could have a material
adverse effect on Avant!'s business, operating results and financial
condition. See "Risk Factors-Product Concentration."

During 1994, 1995, 1996, and during the first nine months of 1997, Avant!
derived 33%, 32%, 34%, and 44%, respectively, of its total revenue from the
licensing and support of its software products internationally, principally in
Asia. Avant! currently expects that the percentage from the license and support
of its software products in Asia will continue to be a significant percentage of
its total revenue. Any significant decline in demand for Avant!'s products in
Asia would have a material adverse effect on Avant!'s business, operating
results and financial condition. Avant!'s international revenue involves a
number of risks, including the impact of possible recessionary environments in
economies outside the U.S., longer receivables collection periods and
greater difficulty in accounts receivable collection, difficulties in staffing
and managing foreign operations, political and economic instability, unexpected
changes in regulatory requirements, reduced protection for intellectual property
rights in some countries and tariffs and other trade barriers. There can be no
assurance that Avant! will be able to sustain or increase revenue derived from
international licensing and service or that the foregoing factors will not have
a material adverse effect on Avant!'s future international license and service
revenue, and consequently, on Avant!'s business, operating results and financial
condition. Failure to sustain or increase such revenue would materially and
adversely affect Avant!'s business, operating results and financial condition.
Although Avant! has attempted to reduce the risk of fluctuations in exchange
rates associated with international revenue by pricing its products and services
in U.S. dollars, Avant! pays the expenses of its international operations in
local currencies and does not currently engage in hedging transactions with
respect to such obligations. Currency exchange fluctuations in countries in
which Avant! licenses its products could have a material adverse effect on
Avant!'s business, operating results or financial condition by resulting in
prices that are not competitive with products priced in local currencies.
Furthermore, there can be no assurance that in the future Avant! will be able to
continue to price its products and services

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internationally in U.S. dollars.

The ICDA industry is characterized by extremely rapid technological change,
frequent new product introductions and enhancements, evolving industry standards
and rapidly changing customer requirements. The development of more complex ICs
embodying new technologies will require increasingly sophisticated design tools.
Avant!'s future results of operations will depend in part upon its ability to
enhance its current products and to develop and introduce new products on a
timely and cost-effective basis that will keep pace with technological
developments and evolving industry standards and methodologies, as well as
address the increasingly sophisticated needs of Avant!'s customers. For example,
all of Avant!'s current products operate in, and planned future products will
operate in, the Unix operating system. In the event that another operating
system, such as Windows NT, were to achieve broad acceptance in the ICDA
industry, Avant! would be required to port its products to such an operating
system, which would be costly, time consuming and could have a material adverse
effect on Avant!'s business, operating results or financial condition. Avant!
has in the past and may in the future experience delays in new product
development. The introduction of certain products in the past have been delayed
by as much as 12 months beyond their original scheduled release dates. There can
be no assurance that Avant! will be successful in developing and marketing
product enhancements or new products that respond to technological change,
evolving industry standards and changing customer requirements, that Avant! will
not experience difficulties that could delay or prevent the successful
development, introduction and marketing of these products or product
enhancements, or that its new products and product enhancements will adequately
meet the requirements of the marketplace and achieve any significant degree of
market acceptance. Failure of Avant!, for technological or other reasons, to
develop and introduce new products and product enhancements in a timely and
cost-effective manner would have a material adverse effect on Avant!'s business,
operating results and financial condition. In addition, the introduction or even
announcement of products by Avant! or one or more of the competitors embodying
new technologies or changes in industry standards or customer requirements could
render Avant!'s existing products obsolete or unmarketable. There can be no
assurance that the introduction or announcement of new product offerings by
Avant! or one or more of its competitors will not cause customers to defer
purchases of existing Avant! products. Such deferment of purchases could have a
material adverse effect on Avant!'s business, operating results or financial
condition.

CUSTOMERS

Avant! focuses its sales and marketing efforts on creating strategic
relationships with technology leaders in IC design and with early adopters of
the most advanced EDA tools. By creating strong relationships with industry
leaders, Avant! receives critical technical feedback that enables it to develop
and implement proprietary design technologies and methodologies. In addition,
strategic relationships with these companies can create influential references
for other prospective customers.

The market for Avant!'s physical layout, verification and analysis products
encompasses a wide range of industries, including semiconductor, computer,
consumer electronics, multimedia and telecommunications IC companies worldwide.
End-users of Avant!'s products range from small companies to a number of the
world's largest manufacturing organizations.

No one customer accounted for greater than 10% of Avant!'s revenue in 1994,
1995, 1996 or the first nine months of 1997. Avant! does not believe that
seasonality is a significant factor in sales.

SALES AND MARKETING

Avant! markets its products in North America and Europe primarily through
its direct sales and support force. Avant! employs highly skilled engineers and
technically proficient sales persons capable of serving the sophisticated needs
of its prospective customers' engineering and management staffs. Avant! has
domestic sales and support offices in or near Austin, Texas; Boston,
Massachusetts; Chicago, Illinois;

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<PAGE>
Dallas, Texas; Los Angeles, California; Phoenix, Arizona; Portland, Oregon;
Philadelphia, Pennsylvania; Research Triangle Park, North Carolina and Fremont,
California; international sales and support offices in London, England; Paris,
France and Tokyo, Japan; and international support offices in Munich, Germany;
Geneva, Switzerland and Seoul, South Korea. In addition to its direct sales and
marketing efforts, Avant! participates in industry trade shows and organizes
seminars to promote the adoption of its products and methodologies.

In Asia, Avant! markets its products primarily through a limited number of
"Third Party Sellers" that license and service Avant! products in this market.
Avant! also supports these distributors and representatives and their customers
with technical, sales and management personnel.

Avant! has relied on Third Party Sellers for licensing and support of its
products in Japan, Korea, Taiwan and Singapore. A substantial portion of
Avant!'s international license and service revenue has resulted from a limited
number of these Third Party Sellers. During 1994, 1995, 1996, and the first nine
months of 1997, revenue from these channels accounted for an aggregate of
approximately 30%, 28%, 27%, and 34%, respectively, of Avant!'s total revenue.

In 1997, Avant! consolidated its Japanese sales channel by forming a
distributor, MainGate Electronics, Inc. ("MainGate") owned by Avant!, Gerald
C. Hsu, Avant!'s Chairman of the Board, President and Chief Executive
Officer, and other parties (including other Avant! employees and former
employees of Avant!'s third party distributors). Mr. Hsu owns approximately
40% and Avant! owns approximately 35% of the outstanding shares of MainGate.
Avant! believes that this arrangement optimizes its competitive advantage in
the Asian market to an extent that could not be achieved by using another
distributor or by directly selling into these markets. Distribution and
marketing in these markets are dominated by local companies, making it
difficult for non-local manufacturers to distribute their products directly.
Thus, Avant! created MainGate, which is locally managed and operated and has
significant local ownership. By providing for local ownership of MainGate
through equity incentives, Avant! believes that it is best able to attract
and retain top local talent. However, there can be no assurance that MainGate
will be successful. If it is not successful, it could have a material adverse
effect on Avant!'s business, operating results or financial condition. See
"Risk Factors--Dependence Upon Distributors and Manufacturer's
Representatives."

Since Avant!'s products are used by highly skilled professional engineers,
in order to be effective, a Third Party Seller must possess sufficient
technical, marketing and sales resources and must devote these resources to a
lengthy sales cycle, customer training and product service and support. Only
a limited number of Third Party Sellers possess such resources. In addition,
Avant!'s Third Party Sellers generally offer products of several different
companies, including, in some cases, products that are competitive with
Avant!'s products. There can be no assurance that Avant!'s current Third
Party Sellers or MainGate will choose to or be able to market or service and
support Avant!'s products effectively, that economic conditions or industry
demand will not adversely affect these or other Third Party Sellers, that any
Third Party Seller or MainGate will continue to market and support Avant!'s
products or that these Third Party Sellers or Main Gate will not devote
greater resources to marketing and supporting products of other companies.
The loss of, or a significant reduction in revenue from, one of Avant!'s
Third Party Sellers or MainGate could have a material adverse effect on
Avant!'s business, operating results or financial condition.

The license of Avant!'s software products generally involves a significant
commitment of capital by prospective customers, with the attendant delays
frequently associated with large capital expenditures and lengthy acceptance
procedures. For these and other reasons, the sales cycle associated with the
license of Avant!'s products is typically lengthy and subject to a number of
significant risks over which Avant! has little or no control and, as a result,
Avant! believes that its quarterly operating results are likely to vary
significantly in the future. Due to the nature of Avant!'s business, Avant! does
not believe any of its backlog orders to be firm.

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CUSTOMER SERVICE AND SUPPORT

Avant!'s product management group provides customers with technical support,
training and consulting services. Avant! believes that a high level of customer
service and support is critical to the adoption and successful utilization of
its physical design technology and products.

To address technical issues, Avant! has established both field and corporate
technical application engineering groups that understand the design
methodologies of Avant!'s customers and generally have IC design backgrounds.
Most of Avant!'s customers currently have maintenance agreements that entitle
them to receive software updates, documentation updates and a formal problem
identification and resolution process through a support hotline. Questions or
suggestions may be submitted by facsimile or through the Internet network mail
system. Avant! also offers additional training and consulting services for a
fee. Avant! provides on-site and in-house training on all products.

Avant! consultants are available to work closely with customer design
engineering teams for all phases of physical design from conception through
implementation. Avant! consultants provide customers with in-depth technical
expertise in the use of Avant!'s physical design methodology and products.

RESEARCH AND DEVELOPMENT

The ICDA industry is characterized by extremely rapid technological change,
frequent product introductions and enhancements, evolving industry standards and
rapidly changing customer requirements. The development of more complex ICs
embodying new technologies will require increasingly sophisticated design tools.
Avant! believes its future competitive positions and future results of
operations will depend in large part on its ability to quickly and
cost-effectively develop new products, maintain and enhance its current product
line, maintain technological competitiveness and meet an expanding range of
customer requirements. In addition to supporting and enhancing its existing
physical layout, design, verification, simulation, timing and analysis products,
Avant! maintains an advanced research group that is responsible for exploring
new directions and applications of Avant's proprietary technologies, migrating
new technologies into the existing product lines and maintaining strong research
relationships outside Avant! with industry and academia.

During 1994, 1995, 1996 and the nine months ended September 30, 1997,
Avant!'s research and development expenditures were approximately $9.7
million, $15.3 million, $20.7 million and $19.7 million, respectively
(excluding capitalized software development costs of $143,000, $63,000, none
and none, respectively, for the same periods). The amount of capitalized
software development costs amortized was $199,000, $228,000, $88,000 and
$49,000 for 1994, 1995, 1996 and the nine months ended September 30, 1997,
respectively.

Avant! believes that it must continue to commit substantial resources to
enhance and extend its product lines in order to remain competitive in the ICDA
market. Avant! intends to continue to increase its internally funded product
development program and, if appropriate, to enter into development agreements
with customers and other third parties to develop specific new product
applications and features. Avant! currently has no material third-party funded
development agreements.

COMPETITION

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<PAGE>
respond more quickly to new or emerging technologies and changes in customer
requirements, and to devote greater resources to the development, promotion and
sale of their products than Avant!. These companies also have established
relationships with current and potential customers of Avant! and can devote
substantial resources aimed at preventing Avant! from enhancing relationships
with existing customers or establishing relationships with potential customers.
Moreover, the industry in which Avant! competes is undergoing a trend toward
consolidation that is expected to result in large, more financially flexible
competitors with a broad range of product offerings. Further, other companies
may develop and bring new products to the market which could create significant
competition for Avant! and its products. Competition from EDA companies that
currently offer only functional or logic design products and that choose to
enter the physical design market could present particularly formidable
competition due to their relationships with Avant!'s current and potential
customers, their ability to offer a complete integrated IC design solution which
Avant! does not currently offer and their knowledge of the EDA industry.

PROPRIETARY RIGHTS

Avant! relies on a combination of license agreements, patents, copyright,
trademarks and trade secrets to establish and protect proprietary rights to its
technology. Avant! holds three U.S. patents covering certain aspects of its
products expiring between August 8, 2012 and September 1, 2013, and has seven
U.S. patent applications pending. Avant! also has foreign patent applications
corresponding to one of its U.S. patents and one of its U.S. patent applications
pending in certain foreign countries. In addition, Avant!

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<PAGE>
acquired certain rights to certain technology owned by VLSI pursuant to licenses
granted by VLSI to Compass which were acquired by Avant! pursuant to the Compass
Acquisition and pursuant to licenses granted directly by VLSI to Avant!. Avant!
generally provides products to end-users under non-exclusive licenses, which
typically have a perpetual term unless terminated for breach. The license
provides that the software may be used solely for internal operations in
designated computers at specified sites. Avant!'s software is shipped with a
software security lock which limits software access to authorized users. The
source code of Avant!'s products is protected both as a trade secret and as an
unpublished copyrighted work, and is not made available to third parties.
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use Avant!'s products or technology without authorization
or to develop similar technology independently. In addition, effective copyright
and trade secret protection may be unavailable or limited in certain foreign
countries. Avant! believes that, due to the rapid pace of innovation within the
IC CAD software industry, factors such as the technological and creative skills
of its personnel, new product developments, frequent product enhancements, name
recognition and reliable product maintenance are more important to establishing
and maintaining a technology leadership position than are the various legal
protections of its technology.

Avant! is heavily dependent upon its proprietary software technology.
Avant! currently holds several patents and also relies on a combination of
trade secret, copyright and trademark laws, nondisclosure and other
contractual agreements and technical measures to protect its proprietary
rights in its products. Although Avant! holds several patents, there can be
no assurance that Avant! will develop additional proprietary products or
technologies that are patentable, that any issued patent will provide Avant!
with any competitive advantages or will not be challenged by third parties,
or that the patents of others will not have an adverse effect on Avant!'s
ability to do business. Furthermore, there can be no assurance that others
will not independently develop similar products, duplicate Avant!'s products
or design around the patents currently issued or patents that may be issued
in the future to Avant!. There can be no assurance that the steps taken by
Avant! will prevent misappropriation of its technology, and such protections
may not preclude competitors from developing products with functionality or
features similar to Avant!'s products. In addition, effective copyright and
trade secret protection may be unavailable or limited in certain foreign
countries. Avant! expects that software companies will increasingly be
subject to infringement claims as the number of products and competitors in
the industry in which Avant! competes grows and the functionality of products
in different industry segments overlaps. In particular, Avant!'s current
litigation with Cadence involves such infringement claims. Avant! believes
that its products and trademarks do not infringe upon the proprietary rights
of third parties. There can be no assurance, however, that third parties will
not assert infringement claims, regardless of merit, against Avant! in the
future or that such claims will not require Avant! to cease use of certain
technology or enter into expensive royalty arrangements, if licenses are
available, or result in costly litigation, any of which could materially and
adversely affect Avant!'s business, operating results or financial condition.
See "Risk Factors-Limitations on Protection of Intellectual Property and
Proprietary Rights."

ENVIRONMENTAL AFFAIRS

Avant!'s operations are subject to numerous federal, state and local laws
and regulations designed to protect the environment. There are no administrative
or judicial proceedings pending or threatened against Avant! alleging violations
of such environmental laws and regulations. Compliance with these laws and
regulations has not had, and is not expected to have, a material adverse effect
on the capital expenditures, earnings and competitive position of Avant!.

EMPLOYEES

As of November 20, 1997, Avant! had 572 employees, including 271 in research
and development, 201 in sales, marketing and related customers support services,
and 100 in finance and administration. Of these employees, 476 were located in
the United States, 72 in Europe, 4 in Japan and 20 in Taiwan. None of

<PAGE>
Avant!'s employees is represented by a labor union or is subject to a collective
bargaining agreement, nor has Avant! experienced any work stoppage. Avant!
considers its relations with its employees to be good.

Avant! has recently experienced a period of rapid growth and expansion,
especially the mergers of four companies in a four month period in late 1996
and the Compass Acquisition in the third quarter of 1997, that has placed and
continues to place a significant strain upon its management systems and
resources. Avant! currently plans to continue to expand its staff. To
accommodate this recent growth, Avant! will be required to implement a
variety of new and upgraded operational and financial systems, procedures and
controls, some of which currently require substantial management effort.
There can be no assurance that Avant! will be able to do so successfully. The
increase in the number of Avant!'s employees and Avant!'s market
diversification and product development activities have resulted in increased
responsibility for Avant!'s management. Avant! anticipates that continued
growth, if any, will require it to recruit and hire a substantial number of
new engineering, managerial, finance, sales and marketing and support
personnel; however, there can be no assurance that Avant! will be successful
at hiring or retaining these personnel. Avant!'s ability to compete
effectively and to manage future growth, if any, will require Avant! to
continue to implement and improve operational, financial and management
information systems on a timely basis and to expand, train, motivate and
manage its work force. There can be no assurance that Avant!'s personnel,
systems, procedures and controls will be adequate to support Avant!'s
operations. Any failure to implement and improve Avant!'s operational,
financial and management systems or to expand, train, motivate or manage
employees, could have a material adverse effect on Avant!'s business,
operating results or financial condition.

Avant!'s future operating results depend in significant part upon the
continued service of its key technical and senior management personnel,
including in particular, Gerald C. Hsu, Avant!'s President and Chief Executive
Officer. None of Avant!'s employees is bound by an employment agreement.
Avant!'s business, operating results and financial condition also depend on its
continuing ability to attract and retain highly qualified technical and
managerial personnel. Competition for such personnel is intense, and there can
be no assurance that Avant! will retain its key technical and managerial
personnel or attract such personnel in the future.

PROPERTIES

In February 1997, Avant! signed four leases for its new headquarters in
Fremont, California. The leases cover four buildings with an aggregate of
approximately 281,000 square feet of space with an aggregate annual base rent
amount of approximately $4.8 million. The leases for three of the buildings
expire on September 1, 2010 and the lease for the fourth building expires on
August 31, 2012. Avant! also occupies a facility near Research Triangle Park
in Durham, North Carolina with an annual base rent of approximately $666,000.
The lease expires on November 30, 2005. Avant! also leases sales and support
offices in the United States, Europe, Japan and Taiwan. Avant! believes that
its existing facilities are adequate for its current needs.

LITIGATION

Avant! is subject to a number of related litigation matters, including a
civil action brought by Cadence, a criminal complaint filed by the Santa
Clara County District Attorney's office against Avant! and certain of its
employees and securities class action claims resulting from these lawsuits.
In addition, default judgments in the aggregate amount of $31.4 million will
be entered against Meta, which Avant! acquired in October 1996 and which is
now a wholly owned subsidiary of Avant!

CADENCE LITIGATION.

<PAGE>

competition, misappropriation of trade secrets, conspiracy, breach of
contract, inducing breach of contract and false advertising. The essence of
the complaint is that certain Avant! employees who formerly were Cadence
employees misappropriated and improperly copied source code for certain
important functions of Avant! place and route products from Cadence, and that
Avant! has allegedly competed unfairly by making false statements concerning
Cadence and its products. The action also alleges that Avant! induced certain
individual defendants to breach their agreements of employment and
confidentiality with Cadence. The matter is currently awaiting trial, pending
further pretrial matters. A trial date has not been set. On July 25, 1997, a
federal judge stayed the Cadence civil action pending completion of the
criminal proceedings described below, except for certain documentary and
third-party discovery. Avant! posted a $5.0 million bond pending the
resumption of the civil action.

In addition to actual and punitive damages, which were not quantified by
Cadence, Cadence seeks to enjoin the sale of Avant!'s place and route
products pending trial of the action. On March 18, 1997, the District Court
denied Cadence's motion for a preliminary injunction. Cadence appealed the
order denying a preliminary injunction. On September 23, 1997, the United
States Court of Appeals for the Ninth Circuit overruled the District Court's
denial of Cadence's motion with respect to Avant!'s ArcCell product, a
product that Avant! no longer sells, and held that a preliminary injunction
should be granted against the further sale of the ArcCell product. The Court
of Appeals did not enjoin Avant!'s Aquarius place and route products, but
rather remanded this aspect of Cadence's motion to the District Court for
further consideration. The Court of Appeals stated that, if Avant!'s Aquarius
products are determined to infringe Cadence products, the sale of the
Aquarius products should be enjoined. Avant! requested a rehearing on the
issue, but on November 21, 1997 the Ninth Circuit denied this request. On
December 19, 1997, the District Court stated its intention to enjoin Avant!
from directly or indirectly marketing, selling, licensing, copying or
transferring any work copied or derived from Cadence's Design Framework II,
specifically including, but not limited to, Avant!'s ArcCell, ArcCellBV and
ArcCellXO products. The District Court also stated that it would direct
Avant! to deliver a copy of its order to all present or former customers that
have received copies of any such infringing products and, to the extent it
has a legal right to do so, request that such customers return or destroy any
such products. Avant! also will be directed to furnish to Cadence a list of
any customers that still maintain a functioning copy of such products. At the
December 19, 1997 hearing, the District Court did not rule on Cadence's
request to enjoin the sale, license or support of Avant!'s Aquarius place and
route products from which Avant! derives a significant portion of its total
revenue. The District Court will hold future hearings regarding the Aquarius
products. There can be no assurance that the District Court will not, upon
further consideration, grant a preliminary injunction with respect to the
sale of the Aquarius products, which would have a material adverse effect on
Avant!'s business, financial position and results of operations.

CRIMINAL COMPLAINT.

28
<PAGE>
Avant! and the following Avant! employees and/or directors, Gerald C. Hsu,
President, Chief Executive Officer and Chairman of the Board of Directors, Y.
Eric Cho, a member of the Board of Directors, Y. Z. Liao, Corporate Fellow,
Stephen Wuu, CEO Staff, Operations, Leigh Huang, Marketing Manager and Eric
Cheng, Research and Development Manager, for allegedly violating various
California Penal Code sections relating to the theft of trade secrets. Avant!
and the individuals have pleaded not guilty and are awaiting further
proceedings. The criminal complaint could result in criminal fines against
Avant!, as well as the potential incarceration of certain members of its
management team. Such outcomes could result in canceled or postponed customer
orders, increased future expenditures, the loss of management and other key
personnel, additional stockholder litigation, loss of goodwill and would have
other material adverse effects on Avant!'s business, consolidated financial
position or consolidated results of operations.

SILVACO LITIGATION.

In August 1997, the Superior Court entered a default judgment against Mr.
Hailey as to the defamation and interference with economic advantage claims for
failure to answer the complaint. In October 1997, Mr. Hailey's application for
relief from the default judgment was denied. In August 1997, the Superior Court
entered a default judgment against Meta as to the defamation and interference
with economic advantage claims. On October 31, 1997, Meta's application for
relief from the default judgment was denied. On October 28, 1997, Silvaco first
presented its theory of damages and a trial began on November 3, 1997. On
November 4, 1997, the Superior Court dismissed Meta's remaining affirmative
claims. On November 5, 1997, the Superior Court awarded Silvaco $20.0 million in
damages against Mr. Hailey and Meta related to the defamation and interference
with economic advantage claims, and, on November 6, 1997, the Superior Court
awarded Silvaco $11.4 million in damages related to the unfair competition claim
and claims related to the product development and marketing program. On November
12, 1997, the Superior Court awarded nominal damages to Silvaco related to the
August 1995 cross-complaint.

Meta intends to pursue all remedies available to it in connection with the
litigation with Silvaco, including filing an appeal as quickly as practicable.
Meta believes it has substantial appellate issues which could cause the judgment
to be remanded to the trial court for further proceedings. Should Meta be
permitted to participate fully in further trial court proceedings, Meta believes
it would have substantial defenses to Silvaco's claims. However, there can be no
assurance that any such remedies will be successful. Although it is reasonably
possible Meta will incur a loss in relation to this claim, it is currently
unable to estimate the actual loss or range of loss. Payment of the damages
previously awarded, and damages which

29
<PAGE>
may be awarded in the future, would have a material adverse effect on Avant!'s
business, consolidated financial condition and consolidated results of
operations.

SECURITIES CLASS ACTION CLAIMS.

Avant! believes it has defenses to all of the plaintiffs' claims and intends
to defend itself vigorously. There can be no assurance, however, that Avant!'s
defenses will be successful. Although it is reasonably possible Avant! will
incur a loss in relation to these claims, it is currently unable to estimate the
actual loss or range of loss. In the event Avant!'s defenses are unsuccessful,
Avant! may be required to pay damages to the securities class action plaintiffs,
and such a judgment could have a material adverse effect on Avant!'s business,
consolidated financial condition and consolidated results of operations.

LITIGATION COSTS.

The pending litigation and any future litigation against Avant!
or its employees, regardless of the outcome, is expected to result in
substantial costs and expenses to Avant!. For example, during 1996 Avant!
incurred and charged to operations approximately $6.8 million in litigation
expenses and expects to incur approximately $7.5 million in litigation
expenses in 1997. While litigation is inherently unpredictable, Avant!
currently expects that its litigation expenses during 1998 will be at least
as much as those incurred in 1997. Accordingly, any such litigation could
have a material adverse effect on Avant!'s business, operating results or
financial condition. Furthermore, if Avant! is required to satisfy the
default judgments in full in the Silvaco litigation, Avant! could be required
to pay up to $31.4 million in damages, which would have a material adverse
effect on Avant!'s business, consolidated financial condition and
consolidated results of operations.

<PAGE>
MANAGEMENT

The executive officers and directors of Avant!, and their ages as of
December 1, 1997, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- -----------------------------------------------------------------------------
<S> <C> <C>
Gerald C. Hsu............... 50 President, Chief Executive Officer and Chairman of the Board of Directors

John P. Huyett.............. 44 Vice President of Finance, Treasurer and Principal Accounting Officer

Y. Eric Cho................. 50 Director

Tench Coxe.................. 39 Director

Eric A. Brill............... 47 Director and Secretary

Charles L. St. Clair........ 67 Director
</TABLE>

MR. HSU joined Avant! in March 1994 as President, Chief Executive Officer
and a director, and has been Chairman of the Avant! Board of Directors since
November 1995. From July 1991 to March 1994, Mr. Hsu was employed by Cadence,
where his last position was President and General Manager of the IC Design
Group. From June 1988 to July 1991, Mr. Hsu was employed by Sun Microsystems,
Inc., an engineering workstation company, where his last position was Director
of Strategic Business Development. Mr. Hsu holds an S.M. in Ocean Engineering
from the Massachusetts Institute of Technology, an M.S. in Mechanics and
Hydraulics from the University of Iowa and a B.S. in Applied Mathematics from
the National Chung-Hsing University.

MR. HUYETT has served as Vice President of Finance, Treasurer and
Principal Accounting Officer since he joined Avant! in connection with the
merger of Integrated Silicon Solutions, Inc. ("ISS") with and into Avant! in
November 1995. From July 1993 to November 1995, Mr. Huyett served as Vice
President of Finance and Chief Financial Officer of ISS. Mr. Huyett also
served as Treasurer and Secretary of ISS from October 1994 to November 1995.
Prior to July 1993, Mr. Huyett was a partner with KPMG Peat Marwick LLP,
independent auditors to Avant!.

DR. CHO co-founded Avant! in February 1991 and has been a director of Avant!
since such date. From January 1996 until his resignation in October 1997, Dr.
Cho served as the Senior Vice President of Corporate Operations. From October
1993 until January 1996, he served as the Vice President of Asian Operations.
From the inception of Avant! until October 1993, Dr. Cho served as Vice
President of Sales and Marketing. From September 1986 to February 1991, Dr. Cho
was employed by Cadence where his last position was a Marketing Director of the
IC Division. Dr. Cho holds an M.B.A. from New York University, an M.S. and a
Ph.D. in Electrical Engineering and Computer Science from the University of
California, Berkeley and a B.S. in Electrical Engineering from the National
Chiao-Tung University, Taiwan.

MR. COXE has been a director of Avant! since February 1992. Mr. Coxe is a
general partner of the general partner of Sutter Hill Ventures, a venture
capital investment firm, and has been associated with Sutter Hill Ventures since
1987. Mr. Coxe holds a B.A. in Economics from Dartmouth College and an M.B.A.
from the Harvard Business School.

MR. BRILL has been a director and the Secretary of Avant! since November
1996. Mr. Brill is a corporate and securities attorney whose practice focuses
principally on technology companies and private investment partnerships. He has
been in private practice since 1993, and previously practiced with the San
Francisco law firm of Farella, Braun & Martel. Mr. Brill holds a B.S. in History
from Cleveland State University and a J.D. from the Harvard Law School.

MR. ST. CLAIR has served as a consultant to Avant! since April 1996 and has
been a director of Avant! since September 1997. From September 1987 to March
1996, Mr. St. Clair was employed as an Advisor for

31
<PAGE>
Industrial Development to the Government of Botswana's Development Corporation.
From September 1981 to August 1987, Mr. St. Clair served as President of St.
Clair International, an international management consulting firm. Mr. St. Clair
holds a B.S. in Management and Economics from Arizona State University and a
B.F.T., Latin America from the American Graduate School for International
Management (Thunderbird).

There are no family relationships amongst any executive officers or
directors of Avant!.

A criminal complaint has been filed by the Santa Clara County District
Attorney's office against Gerald C. Hsu and Y. Eric Cho for alleged
misappropriation of trade secrets as set forth in the Cadence lawsuit. See "Risk
Factors--Litigation Risk."

<PAGE>

SELLING STOCKHOLDER

The following table sets forth certain information, as of December 19,
1997, with respect to the number of shares of Common Stock owned by the Selling
Stockholder and as adjusted to give effect to the sale of the Shares offered
hereby. The Shares are being registered to permit public secondary trading of
the Shares, and the Selling Stockholder may offer the Shares for resale from
time to time. See "Plan of Distribution."

The Shares being offered by the Selling Stockholder were acquired from the
Company in the Company's acquisition of Compass, pursuant to the Agreement and
Plan of Reorganization dated July 31, 1997, and as amended on August 27, 1997,
whereby GB Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of the Company, was merged with and into Compass, and all outstanding
shares of capital stock of Compass were converted into cash and/or shares of
Common Stock of the Company. Prior to the Company's acquisition of Compass,
Compass was a subsidiary of the Selling Stockholder, VLSI Technology, Inc. The
Common Stock was issued pursuant to the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof.

The Company has filed with the Commission, under the Securities Act, a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to the resale of the Shares from time to time on the Nasdaq National
Market or in privately-negotiated transactions. The Company has agreed to use
its best efforts to keep such Registration Statement effective for the lesser of
one (1) year from the date of effectiveness of this Prospectus or until all
Shares have been sold.

The Shares offered by this Prospectus may be offered from time to time by
the Selling Stockholder named below:

<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Owned After
Offering the Offering
---------------------- ----------------------
Name and Address of Number of Number of Shares Number of
Selling Stockholder Shares Percent(1) Being Offered Shares Percent(1)
- ------------------- ------ ---------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C>
VLSI Technology, Inc. 522,192 1.94% 522,192 0 *
1109 McKay Drive, MS-45
San Jose, California 95131

TOTAL 522,192 1.94% 522,192 0 *
------- ---- ------- ----- -----
------- ---- ------- ----- -----
</TABLE>
_________________
* Less than 1%

(1) Based upon 26,886,862 shares of Common Stock outstanding on December 19,
1997. This Registration Statement shall also cover any additional
shares of Common Stock which become issuable in connection with the
shares registered for sale hereby by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the receipt of consideration which results in an increase in
the number of the Company's outstanding shares of Common Stock.

PLAN OF DISTRIBUTION

The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Stockholder from time to time in
transactions in the over-the-counter market, on the Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices.
The Selling Stockholder may effect such transactions by selling the Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions

33
<PAGE>

from the Selling Stockholder and/or the purchasers of the Shares for whom
such broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess
of customary commissions).

In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

The Selling Stockholder and any broker-dealers or agents that participate
with the Selling Stockholder in the distribution of the Shares may under certain
circumstances be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profit realized on
the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholder may
agree to indemnify such broker-dealers against certain liabilities, including
liabilities under Securities Act.

In connection with the distribution of the Shares, the Selling
Stockholder may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales
of the Shares in the course of hedging the positions they assume with the
Selling Stockholder. The Selling Stockholder also may sell the Shares short
and redeliver the Shares to close out the short positions. The Selling
Stockholder also may enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares,
which the broker-dealers may resell or otherwise transfer pursuant to this
prospectus. The Selling Stockholder also may loan or pledge the Shares to a
broker-dealer and the broker-dealer may sell such shares so loaned or upon a
default the broker-dealer may affect sales of the pledged shares pursuant to
this prospectus.

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder (and, if it acts as agent for the
purchase of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholder to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholder, to purchase as principal any unsold
Shares. Brokers-dealers who acquire Shares as principal may thereafter resell
such Shares from time to time in transactions (which may involve crosses and
block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, on the Nasdaq National Market, in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.

Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholder will be
subject to applicable provisions of the 1934 Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholder.

The Selling Stockholder will pay all commissions and other expenses
associated with the sale of Shares by it. The Shares offered hereby are being
registered pursuant to contractual obligations of the Company, and the Company
has agreed to bear certain expenses in connection with the registration and sale
of the Shares being offered by the Selling Stockholder. The Company has not
made any underwriting arrangements with respect to the sale of Shares offered
hereby.

34
<PAGE>
LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo
Park, California.

EXPERTS

The consolidated balance sheets of Avant! Corporation and its
subsidiaries as of December 31, 1994, 1995 and 1996 and the consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three year period ended December 31, 1996 incorporated in this
Prospectus by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, as stated in their report and are
incorporated herein by reference in reliance upon such firm as experts in
accounting and auditing.

The consolidated balance sheet of Compass Design Automation, Inc. and
subsidiaries as of December 31, 1996 and the consolidated statements of
operations, shareholders' deficit and cash flows as of and for the year ended
December 31, 1996 incorporated in this Prospectus by reference from the
Company's Current Report on Form 8-K/A dated November 25, 1997 have been
audited by KPMG Peat Marwick LLP, independent certified public accountants,
as stated in their report and are incorporated herein by reference in
reliance upon such firm as experts in accounting and auditing.

35
<PAGE>

NO DEALER, SALESPERSON, SELLING STOCKHOLDER OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.

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

TABLE OF CONTENTS

Page
----

Available Information
Information Incorporated by Reference
Forward-Looking Statements
The Company
Recent Developments
Risk Factors
Business
Management
Selling Stockholder
Plan of Distribution
Legal Matters
Experts

522,192 SHARES

AVANT! CORPORATION

Common Stock

_____________

_________, 1998

______________

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses payable by the Registrant in
connection with the offering. All the amounts are estimates except for the
Securities and Exchange Commission registration fee.

Securities and Exchange Commission Registration Fee. . . . . . . . $ 2,628.50
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . 245,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . 440,000.00
Transfer Agent and Registrar Fees. . . . . . . . . . . . . . . . . 10,000.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 27,371.50
----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725,000.00
----------
----------

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Section 145 of the Delaware General Corporation law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to
be made, parties to any threatened, pending or completed legal action, suit
or proceedings, whether civil, criminal, administrative or investigative
(other than action by or in the right of such corporation), by reason of the
fact that such person was an officer or director of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer
or director acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe his conduct was illegal. A
Delaware corporation may indemnify officers and directors in an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation in the performance of
his duty. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which such officer or director
actually and reasonably incurred.

In accordance with the DGCL, Avant!'s Certificate of Incorporation
("Certificate") contains a provision to limit the personal liability of the
directors of Avant! for violations of their fiduciary duty. This provision
eliminates each director's liability to Avant! or its stockholders for
monetary damages except (i) for any breach of the director's duty of loyalty
to Avant! or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which a director derived an improper personal
benefit. The effect of this provision is to eliminate the personal liability
of directors for monetary damages for actions involving a breach of their
fiduciary duty of care, including any such actions involving gross negligence.

Article IX of Avant!'s Certificate and Article VII, Section 6 of
Avant!'s Bylaws provide for indemnification of the officers and directors of
Avant! to the fullest extent permitted by applicable law.

Avant! has entered into indemnification agreements with each director
and executive officer which provide indemnification to such directors and
executive officers under certain circumstances for acts or omissions which
may not be covered by directors' and officers' liability insurance.

II-1

<PAGE>

ITEM 16. EXHIBITS.

The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.

(a) Exhibits

Exhibit
Number Description

2.1 Agreement and Plan of Reorganization dated September 7, 1997, by
and among the Company, Cardinal Merger Corporation and Technology
Modeling Associates, Inc.

2.2 Agreement and Plan of Reorganization dated July 31, 1997, as
amended on August 27, 1997, by and among the Company, GB
Acquisition Corporation, VLSI Technology, Inc. and Compass Design
Automation, Inc.

4.1 Affiliates Agreement dated September 11, 1997, by and between the
Company and VLSI Technology, Inc.

5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP.

23.1 Consent of KPMG Peat Marwick LLP--Avant!.

23.2 Consent of KPMG Peat Marwick LLP--Compass.

23.3 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP (included in the opinion filed as Exhibit 5.1).

24.1 Power of Attorney (reference is made to page II-4 of this
Registrant Statement).

___________________

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-2

<PAGE>

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated
by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

II-3

<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF FREMONT, STATE OF CALIFORNIA, ON
THIS 23 DAY OF DECEMBER, 1997.

AVANT! CORPORATION

By: /s/ Gerald C. Hsu
--------------------------------------
Gerald C. Hsu
Chairman of the Board, President and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Gerald C. Hsu
and John P. Huyett, and each of them, the lawful attorneys and agents, with
power and authority to do any and all acts and things and to execute any and
all instruments which said attorneys and agents determine may be necessary or
advisable or required to enable Avant! Corporation, a Delaware corporation,
to comply with the Securities Act, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with
this Registration Statement. Without limiting the generality of the
foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents or any of them shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

Signature Title Date
--------- ----- ----

/s/ Gerald C. Hsu Chairman of the Board,
- --------------------------- President and Chief December 23, 1997
Gerald C. Hsu Executive Officer

/s/ John P. Huyett Vice President of
- --------------------------- Finance, Treasurer and December 23, 1997
John P. Huyett Principal Accounting Officer

/s/ Y. Eric Cho
- --------------------------- Director December 23, 1997
Y. Eric Cho

/s/ Tench Coxe
- --------------------------- Director December 23, 1997
Tench Coxe

II-4

<PAGE>

/s/ Eric A. Brill
- --------------------------- Director and Secretary December 23, 1997
Eric A. Brill

/s/ Charles St. Clair
- --------------------------- Director December 23, 1997
Charles St. Clair

II-5

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description
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2.1 Agreement and Plan of Reorganization dated September 7, 1997, by
and among the Company, Cardinal Merger Corporation and Technology
Modeling Associates, Inc.

4.1 Affiliates Agreement dated September 11, 1997, by and between the
Company and VLSI Technology, Inc.

5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP.

23.1 Consent of KPMG Peat Marwick LLP--Avant!.

23.2 Consent of KPMG Peat Marwick LLP--Compass.

23.3 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP (included in the opinion filed as Exhibit 5.1).

24.1 Power of Attorney (reference is made to page II-4 of this
Registration Statement).

___________________

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AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

AVANT! CORPORATION,

CARDINAL MERGER CORPORATION

AND

TECHNOLOGY MODELING ASSOCIATES, INC.

SEPTEMBER 7, 1997
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TABLE OF CONTENTS

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ARTICLE I THE MERGER........................................................................................ 1
1.1 The Merger........................................................................................ 1
1.2 Closing, Effective Time........................................................................... 1
1.3 Effect of the Merger.............................................................................. 2
1.4 Articles of Incorporation; Bylaws................................................................. 2
1.5 Directors and Officers............................................................................ 2
1.6 Effect on Capital Stock........................................................................... 2
1.7 Dissenters' Rights................................................................................ 3
1.8 Surrender of Certificates......................................................................... 3
1.9 No Further Ownership Rights in TMAI Common Stock.................................................. 4
1.10 Lost, Stolen or Destroyed Certificates............................................................ 5
1.11 Tax and Accounting Consequences................................................................... 5
1.12 Taking of Necessary Action; Further Action........................................................ 5

ARTICLE II REPRESENTATIONS AND WARRANTIES OF TMAI........................................................... 5
2.1 Organization, Standing and Power.................................................................. 6
2.2 Capital Structure................................................................................. 6
2.3 Authority......................................................................................... 7
2.4 SEC Documents, Financial Statements............................................................... 8
2.5 Absence of Certain Changes........................................................................ 8
2.6 Absence of Undisclosed Liabilities................................................................ 9
2.7 Permits and Licenses.............................................................................. 9
2.8 Properties and Contracts.......................................................................... 9
2.9 Litigation........................................................................................ 10
2.10 Intellectual Property............................................................................. 10
2.11 Environmental Matters............................................................................. 11
2.12 Taxes............................................................................................. 11
2.13 Employee Benefit Plans............................................................................ 12
2.14 Certain Agreements Affected by the Merger......................................................... 14
2.15 Brokers' and Finders' Fees........................................................................ 14
2.16 Opinion of TMAI Financial Advisor................................................................. 14
2.17 Registration Statement; Proxy Statement/Prospectus................................................ 14

ARTICLE III REPRESENTATIONS AND WARRANTIES OF AVANT! AND MERGER SUB.........................................
14
3.1 Organization, Standing and Power.................................................................. 15
3.2 Capital Structure................................................................................. 15
3.3 Authority......................................................................................... 16
3.4 SEC Documents; Financial Statements............................................................... 16
3.5 Absence of Certain Changes........................................................................ 17
3.6 Litigation........................................................................................ 17
3.7 Absence of Undisclosed Liabilities................................................................ 17
3.8 Taxes............................................................................................. 18
3.9 Registration Statement; Proxy Statement/Prospectus................................................ 18
3.10 Intellectual Property............................................................................. 19
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ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.............................................................. 19
4.1 Conduct of Business of TMAI....................................................................... 19
4.2 Covenants of TMAI................................................................................. 19
4.3 Notices........................................................................................... 21
4.4 Other Offers...................................................................................... 21
4.5 Avant! Offers..................................................................................... 22

ARTICLE V ADDITIONAL AGREEMENTS............................................................................. 23
5.1 Proxy Statement/Prospectus; Registration Statement................................................ 23
5.2 Meeting of Shareholders........................................................................... 23
5.3 Access to Information............................................................................. 23
5.4 Confidentiality................................................................................... 24
5.5 Public Disclosure................................................................................. 24
5.6 Consents; Cooperation............................................................................. 24
5.7 Pooling Accounting................................................................................ 25
5.8 Affiliates Agreements............................................................................. 25
5.9 FIRPTA............................................................................................ 25
5.10 Continuity of Interest Certificates............................................................... 25
5.11 Legal Requirements................................................................................ 25
5.12 Blue Sky Laws..................................................................................... 26
5.13 Employee Benefit Plans............................................................................ 26
5.14 Form S-8.......................................................................................... 27
5.15 Indemnification................................................................................... 27
5.16 Listing of Additional Shares...................................................................... 28
5.17 Pooling Letters................................................................................... 28
5.18 Best Efforts and Further Assurances............................................................... 28
5.19 Notification of Certain Matters................................................................... 28
5.20 Shareholder Agreement............................................................................. 29
5.21 HSR Act Filings................................................................................... 29
5.22 Schedules......................................................................................... 29
5.23 Management of TCAD Division....................................................................... 29

ARTICLE VI CONDITIONS TO THE MERGER......................................................................... 29
6.1 Conditions to Obligations of Each Party to Effect the Merger...................................... 29
6.2 Additional Conditions to Obligations of TMAI...................................................... 30
6.3 Additional Conditions to the Obligations of Avant! and Merger Sub................................. 31

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................................... 32
7.1 Termination....................................................................................... 32
7.2 Effect of Termination............................................................................. 33
7.3 Expenses and Termination Fees..................................................................... 33
7.4 Amendment......................................................................................... 34
7.5 Extension; Waiver................................................................................. 34

ARTICLE VIII GENERAL PROVISIONS............................................................................. 34
8.1 Survival.......................................................................................... 34
8.2 Notices........................................................................................... 35
8.3 Interpretation.................................................................................... 35
8.4 Counterparts...................................................................................... 36
8.5 Entire Agreement; Nonassignability; Parties in Interest........................................... 36
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8.6 Severability...................................................................................... 36
8.7 Remedies Cumulative............................................................................... 36
8.8 Governing Law..................................................................................... 36
8.9 Rules of Construction............................................................................. 36
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EXHIBITS
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EXHIBIT A-1 TMAI Affiliates Agreement
EXHIBIT A-2 Avant! Affiliates Agreement
EXHIBIT B Shareholder Agreement
EXHIBIT C Continuity of Interest Certificate
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AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of September 7, 1997, by and among Avant! Corporation, a
Delaware corporation ("Avant!"), Cardinal Merger Corporation, a California
corporation ("Merger Sub") and wholly owned subsidiary of Avant! and Technology
Modeling Associates, Inc., a California corporation ("TMAI").

RECITALS

A. The Boards of Directors of TMAI, Avant! and Merger Sub believe it is in
the best interests of their respective corporations and the stockholders of
their respective corporations that TMAI and Merger Sub combine into a single
company through the statutory merger of Merger Sub with and into TMAI (the
"Merger") and, in furtherance thereof, have approved the Merger.

B. In the Merger, among other things, the outstanding shares of TMAI Common
Stock, no par value ("TMAI Common Stock"), shall be converted into shares of
Avant! Common Stock, $.0001 par value ("Avant! Common Stock"), at the rate set
forth herein.

C. TMAI, Avant! and Merger Sub desire to make certain representations and
warranties and other agreements in connection with the Merger.

D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code.

E. The parties intend for the Merger to be accounted for as a pooling of
interests.

F. Concurrent with the execution of this Agreement and as an inducement to
Avant! and Merger Sub to enter into this Agreement, Roy E. Jewell, Bennet
Weintraub, Lung Chu, Jue-Hsien Chern, David M. Lee, Robert W. Dutton, William E.
Drobish, Louis A. Delmonico and Ronald A. Rohrer (the "Shareholders") who are
officers and directors of TMAI, have on the date hereof entered into an
agreement to vote the shares of TMAI's Common Stock owned by such persons to
approve the Merger.

NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:

ARTICLE I
THE MERGER

1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California General Corporation Law ("California
Law"), Merger Sub shall be merged with and into TMAI, the separate corporate
existence of Merger Sub shall cease and TMAI shall continue as the surviving
corporation. TMAI as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation."

1.2 CLOSING; EFFECTIVE TIME. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
or at such other time as the parties hereto agree (the date on which the Closing
shall occur, the "Closing Date" or the "Effective Date"). The Closing shall take
place at the offices of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by filing an Agreement
of Merger, in form reasonably satisfactory to Avant! and TMAI (the "Agreement of
Merger"), with the Secretary of State of the State of

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California, in accordance with the relevant provisions of California Law (the
time of such filing being the "Effective Time").

1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Agreement of Merger and the
applicable provisions of California Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of TMAI and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of TMAI and Merger
Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4 ARTICLES OF INCORPORATION; BYLAWS.

(a) At the Effective Time, the Articles of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended; provided,
however, that Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
TMAI."

(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.

1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of Merger
Sub shall be the initial directors of the Surviving Corporation and the officers
of Merger Sub shall be the initial officers of the Surviving Corporation, until
their respective successors are duly elected or appointed and qualified.

1.6 EFFECT ON CAPITAL STOCK. By virtue of the Merger and without any
action on the part of Merger Sub, Avant!, TMAI or the holders of any of the
following securities:

(a) CONVERSION OF TMAI COMMON STOCK. At the Effective Time, each share
of TMAI Common Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of TMAI Common Stock to be canceled
pursuant to Section 1.6(b) and any Dissenting Shares (as defined in Section
1.7 below)) will be canceled and extinguished and will be converted
automatically into the right to receive a fraction of a share of Avant!
Common Stock (the "Exchange Ratio"), the numerator of which is equal to (i)
$17.00, and the denominator of which is equal to (ii) the average of the per
share closing prices of Avant! Common Stock as quoted on the Nasdaq National
Market for the ten (10) consecutive trading days ending three (3) business
days prior to the Effective Date of the Merger (the "Average Nasdaq Per
Share Price"). Notwithstanding anything to the contrary set forth herein, in
the event that the Average Nasdaq Per Share Price is greater than $35.678
(the "Maximum Price"), then the Exchange Ratio shall be 0.476484, and in the
event that the Average Nasdaq Per Share Price is less than $25.678 (the
"Minimum Price"), then the Exchange Ratio shall be 0.662045.

(b) CANCELLATION OF TMAI COMMON STOCK OWNED BY AVANT! OR TMAI. At the
Effective Time, all shares of TMAI Common Stock that are owned by TMAI and
each share of TMAI Common Stock owned by Avant! or any direct or indirect
wholly owned subsidiary of Avant! or of TMAI immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.

(c) TMAI STOCK PLANS. At the Effective Time, the 1996 Equity Incentive
Plan, the 1995 Stock Option Plan and the 1989 Stock Option Plan of TMAI, and
all options to purchase TMAI Common Stock then outstanding under such plans,
shall be assumed by Avant! in accordance with Section 5.13. The TMAI 1989
Stock Option Plan, 1995 Stock Option Plan and 1996 Equity Incentive Plan are
sometimes collectively referred to herein as the "TMAI Stock Plans."

(d) TMAI EMPLOYEE STOCK PURCHASE PLAN. At the Effective Time, the TMAI
1996 Employee Stock Purchase Plan (the "TMAI ESPP") and all of the existing
rights and obligations of TMAI pursuant to the outstanding subscription
rights thereunder shall be assumed by Avant! in accordance with Section
5.13.

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(e) CAPITAL STOCK OF MERGER SUB. At the Effective Time, each share of
Common Stock, no par value, of Merger Sub ("Merger Sub Common Stock"),
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one (1) validly issued, fully paid and
nonassessable share of Common Stock, no par value, of the Surviving
Corporation. Each stock certificate of Merger Sub evidencing ownership of
any such shares shall continue to evidence ownership of such shares of
capital stock of the Surviving Corporation.

(f) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible
into Avant! Common Stock or TMAI Common Stock), reorganization,
recapitalization or other like change with respect to Avant! Common Stock or
TMAI Common Stock occurring after the date hereof and prior to the Effective
Time.

(g) FRACTIONAL SHARES. No fraction of a share of Avant! Common Stock
will be issued, but in lieu thereof each holder of shares of TMAI Common
Stock who would otherwise be entitled to a fraction of a share of Avant!
Common Stock (after aggregating all fractional shares of Avant! Common Stock
to be received by such holder) shall receive from Avant! an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the Average Nasdaq Per Share Price.

1.7 DISSENTERS' RIGHTS. If, as of the Effective Time, holders of TMAI
Common Stock have complied with all requirements for perfecting and not
forfeited dissenters' rights ("Dissenting Shares") in connection with the Merger
under California Law, such Dissenting Shares shall not be converted into Avant!
Common Stock but instead shall be converted into the right to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to the California Law. TMAI shall give Avant! prompt notice of
any demand received by TMAI to require TMAI to pay the value of any Dissenting
Shares of TMAI Common Stock, and Avant! shall have the right to participate in
all negotiations and proceedings with respect to such demand. TMAI agrees that,
except with the prior written consent of Avant!, it will not make any payment
with respect to, or settle or offer to settle, any such purchase demand. Each
holder of Dissenting Shares (a "Dissenting Shareholder") who, pursuant to the
provisions of California Law, becomes entitled to payment of the value of shares
of TMAI Common Stock shall receive payment therefor (but only after the value
therefor shall have been agreed upon or finally determined pursuant to such
provisions). In the event of a legal obligation, after the Effective Time, to
deliver shares of Avant! Common Stock to any holder of shares of TMAI Common
Stock who shall have failed to make an effective payment demand or shall have
lost his or her status as a Dissenting Shareholder, Avant! shall issue and
deliver, upon surrender by such Dissenting Shareholder of his or her certificate
or certificates representing shares of TMAI Common Stock, the shares of Avant!
Common Stock to which such Dissenting Shareholder is then entitled under Section
1.6(a) and cash in lieu of fractional shares pursuant to Section 1.6(g).

1.8 SURRENDER OF CERTIFICATES.

(a) EXCHANGE AGENT. Harris Trust Company of California shall act as
exchange agent (the "Exchange Agent") in the Merger.

(b) AVANT! TO PROVIDE COMMON STOCK AND CASH. As soon as practicable after
the Effective Time, but no later than two (2) business days thereafter, Avant!
shall make available to the Exchange Agent for exchange in accordance with this
Article I, through such reasonable procedures as Avant! may adopt, (i) the
shares of Avant! Common Stock issuable pursuant to Section 1.6(a) in exchange
for shares of TMAI Common Stock outstanding immediately prior to the Effective
Time and (ii) cash in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 1.6(g).

(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
but no later than five (5) business days thereafter, the Surviving Corporation
shall cause to be mailed to each holder of record of

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a certificate or certificates (the "Certificates") which immediately prior to
the Effective Time represented outstanding shares of TMAI Common Stock, whose
shares were converted into the right to receive shares of Avant! Common Stock
(and cash in lieu of fractional shares) pursuant to Section 1.6, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as Avant! may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Avant! Common Stock (and cash in lieu of fractional
shares). Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Avant!, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of record of such Certificate shall be
entitled to receive in exchange therefor a certificate representing the number
of whole shares of Avant! Common Stock and payment in lieu of fractional shares
which such holder of record has the right to receive pursuant to Section 1.6,
and the Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of TMAI Common Stock will be deemed from and after the
Effective Time, for all corporate purposes, other than as provided in subsection
(d) below, to evidence only the ownership of the number of full shares of Avant!
Common Stock into which such shares of TMAI Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6.

(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions with respect to Avant! Common Stock with a record date after the
Effective Time will be paid to the holder of record of any unsurrendered
Certificate with respect to the shares of Avant! Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Avant! Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable (but for the provisions of this Section 1.8(d)) with respect
to such shares of Avant! Common Stock.

(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of Avant! Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Avant! or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Avant! Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Avant! or any
agent designated by it that such tax has been paid or is not payable.

(e) NO LIABILITY. Notwithstanding anything to the contrary in this Section
1.8, none of the Exchange Agent, the Surviving Corporation or any party hereto
shall be liable to any person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.

1.9 NO FURTHER OWNERSHIP RIGHTS IN TMAI COMMON STOCK. All shares of Avant!
Common Stock issued upon the surrender for exchange of shares of TMAI Common
Stock in accordance with the terms hereof (including any cash paid in lieu of
fractional shares) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of TMAI Common Stock, and following the
Effective Time there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of TMAI Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.

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1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Avant! Common Stock
(and cash in lieu of fractional shares) as may be required pursuant to Section
1.6; provided, however, that the Exchange Agent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Avant!, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.

1.11 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties hereto
that the Merger shall (i) constitute a reorganization within the meaning of
Section 368 of the Code and (ii) qualify for accounting treatment as a pooling
of interests. No party shall take any action which, to such party's knowledge,
would cause the Merger to fail to qualify as a reorganization within the meaning
of Section 368 of the Code or to fail to qualify for accounting treatment as a
pooling of interest.

1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of TMAI and Merger Sub, the officers and directors of TMAI and
Merger Sub are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action, so long
as such action is not inconsistent with this Agreement.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TMAI

In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken
as a whole; PROVIDED, HOWEVER, that (i) any adverse change, event or effect that
is demonstrated to be primarily caused by conditions affecting the United States
economy generally or the economy of any nation or region in which such entity or
any of its subsidiaries conducts business that is material to the business of
such entity and its subsidiaries, taken as a whole, shall not be taken into
account in determining whether there has been or would be a "Material Adverse
Effect" on or with respect to such entity, (ii) any adverse change, event or
effect that is demonstrated to be primarily caused by conditions generally
affecting the integrated circuit design automation software industry shall not
be taken into account in determining whether there has been or would be a
"Material Adverse Effect" on or with respect to such entity, (iii) any adverse
change, event or effect that is demonstrated to be primarily caused by the
announcement or pendency of the Merger shall not be taken into account in
determining whether there has been or would be a "Material Adverse Effect" on or
with respect to such entity, and (iv) any adverse change in the stock price of
an entity as quoted on the Nasdaq National Market shall not be taken into
account in determining whether there has been or would be a "Material Adverse
Effect" on or with respect to such entity.

In this Agreement, any reference to a party's "knowledge" means such party's
actual knowledge after due and diligent inquiry of officers, directors and other
employees of such party and its subsidiaries reasonably believed to have
knowledge of such matters.

Except as disclosed in a document of even date herewith and delivered by
TMAI to Avant! prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this

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Agreement (the "TMAI Disclosure Schedule"), TMAI represents and warrants to
Avant! and Merger Sub as follows:

2.1 ORGANIZATION, STANDING AND POWER. Each of TMAI and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of TMAI and its subsidiaries has
the corporate power to own its properties and to carry on its business as now
being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on TMAI.
TMAI has delivered a true and correct copy of the Articles of Incorporation
(referred to herein as TMAI's "Articles of Incorporation") and Bylaws or other
charter documents, as applicable, of TMAI and each of its subsidiaries, each as
amended to date, to Avant!. Neither TMAI nor any of its subsidiaries is in
violation of any of the provisions of its Articles of Incorporation or Bylaws or
equivalent organizational documents. TMAI is the owner of all outstanding shares
of capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock of each such subsidiary are owned by TMAI free and clear
of all liens, charges, claims or encumbrances or rights of others. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating TMAI or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire any such securities.
Except as disclosed in the TMAI SEC Documents (as defined in Section 2.4), TMAI
does not directly or indirectly own any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.

2.2 CAPITAL STRUCTURE. The authorized capital stock of TMAI consists of
25,000,000 shares of Common Stock, no par value, and 4,000,000 shares of
Preferred Stock, no par value, of which there were issued and outstanding as of
the close of business on August 31, 1997, 8,089,027 shares of TMAI Common Stock
and no shares of Preferred Stock. There are no other outstanding shares of
capital stock or voting securities of TMAI and no outstanding commitments to
issue any shares of capital stock or voting securities of TMAI after August 31,
1997 other than pursuant to (i) the exercise of options under the TMAI Stock
Plans and the 1996 Directors Stock Option Plan of TMAI (the "Directors Plan") or
(ii) the exercise of subscription rights outstanding as of such date under the
TMAI ESPP. All outstanding shares of TMAI Common Stock are duly authorized,
validly issued, fully paid and non-assessable and are free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the holders thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the Articles of Incorporation or Bylaws of TMAI or
any agreement to which TMAI is a party or by which it is bound. As of the close
of business on August 31, 1997, TMAI had reserved (i) 1,500,000 shares of TMAI
Common Stock for issuance to employees pursuant to the 1996 TMAI Equity
Incentive Plan, of which no shares have been issued pursuant to option exercises
and 800,200 shares are subject to outstanding, unexercised options, (ii) 200,000
shares of TMAI Common Stock for issuance to employees pursuant to the TMAI ESPP,
of which 56,799 shares have been issued and no shares remain purchasable under
outstanding, unexercised subscription rights and no more than 143,201 shares are
subject to outstanding subscriptions, (iii) 229,925 shares of TMAI Common Stock
for issuance to employees pursuant to the TMAI 1989 Stock Option Plan, of which
no shares have been issued pursuant to option exercises and no shares are
subject to outstanding, unexercised options, (iv) 525,525 shares of TMAI Common
Stock for issuance to employees pursuant to the TMAI 1995 Stock Option Plan, of
which no shares have been issued pursuant to option exercises and no shares are
subject to outstanding, unexercised options, and (v) 150,000 shares of TMAI
Common Stock for issuance to board members pursuant to the Directors Plan, of
which no shares have been issued pursuant to option exercises and 15, 000 shares
are subject to outstanding, unexercised options. No Stock Bonuses, Restricted
Stock Awards or other stock-based awards (as all of such terms are defined in
the 1996 TMAI Equity Incentive Plan) have been issued prior to the date hereof
under the 1996 TMAI Equity Incentive Plan. Since August 31, 1997, TMAI has not
(i) issued or granted additional options

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under any of the TMAI Stock Plans or the Directors Plan or (ii) accepted any
additional Common Stock subscriptions or otherwise granted any additional
purchase rights under the TMAI ESPP, except as set forth in the TMAI Disclosure
Schedule. Except for the rights created pursuant to this Agreement and as
disclosed in this Section 2.2, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which TMAI is a party or
by which it is bound obligating TMAI to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of TMAI or obligating TMAI to grant, extend, accelerate
the vesting of, change the price of, or otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. There are no contracts,
commitments or agreements relating to voting, registration, purchase or sale of
TMAI's capital stock (i) between or among TMAI and any of its shareholders or
(ii) to TMAI's knowledge, between or among any of TMAI's shareholders other than
the Shareholder Agreements entered into pursuant hereto. The terms of the TMAI
Stock Plans permit the assumption or substitution of options to purchase Avant!
Common Stock as provided in this Agreement, without the consent or approval of
the holders of such securities, the TMAI shareholders, or otherwise and without
any acceleration of the exercise schedule or vesting provisions in effect for
those options. No benefits under any of such TMAI Stock Plans will accelerate in
connection with the Merger. No other outstanding options, whether under the TMAI
Stock Plans or otherwise, will be accelerated in connection with the Merger,
except options outstanding under the Directors Plan. The most recent two-year
offering period (as contemplated by the TMAI ESPP) commenced under the TMAI ESPP
on August 1, 1997, and except for the subscriptions to acquire no more than
143,201 shares of TMAI Common Stock under the TMAI ESPP, there are no other
subscriptions or purchase rights or options outstanding under the TMAI ESPP.
True and complete copies of all agreements and instruments relating to or issued
under the TMAI Stock Plans, the Directors Plan and the TMAI ESPP have been made
available to Avant! and such agreements and instruments have not been amended,
modified or supplemented, and there are no agreements to amend, modify or
supplement such agreements or instruments in any case from the form made
available to Avant!. TMAI will update the TMAI Disclosure Schedule to reflect
outstanding shares and options as of the Effective Time.

2.3 AUTHORITY. TMAI has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of TMAI, subject only to the approval of the Merger
by TMAI's shareholders as contemplated by Section 6.1(a). This Agreement has
been duly executed and delivered by TMAI and, subject to receipt of such
shareholder approval, constitutes the valid and binding obligation of TMAI
enforceable against TMAI in accordance with its terms. The Board of Directors of
TMAI has unanimously approved this Agreement and the transactions contemplated
hereby. The execution and delivery of this Agreement by TMAI does not, and,
subject to receipt of shareholder approval and the consents contemplated by
Section 2.3 of the TMAI Disclosure Schedule, the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit under (i) any provision of the
Articles of Incorporation or Bylaws of TMAI or any of its subsidiaries, or (ii)
any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to TMAI or any of its
subsidiaries or any of their properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of (ii) would not have had and would not reasonably be
expected to have a Material Adverse Effect on TMAI. Except as set forth in the
TMAI Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to TMAI or any of its subsidiaries in
connection with the execution and delivery of this Agreement, or the
consummation of the transactions contemplated hereby and thereby, except for (i)
the filing of the Agreement of Merger as provided in Section 1.2; (ii) the
filing with the

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Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. (the "NASD") of the Proxy Statement (as defined in
Section 2.17) relating to the TMAI Shareholders' Meeting (as defined in Section
2.17) and any clearance thereof by the SEC (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable state securities laws and the securities laws of any
foreign country; (iv) filings required to be made by each of TMAI and Avant!
under the HSR Act (as defined in Section 5.21 below); and (v) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on TMAI and would not
prevent, or materially alter or delay any of the transactions contemplated by
this Agreement.

2.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. TMAI has furnished to Avant! a
true and complete copy of each statement, report, registration statement
(together with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act of 1933, as amended (the "Securities Act"), if any), definitive
proxy statement and other filings filed with the SEC by TMAI on or after
September 20, 1996, and, prior to the Effective Time, TMAI will have furnished
Avant! with true and complete copies of any additional documents filed with the
SEC by TMAI prior to the Effective Time (collectively, the "TMAI SEC
Documents"). In addition, TMAI has made available to Avant! all exhibits to the
TMAI SEC Documents filed prior to the date hereof, and will promptly make
available to Avant! all exhibits to any additional TMAI SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the TMAI SEC Documents have been so filed. As of their respective filing dates,
or, with respect to registration statements as of their effective dates, the
TMAI SEC Documents complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act, and none of the TMAI SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected, modified or superseded by a subsequently filed TMAI SEC Document. The
financial statements of TMAI, including the notes thereto, included in the TMAI
SEC Documents (the "TMAI Financial Statements"), complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their respective
dates, and have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other (except as may be indicated in the notes thereto).
The TMAI Financial Statements fairly present in all material respects the
consolidated financial condition and operating results of TMAI and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no change in TMAI accounting policies except as described in the
notes to the TMAI Financial Statements.

2.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in the TMAI Disclosure
Schedule or in the TMAI SEC Documents, since June 30, 1997 (the "TMAI Balance
Sheet Date"), TMAI has conducted its business in the ordinary course consistent
with past practice and there has not occurred: (i) any change, event or
condition (whether or not covered by insurance) that has resulted in a Material
Adverse Effect on TMAI; (ii) any acquisition, sale or transfer of any material
asset of TMAI or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by TMAI or any revaluation by TMAI of any of its or any of
its subsidiaries' assets; (iv) any declaration, setting aside, or payment of a
dividend or other distribution with respect to the shares of TMAI, or any direct
or indirect redemption, purchase or other acquisition by TMAI of any of its
shares of capital stock except for the repurchase at cost of unvested shares
held by TMAI employees on the termination of employment; (v) any material
contract entered into by TMAI or any of its subsidiaries, other than in the
ordinary course of business and as provided to Avant!, or any material amendment
or termination of, or default under, any material contract to which TMAI or any
of its subsidiaries is a party or by which it is bound; (vi) any action by TMAI
or, to TMAI's knowledge, any affiliate of TMAI which might reasonably be
expected to preclude

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the ability of Avant! to account for the business combination to be effected by
the Merger as a "pooling of interests" under generally accepted accounting
principles; (vii) any increase in the compensation payable or to become payable
by TMAI to any of its officers, directors, consultants or employees (except for
salary or rate increases granted to such persons in the ordinary course of
business and consistent with prior practice); (viii) any (A) grant of any
severance or termination pay to any director, officer or employee of TMAI or any
of its subsidiaries except in the ordinary course of business and consistent
with past practice, (B) entering into of any employment, deferred compensation
or other similar agreement (or any amendment to any such existing agreement)
with any director, officer or employee of TMAI or any such subsidiary except in
the ordinary course of business and consistent with past practice, (C) any
increase in benefits payable under any existing severance or termination pay
policies or employment agreements, or (D) any increase in compensation, bonus or
other benefits payable to directors, officers or employees of TMAI or any such
subsidiary, in each case other than in the ordinary course of business
consistent with past practice; or (ix) any negotiation or agreement by TMAI or
any of its subsidiaries to do any of the things described in the preceding
clauses (i) through (viii) (other than negotiations with Avant! and its
representatives regarding the transactions contemplated by this Agreement). Any
agreement or obligation to provide severance or termination payments and any
employment, deferred compensation or other similar agreements and the material
terms thereof are set forth on Section 2.5 of the TMAI Disclosure Schedule.

2.6 ABSENCE OF UNDISCLOSED LIABILITIES. TMAI has no material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the Balance Sheet
included in TMAI's Quarterly Report on Form 10-Q for the period ended June 30,
1997 (the "TMAI Balance Sheet"); (ii) those incurred in the ordinary course of
business and not required to be set forth in the TMAI Balance Sheet under
generally accepted accounting principles; (iii) those incurred in the ordinary
course of business since the TMAI Balance Sheet Date and consistent with past
practice; and (iv) those incurred in connection with the execution and delivery
of this Agreement and the transactions contemplated hereby.

2.7 PERMITS AND LICENSES. TMAI is now the holder of all licenses,
franchises, ordinances, authorizations, permits, and certificates, domestic or
foreign (collectively, the "TMAI Licenses"), necessary to enable it to continue
to conduct its business in all material respects, as presently conducted, except
where the failure to have such TMAI Licenses, individually or in the aggregate,
would not have a Material Adverse Effect on TMAI. All of the TMAI Licenses are
in full force and effect. TMAI has no reason to believe that any Federal, state,
or local government or agency having jurisdiction will revoke, cancel, rescind,
refuse to renew in the ordinary course, or modify any of the TMAI Licenses.
There is not now pending, or, to the knowledge of TMAI, threatened any
investigation before any such Federal, state, or local governments or agencies
which, either individually or in the aggregate, would have a Material Adverse
Effect on TMAI. TMAI has conducted its business so as to comply with all
applicable laws, regulations, ordinances, and codes, domestic and foreign,
including, without limitation, laws, regulations, ordinances, and codes relating
to the protection of the environment, the failure to comply with which could
reasonably be expected to have a Material Adverse Effect on TMAI.

2.8 PROPERTIES AND CONTRACTS.

(a) TMAI owns, or is licensed to use, or leases, all property and assets,
real and personal, tangible and intangible, used in or necessary for the conduct
of its business as currently conducted, except in those cases where the failure
so to own, license or lease would not have a Material Adverse Effect on TMAI and
except as this subsection (a) may relate to TMAI Intellectual Property which is
addressed exclusively by Section 2.10 below.

(b) To the knowledge of TMAI, (i) all of the material contracts of TMAI are
presently valid and existing and in full force and effect, and (ii) there is no
violation or default or claim of violation or default by any party thereto and
no condition or event has occurred which with notice or lapse of time or both

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would constitute a violation or default thereunder, except for any such failure
or any such violation, default, or claim, which would not have a Material
Adverse Effect on TMAI.

2.9 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of TMAI, threatened
against TMAI or any of its subsidiaries or any of their respective properties or
any of their respective officers or directors (in their capacities as such)
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on TMAI or that arise out of or in any way relate to
this Agreement, the Merger or any of the transactions contemplated hereby. From
the date of this Agreement until the Effective Time, TMAI shall promptly advise
Avant! of any such action, suit, proceeding, claim, arbitration or investigation
that is commenced, or, to the knowledge of TMAI, threatened against TMAI or any
of its subsidiaries. There is no judgment, decree or order against TMAI or any
of its subsidiaries, or, to the knowledge of TMAI, any of their respective
directors or officers (in their capacities as such), that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this Agreement
or that could reasonably be expected to have a Material Adverse Effect on TMAI.

2.10 INTELLECTUAL PROPERTY.

(a) TMAI and/or its subsidiaries own, or otherwise possess legally
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in source code and/or object code
form), and tangible or intangible proprietary information or material ("TMAI
Intellectual Property") that are used in the business of TMAI and its
subsidiaries as currently conducted (including with respect to products
currently under development), except to the extent that the failure to have such
rights has not had and would not reasonably be expected to have a Material
Adverse Effect on TMAI.

(b) Section 2.10 of the TMAI Disclosure Schedule lists (i) all patents and
patent applications and all material registered and unregistered trademarks,
trade names and service marks, registered copyrights, and maskworks that are
included in the TMAI Intellectual Property, in each case where such applications
have been filed by or registered in the name of TMAI or assigned to TMAI,
including the jurisdictions in which each such TMAI Intellectual Property right
has been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all material licenses, sublicenses and other
agreements as to which TMAI is a party and pursuant to which any person is
authorized to use any TMAI Intellectual Property other than end user licenses
entered into with customers of TMAI in the ordinary course of business, and
(iii) all licenses, sublicenses and other agreements as to which TMAI is a party
and pursuant to which TMAI is authorized to use any third party patents,
trademarks or copyrights, including software ("TMAI Third Party Intellectual
Property Rights") which are incorporated in, are, or form a part of any TMAI
product that is material to its business or any TMAI product under development
that is expected to be material to its business, other than end user licenses of
commercially available products of third parties entered into in the ordinary
course of business.

(c) To the knowledge of TMAI, there is no material unauthorized use,
disclosure, infringement or misappropriation of any TMAI Intellectual Property
rights of TMAI or any of its subsidiaries, any trade secret material to TMAI or
any of its subsidiaries, or any TMAI Intellectual Property right of any third
party to the extent licensed by or through TMAI or any of its subsidiaries, by
any third party, including any employee or former employee of TMAI or any of its
subsidiaries. Neither TMAI nor any of its subsidiaries has entered into any
agreement to indemnify any other person against any charge of infringement by
any TMAI Intellectual Property, other than indemnification provisions contained
in end user licenses, distribution agreements or sales representative agreements
entered into with customers of TMAI arising in the ordinary course of business.

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(d) Neither TMAI nor any of its subsidiaries is, nor will they be as a
result of the execution and delivery of this Agreement or the performance of
their respective obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the TMAI Intellectual Property or TMAI
Third Party Intellectual Property Rights, which breach would have a Material
Adverse Effect on TMAI.

(e) To TMAI's knowledge, all patents, registered trademarks, service marks
and copyrights held by TMAI or any of its subsidiaries are valid and subsisting.
TMAI (i) has not been sued in any suit, action or proceeding which involves a
claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party;
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service mark, copyright, trade
secret or other proprietary right of any third party, which such infringement
would have a Material Adverse Effect on TMAI; and (iii) has not brought any
action, suit or proceeding for infringement of TMAI Intellectual Property or
breach of any license or agreement involving TMAI Intellectual Property against
any third party.

(f) TMAI has secured from all consultants and employees who contributed to
the creation or development of TMAI Intellectual Property valid written
assignments of the rights to such contributions that TMAI does not already own
by operation of law, the absence of which would have a Material Adverse Effect
on TMAI.

(g) TMAI has taken reasonable and practical steps to protect and preserve
the confidentiality of all TMAI Intellectual Property not otherwise protected by
patents, patent applications or copyright ("TMAI Confidential Information"). It
is TMAI's policy that all use, disclosure or appropriation of TMAI Confidential
Information owned by TMAI by or to a third party be pursuant to the terms of a
written agreement between TMAI and such third party. All use, disclosure or
appropriation of TMAI Confidential Information not owned by TMAI has been
pursuant to the terms of a written agreement between TMAI and the owner of such
TMAI Confidential Information, or is otherwise lawful.

2.11 ENVIRONMENTAL MATTERS. To the knowledge of TMAI, each of TMAI and its
subsidiaries is and at all times has been in compliance with all foreign,
federal, state and local laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or waste, except to the extent noncompliance with such laws has not had and
could not reasonably be expected to have a Material Adverse Effect on TMAI.

2.12 TAXES. TMAI and each of its subsidiaries, and each member of any
consolidated, combined or unitary group for Tax purposes of which TMAI or any of
its subsidiaries is or has been a member have timely filed all Tax Returns
required to be filed by them (other than those that are not, individually or in
the aggregate, material) and have paid all Taxes shown thereon to be due. The
TMAI Financial Statements (i) fully accrue all actual and contingent liabilities
for Taxes with respect to all periods through June 30, 1997 and TMAI and each of
its subsidiaries have not and will not incur any Tax liability in excess of the
amount reflected on the TMAI Financial Statements with respect to such periods,
and (ii) properly accrue in accordance with generally accepted accounting
principles all liabilities for Taxes payable after June 30, 1997 with respect to
all transactions and events occurring on or prior to such date. No material Tax
liability since June 30, 1997 has been incurred by TMAI or its subsidiaries
other than in the ordinary course of business and adequate provision has been
made in the TMAI Financial Statements for all Taxes since that date in
accordance with generally accepted accounting principles on at least a quarterly
basis. TMAI and each of its subsidiaries have withheld and paid or will timely
pay to the applicable financial institution or Tax Authority all amounts
required to be withheld. No notice of deficiency or similar document of any Tax
Authority has been received by either TMAI or any of its subsidiaries, and there
are no liabilities for Taxes with respect to the issues that have been raised
(and are currently pending) by any Tax Authority that could, if determined
adversely to TMAI and its subsidiaries, materially and adversely affect the
liability of TMAI and its subsidiaries for Taxes. Except as disclosed in the
TMAI Disclosure Schedule, there (i) is no material claim for Taxes that is a
lien against the property of TMAI or any of its subsidiaries other than

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liens for Taxes not yet due and payable, (ii) has been no notification received
by TMAI of any audit of any Tax Return of TMAI or any of its subsidiaries being
conducted, pending or threatened by a Tax Authority, and (iii) is no extension
or waiver of the statute of limitations on the assessment of any Taxes granted
by TMAI or any of its subsidiaries that is currently in effect, and (iv) is no
agreement, contract or arrangement to which TMAI or any of its subsidiaries is a
party that may result in the payment of any material amount that would not be
deductible by reason of Sections 280G or 404 of the Code. TMAI will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. Neither
TMAI nor any of its subsidiaries is a party to any Tax sharing or Tax allocation
agreement nor does TMAI or any of its subsidiaries owe any amount under any such
agreement. TMAI and each of its subsidiaries are in material compliance with all
terms and conditions of any Tax exemptions or other Tax sharing agreement or
order of a foreign government applicable to them and the consummation of the
Merger shall not have any adverse effect on the continued validity and
effectiveness of any such Tax exemptions or other Tax sharing agreement or
order. For purposes of this Agreement, the following terms have the following
meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means (i)
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person. As used herein, "Tax Return" shall mean any return, statement, report or
form including, without limitation, estimated Tax returns and reports,
withholding Tax returns and reports and information reports and returns required
to be filed with respect to Taxes.

2.13 EMPLOYEE BENEFIT PLANS.

(a) Section 2.13 of the TMAI Disclosure Schedule lists, with respect to
TMAI, any subsidiary of TMAI and any trade or business (whether or not
incorporated) which is treated as a single employer with TMAI (an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the Code,
(i) all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), (ii) each loan to
a non-officer employee in excess of $10,000, loans to officers and directors and
any stock option, stock purchase, phantom stock, stock appreciation right,
supplemental retirement, severance, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident insurance plans,
programs or arrangements, (iii) all bonus, pension, profit sharing, savings,
deferred compensation or incentive plans, programs or arrangements, (iv) other
fringe or employee benefit plans, programs or arrangements that apply to senior
management of TMAI and that do not generally apply to all employees, and (v) any
current or former employment or executive compensation or severance agreements,
written or otherwise, as to which unsatisfied obligations of TMAI of greater
than $10,000 remain for the benefit of, or relating to, any present or former
employee, consultant or director of TMAI (together, the "TMAI Employee Plans").

(b) TMAI has furnished to Avant! a copy of each of the TMAI Employee Plans
and related plan documents (including trust documents, insurance policies or
contracts, employee booklets and the most recent summary plan descriptions) and
has, with respect to each TMAI Employee Plan which is subject to ERISA reporting
requirements, provided copies of the most recent Form 5500 report. Any TMAI
Employee Plan intended to be qualified under Section 401(a) of the Code has
either obtained from the

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Internal Revenue Service a favorable determination as to its qualified status
under the Code, including the provisions of the Tax Reform Act of 1986, or has
applied to the Internal Revenue Service for such a determination prior to the
expiration of the requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for such determination
and to make any amendments necessary to obtain a favorable determination. TMAI
has also furnished Avant! with the most recent Internal Revenue Service
determination or opinion letter issued with respect to each such TMAI Employee
Plan, and nothing has occurred since the issuance of each such letter which
could reasonably be expected to cause the loss of the tax-qualified status of
any TMAI Employee Plan subject to Code Section 401(a).

(c) (i) None of the TMAI Employee Plans promises or provides retiree medical
or other retiree welfare benefits to any person; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any TMAI Employee Plan, which could
reasonably be expected to have, in the aggregate, a Material Adverse Effect on
TMAI; (iii) each TMAI Employee Plan has been administered in accordance with its
terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), except as would
not have, in the aggregate, a Material Adverse Effect on TMAI or as otherwise
disclosed in the TMAI Disclosure Schedule; (iv) neither TMAI nor any subsidiary
or ERISA Affiliate is subject to any liability or penalty under Sections 4976
through 4980 of the Code or Title I of ERISA with respect to any of the TMAI
Employee Plans; (v) all material contributions required to be made by TMAI or
any subsidiary or ERISA Affiliate to any TMAI Employee Plan have been made on or
before their due dates and a reasonable amount has been accrued for such
required contributions to each TMAI Employee Plan for the current plan years;
and (vi) no TMAI Employee Plan is covered by, and neither TMAI nor any
subsidiary or ERISA Affiliate has incurred or expects to incur any material
liability under, Title IV of ERISA or Section 412 of the Code. With respect to
each TMAI Employee Plan subject to ERISA as either an employee pension plan
within the meaning of Section 3(2) of ERISA or an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, TMAI has prepared in good faith and
timely filed all requisite governmental reports (which were true and correct as
of the date filed) and has properly and timely filed and distributed or posted
all notices and reports to employees required to be filed, distributed or posted
with respect to each such TMAI Employee Plan. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
TMAI is threatened, against or with respect to any such TMAI Employee Plan,
including any audit or inquiry by the IRS or United States Department of Labor.
Neither TMAI nor any TMAI subsidiary or other ERISA Affiliate is a party to, or
has made any contribution to or otherwise incurred any obligation under, any
"multiemployer plan" as defined in Section 3(37) of ERISA.

(d) With respect to each TMAI Employee Plan, TMAI and each of its United
States subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), and the proposed regulations thereunder,
and (ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder, except, in each case, to the extent that such failure to
comply would not, in the aggregate, have a Material Adverse Effect on TMAI.

(e) Except as otherwise disclosed in the TMAI Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or other service provider of TMAI, any
TMAI subsidiary or any other ERISA Affiliate to severance benefits or any other
payment (including, without limitation, unemployment compensation, golden
parachute or bonus), except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting of any such benefits, or increase the
amount of compensation due any such employee or service provider.

(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by TMAI, any TMAI subsidiary or other ERISA Affiliate
relating to, or change in participation or coverage under, any TMAI Employee
Plan which would materially increase the expense of maintaining

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such Plan above the level of expense incurred with respect to that Plan for the
most recent fiscal year included in TMAI's financial statements.

2.14 CERTAIN AGREEMENTS AFFECTED BY THE MERGER. Neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
hereby will (i) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of TMAI or any of its subsidiaries,
(ii) materially increase any benefits otherwise payable by TMAI or (iii) result
in the acceleration of the time of payment or vesting of any such benefits.

2.15 BROKERS' AND FINDERS' FEES. TMAI has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby, other than fees and
expenses payable to Wessels, Arnold & Henderson, L.L.C. and Cowen and Company as
set forth on Section 2.15 of the TMAI Disclosure Schedule.

2.16 OPINION OF TMAI FINANCIAL ADVISOR. TMAI has received the opinion of
Wessels, Arnold & Henderson, L.L.C. and Cowen and Company, to the effect that,
as of the date hereof, the consideration to be received by TMAI's shareholders
in the Merger is fair, from a financial point of view, to the shareholders of
TMAI.

2.17 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The written
information supplied by TMAI expressly for the purpose of inclusion in the
registration statement on Form S-4 (or such other or successor form as shall be
appropriate) pursuant to which the issuance of the shares of Avant! Common Stock
to be issued in the Merger will be registered with the SEC (the "Registration
Statement") shall not at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The written information supplied by TMAI
expressly for the purpose of inclusion in the combined proxy
statement/prospectus to be sent to the shareholders of TMAI in connection with
the meetings of TMAI's shareholders (the "TMAI Shareholders Meeting") and
Avant!'s stockholders (the "Avant! Stockholders Meeting") to be held in
connection with the Merger (such proxy statement/ prospectus as amended or
supplemented is referred to herein as the "Proxy Statement") shall not, on the
date the Proxy Statement is first mailed to TMAI's shareholders, at the time of
the TMAI Shareholders Meeting and at the Effective Time, contain any material
statement which, at such time, is false or misleading or omits to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not false or misleading or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the TMAI's
Shareholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event or information should be discovered by TMAI
which should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, TMAI shall promptly inform Avant!.
Notwithstanding the foregoing, TMAI makes no representation, warranty or
covenant with respect to any information supplied by Avant! or Merger Sub that
is contained in any of the foregoing documents.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AVANT! AND MERGER SUB

Except as disclosed in a document of even date herewith and delivered by
Avant! to TMAI prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this

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Agreement (the "Avant! Disclosure Schedule"), Avant! and Merger Sub jointly and
severally represent and warrant to TMAI as follows:

3.1 ORGANIZATION, STANDING AND POWER. Each of Avant! and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Each of Avant! and Merger Sub has the
corporate power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the failure to be so
qualified and in good standing would have a Material Adverse Effect on Avant!.
Avant! has delivered a true and correct copy of the Certificate of Incorporation
and Bylaws or other charter documents, as applicable, of Avant! and each of its
subsidiaries, each as amended to date, to TMAI. Neither Avant! nor Merger Sub is
in violation of any of the provisions of its Certificate or Articles of
Incorporation or Bylaws or equivalent organizational documents. Avant! is the
owner of all outstanding shares of capital stock of Merger Sub and all such
shares are duly authorized, validly issued, fully paid and nonassessable. All of
the outstanding shares of capital stock of Merger Sub are owned by Avant! free
and clear of all liens, charges, claims or encumbrances or rights of others.
Merger Sub was formed on September 5, 1997 for the purpose of consummating this
Merger and has no material assets or liabilities and will conduct no business
except as is necessary for such purpose.

3.2 CAPITAL STRUCTURE. The authorized capital stock of Avant! consists of
75,000,000 shares of Common Stock, $.0001 par value, and 5,000,000 shares of
Preferred Stock, $.0001 par value, of which there were issued and outstanding as
of the close of business on August 31, 1997, 25,926,728 shares of Avant! Common
Stock and no shares of Preferred Stock. There are no other outstanding shares of
capital stock or voting securities of Avant! and no outstanding commitments to
issue any shares of capital stock or voting securities of Avant! after August
31, 1997, other than shares of Avant! Common Stock issued after August 31, 1997
upon the exercise of options under the Avant! 1995 Stock Option/Stock Issuance
Plan, the Integrated Silicon Systems, Inc. stock option plans, the
Meta-Software, Inc. stock option plans, the NexSyn, Inc. stock option plans, the
FrontLine Design Automation, Inc. stock option plans and the Anagram, Inc. stock
option plans (the "Avant! Stock Option Plans"). The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, no par value, all of which
are issued and outstanding and are held by Avant!. All outstanding shares of
Avant! and Merger Sub have been duly authorized, validly issued, fully paid and
are nonassessable and free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof and are not subject
to preemptive rights or rights of first refusal created by statute, the
Certificate of Incorporation or Bylaws of Avant! or any agreement to which
Avant! is a party or by which it is bound. As of August 31, 1997, Avant! had
reserved 4,537,209 shares of Avant! Common Stock for issuance to employees,
directors and independent contractors pursuant to the Avant! Stock Option Plans,
of which approximately 21,861 shares have been issued pursuant to option
exercises, and approximately 1,697,089 shares are subject to outstanding,
unexercised options. Other than this Agreement and the Agreement and Plan of
Reorganization dated as of July 31, 1997 and as amended on August 27, 1997 among
Avant!, GB Acquisition Corporation, Compass Design Automation, Inc., and VLSI
Technology, Inc. (the "Compass Agreement"), there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Avant! or Merger Sub is a party or by which either of them is bound obligating
Avant! or Merger Sub to issue, deliver, sell, repurchase or redeem, or cause to
be issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Avant! or Merger Sub or obligating Avant! or Merger Sub to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. The shares of Avant! Common Stock to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid, and non-assessable, will
not be subject to any preemptive or other statutory right of stockholder, will
be issued in compliance with applicable U.S. Federal and State securities laws
and will be free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof. Except for the
Registration Rights Agreement dated November 27, 1996, by and among Avant! and
Badruddin Agarwala, on behalf of the shareholders and the holders of warrants of
FrontLine Design Automation, Inc., there are no contracts, commitments or
agreements relating to voting, registration,

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purchase or sale of Avant!'s capital stock (i) between or among Avant! and any
of its stockholders or (ii) to the best of Avant!'s knowledge, between or among
any of Avant!'s stockholders.

3.3 AUTHORITY. Each of Avant! and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of Avant! and
Merger Sub, subject only to the approval of the issuance of shares of Avant!
Common Stock in the Merger by the stockholders of Avant!. This Agreement has
been duly executed and delivered by each of Avant! and Merger Sub and
constitutes the valid and binding obligations of each of Avant! and Merger Sub,
enforceable against each in accordance with its terms. The Boards of Directors
of Avant! and Merger Sub have unanimously approved this Agreement and the
transactions contemplated hereby. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under (i) any provision of the Certificate of Incorporation or Bylaws of Avant!
or any of its subsidiaries, or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Avant! or any of its subsidiaries or their properties or assets,
except where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of (ii) would not have had
and would not reasonably be expected to have a Material Adverse Effect on
Avant!. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Avant! or any of its subsidiaries in connection with the execution
and delivery of this Agreement by Avant! and Merger Sub or the consummation by
each of Avant! and Merger Sub of the transactions contemplated hereby, except
for (i) the filing of the Agreement of Merger as provided in Section 1.2, (ii)
the filing with the SEC and NASD of the Registration Statement, (iii) the filing
of a Form 8-K with the SEC and NASD within fifteen (15) days after the Closing
Date, (iv) any filings as may be required under applicable state securities laws
and the securities laws of any foreign country, (v) the filing with the Nasdaq
National Market of a Notification Form for Listing of Additional Shares, in each
case with respect to the shares of Avant! Common Stock issuable upon conversion
of the TMAI Common Stock in the Merger and upon exercise of the options,
subscriptions or other awards, as the case may be, under the TMAI Stock Plans
and the TMAI ESPP to be assumed by Avant!, (vi) filings required to be made by
each of Avant! and TMAI under the HSR Act (as defined in Section 5.21 below);
(vii) the filing of a registration statement on Form S-8 covering the Avant!
Common Stock issuable pursuant to outstanding options under the TMAI Stock Plans
and TMAI ESPP; and (viii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Avant! or would not prevent or materially alter or
delay any of the transactions contemplated by this Agreement.

3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. Avant! has furnished to TMAI a
true and complete copy of each statement, report, registration statement (with
the prospectus in the form filed pursuant to Rule 424(b) of the Securities Act),
definitive proxy statement, and other filings filed with the SEC by Avant! since
June 6, 1995, and, prior to the Effective Time, Avant! will have furnished TMAI
with true and complete copies of any additional documents filed with the SEC by
Avant! prior to the Effective Time (collectively, the "Avant! SEC Documents").
In addition, Avant! has made available to TMAI all exhibits to the Avant! SEC
Documents filed prior to the date hereof, and will promptly make available to
TMAI all exhibits to any additional Avant! SEC Documents filed prior to the
Effective Time. All documents required to be filed as exhibits to the TMAI SEC
Documents have been so filed, and all material contracts so filed as exhibits
are in full force and effect, except those which have expired or have been
terminated in accordance with their terms, and neither Avant! nor any of its
subsidiaries is in material default thereunder. As of their respective filing
dates, or, with respect to registration statements as of their effective dates,
the Avant! SEC Documents complied in all material respects with the requirements
of the

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Exchange Act and the Securities Act, and none of the Avant! SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected, superseded or modified by a subsequently filed
Avant! SEC Document. The financial statements of Avant!, including the notes
thereto, included in the Avant! SEC Documents (the "Avant! Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto as of their respective dates, and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Avant! Financial Statements fairly present the consolidated
financial condition and operating results of Avant! and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments). There has been
no change in Avant! accounting policies except as described in the notes to the
Avant! Financial Statements.

3.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Avant! SEC
Documents, since June 30, 1997 (the "Avant! Balance Sheet Date"), Avant! has
conducted its business in the ordinary course consistent with past practice and
there has not occurred: (i) any change, event or condition (whether or not
covered by insurance) that has resulted in a Material Adverse Effect on Avant!;
(ii) any acquisition, sale or transfer of any material asset of Avant! or any of
its subsidiaries other than in the ordinary course of business and consistent
with past practice; (iii) any change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
Avant! or any revaluation by Avant! of any of its assets; (iv) any declaration,
setting aside, or payment of a dividend or other distribution with respect to
the shares of Avant!, or any direct or indirect redemption, purchase or other
acquisition by Avant! of any of its shares of capital stock; (v) any material
contract entered into by Avant!, other than the Compass Agreement or in the
ordinary course of business and as provided to TMAI, or any material amendment
or termination of, or default under, any material contract to which Avant! is a
party or by which it is bound; (vi) any action by Avant! or, to Avant!'s
knowledge, any affiliate of Avant! which might reasonably be expected to
preclude the ability of Avant! to account for the business combination to be
effected by the Merger as a "pooling of interests" under generally accepted
accounting principles; or (vii) any negotiation or agreement by Avant! or any of
its subsidiaries to do any of the things described in the preceding clauses (i)
through (viii) (other than negotiations with TMAI and its representatives
regarding the transactions contemplated by this Agreement).

3.6 LITIGATION. There is no action, suit, proceeding, arbitration or
investigation pending or, to the knowledge of Avant!, threatened in writing
against Avant! that in any manner challenges or seeks to prevent, enjoin, alter
or delay any of the transactions contemplated hereby. Except as set forth in the
Avant! SEC Documents, Avant! is not aware of any other pending or threatened
action, suit, proceeding, investigation or claim, or any reasonable basis
therefor, that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect on Avant!. From the date of this Agreement until
the Effective Time, Avant! shall promptly advise TMAI of any such action, suit,
proceeding, claim, arbitration or investigation that is commenced, or, to the
knowledge of Avant!, threatened in writing against Avant! or any of its
subsidiaries. As of the date hereof, there is no judgment, decree or order
against Avant! or any of its subsidiaries, or, to the knowledge of Avant!, any
of their respective directors or officers (in their capacities as such), that
could prevent, enjoin, alter or materially delay any of the transactions by this
Agreement or that could reasonably be expected to have a Material Adverse Effect
on Avant!.

3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Avant! has no material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the Balance Sheet
included in Avant!'s Quarterly Report on Form 10-Q for the period ended June 30,
1997

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(the "Avant! Balance Sheet"); (ii) those incurred in the ordinary course of
business and not required to be set forth in the Avant! Balance Sheet under
generally accepted accounting principles; (iii) those incurred in the ordinary
course of business since the Avant! Balance Sheet Date and consistent with past
practice; and (iv) those incurred in connection with the execution of this
Agreement and the Compass Agreement and the transactions contemplated hereby or
thereby.

3.8 TAXES. Avant! and each of its subsidiaries, and each member of any
consolidated, combined or unitary group for Tax purposes of which Avant! or any
of its subsidiaries is or has been a member have timely filed all Tax Returns
required to be filed by them and have paid all Taxes shown thereon to be due.
The Avant! Financial Statements (i) fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through June 30, 1997 and
Avant! and each of its subsidiaries have not and will not incur any Tax
liability in excess of the amount reflected on the Avant! Financial Statements
with respect to such periods, and (ii) properly accrue in accordance with
generally accepted accounting principles all liabilities for Taxes payable after
June 30, 1997 with respect to all transactions and events occurring on or prior
to such date. No material Tax liability since June 30, 1997 has been incurred by
Avant! or its subsidiaries other than in the ordinary course of business and
adequate provision has been made in the Avant! Financial Statements for all
Taxes since that date in accordance with generally accepted accounting
principles on at least a quarterly basis. Avant! and each of its subsidiaries
have withheld and paid or will timely pay to the applicable financial
institution or Tax Authority all amounts required to be withheld. No notice of
deficiency or similar document of any Tax Authority has been received by either
Avant! or any of its subsidiaries, and there are no liabilities for Taxes with
respect to the issues that have been raised (and are currently pending) by any
Tax Authority that could, if determined adversely to Avant! and its
subsidiaries, materially and adversely affect the liability of Avant! and its
subsidiaries for Taxes. There (i) is no material claim for Taxes that is a lien
against the property of Avant! or any of its subsidiaries other than liens for
Taxes not yet due and payable, (ii) has been no notification received by Avant!
of any audit of any Tax Return of Avant! or any of its subsidiaries being
conducted, pending or threatened by a Tax Authority, (iii) is no extension or
waiver of the statute of limitations on the assessment of any Taxes granted by
Avant! or any of its subsidiaries that is currently in effect, and (iv) is no
agreement, contract or arrangement to which Avant! or any of its subsidiaries is
a party that may result in the payment of any material amount that would not be
deductible by reason of Sections 280G or 404 of the Code. Avant! will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. Neither
Avant! nor any of its subsidiaries is a party to any Tax sharing or Tax
allocation agreement nor does Avant! or any of its subsidiaries owe any amount
under any such agreement. Avant! and each of its subsidiaries are in full
compliance with all terms and conditions of any Tax exemptions or other
Tax-sharing agreement or order of a foreign government applicable to them and
the consummation of the Merger shall not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions or other
Tax-sharing agreement or order.

3.9 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The written
information supplied by Avant! and Merger Sub expressly for the purpose of
inclusion in the Registration Statement shall not, at the time the Registration
Statement (including any amendments or supplements thereto) is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
written information supplied by Avant! expressly for the purpose of inclusion in
the Proxy Statement shall not, on the date the Proxy Statement is first mailed
to TMAI's shareholders, at the time of TMAI's Shareholders Meeting and at the
Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which it is made, not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for TMAI's Shareholders Meeting which has
become false or

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misleading. If at any time prior to the Effective Time any event or information
should be discovered by Avant! or Merger Sub which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Avant! or Merger Sub will promptly inform TMAI. Notwithstanding the foregoing,
Avant! and Merger Sub make no representation, warranty or covenant with respect
to any information supplied by TMAI which is contained in any of the foregoing
documents.

3.10 INTELLECTUAL PROPERTY. Avant! and/or its subsidiaries own, or
otherwise possess legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in source code and/or object code form), and tangible or
intangible proprietary information or material that are used in the business of
Avant! and its subsidiaries as currently conducted (including with respect to
products currently under development), except to the extent that the failure to
have such rights has not had a Material Adverse Effect on Avant! excluding the
results and expense as of the date of this Agreement of any litigation or other
court proceedings.

ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME

4.1 CONDUCT OF BUSINESS OF TMAI. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, TMAI agrees (except to the extent expressly contemplated
by this Agreement or the Disclosure Schedules or as consented to in writing by
Avant!) to carry on its and its subsidiaries' business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted; to pay
and to cause its subsidiaries to pay debts and Taxes when due subject (i) to
good faith disputes over such debts or Taxes and (ii) in the case of Taxes of
TMAI or any of its subsidiaries, to Avant!'s consent to the filing of material
Tax Returns, if applicable; to pay or perform other obligations when due; to use
all reasonable efforts consistent with past practice and policies to preserve
intact its and its subsidiaries' present business organizations; to use its
reasonable best efforts consistent with past practice to keep available the
services of its and its subsidiaries' present officers and key employees; and to
use its commercially reasonable efforts consistent with past practice to
preserve its and its subsidiaries' relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
or its subsidiaries, to the end that its and its subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Effective Time. TMAI agrees to
promptly notify Avant! of any event or occurrence not in the ordinary course of
its or its subsidiaries' business, and of any event which could have a Material
Adverse Effect. Without limiting the foregoing, except as expressly contemplated
by this Agreement, TMAI shall not take, or agree in writing or otherwise to
take, any action which would make any of its representations or warranties
contained in this Agreement untrue or incorrect in any material respect or
prevent it from performing or cause it not to perform its covenants hereunder in
any material respect.

4.2 COVENANTS OF TMAI. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, except as expressly contemplated by this Agreement or the TMAI
Disclosure Schedule, TMAI shall not do, cause or permit any of the following, or
allow, cause or permit any of its subsidiaries to do, cause or permit any of the
following, without the prior written consent of Avant!, which shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Avant!'s
consent shall be deemed given if the matter is discussed in advance with John P.
Huyett, and he has received any additional information requested and, after such
discussion and receipt of any additional requested information, he shall not
have objected to the taking of the proposed action.

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(a) MATERIAL CONTRACTS. Enter into any material contract or commitment, or
violate, amend or otherwise modify or waive any of the material terms of any of
its material contracts, other than in the ordinary course of business consistent
with past practice;

(b) INTELLECTUAL PROPERTY. Transfer to any person or entity any rights to
its Intellectual Property other than in the ordinary course of business
consistent with past practice;

(c) EXCLUSIVE RIGHTS. Enter into or amend any agreements pursuant to which
any other party is granted exclusive marketing or other exclusive rights of any
type or scope with respect to any of its products or technology;

(d) INDEBTEDNESS. Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, other than in the ordinary course of business and
consistent with past practice, which in the aggregate do not exceed $100,000;

(e) LEASES. Enter into any operating lease in excess of an aggregate of
$100,000;

(f) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an amount in
excess of $100,000 in any one case or $250,000 in the aggregate, any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the TMAI Financial Statements;

(g) CAPITAL EXPENDITURES. Make any capital expenditures, capital additions
or capital improvements over $100,000 except in the ordinary course of business
and consistent with past practice;

(h) INSURANCE. Materially reduce the amount of any material insurance
coverage provided by existing insurance policies;

(i) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or amend any
employee benefit or stock purchase or option plan, accept any new or additional
subscriptions under the TMAI ESPP, or hire any officer level employee without
prior consultation with Avant!, pay any special bonus or special remuneration to
any employee or director, or increase the salaries or wage rates of its
employees, except in the ordinary course of business and consistent with past
practices or as previously disclosed to Avant!;

(j) SEVERANCE ARRANGEMENTS. Grant any severance or termination pay (i) to
any director or officer or (ii) to any other employee except (A) payments made
pursuant to standard written agreements outstanding on the date hereof or (B)
grants which are made in the ordinary course of business in accordance with its
standard past practice;

(k) CHARTER DOCUMENTS. Cause or permit any amendments to its Articles of
Incorporation or Bylaws or other similar organizational document;

(l) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or propose
the issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of its capital stock or securities convertible into, or subscriptions
(including subscription rights under the TMAI ESPP), rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than the issuance
of shares of its Common Stock pursuant to the exercise of stock options,
warrants or other rights therefor permitted under this Agreement; provided,
however, that TMAI may, in the ordinary course of business consistent with past
practice, grant (A) options for the purchase of up to an aggregate of 40,000
shares of common stock under the TMAI Stock Plans to existing employees and (B)
options for the purchase of common stock under the TMAI Stock Plans to new
employees; provided, however, that TMAI may not grant an individual options to
purchase an aggregate of more than 10,000 shares of common stock pursuant to
this subsection (l) of Section 4.2.

(m) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any dividends on
or make any other distributions (whether in cash, stock or property) in respect
of any of its capital stock, or split, combine or

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reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its subsidiaries;

(n) STOCK OPTION PLANS, ETC. Accelerate, amend or change the period of
exercisability or vesting of options or other rights granted under its stock
option agreements or stock plans or authorize cash payments in exchange for any
options or other rights granted under any of such agreements or plans, except as
disclosed in the TMAI Disclosure Schedule;

(o) POOLING. To the knowledge of TMAI, take any action, that would
interfere with Avant!'s ability to account for the Merger as a pooling of
interests;

(p) DISPOSITIONS. Sell, lease, license or otherwise dispose of or encumber
any of its properties or assets which are material, individually or in the
aggregate, to its and its subsidiaries' business, taken as a whole, except in
the ordinary course of business consistent with past practice;

(q) LAWSUITS. Commence a lawsuit other than (i) for the routine collection
of bills, (ii) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with Avant! prior to the filing of such
a suit, or (iii) for a breach of this Agreement;

(r) ACQUISITIONS. Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to its
and its subsidiaries' business, taken as a whole;

(s) TAXES. Other than as set forth in the TMAI Disclosure Schedule, or in
the ordinary course of business, make or change any material election in respect
of Taxes, except where such change or election would not have a Material Adverse
Effect on TMAI and its subsidiaries, taken as a whole, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement, settle any
claim or assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;

(t) REVALUATION. Revalue in any material respect any of its assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business; or

(u) OTHER. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through (t) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.

4.3 NOTICES. TMAI, with the assistance and advice of Avant!, shall give
all notices and other information required to be given to the employees of TMAI,
any collective bargaining unit representing any group of employees of TMAI, and
any applicable government authority under the WARN Act, the National Labor
Relations Act, the Code, COBRA, and other applicable law in connection with the
transactions provided for in this Agreement.

4.4 OTHER OFFERS. (a) TMAI and its subsidiaries and the officers,
directors, employees or other agents of TMAI and its subsidiaries will not,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Takeover Proposal (defined below) or (ii) engage in negotiations with, or
disclose any nonpublic information relating to TMAI or any of it subsidiaries
to, or afford access to the properties,

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books or records of TMAI or any of its subsidiaries to, any person that has
advised TMAI that it may be considering making, or that has made, a Takeover
Proposal; provided, however, that nothing herein shall prohibit TMAI's Board of
Directors from taking and disclosing to TMAI's shareholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. TMAI will promptly notify Avant! after receipt of any Takeover
Proposal or any notice that any person is considering making a Takeover Proposal
or any request for nonpublic information relating to TMAI or any of its
subsidiaries or for access to the properties, books or records of TMAI or any of
its subsidiaries by any person that has advised TMAI that it may be considering
making, or that has made, a Takeover Proposal and will keep Avant! fully
informed of the status and details of any such Takeover Proposal notice or
request. For purposes of this Agreement, "Takeover Proposal" means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving TMAI or any of its subsidiaries or the acquisition of any
significant equity interest in, or a significant portion of the assets of, TMAI
or any of its subsidiaries, other than the transactions contemplated by this
Agreement.

(b) Notwithstanding the provisions of paragraph (a) above, prior to the
Effective Time, TMAI may, to the extent the Board of Directors of TMAI
determines, in good faith, based upon and consistent with advice received in
consultation with outside legal counsel, that the Board's fiduciary duties under
applicable law require it to do so, participate in discussions or negotiations
with, and, subject to the requirements of paragraph (c), below, furnish
information to any person, entity or group after such person, entity or group
has delivered to TMAI in writing, an unsolicited bona fide Acquisition Proposal
which the Board of Directors of TMAI in its good faith reasonable judgment
determines, based upon and consistent with advice received in consultation with
its independent legal and financial advisors, would result in a transaction more
favorable than the Merger to the shareholders of TMAI from a financial point of
view (a "TMAI Alternative Proposal"). In addition, notwithstanding the
provisions of paragraph (a) above, in connection with a possible Acquisition
Proposal, TMAI may refer any third party to this Section 4.4 or make a copy of
this Section 4.4 available to a third party. In the event TMAI receives a TMAI
Alternative Proposal, nothing contained in this Agreement (but subject to the
terms hereof) will prevent the Board of Directors of TMAI from recommending such
TMAI Alternative Proposal to its Shareholders, if the Board determines, in good
faith, based upon and consistent with advice received in consultation with
outside legal counsel, that such action is required by its fiduciary duties
under applicable law. In such case, the Board of Directors of TMAI may withdraw,
modify or refrain from making its recommendation set forth in Section 5.1, and,
to the extent it does so, TMAI may refrain from soliciting proxies to secure the
vote of its shareholders as may be required by Section 5.2(a); PROVIDED,
HOWEVER, that TMAI shall (i) provide at least 48 hours prior notice to Avant! of
any TMAI Board meeting at which it is reasonably expected to contemplate an
Alternative Proposal, and (ii) not recommend to its shareholders a TMAI
Alternative Proposal for a period of not less than five (5) business days after
Avant!'s receipt of a copy of such TMAI Alternative Proposal (or a description
of the significant terms and conditions thereof, if not in writing); and
PROVIDED, FURTHER, that nothing contained in this Section 4.4 shall limit TMAI's
obligation to hold and convene the TMAI Shareholders' Meeting (regardless of
whether the recommendation of the Board of Directors of TMAI shall have been
withdrawn, modified or not yet made) or to provide the TMAI shareholders with
material information relating to such a meeting.

(c) Notwithstanding anything to the contrary in this Section 4.4, TMAI will
not provide any non-public information to a third party unless: (i) TMAI
provides such non-public information pursuant to a nondisclosure agreement with
terms regarding the protection of confidential information at least as
restrictive as such terms in the Confidentiality Agreement; (ii) such non-public
information has been previously delivered to Avant!; and (iii) TMAI advises
Avant! in writing of such disclosure, including the party to whom disclosed.

4.5 AVANT! OFFERS Avant! will not acquire or agree to acquire any direct
competitor of TMAI if such acquisition would have reasonable likelihood of
preventing or delaying the Merger.

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ARTICLE V
ADDITIONAL AGREEMENTS

5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly as
practicable after the execution of this Agreement, TMAI and Avant! shall prepare
and file with the SEC preliminary proxy materials relating to the approval of
the Merger and the transactions contemplated hereby by the shareholders of TMAI
and Avant! and, as promptly as practicable following receipt of SEC comments
thereon, Avant! shall file with the SEC a Registration Statement on Form S-4 (or
such other or successor form as shall be appropriate), which complies in form
with applicable SEC requirements and shall use all reasonable efforts to cause
the Registration Statement to become effective as soon thereafter as
practicable; provided, however, that Avant! shall have no obligation to agree to
account for the Merger as a "purchase" in order to cause the Registration
Statement to become effective. Subject to the provisions of Section 4.4, the
Proxy Statement shall include the recommendation of the Board of Directors of
TMAI in favor of the Merger.

5.2 MEETING OF SHAREHOLDERS.

(a) TMAI shall promptly after the date hereof take all action necessary in
accordance with California Law and its Articles of Incorporation and Bylaws to
convene the TMAI Shareholders Meeting on or prior to November 30, 1997 or as
soon thereafter as is practicable and in any event on the date within forty (40)
days of the date on which the Registration Statement shall be declared effective
by the SEC, unless otherwise mutually agreed by the parties hereto. TMAI shall
consult with Avant! and use all reasonable efforts to hold the TMAI Shareholders
Meeting and shall not postpone or adjourn (other than for the absence of a
quorum) the TMAI Shareholders Meeting without the consent of Avant!. Subject to
the provisions of Section 5.1 above, TMAI shall use its reasonable best efforts
to solicit from shareholders of TMAI proxies in favor of the Merger and shall
take all other action necessary or advisable to secure the vote or consent of
shareholders required to effect the Merger.

(b) Avant! shall promptly after the date hereof take all action necessary in
accordance with Delaware Law and its Certificate of Incorporation and Bylaws to
convene the Avant! Stockholders Meeting on or prior to November 30, 1997 or as
soon thereafter as is practicable and in any event on the date within forty (40)
days of the date on which the Registration Statement shall be declared effective
by the SEC, unless otherwise mutually agreed by the parties hereto. Avant! shall
consult with TMAI and use all reasonable best efforts to hold the Avant!
Stockholders Meeting on the same day as the TMAI Shareholders Meeting and shall
not postpone or adjourn (other than for the absence of a quorum) the Avant!
Stockholders meeting without the consent of TMAI. Avant! shall use its best
efforts to solicit from stockholders of Avant! proxies in favor of the Merger
and shall take all other action necessary or advisable to secure the vote or
consent of stockholders to effect the Merger.

5.3 ACCESS TO INFORMATION.

(a) TMAI shall afford Avant! and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of TMAI's and its subsidiaries'
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of TMAI and its
subsidiaries as Avant! may reasonably request. TMAI agrees to provide to Avant!
and its accountants, counsel and other representatives copies of internal
financial statements promptly upon request. Avant! shall afford TMAI and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (i) all of
Avant!'s and its subsidiaries' properties, books, contracts, commitments and
records, and (ii) all other information concerning the business, properties and
personnel of Avant! and its subsidiaries as TMAI may reasonably request. Avant!
agrees to provide to TMAI and its accountants, counsel and other representatives
copies of internal financial statements promptly upon request.

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(b) Subject to compliance with applicable law governing the exchange of
information, from the date hereof until the Effective Time, each of Avant! and
TMAI shall confer on a regular and frequent basis with one or more
representatives of the other party to report material operational matters and
the general status of ongoing operations.

(c) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.

5.4 CONFIDENTIALITY. The parties acknowledge that Avant! and TMAI have
previously executed a non-disclosure agreement dated September 4, 1997 (the
"Confidentiality Agreement"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.

5.5 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement,
Avant! and TMAI shall consult with each other before issuing any press release
or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.

5.6 CONSENTS; COOPERATION.

(a) Each of Avant! and TMAI shall promptly apply for or otherwise seek, and
use its reasonable best efforts to obtain, all consents and approvals required
to be obtained by it for the consummation of the Merger, and shall use its
reasonable best efforts to obtain all necessary consents, waivers and approvals
under any of its material contracts in connection with the Merger for the
assignment thereof or otherwise. Subject to compliance with applicable law
governing the exchange of information, the parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any federal or state
antitrust or fair trade law.

(b) Each of Avant! and TMAI shall use all reasonable efforts to resolve such
objections, if any, as may be asserted by any Governmental Entity with respect
to the transactions contemplated by this Agreement under the Sherman Act, as
amended, the Clayton Act, as amended, the Federal Trade Commission Act, as
amended, and any other Federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade
(collectively, "Antitrust Laws"). In connection therewith, if any administrative
or judicial action or proceeding is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of any
Antitrust Law, each of Avant! and TMAI shall cooperate and use all reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of the
Merger or any such other transactions, unless by mutual agreement Avant! and
TMAI decide that litigation is not in their respective best interests.
Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that neither TMAI nor Avant! shall have any
obligation to litigate or contest any administrative or judicial action or
proceeding or any Order beyond January 31, 1998.

(c) Notwithstanding anything to the contrary in subsection (a) or (b) above,
(i) neither Avant! nor any of it subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to

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have a Material Adverse Effect on Avant! or of Avant! combined with the
Surviving Corporation after the Effective Time or (ii) neither TMAI nor its
subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that could reasonably be expected to have a Material Adverse
Effect on TMAI.

5.7 POOLING ACCOUNTING. Avant! and TMAI shall each use its best efforts to
cause the business combination to be effected by the Merger to be accounted for
as a pooling of interests and to take such action as may be reasonably necessary
to permit such treatment. Each of Avant! and TMAI shall use its best efforts to
cause its "Affiliates" (as defined in Section 5.8) not to take any action that
would adversely affect the ability of Avant! to account for the business
combination to be effected by the Merger as a pooling of interest.

5.8 AFFILIATES AGREEMENTS.

(a) Section 5.8(a) of the TMAI Disclosure Schedule sets forth those persons
who may be deemed "Affiliates" of TMAI within the meaning of paragraphs (c) and
(d) of Rule 145 promulgated under the Securities Act ("Rule 145"). TMAI shall
provide Avant! such information and documents as Avant! shall reasonably request
for purposes of reviewing such list. TMAI shall use its best efforts to deliver
or cause to be delivered to Avant!, as soon as practicable following the
execution of this Agreement (and in each case prior to the Effective Time) from
each of the Affiliates of TMAI, an executed Affiliates Agreement in
substantially the form attached hereto as EXHIBIT A-1. Avant! shall be entitled
to place appropriate legends on the certificates evidencing any Avant! Common
Stock to be received by such Affiliates of TMAI pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for Avant! Common Stock, consistent with the terms of such Affiliates
Agreements.

(b) Section 5.8(b) of the Avant! Disclosure Schedule sets forth each person
Avant! believes to be an "Affiliate" of Avant! within the meaning of paragraphs
(c) and (d) of Rule 145. Avant! will use its reasonable best efforts to deliver
or cause to be delivered to TMAI, as soon as practicable following the execution
of this Agreement (and in each case prior to the Effective Time) from each of
the Affiliates of Avant!, an executed Affiliates Agreement in substantially the
form attached hereto as EXHIBIT A-2.

5.9 FIRPTA. TMAI shall, prior to the Closing Date, provide Avant! with a
properly executed Foreign Investment and Real Property Tax Act of 1980
("FIRPTA") Notification Letter, in form and substance reasonably satisfactory to
Avant!, which states that shares of capital stock of TMAI do not constitute
"United States real property interests" under Section 897(c) of the Code, for
purposes of satisfying Avant!'s obligations under Treasury Regulation Section
1.1445-2(c)(3). In addition, simultaneously with delivery of such Notification
Letter, TMAI shall provide to Avant!, as agent for TMAI, a form of notice to the
Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2), which shall be in form and substance
reasonably satisfactory to Avant!, along with written authorization for Avant!
to deliver such notice form to the Internal Revenue Service on behalf of TMAI
upon the Closing of the Merger.

5.10 CONTINUITY OF INTEREST CERTIFICATES. TMAI shall use its best efforts
to deliver or cause to be delivered to Avant!, as of the Effective Time, from
holders of the outstanding capital stock of TMAI specified on Section 5.10 of
the TMAI Disclosure Schedule executed Continuity of Interest Certificates in the
form attached hereto as EXHIBIT C.

5.11 LEGAL REQUIREMENTS. Each of Avant!, Merger Sub and TMAI will, and
will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval,

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order or authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.

5.12 BLUE SKY LAWS. Avant! shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Avant! Common Stock in connection with the
Merger. TMAI shall use its reasonable best efforts to assist Avant! as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Avant! Common Stock in
connection with the Merger.

5.13 EMPLOYEE BENEFIT PLANS.

(a) On or before the Effective Time, TMAI shall cause all options
outstanding under the Directors Plan to terminate as provided in the Directors
Plan. At the Effective Time, the TMAI Stock Plans and each outstanding option to
purchase shares of TMAI Common Stock under the TMAI Stock Plans, whether vested
or unvested, will be assumed by Avant!. Section 5.13(a) of the TMAI Disclosure
Schedule sets forth a true and complete list as of the date hereof of all
holders of outstanding options under the TMAI Stock Plans, including the number
of shares of TMAI capital stock subject to each such option, the exercise or
vesting schedule, the exercise price per share and the grant and expiration
dates of each such option. On the Closing Date, TMAI shall deliver to Avant! an
updated Section 5.13(a) of the TMAI Disclosure Schedule current as of such date.
Each such option so assumed by Avant! under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in each of the
TMAI Stock Plans immediately prior to the Effective Time, except that (i) such
option will be exercisable for that number of whole shares of Avant! Common
Stock equal to the product of the number of shares of TMAI Common Stock that
were issuable upon exercise of such option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounded down to the nearest whole
number of shares of Avant! Common Stock, and (ii) the per share exercise price
for the shares of Avant! Common Stock issuable upon exercise of such assumed
option will be equal to the quotient determined by dividing the exercise price
per share of TMAI Common Stock at which such option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent. Consistent with the terms of the TMAI Stock Plans and the documents
governing the outstanding options under those plans and except as set forth in
the TMAI Disclosure Schedule, the Merger will not terminate or otherwise result
in the cash-out of any of the outstanding options under such plans or accelerate
the exercisability or vesting of such options or the shares of Avant! Common
Stock which will be subject to those options solely as a result of the
consummation of the Merger and Avant!'s assumption of the options in connection
therewith. Avant! shall take all necessary steps to ensure that the options so
assumed by Avant! qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent such options
qualified as incentive stock options prior to the Effective Time. Within ten
(10) business days after the Effective Time, Avant! will issue to each person
who, immediately prior to the Effective Time was a holder of an outstanding
option under any of the TMAI Stock Plans, a document in form and substance
reasonably satisfactory to TMAI evidencing the foregoing assumption of such
option by Avant!. Avant! will take all corporate and other action necessary to
reserve a sufficient number of shares of Avant! Common Stock for issuance upon
the exercise of the options assumed by Avant! pursuant to this subsection (a)
and upon the exercise of TMAI Purchase Rights pursuant to subsection (b) below.

(b) The TMAI ESPP and each outstanding subscription to purchase shares of
TMAI Common Stock thereunder (a "TMAI Purchase Right") shall be assumed by
Avant! at the Effective Time of the Merger. Section 5.13(b) of the TMAI
Disclosure Schedule sets forth a true and complete list as of the date hereof of
all holders of outstanding TMAI Purchase Rights, including the maximum number of
shares of TMAI Common Stock purchasable under each such right, the outstanding
balance in each TMAI ESPP participant's subscription account thereunder, the
fair market value per share of TMAI Common Stock on the date the TMAI Purchase
Right was granted, and the expiration date of such right. On the Closing Date,
TMAI shall deliver to Avant! an updated Section 5.13(b) of the TMAI Disclosure
Schedule current

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as of such date. The TMAI Purchase Rights so assumed by Avant! shall continue to
be exercisable upon the same terms and conditions applicable to those rights
immediately prior to the Effective Time in accordance with the terms of the TMAI
ESPP, except that each such assumed TMAI Purchase Right will be exercisable for
shares of Avant! Common Stock and the purchase price payable per share of Avant!
Common Stock under the assumed right will be equal to eighty-five percent (85%)
of the lower of (i) the fair market value per share of the TMAI Common Stock on
the date the TMAI Purchase Right was granted, divided by the Exchange Ratio and
rounded up to the nearest whole cent, or (ii) the fair market value per share of
Avant! Common Stock on the date such right is exercised. Within ten (10)
business days after the Effective Time, Avant! will issue to each person who,
immediately prior to the Effective Time was a holder of an outstanding TMAI
Purchase Right, a document in form and substance reasonably satisfactory to TMAI
evidencing the foregoing assumption of such TMAI Purchase Right by Avant!. No
additional TMAI Purchase Rights shall be granted after the Effective Time, and
Avant! shall not be obligated to continue the TMAI ESPP after each TMAI Purchase
Right has been exercised.

(c) Avant! shall take such reasonable actions as are necessary to allow
eligible employees of TMAI to participate in the benefit programs of Avant!, or
alternative benefits programs in the aggregate substantially comparable to those
applicable to employees of Avant! on similar terms, as soon as practicable after
the Effective Time of the Merger. For purposes of satisfying the terms and
conditions of such programs, to the extent permitted by Avant!'s benefit
programs, Avant! shall use reasonable efforts to give full credit for
eligibility and vesting for each participant's period of service with TMAI. The
Surviving Corporation will not substitute any employee's health, life or
disability insurance coverage without first obtaining a waiver by the substitute
carrier of any preexisting condition that such employee may have.

(d) Avant! shall issue offer letters to Roy E. Jewell and Jue-Hsien Chern
substantially in the forms attached to the TMAI Disclosure Schedule as EXHIBIT
5.13(d).

(e) On or before the Effective Time, TMAI shall take all necessary actions
to terminate its 401(k) Plan.

5.14 FORM S-8. Avant! agrees to file, no later than ten (10) days after
the Closing, a registration statement on Form S-8 covering the shares of Avant!
Common Stock issuable pursuant to (i) outstanding options under the TMAI Stock
Plans assumed by Avant! and (ii) outstanding TMAI Purchase Rights under the TMAI
ESPP assumed by Avant!. TMAI shall cooperate with and assist Avant! in the
preparation of such registration statement.

5.15 INDEMNIFICATION.

(a) From and after the Effective Time and for a period ending six (6) years
after the Effective Time, Avant! and the Surviving Corporation jointly and
severally shall indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date of this Agreement or who becomes prior to
the Effective Time, an officer, director or employee of TMAI or any of its
subsidiaries (the "Indemnified Parties") in respect of acts or omissions
occurring on or prior to the Effective Time to the extent provided under TMAI's
Articles of Incorporation, Bylaws and indemnification agreements in effect on
the date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. Without limitation of
the foregoing, in the event any such Indemnified Party is or becomes involved in
any capacity in any action proceeding or investigation in connection with any
matter relating to this Agreement or the transactions contemplated hereby
occurring on or prior to the Effective Time, Avant! and the Surviving
Corporation shall jointly and severally pay as incurred such Indemnified Party's
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith by counsel reasonably acceptable
to such Indemnified Parties. The provisions of this Section 5.15 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
or her heirs and representatives.

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(b) If Avant! or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving person of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any person or entity, then and in each such case, proper provision
shall be made so that such successors or assigns of Avant! or the Surviving
Corporation, as the case may be, shall assume the obligations set forth in this
Section 5.15.

(c) Avant! shall use good faith efforts to cause to be maintained in effect
for a period of not less than three (3) years subsequent to the Effective Time
the current policies of the directors' and officers' liability insurance
maintained by Avant! and shall use good faith efforts to cause coverage to be
provided to the former directors and officers of TMAI thereunder (provided that
Avant! may substitute therefor policies of at least the same coverage containing
terms and conditions that are not less advantageous to the former directors and
officers of TMAI) with respect to matters occurring prior to the Effective Time.

(d) All agreements in effect at the date hereof pursuant to which TMAI
covenants and agrees in any respect to indemnify or defend any director or
executive officer of TMAI from and against any liability, cost or expense
identified in Section 5.15 of the TMAI Disclosure Schedule are expressly assumed
by Avant! at the Effective Time.

(e) Promptly after the date hereof, Avant! shall enter into indemnification
agreements with directors and officers of TMAI who become directors or officers
of the Surviving Corporation, which agreements shall be substantially identical
to those which Avant! has entered into with its current directors and officers.

5.16 LISTING OF ADDITIONAL SHARES. Prior to the Effective Time, Avant!
shall file with the Nasdaq National Market a Notification Form for Listing of
Additional Shares with respect to the shares referred to in Section 6.1(f).

5.17 POOLING LETTERS.

(a) TMAI shall use all reasonable efforts to cause to be delivered to TMAI a
letter of Arthur Andersen LLP dated the Effective Date to the effect that the
Merger will qualify for pooling of interests accounting treatment if consummated
in accordance with this Agreement. Such letter shall be in a form reasonably
satisfactory to Avant! and TMAI and shall be customary in scope and substance
for letters delivered by independent public accountants in connection with
transactions of this type.

(b) Avant! shall use all reasonable efforts to cause to be delivered to
Avant! a letter of KPMG Peat Marwick LLP ("KPMG") dated the Effective Date to
the effect that the Merger will qualify for pooling of interests accounting
treatment if consummated in accordance with this Agreement. Such letter shall be
in a form reasonably satisfactory to Avant! and TMAI and shall be customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions of this type.

5.18 BEST EFFORTS AND FURTHER ASSURANCES. Subject to the respective rights
and obligations of TMAI and Avant! under this Agreement, each of the parties to
this Agreement shall use its best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Subject to the foregoing, each party hereto, at
the reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.

5.19 NOTIFICATION OF CERTAIN MATTERS. TMAI shall give prompt notice to
Avant!, and Avant! shall give prompt notice to TMAI, of (i) the occurrence, or
non-occurrence, of any event, the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate at or prior to the Effective Time and (ii)
any failure of TMAI, Avant! or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement

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to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.19 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.

5.20 SHAREHOLDER AGREEMENT. TMAI and the Shareholders shall enter into the
Shareholder Agreement at EXHIBIT B concurrent with the execution of this
Agreement.

5.21 HSR ACT FILINGS. If applicable, each of Avant! and TMAI shall
promptly make its respective filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and thereafter shall make
any required submissions under the HSR Act with respect to the Merger, and shall
cooperate with each other with respect to the foregoing. TMAI and Avant! shall
give each other prior notice and consult with each other prior to any meeting
with the United States Federal Trade Commission or Department of Justice with
respect to their respective filings under the HSR Act or any review by either of
the foregoing agencies. Each of Avant! and TMAI shall take all reasonable
actions necessary to cause the expiration of the waiting periods under the HSR
Act as promptly as possible. Neither party shall be required to take any action
pursuant to Articles IV or V that would cause a violation of the HSR Act.

5.22 SCHEDULES. From time to time prior to the Closing Date, each of
Avant! and TMAI will promptly supplement or amend the TMAI or Avant! Disclosure
Schedules, as the case may be, with respect to any matter hereafter arising
that, if existing or occurring at or prior to the date of this Agreement, would
have been required to be set forth or described in the TMAI or Avant! Disclosure
Schedules, as the case may be, or that is necessary to correct any information
in the TMAI or Avant! Disclosure Schedules, as the case may be, or in any
representation and warranty of each of Avant! and TMAI that has been rendered
inaccurate thereby. For purposes of determining the accuracy of the respective
representations and warranties contained in Articles III and IV, and in order to
determine the fulfillment of the conditions set forth in Sections 6.2(a) and
6.3(a), the TMAI or Avant! Disclosure Schedules, as the case may be, shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in any
subsequent supplement or amendment thereto unless such changes reflect actions
taken in compliance with the provisions of Articles IV and V hereof.

5.23 MANAGEMENT OF TCAD DIVISION. At the Effective Date of the Merger, Roy
Jewell will be appointed the head of Avant!'s TCAD division. As such, Mr. Jewell
will have full responsibility and authority to make all personnel decisions
related to Avant!'s TCAD division, including, without limitation, all
compensation decisions.

ARTICLE VI
CONDITIONS TO THE MERGER

6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, subsection (e) of which may be waived, in writing, by agreement of
all the parties hereto:

(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by (i) the holders of TMAI Common Stock representing a
majority of the total votes entitled to be cast on such matters at the TMAI
Shareholders Meeting at which a quorum is present in person or by proxy and
(ii) the holders of shares of Avant! Common Stock representing a majority of
the total votes cast on such matters at the Avant! Stockholders Meeting at
which a quorum is present in person or by proxy.

(b) REGISTRATION STATEMENT EFFECTIVE. The SEC shall have declared the
Registration Statement effective. No stop order suspending the effectiveness
of the Registration Statement or any part thereof

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shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement, shall have been initiated or
threatened by the SEC; and all requests for additional information on the
part of the SEC shall have been complied with to the reasonable satisfaction
of the parties hereto.

(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect;
nor shall there be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal; and no temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint
provision limiting or restricting Avant!'s conduct or operation of the
business of TMAI and its subsidiaries following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending. In the event an injunction or other order shall have
been issued, each party agrees to use its reasonable diligent efforts to
have such injunction or other order lifted.

(d) GOVERNMENTAL APPROVAL. Avant!, TMAI and Merger Sub and their
respective subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers, authorizations and consents, if any,
necessary for consummation of or in connection with the Merger and the
several transactions contemplated hereby, including such approvals, waivers,
authorizations and consents as may be required under the HSR Act, Securities
Act and under state Blue Sky laws.

(e) TAX OPINIONS. Avant! and TMAI shall have received substantially
identical written opinions of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP and Fenwick & West LLP, respectively, in form and substance
reasonably satisfactory to them, and dated on or about the Effective Date to
the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, and such opinions shall not have been
withdrawn. In rendering such opinions, counsel shall be entitled to rely
upon, among other things, reasonable assumptions as well as representations
of Avant!, Merger Sub and TMAI and certain shareholders of TMAI.

(f) LISTING OF ADDITIONAL SHARES. The filing with the Nasdaq National
Market of a Notification Form for Listing of Additional Shares with respect
to the shares of Avant! Common Stock issuable upon conversion of the TMAI
Common Stock in the Merger and upon exercise of the options under the TMAI
Stock Plans, and upon the exercise of TMAI Purchase Rights under the TMAI
ESPP, assumed by Avant! shall have been made.

6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TMAI. The obligations of TMAI
to consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any of which may be waived, in writing, by TMAI:

(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The representations
and warranties of Avant! and Merger Sub in this Agreement shall be true and
correct in all material respects (other than representations and warranties
regarding litigation or other proceedings connected with the Merger, which
shall be governed solely by the standard set forth in Section 6.1(c) and
except for such representations and warranties that are qualified by their
terms by a reference to materiality which representations and warranties as
so qualified shall be true in all respects) on and as of the Effective Time
as though such representations and warranties were made on and as of such
time except for changes contemplated by this Agreement (except to the extent
such representations and warranties speak as of an earlier date) except, in
all such cases, where such breaches of such representations and warranties,
individually or in the aggregate, have not resulted in, nor reasonably would
be expected to result in liabilities aggregating in excess of $10,000,000 or
have not substantially impaired nor

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reasonably would be expected to substantially impair, Avant!'s ability after
the Closing to continue to develop, produce, sell and distribute the
products and services that are material to Avant!'s business in a manner
that has resulted in or would reasonably be expected to result in a Material
Adverse Effect on Avant!, and (ii) Avant! and Merger Sub shall have
performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by them as of the Effective Time.

(b) CERTIFICATE OF AVANT!. TMAI shall have been provided with a
certificate dated, the Effective Date, executed on behalf of Avant! by its
President and its Chief Financial Officer to the effect that, as of the
Effective Time, the condition provided for in subsection (a) above has been
satisfied.

(c) LEGAL OPINION. TMAI shall have received a legal opinion, dated the
Effective Date, from Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, counsel to Avant! and Merger Sub, in form and substance
reasonably satisfactory to TMAI.

(d) NO MATERIAL ADVERSE CHANGES. There shall have been no material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations or results
of operations (either actual since the date of this Agreement or as such
condition has been represented pursuant to Article III hereof) of Avant!
taken as a whole from the date hereof through the Closing Date; provided,
however, that any developments, changes or results arising out of or related
to the litigation and other court proceedings described in the Avant! SEC
Documents that do not otherwise result in a Material Adverse Effect on
Avant! shall not be considered for purposes of this Section 6.2(d).

(e) THIRD PARTY CONSENTS. TMAI shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons whose consent
or approval shall be required in connection with the Merger under any
material contract of Avant! or any of its subsidiaries or otherwise.

(f) AFFILIATES AGREEMENT. Each of the Affiliates of Avant! identified
on Section 5.8(b) of the Avant! Disclosure Schedule shall have executed an
Affiliates Agreement in substantially the form attached hereto as EXHIBIT
A-2.

6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF AVANT! AND MERGER SUB. The
obligations of Avant! and Merger Sub to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Avant!:

(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The representations
and warranties of TMAI in this Agreement shall be true and correct in all
material respects (other than representations and warranties regarding
litigation or other proceedings connected with the Merger, which shall be
governed solely by the standard set forth in Section 6.1(c) and except for
such representations and warranties that are qualified by their terms by a
reference to materiality, which representations and warranties as so
qualified shall be true in all respects) on and as of the Effective Time as
though such representations and warranties were made on and as of such time
except for changes contemplated by this Agreement except, in all such cases,
where such breaches of such representations and warranties, individually or
in the aggregate, have not resulted in, nor reasonably would be expected to
result in liabilities aggregating in excess of $2,000,000 or, have not
substantially impaired nor reasonably would be expected to substantially
impair, TMAI's ability after the Closing to continue to develop, produce,
sell and distribute the products and services that are material to TMAI's
business in a manner that has resulted in or would reasonably be expected to
result in a Material Adverse Effect on TMAI, and (ii) TMAI shall have
performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Effective Time.

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(b) CERTIFICATE OF TMAI. Avant! shall have been provided with a
certificate, dated the Effective Date, executed on behalf of TMAI by its
President and its Chief Financial Officer to the effect that, as of the
Effective Time, the condition provided for in subsection (a) above has been
satisfied.

(c) LEGAL OPINION. Avant! shall have received a legal opinion, dated
the Effective Date, from Fenwick & West LLP, legal counsel to TMAI, in form
and substance reasonably satisfactory to Avant!.

(d) THIRD PARTY CONSENTS. Avant! shall have been furnished with
evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Merger
under any material contract of TMAI or any of its subsidiaries or otherwise.

(e) No Material Adverse Changes. There shall not have occurred any
material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of TMAI and its subsidiaries,
taken as a whole from the date hereof through the Closing Date.

(f) LETTERS FROM ACCOUNTANTS. Avant! shall have received the letter
referred to in Section 5.17(b) from KPMG.

(g) AFFILIATE AGREEMENTS. Avant! shall have received from each of the
Affiliates of TMAI identified on Section 5.8(a) of the TMAI Disclosure
Schedule an executed Affiliate Agreement in substantially the form attached
hereto as EXHIBIT A-1.

(h) DISSENTING SHARES. Dissenting Shares shall consist of no more ten
(10) percent (10%) of the then outstanding shares of TMAI Capital Stock.

(i) CONTINUITY OF INTEREST CERTIFICATES. Avant! shall have received a
sufficient number of executed Continuity of Interest Certificates, in the
form attached hereto as EXHIBIT C, such that counsel to Avant! shall have
concluded that the Continuity of Interest requirement shall be satisfied for
purposes of issuing the tax opinion pursuant to Section 6.1(e) of this
Agreement.

ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER

7.1 TERMINATION. At any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
shareholders of TMAI, this Agreement may be terminated:

(a) by mutual consent of Avant! and TMAI;

(b) by either Avant! or TMAI, if the Effective Date shall not have
occurred on or before January 31, 1998; PROVIDED that the right to terminate
this Agreement pursuant to this paragraph (b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
a significant cause of, or resulted in, the failure of the Effective Date to
occur on or before such date;

(c) by Avant!, if (i) TMAI shall breach any of its representations,
warranties or obligations hereunder, which breach would result in a material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations or results
of operations of TMAI and its subsidiaries, taken as a whole, and such
breach shall not have been cured within ten (10) business days following
receipt by TMAI of written notice of such breach, (ii) (x) there shall have
occurred any material adverse change in the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of TMAI and its
subsidiaries, taken as a whole, and (y) TMAI shall not, within twenty (20)
business days of notice from Avant! to the effect that Avant! intends to
terminate this Agreement pursuant to

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this clause (ii), have proposed to Avant! a plan to mitigate the effect of
such material adverse change which plan shall be reasonably acceptable to
Avant!, or (iii) the Board of Directors of TMAI shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner
adverse to Avant! or shall have resolved to do any of the foregoing;

(d) by TMAI, if (i) Avant! shall breach any of its representations,
warranties or obligations hereunder, which breach would result in a material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations or results
of operations of Avant! and its subsidiaries, taken as a whole, and such
breach shall not have been cured within ten (10) business days following
receipt by Avant! of written notice of such breach, (ii) (x) there shall
have occurred any material adverse change in the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of Avant! and its
subsidiaries, taken as a whole, and (y) Avant! shall not, within twenty (20)
business days of notice from TMAI to the effect that TMAI intends to
terminate this Agreement pursuant to this clause (ii), have proposed to TMAI
a plan to mitigate the effect of such material adverse change which plan
shall be reasonably acceptable to TMAI, or (iii) the Board of Directors of
Avant! shall have withdrawn or modified its recommendation of this Agreement
or the Merger in a manner adverse to TMAI or shall have resolved to do any
of the foregoing; or

(e) by either Avant! or TMAI, if (i) any permanent injunction or other
order of a court or other competent authority preventing the consummation of
the Merger shall have become final and nonappealable or (ii) at the TMAI
Shareholders Meeting (including any adjournment or postponement thereof) the
requisite vote of shareholders of TMAI shall not have been obtained, or
(iii) at the Avant! Stockholders Meeting (including any adjournment or
postponement thereof) the requisite vote of stockholders of Avant! shall not
have been obtained.

7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Avant!, Merger Sub or TMAI or
their respective officers, directors, stockholders or affiliates, except to the
extent that such termination results from the breach by a party hereto of any of
its representations, warranties or covenants set forth in this Agreement;
PROVIDED that the provisions of Section 5.4 (Confidentiality), Section 7.3
(Expenses and Termination Fees) and this Section 7.2 and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
this Agreement.

7.3 EXPENSES AND TERMINATION FEES.

(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expense, except that, in the event the Merger shall not be consummated for any
reason or if this Agreement shall be terminated for any reason other than
pursuant to Section 7.1(d), expenses incurred in connection with printing the
Proxy Materials and the Registration Statement, registration and filing fees
incurred in connection with the Registration Statement and the Proxy Materials
in connection with the Merger shall be shared equally by TMAI and Avant!.

(b) In the event that (i) either Avant! or TMAI shall terminate this
Agreement pursuant to Section 7.1(e)(ii) following a failure of the shareholders
of TMAI to approve this Agreement and, prior to the time of the meeting of
TMAI's shareholders, there shall have been (A) a Trigger Event with respect to
TMAI that TMAI's Board of Directors has not recommended that its shareholders
reject or (B) a Takeover Proposal with respect to TMAI which at the time of the
meeting of TMAI's shareholders shall not have been rejected by TMAI and
withdrawn by the third party, or (ii) Avant! shall terminate this Agreement
pursuant to Section 7.1(c), due in whole or in part to any failure by TMAI to
use its reasonable best efforts to perform and comply with all agreements and
conditions required by this Agreement to be performed or complied with by TMAI
prior to or on the Closing Date or any failure by TMAI's affiliates to take any

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actions required to be taken hereby, (and if TMAI is not entitled to terminate
this Agreement by reason of Section 7.1(d)), and prior thereto there shall have
been (A) a Trigger Event with respect to TMAI or (B) a Takeover Proposal with
respect to TMAI which shall not have been rejected by TMAI and withdrawn by the
third party, then TMAI shall promptly pay to Avant! the sum of $5,250,000;
provided, however, that with respect to Section 7.3(b)(i)(A) and Section
7.3(b)(ii)(A), a Trigger Event shall not be deemed to include the acquisition by
any Person of securities representing 10% or more of TMAI if such Person has
acquired such securities not with the purpose nor with the effect of changing or
influencing the control of TMAI, nor in connection with or as a participant in
any transaction having such purpose or effect, including without limitation (i)
making any public announcement with respect to the voting of such shares at any
meeting to consider any merger, consolidation, sale of substantial assets or
other business combination or extraordinary transaction involving TMAI, (ii)
making, or in any way participating in, any "solicitation" of "proxies" (as such
terms are defined or used in Regulation 14A under the Exchange Act) to vote any
voting securities of TMAI (including, without limitation, any such solicitation
subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence
any Person with respect to the voting of any voting securities of TMAI, (iii)
forming, joining or in any way participating in any "group" within the meaning
of Section 13(d)(3) of the Exchange Act with respect to any voting securities of
TMAI or (iv) otherwise acting, alone or in concert with others, to seek control
of TMAI or to seek to control or influence the management or policies of TMAI.
As used herein, a "Trigger Event" shall occur if any Person commences a tender
or exchange offer following the successful consummation of which the offeror and
its affiliate would beneficially own securities representing 25% or more, of the
voting power of TMAI.

(c) If this Agreement is terminated by TMAI pursuant to any subsection of
Section 7.1(d) hereof, due in whole or in part to any failure by Avant! to use
its reasonable best efforts to perform and comply with all agreements and
conditions required by this Agreement to be performed or complied with by Avant!
prior to or on the Closing Date or any failure by Avant!'s affiliates to take
any actions required to be taken hereby (and Avant! is not entitled to terminate
this Agreement by reason of Section 7.1(c) hereof), then, Avant! shall promptly
pay to TMAI a termination fee of $5,250,000.

7.4 AMENDMENT. The boards of directors of the parties hereto may cause
this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of this Agreement by the stockholders of
TMAI, Avant! or Merger Sub shall not (i) alter or change the amount or kind of
consideration to be received on conversion of the TMAI Common Stock, (ii) alter
or change any term of the Articles of Incorporation of the Surviving Corporation
to be effected by the Merger, or (iii) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely affect
the holders of TMAI Common Stock or Avant! Common Stock.

7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

ARTICLE VIII
GENERAL PROVISIONS

8.1 SURVIVAL. The representations, warranties and agreements set forth in
this Agreement shall terminate at the Effective Time, except that the agreements
set forth in Article I, Section 5.4 (Confidentiality) 5.7 (Pooling Accounting),
5.8 (Affiliates Agreements), 5.13 (Employee Benefit Plans), 5.14 (Form

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S-8), 5.15 (Indemnification), 5.16 (Listing of Additional Shares), 5.18 (Best
Efforts and Further Assurances), 7.3 (Expenses and Termination Fees), 7.4
(Amendment), and this Article VIII shall survive the Effective Time.

8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):

(a) if to Avant! or Merger Sub, to:

Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
Attention: President
Facsimile No.: 510-413-8080
Telephone No.: 510-413-8000

with a copy to:

Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attention: Steven M. Spurlock, Esq.
Facsimile No.: 650-321-2800
Telephone No.: 650-321-2400

(b) if to TMAI, to:

Technology Modeling Associates, Inc.
595 Lawrence Expressway
Sunnyvale, California 95086
Attention: President
Facsimile No.: 408-328-0940
Telephone No.: 408-328-0930

with a copy to:

Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: Jacqueline A. Daunt
Facsimile No.: 650-494-1417
Telephone No.: 650-494-0600

8.3 INTERPRETATION. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to September 7, 1997. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

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8.4 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.

8.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the TMAI Disclosure Schedule and the Avant! Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a)-(d) and (g), 1.7-1.9, 5.13, 5.14, 5.15 and 5.16; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided.

8.6 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 hereto. 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.

8.7 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California (without regard to its
principles of conflicts of law).

8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

36
<PAGE>
IN WITNESS WHEREOF, Avant!, TMAI and Merger Sub have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized, all as of the date first written above.

<TABLE>
<S> <C> <C>
AVANT! CORPORATION

By: /s/ Gerald C. Hsu
-----------------------------------------
Gerald C. Hsu
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT

CARDINAL MERGER CORPORATION

By: /s/ Gerald C. Hsu
-----------------------------------------
Gerald C. Hsu
PRESIDENT
</TABLE>

<TABLE>
<S> <C> <C>
TECHNOLOGY MODELING ASSOCIATES, INC.

By: /s/ Roy E. Jewell
--------------------------------------
Roy E. Jewell
Chairman of the Board, Chief Executive
Officer and President
</TABLE>

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF JULY 31, 1997,

AMONG

AVANT! CORPORATION,

GB ACQUISITION CORPORATION,

COMPASS DESIGN AUTOMATION, INC.,

AND

VLSI TECHNOLOGY, INC.

<PAGE>

TABLE OF CONTENTS
PAGE
----

ARTICLE I: THE MERGER.........................................................1
1.1 Merger; Effective Time of the Merger..................................1
1.2 Closing...............................................................1
1.3 Effects of the Merger.................................................1
1.4 Escrow................................................................2

ARTICLE II: EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES;
SUPPLEMENTARY ACTION.......................................................2
2.1 Effect on Capital Stock...............................................2
2.2 Exchange of Certificates..............................................5
2.3 Supplementary Action..................................................7

ARTICLE III: REPRESENTATIONS AND WARRANTIES OF COMPASS........................7
3.1 Organization, Standing and Power......................................7
3.2 Capital Structure.....................................................8
3.3 Subsidiaries..........................................................9
3.4 Authority.............................................................9
3.5 Financial Statements.................................................10
3.6 Payables; Receivables................................................11
3.7 Compliance with Laws.................................................11
3.8 No Defaults..........................................................12
3.9 Litigation...........................................................12
3.10 Conduct in the Ordinary Course......................................12
3.11 Absence of Undisclosed Liabilities..................................14
3.12 Documents and Information Supplied..................................14
3.13 Certain Agreements..................................................14
3.14 Employee Plans......................................................14
3.15 Major Contracts.....................................................15
3.16 Taxes...............................................................17
3.17 Intellectual Property...............................................19
3.18 Employee Agreements.................................................20
3.19 Restrictions on Business Activities.................................21
3.20 Title to Properties; Absence of Liens and Encumbrances:
Condition of Equipment.................................................21
3.21 Governmental Authorizations and Licenses............................22
3.22 Environmental Matters...............................................22
3.23 Insurance...........................................................25
3.24 Labor Matters.......................................................25
3.25 Personnel...........................................................26
3.26 Questionable Payments...............................................26

i
<PAGE>

3.27 Third-Party Consents...............................................26
3.28 Related Party Transactions.........................................27
3.29 Customers..........................................................27
3.30 Bank Accounts and Powers of Attorney...............................27
3.31 Products...........................................................27
3.32 Brokers or Finders; Professional Fees..............................27

ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF AVANT! AND SUB................28

4.1 Organization; Standing and Power....................................28
4.2 Authority...........................................................28
4.3 Valid Issuance of Shares of Common Stock of Avant!..................29
4.4 Avant!. Financial Statements........................................29
4.5 Litigation..........................................................29
4.6 Reports.............................................................29
4.7 Restrictions on Business Activities.................................30
4.8 Brokers or Finders; Professional Fees...............................30
4.9 Conduct in the Ordinary Course......................................30
4.10 Third-Party Consents...............................................30
4.11 Due Diligence Investigation........................................30

ARTICLE V: CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; ADDITIONAL
AGREEMENTS...............................................................30
5.1 Conduct of Business of Compass......................................30
5.2 Access to Information; Provision of Interim Financial Statements....33
5.3 Compass Stockholders' Consent.......................................34
5.4 Exclusivity; Acquisition Proposals..................................34
5.5 Breach of Representations, Warranties, Agreements and Covenants.....34
5.6 Consents............................................................35
5.7 Best Efforts........................................................35
5.8 Legal Conditions to the Merger......................................35
5.9 Public Announcements................................................36
5.10 Affiliates Agreement...............................................36
5.11 Expenses...........................................................36
5.12 Information to be Supplied.........................................36
5.13 Form S-3 Registration Statement....................................36
5.14 Schedules..........................................................37
5.15 Certain Benefit Plans..............................................37
5.16 HSR Act Filing.....................................................38
5.17 Listing of Shares..................................................39
5.18 Voting Agreement...................................................39

ARTICLE VI: CONDITIONS PRECEDENT............................................39
6.1 Conditions to Each Party's Obligation to Effect the Merger..........39
6.2 Conditions of Obligations of Avant! and Sub.........................40
6.3 Conditions of Obligation of Compass.................................41

ii
<PAGE>

ARTICLE VII: INDEMNITY......................................................41
7.1 Survival of Representations, Warranties, Covenants and Agreements...41
7.2 Indemnification.....................................................42
7.3 Termination of Indemnity and Representations and Warranties.........43

ARTICLE VIII: TERMINATION...................................................44
8.1 Termination.........................................................44

ARTICLE IX: GENERAL PROVISIONS..............................................45
9.1 Amendment...........................................................45
9.2 Extension; Waiver...................................................45
9.3 Notices.............................................................45
9.4 Interpretation......................................................46
9.5 Counterparts........................................................46
9.6 Entire Agreement....................................................46
9.7 No Transfer.........................................................47
9.8 Severability........................................................47
9.9 Other Remedies......................................................47
9.10 Further Assurances.................................................47
9.11 Absence of Third-Party Beneficiary Rights..........................47
9.12 Governing Law......................................................47

EXHIBITS

1.1 Certificate of Merger
1.3(a) Certificate of Incorporation
1.3(b) Bylaws
1.4 Escrow Agreement
2.1(c) Allocation of Merger Consideration Among Company Stockholders
3.2 Voting Agreement
5.10(a) Affiliates Agreement

SCHEDULES

2.1(d) Holders of Compass Options Exercisable for Common Stock
2.1(e) Stock Options Exercised
3.2(a) Capital Structure
3.2(b) Compliance with Securities Laws
3.2(e) Stockholders Party to the Voting Agreement
3.3(a) Subsidiaries
3.3(b) Jurisdictions Qualified to do Business
3.5 Financial Statements
3.6 Receivables
3.7 Exceptions to Compliance with Laws
3.8 List of Defaults
3.9 Pending Litigation

iii
<PAGE>

3.10 Exceptions to Conduct in the Ordinary Course
3.11 Undisclosed Liabilities
3.13 Certain Agreements
3.14 Compass Compensation Plans
3.15 Major Contracts
3.16 Taxes
3.17 Compass Intellectual Property Rights
3.18 Proprietary Information Agreements
3.19 Restrictions on Business Activities
3.20 Real Property Leased; Physical Assets
3.21 Governmental Authorizations and Licenses
3.22 Environmental Matters
3.23 Insurance
3.25 Personnel
3.27 Third-Party Consents
3.28 Related Party Transactions
3.29 Customers
3.30 Bank Accounts and Powers of Attorney
5.10 List of Affiliates

iv
<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION is dated as of July 31,
1997, by and among Avant! Corporation, a Delaware corporation ("Avant!"),
GB Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary
of Avant! ("Sub"), Compass Design Automation, Inc., a Delaware corporation
("Compass"), and VLSI Technology, Inc., a Delaware corporation ("VLSI").

INTENDING TO BE LEGALLY BOUND, and in consideration of the promises
and mutual covenants and agreements contained herein, Avant!, Sub, Compass and
VLSI hereby agree as follows:

ARTICLE I:
THE MERGER

1.1 MERGER; EFFECTIVE TIME OF THE MERGER. Subject to the terms and
conditions of this Agreement and Plan of Reorganization (this "Agreement") and
as contemplated by the Certificate of Merger attached hereto as EXHIBIT 1.1 (the
"Certificate of Merger"), Sub will be merged with and into Compass (the
"Merger") in accordance with the applicable provisions of the General
Corporation Law of the State of Delaware (the "DGCL"). The Certificate of
Merger provides, among other things, the mode of effecting the Merger and the
manner and basis of converting each issued and outstanding share of capital
stock of Compass into shares of Common Stock, par value $.0001 per share, of
Avant! ("Avant! Common Stock"). The Certificate of Merger shall be executed by
Compass, Avant! and Sub prior to the Effective Date of the Merger (as defined in
this Section 1.1).

Subject to the provisions of this Agreement, the Certificate of Merger
shall be filed in accordance with the DGCL on the Closing Date (as defined in
Section 1.2). The Merger shall become effective upon such filing of the
Certificate of Merger (the date of such filing being hereinafter referred to as
the "Effective Date of the Merger" and the time of confirmation of such filing
being hereinafter referred to as the "Effective Time of the Merger") in the
State of Delaware.

1.2 CLOSING. The closing of the Merger (the "Closing") will take
place as soon as practicable on the first business day after satisfaction or
waiver of the conditions precedent set forth in Article VI of this Agreement
(the "Closing Date"), at the offices of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP, 155 Constitution Drive, Menlo Park, California 94025,
unless a different date or place is agreed to in writing by Avant!, Sub and
Compass.

1.3 EFFECTS OF THE MERGER. At the Effective Time of the Merger, (a)
the separate existence of Sub shall cease and Sub shall be merged with and into
Compass (Sub and Compass are sometimes referred to herein as the "Constituent
Corporations" and Compass after the Merger is sometimes referred to herein as
the "Surviving Corporation"), (b) the Certificate of Incorporation of the
Surviving Corporation shall be set forth in EXHIBIT 1.3(a) hereto, (c) the
Bylaws of the Surviving Corporation shall be set forth in EXHIBIT 1.3(b) hereto,
(d) the directors

<PAGE>

of the Surviving Corporation shall be Gerald C. Hsu and John P. Huyett, (e) the
officers of the Surviving Corporation shall be Gerald C. Hsu, President and
Chief Executive Officer and John P. Huyett, Vice President, Chief Financial
Officer and Secretary and (f) the Merger shall, from and after the Effective
Time of the Merger, have all the effects provided by applicable law.

1.4 ESCROW. An amount of (a) the aggregate cash payment to be made
to VLSI Technology, Inc. ("VLSI") and (b) the aggregate number of shares of
Avant! Common Stock issuable to VLSI in connection with the Merger equal to ten
percent (10%) of the total consideration paid by Avant! in the Merger (the
"Escrow Proceeds") shall be held in escrow as collateral for the indemnification
obligations of Compass pursuant to Article VII of this Agreement and the
provisions of an escrow agreement ("Escrow Agreement") in the form attached
hereto as EXHIBIT 1.4. The Escrow Proceeds shall be withheld pro rata from
proceeds to be received by VLSI upon exchange of Compass shares for the right to
receive cash and/or shares of Avant! Common Stock.

ARTICLE II:
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES; SUPPLEMENTARY ACTION

2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time of the Merger,
by virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of Compass:

(a) CAPITAL STOCK OF SUB. All issued and outstanding shares of
capital stock of Sub shall continue to be issued and outstanding and shall be
converted into 1,000 shares of Common Stock of the Surviving Corporation. Each
stock certificate of Sub evidencing ownership of any such shares shall
thereafter evidence ownership of such shares of capital stock of the Surviving
Corporation into which such shares of stock of Sub have converted.

(b) CANCELLATION OF CAPITAL STOCK OF COMPASS.

(i) All shares of capital stock of Compass that are owned
directly or indirectly by Compass or by any entity controlled by Compass shall
be canceled and no stock of Avant! or other consideration shall be delivered in
exchange therefor. For this purpose, a controlled entity shall mean a
corporation or other entity whose voting securities are owned or are otherwise
controlled directly or indirectly by a parent corporation or other intermediary
entity in an amount sufficient to elect at least a majority of the board of
directors or other managers of such corporation or other entity.

(ii) Each holder of a certificate representing any shares of
Compass capital stock after the Effective Time of the Merger shall cease to have
any rights with respect to such shares, except the right either to receive cash
and/or shares of Avant! Common Stock upon surrender of such certificate, or to
exercise such holder's dissenters' rights, if applicable, as provided in
Section 2.1(f) hereof and pursuant to the DGCL, or alternatively, the

2
<PAGE>

California General Corporation Law (the "CGCL"), to the extent Compass is
determined to be a foreign corporation contemplated by Section 2115 of the CGCL.

(c) CONVERSION OF CAPITAL STOCK OF COMPASS. Subject to
Section 2.2, at the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holders thereof:

(i) CONVERSION OF COMPASS PREFERRED STOCK. Each share of
the Series A Preferred Stock of Compass (the "Compass Preferred Stock") issued
and outstanding at the Effective Time of the Merger (other than any shares of
Compass Preferred Stock to be canceled pursuant to Section 2.1(b)(i) and any
Dissenting Shares (as defined and to the extent provided in Section 2.1(f))
shall be canceled and extinguished and be converted automatically into the right
to receive that portion of the aggregate amount of $43,800,000 (the "Merger
Consideration") to which such share of Compass Preferred Stock is entitled
under, and in accordance with, Article Four, Section 2(a) of the Restated
Certificate of Incorporation of Compass (the "Liquidation Preference"). Such
Liquidation Preference equals the sum of $1.00 per share plus all accrued but
unpaid dividends. Additionally, the holders of Compass Preferred Stock shall
share ratably in the difference between the Merger Consideration and the
Liquidation Preference (the "Net Merger Consideration") with the holders of the
Common Stock of Compass and the holders of vested options to purchase Common
Stock of Compass (assuming that all such options have been exercised). The
Liquidation Preference plus the portion of the Net Merger Consideration payable
to the holders of Compass Preferred Stock pursuant to this Section 2.1(c)(i)
(the "Compass Preferred Stock Consideration") shall be payable in a combination
of cash and shares of Avant! Common Stock. For the purpose of determining the
number of shares of Avant! Common Stock issuable to the holders of the Compass
Preferred Stock, the price of the Avant! Common Stock shall be closing sales
price of Avant! Common Stock as quoted on the Nasdaq National Market for the
five (5) consecutive trading days ending three (3) business days prior to the
Closing Date of the Merger (the "Average Nasdaq Per Share Price"). The total
dollar and share amounts of the Compass Preferred Stock Consideration allocated
to the holders of Compass Preferred Stock is set forth in EXHIBIT 2.1(c),
subject to appropriate adjustments at the Closing to reflect the total of
accrued but unpaid dividends as of such date and the Average Nasdaq Per Share
Price.

(ii) CONVERSION OF COMPASS COMMON STOCK OWNED BY VLSI. Each
share of the Common Stock of Compass issued and outstanding and owned by VLSI
Technology, Inc. ("VLSI") immediately prior to the Effective Time of the Merger
(other than any shares of Compass Common Stock to be canceled pursuant to
Section 2.1(b)(i) and any Dissenting Shares (as defined and to the extent
provided in Section 2.1(f)) (the "VLSI-Owned Common Stock") shall be canceled
and extinguished and be converted automatically into the right to share ratably
in the Net Merger Consideration with the holders of the Compass Preferred Stock,
the holders of the Common Stock of Compass (excluding VLSI-Owned Common Stock)
and the holders of vested options to purchase Common Stock of Compass (assuming
that all such options have been exercised). Such portion of the Net Merger
Consideration payable to VLSI pursuant to this Section 2.1(c)(ii) shall be
payable in a combination of cash and shares of Avant! Common Stock. For the
purpose of determining the number of shares of Avant! Common Stock

3
<PAGE>

issuable to VLSI pursuant to this Section 2.1(c)(ii), the price of the Avant!
Common Stock shall be the Average Nasdaq Per Share Price. The total dollar and
share amounts of such portion of the Net Merger Consideration allocated to VLSI
pursuant to this Section 2.1(c)(ii) is set forth in EXHIBIT 2.1(C), subject to
appropriate adjustments at the Closing to reflect the total of accrued but
unpaid dividends as of such date and the Average Nasdaq Per Share Price.

(iii) CONVERSION OF COMPASS COMMON STOCK NOT OWNED BY
VLSI. Each share of the Common Stock of Compass issued and outstanding
immediately prior to the Effective Time of the Merger (other than any shares of
the VLSI-Owned Common Stock, any shares of Compass Common Stock to be canceled
pursuant to Section 2.1(b)(i) and any Dissenting Shares (as defined and to the
extent provided in Section 2.1(f)) shall be canceled and extinguished and be
converted automatically into the right to share ratably in the Net Merger
Consideration with the holders of the Compass Preferred Stock, the holders of
the VLSI-Owned Common Stock of Compass and the holders of vested options to
purchase Common Stock of Compass (assuming that all such options have been
exercised). Such portion of the Net Merger Consideration allocated to the
holders of the Common Stock of Compass pursuant to this Section 2.1(c)(iii)
shall be payable in cash. The total dollar amount of such portion of the Net
Merger Consideration allocated to the holders of the Common Stock of Compass
pursuant to this Section 2.1(c)(iii) is set forth in EXHIBIT 2.1(c), subject to
appropriate adjustments at the Closing to reflect the total of accrued but
unpaid dividends as of such date and the Average Nasdaq Per Share Price.

(d) CONVERSION OF COMPASS OPTIONS. At the Effective Time of the
Merger, each unexpired and unexercised option to purchase shares of Compass
Common Stock (a "Compass Option") granted under the stock option plans and
agreements or other agreements of Compass outstanding immediately prior to the
Effective Time of the Merger shall terminate and be converted into a right to
receive a cash payment to the extent exercisable for vested shares (the "Option
Payment") from Avant!. SCHEDULE 2.1(d) hereto sets forth a true and complete
list as of the date hereof of all holders of Compass Options to purchase shares
of Compass Common Stock, including the number of shares of Compass Common Stock
subject to such options, a breakdown as between vested and unvested options, the
exercise price per share and the term of such options and the residence address
of each such holder. Three (3) days prior to the Closing Date, Compass shall
deliver to Avant! an updated SCHEDULE 2.1(d) hereto current as of the Closing
Date. With respect to each Compass Option, the amount of the Option Payment
shall be equal to the product of (a) the pro rata share of the Net Merger
Consideration minus the exercise price per share of such Option multiplied by
(b) the number of shares for which such Option is exercisable or vested at the
Effective Time of the Merger. The Option Payment shall be made to the holder of
the Option (or his or her successors) upon the Effective Time of the Merger.
The provisions of the 1992 Stock Option Plan and the applicable stock option
agreement shall control in determining when an Option becomes exercisable or
vested and to what extent an Option is forfeited in the event that the holder's
service with the Company terminates. Each Compass Option shall terminate at the
Effective Time of the Merger to the extent not exercisable for vested shares on
such date. The parties intend that the conversion of the Compass Options
hereunder will not meet the requirements of Section 424(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and this Section 2.1(d) shall be
interpreted consistent with such

4
<PAGE>

intention. Consistent with the terms of the Compass Options and the documents
governing such Compass Options, the Merger will not accelerate any Compass
Option or any right of exercise, vesting or repurchase relating thereto.
Holders of Compass Options will not be entitled to acquire Compass Common Stock
following the Merger. Holders of vested Compass Options may elect to exercise
such options prior to the Effective Time of the Merger and receive the
consideration per share delineated in Section 2.1(c)(iii) by providing notice of
such exercise and payment of the exercise price thereof to Compass at any time
prior to the Effective Time of the Merger. In the event that any holder of
vested Compass Options does not exercise such Compass Options prior to the
Effective Time of the Merger, such Compass Options shall terminate and be
converted into a right to receive the Option Payment. The right to receive the
Option Payment may not be assigned or transferred. Any attempted assignment
contrary to this Section 2.1(d) shall be null and void.

(e) COMPASS CAPITAL STOCK SUBJECT TO REPURCHASE. All cash and
shares of Avant! Common Stock received in the Merger in exchange for shares of
Compass Preferred Stock or Compass Common Stock (collectively, the "Compass
Capital Stock") that, under applicable stock purchase, stock restriction or
similar agreements with Compass, are unvested or subject to a repurchase option
or other condition of forfeiture that by its terms does not terminate due to the
Merger ("Compass Restricted Stock") will also be unvested or subject to the same
repurchase option and escrow conditions or other condition, as the case may be,
and the certificates evidencing any such shares will be marked with appropriate
legends. SCHEDULE 2.1(e) hereto sets forth a true and complete list of all
holders of Compass Restricted Stock, including the number of shares of Compass
Restricted Stock held and a breakdown as between vested and unvested shares. On
the Closing Date, Compass shall deliver to Avant! an updated SCHEDULE 2.1(e)
hereto current as of the Closing Date.

(f) DISSENTERS' RIGHTS. If, as of the Effective Time of the
Merger, holders of the issued and outstanding Compass Capital Stock are entitled
to dissenters' rights under the DGCL, or alternatively, the CGCL to the extent
Compass is determined to be a foreign corporation contemplated by Section 2115
of the CGCL and have properly exercised and not lost such dissenters' rights
("Dissenting Shares") in connection with the Merger, shares of Compass Capital
Stock shall not be converted into or represent a right to receive the cash
consideration and/or Avant! Common Stock pursuant to Section 2.1(c) but shall be
converted into the right to receive such consideration as may be determined to
be due with respect to such Dissenting Shares.

(g) FRACTIONAL SHARES. No fractional shares of Avant! Common
Stock shall be issued by virtue of the Merger, but in lieu thereof each holder
of shares of Compass Capital Stock who would otherwise be entitled to receive a
fraction of a share of Avant! Common Stock shall receive from Avant! the Average
Nasdaq Per Share Price multiplied by the fraction of a share of Avant! Common
Stock to which such holder would otherwise be entitled. The fractional share
interests of each Compass stockholder shall be aggregated, so that no Compass
stockholder shall receive cash in an amount greater than the value of one (1)
full share of Avant! Common Stock.

5
<PAGE>

2.2 EXCHANGE OF CERTIFICATES.

(a) EXCHANGE AGENT. Prior to the Closing Date, Avant! shall
appoint Harris Trust Company to act as exchange agent (the "Exchange Agent") in
the Merger.

(b) AVANT! TO PROVIDE CASH AND COMMON STOCK. Promptly after the
Effective Time of the Merger (but in no event later than ten (10) business days
thereafter), Avant! shall deposit, or shall cause to be deposited, with the
Exchange Agent for exchange in accordance with this Article II, the cash and the
aggregate number of shares of Avant! Common Stock issuable pursuant to
Section 2.1 in exchange for outstanding shares of Compass Capital Stock.

(c) EXCHANGE PROCEDURES. Within ten (10) business days after
the Effective Time of the Merger, the Exchange Agent shall mail to each holder
of record of a certificate or certificates that immediately prior to the
Effective Time of the Merger represented outstanding shares of Compass Capital
Stock (the "Certificates") and which shares were converted into the right to
receive cash and/or shares of Avant! Common Stock pursuant to Section 2.1 hereof
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Avant! may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for cash and/or certificates representing shares of Avant! Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Avant!, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor the cash payment and/or a certificate representing
the number of whole shares of Avant! Common Stock, plus cash in lieu of
fractional shares in accordance with Section 2.1(g), to which such holder of
Compass Capital Stock is entitled pursuant to Section 2.1 hereof. The
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Compass Capital Stock that is not registered on the
transfer records of Compass, the appropriate cash payment and/or a certificate
representing the number of shares of Avant! Common Stock, plus cash in lieu of
fractional shares in accordance with Section 2.1(g), may be delivered to a
transferee if the Certificate representing such Compass Capital Stock is
presented to the Exchange Agent and accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at all times after the Effective
Time of the Merger to represent the right to receive upon such surrender the
cash payment and/or a certificate representing the number of whole shares of
Avant! Common Stock, plus cash in lieu of fractional shares in accordance with
Section 2.1(g), as provided by this Article II and the provisions of the DGCL
but shall have no other right; provided, however, that customary and appropriate
certifications, indemnities and bonds allowing exchange against lost or
destroyed certificates shall be provided; and provided further that nothing in
this Section 2.2(c) shall require Avant! to make a cash payment and/or exchange
its Common Stock to any holder of Compass Capital Stock who shall fail to
surrender a Certificate representing such shares or the certification,
indemnities and bonds relating to a lost

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certificate. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Compass Capital Stock for
any cash payment and/or share of Avant! Common Stock and any other cash,
dividends or distributions delivered to a public official pursuant to applicable
abandoned property, escheat and similar laws. Promptly following the date that
is six (6) months after the Effective Date of the Merger, the Exchange Agent
shall return to the Surviving Corporation the remaining portion of the cash and
shares of Avant! Common Stock deposited with the Exchange Agent pursuant to
Section 2.2(b) in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the cash payment and/or a certificate
representing the shares of Avant! Common Stock to which such holder is entitled
pursuant hereto.

(d) NO FURTHER OWNERSHIP RIGHTS IN COMPASS CAPITAL STOCK. The
cash consideration and all shares of Avant! Common Stock delivered upon the
surrender for exchange of shares of Compass Capital Stock in accordance with the
terms hereof (including any cash paid for fractional shares in respect therefor)
shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares of Compass Capital Stock. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Compass Capital Stock that were outstanding
immediately prior to the Effective Time of the Merger. If, after the Effective
Time of the Merger, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article II.

2.3 SUPPLEMENTARY ACTION. If, at any time after the Effective Time
of the Merger, any further assignments or assurances in law or any other things
are necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either Compass or
Sub or otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered, in
the name of and on behalf of Compass and Sub, to execute and deliver any and all
things necessary or proper to vest or to perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.

ARTICLE III:
REPRESENTATIONS AND WARRANTIES OF COMPASS

Compass represents and warrants to Avant! and Sub that the
representations and warranties set forth below shall be true and correct as of
the date hereof, except as disclosed in a document delivered by Compass to
Avant! prior to the execution of this Agreement (the "Compass Disclosure
Schedules"). As used in this Agreement, "Business Condition" with respect to
Compass shall refer to Compass' financial condition, business (including
products currently under development), property, results of operations and
assets.

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3.1 ORGANIZATION, STANDING AND POWER. Compass is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now being conducted.
Compass is duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material and
adverse effect on Compass' Business Condition. Compass has delivered or made
available to Avant! complete and correct copies of its current charter and
Bylaws, and has delivered minutes of all directors' and stockholders' meetings,
complete and accurate as of the date hereof, and stock certificate books of
Compass, that correctly set forth the record ownership of all outstanding shares
of Compass Capital Stock and the addresses of each of its security holders.

3.2 CAPITAL STRUCTURE.

(a) The authorized Capital Stock of Compass consists of
40,000,000 shares of Common Stock and 2,200,000 shares of Preferred Stock. As
of the date of this Agreement, there were issued and outstanding 19,628,560
shares of Compass Common Stock, and there were issued and outstanding 2,200,000
shares of Compass Series A Preferred Stock. As of the date of this Agreement,
there were an aggregate of 1,880,774 shares of Common Stock reserved for
issuance upon the exercise of outstanding Compass Options. SCHEDULE 3.2(a) sets
forth a listing of each stockholder of Compass and the respective number of
shares of each class of Compass Capital Stock owned by each such stockholder.
Except as set forth on SCHEDULE 3.2(a), there are no outstanding shares of
Compass Capital Stock or any other equity securities or rights to purchase
equity securities of Compass, other than shares of Compass Capital Stock and
Compass Options as described in this paragraph.

(b) All outstanding shares of Compass Capital Stock are, and any
shares of Compass Capital Stock issued upon exercise of any Compass Option will
be, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, Compass' charter or Bylaws or
any agreement to which Compass is a party or by which Compass may be bound.
Except as set forth on SCHEDULE 3.2(b), all outstanding Compass Capital Stock or
other Compass securities have been issued in compliance with applicable
securities laws. Except for the Compass Options, there are no options,
warrants, calls, conversion rights, commitments or agreements of any character
to which Compass is a party or by which Compass may be bound that do or may
obligate Compass to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of Compass Capital Stock or that do or may obligate
Compass to grant, extend or enter into any such option, warrant, call,
conversion right, commitment or agreement.

(c) Except for the Compass Preferred Stock and as set forth on
SCHEDULE 2.1(e), none of the issued and outstanding shares of Compass Capital
Stock is subject to repurchase or redemption. All Compass Options have been
issued in accordance with Compass' stock option plans and all applicable
securities laws, including pursuant to valid permits or exemptions therefrom.
The Compass stock option plans and all amendments thereto have been approved by
all requisite Compass stockholder action. Compass does not have in effect any
stock appreciation rights plan and no stock appreciation rights are currently

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<PAGE>

outstanding. The consummation of the Merger shall not cause an acceleration in
the vesting of any of Compass' Capital Stock.

(d) Except for any restrictions imposed by applicable securities
laws, the Compass Bylaws, the Compass stock option plan and agreements, and the
agreements related to Compass Restricted Stock listed in SCHEDULE 2.1(e), there
is no right of first refusal, co-sale right, right of participation, right of
first offer, option or other restriction on transfer applicable to any shares of
Compass Capital Stock.

(e) Except for the Voting Agreement entered into as of the date
hereof in substantially the form attached hereto as EXHIBIT 3.2(e) (the "Voting
Agreement") with the parties listed on SCHEDULE 3.2(e) hereto, Compass is not a
party or subject to any agreement or understanding, and there is no agreement or
understanding between or among any persons that affects or relates to the voting
or giving of written consent with respect to any outstanding security of
Compass.

3.3 SUBSIDIARIES.

(a) SCHEDULE 3.3(a) hereto sets forth each subsidiary of Compass
(each a "Subsidiary"), together with the jurisdiction of incorporation or
organization of each such Subsidiary, the outstanding capital stock of each such
Subsidiary, and the record owner of all such shares of capital stock. All the
outstanding shares of capital stock of each such Subsidiary have been validly
issued and are fully paid and nonassessable and are owned by Compass free and
clear of all adverse claims, restrictions on voting or transfer, pledges,
claims, liens, charges, encumbrances and security interests or other
restrictions of any kind or nature whatsoever (collectively, "Liens"). There
are no securities convertible into or exchangeable for, or any options,
warrants, calls, subscriptions or other rights (preemptive or otherwise) to
acquire, any shares of capital stock of such Subsidiaries or any agreements or
contractual commitments other than this Agreement obligating Compass, or
restricting Compass' rights, to transfer, sell or vote, the capital stock of any
of such Subsidiaries owned by it, directly or indirectly. Except as set forth
in SCHEDULE 3.3(a) hereto, neither Compass nor any of its Subsidiaries owns,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity or has any agreement,
understanding, contract or commitment relating to an interest in any
corporation, partnership, joint venture or other entity or Compass' or such
Subsidiary's investment therein. Each Subsidiary identified on SCHEDULE 3.3(a)
hereto is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation.

(b) SCHEDULE 3.3(b) hereto sets forth a true and complete list
of all jurisdictions in which Compass and its Subsidiaries are qualified to do
business or own or lease property or have employees.

3.4 AUTHORITY.

(a) Compass has all requisite corporate power and authority to
enter into this Agreement and the Certificate of Merger and the Escrow Agreement
(collectively, the

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"Related Agreements") and, subject to approval of this Agreement and the
Certificate of Merger by the stockholders of Compass, to execute, deliver and
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Related Agreements, the performance by Compass of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Compass, including approval by its
Board of Directors, other than approval of the Compass stockholders. Each of
this Agreement and the Related Agreements is a legal, valid and binding
obligation of Compass enforceable against Compass in accordance with its
respective terms, except (i) as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors' rights
generally, (ii) that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefor may be brought, and
(iii) that indemnification for securities law violations may not be enforceable
as a matter of public policy.

(b) Subject to satisfaction of the conditions set forth in
Article VI hereto, the execution and delivery of this Agreement and the Related
Agreements do not and the performance and consummation of the transactions
contemplated hereby and thereby will not, conflict with or result in any
conflict with, breach or violation of any statute, law, rule, regulation,
judgment, order, decree, or ordinance known to Compass and applicable to Compass
or its properties or assets, or conflict with or result in any conflict with,
breach or violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation, forfeiture or
acceleration of any obligation or the loss of a benefit under, or result in the
creation of a lien or encumbrance on any of the properties or assets of Compass
pursuant to (i) any provision of the current charter or Bylaws of Compass, or
(ii) any agreement, contract, note, mortgage, indenture, lease, instrument,
permit, concession, franchise or license to which Compass is a party or by which
Compass or any of its property or assets may be bound or affected, other than
any such conflict, breach, violation or default which would not have a material
and adverse effect on the Business Condition of Compass.

(c) No consent, approval, order or authorization of, or
registration, declaration of, or qualification or filing with, any court,
administrative agency, commission, regulatory authority or other governmental or
administrative body or instrumentality, whether domestic or foreign (a
"Governmental Entity"), is required by or with respect to Compass in connection
with the execution and delivery of this Agreement and the Related Agreements by
Compass or the consummation by Compass of the transactions contemplated hereby
or thereby, except for (i) the filing of the Certificate of Merger as required
under the DGCL and appropriate documents with the relevant authorities of other
jurisdictions in which Compass is qualified to do business, (ii) compliance with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") as described in Section 5.16 and (iii) such other consents, approvals,
authorizations, registrations or qualifications as may be required under
applicable securities or Blue Sky laws in connection with the Merger.

3.5 FINANCIAL STATEMENTS. Compass has delivered to Avant! a complete
and accurate copy of its unaudited balance sheet at December 27, 1996, and its
unaudited balance

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<PAGE>

sheet at June 27, 1997, and its statement of operations, statement of cash flows
and statement of stockholders' equity, including notes thereto for the year
ended December 27, 1996, and the six months ended June 27, 1997, which are
unaudited (collectively, "the Compass Financial Statements"). The Compass
Financial Statements have been prepared internally in good faith by Compass'
management and applied on a consistent basis throughout the periods indicated
and with each other. Except for the absence of footnotes and customary year-end
adjustments in the financial statements the Compass Financial Statements fairly
present the financial position and operating results of Compass as of the dates,
and for the periods, indicated therein. The Compass Financial Statements have
been prepared with the understanding that: (i) materiality thresholds reflect
management judgments based on consolidated VLSI financial results; (ii) no
attempt has been made to apply carve out accounting principles; and (iii) income
tax provisions are based on the VLSI/Compass tax sharing agreement and do not
take into account FAS 109 on a separate company basis.

3.6 PAYABLES; RECEIVABLES.

(a) All accounts payable and notes payable by Compass to third
parties as of the date hereof arose, and as of the Closing, will have arisen, in
the ordinary course of business.

(b) All of the accounts receivable and notes receivable, net of
allowances, owing to Compass as of June 27, 1997 and as of the Closing are, or
will be, set forth in SCHEDULE 3.6 or an updated SCHEDULE 3.6 delivered at the
Closing, respectively, and constitute, and as of the Effective Time of the
Merger will constitute, valid and enforceable claims arising from bona fide
transactions in the ordinary course of business collectible in the recorded
amounts thereof, to the extent not previously collected (provided further that
this representation regarding collectibility of accounts shall be breached only
to the extent the sum of all uncollectible accounts exceeds the allowances in
the balance sheet as of June 27, 1997 in the Compass Financial Statements or
allowances made in the updated SCHEDULE 3.6 delivered at the Closing, which
allowances have been and shall be calculated in a manner consistent with the
methodologies and practices used by Compass in preparing its balance sheet as of
December 27, 1996), and, there are no known, contingent or asserted claims,
refusals to pay, rights of return, or other rights of set-off against any
thereof. As of the date hereof, and as of the Closing, there is and will be no
account receivable or note receivable that is pledged to any third party by
Compass.

(c) As of June 27, 1997, there are no debts, liabilities,
obligations or claims against Compass of any nature, whether accrued, absolute,
contingent or otherwise (collectively "Liabilities"), and whether due or to
become due, that would be required to be reflected in a balance sheet, or in the
notes thereto, that are not disclosed or provided for in the Compass Financial
Statements or the notes thereto. As of the date hereof, Compass has no
Liabilities other than those specifically set forth in the Compass Financial
Statements or that have arisen in the ordinary course of business since June 27,
1997. All of Compass' general ledgers, books and records have been made
available to Avant!. Compass does not have any of its records, systems,
controls, data or information recorded, stored, maintained, operated or

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<PAGE>

otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
that (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of Compass or its parent, VLSI. Compass'
financial reserves in the Compass Financial Statements are adequate to cover
claims already incurred. The provision for taxes of Compass as set forth in the
Compass Financial Statements is adequate and accurate for taxes due or accrued
as of such date.

3.7 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 3.7,
Compass is in compliance and has conducted its business and operations so as to
comply with all laws, ordinances, rules and regulations, judgments, decrees or
orders of any Governmental Entity known to Compass. There are no judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against Compass or against any
of its properties or businesses, and none are pending or, to Compass' knowledge,
threatened in writing. Compass has not during the past three (3) years received
any governmental notice from any Governmental Entity for any violation of
applicable laws or regulations. Compass has all valid and current permits,
licenses, orders, authorizations, registrations, approvals and other instruments
(each of which is in full force and effect), and Compass has made all filings
and registrations and the like necessary or required by law to conduct its
business.

3.8 NO DEFAULTS. Except as set forth in SCHEDULE 3.8, Compass is
not, and it has not received notice that it is or would be with the passage of
time, in violation of any provision of its current charter or Bylaws or in
default or violation of any term, condition or provision of (a) any judgment,
decree, order, injunction or stipulation applicable to Compass, or (b) any
agreement, note, mortgage, indenture, law, statute, rule, regulation, contract,
lease, instrument, permit, concession, franchise or license to which Compass is
a party or by which Compass or its properties or assets may be bound other than
a default or violation that would not have a material and adverse effect on
Compass' Business Condition.

3.9 LITIGATION. Except as set forth in SCHEDULE 3.9, there is no
action, suit, proceeding, claim, arbitration or investigation pending or, to the
best of Compass' knowledge, threatened against Compass or, to the best of
Compass' knowledge, any of its officers or directors (in their capacities as
such), nor is there any reasonable basis therefor known to Compass. There is no
action, suit, proceeding or investigation by Compass currently pending or which
it intends to initiate. Compass is not a party to or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or Governmental
Entity. Compass has delivered to Avant! correct and complete copies of all
correspondence prepared by its counsel for Compass' independent public
accountants in connection with the last three (3) completed annual Compass
Financial Statements and any such correspondence since the date of the last
Compass Financial Statement.

3.10 CONDUCT IN THE ORDINARY COURSE. Except as set forth in
SCHEDULE 3.10, since June 27, 1997, Compass has conducted its business in the
ordinary course and there has not occurred:

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<PAGE>

(a) Any change in the assets, liabilities, Business Condition or
operating results from that reflected in the Compass Financial Statements at,
and for the six months ended, June 27, 1997 and that might reasonably be
expected to have a material and adverse affect on the Business Condition of
Compass;

(b) Any amendments or changes in the charter or Bylaws of
Compass;

(c) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the Business Condition of
Compass;

(d) Any issuance, redemption, repurchase or other acquisition of
shares of Compass Capital Stock (other than issuances pursuant to exercise of
Compass Options or repurchases of Common Stock at cost in the ordinary course
under the terms of agreements relating to Compass Restricted Stock), or any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to Compass Capital Stock;

(e) Any increase in or modification of the compensation or
benefits payable or to become payable by Compass to any of its service providers
or changes pursuant to employment agreements currently in effect or changes in
position;

(f) Any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement (including,
without limitation, the granting of stock options, restricted stock awards or
stock appreciation rights) made to, for or with any of its service providers;

(g) Any (i) sale of the property or assets of Compass
individually in excess of $10,000 or in the aggregate in excess of $25,000 other
than inventory sales or nonexclusive end user license grants in the ordinary
course of business consistent with past practice or (ii) any mortgage, pledge,
transfer of a security interest in, or lien created by it, with respect to any
of its properties or assets, except liens for taxes not yet due or payable
(other than liens arising under existing lease financing arrangements, liens
arising in the ordinary course of Compass' business that in the aggregate are
not material and liens for Taxes not yet due and payable);

(h) Any alteration in any term of any outstanding security of
Compass;

(i) Any (i) incurrence, assumption or guarantee by Compass of
any debt for borrowed money other than trade indebtedness incurred in the
ordinary course of business consistent with past practice; (ii) any waiver or
compromise by it of a valuable right or of a debt owed to it; (iii) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by it, except that which is not material to its Business Condition;
(iv) issuance or sale of any securities convertible into or exchangeable for
debt securities of Compass; or (v) issuance or sale of options or other rights
to acquire from Compass, directly or indirectly, debt securities of Compass or
any securities convertible into or exchangeable for any such debt securities;

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<PAGE>

(j) Any creation or assumption by Compass of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing lease financing arrangements, liens arising in the
ordinary course of Compass' business that in the aggregate are not material and
liens for Taxes not yet due and payable);

(k) Any making of any loan, advance or capital contribution to,
or investment in, any person other than advances made in the ordinary course of
business of Compass consistent with Compass' past practices;

(l) Any entry into, amendment of, relinquishment, termination or
nonrenewal by Compass of any contract, lease, commitment or other right or
obligation other than in the ordinary course of business consistent with past
practice;

(m) Any transfer or grant of a right under the Compass
Intellectual Property Rights (as defined in Section 3.17) other than those
transferred or granted in the ordinary course of business consistent with past
practice;

(n) Any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of Compass;

(o) Any resignation or termination of employment of any of its
key employees (and Compass does not know of the impending resignation or
termination of employment of any such employee); or

(p) Any agreement or arrangement made by Compass to take any
action that, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Section 3.10 untrue or incorrect as
of the date when made.

3.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 3.11 and in the Compass Financial Statements, Compass has no
liabilities or obligations (whether absolute, accrued or contingent, and whether
or not determined or determinable) of a character that should be accrued, shown,
disclosed, reserved or indicated in a balance sheet of Compass (including the
footnotes thereto).

3.12 DOCUMENTS AND INFORMATION SUPPLIED. The copies of all
instruments, agreements, and documents delivered by Compass, its stockholders
and professional advisors to Avant! and Sub or their counsel and accountants are
and will be true and correct copies of such documents. No representations or
warranties made by Compass in this Agreement, nor any document, information,
statement, financial statement, communication, letter, certificate or exhibit
prepared and furnished or to be prepared and furnished by Compass or its
representatives to Avant! or Sub pursuant hereto or in connection with the
transactions contemplated hereby contain or will contain any untrue statement of
a material fact, or omit or will omit to state a material fact necessary to make
the statements or facts contained herein or therein, in light of the
circumstances under which made, not misleading.

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3.13 CERTAIN AGREEMENTS. Except as set forth in SCHEDULE 3.13,
neither the execution and delivery of this Agreement or any of the Related
Agreements nor the consummation of the transactions contemplated hereby or
thereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any service provider of Compass under any Plan (as defined in
Section 3.14 below) or otherwise, (b) materially increase any benefits otherwise
payable under any Plan, or (c) result in the acceleration of the time of payment
or vesting of any such benefits.

3.14 EMPLOYEE PLANS.

(a) Compass has not failed to comply in any material
respect with Title VII of the Civil Rights Act of 1964, as amended, the Fair
Labor Standards Act, as amended, the Occupational Safety and Health Act of 1970,
as amended, all applicable federal, state, and local laws, rules, and
regulations relating to employment, and all applicable laws, rules, and
regulations governing payment of minimum wages and overtime rates, and the
withholding and payment of compensation of employees, except where the failure
to so comply will not have a material and adverse effect on Compass' Business
Condition.

(b) Compass is not a party to, nor has Compass made any
contribution to or otherwise incurred any obligation under, any "multiemployer
plan" as defined in Section 3(37) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").

(c) All plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document) maintained by or
on behalf of Compass that provide deferred or incentive compensation, stock
options or other stock purchase rights, severance or termination pay, medical,
dental, death, disability or accident benefits (whether or not insured),
collective bargaining agreements, or pension, profit sharing, savings or
retirement benefits to, or for the benefit of, any active, former or retired
service providers of Compass or their spouses or dependents are set forth in
SCHEDULE 3.14 (collectively, the "Plans").

(d) Compass has made available to Avant! or their counsel
complete and accurate copies of each Plan. Compass has prepared in good faith
and timely filed all requisite governmental reports and has properly and timely
posted, or distributed all notices and reports to employees required to be
filed, posted, or distributed with respect to each Plan, except where the
failure to so comply will not have a material and adverse affect on Compass'
Business Condition. Each Plan has at all times been operated and administered
in all material respects in accordance with its terms and all applicable laws
currently in effect, including ERISA and the Code, and including but not limited
to, amendments to Section 401(a) of the Code enacted by the Tax Reform Act of
1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus Budget
Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988,
and the Omnibus Budget Reconciliation Act of 1989.

(e) Compass has not violated in any material respect any of
the health care continuation coverage requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") applicable to its employees prior to
the Time of Closing.

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(f) There are no "reportable events" under Section 4043 of
ERISA with respect to any pension benefit plan within the meaning of
Section 3(2) of ERISA, subject to Title IV of ERISA, and Compass has not
incurred any liability under Title IV of ERISA in connection with the
termination of any pension benefit plan or the complete or partial withdrawal
from any multiemployer plan within the meaning of Section 3(37) of ERISA.

3.15 MAJOR CONTRACTS. Except as set forth in SCHEDULE 3.15, Compass
is not a party to or subject to:

(a) Any union contract or any employment or consulting
contract or arrangement other than stock option or stock purchase agreements or
proprietary information agreements, written or oral with any director, officer
or affiliate;

(b) Any original equipment manufacturer agreement,
distribution agreement, volume or quantity purchase agreement or other similar
agreement (each a "Distribution Agreement"), or joint marketing, joint
development or joint venture contract or arrangement or any other agreement that
has involved or is expected to involve a sharing of profits with other persons
or provides for payments of more than $75,000 per annum;

(d) Any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, leasehold obligations or
otherwise;

(e) Any license agreement over $100,000, either as licensor
or licensee other than standard end-user licensing agreements entered into in
the ordinary course of business;

(f) Any contract containing covenants purporting to limit
the freedom of Compass directly or indirectly to distribute or otherwise compete
in any line of business in any geographic area or with any third party;

(g) Any agreement of indemnification, except
indemnification provided in the ordinary course of business for officers and
directors pursuant to applicable corporate law;

(h) Any agreement, contract or commitment relating to
capital expenditures involving payments of more than $75,000 per annum;

(i) Any agreement, contract or commitment relating to the
disposition or acquisition by Compass of any assets (other than Inventory) or
any Compass Intellectual Property Rights (as defined in Section 3.17 below),
other than nonexclusive object code end-user license grants in the ordinary
course of business;

(j) Any agreement providing for minimum payment or resale
obligations, ongoing support or research and development obligations, or
warranty obligations on the part of Compass, except arrangements entered into in
the ordinary course of business;

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(k) Any agreement for the provision of products or
securities to any Governmental Entity, except customer agreements entered into
in the ordinary course of business;

(l) Any agreement requiring a commitment of Compass
resources or personnel to market, distribute or license products or technology,
whether on a best-efforts basis or otherwise;

(m) Any other agreement, contract, letter of intent,
memorandum of understanding or commitment that is material to Compass and that
provides for payments of more than $75,000 per year;

(n) Service contracts in excess of $100,000 for products
and contracts relating to material amounts of deferred revenues; or

(o) Any sole or limited source supplier agreements (written
or oral).

Except as set forth on SCHEDULE 3.15, each agreement, contract,
mortgage, indenture, plan, lease, instrument, permit, concession, franchise,
arrangement, license and commitment to which Compass is a party or by which it
is bound as set forth in SCHEDULE 3.15 (or required to be set forth in
SCHEDULE 3.15) (i) is valid and binding on Compass, (ii) is in full force and
effect and (iii) has not been breached by Compass or, to the best of Compass'
knowledge, any other party thereto in a manner that is material and adverse to
the Business Condition of Compass. To the best of Compass' knowledge, no party
to any such contract, agreement or instrument intends to cancel, withdraw,
modify or amend such contract, agreement or arrangement. Compass is not aware
of any facts from which it should reasonably conclude that it will not be able
to perform in all material respects the obligations required to be performed by
it subsequent to the date hereof under each such agreement, which
non-performance would reasonably be expected to result in a material and adverse
change to the Business Condition of Compass.

3.16 TAXES. Federal income tax returns and certain other Tax
returns have been filed on a combined or consolidated basis by VLSI. All Tax
returns, statements, reports, declarations and other forms and documents
(including without limitation estimated Tax returns and reports and material
information returns and reports) required to be filed with any Tax authority
with respect to any Taxable period ending on or before the Closing (or, in the
case of a Tax Return that is not filed with respect to a period) that is due on
or before the Closing, by or on behalf of Compass (collectively, "Tax Returns"
and individually a "Tax Return"), have been or will be completed and filed when
due (including any extensions of such due date), all such Tax Returns were or
will be complete and accurate as filed, and all amounts shown due on such Tax
Returns on or before the Effective Time of the Merger have been or will be paid
on or before such date. The Compass Financial Statements (i) fully accrue all
actual and contingent liabilities

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for Taxes (whether or not shown as due on the Tax Returns) with respect to all
periods or portions thereof through June 27, 1997 and Compass has not incurred
and will not incur any Tax liability in excess of the amount reflected on its
June 27, 1997 balance sheet included in the Compass Financial Statements with
respect to such periods or portions thereof, and (ii) fully accrues all material
liabilities for Taxes payable after June 30, 1997 with respect to all
transactions and events occurring on or prior to such date. All information set
forth in the notes to the Compass Financial Statements relating to Tax matters
is true, complete and accurate in all material respects. No Tax liability since
June 27, 1997 has been incurred by Compass in excess of the amount of Tax
liability that would have been incurred in the ordinary course of business of
Compass during such period had Compass not been a member of an affiliated,
consolidated, combined or unitary group for Tax purposes during any part of such
period and adequate provision has been made by Compass for all Taxes since that
date on at least a quarterly basis. Compass has withheld and paid to the
applicable financial institution or Tax authority all amounts required to be
withheld. Except as set forth on SCHEDULE 3.16, to the best knowledge of
Compass, no Tax Returns filed with respect to Taxable years of Compass through
the Taxable year ended December 31, 1996 in the case of the United States, have
been examined and closed. Compass (or any member of any affiliated or combined
group of which Compass has been a member) has not granted any extension or
waiver of the limitation period applicable to any Tax Returns that is still in
effect. Except as set forth on SCHEDULE 3.16, there is no material claim,
audit, action, suit, proceeding, or (to the best knowledge of Compass)
investigation now pending or (to the best knowledge of Compass) threatened
against or with respect to Compass in respect of any Tax or assessment. Except
as set forth on SCHEDULE 3.16, no notice of deficiency or similar document of
any Tax authority has been received by Compass, and there are no liabilities for
Taxes (including liabilities for interest, additions to Tax and penalties
thereon and related expenses) with respect to the issues that have been raised
(and are currently pending) by any Tax authority that could, if determined
adversely to Compass, materially and adversely affect the liability of Compass
for Taxes. There are no liens for Taxes (other than for current Taxes not yet
due and payable) upon the assets of Compass. Compass is in full compliance with
all the terms and conditions of any Tax exemptions or other Tax-sharing
agreement or order of a foreign government and the consummation of the Merger
will not have any adverse effect on the continued validity and effectiveness of
any such Tax exemption or other Tax-sharing agreement or order. Neither Compass
nor any person on behalf of Compass has entered into or will enter into any
agreement or consent pursuant to the collapsible corporation provisions of
Section 341(f) of the Code (or any corresponding provision of state, local or
foreign income tax law) or agreed to have Section 341(f)(2) of the Code (or any
corresponding provision of state, local or foreign income tax law) apply to any
disposition of any asset owned by Compass. None of the assets of Compass is
property that Compass is required to treat as being owned by any other person
pursuant to the so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Code. None of the assets of Compass directly or
indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code. None of the assets of Compass is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. Compass has not
made and will not make a deemed dividend election under Treas. Reg. Section
1.1502-32(f)(2) or a consent dividend election under Section 565 of the Code.
Compass has not participated in (and will not participate in) an international
boycott within the meaning of Section 999 of the Code. Except as set forth on
SCHEDULE 3.16 hereto, Compass does not have and has not had a permanent

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establishment in any foreign country, as defined in any applicable tax treaty or
convention between the United States of America and such foreign country. All
material elections with respect to Compass' Taxes made during the fiscal years
ending December 27, 1994, 1995 and 1996 are reflected on the Compass Tax Returns
for such periods, copies of which have been provided to Avant!. There is no
agreement, contract or arrangement to which Compass is a party that could,
individually or collectively, result in the payment of any amount that would not
be deductible by reason of Sections 280G (as determined without regard to
Section 280G(b)(4)), 162 (other than 162(a)) or 404 of the Code. Compass is not
a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement (whether written or unwritten or arising under operation of federal
law as a result of being a member of a group filing consolidated Tax returns,
under operation of certain state laws as a result of being a member of a unitary
group, or under comparable laws of other states or foreign jurisdictions) which
includes a party other than Compass nor does Compass owe any amount under any
such Agreement. Compass has previously provided or made available to Avant!
true and correct copies of all Tax Returns, and, as reasonably requested by
Avant!, prior to or following the date hereof, presently existing information
statements and reports. Compass is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Other than by reason of the Merger, Compass has not been and will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. For
purposes of this Agreement, the following terms have the following meanings:
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any and all
taxes including, without limitation, (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, value added, net worth, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period or as
the result of being a transferee or successor thereof and (iii) any liability
for the payment of any amounts of the type described in (i) or (ii) as a result
of any express or implied obligation to indemnify any other person. As used in
this Section 3.16, the term "Compass" means Compass and any entity included in,
or required to be included in, or required under generally accepted accounting
principles ("GAAP") to be included in any of the Compass Financial Statements.

3.17 INTELLECTUAL PROPERTY.

(a) Except as otherwise set forth in SCHEDULE 3.17, Compass
owns, or is licensed or otherwise entitled to exercise, without material
restriction, all rights to all patents, trademarks, trade names, service marks,
copyrights, mask work rights, trade secret rights and other intellectual
property rights, and any applications or registrations therefor, and all mask

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works, net lists, schematics, technology, source code, know-how, computer
software programs and all other tangible and intangible information or material
used in the business of Compass as currently conducted or in connection with
products currently under development without any conflict or infringement of the
rights of others (collectively, the "Compass Intellectual Property Rights").
All of the trademarks, trade names, service marks and registered copyrights
included in such Compass Intellectual Property Rights are set forth in
SCHEDULE 3.17. Except as set forth on SCHEDULE 3.17, Compass has no patents,
patent applications or copyright registrations. In addition, Compass has taken
all reasonable and practicable steps (including, without limitation, entering
into confidentiality and non-disclosure agreements with all officers and
employees of and consultants to Compass with access to or knowledge of Compass'
Intellectual Property Rights that Compass wishes to maintain as confidential) to
maintain the secrecy and confidentiality of and its proprietary rights in, all
Compass Intellectual Property Rights that Compass wishes to maintain as
confidential.

(b) SCHEDULE 3.17 also lists (i) all patents and patent
applications and all registered copyrights, trade names, trademarks, service
marks and other company, product or service identifiers included in the Compass
Intellectual Property Rights, and specifies the jurisdictions in which each such
Compass Intellectual Property Right has been registered, including the
respective registration numbers; (ii) other than nonexclusive end-user licenses
entered into in the ordinary course of business, all licenses, sublicenses and
other agreements as to which Compass is a party and pursuant to which Compass or
any other person is authorized to use any Compass Intellectual Property Right;
and (iii) all licenses under which Compass is or may be obligated to make
royalty or other payments. Copies of all licenses, sublicenses, and other
agreements identified pursuant to clause (ii) above have been delivered by
Compass to Avant!.

(c) Compass is not in violation in any material respect of
any license, sublicense or agreement described in SCHEDULE 3.17. As a result of
the execution and delivery of this Agreement or the performance of Compass'
obligations hereunder, Compass will not be in violation in any material respect
of any license, sublicense or agreement described in SCHEDULE 3.17, or lose or
in any way impair any rights pursuant thereto.

(d) Compass is the absolute owner or exclusive licensee of,
with all necessary right, title and interest in and to (free and clear of any
liens, encumbrances or security interests), the Compass Intellectual Property
Rights and has rights to the use, sale, license or disposal thereof in
connection with the services or products in respect of which the Compass
Intellectual Property Rights are being used or proposed to be used in connection
with products currently under development.

(e) No claims with respect to the Compass Intellectual
Property Rights have been asserted to Compass, or to Compass' knowledge, are
threatened by any person, (i) to the effect that Compass infringes any
copyright, patent, trade secret, or other intellectual property right of any
third party or violates any license or agreement with any third party, (ii)
contesting the right of Compass to use, sell, license or dispose of any Compass
Intellectual Property Rights, or (iii) challenging the ownership, validity or
effectiveness of any of the Compass Intellectual Property Rights.

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(f) To Compass' knowledge, all trademarks, service marks,
and other company, product or service identifiers held by Compass are valid and
subsisting.

(g) To the best of Compass' knowledge, there has not been
and there is not now any unauthorized use, infringement or misappropriation of
any of the Compass Intellectual Property Rights by any third party, including,
without limitation, any service provider of Compass; Compass has not been sued
or charged as a defendant in any claim, suit, action or proceeding that involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
other intellectual property rights. To Compass' knowledge, it does not have any
infringement liability with respect to any patent, trademark, service mark,
copyright or other intellectual property right of another.

(h) No Compass Intellectual Property Right is subject to
any outstanding order, judgment, decree, stipulation or agreement restricting in
any manner the licensing thereof by Compass. Compass has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Compass Intellectual Property Right, except in the ordinary course of
business. Compass has not entered into any agreement granting any third party
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any Compass Intellectual Property Right. Compass has
the exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Compass Intellectual Property Rights developed
or owned by Compass, except patents and patent applications previously assigned
to VLSI.

3.18 EMPLOYEE AGREEMENTS. To the best of Compass' knowledge, no
service provider of Compass is in violation of any term of any judgment, decree
or order, or any term of an employment contract (whether written or verbal),
patent or trademark disclosure agreement or any other contract or agreement
relating to the relationship of any such service provider with Compass or any
other party (including prior employers), because of the nature of the business
now conducted by Compass. Each current and former service provider of Compass
has executed a proprietary information and inventions agreement (or similar
agreement) with Compass in the form then being used by Compass, all of which
forms have been attached to SCHEDULE 3.18.

3.19 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
SCHEDULE 3.19, there is no agreement, judgment, injunction, order or decree
binding upon Compass or which has or could reasonably be expected to have the
effect of prohibiting or significantly impairing any material business practice
of Compass, any material acquisition of property by Compass, or the continuation
of the business of Compass as currently conducted.

3.20 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES:
CONDITION OF EQUIPMENT.

(a) Compass does not own any real property.

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(b) All of the existing Compass real property leases have
been previously delivered to Avant!. SCHEDULE 3.20 sets forth a complete and
accurate list of all real property leased by Compass.

(c) Compass owns or has valid leasehold interests in all of
its tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens (other than liens for Taxes that are not
yet delinquent), charges, pledges, security interests or other encumbrances,
except as reflected in the Compass Financial Statements and except for such
imperfections of title and encumbrances, if any, that are not substantial in
character, amount or extent, and that do not and are not reasonably likely to
materially detract from the value, or interfere with the use, as presently
conducted, of the property subject thereto or affected thereby. Compass has
delivered to Avant! correct and complete copies of each lease identified in
SCHEDULE 3.20 and such lease(s) are valid and enforceable by Compass in
accordance with their terms, except (i) as enforcement may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights generally, and (ii) that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought. Compass has received no notice that, and, to the best
of Compass' knowledge, no circumstance exists which, with the passage of time or
the giving of notice could constitute a default under, any such lease(s).
Except as set forth in SCHEDULE 3.20, no consent of any party is required to any
lease of which Compass is a party as a consequence of the Merger.

(d) Each item of machinery and equipment (the "Equipment")
owned or leased by Compass is listed in SCHEDULE 3.20, except such Equipment
which individually has a net book value of less than $50,000. The Equipment is
(i) adequate for the conduct of the business of Compass consistent with its past
practice, (ii) suitable for the uses to which it is currently employed, (iii) in
good operating condition, (iv) regularly and properly maintained, and (v) not
obsolete, dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business.

(e) Since June 27, 1997, there has not occurred any
transfer of title other than in the ordinary course of business, any material
abandonment, or any material pilferage or any other material loss with respect
to, any of its property, plant or equipment.

(f) SCHEDULE 3.20 also contains a true and correct list of
all of the physical assets (including fixed assets) having a net book value in
excess of $50,000 owned or leased by Compass or on consignment, provided that
leased property may be summarized on such schedule by lessor, lease number,
amount financed and type of equipment. All improvements on leased property used
in the business of Compass and the present use thereof are performed in all
material respects in accordance with all applicable laws. The net book value of
any fixed assets used in Compass' business has not been written up or down,
other than pursuant to depreciation or amortization expense in accordance with
its historical practice.

3.21 GOVERNMENTAL AUTHORIZATIONS AND LICENSES. SCHEDULE 3.21 sets
forth all of Compass' licenses, authorizations, permits, concessions,
certificates and other franchises of any Governmental Entity required to operate
its business as currently conducted (collectively, the

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Government Licenses). Compass is in compliance in all material respects with
the terms, conditions, limitations, restrictions, standards, prohibitions,
requirements and obligations of such Government Licenses. The Government
Licenses are in full force and effect. There is not now pending, nor, to the
best of Compass' knowledge, is there threatened, any action, suit, investigation
or proceeding against Compass before any Governmental Entity with respect to the
Government Licenses, nor is there any issued or outstanding notice, order or
complaint with respect to the violation by Compass of the terms of any
Government License or any rule or regulation applicable thereto.

3.22 ENVIRONMENTAL MATTERS.

(a) For purposes of this Section 3.22, the following terms
shall have the following meanings:

(i) "Court Order" shall mean any judgment, order,
award or decree of any foreign, federal, provincial, state, local or other court
or tribunal, or any Governmental Entity, and any award in any arbitration
proceeding.

(ii) "Disposal Site" shall mean landfill, disposal
agent, waste hauler or recycler of Hazardous Materials.

(iii) "Environmental Encumbrance" shall mean any
lien, claim, charge, security interest, mortgage, pledge, easement, conditional
sale or other title retention agreement, defect in title, covenant or other
restrictions of any kind in favor of any Governmental Entity for (i) any
liability under any Environmental Law or (ii) damages arising from, or costs
incurred by such Governmental Entity in response to, a Release or threatened
Release of Hazardous Material into the environment.

(iv) "Environmental Laws" shall mean all
Requirements of Laws that relate to any Hazardous Material, any Hazardous
Materials Activities or the use, handling, transportation, production, spin,
lead pumping, injection, deposit, disposal discharge, Release, threatened
Release, migration, emission, sale or storage of, or the exposure of any person
to, Hazardous Material

(v) "Governmental Permits" shall mean all licenses,
franchises, permits, privileges, immunities, approvals and other authorizations
from a Governmental Entity.

(vi) "Hazardous Material" shall mean any material or
substance that is prohibited or regulated by any Requirement of Law or that is
designated by any Governmental Entity to be radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment.

(vii) "Hazardous Materials Activities" shall mean the
generation, release, storage, use, handling, transportation, distribution, sale,
Release or threatened Release of, or Remedial Action concerning any Hazardous
Material, performed in connection with Compass' business or the Real Property.

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(viii) "Real Property" shall mean real property now or
at any time in the past owned or leased by Compass or any predecessors.

(ix) "Release" shall mean release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of Hazardous Material in, on, under or through the Real Property or
the air, soil, surface water, ground water or improvements thereof.

(x) "Remedial Action" shall mean any reporting,
investigation, characterization, feasibility study, health assessment, risk
assessment, remediation, treatment, recycling, removal, transport, monitoring,
maintenance or any other activity incident to the Release, threatened Release,
investigation, remediation or removal of Hazardous Material existing on the Real
Property or in, on, under or through the air, soil, ground water, surface water
or improvements thereof.

(xi) "Requirements of Laws" shall mean any laws,
statutes, regulations, rules, guidelines, codes, ordinances, judgments,
injunctions' decrees, orders, permits, approvals, treaties or protocols enacted,
adopted, issued or promulgated by any Governmental Entity (including, without
limitation, those pertaining to electrical building, zoning, environmental and
occupational safety and health requirements) or common law in effect on the date
hereof.

(b) Except to the extent described in reasonable detail in
SCHEDULE 3.22 hereto:

(i) Compass complies in all respects with any
applicable existing federal, state or local law, statute or regulation, or any
existing decree, order, arbitration award, or any license or permit issued by
any federal, state or local governmental authority relating to the Environmental
Laws, including, without limitation, Environmental Laws relating to: (i)
Hazardous Materials; (ii) air, water and noise pollution; (iii) ground water
contamination; (iv) the release or threatened release into the environment of
Hazardous Materials; (v) the protection of wildlife, marine sanctuaries and
wetlands; (vi) the protection of natural resources; (vii) storage tanks, vessels
and related equipment; (viii) abandoned or discarded barrels, containers and
other closed receptacles; (ix) health and safety of employees and other persons;
and (x) otherwise relating to the manufacture, processing, use, distribution,
treatment, storage, disposal, transportation or handling of Hazardous Materials;

(ii) Compass has obtained all environmental health
and safety Governmental Permits necessary for its operation or required by any
Environmental Laws, all such Governmental Permits are in good standing, and
Compass is in compliance in all material respects with all terms and conditions
of such permits;

(iii) to Compass' knowledge, none of Compass nor any
of the Real Property or present or past Compass operations is subject to any
pending or ongoing investigation by notice or order from or agreement with any
person with respect to (A) any claim

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of Environmental Law, (B) any Remedial Action or (C) any claim of losses and
expenses arising from the Release or threatened Release of Hazardous Material;

(iv) Compass is not subject to any pending or
existing judicial or administrative proceeding, Court Order or settlement
alleging or addressing a violation of or liability under any Environmental Law;

(v) Compass has not filed, and Compass does not
intend to file any notice or report under any Environmental Law reporting a
violation of any Environmental Law;

(vi) to Compass' knowledge, there is not now, and
there has never been, on or under any Real Property; (A) any underground storage
tank or surface impoundment; or (B) any landfill or waste pile that either is or
was used to dispose or store any Hazardous Material or contains or contained
Hazardous Material;

(vii) Compass has not received any notice of claim to
the effect that it is or may be liable to any person as a result of the Release
or threatened Release of Hazardous Material into the environment or any
Hazardous Materials Activities from or on any Real Property;

(viii) There are no written notices or written
complaints which Compass has received in violation of the Environmental Laws;

(ix) Compass is not aware of any Environmental
Encumbrance on any Real Property;

(x) to Compass' knowledge, any asbestos-containing
material that is on or part of any Real Property is in good repair according to
the current standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law;

(xi) none of the products Compass manufactures,
distributes or sells or has manufactured, distributed or sold in the past,
contains substantial amounts of asbestos containing material;

(xii) to Compass' knowledge, no Hazardous Material is
present on Real Property;

(xiii) Hazardous Materials Activities (A) have been
conducted in compliance with applicable Environmental Laws, and (B) have not
resulted in the exposure of any person to Hazardous Material in a manner that
has or will cause an adverse health effect to such person;

(xiv) no Court Order, action, proceeding, liability
or claim exists or, to Compass' knowledge, is threatened, against any Disposal
Site used by Compass or against

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Compass with respect to any transfer or release of Hazardous Materials by
Compass to a Disposal Site used by Compass, and there is no valid basis for such
claim based on any conduct of Compass;

(xv) Compass is not aware of any fact or
circumstance that is reasonably expected to involve Compass in any environmental
litigation or impose upon Compass any environmental liability that would have a
material and adverse effect on the Business Condition of Compass; and

(xvi) Compass has no records pertaining to
environmental audits or environmental assessments of any Real Property.

(c) Except to the extent described in reasonable detail on
SCHEDULE 3.22 attached hereto, there have been no events, conditions,
circumstances, activities, practices, incidents, actions or plans (i) which may
prevent continued compliance by Compass with the Environmental Laws or which may
give rise to any criminal or civil liability on the part of Compass or Avant!
under the Environmental Laws, and (ii) which could have a material adverse
effect on the Compass' Business Condition.

3.23 INSURANCE. Excluding any policies held by VLSI that included
coverage for Compass as a majority-owned subsidiary, SCHEDULE 3.23 lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of Compass, and the
amounts of coverage under each such policy and bond of Compass. Compass has not
been refused any requested coverage and no material claim made by Compass has
been denied by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid, and Compass is otherwise in
full compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). Compass is in
compliance in all material respects with each of such policies. Compass does
not know of any threatened termination of, the invalidation of any coverage of
or premium increase with respect to, any of such policies.

3.24 LABOR MATTERS. Compass is in compliance in all material
respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment and
wages and hours and occupational safety and health and employment practices, and
Compass is not engaged in any unfair labor practice. Compass has not received
any notice from any Governmental Entity; and, to the best of Compass' knowledge,
there has not been asserted before any Governmental Entity, any claim action or
proceeding to which Compass is a party or involving Compass, and there is
neither pending nor, to the best of Compass' knowledge, threatened any
investigation or hearing concerning Compass arising out of or based upon any
such laws, regulations or practices. There are no strikes or labor disputes
pending or threatened by or any attempts at union organization of any Compass
employees. No employee or group of employees whose continued services are
material to Compass business as presently conducted and as intended to be
conducted with regard to products currently under development has terminated
employment and, to the best of Compass' knowledge, there is none that intends to
do so.

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2.25 PERSONNEL. Set forth on SCHEDULE 3.25 is a true and complete
list identifying all current directors, officers, regular and temporary
employees, independent contractors and consultants of Compass, as of the date
hereof, setting forth the job title of, salary (including bonuses and
commissions) payable to each such person and the location at which each employee
is based. None of such service providers whose annual base compensation exceeds
$100,000 has indicated to Compass a present intention to resign or retire.
Except as may be modified by law for employees outside the State of California,
the employment of each of Compass' employees is at-will employment. Except as
set forth on SCHEDULE 3.25, Compass does not have any obligation (i) to provide
any particular form or period of notice prior to termination or (ii) to pay any
of such employees any severance benefits in connection with their termination of
employment or service. In addition, no severance pay will become due to any
Compass employees or other service providers in connection with the Merger as a
result of any Compass agreement, plan or program. Except as set forth on
SCHEDULE 3.25, Compass has not entered into any consulting agreements with any
service provider who owes services to or are owed compensation by Compass for
services provided.

3.26 QUESTIONABLE PAYMENTS. Neither Compass nor any director,
officer or other employee, agent or representative of Compass has (a) made any
illegal payments or provided services or other favors that are illegal in the
United States of America or in any foreign country in order to obtain
preferential treatment or consideration by any Governmental Entity with respect
to any aspect of the business of Compass; or (b) made any political
contributions that would not be lawful under the laws of the United States or
the foreign country in which such payments were made. To Compass' knowledge,
neither Compass nor any director, officer or other employee, agent or
representative of Compass has been the subject of any inquiry or investigation
by any Governmental Entity in connection with payments or benefits or other
favors to or for the benefit of any governmental or armed services official,
agent, representative or employee with respect to any aspect of the business of
Compass or with respect to any political contribution.

3.27 THIRD-PARTY CONSENTS. Except as set forth in SCHEDULE 3.27 and
except as required by the HSR Act and except for approval of the Merger by
Compass' stockholders, no consent or approval is needed from any third party in
order to effect the Merger or any of the transactions contemplated hereby, or
those that a third party has, to Compass' knowledge, decided are necessary to
avoid the loss of rights to use Compass Intellectual Property Rights. The
Compass stockholders that are party to the Voting Agreement represent a
sufficient majority of Compass stockholders to approve the Merger and related
transactions.

3.28 RELATED PARTY TRANSACTIONS. Except as set forth in
SCHEDULE 3.28, no employee, officer or director of Compass or member of his or
her immediate family is indebted to Compass, nor is Compass indebted (or
committed to make loans or extend or guarantee credit) to or subject to a
guarantee from any of them. None of such persons has any direct or indirect
ownership interest in any firm or corporation with which Compass is affiliated
or with which Compass has a business relationship, or any firm or corporation
that competes with Compass, except that the employees, officers or directors of
Compass and members of their immediate families may own stock in publicly traded
companies that may compete with Compass. No

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member of the immediate family of any officer or director of Compass is directly
interested in any contract with Compass.

3.29 CUSTOMERS. SCHEDULE 3.29 sets forth a list of the names of the
ten (10) largest customers of Compass during the past twelve (12) months
(determined on the basis of revenues and expenses, respectively, during such
period). Compass has not been informed by any of such customers that such
customer has terminated, or intends to reduce or terminate the use of Compass
products.

3.30 BANK ACCOUNTS AND POWERS OF ATTORNEY. Set forth in
SCHEDULE 3.30 is an accurate and complete list showing (a) the name and address
of each bank in which Compass has an account or safe deposit box, the number of
any such account or any such box and the names of all persons authorized to draw
thereon or to have access thereto and (b) the names of all persons, if any,
holding powers of attorney from Compass and a summary statement of the terms
thereof.

3.31 PRODUCTS. Compass has delivered to Avant! copies of its
warranty policies and all outstanding warranties or guarantees relating to any
of Compass' products other than warranties or guarantees implied by law.
Compass is not aware of any claim asserting (a) any material damage, loss or
injury caused by any product, or (b) any breach of any express or implied
product warranty or any other similar claim with respect to any product other
than standard warranty obligations (to replace, repair or refund) made by
Compass in the ordinary course of business.

3.32 BROKERS OR FINDERS; PROFESSIONAL FEES. No third party shall be
entitled to receive any brokerage commissions, finder's fees, fees for financial
advisory services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Compass or any stockholder of Compass except Deutsche Morgan
Grenfell Inc. for whom VLSI shall be solely responsible.

ARTICLE IV:
REPRESENTATIONS AND WARRANTIES OF AVANT! AND SUB

Avant! and Sub represents and warrants to Compass that the
representations and warranties set forth below shall be true and correct as of
the date hereof. As used in this Agreement, Business Condition with respect to
Avant! shall refer to Avant! and all of its subsidiaries taken as a whole and
shall mean the financial condition, business (including products currently under
development), results of operations and assets of Avant! and all of its
subsidiaries taken as a whole.

4.1 ORGANIZATION; STANDING AND POWER. Each of Avant! and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as now being conducted.
Avant! is duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on Avant!'s Business Condition.

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4.2 AUTHORITY.

(a) Avant! and Sub have all requisite corporate power and
authority to enter into this Agreement and the Related Agreements (to the extent
each is a party), to execute, deliver and perform their respective obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Related
Agreements, the performance by Avant! and Sub of their respective obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Avant! and Sub, including approval by their
respective Boards of Directors and by Avant! as the sole stockholder of Sub.
Each of this Agreement and the Related Agreements is a legal, valid and binding
obligation of Avant! and Sub enforceable against Avant! and Sub in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights generally
and except that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefor may be brought.

(b) Subject to satisfaction of the conditions set forth in
Article VI hereto, the execution and delivery of this Agreement and the Related
Agreements do not and the performance and consummation of the transactions
contemplated hereby and thereby will not conflict with or result in any
violation of any statute, law, rule, regulation, judgment, order, decree, or
ordinance applicable to Avant! or Sub or their respective properties or assets,
or conflict with or result in any conflict with, breach or violation or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation, forfeiture or acceleration of any obligation
or the loss of a benefit under, or result in the creation of a lien or
encumbrance on any of the properties or assets of Avant! or Sub pursuant to (i)
any provision of their respective Certificate of Incorporation or Bylaws, or
(ii) any agreement, contract, note, mortgage, indenture, lease, instrument,
permit, concession, franchise or license to which Avant! or Sub is a party or by
which Avant! or Sub or any of their respective property or assets may be bound
or affected.

(c) No consent, approval, order or authorization of, or
registration, declaration, qualification, or filing of or with, any Governmental
Entity is required by or with respect to Avant! or Sub in connection with the
execution and delivery of this Agreement or the Related Agreements or the
consummation by Avant! and Sub of the transactions contemplated hereby, except
for (i) the filing of documents with, and the obtaining of orders from, the
various securities or "blue sky" authorities, (ii) the making of such reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
are required in connection with the transactions contemplated by this Agreement,
(iii) the filing of the Certificate of Merger with the appropriate documents
with the relevant governmental authorities, and (iv) compliance with the HSR Act
as described in Section 5.16.

4.3 VALID ISSUANCE OF SHARES OF COMMON STOCK OF AVANT!. The Shares
of Avant! Common Stock, when issued, sold and delivered to the stockholders and
optionholders of Compass in accordance with the terms hereof for the
consideration described herein, will be duly

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authorized, validly issued, fully paid and non-assessable and will be issued in
compliance with all applicable securities laws and will be free and clear of any
liens, claims, encumbrances or restrictions other than liens or encumbrances
created by or imposed upon the holders hereof.

4.4 AVANT! FINANCIAL STATEMENTS. The financial statements of
Avant! included in the Registration Statement on Form S-1, as amended, and the
annual, quarterly or other reports filed on or prior to the Closing Date by
Avant! with the Securities and Exchange Commission (the "SEC") (the "Avant!
Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements as permitted by published rules and regulations of
the SEC) and fairly present the consolidated financial position of Avant! and
its consolidated subsidiaries at the dates thereof and the consolidated results
of their operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal recurring audit
adjustments). There has been no change in Avant!'s accounting policies or
estimates, except as described in the notes to the Avant! Financial Statements.
There has been no material and adverse change in Avant!'s Business Condition
subsequent to June 30, 1997.

4.5 LITIGATION. There is no action, suit, proceeding, arbitration
or investigation pending against Avant! or Sub that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby.

4.6 REPORTS. Avant! has furnished or made available to Compass
complete and accurate copies, as amended or supplemented, of (i) its
Registration Statement on Form S-1, as amended, filed with the SEC, (ii) its
Quarterly Reports on Form 10-Q filed with the SEC since Avant! became obligated
to file such reports, and (iii) all other reports and filings made with the SEC,
including current reports on Form 8-K since Avant! became obligated to file such
reports (such reports and other filings, together with any amendments or
supplements thereto, are collectively referred to herein as the "Avant!
Reports"). As of their respective filing dates, the Avant! Reports complied in
all material respects with the rules and regulations promulgated by the SEC, and
none of the Avant! Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. Avant! has made all filings required under the rules
and regulations promulgated by the SEC.

4.7 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon Avant! or Sub that has or
could reasonably have the effect of prohibiting or significantly impairing any
business practice of Avant!, any acquisition of property by Avant!, or the
continuation of the business of Avant! as currently conducted or as currently
proposed to be conducted.

4.8 BROKERS OR FINDERS; PROFESSIONAL FEES. No third party shall be
entitled to receive any brokerage commissions, finder's fees, or similar
compensation in connection with

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the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Avant! or Sub.

4.9 CONDUCT IN THE ORDINARY COURSE. Since June 30, 1997, there has
not occurred any amendments or changes in the charter or Bylaws of Avant! or any
agreement or arrangement made by Avant! to do the same.

4.10 THIRD-PARTY CONSENTS. No consent or approval is needed from
any third party in order to enable Avant! and Sub to effect the Merger or any of
the transactions contemplated hereby.

4.11 DUE DILIGENCE INVESTIGATION. In each case, without affecting
the right of Avant! and Sub to rely on the representations, covenants and
warranties made herein by Compass:

(a) Each of Avant! and Sub acknowledges that: (i) it has
had the opportunity to visit with Compass and meet with its officers and other
representatives to discuss the business and the assets, liabilities, financial
condition, cash flow and operations of Compass, and (ii) all materials and
information requested by Avant! have, to Avant!'s knowledge, been provided to
Avant! to Avant!'s reasonable satisfaction.

(b) Each of Avant! and Sub acknowledges that it has made
its own independent examination, investigation, analysis and evaluation of
Compass, including its own estimate of the value of Compass' business.

(c) Each of Avant! and Sub acknowledges that it has
undertaken such due diligence (including, without limitation, a review of the
assets, liabilities, books, records and contracts of Compass) as it deems
adequate.

ARTICLE V:
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS

5.1 CONDUCT OF BUSINESS OF COMPASS. During the period from the
date hereof and continuing until the earlier of the termination of this
Agreement or the Effective Time of the Merger, Compass shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as conducted prior to the date of this Agreement and, to the extent
consistent with such business, use its best efforts to preserve intact its
present business organizations, keep available the services of its present
service providers and preserve its relationships with customers, suppliers,
distributors, licensers, licensees, and others with whom it has business
dealings, to the end that its goodwill and ongoing businesses shall be
unimpaired at the Effective Time of the Merger. Compass shall promptly notify
Avant! of any material event or occurrence not in the ordinary course of
business of Compass, and any event that would reasonably be expected to have a
material and adverse effect on the Business Condition of Compass. Except as
expressly contemplated by this Agreement, Compass, without the prior written
consent of Avant! or Sub shall not:

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(a) Accelerate, amend or change the period of
exercisability of options, warrants, stock or purchase rights or authorize cash
payments in exchange therefor;

(b) Enter into any commitment or transaction not in the
ordinary course of business to be performed over a period longer than six (6)
months in duration, or, except as in accordance with its existing capital budget
previously disclosed to Avant!, to purchase fixed assets with an aggregate
purchase price exceeding $10,000;

(c) Grant any severance or termination pay to any service
provider, except mandatory payments made pursuant to standard written agreements
outstanding on the date hereof (with any such agreement or arrangement to be
disclosed in SCHEDULE 3.18);

(d) Transfer to any person or entity any rights to the
Compass Intellectual Property Rights, except licenses of Intellectual Property
Rights in connection with the sale of Compass products in the ordinary course of
business consistent with past practice;

(e) Enter into or amend any agreements pursuant to which
any other party is granted marketing or other similar rights of any type or
scope with respect to any products of Compass;

(f) Violate, amend or otherwise modify, in any material
respect, the terms of any contract listed in SCHEDULE 3.15;

(g) Commence a lawsuit other than for the routine
collection of bills;

(h) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Compass
Capital Stock, or split, combine or reclassify any of its Common Stock or issue
or authorize the issuance of other securities in respect of, in lieu of, or in
substitution for shares of Compass Capital Stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of Compass Capital Stock except as
set forth in the Compass Disclosure Schedules, pursuant to the exercise of
outstanding Compass Options or pursuant to repurchases of Common Stock at cost
from former service providers in accordance with the terms of agreements
providing for the repurchase of shares in connection with any termination of
service to Compass or repurchase of Compass options pursuant to a rescission
offer.

(i) Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of or authorization of, the purchase of any shares of
Compass Capital Stock or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of Compass Common Stock upon the
exercise of Compass Options;

(j) Cause or permit any amendments to Compass' charter or
Bylaws, or take any action or make any filings with any federal or state
regulatory agency or department that would modify or alter Compass' corporate,
legal or regulatory status in any material respect;

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(k) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to the
Business Condition of Compass, except as in accordance with its existing capital
budget previously disclosed to Avant!;

(l) Sell, lease, license or otherwise dispose of any of its
properties or assets except in the ordinary course of business;

(m) Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;

(n) Adopt or amend any plan, or enter into any employment
contract, pay any special bonus or special remuneration to any service provider,
or increase the salaries or wage rates of its employees other than pursuant to
scheduled employee reviews under normal employee review cycles or pursuant to
Compass' existing bonus plans, as the case may be, or in connection with the
hiring of employees other than officers in the ordinary course of business, in
all cases consistent with past practice, or otherwise increase or modify the
compensation or benefits payable or to become payable by Compass to any of its
service providers, except for employees other than officers in the ordinary
course of business, consistent with past practice, or for changes pursuant to
employment agreements in effect as of the date hereof;

(o) Re-value in any material respect any of its assets,
including, without limitation, writing down the value of inventory or accounts
receivable;

(p) Pay, discharge or satisfy in an amount in excess of
$10,000 in any one case any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business consistent with
past practice of liabilities reflected or reserved against in the Compass
Financial Statements;

(q) Make any material Tax election, change any material Tax
election, adopt any Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any Tax accounting method,
file any Tax Return (other than any estimated Tax Returns, immaterial
information returns, payroll Tax Returns or sales Tax Returns) or any amendment
to a Tax Return, enter into any closing agreement, settle any Tax claim or
assessment or consent to any Tax claim or assessment;

(r) Engage in any activities or transactions that are
outside the ordinary course of its business consistent with past practice,
including the forming, financing or contributing any property to any business
entity;

(s) Fail to pay or otherwise satisfy its monetary
obligations as they become due or consistent with past practice, except such as
are being contested in good faith;

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(t) Waive or commit to waive any rights of substantial
value;

(u) Cancel, amend or, other than in the ordinary course
upon expiration of a policy term, renew any insurance policy;

(v) Alter, or enter into any commitment to alter, in any
material respect its interest in any corporation, association, joint venture,
partnership or business entity in which Compass directly or indirectly holds any
interest on the date hereof;

(w) Pay its employees bonuses, other than in the ordinary
course of business, or any other extraordinary payments to its employees or
stockholders, including, without limitation, dividends or other distributions
with respect to its outstanding capital stock;

(x) Issue any new options, warrants or any instruments to
purchase Compass' Capital Stock; or

(y) Take, or agree (in writing or otherwise) to take, any
of the actions described in this Section 5.1 or any action that would make any
of the representations or warranties or covenants of Compass contained in this
Agreement untrue or incorrect.

5.2 ACCESS TO INFORMATION; PROVISION OF INTERIM FINANCIAL
STATEMENTS.

(a) Compass shall afford Avant! and its accountants,
counsel and other representatives, reasonable access during normal business
hours in such manner as not to disrupt business during the period from the date
of this Agreement until the earlier of the Effective Time of the Merger or the
termination of this Agreement to (i) all properties, books, contracts,
commitments and records, and (ii) all other information concerning the business,
properties and personnel as may reasonably be requested, provided that any
information provided pursuant hereto or any investigation by each party hereto
shall not affect such party's right to rely on the representations, warranties,
agreements and covenants made by the other party herein. Compass shall cause
Compass' accountants to cooperate with Avant! in reviewing the financial
statements of Compass' business.

(b) Compass shall provide Avant! with an unaudited monthly
balance sheet, income statement and statement of cash flows within fifteen (15)
days of each month-end prior to the Effective Time of the Merger as well as
copies of such other internal financial statements as may be reasonably
requested by Avant!.

(c) Compass shall provide Avant! with all information
regarding Compass necessary for the preparation of any documents or filings
prepared by Avant! to be filed with the SEC and any applicable securities or
blue sky commissions.

5.3 COMPASS STOCKHOLDERS' CONSENT. Compass shall solicit the
consent of its stockholders as promptly as practicable after the date hereof for
the purpose of obtaining the stockholder approval required in connection with
the transactions contemplated hereby, and shall use its best efforts to obtain
such approval.

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5.4 EXCLUSIVITY; ACQUISITION PROPOSALS. Until the earlier of (i)
the Closing or (ii) the termination of this Agreement:

(a) Compass shall not knowingly, and shall not knowingly
cause or permit, directly or indirectly, through any officer, director, agent or
representative (including, without limitation, investment bankers, attorneys,
accountants and consultants), or otherwise:

(i) Solicit, initiate or further the submission of
proposals or offers from, or enter into any agreement with, any firm,
corporation, partnership, association, group (as defined in Section 13(d)(3) of
the Exchange Act) or other person or entity, individually or collectively
(including, without limitation, any managers or other employees of Compass or
any affiliates), other than Avant! and Sub (a "Third Party"), relating to any
acquisition or purchase of all or any substantial portion of the assets of, or
any equity interest in, Compass or any merger, consolidation or business
combination with Compass;

(ii) Participate in any discussions or negotiations
regarding, or furnish to any Third Party any confidential information with
respect to Compass in connection with any acquisition or purchase of all or any
substantial portion of the assets of, or any equity interest in, Compass or any
merger, consolidation or business combination with Compass; or

(iii) Otherwise knowingly cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any Third Party to undertake or seek to undertake any acquisition or purchase of
all or any portion of the assets of, or any equity interest in, Compass, or any
merger, consolidation or business combination with Compass.

(b) In the event Compass receives prior to termination of
this Agreement any offer or indication of interest from any Third Party relating
to any acquisition or purchase of all or any portion of the assets of, or any
equity interest in, Compass or any merger, consolidation or business combination
with Compass, Compass shall promptly notify Avant! and Sub in writing, and shall
in any such notice, set forth in reasonable detail the identity of the Third
Party, the terms and conditions of any proposal and any other information
requested of it by the Third Party or in connection therewith.

(c) Compass shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Third
Party conducted prior to the date of this Agreement with respect to any of the
foregoing.

5.5 BREACH OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS. Each of Avant!, Sub and Compass shall use its respective best
efforts to refrain from taking any action that from the date hereof through the
Closing or earlier termination of this Agreement would cause or constitute a
breach of any of its respective representations, warranties, agreements and
covenants set forth in this Agreement. In the event of, and promptly after
becoming aware of, the actual, pending or threatened occurrence of any event
that would cause or constitute such a breach or inaccuracy, each party shall
give detailed notice thereof to the other parties and shall use its best efforts
to prevent or promptly remedy such breach or inaccuracy.

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5.6 CONSENTS. Each of Avant!, Sub and Compass shall promptly apply
for or otherwise seek and use its best efforts to obtain, all consents and
approvals required to be obtained by it for the consummation of the Merger, and
Compass shall use its best efforts to obtain all necessary consents, waivers and
approvals under any of Compass' agreements, contracts, licenses or leases in
connection with the Merger, except such consents and approvals which are not
material to the Business Condition of Compass (the existence of which Compass
shall have notified Avant! of) or which Avant! and Compass agree Compass shall
not seek to obtain.

5.7 BEST EFFORTS. If applicable, each of Avant!, Sub and Compass
shall use best efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement.

5.8 LEGAL CONDITIONS TO THE MERGER.

(a) Compass shall take all reasonable actions necessary to
comply promptly with all legal requirements that may be imposed on Compass with
respect to the Merger and will promptly cooperate with and furnish information
to Avant! in connection with any such requirements imposed upon Avant! or Sub in
connection with the Merger. Compass shall take all reasonable actions to obtain
(and to cooperate with Avant! and Sub in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity required to
be obtained or made by Compass (or by Avant! or Sub) in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement,
and to defend such lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby as Compass
deems advisable in good faith, to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby as Compass deems advisable in
good faith, and to effect all necessary registrations and filings and
submissions of information as Compass deems advisable in good faith required by
any Governmental Entity, and to fulfill all conditions to this Agreement.

(b) Each of Avant! and Sub shall take all reasonable
actions necessary to comply promptly with all legal requirements that may be
imposed on them with respect to the Merger and will promptly cooperate with and
furnish information to Compass in connection with any such requirement imposed
upon Compass or any subsidiary of Compass in connection with the Merger. Avant!
and Sub shall take all reasonable actions to obtain (and to cooperate with
Compass in obtaining) any consent, authorization order or approval of, or
exemption by, any Governmental Entity required to be obtained or made by Avant!
or Sub (or by Compass or any of its subsidiaries) in connection with the Merger
or the taking of any action contemplated thereby or by this Agreement, and to
defend such lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby as Avant! and Sub deem
advisable in good faith, to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby as Avant! and Sub deem advisable in good faith,
and to effect all necessary registrations and

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filings and submissions of information as Avant! and Sub deem advisable in good
faith, required by any Governmental Entity, and to fulfill all conditions to
this Agreement.

5.9 PUBLIC ANNOUNCEMENTS. Avant! and Compass will make joint
announcements to employees and the public after the execution of this Agreement.
Each party will consult in advance with the other concerning the timing and
content of any announcements, press releases or public statements concerning the
Merger and will not make any such announcement, release or statement to any
party who is not entitled to have knowledge of the Merger without the other's
prior written consent (which consent shall not be unreasonably withheld);
provided, however, that either Avant! or Compass, or its parent, VLSI may make
any public statement concerning the Merger without the other's consent, after it
has used reasonable efforts to obtain consent, and in the opinion of counsel for
the disclosing party, such statement or announcement is required or advisable to
comply with applicable law.

5.10 AFFILIATES AGREEMENT. The stockholders of Compass listed on
SCHEDULE 5.10 are, in Compass' reasonable judgment, the only persons and
entities that are stockholders of Compass who may be deemed to be "affiliates"
of Compass within the meaning of Rule 145 (each such person an "Affiliate")
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
("Rule 145"). Compass shall deliver or cause to be delivered to Avant!,
concurrently with the execution of this Agreement, from each of the Affiliates
of Compass who are directors or officers of Compass, and concurrently with or
promptly following execution of this Agreement from each other Affiliate, an
Affiliates Agreement in the form attached hereto as EXHIBIT 5.10(A). Avant! and
Sub shall be entitled to place appropriate legends on the certificates
evidencing any Avant! Common Stock to be received by such Affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for Avant! Common Stock, consistent with the terms of such
Affiliates Agreement. Such Affiliates Agreements shall not impose any greater
restrictions on Affiliates than are required by law.

5.11 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the Related Agreements and the transactions contemplated
hereby and thereby, including fees of any finders or brokers or investment
bankers, attorneys and accountants retained by such party, shall be paid by the
party incurring such expense.

5.12 INFORMATION TO BE SUPPLIED. All information supplied by
Compass, Avant! and Sub for inclusion in the Compass stockholder solicitation
materials as described in Section 5.3 above and any other solicitation materials
relating to the Merger or relating to any offering of securities by Avant! shall
not contain any untrue statement of material fact and shall not omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading.

5.13 FORM S-3 REGISTRATION STATEMENT. Within thirty (30) days of
the Effective Time of the Merger, Avant! shall file with the SEC a registration
statement on Form S-3 to register the Avant! Common Stock issued pursuant to the
Merger for resale. Avant! will, at its expense (excluding any broker fees and
commissions), use its best efforts to cause such

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registration statement to become effective, and, subject to the provisions
below, use best efforts to, keep such registration statement effective for the
lesser of one (1) year or until all such shares of Avant! Common Stock have been
sold. If at any time after such registration statement becomes effective,
Avant! advises the holders of such Avant! Common Stock in writing that due to
the existence of material information that has not been disclosed to the public
and included in the registration statement it is thus necessary to amend the
registration statement (including by reporting such information under the
Exchange Act), the holders of such Avant! Common Stock shall suspend any further
sale of Avant! Common Stock pursuant to the registration statement until the
registration statement has been amended. In such event, Avant! shall use best
efforts to amend the registration statement as soon as reasonably practicable
and in no event later than the earlier of (i) ten (10) days after Avant! has
advised the holders of such Avant! Common Stock to suspend sales (which ten (10)
day period may be extended, one time only, an additional ten (10) days (the
"Additional Suspension") if the Board of Directors of Avant! in its good faith
judgment determines that such disclosure would be substantially detrimental to
Avant!; provided, however, that Avant! shall only have the right to effect an
Additional Suspension twice in any twelve (12) month period) or (ii) the
commencement of any period in which directors and officers of Avant! are allowed
to buy or sell Common Stock of Avant! pursuant to Avant!'s insider trading
policy. Avant! shall not impose a suspension on the sale of Avant! Common Stock
by the holders of Avant! Common Stock unless Avant!'s insider trading window is
closed. In addition, Avant! shall use its best efforts to (i) register and
qualify the Avant! Common Stock covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the holders of a majority of such Avant! Common Stock;
provided that Avant! shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless Avant! is already
subject to service in such jurisdiction and except as may be required by the
Securities Act; and (ii) file with the SEC in a timely manner all reports and
other documents required of Avant! under the Exchange Act.

5.14 SCHEDULES. From time to time prior to the Closing Date, each
of Avant! and Compass will promptly supplement or amend the Compass or Avant!
Disclosure Schedules, as the case may be, with respect to any matter hereafter
arising that, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in the Compass
or Avant! Disclosure Schedules, as the case may be, or that is necessary to
correct any information in the Compass or Avant! Disclosure Schedules, as the
case may be, or in any representation and warranty of each of Avant! and Compass
that has been rendered inaccurate thereby. For purposes of determining the
accuracy of the respective representations and warranties contained in
Articles III and IV, and in order to determine the fulfillment of the conditions
set forth in Sections 6.2(a) and 6.3(a), the Compass or Avant! Disclosure
Schedules, as the case may be, shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto;
provided, however that for the purpose of determining the availability of rights
to indemnification under Article VII below or otherwise, such revised Compass or
Avant! Disclosure Schedules, as the case may be, shall be deemed to include all
information contained in such revised Compass or Avant! Disclosure Schedules as
of the Closing, as the case may be.

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5.15 CERTAIN BENEFIT PLANS. Avant! shall take such reasonable
actions as are necessary to allow eligible employees of Compass to participate
in the benefit programs of Avant!, or alternative benefits programs in the
aggregate substantially comparable to those applicable to employees of Avant! on
similar terms, as soon as practicable after the Effective Time of the Merger.
For purposes of satisfying the terms and conditions of such programs, to the
extent permitted by Avant!'s benefit programs, Avant! shall use reasonable
efforts to give full credit for eligibility, vesting or benefit accrual for each
participant's period of service with Compass or VLSI.

5.16 HSR ACT FILING.

(a) Each of Avant! and Compass shall (i) promptly make or
cause to be made the filings required of such party or any of its affiliates or
subsidiaries under the HSR Act with respect to the Merger and the other
transactions provided for in this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other material received by such party or any of its affiliates or
subsidiaries from the Federal Trade Commission or the Department of Justice or
other Governmental Entity in respect of such filings, the Merger, or such other
transactions, and (iii) cooperate with the other party in connection with any
such filing and in connection with resolving any investigation or other inquiry
of any such agency or other Governmental Entity under any Antitrust Laws (as
defined in Section 5.16(b)) with respect to any such filing, the Merger, or any
such other transaction. Each party shall promptly inform the other party of any
material communication with, and any proposed understanding, undertaking, or
agreement with, any Governmental Entity regarding any such filings, the Merger,
or any such other transactions. Neither party shall participate in any meeting
with any Governmental Entity in respect of any such filings, investigation, or
other inquiry without giving the other party notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to attend and
participate.

(b) Each of Avant! and Compass shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the Merger or any other transactions
provided for in this Agreement under the HSR Act, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
any other federal, state or foreign statutes, rules, regulations, orders, or
decrees that are designed to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade (collectively,
"Antitrust Laws"). In connection therewith, if any administrative or judicial
action or proceeding is instituted (or threatened to be instituted) challenging
the Merger as violative of any Antitrust Law, and, if by mutual agreement,
Compass and Avant! decide that litigation is in their best interests, each of
Compass and Avant! shall cooperate and use its reasonable efforts vigorously to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction, or other order,
whether temporary, preliminary, or permanent, that is in effect and that
prohibits, prevents, or restricts consummation of the Merger. Each of Compass
and Avant! shall use commercially reasonable efforts to take such action as may
be required to cause the expiration of the notice periods under the HSR Act or
other Antitrust Laws with respect to the Merger and

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such other transactions as promptly as possible after the execution of this
Agreement. Notwithstanding anything to the contrary in this Section 5.16,
neither Compass or any of its affiliates, nor Avant! or any of its affiliates,
shall be required to divest any of their respective businesses, product lines,
or assets, or to take or agree to take any other action or agree to any
limitation that would have a material adverse effect on their respective
businesses, product lines or assets.

5.17 LISTING OF SHARES. Upon Closing, Avant! will amend its listing
application with the Nasdaq National Market to include the Avant! Common Stock
issued under this Agreement.

5.18 VOTING AGREEMENT. Compass and the parties listed on
SCHEDULE 3.2(e) hereto shall enter into the Voting Agreement attached hereto as
EXHIBIT 3.21(e) concurrent with the execution of this Agreement.

ARTICLE VI:
CONDITIONS PRECEDENT

6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction (or, to the extent legally permissible, waiver) prior to the
Closing of the following conditions:

(a) APPROVALS. All authorizations, consents, orders or
approvals of, or declarations or filings with or expiration of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained.

(b) LEGAL ACTION. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the Merger shall have been issued by any Governmental Entity of
competent jurisdiction and remain in effect, and no litigation not pending on
the date hereof shall be pending the ultimate resolution of which may in the
opinion of Avant! or Compass (i) result in the issuance of such an order or
injunction, or the imposition against Compass or Avant! of substantial damages
if the Merger is consummated, or (ii) render Avant!, Sub or Compass unable to
consummate the Merger. In the event any such order or injunction shall have
been issued, each party agrees to use its best efforts to have any such
injunction lifted as promptly as practicable.

(c) STATUTES. No action shall have been taken, and no
statute, rule, regulation or order shall have been enacted, promulgated or
issued or deemed applicable to the Merger by any Governmental Entity of
competent jurisdiction that would (i) make the consummation of the Merger
illegal or (ii) render Avant!, Sub or Compass unable to consummate the Merger,
except for any waiting period provisions.

(d) HSR. The applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated.

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(e) STOCKHOLDER APPROVAL. This Agreement and the Merger
shall have been approved and adopted by (i) the holders of Compass Capital Stock
representing a majority of the total votes entitled to be cast on such matters,
(ii) the holders of a majority of the shares of Compass Preferred Stock
outstanding and voting together as a single class, and (iii) the holders of a
majority of the shares of Compass Common Stock outstanding and voting together
as a single class.

6.2 CONDITIONS OF OBLIGATIONS OF AVANT! AND SUB. The obligations
of Avant! and Sub to effect the Merger are also subject to the satisfaction of
the following conditions, unless waived by Avant!:

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Compass set forth in this Agreement that are qualified as to
materiality shall be true and correct as so qualified, and the representations
and warranties of Compass set forth in this Agreement that are not so qualified
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent any such representation or warranty expressly speaks
as of an earlier date), and Avant! shall have received a certificate signed on
behalf of Compass by the chief executive officer and chief financial officer of
Compass to such effect.

(b) PERFORMANCE OF OBLIGATIONS OF COMPASS. Compass shall
have performed in all material respects all obligations and covenants required
to be performed by it under this Agreement prior to the Closing Date, and Avant!
shall have received a certificate signed on behalf of Compass by the chief
executive officer and the chief financial officer of Compass to such effect.

(c) AFFILIATES AGREEMENT. Avant! shall have received from
each stockholder of Compass listed on SCHEDULE 5.10, a duly executed Affiliates
Agreement substantially in the form attached hereto and approved by Avant!'s and
Compass' respective counsel.

(d) TECHNOLOGY TRANSFER AGREEMENT. Compass and VLSI shall
have amended that certain Intercompany Agreement, dated July 1, 1991, by and
between Compass and VLSI in a manner satisfactory to Avant!.

(e) ESCROW AGREEMENT. The Escrow Agreement shall be
executed by all appropriate parties.

(f) OPINION OF COMPASS' COUNSEL. Avant! shall have
received an opinion dated the Closing Date of Larry L. Grant, counsel to
Compass, in form and substance reasonably satisfactory to Avant!.

(g) DISSENTING SHARES. Dissenting Shares shall consist of
no more than ten percent (10%) of the then outstanding shares of Compass Capital
Stock.

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(h) CONSENTS. Avant! shall have received duly executed
copies of all third-party consents and approvals contemplated by this Agreement
or the Compass Schedules in form and substance reasonably satisfactory to
Avant!.

(i) FIRPTA. Compass shall, prior to the Closing Date,
provide Avant! with a properly executed Foreign Investment and Real Property Tax
Act of 1980 ("FIRPTA") Notification Letter, in form and substance satisfactory
to Avant!, which states that shares of Compass Capital Stock do not constitute
"United States real property interests" under Section 897(c) of the Code, for
purposes of satisfying Avant!'s obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, Compass shall have provided to Avant!, as agent for
Compass, a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Avant! to deliver such notice form to the Internal Revenue
Service on behalf of Compass upon the Closing of the Merger.

(j) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any
registration rights or rights of first refusal and/or negotiation relating to
any outstanding Compass Capital Stock shall by their terms terminate upon the
Closing or have been terminated or permanently waived as of the Closing, which
termination or waiver may be strictly contingent upon the occurrence of the
Closing. Except as contemplated by Section 3.2, with such changes as may be
permitted under Section 5.1, there shall be no warrants, options, convertible
securities or other rights to purchase or acquire any securities of Compass
outstanding.

6.3 CONDITIONS OF OBLIGATION OF COMPASS. The obligation of Compass
to effect the Merger is also subject to the satisfaction of the following
conditions unless waived by Compass:

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Avant! set forth in this Agreement that are qualified as to
materiality shall be true and correct as so qualified, and the representations
and warranties of Avant! set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent any such representation or warranty expressly
speaks as of an earlier date), and Compass shall have received a certificate
signed on behalf of Avant! by the chief executive officer and chief financial
officer of Avant! to such effect.

(b) PERFORMANCE OF OBLIGATIONS OF AVANT! AND SUB. Avant!
and Sub shall have performed in all material respects all obligations and
covenants required to be performed by them under this Agreement and the
Certificate of Merger prior to the Closing Date, and Compass shall have received
a certificate signed on behalf of Avant! by the chief executive officer and the
chief financial officer of Avant! to such effect.

(c) NO STOP ORDER. The SEC shall not have issued any stop
order preventing the sale of any Common Stock of Avant! pursuant to a
registration statement.

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(d) OPINION OF AVANT!'S COUNSEL. Compass shall have
received an opinion dated the Closing Date of Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP, counsel to Avant!, in form and substance
reasonably satisfactory to Compass.

ARTICLE VII:
INDEMNITY

7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.

(a) Notwithstanding any investigation conducted at any time
with regard thereto by or on behalf of any party to this Agreement, all
representations, warranties, covenants and agreements of the parties hereto
shall survive the execution, delivery, and performance of this Agreement in
accordance with Section 7.3 of this Agreement. No investigation made by or on
behalf of a party hereto with respect to another party shall be deemed to affect
the party's reliance on the representations, warranties, covenants and
agreements made by the other party contained in this Agreement, when read
together with the disclosure schedules of such party, and shall not be a waiver
of Avant!'s or Sub's rights to indemnity as herein provided for the breach or
inaccuracy of or failure to perform or comply with any of Compass'
representations, warranties, covenants or agreements under this Agreement or the
Escrow Agreement. All representations and warranties of each party set forth in
this Agreement shall be deemed to have been made again by such party at and as
of the Closing Date.

(b) As used in this Article VII, any reference to a
representation, warranty, agreement or covenant contained in any section of this
Agreement shall include the Schedules attached hereto (in the form delivered at
the time of Closing).

(c) Nothing in this Agreement shall be construed as
limiting in any way: (i) the remedies that may be available to a party in the
event of fraud relating to the representations, warranties, agreements or
covenants made by any other party in this Agreement; (ii) Avant!'s right to seek
indemnification from VLSI for the applicable statute of limitations for breaches
of Section 3.16 of this Agreement.

(d) VLSI shall have liabilities and obligations for Damages
(as defined below) under this Agreement only with respect to claims submitted or
notice of claims provided during the time period of survivability of the
specific representation, warranty, covenant or agreement as set forth in
Section 7.3. Notwithstanding the expiration date of the representations,
warranties, covenants and agreements set forth herein, if Avant! or Compass
shall notify VLSI with respect to the submission of a claim during the time
period of survivability of such representation, warranty, covenant or agreement,
VLSI's liability or obligation for Damages shall continue in full force and
effect until settled with respect to those claims timely made.

(e) Avant! shall be entitled to use the Escrow Proceeds as
the sole remedy for the obligations of VLSI pursuant to this Article VII Of this
Agreement.

7.2 INDEMNIFICATION.

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(a) Subject to the limitations set forth in this
Article VII, VLSI hereby agrees to indemnify, reimburse, defend and hold
harmless Avant!, Compass and Sub and each of their respective officers,
directors, agents and affiliates against any and all losses, liabilities,
damages, demands, claims, suits, actions, judgments, and causes of action,
assessments, costs, and expenses, including, without limitation, interest,
penalties, attorneys' fees, any and all expenses incurred in investigating,
preparing, and defending against any litigation, commenced or threatened, and
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation (collectively, "Damages"), asserted against, resulting from, imposed
upon, or incurred or suffered, directly or indirectly, by Avant!, Compass or Sub
and each of their respective officers, directors, agents and affiliates,
directly or indirectly, as a result of or arising from or in connection with:
(i) any inaccuracy in or breach, or any claim (including claims by parties other
than Avant!) that if true, would constitute a breach, nonfulfillment of or
noncompliance with any of the representations, warranties, covenants, or
agreements made by Compass in this Agreement (including any exhibit, letter,
schedule, certificate or document delivered pursuant hereto or other instrument
referred to herein) or the Escrow Agreement or any facts or circumstances
constituting such an inaccuracy, breach, nonfulfillment or noncompliance; (ii)
expenditures in excess of $100,000 in the aggregate in connection with the
lawsuits listed on SCHEDULE 3.9; and (iii) any Damages resulting from the
failure of the Compass Financial Statements to fairly present the financial
position and operating results of Compass in accordance with GAAP on a separate
company basis (all of which shall also be referred to as "Indemnifiable
Claims"). Avant! And Sub shall be entitled to make claims under the foregoing
provisions of this Article VII only in the event that Damages exceed $100,000 in
the aggregate.

(b) VLSI hereby agrees to indemnify, reimburse, defend and
hold harmless Avant!, Compass and Sub and each of their respective officers,
directors, agents and affiliates against any and all Damages asserted against,
resulting from, imposed upon, or incurred or suffered, directly or indirectly,
by Avant!, Compass or Sub and each of their respective officers, directors,
agents and affiliates, directly or indirectly, as a result of or arising from or
in connection with any inaccuracy in or breach, or any claim (including claims
by parties other than Avant!) that if true, would constitute a breach,
nonfulfillment of or noncompliance with any of the representations, warranties,
covenants, or agreements made by Compass in this Agreement relating to Taxes
(including any exhibit, letter, schedule, certificate or document delivered
pursuant hereto or other instrument referred to herein) or any facts or
circumstances constituting such an inaccuracy, breach, nonfulfillment or
noncompliance including, without limitation, any Taxes of Compass and its
subsidiaries with respect to any Tax year or portion thereof ending on or before
the Closing Date (or for any Tax year beginning before and ending after the
Closing Date to the extent allocable to the portion of such period beginning
before and ending on the Closing Date), to the extent that such Taxes exceed the
sum of (i) the amount of Taxes reflected in the reserve for Tax liability (other
than any reserve established to reflect timing differences between book and Tax
income) reflected on the June 27, 1997 balance sheet that is part of the Compass
Financial Statements and (ii) the amount of Taxes that would have been incurred
by Compass in the ordinary course of business between June 27, 1997 and the
Closing Date had Compass not been a member of an affiliated, consolidated,
combined or unitary group for Tax purposes during any part of such period.
Notwithstanding any other provision of this Agreement

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(including SECTION 7.3), the obligations of VLSI pursuant to this Section 7.2(b)
shall be unlimited and shall survive until expiration of the applicable statute
of limitations with respect to any Tax.

7.3 TERMINATION OF INDEMNITY AND REPRESENTATIONS AND WARRANTIES.
Except as otherwise stated in Article VII Of this Agreement the Indemnity
obligations of VLSI Pursuant to this Article VII For a breach or inaccuracy of
or a failure to perform or comply with any or all of Compass' representations,
warranties, covenants and agreements, and the representations and warranties of
Avant! And Compass shall terminate one (1) year after the Effective Time of the
Merger. The covenants of Article V listed in Section 9.11 are unaffected by the
termination provisions of this Section 7.3. For purposes of the indemnification
set forth herein, the fair market value of one share of Avant! Common Stock
shall be the Average Nasdaq Per Share Price.

ARTICLE VIII:
TERMINATION

8.1 TERMINATION.

(a) This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of the Merger
by the stockholders of Compass:

(i) by mutual agreement of the Boards of Directors of
Avant! and Compass;

(ii) by Avant!, if there has been a material breach by
Compass or Compass Stockholder of any representation, warranty, covenant or
agreement set forth in this Agreement and, to the extent such breach shall be
curable, such breach shall not have been cured within thirty (30) days following
receipt by Compass of written notice of such breach;

(iii) by Compass, if there has been a material breach by
Avant! Or Sub of any representation, warranty, covenant or agreement set forth
in this Agreement and, to the extent such breach shall be curable, such breach
shall not have been cured within thirty (30) days following receipt by Avant! of
written notice of such breach;;

(iv) by Compass or Avant!, if any permanent injunction or
other order of a court preventing the Merger shall have become final and
nonappealable or shall render unlikely within a reasonable period of time the
consummation of the Merger on the terms contemplated hereby; or

(v) by Compass or Avant!, if any Governmental Entity of
competent jurisdiction shall have issued a temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the Merger or any litigation not pending on the date hereof
shall be pending, the ultimate resolution of which is likely in such party's
opinion to (i) result in the issuance of such an order or injunction, or the
imposition

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against the Surviving Corporation or Avant! of substantial damages if the Merger
is consummated, or (ii) render Avant!, Sub or Compass unable to consummate the
Merger.

(b) Where action is taken to terminate this Agreement pursuant
to this Section 8.1, it shall be sufficient authorization for such action to be
authorized by the Board of Directors of the party taking such action and for
such party to notify the other parties in writing of the termination.

(c) If the Effective Date shall not have occurred on or before
October 31, 1997, this Agreement may be terminated by Avant! Or Compass with
prior written notice to the other party provided that the right to terminate
this Agreement pursuant to this paragraph (c) shall not be available to any
party whose failure to fulfill any material, uncured breach of any obligation
under this Agreement that has been a significant cause of, or resulted in, the
failure of the Effective Date to occur on or before such date and provided
further that, except as otherwise provided herein, no such termination shall
relieve any party hereto of any liability or damages resulting from any breach
of this Agreement.

ARTICLE IX:
GENERAL PROVISIONS

9.1 AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after approval of the Merger by the stockholders of
Compass; provided, however, that following approval of the Merger by the
stockholders of Compass, no amendment shall be made that by law requires the
further approval of such stockholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

9.2 EXTENSION; WAIVER. At any time prior to the Effective Time of
the Merger, each of Compass and Avant!, to the extent legally allowed, (a) may
extend the time for the performance of any of the obligations or other acts of
the other, (b) may waive any inaccuracies in the representations and warranties
made to it contained herein or in any document delivered pursuant hereto, and
(c) may waive compliance with any of the agreements or conditions for the
benefit of it contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.

9.3 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given (a) on the same day if delivered
personally, (b) three (3) business days after being mailed by registered or
certified mail (return receipt requested), or (c) on the same day if sent by
facsimile, confirmation received, to the parties at the following addresses and
facsimile numbers (or at such other address or number for a party as shall be
specified by like notice):

If to Avant! or Sub, to:

Avant! Corporation

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46871 Bayside Parkway
Fremont, California 94538
Attention: John P. Huyett
Telephone No.: (510) 413-8000
Facsimile No.: (510) 413-8080

with copy to:

Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attention: Steven M. Spurlock, Esq.
Telephone No.: (415) 321-2400
Facsimile No.: (415) 321-2800

If to Compass:

Compass Design Automation, Inc.
1865 Lundy Avenue
San Jose, California 95131
Attention: Paul McLellan
Telephone No.: (408) 434-7990
Facsimile No.: (408) 434-7820

If to VLSI:

VLSI Technology, Inc.
1109 McKay Drive, MS-45
San Jose, California 95131
Attention: Larry L. Grant, Esq.
Telephone No.: (408) 434-3063
Facsimile No.: (408) 434-7744

with copy to:

Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attention: Ann Yvonne Walker, Esq.
Telephone No.: (415) 493-9300
Facsimile No.: (415) 493-6811

9.4 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such references shall be to a Section, Exhibit
or Schedule to this

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Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation."

9.5 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 party.

9.6 ENTIRE AGREEMENT. Except for the mutual nondisclosure agreement
previously signed by the parties hereto, which shall survive in its entirety,
this Agreement and the documents and instruments and other agreements among the
parties delivered pursuant hereto constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings, representations and warranties, both written and
oral, among the parties with respect to the subject matter hereof and are not
intended to confer upon any other person any rights or remedies hereunder except
as otherwise expressly provided herein. EACH PARTY HERETO AGREES THAT, EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER
AVANT! AND SUB NOR COMPASS MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND
EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR
ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS
OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY
OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION
OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.

9.7 NO TRANSFER. This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by operation of law or otherwise
without the consent of each party hereto. This Agreement is binding upon and
will inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

9.8 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. 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 the void or unenforceable provision.

9.9 OTHER REMEDIES. Unless otherwise expressly specified herein, any
and all remedies set forth in this Agreement and in the Related Agreements
expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby or by law or equity on such
party; and the exercise of any one remedy will not preclude the exercise of any
other.

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<PAGE>

9.10 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.

9.11 ABSENCE OF THIRD-PARTY BENEFICIARY RIGHTS. No provision of
this Agreement is intended, or will be interpreted, to provide to or create for
any third-party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, stockholder, employee, partner or any party hereto
or any other person or entity, and all provisions hereof will be personal solely
between the parties to this Agreement, except that the provisions of
Section 5.15 shall be for the benefit of the employees of Compass, and
Article IV and Sections 5.13 and 5.17 shall be for the benefit of the
stockholders of Compass and shall be enforceable by such individuals against
Avant! subject to the terms and conditions of this Agreement.

9.12 GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to its choice of law principles).
Provided, however, that the law governing the fiduciary duties of each party
hereto and their respective boards of directors and the law governing any other
matters of internal corporate governance of any of Avant! or Compass shall be
the law of their respective jurisdictions of incorporation.

49
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Reorganization as of the date first above written.

AVANT! CORPORATION

By: /s/ Gerald C. Hsu
------------------------------------
Gerald C. Hsu
Chairman of the Board, Chief
Executive Officer and President

COMPASS DESIGN AUTOMATION, INC.

By: /s/ Paul McLellan
------------------------------------
Paul McLellan
President

GB ACQUISITION CORPORATION

By: /s/ Gerald C. Hsu
------------------------------------
Gerald C. Hsu
President

VLSI TECHNOLOGY, INC.

By: /s/ Larry L. Grant
------------------------------------
Larry L. Grant
Vice President, General Counsel and
Secretary

<PAGE>

AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION

THIS AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this
"Amendment") is made as of August 27, 1997, by and among Avant! Corporation,
a Delaware corporation ("Avant!"), GB Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Avant! ("Sub"), Compass Design
Automation, Inc., a Delaware corporation ("Compass"), and VLSI Technology,
Inc., a Delaware corporation ("VLSI").

R E C I T A L S

WHEREAS, Avant!, Sub, Compass and VLSI entered into that certain
Agreement and Plan of Reorganization, dated July 31, 1997 (the "Merger
Agreement"); and

WHEREAS, Avant!, Sub, Compass and VLSI desire to amend the Merger
Agreement as provided below.

NOW, THEREFORE, in consideration of the promises and conditions
contained herein, the parties hereby agree as follows:

1. Section 2.1(c)(i) of the Merger Agreement be, and it hereby is,
amended and restated to read in full as follows:

"(i) CONVERSION OF COMPASS PREFERRED STOCK. Each share of the
Series A Preferred Stock of Compass (the "Compass Preferred Stock") issued
and outstanding at the Effective Time of the Merger (other than any shares of
Compass Preferred Stock to be canceled pursuant to Section 2.1(b)(i) and any
Dissenting Shares (as defined and to the extent provided in Section 2.1(f))
shall be canceled and extinguished and be converted automatically into the
right to receive that portion of the aggregate amount of $35,000,000 (the
"Merger Consideration") to which such share of Compass Preferred Stock is
entitled under, and in accordance with, Article Four, Section 2(a) of the
Restated Certificate of Incorporation of Compass (the "Liquidation
Preference"). Such Liquidation Preference equals the sum of $1.00 per share
plus all accrued but unpaid dividends. Additionally, the holders of Compass
Preferred Stock shall share ratably in the difference between the Merger
Consideration and the aggregate Liquidation Preference (the "Net Merger
Consideration") with the holders of the Common Stock of Compass and the
holders of vested options to purchase Common Stock of Compass (assuming that
all such options have been exercised). The aggregate Liquidation Preference
plus the portion of the Net Merger Consideration payable to the holders of
Compass Preferred Stock pursuant to this Section 2.1(c)(i) (the "Compass
Preferred Stock Consideration") shall be payable in a combination of cash and
shares of Avant! Common Stock. For the purpose of determining the number of
shares of Avant! Common Stock issuable to the holders of the Compass
Preferred Stock, the price of the Avant! Common Stock shall be the average
closing sales price of Avant! Common Stock as quoted on the Nasdaq National
Market for the five (5) consecutive trading days ending three (3) business
days prior to the Closing Date of the Merger (the "Average Nasdaq Per Share
Price"). The total dollar and share amounts of the Compass Preferred Stock
Consideration allocated to the holders of Compass Preferred Stock are set
forth in EXHIBIT 2.1(c), subject to appropriate adjustments at the Closing to
reflect the total of accrued but unpaid dividends as of such date and the
Average Nasdaq Per Share Price."

<PAGE>

2. The following provision shall be inserted into the Merger Agreement
as Section 5.19:

"5.19 ELECTION PURSUANT TO INTERNAL REVENUE CODE SECTION 338(h)(10).

(a) VLSI agrees, at the request of Avant!, to join in an election
under Section 338(h)(10) of the Code (hereinafter referred to as the
"Election") and, at the request of Avant!, to join in an election under any
comparable provisions of state or local law under which such an Election is
permissible and to take all actions reasonably necessary to effect same,
including those actions set forth below.

(b) Avant! shall be responsible for the preparation and filing of
all forms and documents required in connection with the Election. VLSI shall
pay all Taxes resulting from the Election; provided, however, that if prior
to making such Election VLSI shall inform Avant! of the amount (the
"Additional Tax Amount") of the difference, if any, between the Taxes VLSI is
required to pay as a result of the Election and the Taxes that VLSI would
otherwise have incurred by reason of the Merger if the Election were not made
but the Merger were consummated, then Avant! shall indemnify VLSI for the
payment of the Additional Tax Amount. VLSI shall execute and deliver to
Avant! such documents or forms as are reasonably requested and are required
by any tax laws to complete properly the Election at least twenty (20) days
prior to the date such Election is required to be filed. For the purpose of
executing the Election, VLSI and Avant! shall, as soon as practicable after
the Effective Date of the Merger but in no event sooner than 90 days
thereafter, execute Internal Revenue Service Form 8023-A and all attachments
required to be filed therewith pursuant to applicable Treasury Regulations.
Avant! shall not file such Form 8023-A or the attachments thereto as
corrected, amended or supplemented unless it shall have obtained VLSI's
consent thereto, which consent shall not be unreasonably withheld. On or
prior to the tenth (10th) day after VLSI's receipt of such corrections,
amendments or supplements from Avant!, VLSI shall deliver to Avant! either
(i) its consent to such filing or (ii) a written notice specifying in
reasonable detail all disputed items and the basis therefore. If, within ten
(10) days after Avant!'s receipt of the written notice described in clause
(ii) above, VLSI and Avant! have been unable to resolve their differences,
any remaining disputed issues shall be submitted to Deloitte & Touche LLP to
resolve in a final and binding manner after hearing the views of both
parties. In that event, VLSI and Avant! shall execute and consent to the
filing of such corrected, amended or supplemented Form 8023-A in the manner
determined by Deloitte & Touche LLP.

(c) Avant!, not less than thirty (30) days prior to the date the
forms required under Section 338(h)(10) are required to be filed, shall
provide VLSI with a valuation statement reflecting, as of the Effective Date
of the Merger, the fair market values of all of the assets and the
liabilities of Compass. VLSI shall review said values and to the extent VLSI
disagrees therewith, will notify Avant!. Should the parties fail to agree,
the dispute shall be resolved by Deloitte & Touche LLP as set forth above.
VLSI and Avant! shall file all returns with respect to taxes and statements,
forms and schedules in connection therewith (including, without limitation,
Internal Revenue Service Form 8594 and any required exhibits thereto) in a

2
<PAGE>

manner consistent with such valuations, and shall take no position contrary
thereto unless required to do so by applicable tax laws.

(d) To the extent permitted by state and local laws, the principles
and procedures of this Section 5.20 shall also apply with respect to a
Section 338(h)(10) election or equivalent or comparable provision under state
or local law, including without limitation, an election under Section 338(g)
of the Code."

3. The following provision shall be inserted into the Merger Agreement
as Section 5.20:

"5.20 USE OF VLSI DATA CENTER. As of the date of the Merger
Agreement, VLSI occupied approximately 3,800 square feet of office space at
Compass' building located at 1865 Lundy Avenue, San Jose, California 95131
(the "Compass Space"). From the Effective Date of the Merger until December
31, 1997, VLSI shall have the right to continue to occupy and use the Compass
Space rent free as a data center upon the same terms and conditions that VLSI
occupied and used the Compass Space prior to the Effective Date of the
Merger."

4. The following provision shall be inserted into the Merger Agreement
as Section 5.21:

"5.21 INTERCOMPANY DEBT. The parties acknowledge that VLSI has
loaned money to Compass to cover operating and other expenses on an ongoing
basis, which such monies have been reflected in the Financial Statements as
intercompany debt payable to VLSI. Avant! hereby agrees to cause the
intercompany debt outstanding on the Effective Date of the Merger to be paid
in full to VLSI on or before September 26, 1997, or if the Effective Date of
the Merger has not occurred prior to that date, on the Effective Date of the
Merger; provided, however, the parties agree that, immediately prior to the
Effective Time of the Merger, VLSI shall contribute to the capital of Compass
the amount by which the intercompany debt owed to VLSI exceeds the sum of
$16,000,000 plus the amount of any intercompany receivable then due Compass
from VLSI. Such contribution shall not be made in cash but shall instead be
made by VLSI contributing a portion of such intercompany debt. It is further
understood that the intercompany debt may include amounts paid by Compass for
retention bonuses previously agreed to be paid by Compass which have been
disclosed to Avant! in SCHEDULE 3.13."

5. MISCELLANEOUS.

(a) NO OTHER MODIFICATION. Except as expressly provided herein, this
Agreement does not in any way change, modify or delete any of the provisions
of the Merger Agreement, and all such provisions shall remain in full force
and effect.

(b) GOVERNING LAW. This Amendment shall be governed by and construed
under the laws of the State of Delaware.

(c) COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

3
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

AVANT! CORPORATION

By: /s/ Gerald C. Hsu
--------------------------------------
Gerald C. Hsu
Chairman of the Board, Chief Executive
Officer and President

COMPASS DESIGN AUTOMATION, INC.

By: /s/ Paul McLellan
--------------------------------------
Paul McLellan
President

GB ACQUISITION CORPORATION

By: /s/ Gerald C. Hsu
--------------------------------------
Gerald C. Hsu
President

VLSI TECHNOLOGY, INC.

By: /s/ Larry L. Grant
--------------------------------------
Larry L. Grant
Vice President, General Counsel and
Secretary

<PAGE>

AFFILIATES AGREEMENT

THIS AFFILIATES AGREEMENT (the "Affiliates Agreement") is entered
into as of September 11, 1997 between Avant! Corporation, a Delaware
corporation ("Avant!"), and the undersigned stockholder (the "Stockholder")
of Compass Design Automation, Inc., a Delaware corporation ("Compass").

RECITALS

A. Compass, Avant! and GB Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Avant! ("Merger Sub"), have
entered into an Agreement and Plan of Reorganization dated July 31, 1997 and
as amended on August 27, 1997 (the "Merger Agreement"), pursuant to which
Merger Sub will be merged into Compass (the "Merger"), and Compass will
become a wholly owned subsidiary of Avant!.

B. Upon the consummation of the Merger and in connection
therewith, the undersigned Stockholder will become the owner of shares of
Common Stock of Avant! (the "Avant! Shares").

NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants set forth in the Merger Agreement and in
this Affiliates Agreement, it is hereby agreed as follows:

1. The undersigned Stockholder hereby agrees that:

(a) The undersigned Stockholder may be deemed to be (but does
not hereby admit to be) an "affiliate" of Compass within the meaning of Rule
145 under the Securities Act of 1933, as amended (the "Securities Act").

(b) The undersigned Stockholder agrees not to offer, sell,
exchange, transfer, pledge or otherwise dispose of any of the Avant! Shares
unless at that time:

(i) such transaction is permitted pursuant to the
provisions of Rule 145(d) under the Securities Act; or

(ii) counsel representing the undersigned Stockholder,
satisfactory to Avant!, shall have advised Avant! in a written opinion letter
satisfactory to Avant! and Avant!'s counsel and upon which Avant! and its
counsel may rely, that no registration under the Securities Act is required
in connection with the proposed sale, transfer or other disposition; or

(iii) a registration statement under the Securities Act
covering the Avant! Shares proposed to be sold, transferred or otherwise
disposed of, describing the manner and terms of the proposed sale, transfer
or other disposition, and containing a current

<PAGE>

prospectus, is filed with the Securities and Exchange Commission (the "SEC")
and made effective under the Securities Act; or

(iv) an authorized representative of the SEC shall have
rendered written advice to the undersigned Stockholder (sought by the
undersigned Stockholder or counsel to the undersigned Stockholder, with a
copy thereof and of all other related communications delivered to Avant!) to
the effect that the SEC will take no action, or that the staff of the SEC
will not recommend that the SEC take action, with respect to the proposed
offer, sale, exchange, transfer, pledge or other disposition if consummated.

(c) All certificates representing the Avant! Shares
deliverable to the undersigned Stockholder pursuant to the Merger Agreement
and in connection with the Merger and any certificates subsequently issued
with respect thereto or in substitution therefor shall, unless one or more of
the alternative conditions set forth in the subparagraphs of paragraph (b) of
this Section 1 shall have occurred, bear a legend substantially as follows:

"The shares represented by this certificate may not be
offered, sold, exchanged, transferred, pledged or otherwise
disposed of except in accordance with the requirements of
the Securities Act of 1933, as amended, and the other
conditions specified in that certain Affiliates Agreement
dated as of September 11, 1997 between Avant! and VLSI
Technology, Inc., a copy of which Affiliates Agreement may
be inspected by the holder of this certificate at the
offices of Avant!, or Avant! will furnish, without charge, a
copy thereof to the holder of this certificate upon written
request therefor."

Avant!, at its discretion, may cause stop transfer orders to be placed with
its transfer agent with respect to the certificates for the Avant! Shares but
not as to the certificates for any part of the Avant! Shares as to which said
legend is no longer appropriate when one or more of the alternative
conditions set forth in the subparagraphs of paragraph (b) of this Section 1
shall have occurred.

(d) The undersigned Stockholder will observe and comply with
the Securities Act and the General Rules and Regulations thereunder, as now
in effect and as from time to time amended and including those hereafter
enacted or promulgated, in connection with any offer, sale, exchange,
transfer, pledge or other disposition of the Avant! Shares or any part
thereof.

2. WAIVER. No waiver by any party hereto of any condition or of
any breach of any provision of this Affiliates Agreement shall be effective
unless in writing.

3. NOTICES. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms of
this Affiliates Agreement shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed by registered or certified
mail, postage prepaid, as follows:

2
<PAGE>

(a) If to the Stockholder, at the address set forth below the
Stockholder's signature at the end hereof.

(b) If to Avant!:

Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
Attention: John P. Huyett
Telephone: (510) 413-8000
Facsimile: (510) 413-8080

with a copy to:

Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attention: Steven M. Spurlock, Esq.
Telephone: (415) 321-2400
Facsimile: (415) 321-2800

or to such other address as any party hereto may designate for itself by
notice given as herein provided.

4. COUNTERPARTS. For the convenience of the parties hereto, this
Affiliates Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.

5. SUCCESSORS AND ASSIGNS. This Affiliates Agreement shall be
enforceable by, and shall inure to the benefit of and be binding upon, the
parties hereto and their respective successors and assigns. As used herein,
the term "successors and assigns" shall mean, where the context so permits,
heirs, executors, administrators, trustees and successor trustees, and
personal and other representatives.

6. GOVERNING LAW. This Affiliates Agreement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the
State of Delaware, without regard to the conflicts of law provisions thereof.

7. EFFECTIVENESS; SEVERABILITY. This Affiliates Agreement shall
become effective at the Effective Time of the Merger. If a court of competent
jurisdiction determines that any provision of this Affiliates Agreement is
unenforceable or enforceable only if limited in time and/or scope, this
Affiliates Agreement shall continue in full force and effect with such
provision stricken or so limited.

3
<PAGE>

8. EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of
this Affiliates Agreement.

9. DEFINITIONS. All capitalized terms used herein shall have the
meaning defined in the Merger Agreement, unless otherwise defined herein.

4
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Affiliates
Agreement to be executed as of the date first above written.

AVANT! CORPORATION VLSI TECHNOLOGY, INC.

By: /s/ Gerald C. Hsu By: /s/ Larry L. Grant
------------------------------- -------------------------------
Gerald C. Hsu Larry L. Grant
Chairman of the Board, Chief Vice President, General
Executive Officer and President Counsel and Secretary

Address:
1109 McKay Drive, MS-45
San Jose, California 95131

<PAGE>

December 23, 1997

Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538

Re: REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-3 originally
filed by Avant! Corporation (the "Company") with the Securities and Exchange
Commission (the "Commission") on December 23, 1997, as thereafter amended or
supplemented (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of up to 522,192
shares of the Company's Common Stock of a certain stockholder of the Company
(the "Shares"). As your counsel in connection with this transaction, we have
examined the proceedings taken and are familiar with the proceedings proposed
to be taken by you in connection with the sale and issuance of the Shares.

It is our opinion that the Shares are legally and validly issued,
fully paid and non-assessable.

We consent to the use of this opinion as an exhibit to said
Registration Statement, and further consent to the use of our name wherever
appearing in said Registration Statement, including the prospectus
constituting a part thereof, and in any amendment or supplement thereto.

Very truly yours,

/s/ Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP

GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP

<PAGE>
EXHIBIT 23.1

The Board of Directors
Avant! Corporation

We consent to incorporation by reference in the registration statement filed
as of December 23, 1997 on Form S-3 of Avant! Corporation of our report dated
January 22, 1997, except as to the second paragraph of Note 11, which is as
of March 18, 1997, relating to the consolidated balance sheets of Avant!
Corporation and subsidiaries as of December 31, 1996, and 1995, and the
related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996
and related schedule which report appears in the December 31, 1996, annual
report on Form 10-K of Avant! Corporation and to the reference to our firm
under the heading "Experts" in the registration statement.

San Jose, California KPMG Peat Marwick LLP
December 23, 1997

<PAGE>
EXHIBIT 23.2

The Board of Directors
Compass Design Automation, Inc.:

We consent to incorporation by reference in the registration statement filed
as of December 23, 1997 on Form S-3 of Avant! Corporation of our report dated
November 18, 1997, relating to the consolidated balance sheet of Compass
Design Automation, Inc. and subsidiaries as of December 31, 1996, and the
related consolidated statements of operations, shareholders' deficit, and
cash flows for the year then ended, and related schedule, which report
appears in the Form 8-KA of Avant! Corporation, dated November 25, 1997, and
to the reference to our firm under the heading "Experts" in the registration
statement.

San Jose, California KPMG Peat Marwick LLP
December 23, 1997