AMONG

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

AGREEMENT AND PLAN OF MERGER

DATED AS OF DECEMBER 8, 1998

AMONG

CADENCE DESIGN SYSTEMS, INC.,

QUICKTURN SYSTEMS DESIGN, INC.

AND

CDSI ACQUISITION, INC.

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

TABLE OF CONTENTS

Page
----

ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.3. Closing of the Merger . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.4. Effects of the Merger . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.5. Certificate of Incorporation and Bylaws . . . . . . . . . . . . .2
SECTION 1.6. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.7. Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.8. Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . .3
Section 1.9. Dissent and Appraisal Rights. . . . . . . . . . . . . . . . . . .3
Section 1.10. Exchange of Certificates. . . . . . . . . . . . . . . . . . . . .4
Section 1.11. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . .6

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . .7
Section 2.1. Organization and Qualification; Subsidiaries; Investments . . . .7
Section 2.2. Capitalization of the Company and its Subsidiaries. . . . . . . .8
Section 2.3. Authority Relative to this Agreement; Recommendation. . . . . . 10
Section 2.4. SEC Reports; Financial Statements . . . . . . . . . . . . . . . 10
Section 2.5. Information Supplied. . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6. Consents and Approvals; No Violations . . . . . . . . . . . . . 11
Section 2.7. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.8. No Undisclosed Liabilities; Absence of Changes. . . . . . . . . 12
Section 2.9. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.10. Compliance with Applicable Law. . . . . . . . . . . . . . . . . 14
Section 2.11. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . 14
Section 2.12. Environmental Laws and Regulations. . . . . . . . . . . . . . . 16
Section 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.14. Intellectual Property . . . . . . . . . . . . . . . . . . . . . 17
Section 2.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.16. Certain Business Practices. . . . . . . . . . . . . . . . . . . 22
Section 2.17. Product Warranties. . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.18. Suppliers and Customers . . . . . . . . . . . . . . . . . . . . 23
Section 2.19. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.20. Tax Treatment; Pooling. . . . . . . . . . . . . . . . . . . . . 23
Section 2.21. Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.22. Opinion of Financial Adviser. . . . . . . . . . . . . . . . . . 23
Section 2.23. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.24. Company Rights Agreement. . . . . . . . . . . . . . . . . . . . 24

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION. . . . . . . . 24
Section 3.1. Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.2. Capitalization of Parent and its Subsidiaries . . . . . . . . . 25
Section 3.3. Authority Relative to this Agreement. . . . . . . . . . . . . . 26
Section 3.4. SEC Reports; Financial Statements . . . . . . . . . . . . . . . 26
Section 3.5. Information Supplied. . . . . . . . . . . . . . . . . . . . . . 27
Section 3.6. Consents and Approvals; No Violations . . . . . . . . . . . . . 27
Section 3.7. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.8. No Undisclosed Liabilities; Absence of Changes. . . . . . . . . 28
Section 3.9. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.10. Compliance with Applicable Law. . . . . . . . . . . . . . . . . 28
Section 3.11. Tax Treatment; Pooling. . . . . . . . . . . . . . . . . . . . . 29
Section 3.12. Opinion of Financial Adviser. . . . . . . . . . . . . . . . . . 29
Section 3.13. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.14. No Prior Activities . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.15 ENVIRONMENTAL LAWS AND Regulations. . . . . . . . . . . . . . . 30

ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.1. Conduct of Business of the Company. . . . . . . . . . . . . . . 30
Section 4.2. Conduct of Business of Parent . . . . . . . . . . . . . . . . . 32
Section 4.3. Preparation of S-4 and the Proxy Statement. . . . . . . . . . . 33
Section 4.4. Other Potential Acquirers . . . . . . . . . . . . . . . . . . . 33
Section 4.5. Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.6. Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . 35
Section 4.7. Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . 36
Section 4.8. Access to Information . . . . . . . . . . . . . . . . . . . . . 36
Section 4.9. Certain Filings; Reasonable Efforts . . . . . . . . . . . . . . 37
Section 4.10. Public Announcements. . . . . . . . . . . . . . . . . . . . . . 38
Section 4.11. Indemnification and Directors' and Officers' Insurance. . . . . 38
Section 4.12. Notification of Certain Matters . . . . . . . . . . . . . . . . 39
Section 4.13. Affiliates; Pooling; Tax-Free Reorganization. . . . . . . . . . 39
Section 4.14. Additions to and Modification of Company Disclosure
Schedule. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.15. Company Rights Agreement. . . . . . . . . . . . . . . . . . . . 40

ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . . . . . . . . . . . . 41
Section 5.1. Conditions to Each Party's Obligations to Effect the Merger . . 41
Section 5.2. Conditions to the Obligations of the Company. . . . . . . . . . 41
Section 5.3. Conditions to the Obligations of Parent and Acquisition . . . . 43

ARTICLE 6 TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . . . . . . . . . . . 44
Section 6.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . 45
Section 6.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.4. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.5. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE 7 MISCELLANEOUS 47
Section 7.1. Nonsurvival of Representations and Warranties . . . . . . . . . 47
Section 7.2. Entire Agreement; Assignment. . . . . . . . . . . . . . . . . . 47
Section 7.3. Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.6. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . 48
Section 7.7. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.8. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.9. Personal Liability. . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.10. Specific Performance. . . . . . . . . . . . . . . . . . . . . . 49
Section 7.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 50

iii

TABLE OF EXHIBITS

Exhibit A-1. . . Form of Letter Agreement with Company Affiliates
Exhibit A-2. . . Form of Letter Agreement with Parent Affiliates
Exhibit B-1. . . Form of Representations related to Tax Matters of the Company
Exhibit B-2. . . Form of Representations Related to Tax Matters of Parent and Acquisition
Exhibit C. . . . Matters to be Covered by Opinion of Legal Counsel to the Company
Exhibit D. . . . Matters to be Covered by Opinion of Legal Counsel to Parent and Acquisition
Exhibit E. . . . Form of Certificate of Merger

TABLE OF CONTENTS
TO
COMPANY DISCLOSURE SCHEDULE

Section 2.1(a) . . . . . . . . . . Subsidiaries
Section 2.1(c) . . . . . . . . . . Equity Investments
Section 2.6. . . . . . . . . . . . Consents and Approval
Section 2.7. . . . . . . . . . . . Defaults
Section 2.8. . . . . . . . . . . . Undisclosed Liabilities; Absence of Changes
Section 2.9. . . . . . . . . . . . Litigation
Section 2.11(a). . . . . . . . . . Employee Plans
Section 2.11(b). . . . . . . . . . Employment and Related Agreements
Section 2.11(c). . . . . . . . . . Employee Benefits Affected by this Transaction
Section 2.11(d). . . . . . . . . . Employee Benefits to Former Employees
Section 2.11(e). . . . . . . . . . Employee Matters
Section 2.13(b). . . . . . . . . . Delinquent or Inaccurate Tax Returns
Section 2.13(c). . . . . . . . . . All Taxes Paid
Section 2.13(d). . . . . . . . . . Tax Claims
Section 2.13(e). . . . . . . . . . Excess Parachute Payments
Section 2.14(a). . . . . . . . . . Intellectual Property
Section 2.14(e)(1) . . . . . . . . Inbound License Agreements
Section 2.14(e)(2) . . . . . . . . Outbound License Agreements
Section 2.14(i). . . . . . . . . . Pending or Threatened Infringement Claims
Section 2.14(j). . . . . . . . . . Infringement Matters
Section 2.14(k). . . . . . . . . . Existing Software Products
Section 2.14(l). . . . . . . . . . Non Company Intellectual Property Rights
Section 2.14(m). . . . . . . . . . Existing and Currently Manufactured Software
Section 2.14(o). . . . . . . . . . Year 2000 Compliance
Section 2.17 . . . . . . . . . . . Product Warranties
Section 2.18 . . . . . . . . . . . Suppliers and Customers
Section 2.21 . . . . . . . . . . . Affiliates
Section 4.1. . . . . . . . . . . . Conduct of Business
Section 5.3(i) . . . . . . . . . . Third Party Consents

TABLE OF DEFINED TERMS

Cross Reference
Term in Agreement Page
---- --------------- ----

Acquisition . . . . . . . . . . . . . .Preamble . . . . . . . . . . . . 1
affiliate . . . . . . . . . . . . . . .Section 7.8(a) . . . . . . . . . 46
Agreement . . . . . . . . . . . . . . .Preamble . . . . . . . . . . . . 1
business day . . . . . . . . . . . . . .Section 7.8(b) . . . . . . . . . 46
Business System . . . . . . . . . . . .Section 2.14(o)(i) . . . . . . . 21
capital stock . . . . . . . . . . . . .Section 7.8(c) . . . . . . . . . 47
Certificate of Merger . . . . . . . . .Section 1.2. . . . . . . . . . . 2
Certificates . . . . . . . . . . . . . .Section 1.10(b). . . . . . . . . 4
Closing Date . . . . . . . . . . . . . .Section 1.3. . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . .Section 1.3. . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . .Preamble . . . . . . . . . . . . 1
Company . . . . . . . . . . . . . . . .Preamble . . . . . . . . . . . . 1
Company Acquisition . . . . . . . . . .Section 7.8(d) . . . . . . . . . 47
Company Affiliates . . . . . . . . . . .Section 2.21 . . . . . . . . . . 22
Company Board . . . . . . . . . . . . .Section 2.3(a) . . . . . . . . . 9
Company Financial Adviser . . . . . . .Section 2.22 . . . . . . . . . . 22
Company Permits . . . . . . . . . . . .Section 2.10 . . . . . . . . . . 13
Company Plans . . . . . . . . . . . . .Section 1.11(a). . . . . . . . . 6
Company Rights Agreement . . . . . . . .Section 2.2(a) . . . . . . . . . 8
Company Rights . . . . . . . . . . . . .Section 2.2(a) . . . . . . . . . 8
Company SEC Reports . . . . . . . . . .Section 2.4(a) . . . . . . . . . 10
Company Securities . . . . . . . . . . .Section 2.2(a) . . . . . . . . . 8
Company Stock Option or Options . . . .Section 1.11(a). . . . . . . . . 5
DGCL . . . . . . . . . . . . . . . . . .Section 1.1. . . . . . . . . . . 1
Effective Time . . . . . . . . . . . . .Section 1.2. . . . . . . . . . . 2
Employee Plans . . . . . . . . . . . . .Section 2.11(a). . . . . . . . . 14
Environmental Claim . . . . . . . . . .Section 2.12(a). . . . . . . . . 15
Environmental Laws . . . . . . . . . . .Section 2.12(a). . . . . . . . . 15
ERISA Affiliate . . . . . . . . . . . .Section 2.11(a). . . . . . . . . 14
ERISA . . . . . . . . . . . . . . . . .Section 2.11(a). . . . . . . . . 14
Exchange Act . . . . . . . . . . . . . .Section 2.2(c) . . . . . . . . . 9
Exchange Agent . . . . . . . . . . . . .Section 1.10(a). . . . . . . . . 3
Exchange Fund . . . . . . . . . . . . .Section 1.10(a). . . . . . . . . 3
Exchange Ratio . . . . . . . . . . . . .Section 1.8(b) . . . . . . . . . 3
Governmental Entity . . . . . . . . . .Section 2.6. . . . . . . . . . . 11
HSR Act . . . . . . . . . . . . . . . .Section 2.6. . . . . . . . . . . 11
include . . . . . . . . . . . . . . . .Section 7.8(e) . . . . . . . . . 47
Indemnified Liabilities . . . . . . . .Section 4.11 . . . . . . . . . . 37
Indemnified Persons . . . . . . . . . .Section 4.11 . . . . . . . . . . 36
Insurance Policies . . . . . . . . . . .Section 2.15 . . . . . . . . . . 21

IRS . . . . . . . . . . . . . . . . . .Section 2.11(a). . . . . . . . . 14
ISOs . . . . . . . . . . . . . . . . . .Section 1.11(a). . . . . . . . . 6
knowledge or known . . . . . . . . . . .Section 7.8(d) . . . . . . . . . 47
Lien . . . . . . . . . . . . . . . . . .Section 2.2(b) . . . . . . . . . 9
Material Adverse Effect on Parent . . .Section 3.1(b) . . . . . . . . . 23
Material Adverse Effect on the Company .Section 2.1(b) . . . . . . . . . 7
Merger Consideration . . . . . . . . . .Section 1.8(a) . . . . . . . . . 3
Merger . . . . . . . . . . . . . . . . .Section 1.1. . . . . . . . . . . 1
Notice of Superior Proposal . . . . . .Section 4.4(b) . . . . . . . . . 33
Other Interests . . . . . . . . . . . .Section 2.1(b) . . . . . . . . . 8
Parent . . . . . . . . . . . . . . . .Preamble . . . . . . . . . . . . 1
Parent Common Stock . . . . . . . . . .Section 1.8(a) . . . . . . . . . 3
Parent Financial Adviser . . . . . . . .Section 3.12 . . . . . . . . . . 28
Parent Permits . . . . . . . . . . . . .Section 3.10 . . . . . . . . . . 27
Parent Rights . . . . . . . . . . . . .Section 3.2(a) . . . . . . . . . 24
Parent SEC Reports . . . . . . . . . . .Section 3.4(a) . . . . . . . . . 25
Parent Securities . . . . . . . . . . .Section 3.2(a) . . . . . . . . . 24
person . . . . . . . . . . . . . . . . .Section 7.8(f) . . . . . . . . . 47
Pooling Transaction . . . . . . . . . .Section 2.20 . . . . . . . . . . 22
Proxy Statement . . . . . . . . . . . .Section 2.5. . . . . . . . . . . 10
S-4 . . . . . . . . . . . . . . . . . .Section 2.5. . . . . . . . . . . 10
SEC . . . . . . . . . . . . . . . . . .Section 2.4(a) . . . . . . . . . 10
Securities Act . . . . . . . . . . . . .Section 2.4(a) . . . . . . . . . 10
Share . . . . . . . . . . . . . . . . .Section 1.8(a) . . . . . . . . . 2
Shares . . . . . . . . . . . . . . . . .Section 1.8(a) . . . . . . . . . 2
Stock Option Agreement . . . . . . . . .Section 5.2(a) . . . . . . . . . 40
subsidiary or subsidiaries . . . . . . .Section 7.8(g) . . . . . . . . . 47
Superior Proposal . . . . . . . . . . .Section 4.4(c) . . . . . . . . . 33
Surviving Corporation . . . . . . . . .Section 1.1. . . . . . . . . . . 1
Tax or Taxes . . . . . . . . . . . . . .Section 2.13(a)(i) . . . . . . . 16
Tax Return . . . . . . . . . . . . . . .Section 2.13(a)(ii). . . . . . . 16
Third Party Acquisition . . . . . . . .Section 4.4(c) . . . . . . . . . 33
Third Party . . . . . . . . . . . . . .Section 4.4(c) . . . . . . . . . 33
Year 2000 Compliant . . . . . . . . . .Section 2.14(o)(i) . . . . . . . 21

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
December 8, 1998, is by and among Quickturn Design Systems, Inc., a Delaware
corporation (the "Company"), Cadence Design Systems, Inc., a Delaware
corporation ("Parent"), and CDSI ACQUISITION, INC., a Delaware corporation
and a wholly owned subsidiary of Parent ("Acquisition").

WHEREAS, the Boards of Directors of the Company, Parent and
Acquisition have each (i) determined that the Merger (as defined below) is
advisable and fair and in the best interests of their respective stockholders
and (ii) approved the Merger upon the terms and subject to the conditions set
forth in this Agreement;

WHEREAS, for Federal income tax purposes it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, certain officers and employees of the Company have entered
into employment and non-competition agreements, effective upon consummation
of the Merger, as an inducement to Parent to enter into this Agreement; and

WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for financial accounting purposes.

NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition
hereby agree as follows:

ARTICLE 1

THE MERGER

SECTION 1.1. THE MERGER. At the Effective Time (as defined below)
and upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"),
Acquisition shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") and the separate corporate existence of
Acquisition shall cease. At the election of the parties, the Merger may be
structured so that the Company shall be merged with and into Acquisition with
the result that Acquisition shall become the "Surviving Corporation." The
Merger is intended to qualify as a tax-free reorganization under Section
368(a) of the Code. Parent, as the sole stockholder of Acquisition, hereby
approves the Merger and this Agreement.

SECTION 1.2. EFFECTIVE TIME. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 1.3),
a Certificate of Merger substantially in the form of EXHIBIT E (the
"Certificate of Merger") shall be duly executed and acknowledged by
Acquisition and the Company and thereafter delivered to the Secretary of
State of the State of Delaware for filing pursuant to Section 251 of the
DGCL. The Merger shall become effective at such time as a properly executed
copy of the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware in accordance with Section 251 of the DGCL or such
later time as Parent and the Company may agree upon and as set forth in the
Certificate of Merger (the time the Merger becomes effective being referred
to herein as the "Effective Time").

SECTION 1.3. CLOSING OF THE MERGER. The closing of the Merger
(the "Closing") will take place at a time and on a date (the "Closing Date")
to be specified by the parties, which shall be no later than the second
business day after satisfaction of the latest to occur of the conditions set
forth in Article 5, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, Xxx
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, unless another time, date
or place is agreed to in writing by the parties hereto.

SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Acquisition
shall vest in the Surviving Corporation and all debts, liabilities and duties
of the Company and Acquisition shall become the debts, liabilities and duties
of the Surviving Corporation.

SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation of Acquisition in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with applicable law. The bylaws of Acquisition in
effect at the Effective Time shall be the bylaws of the Surviving Corporation
until amended in accordance with applicable law.

SECTION 1.6. DIRECTORS. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
bylaws of the Surviving Corporation until such director's successor is duly
elected or appointed and qualified.

Section 1.7. OFFICERS. The officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
bylaws of the Surviving Corporation until such officer's successor is duly
elected or appointed and qualified.

Section 1.8. CONVERSION OF SHARES.

(a) At the Effective Time, each share of common stock, $0.001 par
value per share, of the Company (individually a "Share" and collectively the
"Shares") issued and outstanding immediately prior to the Effective Time
(other than (i) Shares held in the

Company's treasury or by any of the Company's subsidiaries and (ii) Shares
held by Parent, Acquisition or any other subsidiary of Parent) shall, by
virtue of the Merger and without any action on the part of Acquisition, the
Company or the holder thereof, be converted into and shall become a number of
fully paid and nonassessable shares of common stock, par value $.01 per
share, of Parent ("Parent Common Stock") equal to the Exchange Ratio (as
defined below) (the "Merger Consideration"). Unless the context otherwise
requires, each reference in this Agreement to shares of Parent Common Stock
and to the Shares shall include the associated Parent Rights (as such term is
defined in Section 3.2(a) hereof) and associated Company Rights (as defined
in Section 2.2(a)), respectively. Notwithstanding the foregoing, if, between
the date of this Agreement and the Effective Time, the outstanding shares of
Parent Common Stock or the Shares shall have been changed into a different
number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares then the Exchange Ratio shall be correspondingly adjusted
to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.

(b) The "Exchange Ratio" shall be (i) $14.00 divided by (ii) the
average closing price of one share of Parent Common Stock (as reported on the
NYSE Composite Transactions reporting system) during the five trading days
immediately preceding the second business day prior to the Closing Date.

(c) At the Effective Time, each outstanding share of the common
stock, $0.01 par value per share, of Acquisition shall be converted into one
share of common stock, $0.01 par value per share, of the Surviving
Corporation.

(d) At the Effective Time, each Share held in the treasury of the
Company and each Share held by Parent, Acquisition or any subsidiary of
Parent, Acquisition or the Company immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of
Acquisition, the Company or the holder thereof, be canceled, retired and
cease to exist and no shares of Parent Common Stock shall be delivered with
respect thereto.

Section 1.9. DISSENTERS AND APPRAISAL RIGHTS. The holders of the
Shares will not be entitled to dissenters and appraisal rights in accordance
with Section 262 of the DGCL.

Section 1.10. EXCHANGE OF CERTIFICATES.

(a) From time to time following the Effective Time, as required by
subsections (b) and (c) below, Parent shall deliver to its transfer agent, or
a depository or trust institution of recognized standing selected by Parent
and Acquisition (the "Exchange Agent") for the benefit of the holders of
Shares for exchange in accordance with this Article I: (i) certificates
representing the appropriate number of shares of Parent Common Stock issuable
pursuant to Section 1.8, and (ii) cash to be paid in lieu of fractional
shares of Parent Common Stock (such shares of Parent Common Stock and such
cash are hereinafter referred to as the "Exchange Fund"), in exchange for
outstanding Shares.

(b) As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") and whose shares were converted into
the right to receive shares of Parent Common Stock pursuant to Section 1.8:
(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 Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock
and, if applicable, a check representing the cash consideration to which such
holder may be entitled on account of a fractional share of Parent Common
Stock that such holder has the right to receive pursuant to the provisions of
this Article I and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, a certificate representing
the proper number of shares of Parent Common Stock may be issued to a
transferee if the Certificate representing such Shares is presented to the
Exchange Agent accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 1.10, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Parent Common Stock and cash in lieu of any fractional shares of
Parent Common Stock as contemplated by this Section 1.10.

(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 1.10(f), until the holder of record of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor without interest (i) the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 1.10(f) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such number of whole shares
of Parent Common Stock and (ii) at the appropriate payment date the amount of
dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable
with respect to such whole shares of Parent Common Stock.

(d) In the event that any Certificate for Shares shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange
therefor upon the making of an affidavit of that fact by the holder thereof
such shares of Parent Common Stock and cash in

lieu of fractional shares, if any, as may be required pursuant to this
Agreement; PROVIDED, HOWEVER, that Parent or the Exchange Agent may, in its
discretion, require the delivery of a suitable bond or indemnity.

(e) All shares of Parent Common Stock issued upon the surrender
for exchange of Shares in accordance with the terms hereof (including any
cash paid pursuant to Section 1.10(c) or 1.10(f)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares;
SUBJECT, HOWEVER, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
date hereof that remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that 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.

(f) No fractions of a share of Parent Common Stock shall be issued
in the Merger but in lieu thereof each holder of Shares otherwise entitled to
a fraction of a share of Parent Common Stock shall upon surrender of his or
her Certificate or Certificates be entitled to receive an amount of cash
(without interest) determined by multiplying the average closing price for
Parent Common Stock as reported on the NYSE Composite Transactions reporting
system for the five (5) business days prior to the Effective Time by the
fractional share interest to which such holder would otherwise be entitled.
The parties acknowledge that payment of the cash consideration in lieu of
issuing fractional shares was not separately bargained for consideration, but
merely represents a mechanical rounding off for purposes of simplifying the
corporate and accounting complexities that would otherwise be caused by the
issuance of fractional shares.

(g) Any portion of the Exchange Fund that remains undistributed to
the stockholders of the Company upon the expiration of twelve (12) months
after the Effective Time shall be delivered to Parent upon demand and any
stockholders of the Company who have not theretofore complied with this
Article 1 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock and cash in lieu of fractional shares as the case may be
and any applicable dividends or distributions with respect to Parent Common
Stock.

(h) Neither Parent nor the Company shall be liable to any holder
of Shares or Parent Common Stock as the case may be for such shares (or
dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.

Section 1.11. STOCK OPTIONS.

(a) At the Effective Time, each outstanding option or warrant to
purchase Shares (a "Company Stock Option" or collectively "Company Stock
Options") issued pursuant to the Company's 1988 Stock Option Plan, 1990 Stock
Option Plan, 1992 Key Executive Stock Option Plan, 1993 Employee Qualified
Stock Purchase Plan, 1996

Supplemental Stock Plan, as amended, 1997 Stock Option Plan, as amended, 1994
Outside Director Stock Option Plan, Key Executive Stock Option Plan,
SpeedSim, Inc. 1995 Incentive and Nonqualified Stock Option Plan, or other
agreement or arrangement, whether vested or unvested, shall be converted as
of the Effective Time into options or warrants, as applicable, to purchase
shares of Parent Common Stock in accordance with the terms of this Section
1.11. All plans or agreements described above pursuant to which any Company
Stock Option has been issued or may be issued other than outstanding warrants
are referred to collectively as the "Company Plans." Each Company Stock
Option shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Company Stock Option, a number
of shares of Parent Common Stock equal to the number of shares of Parent
Common Stock that the holder of such Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such
option or warrant in full immediately prior to the Effective Time at a price
per share equal to (x) the aggregate exercise price for the Shares otherwise
purchasable pursuant to such Company Stock Option divided by (y) the product
of (i) the number of Shares otherwise purchasable pursuant to such Company
Stock Option, multiplied by (ii) the Exchange Ratio; PROVIDED, HOWEVER, that
in the case of any option to which Section 421 of the Code applies by reason
of its qualification under Section 422 of the Code ("incentive stock options"
or "ISOs") the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424(a) of the Code.

(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights pursuant to the Company Plan and that the
agreements evidencing the grants of such Options shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section 1.11 after giving effect to the Merger). Parent shall comply with
the terms of the Company Plans and ensure, to the extent required by and
subject to the provisions of such Plans, that Company Stock Options that
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options of Parent after the Effective Time.

(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Company Stock Options assumed in accordance with
this Section 1.11. As soon as practicable after the Effective Time, Parent
shall file a registration statement on Form S-8 (or any successor or other
appropriate forms) with respect to the shares of Parent Common Stock subject
to any Company Stock Options held by persons who are directors, officers or
employees of the Company or its subsidiaries and shall use all reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain
outstanding.

(d) At or before the Effective Time, the Company shall cause to be
effected any necessary amendments to the Company Plans to give effect to the
foregoing provisions of this Section 1.11.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to each of Parent and
Acquisition, subject to the exceptions set forth in the Disclosure Schedule
(the "Company Disclosure Schedule") delivered by the Company to Parent in
accordance with Section 4.15 (which exceptions shall specifically identify a
Section, Subsection or clause of a single Section or Subsection hereof, as
applicable, to which such exception relates) that:

Section 2.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES;
INVESTMENTS.

(a) Section 2.1(a) of the Company Disclosure Schedule sets forth,
as of the date of this Agreement, a true and complete list of all the
Company's directly or indirectly owned subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock or other equity interests owned by the
Company or another subsidiary of the Company. Each of the Company and its
subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. The Company has heretofore
delivered to Acquisition or Parent accurate and complete copies of the
Certificate of Incorporation and bylaws (or similar governing documents), as
currently in full force and effect, of the Company and its subsidiaries.
Section 2.1(a) of the Company Disclosure Schedule identifies all the material
subsidiaries of the Company. The Company has no operating subsidiaries other
than those incorporated in a state of the United States.

(b) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) on the Company. When used in connection
with the Company or its subsidiaries, the term "Material Adverse Effect on
the Company" means any circumstance, change in, or effect on (or
circumstance, change in, or effect involving a prospective change on) the
Company and its subsidiaries, taken as a whole, (a) that is, or is reasonably
likely in the future to be, materially adverse to the operations, assets or
liabilities (including contingent liabilities), earnings or results of
operations, or the business (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, excluding from the foregoing the effect, if
any, of (i) changes in general economic conditions or changes affecting the
industry in which the Company operates, (ii) stockholder class action
litigation arising from allegations of a breach of fiduciary duty relating to
this Agreement, (iii) of the public announcement or pendency of the
transactions contemplated hereby on current or prospective customers or
revenues of the Company (provided that such effect is direct and that the
Company shall have the burden of proving such direct effect), or (iv) any
action or inaction required of the Company by Parent under Section 4.1, or
(b) that would reasonably be

expected to prevent or materially delay or impair the ability of the Company
to consummate the transactions contemplated by this Agreement.

(c) Section 2.1(c) of the Company Disclosure Schedule sets forth a
true and complete list of each equity investment in an amount of One Hundred
Thousand Dollars ($100,000) or more or that represents a five percent (5%) or
greater ownership interest in the subject of such investment made by the
Company or any of its subsidiaries in any other person other than the
Company's subsidiaries ("Other Interests"). The Other Interests are owned by
the Company, by one or more of the Company's subsidiaries or by the Company
and one or more of its subsidiaries, in each case free and clear of all Lien
(as defined below), except for Liens that may be created by any partnership
or joint venture agreements for Other Interests.

Section 2.2. CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.

(a) The authorized capital stock of the Company consists of Forty
Million (40,000,000) Shares, of which, as of November 30, 1998, 18,095,580
Shares were issued and outstanding and Two Million (2,000,000) shares of
preferred stock, $0.001 par value per share, no shares of which are
outstanding. All of the outstanding Shares have been validly issued and are
fully paid, nonassessable and free of preemptive rights. As of November 30,
1998, approximately 4,396,556 Shares were reserved for issuance and, as of
December 5, 1998, 3,597,768 were issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plans. Between December 5, 1998 and the date hereof,
no shares of the Company's capital stock have been issued other than pursuant
to Company Stock Options already in existence on such date, and between
December 5, 1998 and the date hereof no stock options have been granted.
Except as set forth above and for the rights (the "Company Rights") issued
pursuant to the Company's Preferred Shares Rights Agreement, dated as of
January 10, 1996, as amended between the Company and BankBoston, N.A. (the
"Company Rights Agreement"), as of the date hereof, there are outstanding (i)
no shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or any of its subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or voting securities
of the Company, (iii) no options or other rights to acquire from the Company
or any of its subsidiaries, and, except as described in the Company SEC
Reports (as defined below), no obligations of the Company or any of its
subsidiaries to issue any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Company and (iv) no equity equivalent interests in the
ownership or earnings of the Company or its subsidiaries or other similar
rights (collectively "Company Securities"). As of the date hereof, there are
no outstanding rights or obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it
is bound relating to the voting or registration of any shares of capital
stock of the Company.

(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear
of any Lien or any other limitation or restriction (including any restriction
on the right to vote or sell the same except as may be provided as a matter
of law). There are no (i) securities of the Company or any of its
subsidiaries convertible into or exchangeable or exercisable for, (ii)
options or (iii) except for the Company Rights, other rights to acquire from
the Company or any of its subsidiaries any capital stock or other ownership
interests in or any other securities of any subsidiary of the Company, and
there exists no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for the issuance or sale, directly or
indirectly, of any such capital stock. There are no outstanding contractual
obligations of the Company or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including any security), any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset; PROVIDED, HOWEVER, that the term "Lien" shall not
include (i) statutory liens for Taxes, which are not yet due and payable or
are being contested in good faith by appropriate proceedings and disclosed in
Section 2.13(d) of the Company Disclosure Schedule or that are otherwise not
material, (ii) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises rented,
(iii) deposits or pledges made in connection with, or to secure payment of,
workers' compensation, unemployment insurance, old age pension or other
social security programs mandated under applicable laws, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies and other like
liens, and (v) restrictions on transfer of securities imposed by applicable
state and federal securities laws.

(c) The Company Rights and the Shares constitute the only class of
equity securities of the Company or its subsidiaries registered or required
to be registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

Section 2.3. AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION.

(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations under 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 and validly authorized by the
Board of Directors of the Company (the "Company Board"), and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby except
the approval and adoption of this Agreement by the holders of a majority of
the outstanding Shares. This Agreement has been duly and validly executed
and delivered by the Company and constitutes, assuming the due authorization,
execution and delivery hereof by Parent and Acquisition, a valid, legal and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization,

moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.

(b) The Company Board has unanimously resolved to recommend that
the stockholders of the Company approve and adopt this Agreement.

Section 2.4. SEC REPORTS; FINANCIAL STATEMENTS.

(a) The Company has filed all required forms, reports and
documents ("Company SEC Reports") with the Securities and Exchange Commission
(the "SEC") since January 1, 1997, each of which complied at the time of
filing in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act, each law as in effect on the dates such forms, reports and documents
were filed. None of such Company SEC Reports, including, any financial
statements or schedules included or incorporated by reference therein,
contained when filed any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein in light of the
circumstances under which they were made not misleading, except to the extent
superseded by a Company SEC Report filed subsequently and prior to the date
hereof. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present, in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended.

(b) The Company has heretofore made available or promptly will
make available to Acquisition or Parent a complete and correct copy of any
amendments or modifications that are required to be filed with the SEC but
have not yet been filed with the SEC to agreements, documents or other
instruments that previously had been filed by the Company with the SEC
pursuant to the Exchange Act.

Section 2.5. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of shares of Parent Common
Stock in the Merger (the "S-4") will, at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the proxy statement relating to
the meeting of the Company's stockholders to be held in connection with the
Merger (the "Proxy Statement") will, at the date mailed to stockholders of
the Company and at the time of the meeting of stockholders of the Company to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein in light of the
circumstances under which they are made not misleading. The Proxy Statement
insofar as it relates to the meeting of the Company's

stockholders to vote on the Merger will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Parent or Acquisition which is contained in or omitted from any of
the foregoing documents.

Section 2.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no filing
with or notice to and no permit, authorization, consent or approval of any
United States or foreign court or tribunal, or administrative, governmental or
regulatory body, agency or authority (a "Governmental Entity") is necessary for
the execution and delivery by the Company of this Agreement or the consummation
by the Company of the transactions contemplated hereby, except where the failure
to obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice would not, individually or in the aggregate,
materially and adversely affect the business operations of the Company after the
Merger or its ability to consummate the Merger. Neither the execution, delivery
and performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the respective Certificate of Incorporation or
bylaws (or similar governing documents) of the Company or any of its
subsidiaries, (ii) except as set forth in Section 2.6 of the Company Disclosure
Schedule, result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound or (iii) except as set forth
in Section 2.6 of the Company Disclosure Schedule, violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets
except, in the case of clause (ii) or (iii), for violations, breaches or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.

Section 2.7. NO DEFAULT. Except as set forth in Section 2.7 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
in breach, default or violation (and no event has occurred that with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is now a party or by which it or
any of its properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of its properties or

assets, except, in the case of clause (ii) or (iii), for violations, breaches
or defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.

Section 2.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
Except as and to the extent publicly disclosed by the Company in the Company
SEC Reports or as set forth in Section 2.8 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles
to be reflected on a consolidated balance sheet of the Company (including the
notes thereto), other than liabilities and obligations which, individually or
in the aggregate, will not have a Material Adverse Effect on the Company.
Except as publicly disclosed by the Company in the Company SEC Reports or as
set forth in Section 2.8 of the Company Disclosure Schedule, since September
30, 1998, there have been no events, changes or effects with respect to the
Company or its subsidiaries that have had or reasonably would be expected to
have a Material Adverse Effect on the Company. Without limiting the
generality of the foregoing, except as and to the extent publicly disclosed
by the Company in the Company SEC Reports or as set forth in Section 2.8 of
the Company Disclosure Schedule, since September 30, 1998, the Company and
its subsidiaries have conducted their respective businesses in all material
respects only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses consistent
with past practices, and there has not been any (i) change in the financial
condition, properties, business or results of operations of the Company and
its subsidiaries, except for those changes that, individually or in the
aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect on the Company; (ii) material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased or
otherwise used by the Company or any of its subsidiaries, not covered by
insurance; (iii) declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any of
its subsidiaries (other than wholly-owned subsidiaries) or any repurchase,
redemption or other acquisition by the Company or any of its subsidiaries of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any of its subsidiaries; (iv)
amendment of any material term of any outstanding security of the Company or
any of its subsidiaries; (v) incurrence, assumption or guarantee by the
Company or any of its subsidiaries of any indebtedness for borrowed money
other than in the ordinary course of business and in amounts and on terms
consistent with past practices; (vi) creation or assumption by the Company or
any of its subsidiaries of any Lien on any material asset other than in the
ordinary course of business consistent with past practices; (vii) loan,
advance or capital contributions made by the Company or any of its
subsidiaries to, or investment in, any person other than (x) loans or
advances to employees in connection with business-related travel, (y) loans
made to employees consistent with past practices that are not in the
aggregate in excess of Fifty Thousand Dollars ($50,000), and (z) loans,
advances or capital contributions to or investments in wholly-owned
subsidiaries, and in each case made in the ordinary course of business
consistent with past practices; (viii) transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its subsidiaries
relating to its assets or business (including the acquisition or disposition
of any assets) or any relinquishment by the Company or any of its
subsidiaries of any contract, agreement or other

right, in either case, material to the Company and its subsidiaries, taken as
a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement; (ix) labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its subsidiaries, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees; or (x) change by the Company or any of its
subsidiaries in its accounting principles, practices or methods. Since
September 30, 1998, except as disclosed in the Company SEC Reports filed
prior to the date hereof or increases in the ordinary course of business
consistent with past practices, there has not been any increase in the
compensation payable or that could become payable by the Company or any of
its subsidiaries to (a) officers of the Company or any of its subsidiaries or
(b) any employee of the Company or any of its Subsidiaries whose annual cash
compensation is One Hundred Thousand Dollars ($100,000) or more.

Section 2.9. LITIGATION. Except as publicly disclosed by the
Company in the Company SEC Reports or as set forth in Section 2.9 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties
or assets before any Governmental Entity that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
the Company or would reasonably be expected to prevent or delay the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by the Company in the Company SEC Reports, neither the
Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree that, insofar as can be reasonably foreseen in the
future, would reasonably be expected to have a Material Adverse Effect on the
Company or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated hereby.

Section 2.10. COMPLIANCE WITH APPLICABLE LAW. Except as publicly
disclosed by the Company in the Company SEC Reports, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals that
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. Except as publicly disclosed by the Company in the Company
SEC Reports, the Company and its subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Except as publicly disclosed by the Company in the Company SEC
Reports, the businesses of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of the United
States or any foreign country or any political subdivision thereof or of any
Governmental Entity, except (i) that no representation or warranty is made in
this Section 2.10 with respect to Environmental Laws (as defined in Section
2.12) and (ii) for violations or possible violations of any United States or
foreign laws, ordinances or regulations that do not and, insofar as
reasonably can be foreseen in the future, will not result in any charges,
assessments, levies, fines or other

liabilities being imposed upon or incurred by the Company that will equal or
exceed Five Hundred Thousand Dollars ($500,000) for any single violation or
One Million Dollars ($1,000,000) in the aggregate. Except as publicly
disclosed by the Company in the Company SEC Reports, no investigation or
review by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor,
to the knowledge of the Company, has any Governmental Entity indicated an
intention to conduct the same, other than such investigations or reviews as
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.

Section 2.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.

(a) Section 2.11(a) of the Company Disclosure Schedule lists as of
the date hereof all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
all bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, health, life, or disability insurance, dependent
care, severance and other similar fringe or employee benefit plans, programs
or arrangements and any current or former employment or executive
compensation or severance agreements written or otherwise maintained or
contributed to for the benefit of or relating to any employee or former
employee of the Company, any trade or business (whether or not incorporated)
that is a member of a controlled group including the Company or that is under
common control with the Company within the meaning of Section 414 of the Code
(an "ERISA Affiliate"), as well as each plan with respect to which the
Company or an ERISA Affiliate could incur liability under Section 4069 (if
such plan has been or were terminated) or Section 4212(c) of ERISA (together
the "Employee Plans"), excluding Employee Plans under which the Company has
no remaining obligations and any of the foregoing that are required to be
maintained by the Company under the laws of any foreign jurisdiction. The
Company has made available to Parent a copy of (i) the most recent annual
report on Form 5500 filed with the Internal Revenue Service (the "IRS") for
each disclosed Employee Plan where such report is required and (ii) the
documents and instruments governing each such Employee Plan (other than those
referred to in Section 4(b)(4) of ERISA). No event has occurred and, to the
knowledge of the Company, there currently exists no condition or set of
circumstances in connection with which the Company or any of its subsidiaries
could be subject to any liability under the terms of any Employee Plans,
ERISA, the Code or any other applicable law, including any liability under
Title IV of ERISA, that would have a Material Adverse Effect on the Company.

(b) Section 2.11(b) of the Company Disclosure Schedule sets forth
a list as of the date hereof of (i) all employment agreements with officers
of the Company; (ii) all agreements with consultants who are individuals
obligating the Company to make annual cash payments in an amount exceeding
Fifty Thousand Dollars ($50,000); (iii) all severance agreements, programs
and policies of the Company with or relating to its employees except such
programs and policies required to be maintained by law; and (iv) all plans,
programs, agreements and other arrangements of the Company with or relating
to its employees that contain change in control provisions whether or not
listed in other parts of the Company Disclosure Schedule. The Company has
made available to Parent copies (or descriptions in

detail reasonably satisfactory to Parent) of all such agreements, plans,
programs and other arrangements.

(c) Except as disclosed in Section 2.11(c) of the Company
Disclosure Schedule, there will be no payment, accrual of additional
benefits, acceleration of payments or vesting of any benefit under any
Employee Plan or any agreement or arrangement disclosed under this Section
2.11 solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.

(d) No Employee Plan that is a welfare benefit plan within the
meaning of Section 3(1) of ERISA provides benefits to former employees of the
Company or its ERISA Affiliates other than pursuant to Section 4980B of the
Code or similar state laws.

(e) There are no controversies relating to any Employee Plan or
other labor matters pending or, to the knowledge of the Company, threatened
between the Company or any of its subsidiaries and any of their respective
employees, which controversies, individually or in the aggregate, have or
would reasonably be expected to have a Material Adverse Effect of the
Company. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any of its subsidiaries except as
disclosed in Section 2.11(e) of the Company Disclosure Schedule, nor does the
Company know of any activities or proceedings of any labor union to organize
any such employees. The Company has no knowledge of any strikes, slowdowns,
work stoppages, lockouts or threats thereof by or with respect to any
employees of the Company or any of its subsidiaries.

Section 2.12. ENVIRONMENTAL LAWS AND REGULATIONS.

(a) Except as publicly disclosed by the Company in the Company SEC
Reports, (i) each of the Company and its subsidiaries is in material
compliance with all applicable federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface
or subsurface strata) (collectively "Environmental Laws") except for
non-compliances that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, which compliance includes, but is not
limited to, the possession by the Company and its subsidiaries of all
material permits and other governmental authorizations required under
applicable Environmental Laws and compliance with the terms and conditions
thereof; (ii) neither the Company nor any of its subsidiaries has received
written notice of or, to the knowledge of the Company, is the subject of any
action, cause of action, claim, investigation, demand or notice by any person
alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim"); and (iii) to the knowledge of the Company, there are
no existing facts that are reasonably likely to prevent or interfere with
such material compliance in the future.

(b) Except as disclosed in the Company SEC Reports, there are no
Environmental Claims that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on the Company that are pending
or, to the knowledge of the

Company, threatened against the Company or any of its subsidiaries or, to the
knowledge of the Company, against any person whose liability for any
Environmental Claim the Company or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law.

Section 2.13. TAXES.

(a) DEFINITIONS. For purposes of this Agreement:

(i) the term "Tax" (including "Taxes") means (A) all federal,
state, local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
with respect thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of being a member of
an affiliated, consolidated, combined or unitary group for any period, or
otherwise through operation of law, and (C) any liability for the payment of
amounts described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied
agreement to indemnify any other person; and

(ii) the term "Tax Return" means any return, declaration,
report, statement, information statement and other document required to be
filed with respect to Taxes.

(b) Except as set forth in Section 2.13(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have timely filed all
material Tax Returns they are required to have filed; and such Tax Returns
are accurate and correct in all material respects and do not contain a
disclosure statement under Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law).

(c) The Company and its subsidiaries have paid or adequately
provided in the financial statements included in the SEC Reports for all
Taxes (whether or not shown on any Tax Return) they are required to have paid
or to pay, which amounts are not material either individually or in the
aggregate.

(d) Except as set forth in Section 2.13(d) of the Company
Disclosure Schedule, no material claim for assessment or collection of Taxes
is presently being asserted against the Company or its subsidiaries and
neither the Company nor any of its subsidiaries is a party to any pending
action, proceeding, or investigation by any governmental taxing authority nor
does the Company have knowledge of any such threatened action, proceeding or
investigation.

(e) Except as set forth in Section 2.13(e) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a
party to any agreement,

contract, arrangement or plan that has resulted or would result, individually
or in the aggregate, in connection with this Agreement or any change of
control of the Company or any of its subsidiaries, in the payment of any
"excess parachute payments" within the meaning of Section 28OG of the Code.

Section 2.14. INTELLECTUAL PROPERTY.

(a) Section 2.14(a) of the Company Disclosure Schedule sets forth,
for the Intellectual Property owned, in whole or in part, including jointly
with others, by the Company or any of its subsidiaries, a complete and
accurate list of all United States and foreign (a) patents and patent
applications; (b) Trademark registrations and applications and material
unregistered Trademarks; and (c) copyright registrations and applications,
indicating for each, the applicable jurisdiction, registration number (or
application number), and date issued (or date filed). For purposes of this
Agreement, "Intellectual Property" means: trademarks and service marks
(whether register or unregistered), trade names, designs and general
intangibles of like nature, together with all goodwill related to the
foregoing (collectively, "Trademarks"); patents (including any continuations,
continuations in part, renewals and applications for any of the
foregoing)(collectively "Patents"); copyrights (including any registrations
and applications therefor and whether registered or
unregistered)(collectively "Copyrights"); computer software; databases; works
of authorship; mask works; technology; trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms, models,
user interfaces, customer lists, inventions, discoveries, concepts, ideas,
techniques, methods, source codes, object codes, methodologies and, with
respect to all of the foregoing, related confidential data or information
(collectively, "Trade Secrets").

(b) TRADEMARKS.

(i) All Trademark registrations are currently in compliance
in all material respects with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and
renewal applications) other than any requirement that, if not satisfied,
would not result in a cancellation of any such registration or otherwise
materially affect the priority and enforceability of the Trademark in
question.

(ii) No registered Trademark has been within the last three
(3) years or is now involved in any opposition or cancellation proceeding in
the United States Patent and Trademark Office. To the Company's knowledge,
no such action has been threatened in writing within the one (1)-year period
prior to the date of this Agreement.

(iii) To the knowledge of the Company and its
subsidiaries, there has been no prior use of any material Trademark by any
third party which would confer upon said third party superior rights in any
such Trademark.

(iv) All material Trademarks registered in the United States
have been in continuous use by the Company or its subsidiaries.

(v) The Company and its subsidiaries have adequately policed
the Trademarks against third party infringement; and the material Trademarks
registered in the United States have been continuously used in the form
appearing in, and in connection with the goods and services listed in, their
respective registration certificates.

(i) All Patents are currently in compliance with legal
requirements (including payment of filing, examination, and maintenance fees
and proofs of working or use) other than any requirement that, if not
satisfied, would not result in a revocation or otherwise materially affect
the enforceability of the Patent in question.

(ii) No Patent has been or is now involved in any
interference, reissue, reexamination or opposing proceeding in the United
States Patent and Trademark Office. To the Company's knowledge, no such
action has been threatened in writing within the one (1)-year period prior to
the date of this Agreement.

(iii) To the Company's knowledge, there is no patent or
patent application of any person that conflicts in any material respect with
any Patent.

(d) TRADE SECRETS.

(i) The Company has taken reasonable steps in accordance with
normal industry practice to protect the Company's rights in confidential
information and Trade Secrets of the Company.

(ii) Without limiting the generality of Section 2.14(d)(i) and
except as would not be materially adverse to the Company or its business, the
Company enforces a policy of requiring each relevant employee, consultant and
contractor to execute proprietary information, confidentiality and assignment
agreements substantially in the Company's standard forms that assign to the
Company all rights to any Intellectual Property rights relating to the
Company's business and that otherwise appropriately protect the Intellectual
Property of the Company, and, except under confidentiality obligations, there
has been no disclosure by the Company or any subsidiary of material
confidential information or Trade Secrets.

(e) LICENSE AGREEMENTS.

Section 2.14(e)(1) of the Company Disclosure Schedule sets
forth a complete and accurate list of all license agreements granting to the
Company or any of its subsidiaries any material right to use or practice any
rights under any Intellectual Property other than office automation software
used generally in the Company's or any of its subsidiaries' operations and
other software that is not used in connection with the design, development,
use, maintenance and support, testing, assembly and manufacture of the
Company's or any such subsidiary's products and is commercially available on
reasonable terms to any person for a license fee of no more than $100,000
(collectively, the "Inbound

License Agreements"), indicating for each the title and the parties thereto
and the amount of any future royalty or license fee payable thereunder.
Section 2.14(e)(2) of the Company Disclosure Schedule sets forth a complete
and accurate list of all license agreements under which the Company or any of
its subsidiaries licenses software or grants other rights in to use or
practice any rights under any Intellectual Property, excluding licenses with
customers that in the twelve-month period prior to the date hereof have
purchased or licensed products for which the total payments to the Company
and its subsidiaries did not exceed $100,000 (collectively, the "Outbound
License Agreements"), indicating for each the title and the parties thereto.
There is no material outstanding or, to the Company's knowledge, threatened
dispute or disagreement with respect to any Inbound License Agreement or any
Outbound License Agreement.

(f) OWNERSHIP; SUFFICIENCY OF IP ASSETS. The Company or one of
its subsidiaries owns or possesses adequate licenses or other rights to use,
free and clear of Liens, orders and arbitration awards, all of its
Intellectual Property used in its business. The Intellectual Property
identified in Section 2.14(a) of the Company Disclosure Schedule, together
with the Company's and its subsidiaries' unregistered copyrights and the
Company's and such subsidiaries' rights under the licenses granted to the
Company or any of its subsidiaries under the Inbound License Agreements,
constitute all the material Intellectual Property rights used in the
operation of the Company's and its subsidiaries' businesses as they are
currently conducted and are all the Intellectual Property rights necessary to
operate such businesses after the Effective Time in substantially the same
manner as such businesses have been operated by the Company prior thereto.

(g) PROTECTION OF IP. The Company has taken reasonable steps to
protect the Intellectual Property of the Company and its subsidiaries.

(h) NO INFRINGEMENT BY THE COMPANY. To the Company's knowledge,
the products used, manufactured, marketed, sold or licensed by the Company,
and all Intellectual Property used in the conduct of the Company's and its
subsidiaries' businesses as currently conducted, do not infringe upon,
violate or constitute the unauthorized use of any rights owned or controlled
by any third party, including without limitation, any Intellectual Property
of any third party.

(i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS. Except and to
the extent publicly disclosed in the Company SEC Reports, no litigation is
now or, within the three (3) years prior to the date of this Agreement, was
pending and, to the Company's knowledge, no notice or other claim in writing
has been received by the Company within the one (1) year prior to the date of
this Agreement, (A) alleging that the Company any of its subsidiaries has
engaged in any activity or conduct that infringes upon, violates, or
constitutes the unauthorized use of the Intellectual Property rights of any
third party or (B) challenging the ownership, use, validity or enforceability
of any Intellectual Property owned or exclusively licensed by the Company.
Except as specifically disclosed in one or more Sections of the Company
Disclosure Schedules pursuant to this Section 2.14, no Intellectual Property
owned or licensed by the Company or any of its subsidiaries is subject to any

outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by the Company or any such subsidiary or, in the case of any
Intellectual Property licensed to others, restricting the sale, transfer,
assignment or licensing thereof by the Company or any of its subsidiaries to
any person.

(j) NO INFRINGEMENT BY THIRD PARTIES. Except as and to the extent
publicly disclosed in the Company SEC Reports or as set forth in Section
2.14(j) of the Company Disclosure Schedule, to the knowledge of the Company,
no third party is misappropriating, infringing, diluting, or violating any
Intellectual Property owned or exclusively licensed by the Company or any of
its subsidiaries, and no such claims have been brought against any third
party by the Company or any of its subsidiaries.

(k) ASSIGNMENT; CHANGE OF CONTROL. The execution, delivery and
performance by the Company of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the loss or impairment
of, or give rise to any right of any third party to terminate, any of the
Company's or any of its subsidiaries' rights to own any of its Intellectual
Property or their respective rights under the License Agreements, nor require
the consent of any Governmental Authority or third party in respect of any
such Intellectual Property.

(l) SOFTWARE. The Software owned or purported to be owned by the
Company or any of its subsidiaries, was either (i) developed by employees of
Company or any of its subsidiaries within the scope of their employment; (ii)
developed by independent contractors who have assigned their rights to the
Company or any of its subsidiaries pursuant to written agreements; or (iii)
otherwise acquired by the Company or a subsidiary from a third party. Except
as set forth in Section 2.14(l) of the Company Disclosure Schedule, the
Software does not contain any programming code, documentation or other
materials or development environments that embody Intellectual Property
rights of any person other than the Company or any of its subsidiaries,
except for such materials or development environments obtained by the Company
or any of its subsidiaries from other persons who make such materials or
development environments generally available to all interested purchasers or
end-users on standard commercial terms. For purposes of this Section
2.14(l), "Software" means any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable
or otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, and (iv) all
documentation, including user manuals and training materials, relating to any
of the foregoing.

(m) PERFORMANCE OF EXISTING SOFTWARE PRODUCTS. The Company's and
its subsidiaries' existing and currently manufactured and marketed Software
products listed and described on Section 2.14(m) of the Company Disclosure
Schedule perform in all material respects, free of significant bugs or
programming errors, the functions described in any agreed specifications or
end user documentation or other information provided to customers of the

Company on which such customers relied when licensing or otherwise acquiring
such products.

(n) DOCUMENTATION. The Company and its subsidiaries have taken
all actions customary in the software industry to document the Software and
its operation, such that the materials comprising the Software, including the
source code and documentation, have been written in a clear and professional
manner so that they may be understood, modified and maintained in an
efficient manner by reasonably competent programmers.

(o) YEAR 2000 COMPLIANCE.

(i) Except as set forth in Section 2.14(o) of the Company
Disclosure Schedule, all of the Company's and its subsidiaries' material
products (including products currently under development) will record, store,
process and calculate and present calendar dates falling on and after
December 31, 1998, and will calculate any information dependent on or
relating to such dates in the same manner and with the same functionality,
data integrity and performance as the products record, store, process,
calculate and present calendar dates on or before December 31, 1998, or
calculate any information dependent on or relating to such dates
(collectively "Year 2000 Compliant"). Except as set forth in Section 2.14(o)
of the Company Disclosure Schedule, (A) all of the Company's and its
subsidiaries' material products will lose no significant functionality with
respect to the introduction of records containing dates falling on or after
December 31, 1998; (B) all of the Company's and its subsidiaries' internal
computer systems comprised of software, hardware, databases or embedded
control systems (microprocessor controlled, robotic or other device) related
to the Company's and its subsidiaries' businesses (collectively, a "Business
System"), that constitutes any material part of, or is used in connection
with the use, operation or enjoyment of, any material tangible or intangible
asset or real property of the Company and its subsidiaries, including its
accounting systems, are Year 2000 Compliant. Except as set forth on Section
2.14(o) of the Company Disclosure Schedule, the current versions of the
Company's and its subsidiaries' software and all other Intellectual Property
may be used prior to, during and after December 31, 1998, such that such
Software and Intellectual Property will operate prior to, during and after
such time period without error caused by date data that represents or
references different centuries or more than one century.

(ii) To the knowledge of the Company, all of the Company's
products and the conduct of the Company's business with customers and
suppliers will not be materially adversely affected by the advent of the year
2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century.
To the knowledge of the Company and except as set forth on Section 2.14(o) of
the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any products
(including all products sold on or prior to the date hereof) as a result of
the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000.

Section 2.15. INSURANCE. Each of the Company and its subsidiaries
maintains insurance policies (the "Insurance Policies") against all risks of
a character and in such amounts as are usually insured against by similarly
situated companies in the same or similar businesses. Each Insurance Policy
is in full force and effect and is valid, outstanding and enforceable, and
all premiums due thereon have been paid in full. None of the Insurance
Policies will terminate or lapse (or be affected in any other materially
adverse manner) by reason of the transactions contemplated by this Agreement.
Each of the Company and its subsidiaries has complied in all material
respects with the provisions of each Insurance Policy under which it is the
insured party. No insurer under any Insurance Policy has canceled or
generally disclaimed liability under any such policy or, to the Company's
knowledge, indicated any intent to do so or not to renew any such policy.
All material claims under the Insurance Policies have been filed in a timely
fashion.

Section 2.16. CERTAIN BUSINESS PRACTICES. None of the Company,
any of its subsidiaries or any directors, officers, agents or employees of
the Company or any of its subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or (iii) made any other unlawful payment.

Section 2.17. PRODUCT WARRANTIES. Section 2.17 of the Company
Disclosure Schedule sets forth complete and accurate copies of the written
warranties and guaranties by the Company or any of its subsidiaries currently
in effect with respect to its products. There have not been any material
deviations from such warranties and guaranties, and neither the Company, any
of its subsidiaries nor any of their respective salesmen, employees,
distributors and agents is authorized to undertake obligations to any
customer or to other third parties in excess of such warranties or
guaranties. Neither the Company nor any of its subsidiaries has made any
oral warranty or guaranty with respect to its products.

Section 2.18. SUPPLIERS AND CUSTOMERS. The documents and
information supplied by the Company to Parent or any of its representatives
in connection with this Agreement with respect to relationships and volumes
of business done with its significant suppliers and customers are accurate in
all material respects. During the last twelve (12) months, the Company has
received no notices of termination or written threats of termination from any
of the five (5) largest suppliers or the five (5) largest customers of the
Company and its subsidiaries.

Section 2.19. VOTE REQUIRED. The affirmative vote of the holders
of a majority of the outstanding Shares is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve and
adopt this Agreement.

Section 2.20. TAX TREATMENT; POOLING. Neither the Company nor, to
the knowledge of the Company, any of its affiliates has taken or agreed to
take action that would prevent the Merger from (a) constituting a
reorganization qualifying under the provisions of

Section 368(a) of the Code or (b) being treated for financial accounting
purposes as a pooling of interests in accordance with generally accepted
accounting principles and the rules regulations and interpretations of the
SEC (a "Pooling Transaction").

Section 2.21. AFFILIATES. Except for the directors and executive
officers of the Company, each of whom is listed in Section 2.21 of the
Company Disclosure Schedule, there are no persons who, to the knowledge of
the Company, may be deemed to be affiliates of the Company under Rule 145 of
the Securities Act ("Company Affiliates").

Section 2.22. OPINION OF FINANCIAL ADVISER. Xxxxxxxxx & Xxxxx LLC
(the "Company Financial Adviser") has delivered to the Company Board its
written opinion dated the date of this Agreement to the effect that as of
such date the Merger Consideration is fair, from a financial point of view,
to the holders of Shares.

Section 2.23. BROKERS. No broker, finder or investment banker
(other than the Company Financial Adviser, a true and correct copy of whose
engagement agreement has been provided to Acquisition or Parent) is entitled
to any brokerage finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.

Section 2.24. COMPANY RIGHTS AGREEMENT. The Company has taken all
necessary action to ensure that neither its entering into this Agreement or
the Stock Option Agreement, nor the consummation of the Merger, nor exercise
of Parent's rights under such Stock Option Agreement in accordance with its
terms, will cause the Company Rights to become exercisable, cause Parent or
Acquisition to become an "Acquiring Person" (each as defined in the Company
Rights Agreement), or cause there to occur a "Triggering Event" or a
"Distribution Date" (each as defined in the Company Rights Agreement).

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION

Parent and Acquisition hereby represent and warrant to the Company as
follows:

Section 3.1. ORGANIZATION.

(a) Each of Parent and Acquisition is duly organized, validly
existing and in good standing under the laws of the State of Delaware,
respectively, and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted.
Parent has heretofore made available to the Company accurate and complete copies
of the Certificate of Incorporation and bylaws as currently in full force and
effect, of Parent and Acquisition.

(b) Each of Parent and Acquisition is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Material Adverse Effect on Parent. When
used in connection with Parent or Acquisition the term "Material Adverse
Effect on Parent" means any circumstance, change in, or effect on (or
circumstance, change in, or effect involving a prospective change on) Parent
and its subsidiaries, taken as a whole, (a) that is, or is reasonably likely
in the future to be, materially adverse to the operations, assets or
liabilities (including contingent liabilities), earnings or results of
operations, or the business (financial or otherwise) of Parent and its
subsidiaries, taken as a whole, excluding from the foregoing the effect, if
any, of (i) changes in general economic conditions or changes affecting the
industry in which Parent operates, (ii) stockholder class action litigation
arising from allegations of a breach of fiduciary duty relating to this
Agreement, (iii) the public announcement or pendency of the transactions
contemplated hereby on current or prospective customers or revenues of the
Parent (provided that such effect is direct and that Parent shall have the
burden of proving such direct effect), or (iv) any action or inaction
required of Parent by the Company under this Agreement, or (b) that would
reasonably be expected to prevent or materially delay or impair the ability
of Parent and Acquisition to consummate the transactions contemplated by this
Agreement.

Section 3.2. CAPITALIZATION OF PARENT AND ITS SUBSIDIARIES.

(a) The authorized capital stock of Parent consists of 600,000,000
shares of Parent Common Stock, of which, as of December 7, 1998, 218,140,000
shares of Parent Common Stock were issued and outstanding (each together with
a Parent Common Stock purchase right (the "Parent Rights") issued pursuant to
the Rights Agreement dated as of February 9, 1996 between Parent and Xxxxxx
Trust and Savings Bank) and 400,000 shares of preferred stock, $.01 par value
per share, none of which are outstanding. All of the outstanding shares of
Parent Common Stock have been validly issued and are fully paid,
nonassessable and free of preemptive rights. As of December 7, 1998,
58,185,625 shares of Parent Common Stock were reserved for issuance and
39,311,061 were issuable upon or otherwise deliverable in connection with the
exercise of outstanding options and warrants. Between December 7, 1998 and
the date hereof, no shares of Parent's capital stock have been issued other
than pursuant to stock options and warrants already in existence on such date
and except for grants of stock options to employees, officers and directors
in the ordinary course of business consistent with past practice. Between
December 7, 1998 and the date hereof, no stock options or warrants have been
granted. Except as set forth above and except for the Parent Rights, as of
the date hereof, there are outstanding (i) no shares of capital stock or
other voting securities of Parent (ii) no securities of Parent or its
subsidiaries convertible into or exchangeable for shares of capital stock, or
voting securities of Parent (iii) no options or other rights to acquire from
Parent or its subsidiaries and no obligations of Parent or its subsidiaries
to issue any capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of Parent and (iv)
except for the Parent Rights, the Automated Systems, Inc. 1983 Stock Option
Plan, Xxxxxx & Chyan Technology, Inc. 1989

Stock Option Plan, Xxxxxx & Chyan Technology, Inc. 1993 Equity Incentive
Plan, Unicad, Inc. Stock Option Plan, Cadence Design Systems, Inc. 1997
Nonstatutory Stock Option Plan, High Level Design Systems 1993 Stock Option
Plan, High Level Design Systems 1995 Special Nonstatutory Stock Option Plan,
Ambit Design Systems, Inc. 1994 Incentive Stock Option Plan, Ambit Design
Systems, Inc. 1996 Incentive Stock Option Plan, Ambit OP (Shares Issued
Outside Plans), Cadence Design Systems, Inc. 1993 Non-Statutory Stock Option
Plan, Cadence Design Systems, Inc. 1993 Directors Stock Option Plan, Cadence
Design Systems, Inc. 1995 Directors Stock Option Plan, Cadence Design
Systems, Inc. 1997 Nonstatutory Stock Option Plan, OP Stock Option Plan
(shares issued outside CDN Directors Plan) and warrants issued to Comdisco
and Xxxxxxx, Sachs & Co., no equity equivalent interests in the ownership or
earnings of Parent or its subsidiaries or other similar rights (collectively,
"Parent Securities"). As of the date hereof, other than in connection with
the Company's seasoned authorized stock repurchase program, there are no
outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which
Parent is a party or by which it is bound relating to the voting of any
shares of capital stock of Parent.

(b) The Parent Rights and Parent Common Stock constitute the only
classes of equity securities of Parent or any of its subsidiaries registered
or required to be registered under the Exchange Act.

Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Acquisition has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations under 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 and validly authorized by the boards of
directors of Parent and Acquisition and by Parent as the sole stockholder of
Acquisition and no other corporate proceedings on the part of Parent or
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes,
assuming the due authorization, execution and delivery hereof by the Company,
a valid, legal and binding agreement of each of Parent and Acquisition
enforceable against each of Parent and Acquisition in accordance with its
terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.

Section 3.4. SEC REPORTS; FINANCIAL STATEMENTS.

(a) Parent has filed all required forms, reports and documents
("Parent SEC Reports") with the SEC since December 31, 1997, each of which,
complied at the time of filing in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each law as in
effect on the dates such forms reports and documents were filed. None of
such Parent SEC Reports, including any financial statements or schedules
included or

incorporated by reference therein, contained when filed any untrue statement
of a material fact or omitted to state a material fact required to be stated
or incorporated by reference therein or necessary in order to make the
statements therein in light of the circumstances under which they were made
not misleading, except to the extent superseded by a Parent SEC Report filed
subsequently and prior to the date hereof. The audited consolidated
financial statements of Parent included in the Parent SEC Reports fairly
present in conformity in all material respects with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto) the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended.

(b) Parent has heretofore made available or promptly will make
available to the Company a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet
been filed with the SEC to agreements documents or other instruments that
previously had been filed by Parent with the SEC pursuant to the Exchange
Act.

Section 3.5. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference to (i) the S-4 will at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will at the date mailed to
stockholders and at the times of the meeting or meetings of stockholders of
the Company to be held in connection with the Merger contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein in
light of the circumstances under which they are made not misleading. The S-4
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder. Notwithstanding the
foregoing, Parent makes no representation, warranty or covenant with respect
to any information supplied or required to be supplied by the Company which
is contained in or omitted from any of the foregoing documents.

Section 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents, and approvals as may be required
under and other applicable requirements of the Securities Act, the Exchange
Act, state securities or blue sky laws, the HSR Act, and any filings under
similar merger notification laws or regulations of foreign Governmental
Entities and the filing and recordation of the Certificate of Merger as
required by the DGCL, no filing with or notice to, and no permit
authorization consent or approval of any Governmental Entity is necessary for
the execution and delivery by Parent or Acquisition of this Agreement or the
consummation by Parent or Acquisition of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Neither the execution, delivery and performance of this Agreement by Parent
or Acquisition nor the consummation by Parent or Acquisition of the
transactions contemplated hereby will (i)

conflict with or result in any breach of any provision of the respective
Certificate or Certificate of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition or any of Parent's other subsidiaries,
(ii) result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which Parent or Acquisition or any of Parent's other subsidiaries is a party
or by which any of them or any of their respective properties or assets may
be bound or (iii) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to Parent or Acquisition or any of Parent's
other subsidiaries or any of their respective properties o assets except, in
the case of (ii) or (iii), for violations, breaches or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent.

Section 3.7. NO DEFAULT. Neither Parent nor any of its
subsidiaries is in breach, default or violation (and no event has occurred
that with notice or the lapse of time or both would constitute a breach,
default or violation) of any term, condition or provision of (i) its
Certificate of Incorporation or bylaws (or similar governing documents), (ii)
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or any of its subsidiaries is
now a party or by which any of them or any of their respective properties or
assets may be bound or (iii) any order, writ, injunction, decree, law,
statute, rule or regulation applicable to Parent or any of its subsidiaries
or any of their respective properties or assets, except, in the case of
clause (ii) or (iii), for violations, breaches or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.

Section 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
Except as and to the extent publicly disclosed by Parent in the Parent SEC
Reports, neither Parent nor any of its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of Parent and its consolidated
subsidiaries (including the notes thereto), other than liabilities and
obligations incurred in the ordinary course of business since September 30,
1998, which, individually or in the aggregate, will not have a Material
Adverse Effect on Parent. Except as publicly disclosed by Parent in the
Parent SEC Reports, since September 30, 1998, there have been no events
changes or effects with respect to Parent or its subsidiaries having or that
would reasonably be expected to have a Material Adverse Effect on Parent.

Section 3.9. LITIGATION. Except as publicly disclosed by Parent
in the Parent SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent threatened, against
Parent or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity that, individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as publicly disclosed by
Parent in the Parent SEC

Reports, neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that, insofar as can be
reasonably foreseen in the future would reasonably be expected to have a
Material Adverse Effect on Parent or could reasonably be expected to prevent
or delay the consummation of the transactions contemplated hereby.

Section 3.10. COMPLIANCE WITH APPLICABLE LAW. Except as publicly
disclosed by Parent in the Parent SEC Reports, Parent and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Parent Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals that
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent. Except as publicly disclosed by Parent in the Parent SEC Reports,
Parent and its subsidiaries are in compliance with the terms of the Parent
Permits, except where the failure so to comply would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, the businesses of Parent and
its subsidiaries are not being conducted in violation of any law ordinance or
regulation of any Governmental Entity except that no representation or
warranty is made in this Section 3.10 with respect to Environmental Laws and
except for violations or possible violations that do not and, insofar as
reasonably can be foreseen in the future, will not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, no investigation or review by
any Governmental Entity with respect to Parent or its subsidiaries is pending
or, to the knowledge of Parent, threatened, nor, to the knowledge of Parent,
has any Governmental Entity indicated an intention to conduct the same, other
than in each case those that Parent reasonably believes will not have a
Material Adverse Effect on Parent.

Section 3.11. TAX TREATMENT; POOLING. Neither Parent, Acquisition
nor, to the knowledge of Parent, any of its affiliates has taken, proposes to
take, or has agreed to take any action that would prevent the Merger (a) from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code or (b) from being treated as a Pooling Transaction for financial
accounting purposes.

Section 3.12. OPINION OF FINANCIAL ADVISER. Xxxxxxx, Xxxxx & Co.
(the "Parent Financial Adviser") has delivered to the Board of Directors of
Parent its opinion to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to Parent.

Section 3.13. BROKERS. No broker finder or investment banker (other
than the Parent Financial Adviser) is entitled to any brokerage finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Acquisition.

Section 3.14. NO PRIOR ACTIVITIES. Except for obligations incurred
in connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any

obligation or liability nor engaged in any business or activity of any type
or kind whatsoever or entered into any agreement or arrangement with any
person.

Section 3.15 ENVIRONMENTAL LAWS AND REGULATIONS.

(a) Except as publicly disclosed by Parent in the Parent SEC Reports
(i) each of Parent and its subsidiaries is in material compliance with all
Environmental Laws, except for non-compliances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Parent, which
compliance includes, but is not limited to, the possession by the Parent and its
subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws and compliance with the terms and
conditions thereof; (ii) neither Parent nor any of its subsidiaries has received
written notice of or, to the knowledge of Parent, is the subject of any
Environmental Claim, and (iii) to the knowledge of Parent, there are no existing
facts that are reasonably likely to prevent or interfere with such material
compliance in the future.

(b) Except as disclosed in the Parent SEC Reports, there are no
Environmental Claims that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company that are pending or,
to the knowledge of Parent, threatened against Parent or any of its subsidiaries
or, to the knowledge of Parent, against any person whose liability for any
Environmental Claim the Parent or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law.

ARTICLE 4

COVENANTS

Section 4.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as described in Section 4.1 of the Company
Disclosure Schedule, during the period from the date hereof to the Effective
Time, the Company will and will cause each of its subsidiaries to conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement seek, to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it with the intention that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing, except as otherwise expressly provided in this
Agreement or as described in Section 4.1 of the Company Disclosure Schedule,
prior to the Effective Time, neither the Company nor any of its subsidiaries
will, without the prior written consent of Parent and Acquisition:

(a) amend its Certificate or Articles of Incorporation or bylaws (or
other similar governing instrument);

(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (except bank loans)
or equity equivalents (including any stock options or stock appreciation
rights) except for the issuance and sale of Shares pursuant to options
granted under the Company Plans prior to the date hereof;

(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities or any
securities of any of its subsidiaries;

(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);

(e) alter through merger, liquidation, reorganization,
restructuring or any other fashion the corporate structure of ownership of
any subsidiary;

(f) (i) incur or assume any long-term or short-term debt or issue
any debt securities except for borrowings under existing lines of credit in
the ordinary course of business; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other person except for obligations of
subsidiaries of the Company incurred in the ordinary course of business;
(iii) make any loans, advances or capital contributions to or investments in
any other person (other than to subsidiaries of the Company or customary
loans or advances to employees in each case in the ordinary course of
business consistent with past practice); (iv) pledge or otherwise encumber
shares of capital stock of the Company or any of its subsidiaries; or (v)
mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon;

(g) except as may be required by law, enter into, adopt or amend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, health, life, or disability insurance, dependent
care, severance or other employee benefit plan agreement, trust, fund or
other arrangement for the benefit or welfare of any director, officer or
employee in any manner or increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required
by any plan and arrangement as in effect as of the date hereof (including the
granting of stock appreciation rights or performance units); PROVIDED,
HOWEVER, that this paragraph (g) shall not prevent the Company or its
subsidiaries from increasing annual compensation and/or providing for or
amending bonus arrangements for employees for fiscal 1998 in the ordinary
course of year-end compensation reviews

consistent with past practice (to the extent that such compensation increases
and new or amended bonus arrangements do not result in a material increase in
benefits or compensation expense to the Company or any such subsidiary);

(h) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions having a fair market value in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate, other than
sales of its products in the ordinary course of business consistent with past
practices;

(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, practices or methods used by it;

(j) revalue in any material respect any of its assets, including
writing down the value of inventory or writing-off notes or accounts receivable,
other than in the ordinary course of business;

(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice that would be material to the Company and its subsidiaries, taken as a
whole; (iii) amend, modify or waive any right under any material contract of the
Company or any of its subsidiaries; (iv) modify its standard warranty terms for
its products or amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Company or any of its
subsidiaries; or (v) authorize any new capital expenditure or expenditures that
individually is in excess of One Hundred Thousand Dollars ($100,000) or in the
aggregate are in excess of Three Hundred Thousand Dollars ($300,000); PROVIDED
that nothing in the foregoing clause (v) shall limit any capital expenditure
required pursuant to existing customer contracts;

(l) make any tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole;

(m) settle or compromise any pending or threatened suit, action or
claim that (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which would have a Material Adverse Effect on the
Company;

(n) commence any material software development project or terminate
any material software development project that is currently ongoing, in either
case except pursuant to the terms of existing contracts with customers or except
as contemplated by the Company's project development budget previously provided
to Parent; or

(o) take or agree in writing or otherwise to take any of the actions
described in Sections 4.1(a) through 4.1(n) (and it shall use all reasonable
efforts not to take any action that would make any of the representations or
warranties of the Company contained in this Agreement untrue or incorrect).

Section 4.2. CONDUCT OF BUSINESS OF PARENT. Except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, Parent will and will cause each of its subsidiaries to
conduct their operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organizations, keep available the
service of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it to the
end that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement prior to the Effective Time, neither
Parent nor any of its subsidiaries will, without the prior written consent of
the Company:

(a) knowingly take any action that would result in a failure to
maintain the trading of the Parent Common Stock on the New York Stock Exchange
("NYSE");

(b) acquire or agree to acquire by merging or consolidating with by
purchasing an equity interest in or the assets of or by any other manner any
business or any corporation, partnership or other business organization or
division thereof or otherwise acquire or agree to acquire any assets of any
other entity (other than the purchase of assets from suppliers, clients or
vendors in the ordinary course of business and consistent with past practice) if
such transaction would prevent or materially delay the consummation of the
transactions contemplated by this Agreement;

(c) adopt or propose to adopt any amendments to its charter documents
that would have an adverse impact on the consummation of the transactions
contemplated by this Agreement; or

(d) take or agree in writing or otherwise to take any of the actions
described in Sections 4.2(a) through 4.2(c) or any action that would make any of
the representations or warranties of Parent contained in this Agreement untrue
or incorrect.

Section 4.3. PREPARATION OF S-4 AND THE PROXY STATEMENT. The Company
shall promptly prepare and file with the SEC the Proxy Statement and Parent
shall promptly prepare and file with the SEC the S-4 in which the Proxy
Statement will be included as a prospectus. Each of Parent and the Company
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is now not so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Common Stock in
the Merger and upon the exercise of Company Stock Options and the Company shall
furnish all information concerning the Company and the holders of Shares as may
be reasonably requested in connection with any such action.

Section 4.4. OTHER POTENTIAL ACQUIRERS.

(a) The Company, its affiliates (as reasonably determined by the
Company) and their respective officers and other employees with managerial
responsibilities, directors, representatives and agents shall immediately
cease any discussions or negotiations with any parties with respect to any
Third Party Acquisition (as defined below). Neither the Company nor any of
its affiliates (as reasonably determined by the Company) shall, nor shall the
Company authorize or permit any of its or their respective officers,
directors, employees representatives or agents to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations
with or provide any non-public information to any person or group (other than
Parent and Acquisition or any designees of Parent and Acquisition) concerning
any Third Party Acquisition; PROVIDED, HOWEVER, that nothing herein shall
prevent the Company Board from taking and disclosing to the Company's
stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to any tender or exchange offer. The
Company shall promptly notify the Parent in the event it receives any
proposal or inquiry concerning a Third Party Acquisition, including the terms
and conditions thereof and the identity of the party submitting such
proposal, and shall advise Parent from time to time of the status and any
material developments concerning the same.

(b) Except as set forth in this Section 4.4(b), the Company Board
shall not withdraw its recommendation of the transactions contemplated hereby or
approve or recommend, or cause the Company to enter into any agreement with
respect to, any Third Party Acquisition. Notwithstanding the foregoing, if the
Company Board by a majority vote determines in its good faith judgment, after
consultation with and based upon the advice of legal counsel, that it is
required to do so in order to comply with its fiduciary duties, the Company
Board may withdraw its recommendation of the transactions contemplated hereby or
approve or recommend a Superior Proposal (as defined in subsection (c) below),
but in each case only (i) after providing written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal and (ii) if
Parent does not, within five (5) business days of Parent's receipt of the Notice
of Superior Proposal, make an offer that the Company Board by a majority vote
determines in its good faith judgment (based on the written advice of a
financial adviser of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal; PROVIDED,
HOWEVER, that the Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until this Agreement is terminated by
its terms pursuant to Section 6.1 and the Company has paid all amounts due to
Parent pursuant to Section 6.3. Any disclosure that the Company Board may be
compelled to make with respect to the receipt of a proposal for a Third Party
Acquisition or otherwise in order to comply with its fiduciary duties or
Rule 14d-9 or 14e-2 will not constitute a violation of this Agreement, PROVIDED
that such disclosure states that no action will be taken by the Company Board in
violation of this Section 4.4(b).

(c) For the purposes of this Agreement, "Third Party Acquisition"
means the occurrence of any of the following events: (i) the acquisition of the
Company by merger or

otherwise by any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition or any
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
any material portion of the assets of the Company and its subsidiaries taken
as a whole, other than the sale of its products in the ordinary course of
business consistent with past practices; (iii) the acquisition by a Third
Party of fifteen percent (15%) or more of the outstanding Shares; (iv) the
adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; (v) the repurchase by the Company or
any of its subsidiaries of more than ten percent (10%) of the outstanding
Shares; or (vi) the acquisition by the Company or any of its subsidiaries by
merger, purchase of stock or assets, joint venture or otherwise of a direct
or indirect ownership interest or investment in any business whose annual
revenues, net income or assets is equal or greater than ten percent (10%) of
the annual revenues, net income or assets of the Company. For purposes of
this Agreement, a "Superior Proposal" means any bona fide proposal to acquire
directly or indirectly for consideration consisting of cash and/or securities
more than 50% of the Shares then outstanding or all or substantially all the
assets of the Company and otherwise on terms that the Company Board by a
majority vote determines in its good faith judgment (based on the written
advice of Xxxxxxxxx & Xxxxx LLC or another financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders
than the Merger.

Section 4.5. COMFORT LETTERS.

(a) The Company shall use all reasonable efforts to cause
PricewaterhouseCoopers LLP to deliver a letter dated not more than five days
prior to the date on which the S-4 shall become effective and addressed to
itself and Parent and their respective Boards of Directors in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
agreed-upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the S-4
and the Proxy Statement.

(b) Parent shall use all reasonable efforts to cause Xxxxxx
Xxxxxxxx LLP to deliver a letter dated not more than five (5) days prior to the
date of the S-4 shall become effective and addressed to itself and the Company
and their respective Boards of Directors in form and substance reasonably
satisfactory to the Company and customary in scope and substance for agreed-upon
procedures letters delivered by independent accountants in connection with
registration statements and proxy statements similar to the S-4 and the Proxy
Statement.

Section 4.6. MEETING OF STOCKHOLDERS. The Company shall take all
actions necessary in accordance with the DGCL and its Certificate of
Incorporation and bylaws to duly call give notice of, convene and hold a
meeting of its stockholders as promptly as practicable to consider and vote
upon the adoption and approval of this Agreement and the transactions
contemplated hereby. The stockholder vote required for the adoption and
approval of the transactions contemplated by this Agreement shall be the vote
required by the DGCL and the Company's Certificate of Incorporation and
bylaws. The Company will,

through the Company Board, recommend to its stockholders approval of such
matters subject to the provisions of Section 4.4(b). The Company shall
promptly prepare and file with the SEC the Proxy Statement for the
solicitation of a vote of the holders of Shares approving the Merger, which,
subject to the provisions of Section 4.4(b), shall include the recommendation
of the Company Board that stockholders of the Company vote in favor of the
approval and adoption of this Agreement and the written opinion of the
Financial Advisor that the cash consideration to be received by the
stockholders of the Company pursuant to the Merger is fair to such
stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly
as practicable after such filing, and promptly thereafter mail the Proxy
Statement to the stockholders of the Company. Parent shall use all
reasonable efforts to obtain all necessary state securities law or "blue sky"
permits and approvals required in connection with the Merger and to
consummate the other transactions contemplated by this Agreement and will pay
all expenses incident thereto, PROVIDED that the Company shall cooperate with
Parent in obtaining such permits and approvals as reasonably requested.

Section 4.7. STOCK EXCHANGE LISTING. Parent shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Effective Time.

Section 4.8. ACCESS TO INFORMATION.

(a) Between the date hereof and the Effective Time, the Company
will give Parent and its authorized representatives reasonable access to all
employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries as Parent may reasonably
require, and will cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with
respect to the business and properties of the Company and its subsidiaries as
Parent may from time to time reasonably request. Between the date hereof and
the Effective Time, Parent shall make available to the Company, as reasonably
requested by the Company, a designated officer of Parent to answer questions
and make available such information regarding Parent and its subsidiaries as
is reasonably requested by the Company taking into account the nature of the
transactions contemplated by this Agreement.

(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent (1) within two (2) business days following preparation thereof
(and in any event within twenty (20) business days after the end of each
calendar month, commencing with December 1998), an unaudited balance sheet as of
the end of such month and the related statements of earnings, stockholders'
equity (deficit) and cash flows, (2) within two (2) business days following
preparation thereof

(and in any event within twenty (20) business days after the end of each
fiscal quarter) an unaudited balance sheet as of the end of such quarter and
the related statements of earnings, stockholders' equity (deficit) and cash
flows for the quarter then ended, and (3) within two (2) business days
following preparation thereof (and in any event within ninety (90) calendar
days after the end of each fiscal year, an audited balance sheet as of the
end of such year and the related statements of earnings, stockholders' equity
(deficit) and cash flows, all of such financial statements referred to in
clauses (1), (2) and (3) to prepared in accordance with generally accepted
accounting principles in conformity with the practices consistently applied
by the Company with respect to such financial statements. All the foregoing
shall be in accordance with the books and records of the Company and shall
fairly present its financial position (taking into account the differences
between the monthly, quarterly and annual financial statements prepared by
the Company in conformity with its past practices) as of the last day of the
period then ended.

(c) Each of the parties hereto will hold, and will cause its
consultants and advisers to hold, in confidence all documents and information
furnished to it by or on behalf of another party to this Agreement in connection
with the transactions contemplated by this Agreement pursuant to the terms of
that certain Confidentiality Agreement entered into between the Company and
Parent dated December 4, 1998.

Section 4.9. CERTAIN FILINGS; REASONABLE EFFORTS.

(a) Subject to the terms and conditions herein provided, including,
without limitation, Section 4.4(b), each of the parties hereto agrees to use all
reasonable efforts to take or cause to be taken all action and to do or cause to
be done all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts to do the
following, (i) cooperate in the preparation and filing of the Proxy Statement
and the S-4 and any amendments thereto, any filings that may be required under
the HSR Act and any filings under similar merger notification laws or
regulations of foreign Governmental Entities; (ii) obtain consents of all third
parties and Governmental Entities necessary, proper or advisable for the
consummation of the transactions contemplated by this Agreement; (iii) contest
any legal proceeding relating to the Merger; and (iv) execute any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, Parent and Acquisition
agree to use all reasonable efforts to cause the Effective Time to occur as soon
as practicable after the Company stockholder vote with respect to the Merger.
The Company agrees to use all reasonable efforts to encourage its employees to
accept any offers of employment extended by Parent. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto shall take all
such necessary action.

(b) Parent and the Company will consult and cooperate with one
another, and consider in good faith the views of one another, in connection with
any analyses, appearances, presentations, letters, white papers, memoranda,
briefs, arguments, opinions or proposals made or submitted by or on behalf of
any party hereto in connection with proceedings under or relating to the HSR Act
or any other foreign, federal, or state antitrust, competition, or fair trade
law. In this regard but without limitation, each party hereto shall promptly
inform the other of any material communication between such party and the
Federal

Trade Commission, the Antitrust Division of the United States Department of
Justice, or any other federal, foreign or state antitrust or competition
Governmental Entity regarding the transactions contemplated herein.

Section 4.10. PUBLIC ANNOUNCEMENTS. Parent, Acquisition and the
Company, as the case may be, will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation except (i) as may be required by applicable law, or by the rules
and regulations of, or pursuant to any listing agreement with, the NYSE or the
Nasdaq National Market, as determined by Parent, Acquisition or the Company, as
the case may be, or (ii) following a change, if any, of the Company Board's
recommendation of the Merger (in accordance with Section 4.4(b)), after which
event no such consultation shall be required. Notwithstanding the preceding
sentence, the first public announcement of this Agreement and the Merger shall
be a joint press agreed upon by Parent and the Company.

Section 4.11. INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE.

(a) After the Effective Time, Parent shall cause the Surviving
Corporation to indemnify and hold harmless (and shall also advance expenses as
incurred to the fullest extent permitted under applicable law to), to the extent
not covered by insurance, each person who is now or has been prior to the date
hereof or who becomes prior to the Effective Time an officer or director of the
Company or any of the Company's subsidiaries (the "Indemnified Persons") against
(i) all losses, claims, damages, costs, expenses (including counsel fees and
expenses), settlement, payments or liabilities arising out of or in connection
with any claim, demand, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such person is
or was an officer or director of the Company or any of its subsidiaries, whether
or not pertaining to any matter existing or occurring at or prior to the
Effective Time and whether or not asserted or claimed prior to or at or after
the Effective Time ("Indemnified Liabilities"); and (ii) all Indemnified
Liabilities based in whole or in part on or arising in whole or in part out of
or pertaining to this Agreement or the transactions contemplated hereby, in each
case to the fullest extent required or permitted under applicable law. Nothing
contained herein shall make Parent, Acquisition, the Company or the Surviving
Corporation, an insurer, a co-insurer or an excess insurer in respect of any
insurance policies which may provide coverage for Indemnified Liabilities, nor
shall this Section 4.11 relieve the obligations of any insurer in respect
thereto. The parties hereto intend, to the extent not prohibited by applicable
law, that the indemnification provided for in this Section 4.11 shall apply
without limitation to negligent acts or omissions by an Indemnified Person.
Parent hereby guarantees the payment and performance of the Surviving
Corporation's obligations in this Section 4.11. Each Indemnified Person is
intended to be a third party beneficiary of this Section 4.11 and may
specifically enforce its terms. This Section 4.11 shall not limit or otherwise
adversely affect any rights any Indemnified Person may have under any agreement
with the Company or under the Company's Certificate of Incorporation or bylaws
as presently in effect.

(b) From and after the Effective Time, Parent will fulfill and
honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and its directors and officers as of or prior
to the date hereof (or indemnification agreements in the Company's customary
form for directors joining the Company's Board of Directors prior to the
Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time.

(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "Insured Parties") on terms no
less favorable to the Insured Parties than those of the Company's present
directors' and officers' liability insurance policy; PROVIDED, HOWEVER, that in
no event will Parent or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by the Company for such
coverage (or such coverage as is available for 150% of such annual premium);
PROVIDED FURTHER, that, in lieu of maintaining such existing insurance as
provided above, Parent may cause coverage to be provided under any policy
maintained for the benefit of Parent or any of its subsidiaries, so long as the
terms are not materially less advantageous to the intended beneficiaries thereof
than such existing insurance.

(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and will be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person. Parent will not
permit the Surviving Corporation to merge or consolidate with any other Person
unless the Surviving Corporation will ensure that the surviving or resulting
entity assumes the obligations imposed by this Section 4.11.

Section 4.12. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent and Acquisition, and Parent and Acquisition shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which has caused or would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and
(ii) any material failure of the Company, Parent or Acquisition, as the case may
be, to comply with or satisfy in any material respect any covenant condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 4.12 shall not cure
such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.

Section 4.13. AFFILIATES; POOLING; TAX-FREE REORGANIZATION.

(a) The Company shall use all reasonable efforts to obtain from all
Company Affiliates and from any person who may be deemed to have become a
Company Affiliate, after the date of this Agreement and on or prior to the
Effective Time, a letter agreement substantially in the form of EXHIBIT A-1
hereto as soon as practicable.

(b) Parent shall use all reasonable efforts to obtain from each of
its directors, officers and any other person who may be deemed to be an
affiliate of Parent pursuant to Rule 145 under the Securities Act, as soon as
practicable after the date of this Agreement and on or prior to the Effective
Time, a letter agreement substantially in the form of EXHIBIT A-2 hereto.

(c) Parent shall not be required to maintain the effectiveness of the
S-4 for the purpose of resale of shares of Parent Common Stock by stockholders
of the Company who may be affiliates of the Company or Parent pursuant to Rule
145 under the Securities Act.

(d) Each party hereto shall use all reasonable efforts to cause the
Merger to be treated for financial accounting purposes as a Pooling Transaction
and shall not take and shall use all reasonable efforts to prevent any affiliate
of such party from taking any actions that could prevent the Merger from being
treated for financial accounting purposes as a Pooling Transaction, and shall
take all reasonable actions to remedy the effects of any prior actions so as to
permit such treatment.

(e) The Company, on the one hand, and Parent and Acquisition, on the
other hand, shall execute and deliver to legal counsel to the Company and Parent
certificates substantially in the form attached hereto as EXHIBITS B-1 and B-2,
respectively, at such time or times as reasonably requested by such legal
counsel in connection with its delivery of an opinion with respect to the
transactions contemplated hereby and the Company and Parent shall each provide a
copy thereof to the other parties hereto. Prior to the Effective Time, none of
the Company, Parent or Acquisition shall take or cause to be taken any action
that would cause to be untrue (or fail to take or cause not to be taken any
action that would cause to be untrue) any of the representations in EXHIBITS B-1
or B-2.

4.14. ADDITIONS TO AND MODIFICATION OF COMPANY DISCLOSURE SCHEDULE.
Concurrently with the execution and delivery of this Agreement, the Company has
delivered a Company Disclosure Schedule that includes all of the information
required by the relevant provisions of this Agreement. In addition, the Company
shall deliver to Parent and Acquisition such additions to or modifications of
any Sections of the Company Disclosure Schedule necessary to make the
information set forth therein true, accurate and complete in all material
respects as soon as practicable after such information is available to the
Company after the date of execution and delivery of this Agreement; PROVIDED,
HOWEVER, that such disclosure shall not be deemed to constitute an exception to
its representations and warranties under Article 2, nor limit the rights and
remedies of Parent and Acquisition under this Agreement for any breach by the
Company of such representation and warranties.

4.15. COMPANY RIGHTS AGREEMENT. The Company shall not redeem any of
the Company Rights issued pursuant to the Company Rights Agreement nor will the
Company take any action to amend the Company Rights Agreement to facilitate the
acquisition of Shares by any person other than Parent or Acquisition unless this
Agreement is first terminated in accordance with Article 6 of this Agreement.

ARTICLE 5

CONDITIONS TO CONSUMMATION OF THE MERGER

Section 5.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:

(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;

(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;

(d) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby and to
operate the Business after the Effective Time in all material respects as it was
operated prior thereto (other than under the HSR Act) shall have been given,
obtained or complied with, as applicable;

(e) the S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order
and Parent shall have received all state securities laws or "blue sky" permits
and authorizations necessary to issue shares of Parent Common Stock in exchange
for Shares in the Merger; and

(f) The Company shall have received from PricewaterhouseCoopers LLP
and Parent shall have received from Xxxxxx Xxxxxxxx LLP, independent accountants
for the Company and Parent, respectively, a copy of a letter addressed to the
Company and Parent, respectively, each dated the Closing Date, in substance
reasonably satisfactory to Parent and the Company (and which may contain
customary qualifications and assumptions), to the effect that such independent
accountants concur with the Company's and Parent's managements' conclusions that
no conditions exist related to the Company or Parent, respectively, that would
preclude Parent from accounting for the Merger as a "pooling of interests."

Section 5.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:

(a) the representations and warranties of Parent and Acquisition
contained in this Agreement or in the Stock Option Agreement of even date
herewith between Parent

and the Company (the "Stock Option Agreement") shall be true and correct
(except to the extent that the aggregate of all breaches thereof would not
have a Material Adverse Effect on Parent) at and as of the Effective Time
with the same effect as if made at and as of the Effective Time (except to
the extent such representations specifically related to an earlier date, in
which case such representations shall be true and correct as of such earlier
date, and in any event, subject to the foregoing Material Adverse Effect
qualification) and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and Acquisition;

(b) each of the covenants and obligations of Parent and Acquisition
to be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and Acquisition;

(c) the shares of Parent Common Stock issuable to the Company's
stockholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been authorized
for listing on the NYSE upon official notice of issuance;

(d) the Company shall have received the opinion of tax counsel to the
Company to the effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and (ii) each of Parent, Acquisition and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code, which opinion
may rely on the representations set forth in Exhibits B-1 and B-2 and such other
representations as such counsel reasonably deems appropriate and such opinion
shall not have been withdrawn or modified in any material respect;

(e) the Company shall have received the opinion of legal counsel to
Parent as to the matters set forth in EXHIBIT C;

(f) Parent shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement or instrument, except those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of the Company, individually or in the aggregate, have a Material
Adverse Effect on Parent; and

(g) there shall have been no events, changes or effects with respect
to Parent or its subsidiaries having or that would reasonably be expected to
have a Material Adverse Effect on Parent,

Section 5.3. CONDITIONS TO THE OBLIGATIONS OF PARENT AND ACQUISITION.
The respective obligations of Parent and Acquisition to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:

(a) the representations and warranties of the Company contained in
this Agreement (other than those contained in Section 2.24) and in the Stock
Option Agreement shall be true and correct (except to the extent that the
aggregate of all breaches thereof would not have a Material Adverse Effect on
the Company) at and as of the Effective Time with the same effect as if made
at and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date, and in any event, subject
to the foregoing Material Adverse Effect qualification) and the
representations and warranties of the Company contained in Section 2.24 shall
be true and correct in all respects at and as of the Effective Time, and, at
the Closing, the Company shall have delivered to Parent and Acquisition a
certificate to that effect, executed by two (2) executive officers of the
Company;

(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, the Company shall have delivered to
Parent and Acquisition a certificate to that effect, executed by two (2)
executive officers of the Company;

(c) Parent shall have received from each affiliate of the Company
referred to in Sections 2.21 and 4.13(a) an executed copy of the letter attached
hereto as EXHIBIT A-1;

(d) there shall have been no events, changes or effects with respect
to the Company or its subsidiaries having or that, individually or in the
aggregate, would reasonably be expected to have, a Material Adverse Effect on
the Company;

(e) Parent shall have received the opinion of tax counsel to Parent
to the effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and (ii) each of Parent, Acquisition and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code, which opinion
may rely on the representations set forth in EXHIBITS B-1 and B-2 and such other
representations as such counsel reasonably deems appropriate, and such opinion
shall not have been withdrawn or modified in any material respect;

(f) Parent shall have received the opinion of legal counsel to the
Company as to the matters set forth in EXHIBIT D;

(g) the Company shall have obtained the consent or approval of each
person whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any obligation
right or interest of the Company or any subsidiary of the Company the agreements
and instruments, set forth in Section 5.3(g) of the Company Disclosure Schedule;
and

(h) Xxxxx X. Xxxx shall not have questioned the validity or
enforceability of the employment or non-competition agreement dated the date
hereof with Parent or otherwise expressed his intent not to continue his
employment with the Surviving Corporation.

ARTICLE 6

TERMINATION; AMENDMENT; WAIVER

Section 6.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time whether before
or after approval and adoption of this Agreement by the Company's stockholders:

(a) by mutual written consent of Parent, Acquisition and the Company;

(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States federal or
state Governmental Entity shall have issued a final order, decree or ruling, or
taken any other final action, restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action is or shall have
become nonappealable or (ii) the Merger has not been consummated by June 30,
1999 (the "Final Date"); PROVIDED that no party may terminate this Agreement
pursuant to this clause (ii) if such party's failure to fulfill any of its
obligations under this Agreement shall have been the reason that the Effective
Time shall not have occurred on or before said date;

(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth in
this Agreement or if any representation or warranty of Parent or Acquisition
shall have become untrue such that the conditions set forth in Section 5.2(a)
would be incapable of being satisfied by the Final Date, PROVIDED that the
Company has not breached any of its obligations hereunder in any material
respect; (ii) there shall have been a breach by Parent or Acquisition of any of
their respective covenants or agreements hereunder having a Material Adverse
Effect on Parent or materially adversely affecting (or materially delaying) the
consummation of the Merger, and Parent or Acquisition, as the case may be, has
not cured such breach within twenty (20) business days after notice by the
Company thereof, PROVIDED that the Company has not breached any of its
obligations hereunder in any material respect; (iii) the Company shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders at such meeting
(including any adjournments thereof); or (iv) the Company Board has received a
Superior Proposal, has complied with the provisions of Section 4.4(b), and has
made the payment called for by Section 6.3(a); or

(d) by Parent and Acquisition if (i) there shall have been a breach
of any representation or warranty on the part of the Company set forth in this
Agreement or if any representation or warranty of the Company shall have become
untrue such that the conditions set forth in Section 5.3(a) would be incapable
of being satisfied by the Final Date, PROVIDED that neither Parent nor
Acquisition has breached any of their respective obligations hereunder in any
material respect; (ii) there shall have been a breach by the Company of its
covenants or agreements hereunder having a Material Adverse Effect on the
Company or materially adversely affecting (or materially delaying) the
consummation of the Merger, and the Company has not cured such breach within
twenty (20) business days after notice by Parent or Acquisition thereof,
PROVIDED that neither Parent nor Acquisition has breached any of their

respective obligations hereunder in any material respect; (iii) the Company
Board shall have recommended to the Company's stockholders a Superior
Proposal; (iv) the Company Board shall have withdrawn or adversely modified
its approval or recommendation of this Agreement or the Merger; (v) the
Company shall have ceased using all reasonable efforts to call, give notice
of, or convene or hold a stockholders' meeting to vote on the Merger as
promptly as practicable after the date hereof or shall have adopted a
resolution not to effect any of the foregoing; or (vi) the Company shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders at such meeting
(including any adjournments thereof).

Section 6.2. EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 6.2 and Sections 4.8(c) and 6.3 hereof.
Nothing contained in this Section 6.2 shall relieve any party from liability for
any breach of this Agreement prior to such termination.

Section 6.3. FEES AND EXPENSES.

(a) In the event that this Agreement shall be terminated pursuant to:

(i) Section 6.1(c)(iv) or 6.1(d)(iii), (iv) or (v);

(ii) Section 6.1(d)(i) or (ii) and within twelve (12) months
thereafter the Company enters into an agreement with respect to a Company
Acquisition or a Company Acquisition occurs involving any party (or any
affiliate thereof) (x) with whom the Company (or its agents) had negotiations
with a view to a Company Acquisition, (y) to whom the Company (or its agents)
furnished information with a view to a Company Acquisition or (z) who had
submitted a proposal or expressed an interest in a Company Acquisition, in the
case of each of clauses (x), (y) and (z), prior to such termination; or

(iii) Section 6.1(c)(iii) or 6.1(d)(vi) and at the time of the
Company stockholders' meeting at which the Company failed to obtain the
requisite vote there shall be outstanding at that time an offer by a Third
Party to consummate, or a third party shall have publicly announced (and not
withdrawn) a plan or proposal with respect to, a Company Acquisition;

Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent
and Acquisition for such damages the Company shall pay to Parent the amount
of $10,557,000 as liquidated damages immediately upon the occurrence of the
event described in this Section 6.3(a) giving rise to such damages. It is
specifically agreed that the amount to be paid pursuant to this Section
6.3(a) represents liquidated damages and not a penalty. The Company hereby
waives any right to set-off or counterclaim against such amount.

(b) Upon the termination of this Agreement pursuant to Section
6.1(c)(iii), (iv) or 6.1(d)(i), (ii), (iv), (v) or (vi), in addition to any
other remedies that Parent, Acquisition or their affiliates may have as a result
of such termination, the Company shall pay to Parent the amount of $3,500,000 as
reimbursement for the costs, fees and expenses incurred by any of them or on
their behalf in connection with this Agreement, the Merger and the consummation
of all transactions contemplated by this Agreement (including fees payable to
investment bankers, counsel to any of the foregoing and accountants).

(c) Upon the termination of this Agreement pursuant to
Section 6.1(c)(i) or (ii), in addition to any other remedies that the Company or
its affiliates may have as a result of such termination, Parent shall pay to the
Company the amount of $3,500,000 as reimbursement for the costs, fees and
expenses incurred by any of them or on their behalf in connection with this
Agreement, the Merger and the consummation of all transactions contemplated by
this Agreement (including fees payable to investment bankers, counsel to any of
the foregoing and accountants).

(d) Except as specifically provided in this Section 6.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.

Section 6.4. AMENDMENT. This Agreement may be amended by action
taken by the Company, Parent and Acquisition at any time before or after
approval of the Merger by the stockholders of the Company but after any such
approval no amendment shall be made that requires the approval of such
stockholders under applicable law without such approval. This Agreement
(including, subject to Section 4.15, the Company Disclosure Schedule) may be
amended only by an instrument in writing signed on behalf of the parties hereto.

Section 6.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, each party hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any 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. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.

ARTICLE 7

MISCELLANEOUS

Section 7.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.

Section 7.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Company Disclosure Schedule) (a) constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings both written and oral between the
parties with respect to the subject matter hereof and (b) shall not be assigned
by operation of law or otherwise; PROVIDED, HOWEVER, that Acquisition may assign
any or all of its rights and obligations under this Agreement to any wholly
owned subsidiary of Parent, but no such assignment shall relieve Acquisition of
its obligations hereunder if such assignee does not perform such obligations.

Section 7.3. VALIDITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.

Section 7.4. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to each other party as follows:

if to Parent or Acquisition: Cadence Design Systems, Inc.
0000 Xxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel

with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxx

if to the Company to: Quickturn Design Systems, Inc.
00 Xxxx Xxxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: President

with a copy to: Wilson, Sonsini, Xxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxxx

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

Section 7.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of law thereof.

Section 7.6. DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.

Section 7.7. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, including in
Sections 4.12 and 7.2, nothing in this Agreement is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.

Section 7.8. CERTAIN DEFINITIONS. For the purposes of this Agreement
the term:

(a) "affiliate" means (except as otherwise provided in Sections 2.21
and 4.14) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with the
first-mentioned person;

(b) "business day" means any day other than a day on which the NYSE
is closed;

(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;

(d) "Company Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger or otherwise by
any Third Party; (ii) the acquisition by a Third Party of any material portion
of the assets of the Company and its subsidiaries taken as a whole; or (iii) the
acquisition by a Third Party of thirty percent (30%) or more of the outstanding
Shares or any securities convertible into or exchangeable for such number of
Shares;

(e) "knowledge" or "known" means, with respect to any matter in
question, the actual knowledge of such matter of any executive officer of the
Company or Parent, as the case may be;

(f) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language following
"include" or "including" shall not be deemed to set forth an exhaustive list.

(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity; and

(h) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which the Company, Parent, the Surviving Corporation or
any such other person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, 50% or more of the
capital stock the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.

Section 7.9. PERSONAL LIABILITY. This Agreement shall not create or
be deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.

Section 7.10. SPECIFIC PERFORMANCE. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; PROVIDED, HOWEVER, that if a party
hereto is entitled to receive any payment or reimbursement of expenses pursuant
to Section 6.3(a), (b) or (c) it shall not be entitled to specific performance
to compel the consummation of the Merger.

Section 7.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.

(Remainder of page intentionally left blank)

IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.

CADENCE DESIGN SYSTEMS, INC.

By: /s/H. Xxxxxxx Xxxxxxx
----------------------------
Name: H. Xxxxxxx Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer

QUICKTURN DESIGN SYSTEMS, INC.

By: /s/Xxxxx X. Xxxx
----------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief Executive
Officer

CDSI ACQUISITION, INC.

By: /s/H. Xxxxxxx Xxxxxxx
----------------------------
Name: H. Xxxxxxx Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer

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

EXHIBITS TO

AGREEMENT AND PLAN OF MERGER

DATED AS OF DECEMBER 8, 1998
AMONG
CADENCE DESIGN SYSTEMS, INC.,
QUICKTURN DESIGN SYSTEM, INC.
AND
CDSI ACQUISITION, INC.

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

EXHIBIT A-1

Form of Letter Agreement with Company Affiliates
------------------------------------------------

___________ __, 199_

Cadence Design Systems, Inc.
0000 Xxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000

Dear Sirs:

Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of December 8, 1998 (together with any amendments
thereto, the "Merger Agreement"), among Quickturn Design Systems, Inc., a
Delaware corporation (the "Company"), Cadence Design Systems, Inc., a
Delaware corporation ("Parent"), and CDSI Acquisition, Inc., Delaware
corporation and a wholly owned subsidiary of Parent ("Acquisition"), pursuant
to which Acquisition will be merged with and into the Company, with the
Company continuing as the surviving corporation (the "Merger"). This letter
constitutes the undertakings of the undersigned contemplated by the Merger
Agreement.

I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and that the transferability of the shares of common stock, par value
$.01 per share, of Parent (including the associated preferred stock purchase
rights, the "Parent Common Stock") that I will receive upon the consummation
of the Merger in exchange for my shares of common stock, par value $.001 per
share, of the Company (including the associated preferred stock purchase
rights, the "Company Common Stock") or upon exercise of certain options I
hold to purchase Shares, is restricted. Nothing herein shall be construed as
an admission that I am an affiliate of the Company.

I hereby represent, warrant and covenant to Parent that:

(a) I will not transfer, sell or otherwise dispose of
any shares of Parent Common Stock, except (i) pursuant to an effective
registration statement under the Securities Act or (ii) as permitted by, and
in accordance with, Rule 145, if applicable, or another applicable exemption
under the Securities Act; and

(b) I will not (i) transfer, sell, pledge or otherwise
dispose of any shares of Company Common Stock prior to the Effective Time (as
defined in the Merger Agreement) or (ii) transfer, sell, pledge or otherwise
reduce my risk (within the meaning of the Securities and Exchange
Commission's Financial Reporting Release No. L, "Codification of Financial
Reporting Policies," Section 201.01 [47 F.R. 210281] (May 17, 1982)) with
respect to any shares of Parent Common Stock until after such time (the
"Delivery Time") as financial results reflecting at least 30 days of
post-Merger combined operations of Parent and the Company have been published
by Parent, except as permitted by Staff Accounting Bulletin No. 76 issued by
the Securities and Exchange Commission; and

A(1)-1

(c) I have not taken and will not take or agree to take
any action that would prevent the Merger from qualifying, or being accounted
for under generally accepted accounting principles, as a pooling-of-interests.

I hereby acknowledge that, except as otherwise provided in
the Merger Agreement, Parent is under no obligation to register the sale,
transfer, pledge or other disposition of the shares of Parent Common or to
take any other action necessary for the purpose of making an exemption from
registration available except that Parent agrees to use its reasonable
commercial efforts, for a period of two years from the date of the closing of
the Merger, to file with the Securities and Exchange Commission in a timely
manner all reports and other documents required of Parent under the
Securities Act and the Securities Exchange Act of 1934, as amended.

I understand that Parent will issue stop transfer
instructions to its transfer agent with respect to the shares of Parent
Common Stock and that a restrictive legend will be placed on the certificates
delivered to me evidencing the shares of Parent Common Stock in substantially
the following form:

"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold or otherwise disposed of
unless registered under the Securities Act pursuant to a Registration
Statement in effect at the time or unless the proposed sale or other
disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference
is made to that certain letter agreement dated ________, 1999 between
the Holder and the Issuer, a copy of which is on file in the
principal office of the Issuer that contains further restrictions on
the transferability of this certificate and the shares represented
hereby."

Parent agrees to cause this legend to be removed from the
certificates delivered to me evidencing the shares of Parent Common Stock
promptly after the restrictions on transferability of the shares of Parent
Common Stock are no longer applicable and after I have surrendered such
certificates to the transfer agent with a request for such removal.

The term "Parent Common Stock" as used in this letter shall
mean and include not only the common stock of Parent as presently
constituted, but also any other stock that may be issued in exchange for, in
lieu of, or in addition to, all or any part of such Parent Common Stock.

A(1)-2

I hereby acknowledge that the receipt of this letter by
Parent is an inducement and a condition to Parent's obligation to consummate
the Merger under the Merger Agreement, and I understand the requirements of
this letter and the limitations imposed upon the transfer, sale, pledge or
other disposition of shares of Company Common Stock and Parent Common Stock.

Very truly yours,

_______________________

[AFFILIATE]

ACKNOWLEDGED AND ACCEPTED:

CADENCE DESIGN SYSTEM, INC.

By:
----------------------------
Name:
--------------------------
Title:
-------------------------

A(1)-3

EXHIBIT A-2

Form of Letter Agreement with Parent Affiliates
-----------------------------------------------

____________ __, 199_

Cadence Design Systems, Inc.
0000 Xxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000

Dear Sirs:

Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of December 8, 1998 (together with any amendments
thereto, the "Merger Agreement"), among Quickturn Design Systems, Inc.,
Delaware corporation (the "Company"), Cadence Design Systems, Inc., a
Delaware corporation ("Parent"), and CDSI Acquisition, Inc., Delaware
corporation and a wholly owned subsidiary of Parent ("Acquisition"), pursuant
to which Acquisition will be merged with and into the Company, with the
Company continuing as the surviving corporation (the "Merger"). This letter
constitutes the undertakings of the undersigned contemplated by the Merger
Agreement.

I hereby represent, warrant and covenant to Parent that:

(a) I will not transfer, sell, pledge or otherwise
reduce my risk (within the meaning of the Securities and Exchange
Commission's Financial Reporting Release No. L, "Codification of Financial
Reporting Policies," Section 201.01 [47 F.R. 210281] (May 17, 1982)) with
respect to any shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock") owned by me until after such time (the "Delivery
Time") as financial results reflecting at least 30 days of post-merger
combined operations of Parent and the Company have been published by Parent,
except as permitted by Staff Accounting Bulletin No. 76 issued by the
Securities and Exchange Commission; and

(b) I have not taken and will not take or agree to take
any action that would prevent the Merger from qualifying, or being accounted
for under generally accepted accounting principles, as a pooling-of-interests.

I further understand that Parent shall not be bound by any
attempted transfer, sale, pledge or other disposition of any Parent Common
Stock, and will issue stop transfer instructions to its transfer agent with
respect to the shares of Parent Common Stock.

Nothing herein shall be construed as an admission that I am
an affiliate of Parent.

A(2)-1

I hereby acknowledge that the receipt of this letter by
Parent is an inducement and a condition to Parent's obligation to consummate
the Merger under the Merger Agreement and that I understand the requirements
of this letter and the limitations imposed upon the transfer, sale, pledge or
other disposition of the shares of Parent Common Stock.

Very truly yours,

____________________________

[AFFILIATE]

ACKNOWLEDGED AND ACCEPTED:

CADENCE DESIGN SYSTEMS, INC.

By:
----------------------------
Name:
--------------------------
Title:
-------------------------

A(2)-2

EXHIBIT B-1

Form of Representations Relating to Tax Matters of the Company
--------------------------------------------------------------

1. As of the Effective Time, the Company will hold at least
ninety percent (90%) of the fair market value of the net assets and at least
seventy percent (70%) of the fair market value of the gross assets held by it
immediately prior to the Merger. For the purpose of determining the
percentage of the Company's net and gross assets held immediately prior to
the Merger, the following assets will be treated as property immediately
prior to the Merger: (i) assets used by the Company to pay stockholders
perfecting their dissenters' rights or to pay other expenses or liabilities
incurred in connection with the Merger and (ii) assets used by the Company to
make distributions, redemptions or other payments in respect of stock of the
Company (except for regular, normal distributions) or in respect of rights to
acquire such stock (including payments treated as such for tax purposes) that
are made in contemplation of the Merger or that are related thereto;

2. Other than in the ordinary course of business or
pursuant to its obligations under the Agreement, the Company has not disposed
of any of its assets (including any distribution of assets with respect to,
or in redemption of, stock) since January 1, 1998;

3. The Company's principal reasons for participating in the
Merger are bona fide business purposes unrelated to taxes;

4. In the Merger, Shares representing "Control" of the
Company will be exchanged solely for voting stock of Parent. For purposes of
this paragraph, Shares exchanged in the Merger for cash and other property
(including, without limitation, cash paid to stockholders of the Company
perfecting dissenters' rights or in lieu of fractional shares of Parent
Common Stock) will be treated as outstanding Shares on the date of the Merger
but not exchanged for shares of Parent Common Stock. As used herein,
"Control" shall consist of direct ownership of shares of stock possessing at
least eighty percent (80%) of the total combined voting power of shares of
all classes of stock entitled to vote and at least eighty percent (80%) of
the total number of shares of all other classes of stock of the corporation.
For purposes of determining Control, a person shall not be considered to own
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;

5. The Company has no outstanding warrants, options,
convertible securities or any other type of right to acquire capital stock of
the Company (or any other equity interest in the Company) or to vote (or
restrict or otherwise control the vote of) shares of the Company's capital
stock that, if exercised, would affect Parent's acquisition and retention of
Control of the Company;

B(1)-1

6. The payment of cash in lieu of fractional shares of
Parent Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that
will be paid in the Merger to the Company stockholders in lieu of fractional
shares of Parent Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the Company stockholders
in exchange for their Shares;

7. The Company has no plan or intention to issue additional
shares of capital stock after the Merger, or take any other action, that
would result in Parent losing Control of the Company;

8. The Company has no plan or intention to sell or
otherwise dispose of any of its assets or of any of the assets acquired from
Acquisition in the Merger except for dispositions made in the ordinary course
of business and except for transfers of its assets or assets of Acquisition
to a corporation controlled by the Company;

9. The fair market value of the Company's assets will, at
the Effective Time of the Merger, exceed the aggregate liabilities of the
Company plus the amount of liabilities, if any, to which such assets are
subject;

10. The fair market value of the shares of Parent Common
Stock received by each stockholder of the Company will be approximately equal
to the fair market value of the Shares surrendered in exchange therefor and
the aggregate consideration received by stockholders of the Company in
exchange for their Shares will be approximately equal to the fair market
value of all of the outstanding Shares immediately prior to the Merger;

11. The Company is not an "investment company" within the
meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code;

12. The Company is not under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code;

13. There is no plan or intention by the shareholders of the
Company who own five percent (5%) or more of the Company stock, and to the
best knowledge of the management of the Company, there is no plan or
intention on the part of the remaining shareholders of the Company to sell,
exchange, or otherwise dispose of a number of shares of Parent Common Stock
received in the Merger that would reduce the Company shareholders' ownership
of Parent Common Stock to a number of shares having a value, as of the date
of the Merger, of less than fifty percent (50%) of the value of all of the
formerly outstanding stock of the Company as of the same date. For purposes
of the preceding sentence the only transactions that shall be taken into
account are (i) future sales, exchanges or dispositions of Company stock to
or with the Parent or a "related person" as to the Parent or (ii) future
sales, exchanges or dispositions of Company stock for any consideration that
in substance is furnished by the Parent. For purposes of this
representation, any shares of the Company stock exchanged in the Merger for
cash or other property, surrendered by dissenters, or exchanged for cash in
lieu of fractional shares of the Parent Common Stock will be treated as
outstanding

B(1)-2

stock on the date of the Merger. For purposes of the foregoing, two
corporations are "related persons" if either (i) the corporations are members
of the same affiliated group as defined in Section 1504 without regard to
section 1504(b), or (ii) one corporation owns, directly or indirectly, stock
possessing at least fifty percent (50%) of the total combined voting power of
all classes of stock entitled to vote, or at least fifty percent (50%) of the
total value of shares of all classes of stock (determined by taking into
account the constructive ownership of stock rules under Section 318(a) as
modified by Section 304(c)) of the other corporation. In addition, (i) two
corporations will be related if either of the foregoing relationships exist
immediately before the Merger, immediately after the Merger, or is created in
connection with the Merger, and (ii) a partner of a partnership is treated as
owning or acquiring any stock owned or acquired by the partnership in
accordance with that partner's interest in the partnership;

14. Neither the Company nor a corporation "related" (as
defined above) to the Company has within the last two years redeemed or
acquired any shares of Company stock or entered into any agreement,
arrangement, or understanding to redeem or acquire any shares of Company
stock; nor will it redeem or acquire, or enter into any such agreement,
arrangement or understanding to redeem or acquire, any such shares at anytime
during the period commencing on the execution hereof and through the
Effective Time.

15. Dividends, if any, that the Company has paid or will pay
to its shareholders prior to the Effective Time have been and will be regular
and normal distributions made in accordance with the Company's past
practices, and the Company has not made any extraordinary distributions (as
determined under Treasury Regulation Section 1.368-1T(e)(1)(ii)(A)) in
connection with the Merger;

16. There is no intercorporate indebtedness existing between
Parent and the Company or between Acquisition and the Company that was
issued, acquired, or will be settled at a discount as a result of the Merger;

17. None of the compensation received by any
shareholder-employee of the Company will be separate consideration for, or
allocable to, any of Shares owned by them; none of the shares of Parent
Common Stock received by any shareholder-employee of the Company will be
separate consideration for, or allocable to, any employment agreement or any
covenants not to compete; and the compensation paid to any
shareholder-employee of the Company will be for services actually rendered
and will be commensurate with amounts paid to third parties bargaining at
arm's length for similar services; and

18. Parent, Acquisition, the Company, and the Company's
stockholders will pay their respective expenses, if any, incurred in
connection with the Merger.

B(1)-3

EXHIBIT B-2

Form of Representations Relating to Tax Matters of Parent and Acquisition
-------------------------------------------------------------------------

1. Pursuant to the Merger, Acquisition will merge with and
into the Company, and the Company will acquire all of the assets and
liabilities of Acquisition. Specifically, the assets transferred to the
Company pursuant to the Merger will represent at least ninety percent (90%)
of the fair market value of the net assets and at least seventy percent (70%)
of the fair market value of the gross assets held by Acquisition immediately
prior to the Merger. In addition, at least ninety percent (90%) of the fair
market value of the net assets and at least seventy percent (70%) of the fair
market value of the gross assets held by the Company immediately prior to the
Merger will continue to be held by the Company immediately after the Merger.
For the purpose of determining the percentage of the Company's and
Acquisition's net and gross assets held by the Company immediately following
the Merger, the following assets will be treated as property held by
Acquisition or the Company, as the case may be, immediately prior but not
subsequent to the Merger: (i) assets used by the Company or Acquisition
(other than assets transferred from Parent to Acquisition for such purpose)
to pay stockholders perfecting dissenters' rights or other expenses or
liabilities incurred in connection with the Merger and (ii) assets used to
make distributions, redemptions or other payments in respect of stock of the
Company (except for regular, normal distributions) or in respect of rights to
acquire such stock (including payments treated as such for tax purposes) that
are made in contemplation of the Merger or that are related thereto;

2. Acquisition was formed solely for the purpose of
consummating the transactions contemplated by the Agreement and at no time
will Acquisition conduct any business activities or other operations, or
dispose of any of its assets, other than pursuant to its obligations under
the Agreement;

3. Parent's principal reasons for participating in the
Merger are bona fide business purposes not related to taxes;

4. No shares of Acquisition (or, following the Effective
Time, the Company) have been or will be used as consideration or issued to
stockholders of the Company pursuant to the Merger;

5. Prior to and at the Effective Time, Parent will be in
"Control" of Acquisition. As used herein, "Control" shall consist of direct
ownership of shares of stock possessing at least eighty percent (80%) of the
total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares of all other classes
of stock of the corporation. For purposes of determining Control, a person
shall not be considered to own shares of voting stock if rights to vote such
shares (or to restrict or otherwise control the voting of such shares) are
held by a third party (including a voting trust) other than an agent of such
person;

B(2)-1

6. In the Merger, Shares representing Control of the
Company will be exchanged solely for shares of voting stock of Parent. For
purposes of this paragraph, Shares exchanged in the Merger for cash and other
property (including, without limitation, cash paid to shareholders of the
Company perfecting dissenters' rights or in lieu of fractional shares of
Parent Common Stock) will be treated as Shares outstanding on the date of the
Merger but not exchanged for shares of voting stock of Parent. Parent has no
plan or intention to cause the Company to issue additional Shares after the
Merger, or take any other action, that would result in Parent losing Control
of the Company;

7. The payment of cash in lieu of fractional shares of
Parent Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that
will be paid in the Merger to the Company stockholders in lieu of fractional
shares of Parent Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the Company stockholders
in exchange for their Shares;

8. Parent has no plan or intention to reacquire any of its
stock issued in the Merger. Neither Parent nor any "Related Person" will, in
connection with the Merger, directly or indirectly reacquire any of Parent's
stock issued in the Merger. For purposes of the foregoing, two corporations
are related if either (i) the corporations are members of the same affiliated
group as defined in Section 1504 without regard to section 1504(b), or (ii)
one corporation owns, directly or indirectly, stock possessing at least fifty
percent (50%) of the total combined voting power of all classes of stock
entitled to vote, or at least fifty percent (50%) of the total value of
shares of all classes of stock (determined by taking into account the
constructive ownership of stock rules under Section 318(a) as modified by
Section 304(c)) of the other corporation. In addition, (i) two corporations
will be related if either of the foregoing relationships exist immediately
before the Merger, immediately after the Merger, or is created in connection
with the Merger, and (ii) a partner of a partnership is treated as owning or
acquiring any stock owned or acquired by the partnership in accordance with
that partner's interest in the partnership;

9. Parent has no plan or intention to liquidate the
Company; to merge the Company with or into another corporation; to sell,
distribute or otherwise dispose of the stock of the Company, including by
means of a spin-off; to spin-off any other Subsidiary of Parent; or to cause
the Company to sell or otherwise dispose of any of its assets, including by
means of a spin-off, or of any assets acquired from Acquisition, except for
dispositions made in the ordinary course of business or payment of expenses,
including payments to stockholders of the Company perfecting dissenters'
rights, incurred by the Company pursuant to the Merger and except for
transfers of stock of the Company to a corporation controlled by Parent or of
assets of the Company or Acquisition to a corporation controlled by the
Company;

10. Following the Merger, Parent will either continue the
historic business of the Company or use a significant portion of the historic
business assets of the Company in a business. For purposes of this
representation, Parent will be treated (i) as holding all of the businesses
and assets of all of the members of the "qualified group" and (ii) as
conducting the

B(2)-2

business of a partnership if members of the "qualified group" own (in the
aggregate) more than a thirty three and one-third percentage (33-1/3%)
interest in the capital and profits of the partnership or own more than a
twenty percent (20%) interest in the capital and profits of the partnership
and have active and substantial management functions as a partner with
respect to the business of the partnership. The "qualified group" is one or
more chains of corporations connected through stock ownership with the
Parent, but only if the Parent owns directly an amount of stock meeting the
control requirements of Section 368(c) in at least one of the corporations,
and stock meeting the control requirements of Section 368(c) in each of the
corporations (except the Parent) is owned directly by one of the other
corporations.

11. In the Merger, Acquisition will have no liabilities
assumed by the Company and will not transfer to the Company any assets
subject to liabilities, except to the extent incurred in connection with the
transactions contemplated by the Agreement;

12. During the past five (5) years, none of the outstanding
shares of Company capital stock, including the right to acquire or vote any
such shares, have directly or indirectly been owned by Parent;

13. Neither Parent nor Acquisition is an "investment
company" within the meaning of Sections 368(a)(2)(F)(iii) and (iv) of the
Code;

14. Neither Parent nor Acquisition is under the
jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code;

15. The fair market value of the Parent Common Stock
received by each stockholder of the Company will be approximately equal to
the fair market value of the Shares surrendered in exchange therefor, and the
aggregate consideration received by stockholders of the Company in exchange
for their Shares will be approximately equal to the fair market value of all
of the outstanding Shares immediately prior to the Merger;

16. Acquisition, Parent, the Company and the stockholders of
the Company will each pay separately its or their own expenses relating to
the Merger;

17. There is no intercorporate indebtedness existing between
Parent and the Company or between Acquisition and the Company that was
issued, acquired or will be settled at a discount as a result of the Merger;

18. Any amounts paid with respect to dissenting Shares of
the Company will be paid by the Company solely from the Company's pre-Merger
assets and without reimbursement therefor by Parent or Acquisition;

19. Other than as specifically provided in this Agreement,
Parent will not reimburse any stockholder of the Company for the Company's
capital stock such stockholder may have purchased or for other obligations
such stockholder may have incurred; and

B(2)-3

20. The likelihood that the rights to be granted to
stockholders of the Company in connection with the Merger, under the Rights
Agreement dated as of February 9, 1996 between Parent and Xxxxxx Trust and
Savings Bank, will be exercised at any time is remote, contingent and
speculative.

B(2)-4

EXHIBIT C

Matters to be Covered by Opinion of Legal Counsel to the Company
----------------------------------------------------------------

(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware. The Company has
all requisite corporate power and authority to own or lease its properties
and assets and conduct its business as is currently conducted.

(ii) The Company has all requisite corporate power and
authority to execute and deliver the Agreement and to consummate the
transactions contemplated thereby.

(iii) The execution and delivery of the Agreement by the
Company and the consummation of the transactions contemplated thereby have
been duly and validly authorized by the Company Board and the holders of a
majority of the outstanding Shares and no other corporate proceedings on the
part of the Company are necessary to authorize the Agreement or to consummate
the transactions contemplated thereby.

(iv) The Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.

(v) Neither the execution, delivery and performance of the
Agreement by the Company nor the consummation by the Company of the
transactions contemplated thereby will (a) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or
bylaws (or similar governing documents) of the Company, (b) result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation which is listed on EXHIBIT A to
the Officer's Certificate attached hereto, except for such violations,
breaches and defaults as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or (c) violate any United States
federal or State of California law, statute, rule or regulation or any
provision of the Delaware General Corporation Law, or any order, writ,
injunction or decree known to us, applicable to the Company or any of its
subsidiaries or any of their respective properties or assets.

(vi) No filing with or notice to and no permit,
authorization, consent or approval of any Governmental Entity is necessary
for the execution and delivery by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby, except
(a) for such filings, notifications, permits, authorizations, consent or
approvals as have already been made, given or obtained, (b) for filing of the
Certificate of Merger in accordance with the DGCL and (c) where the failure
to obtain any such permit,

C-1

authorization, consent or approval or to make such filing or give such notice
would not have a Material Adverse Effect on the Company.

(vii) To our knowledge, there are no actions, proceedings or
investigations pending or overtly threatened against the Company before any
court or administrative agency that question the validity of the Agreement or
that could reasonably be expected to result in a Material Adverse Effect on
the Company.

C-2

EXHIBIT D

Matters to be Covered by Legal Counsel to Parent and Acquisition
----------------------------------------------------------------

(i) Each of Parent and Acquisition is a corporation duly
incorporated, validly existing and in good standing under the laws of
Delaware. Parent has all requisite corporate power and authority to own or
lease its properties and assets and conduct its business as is currently
conducted and is qualified as foreign corporation in every jurisdiction where
the conduct of its business or leasing of properties requires, except where
such failure to qualify as would not, individually or in the aggregate, have
a Material Adverse Effect on Parent.

(ii) Each of Parent and Acquisition has all requisite
corporate power and authority to execute and deliver the Agreement and to
consummate the transactions contemplated thereby.

(iii) The execution and delivery of the Agreement by each of
Parent and Acquisition and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the boards of directors of
Parent and Acquisition and by Parent as the sole stockholder of Acquisition
and no other corporate proceedings on the part of Parent or Acquisition are
necessary to authorize the Agreement or to consummate the transactions
contemplated thereby.

(iv) The Agreement has been duly and validly executed and
delivered by each of Parent and Acquisition and constitutes a valid and
binding agreement of Parent and Acquisition, enforceable against each of
Parent and Acquisition in accordance with its terms.

(v) Neither the execution, delivery and performance of the
Agreement by Parent and Acquisition nor the consummation by Parent and
Acquisition of the transactions contemplated thereby will (a) conflict with
or result in any breach of any provision of the respective Certificate of
Incorporation or bylaws (or similar governing documents) of Parent or
Acquisition, (b) result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent or Acquisition or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound which are listed on EXHIBIT A to the
Officer's Certificate attached hereto, except for such violations, breaches
and defaults as would not, individually or in the aggregate, have a Material
Adverse Effect on Parent or (c) violate any United States federal or State of
California law, statute, rule or regulation or any provision of the Delaware
General Corporation Law, or any order, writ, injunction or decree known to
us, applicable to Parent or Acquisition or any of their respective properties
or assets.

D-1

(vi) No filing with or notice to and no permit,
authorization, consent or approval of any Governmental Entity is necessary
for the execution and delivery by Parent and Acquisition of this Agreement or
the consummation by Parent and Acquisition of the transactions contemplated
hereby, except (a) for such filings, notifications, permits, authorizations,
consent or approvals as have already been made, given or obtained, (b) for
filing of the Certificate of Merger in accordance with the DGCL and (c) where
the failure to obtain such permits, authorizations, consents or approvals or
to make such filings or give such notice would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.

(vii) To our knowledge, there are no actions, proceedings or
investigations pending or overtly threatened against Parent before any court
or administrative agency that question the validity of the Agreement or that
could reasonably be expected to result, individually or in the aggregate, in
a Material Adverse Effect on Parent.

D-2

EXHIBIT E

CERTIFICATE OF MERGER

CDSI ACQUISITION, INC.
(A DELAWARE CORPORATION)

WITH AND INTO

QUICKTURN DESIGN SYSTEMS, INC.
(A DELAWARE CORPORATION)

UNDER SECTION 251 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE

The undersigned corporation, [Quixote], hereby certifies that:

FIRST: The name and state of incorporation of each of the
constituent corporations is: CDSI Acquisition, Inc., a Delaware corporation (the
"Disappearing Corporation") and Quickturn Design Systems, Inc., a Delaware
corporation (the "Surviving Corporation").

SECOND: An agreement of merger has been approved, adopted,
certified, executed and acknowledged by the Disappearing Corporation and by the
Surviving Corporation in accordance with the provisions of Section 251 of the
General Corporation Law of the State of Delaware.

THIRD: The name of the surviving corporation is Quixote.

FOURTH: Upon the effectiveness of the merger, the Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of the Disappearing Corporation.

FIFTH: The executed agreement of merger is on file at the
principal place of business of the Surviving Corporation at [address].

SIXTH: A copy of the agreement of merger will be furnished by the
Surviving Corporation on request and without cost, to any shareholder of the
Disappearing Corporation or the Surviving Corporation.

E-1

IN WITNESS WHEREOF, the undersigned has executed and subscribed to
this Certificate of Merger on behalf of Quickturn Design Systems, Inc. as its
authorized officer and hereby affirms, under penalties of perjury, that this
Certificate of Merger is the act and deed of such corporation and that the facts
stated herein are true.

DATED: ____________, 1999

QUICKTURN DESIGN SYSTEMS, INC.
A DELAWARE CORPORATION

By:
------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief Executive Officer

E-2

Document Metadata

Table of Contents

AMONG

Document Metadata