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Series A Preferred Stock Purchase Agreement - VLSI Libraries Inc., US Venture Partners IV LP, Second Ventures II LP, USVP Entrepreneur Partners II LP, and 2180 Associates Fund

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                          VLSI LIBRARIES INCORPORATED

________________________________________________________________________________


                  SERIES A PREFERRED STOCK PURCHASE AGREEMENT

                                March 20, 1996

________________________________________________________________________________
<PAGE>
 
                               TABLE OF CONTENTS

 
 
                                                                            PAGE
                                                                            ----
                                                                          
SECTION 1 - Authorization and Sale of Series A Preferred Stock.............. 1

     1.1    Authorization................................................... 1
     1.2    Sale of Series A Preferred Stock................................ 1
 
SECTION 2 - Closing Date; Delivery.......................................... 1
 
     2.1    Closing Date.................................................... 1
     2.2    Delivery........................................................ 1
 
SECTION 3 - Representations and Warranties of the Company................... 1
 
     3.1    Corporate Organization and Authority............................ 2
     3.2    Capitalization.................................................. 2
     3.3    Subsidiaries.................................................... 2
     3.4    Authorization................................................... 2
     3.5    Validity of Shares.............................................. 3
     3.6    No Conflict with Other Instruments.............................. 3
     3.7    Litigation...................................................... 3
     3.8    Title to Properties, Liens and Encumbrances..................... 3
     3.9    Patents and Other Propriety Rights.............................. 3
     3.10   Company's Contracts............................................. 4
     3.11   No Defaults, Violations or Conflicts............................ 4
     3.12   Private Offering................................................ 4
     3.13   Prior Registration Rights....................................... 5
     3.14   Full Disclosure................................................. 5
     3.15   Business Plan................................................... 5
     3.16   Related-Party Transactions...................................... 5
     3.17   Distributions................................................... 5
     3.18   Employee Compensation Plans..................................... 5
     3.19   Employee Relations.............................................. 6
     3.20   Brokers and Finders............................................. 6
     3.21   Transactions with Affiliates.................................... 6
     3.22   Governmental Consents........................................... 6
     3.23   Environmental Regulations....................................... 6
     3.24   Minute Books.................................................... 6
     3.25   Financial Statements............................................ 6
 

                                      -i-
<PAGE>
 
                               TABLE OF CONTENTS
                                  (continued)

 
 
                                                                            PAGE
                                                                            ----
                                                                          
     3.26   Absence of Certain Changes......................................  7
     3.27   Tax Returns, Payments and Elections.............................  8
     3.28   Insurance.......................................................  8
     3.29   Permits.........................................................  8
     3.30   Section  83(b) Elections........................................  8
     3.31   Corporate Documents.............................................  8
 
SECTION 4 - Representations and Warranties of the Purchasers................  9
 
     4.1    Experience......................................................  9
     4.2    Investment......................................................  9
     4.3    Rule 144........................................................  9
     4.4    No Public Market................................................  9
     4.5    Access to Data..................................................  9
     4.6    Authorization................................................... 10
     4.7    Brokers or Finders.............................................. 10
 
SECTION 5 - Conditions to Closing of Purchasers............................. 10
 
     5.1    Presentations and Warranties Correct............................ 10
     5.2    Covenants....................................................... 10
     5.3    Compliance Certificate.......................................... 10
     5.4    Blue Sky........................................................ 10
     5.5    Articles of Incorporation....................................... 10
     5.6    Rights Agreement................................................ 10
     5.7    Opinion of Company's Counsel.................................... 11
     5.8    Minimum Investment.............................................. 11
     5.9    Proprietary Information Agreements.............................. 11
     5.10   Consulting Agreement............................................ 11
     5.11   Co-Sale Agreement............................................... 11
     5.12   Board Representation............................................ 11
 
SECTION 6 - Conditions to Closing of Company................................ 11
 
     6.1    Representations................................................. 11
     6.2    Blue Sky........................................................ 11
 

                                     -ii-
<PAGE>
 
                               TABLE OF CONTENTS
                                  (continued)

 
 
                                                                            PAGE
                                                                            ----
                                                                          
     6.3    Articles of Incorporation....................................... 11
     6.4    Covenants....................................................... 11
     6.5    Rights Agreement................................................ 12
     6.6    Co-Sale Agreement............................................... 12
     6.7    Board Representation............................................ 12
 
SECTION 7 - Affirmative Covenants of the Company............................ 12
 
     7.1    Financial Information........................................... 12
     7.2    Additional Information.......................................... 12
     7.3    Transfer of Information Rights.................................. 13
     7.4    Termination of Covenants........................................ 13
     7.5    Securities Laws Compliance...................................... 13
     7.6    Confidential Information and Invention Assignment Agreement..... 13
     7.7    Board Representation............................................ 13
     7.8    Vesting of Employee Stock....................................... 14
 
SECTION 8 - Miscellaneous................................................... 14
 
     8.1    Governing Law................................................... 14
     8.2    Survival........................................................ 14
     8.3    Successors and Assigns.......................................... 14
     8.4    Entire Agreement, Amendment..................................... 14
     8.5    Notices, etc.................................................... 14
     8.6    Delays or Omissions............................................. 15
     8.7    California Corporate Securities Law............................. 15
     8.8    Expenses........................................................ 15
     8.9    Counterparts.................................................... 15
     8.10   Severability.................................................... 16
     8.11   Titles and Subtitles............................................ 16


                                     -iii-
<PAGE>
 
EXHIBITS

A.   Schedule of Purchasers
B.   Form of Amended and Restated Articles of Incorporation
C.   Schedule of Exceptions
D.   Holders of Common Stock
E.   Registration Rights Agreement
F.   Compliance Certificate
G.   Form of Opinion of Wilson, Sonsini, Goodrich & Rosati
H-1. Form of Proprietary Information Agreement
H-2. Form of Consulting Agreement
I.   Form of Co-Sale Agreement

                                     -iv-
<PAGE>
 
                          VLSI LIBRARIES INCORPORATED

                  SERIES A PREFERRED STOCK PURCHASE AGREEMENT


     This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
as of March 20, 1996 by and among VLSI Libraries Incorporated, a California
corporation (the "Company"), and the investor listed on Exhibit A to this
                                                        ---------        
Agreement (the "Purchasers").

                                   SECTION 1

              Authorization and Sale of Series A Preferred Stock
              --------------------------------------------------

     1.1   Authorization. The Company will authorize the sale and issuance of up
           -------------
to 2,263,799 shares of its Series A Preferred Stock, having the rights,
privileges and preferences as set forth in the Amended and Restated Articles of
Incorporation (the "Restated Articles") in the form attached to this Agreement
as Exhibit B.
   --------- 

     1.2   Sale of Series A Preferred Stock. Subject to the terms and conditions
           --------------------------------                                     
of this Agreement, each Purchaser agrees to purchase at the Closing (as defined
below), and the Company agrees to sell and issue to each Purchaser, that number
of shares of the Company's Series A Preferred Stock (the "Shares" or "Series A
Preferred") set forth opposite each Purchaser's name on Exhibit A to this
                                                        ---------        
Agreement at a purchase price of $1.5461 per share.

                                   SECTION 2

                            Closing Date; Delivery
                            ----------------------

     2.1   Closing Date. The closing of the purchase and sale of the Shares
           ------------                                                     
under this Agreement shall be held at the offices of Wilson, Sonsini, Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, California, at 3:00  p.m., on March 20,
1996, (the "Closing") or at such other time and place upon which the Company and
the Purchasers shall agree (the date of the Closing is hereinafter referred to
as the "Closing Date").

     2.2   Delivery. At the Closing, the Company will deliver to each Purchaser
           --------
a certificate or certificates representing the number of Shares to be purchased
by each Purchaser at the Closing, against delivery to the Company by each
Purchaser of payment by check or wire transfer of immediately available funds.

                                   SECTION 3

                 Representations and Warranties of the Company
                 ---------------------------------------------

     Except as set forth on Exhibit C attached to this Agreement, the Company
                            ---------                                        
hereby represents and warrants to the Purchasers as follows:
<PAGE>
 
     3.1   Corporate Organization and Authority. The Company is a corporation
           ------------------------------------                               
duly organized, validly existing, authorized to exercise all its corporate
powers, rights and privileges, and in good standing in the State of California,
has the corporate power and corporate authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted and is not qualified to do business as a foreign corporation in any
jurisdiction and such qualification is not presently required in any
jurisdiction where a failure to so qualify would have a material adverse effect
on the Company.

     3.2   Capitalization. Immediately prior to the Closing, the authorized
           --------------                                                   
capital stock of the Company shall consist of:

           (a) Preferred Stock.  2,263,799 shares of Preferred Stock, of which
               ---------------                                                
all shares are designated Series A Preferred Stock, none of which shares are
issued and outstanding prior to the date hereof. The rights, preferences,
privileges and beneficial restrictions on the Series A Preferred Stock of the
Company are set forth in the Restated Articles of Incorporation as in effect on
the Closing Date. The Company has reserved an aggregate of 2,263,799 shares of
its Series A Preferred Stock for issuance hereunder;

           (b) Common Stock.  15,000,000 shares of Common Stock, of which
               ------------                                              
5,029,000 shares are duly and validly issued, fully-paid, nonassessable,
outstanding and held by the persons and in the amounts set forth on Exhibit D.
                                                                    ---------  
The Company has reserved 2,263,799 shares of Common Stock for issuance upon
conversion of the outstanding shares of Series A Preferred Stock. The Company
has reserved 1,891,396 shares of Common Stock for issuance to employees and
directors of, and consultants to, the Company under the 1993 Stock Option Plan,
of which options to purchase 129,000 shares have been exercised, 1,128,532
shares are subject to outstanding options and 633,864 shares remain available
for future grant. Except as contemplated by this Agreement there are no other
outstanding warrants, options, conversion privileges, preemptive rights, or
other rights or agreements to purchase or otherwise acquire or issue any equity
securities of the Company. The Company is not a party or subject to any
agreement or understanding, and, to the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.

     3.3   Subsidiaries. The Company does not presently own, have any investment
           ------------ 
in, or control, directly or indirectly, any Subsidiaries, associations or other
business entities. The Company is not a participant in any joint venture or
partnership.

     3.4   Authorization. All corporate action on the part of the Company, its
           -------------                                                       
officers, directors and shareholders necessary for the authorization, execution,
delivery and performance of all obligations under this Agreement and for the
sale, issuance and delivery of the Shares, and of the Common Stock issuable upon
conversion of the Shares has been taken, and this Agreement, the Registration
Rights Agreement attached hereto as Exhibit E (the "Rights Agreement") and the
                                    ---------                                 
Right of First Refusal and Co-Sale Agreement attached hereto as Exhibit I (the
                                                                ---------     
"Co-Sale Agreement"), and entered into with the Purchasers in connection with
this Agreement, constitute legally binding valid obligations of the Company
enforceable in accordance with their terms.

                                      -2-
<PAGE>
 
     3.5   Validity of Shares. The Shares, when issued, sold and delivered in
           ------------------                                                 
accordance with the terms and for the consideration expressed in this Agreement
shall be duly and validly issued (including, without limitation, issued in
compliance with applicable federal and state securities laws), fully-paid and
nonassessable and free and clear of all liens and encumbrances (other than
those, if any, created or imposed by a Purchaser). The Common Stock issuable
upon conversion of the Shares has been reserved, and assuming such Common Stock
is issued to the Purchasers, upon issuance in accordance with the Restated
Articles of Incorporation, shall be duly and validly issued (including, without
limitation, issued in compliance with all applicable federal and state
securities laws), fully-paid and non-assessable.

     3.6   No Conflict with Other Instruments. The execution, delivery and
           ----------------------------------                              
performance of this Agreement, the Rights Agreement and the Co-Sale Agreement
will not result in any violation of, be in conflict with, or constitute a
default under, with or without the passage of time or the giving of notice: (i)
any provision of the Company's Restated Articles of Incorporation or Bylaws;
(ii) any provision of any judgment, decree or order to which the Company is a
party or by which it is bound; (iii) any material contract, obligation or
commitment to which the Company is a party or by which it is bound; or (iv) any
statute, rule or governmental regulation applicable to the Company.

     3.7   Litigation. There is no action, proceeding or investigation pending
           ----------                                                          
or threatened, to the best of the Company's knowledge, or any basis therefor
known to the Company, that questions the validity of this Agreement, the Rights
Agreement or the Co-Sale Agreement or the right of the Company to enter into
this Agreement, the Rights Agreement or the Co-Sale Agreement, or that would
result, either individually or in the aggregate, in any event having a
materially adverse effect on the business, properties, prospects or financial
condition of the Company, including, without limitation, any action, suit,
proceeding or investigation involving the prior employment or consultancy of any
of the Company's employees or consultants or their use of any information or
techniques alleged to be proprietary to any former employer of any such employee
or consultant. There is no judgment, decree or order of any court in effect
against the Company, and the Company is not in default with respect to any order
of any governmental authority to which the Company is a party or by which it is
bound. There is no action, suit, proceeding or investigation by the Company
currently pending or which the Company presently intends to initiate.

     3.8   Title to Properties, Liens and Encumbrances. The Company has good and
           -------------------------------------------                          
marketable title to all of its properties and assets, both real and personal,
and has good title to all its leasehold interests, in each case subject to no
mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance or charge.

     3.9   Patents and Other Propriety Rights.
           ---------------------------------- 

           (a) The Company owns or possesses, has access to or can become
licensed on reasonable terms under, all patents, patent applications,
trademarks, trade names, licenses, inventions, computer software, technical
information and copyrights necessary for the operation of its business as now
conducted and as proposed to be conducted by the Company with no known
infringement of or conflict with the rights of others (nor, to the best of the
Company's knowledge, any basis therefor).

                                      -3-
<PAGE>
 
           (b) There are no outstanding options, licenses or agreements of any
kind relating to the matters listed in subsection 3.9(a), nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity.

           (c) The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or any proprietary rights of any other person or entity.

           (d) The Company is not aware that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as presently conducted.

           (e) Neither the execution nor delivery of this Agreement, the Rights
Agreement or the C-Sale Agreement, nor the carrying on of the Company's business
by the employees of the Company, nor the conduct of the Company's business as
presently conducted, will, to the Company's knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees is
now obligated.

           (f) The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently intends
to hire) made prior to their employment by the Company and the rights to which
have not been fully assigned to the Company.

     3.10  Company's Contracts. All of the contracts and agreements with
           -------------------                                           
expected receipts or expenditures in excess of $100,000 or involving a license
or grant of rights to or from the Company involving patents, trademarks,
copyrights or other proprietary information applicable to the business of the
Company outside the normal course of business, to which the Company is a party
as of the date of the Closing are listed on Exhibit C. All such contracts and
                                            ---------                         
agreements are legally binding, valid, and in full force and effect in all
material respects, and there is no indication of reduced activity relating to
such contract or agreement (other than in the ordinary course of business) by
any of the parties to any such contract or agreement.

     3.11  No Defaults, Violations or Conflicts. The Company is not in violation
           ------------------------------------ 
of any term or provision of its Restated Articles of Incorporation or Bylaws, or
any material term or provision of any indebtedness, mortgage, indenture,
contract, agreement, judgment, statute, rule or regulation, or to the Company's
knowledge, any decree or order.

     3.12  Private Offering. The Company agrees that neither the Company nor
           ----------------                                                  
anyone acting on its behalf will offer any of the Shares or any similar
securities for issuance or sale to, or solicit any offering to acquire any of
the same from, anyone so as to make the sale and issuance of the Shares

                                      -4-
<PAGE>
 
subject to the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act").

     3.13  Prior Registration Rights. Except as provided in the Rights
           -------------------------                                   
Agreement, the Company is under no contractual obligation to register under the
Securities Act any of its presently outstanding securities or any of its
securities that may subsequently be issued.

     3.14  Full Disclosure. The Company has fully provided the Purchasers with
           ---------------                                                     
all the information which the Purchasers have requested for deciding whether to
purchase the Shares and all information which the Company believes is reasonably
necessary to enable the Purchasers to make such decision. The representations
and warranties of the Company contained in this Agreement, the Rights Agreement
and the Co-Sale Agreement, certificates and other documents made or delivered in
connection herewith, together with the financial projections of the Company
previously delivered to the Purchasers, do not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained therein or herein in view of the circumstances under which they were
made not misleading; provided however, that with respect to the financial
projections, the Company represents only that the Company reasonably believes
there is a reasonable basis for such projections.

     3.15  Business Plan. The Business Plan dated October, 1995, has been
           -------------                                                  
prepared in good faith by the Company and does not contain any untrue statement
of a material fact nor does it omit to state a material fact necessary to make
the statements made therein not misleading, except that with respect to
projections contained in the Business Plan, the Company represents only that
such projections were prepared in good faith and that the Company reasonably
believes there is a reasonable basis for such projections.

      3.16 Related-Party Transactions. No employee, officer or director of the
           --------------------------                                          
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. No member of the immediate family or any officer or director
of the Company is directly or indirectly interested in any material contract
with the Company.

     3.17  Distributions. There has been no declaration or payment by the
           -------------                                                  
Company of any dividend, nor any distribution by the Company of any assets of
any kind, to any class or series of its capital stock.

     3.18  Employee Compensation Plans. The Company is not party to or bound by
           ---------------------------                                          
any currently effective employment contracts, deferred compensation agreements,
bonus plans, incentive plans, profit sharing plans, retirement agreements,
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, or other employee compensation agreements. Subject to applicable law, the
employment of each officer and employee of the Company is terminable at the will
of the Company.

                                      -5-
<PAGE>
 
     3.19  Employee Relations. The Company believes its relations with its
           ------------------                                              
employees are satisfactory. The Company's employees are not represented by any
labor unions nor, to the Company's knowledge, is any union organization campaign
in progress. The Company is not aware that any of its officers or employees
intends to terminate employment.

     3.20  Brokers and Finders. The Company has not retained any investment
           -------------------                                              
banker, broker or finder in connection with the transactions contemplated by
this Agreement.

     3.21  Transactions with Affiliates. Except for (i) the purchase of shares
           ----------------------------                                        
of the Company's Common Stock and the issuance by the Company of options to
purchase shares of the Company's Common Stock, (ii) regular salary payments and
fringe benefits under an individual's compensation package with the Company, and
(iii) the issuance and sale of the Shares pursuant to the terms and conditions
of this Agreement, none of the officers, employees, directors or other
affiliates of the Company are a party to any transactions with the Company.
There have been no assumptions or guarantees by the Company of any obligations
of such affiliates.

     3.22  Governmental Consents. No consent, approval, order or authorization
           ---------------------                                               
of, or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended, and the
rules thereunder, which filing will be effected within fifteen (15) days after
the Closing.

     3.23  Environmental Regulations. Except for failures which will not have a
           -------------------------                                            
material adverse effect on the Company, the Company has met, and continues to
meet, all applicable local, state, federal and national environmental
regulations and has disposed of its waste products and effluents and/or has
caused others to dispose of such waste products and effluents, in accordance
with all applicable state, local, federal and national environmental regulations
and in such a manner that no harm has resulted or will result to any of its
respective employees or properties or to any other person or entities or their
properties.

     3.24  Minute Books. The minute books of the Company contain a complete
           ------------                                                     
summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.

     3.25  Financial Statements. The unaudited balance sheets dated September
           --------------------                                               
30, 1994 and September 30, 1995 and related unaudited statements of income for
the fiscal years then ended, and the unaudited balance sheet dated January 31,
1996 and related unaudited statements of income for the four months then ended
(collectively, the "Financial Statements"), are complete and correct in all
material respects, present fairly the financial position and results of
operations of the Company at the dates and for the periods to which they relate,
have been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved, and show all material
liabilities, absolute or contingent, of the Company required to be recorded
therein in accordance with

                                      -6-
<PAGE>
 
generally accepted accounting principles consistently applied with prior
statements as at the date thereof, except that the Financial Statements have
been prepared by the Company and have not been audited and are subject to normal
year-end audit adjustments, and do not contain footnotes normally associated
with year-end financial statements. Except as set forth in the Financial
Statements, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
January 31, 1996, (ii) obligations under contracts and commitments incurred in
the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company and (iii) obligations under contracts or
arrangements described in Exhibit C hereof. The Company has not had its
                          ---------
historical financial statements audited.

     3.26  Absence of Certain Changes. Since January 31, 1996 and at all times
           --------------------------                                          
up to the Closing, there has not been, nor, so far as reasonably can be foreseen
at this time, is there reasonably likely to be, any event or condition of any
character which has materially adversely affected, or is likely to affect, the
Company's business operations, assets, condition (financial or otherwise),
liabilities, earnings or prospects including but not limited to:

           (a) an event that would have a material adverse effect on the
business, properties, prospects or financial condition of the Company, or became
reasonably foreseeable, and if it were to occur might adversely affect the
business, properties, prospects or financial conditions of the Company;

           (b) any declaration, setting aside or payment or other distribution
in respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Company;

           (c) any waiver by the Company of a valuable right or of a material
debt owed to it;

           (d) any material change or amendment to a contract or arrangement by
which the Company or any of its assets or properties is bound or subject;

           (e) any damage, destruction or loss to any asset of the Company
(whether or not covered by insurance) that, individually or in the aggregate,
would have a material adverse effect on the business, properties, prospects or
financial condition of the Company;

           (f) any commitment, transaction or other action by the Company other
than in the ordinary course of business and consistent with past practice;

           (g) any sale or other disposition of any right, title or interest in
or to any assets or properties of the Company or any revenues derived therefrom
other than in the ordinary course of business and consistent with past practice;

           (h) (x) any approval or action to put into effect any general
increase in any compensation-or benefits payable to any class or group of
employees of the Company, any increase in

                                      -7-
<PAGE>
 
the compensation or benefits payable or to become payable by the Company to any
of their directors, officers or any of their employees whose total compensation
after such increase would exceed $50,000 per annum (collectively, "Key
Employees") or any bonus, service award, percentage compensation or other
benefit paid, granted or accrued to or for the benefit of any Key Employee or
(y) the adoption or amendment in any material respect of any employee benefit
plan or compensation commitment or any severance agreement or employment
contract to which any Key Employee is a party;

           (i) any creation, incurrence or assumption of any indebtedness for
money borrowed by the Company exceeding $100,000;

           (j) any capital expenditures by the Company in excess of $100,000;

           (k) any material change in any accounting principle or method or
election for federal income tax purposes used by the Company;

           (l) any authorization, approval, agreement or commitment to do any of
the foregoing.

     3.27  Tax Returns, Payments and Elections. To date, the Company filed all
           -----------------------------------                                 
tax returns and reports as required by law. The provision for taxes of the
Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not made any elections-pursuant
to the Internal Revenue Code of 1986, as amended (the "Code") (other than
elections that relate solely to methods of accounting, depreciation or
amortization) that would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets.

     3.28  Insurance. The Company will use its best efforts to obtain fire and
           ---------                                                           
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.

     3.29  Permits. The Company will use its good faith efforts to obtain all
           -------                                                           
franchises, permits, licenses and any similar authority as necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect (financially or otherwise) the business,
properties, assets, liabilities or prospects (as contemplated in the Business
Plan) of the Company and believes it can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to be
conducted (as contemplated in the Business Plan). The Company is not in default
in any material respect under any of such franchises, permits, licenses or other
similar authority.

     3.30  Section 83(b) Elections. To the best of the Company's knowledge, all
           -----------------------
elections and notices required by Section 83(b) of the Code and any analogous
provisions of applicable state tax- laws have been timely filed by all
individuals who have purchased shares of the Company's Common Stock.

     3.31  Corporate Documents. The Company's Amended and Restated Articles of
           -------------------
Incorporation and Bylaws are in the form previously provided to the Purchasers.

                                      -8-
<PAGE>
 
                                   SECTION 4

               Representations and Warranties of the Purchasers
               ------------------------------------------------

     Each Purchaser hereby represents and warrants to the Company with respect
to the purchase of the Shares as follows:

     4.1   Experience. Purchaser has substantial experience in evaluating and
           ----------                                                         
investing in private placement transactions so that Purchaser is capable of
evaluating the merits and risks of Purchaser's investment in the Company.
Purchaser, by reason of its business or financial experience or the business or
financial experience of its professional advisors who are unaffiliated with and
who are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly, has the capacity to protect its own interests
in connection with the purchase of the Shares under this Agreement.

     4.2   Investment. Purchaser is acquiring the Shares and the underlying
           ----------                                                       
Common Stock for investment for Purchaser's own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof Purchaser understands that the Shares and the underlying
Common Stock have not been, and will not be, registered under the Securities Act
by reason of a specific exemption therefrom, and that any such exemption would
depend, among other things, upon the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed in this
Agreement. Purchaser has not been formed for the specific purpose of acquiring
the Shares or the underlying Common Stock.

     4.3   Rule 144. Purchaser acknowledges that the Shares and the underlying
           --------                                                            
Common Stock must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser
is aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than two
years after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" (as provided by Rule 144(f)) and the number of shares being
sold during any three-month period not exceeding specified limitations.

     4.4   No Public Market. Purchaser understands that no public market now
           ----------------                                                  
exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Shares or the
underlying Common Stock and that, even if such a public market exists at some
future time, the Company may not then be satisfying the current public
information requirements of Rule 144.

     4.5   Access to Data. Purchaser and its representatives have met with
           --------------                                                  
representatives of the Company and thereby have had the opportunity to ask
questions of, and receive answers from, said representatives concerning the
Company and the terms and conditions of this transaction as well as to

                                      -10-
<PAGE>
 
obtain any information requested by Purchaser. Any questions raised by Purchaser
or its representatives concerning the transaction have been answered to the
satisfaction of Purchaser and its representatives. Purchaser's decision to
purchase the Shares is based in part on the answers to such questions as
Purchaser and its representatives have raised concerning the transaction and on
its own evaluation of the risks and merits of the purchase and the Company's
proposed business activities.

     4.6   Authorization. This Agreement when executed and delivered by the
           -------------                                                    
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent conveyance, moratorium or other laws affecting creditors
rights generally and to equitable principles of general applicability.

     4.7   Brokers or Finders. The Company has not incurred, and will not incur,
           ------------------       
directly or indirectly, as a result of any action taken by the Purchaser any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.

                                   SECTION 5

                      Conditions to Closing of Purchasers
                      -----------------------------------

     Each Purchasers obligation to purchase the Shares at the Closing is, at the
option of the Purchaser, subject to the fulfillment or waiver as of the Closing
Date of the following conditions:

     5.1   Presentations and Warranties Correct. The representations and
           ------------------------------------                          
warranties made by the Company in Section  3 of this Agreement shall be true and
correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date.

     5.2   Covenants. All covenants, agreements and conditions contained in this
           ---------    
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all respects.

     5.3   Compliance Certificate. The Company shall have delivered to each
           ----------------------                                           
Purchaser a certificate of the Company in the form attached hereto as Exhibit F,
executed by the President of the Company, dated the Closing Date, and certifying
to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.

     5.4   Blue Sky. The Company shall have obtained all necessary Blue Sky law
           --------                                                             
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Shares and the Common Stock issuable upon
conversion of the Shares.

     5.5   Articles of Incorporation. The Restated Articles shall have been
           -------------------------                                        
filed with the Secretary of State of the State of California.

                                      -11-
<PAGE>
 
     5.6   Rights Agreement. The Company shall have entered into the
           ----------------                                          
Registration Rights Agreement substantially in the form attached hereto as
Exhibit E.

     5.7   Opinion of Company's Counsel. At the Closing, the Purchasers shall
           ----------------------------                                      
have received from Wilson, Sonsini, Goodrich & Rosati, counsel to the Company, a
favorable opinion addressed to them, dated the Closing Date, in substantially
the form attached to this Agreement as Exhibit G.
                                       ---------      

     5.8   Minimum Investment. The Purchasers shall have tendered, in the
           ------------------                                             
aggregate, at the Closing consideration of not less than $3,500,000 for purchase
of the Shares.

     5.9   Proprietary Information Agreements. Each officer, director and
           ----------------------------------                            
employee of the Company, shall have entered into a proprietary information
agreement in the form of Exhibit H-1 hereto.

     5.10  Consulting Agreement. The consultants of the Company shall each have
           --------------------                                                 
executed and delivered to the Company a consulting agreement substantially in
the form of Exhibit H-2 hereto.

     5.11  Co-Sale Agreement. Each of the Purchasers and each of Scott T.
           -----------------                                              
Becker, Duane R. Hook, John G. Malecki, Daniel I. Rubin and Mark R. Templeton
(collectively, the "Founders") shall have entered into a Co-Sale Agreement in
the form attached hereto as Exhibit I.

     5.12  Board Representation.  The Company shall have taken all necessary
           --------------------                                             
corporate action to cause the Board of Directors of the Company to consist of
Lucio L. Lanza, Irwin Federman, Mark Templeton, Scott T. Becker and one vacancy
effective as of the Closing Date.

                                   SECTION 6

                       Conditions to Closing of Company
                       --------------------------------

     The Company's obligation to sell and issue the Shares at the Closing is, at
the option of the Company, subject to the fulfillment or waiver of the following
conditions:

     6.1   Representations. The representations made by each Purchaser in 
           ---------------
Section 4 of this Agreement shall be true and correct when made, and shall be
true and correct on the Closing Date.

     6.2   Blue Sky. The Company shall have obtained all necessary Blue Sky law
           --------                                                             
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Shares and the Common Stock issuable upon
conversion of the Shares.

     6.3   Articles of Incorporation. The Restated Articles shall have been
           -------------------------                                        
filed with the Secretary of State of the State of California.

                                      -12-
<PAGE>
 
     6.4   Covenants. All covenants, agreements and conditions contained in this
           ---------   
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.

     6.5   Rights Agreement. The Purchasers shall have entered into the Rights
           ----------------                                                    
Agreement substantially in the form attached hereto as Exhibit E.

     6.6   Co-Sale Agreement. Each of the Purchasers and each of Scott T.
           -----------------                                              
Becker, Duane R. Hook, John G. Malecki, Daniel I. Rubin and Mark R. Templeton
(collectively, the "Founders") shall have entered in to a Co-Sale Agreement in
the form attached hereto as Exhibit I.

     6.7   Board Representation. The Company shall have taken all necessary
           --------------------                                             
corporate action to cause the Board of Directors of the Company to consist of
Lucio L. Lanza, Irwin Federman, Mark Templeton, Scott T. Becker and one vacancy
effective as of the Closing Date.


                                   SECTION 7

                     Affirmative Covenants of the Company
                     ------------------------------------

     The Company hereby covenants and agrees as follows:

     7.1   Financial Information. The Company will mail the following reports to
           ---------------------
each Purchaser for so long as such Purchaser is a holder of any Shares purchased
by such person pursuant to this Agreement (or Common Stock issued upon
conversion of the Shares):

           (a) As soon as practicable after the end of each fiscal year, and in
any event within ninety (90) days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and audited by the Company's independent public
accountants.

           (b) Contemporaneously with delivery to holders of Common Stock, a
copy of each report of the Company delivered to holders of the Company's Common
Stock.

     7.2   Additional Information.  For so long as Purchaser holds not less
           ----------------------                                            
than 255,000 Shares (or an equivalent number of shares consisting of the Shares
or Common Stock issued upon conversion of the Shares), as adjusted for
recapitalizations, stock splits, stock dividends and the like, the Company will
mail the following reports to such Purchaser:

           (a) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and in any
event within 45 days thereafter, a 

                                      -13-
<PAGE>
 
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of each such quarterly period, and consolidated statements of income and
consolidated statement of cash flows of the Company and its subsidiaries for
such period, and for the accepted accounting principles, all in reasonable
detail and signed, subject to charges resulting from year-end audit adjustments,
by the principal financial or accounting officer of the Company.

           (b) As soon as practicable, but in any event prior to the end of each
fiscal year, a budget for the next fiscal year, including balance sheets and
sources and applications of funds statements and, as soon as prepared, any other
budgets or revised budgets prepared by the Company.

           (c) For so long as a Purchaser is eligible to receive reports under
this Section 7.2, it shall also have the right, at its expense, to discuss the
affairs, finances and accounts of the Company with the Company's officers, all
at such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated to provide any information that
it reasonably considers to be a trade secret or to contain confidential
information.

     7.3   Transfer of Information Rights.  The information rights set forth in
           ------------------------------                                      
Sections 7.1 and 7.2 may be transferred in any nonpublic transfer of Shares (or
Shares of Common Stock issued upon conversion of the Shares), provided that the
Company is given written notice of such transfer, and provided further that the
right to receive the information set forth in Section 7.2 may only be
transferred to a holder of, or affiliated holders who in the aggregate hold, at
least 255,000 Shares (or an equivalent number of shares consisting of the Shares
or Common Stock issued upon conversion of the Shares, as appropriately adjusted
for stock splits and the like).   In the event that the Company reasonably
determines that provision of information to a transferee pursuant to this
Section 7.3 would materially adversely affect its proprietary position, such
information may be edited in the manner necessary to avoid such effect.

     7.4   Termination of Covenants.  The covenants set forth in Sections 7.1 
           ------------------------       
and 7.2 shall terminate on and be of no further force or effect upon the earlier
of (i) the consummation of the Company's sale of its Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act, immediately subsequent to which the Company
shall be obligated to file annual and quarterly reports with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.

     7.5   Securities Laws Compliance.  The Company shall within fifteen days of
           --------------------------                                           
the Closing file a notice of the sale of the Shares to the Purchasers pursuant
to Section  25102(f) of the California Corporations Code.

     7.6   Confidential Information and Invention Assignment Agreement.  The
           -----------------------------------------------------------      
Company shall require all of its current and future officers and each employee
with access to confidential information regarding the Company's operations, to
execute and deliver a Confidential Information and Invention Assignment
Agreement in substantially the form attached as Exhibit H-1 hereto.
                                                -----------        

                                      -14-
<PAGE>
 
     7.7   Board Representation.     Effective as of the Closing Date, the Board
           --------------------                                                 
of Directors shall consist of (i) Mark R. Templeton and Scott T. Becker,
representing the holders of Common Stock; (ii) Lucio L. Lanza and Irwin
Federman, representing the holders of Series A Preferred Stock; and (iii) one
vacancy to be filled by the Board of Directors as soon as possible after the
Closing with an individual with relevant industry experience.

     7.8   Vesting of Employee Stock.  Unless otherwise approved by the Board of
           -------------------------                                            
Directors, any stock granted to employees of or consultants to the Company as
part of the 633,864 shares (and such other shares as may be returned to the
Plan) of Common Stock remaining available for grant under the Company's 1993
Stock Option Plan shall be subject to the Company's standard vesting provisions,
which allows for a four-year term with 6.25% of the total shares or options
vesting each quarter following the grant, provided, however, that the option may
not be exercised prior to the first anniversary of the vesting date.

                                   SECTION 8

                                 Miscellaneous
                                 -------------

     8.1   Governing Law.  This Agreement shall be governed in all respects by
           -------------                                                      
the laws of the State of California in the United States of America without
giving effect to the conflicts of laws principles thereof.

     8.2   Survival.  The representations, warranties, covenants and agreements
           --------                                                            
made in this Agreement shall survive the closing of the transactions
contemplated hereby, and shall in no way be affected by any investigation of the
subject matter hereof made by or on behalf of the Purchasers or the Company.

     8.3   Successors and Assigns.  Except as otherwise provided in this
           ----------------------                                       
Agreement, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Successors, assigns, heirs, executors and administrators of
the parties to this Agreement; provided, however, that the right of the
Purchasers to purchase the Shares shall not be assignable without the prior
written consent of the Company.

     8.4   Entire Agreement, Amendment.  This Agreement and the other documents
           ---------------------------                                         
delivered pursuant to this Agreement at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and supersede all prior agreements and merge all
prior discussions, negotiations, proposals and offers (written or oral) between
them, and no party shall be liable or bound to any other party in any manner by
any warranties, representations or covenants except as specifically set forth
herein or therein.  Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought; provided,
however, that holders of at least a majority of the Shares (or shares of Common
Stock issued upon conversion of the Shares) may, with the 

                                      -15-
<PAGE>
 
written consent of the Company, waive, modify or amend on behalf of all holders,
any provisions hereof benefiting such holders, so long as the effect thereof
will be that all such holders will be treated equally.

     8.5   Notices, etc.  All notices and other communications required or
           -------------                                                  
permitted under this Agreement shall be mailed by registered or certified mail,
postage prepaid, or otherwise delivered by hand or by messenger, addressed (a)
if to a Purchaser, at such Purchaser's address set forth on Exhibit A, or, at
                                                            ---------        
such other address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares, at such address as such
holder shall have furnished the Company in writing, or, until any such holder so
furnishes an address to the Company, then to and at the address of the last
holder of such Shares who has so furnished an address to the Company, or (c) if
to the Company, one copy should be sent to its offices and addressed to the
attention of the President, or at such other address as the Company shall have
furnished to the Purchaser.

     Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and postage prepaid as
aforesaid.

     8.6   Delays or Omissions.  Except as expressly provided in this Agreement,
           -------------------                                                  
no delay or omission to exercise any right, power or remedy accruing to any
holder of any Shares, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval 'of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing.  All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

     8.7   California Corporate Securities Law.  THE SALE OF THE SECURITIES 
           -----------------------------------
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.

     8.8   Expenses.  The Company and the Purchasers shall each bear their own
           --------                                                           
expenses incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby; provided, however, that if the transactions
are consummated, the Company will pay the reasonable fees and 

                                      -16-
<PAGE>
 
expenses of Venture Law Group up to a maximum of $10,000 upon presentation of an
itemized invoice therefor.

     8.9   Counterparts.  This Agreement may be executed in any number of
           ------------                                                  
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

     8.10  Severability.  In the event that any provision of this Agreement
           ------------                                                    
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.

     8.11  Titles and Subtitles.  The titles and subtitles used in this 
           -------------------                                                  
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.

     The foregoing agreement is hereby executed as of the date first above
written.


"COMPANY"                     "PURCHASERS"

VLSI LIBRARIES INCORPORATED,        U.S. VENTURE PARTNERS IV, L.P.
a California corporation            By Presidio Management Group IV, L.P.
                                    Its General Partner


By: /s/ Mark R. Templeton           By /s/ Michael P. Maher
    ---------------------------        ----------------------------
   Mark R. Templeton, President        Michael P. Maher
                                       Attorney-in-Fact            

                                    SECOND VENTURES II, L.P.
                                    By Presidio Management Group IV, L.P.
                                    Its General Partner



                                    By /s/ Michael P. Maher
                                       ----------------------------
                                       Michael P. Maher
                                       Attorney-in-Fact            

                                    USVP ENTREPRENEUR PARTNERS II, L.P.
                                    A Delaware Limited Partnership
                                    By Presidio Management Group IV, L.P.
                                    Its General Partner

                                      -17-
<PAGE>
 
                                    By /s/ Michael P. Maher
                                       -----------------------------
                                           Michael P. Maher
                                           Attorney-in-Fact

                                      -18-
<PAGE>
 
                                    2180 ASSOCIATES FUND
                                    By  Michael P. Maher, Attorney-In-Fact



                                    By /s/ Michael P. Maher
                                       -------------------------------

                                      -19-
<PAGE>
 
                                   EXHIBIT A
                                   ---------

                             SCHEDULE OF PURCHASERS
                             ----------------------



                                         NO. OF SHARES     
        PURCHASER                       TO BE PURCHASED  PURCHASE PRICE
--------------------------------------------------------------------------
                                                   
U.S. VENTURE PARTNERS IV, L.P.               1,951,395   $3,017,051.81
c/o U.S. Venture Partners
2180 Sand Hill Road
Suite 300
Menlo Park, CA  94025
Attention:  Lucio Lanza
 
SECOND VENTURES II, L.P.                       237,699      367,506.42
c/o U.S. Venture Partners
2180 Sand Hill Road
Suite 300
Menlo Park, CA  94025
Attention:  Lucio Lanza
 
USVP ENTREPRENEUR PARTNERS II, L.P.             67,914      105,001.84
c/o U.S. Venture Partners
2180 Sand Hill Road
Suite 300
Menlo Park, CA  94025
Attention:  Lucio Lanza
 
2180 ASSOCIATES FUND                             6,791       10,499.57
c/o U.S. Venture Partners
2180 Sand Hill Road
Suite 300
Menlo Park, CA  94025
Attention:  Lucio Lanza
                                             ---------     -----------
           TOTAL                             2,263,799   $3,500,059.64
                                                   


                                      -20-