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Registration Rights Agreement - VLSI Libraries Inc., US Venture Partners IV LP, Second Ventures II LP, USVP Entrepreneur Partners II LP, 2180 Associates Fund and Synopsys Inc.

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                          VLSI LIBRARIES INCORPORATED

________________________________________________________________________________

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

                               December 17, 1996

________________________________________________________________________________
<PAGE>
 
                               TABLE OF CONTENTS



                                                                  PAGE
                                                               
SECTION 1 - Restrictions on Transferability; Registration Rights.... 1

        1.1  Certain Definitions.................................... 1
        1.2  Restrictions........................................... 3
        1.3  Restrictive Legend..................................... 3
        1.4  Notice of Proposed Transfers........................... 3
        1.5  Requested Registration................................. 4
        1.6  Company Registration................................... 6
        1.7  Registration on Form S-3............................... 7
        1.8  Limitations on Subsequent Registration Rights.......... 8
        1.9  Expenses of Registration............................... 8
       1.10  Registration Procedures................................ 8
       1.11  Indemnification........................................ 8
       1.12  Information by Holder..................................10
       1.13  Rule 144 Reporting.....................................10
       1.14  Transfer of Registration Rights........................10
       1.15  Standoff Agreement.....................................11
       1.16  Termination of Rights..................................11

SECTION 2 - Right of Participation..................................11

        2.1  Purchasers' Right of Participation.....................11
        2.2  Termination of Participation Right.....................13

SECTION 3 - Miscellaneous...........................................14

        3.1  Assignment.............................................14
        3.2  Third Parties..........................................14
        3.3  Governing Law..........................................14
        3.4  Counterparts...........................................14
        3.5  Notices................................................14
        3.6  Severability...........................................14
        3.7  Amendment and Waiver...................................14
        3.8  Effect of Amendment or Waiver..........................15
        3.9  Rights of Holders......................................15
       3.10  Delays or Omissions....................................15
       3.11  Restatement of Prior Agreement.........................15


                                      -i-
<PAGE>
 
              AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT


     THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is entered into as of the 17th day of December, 1996 by and among VLSI Libraries
Incorporated, a California corporation (the "Company"), and the investors listed
on Exhibit A hereto (the "Purchasers").

                                   RECITALS

     WHEREAS, the Company and the Purchasers are entering into a Series B
Preferred Stock and Warrant Purchase Agreement of even date herewith (the
"Purchase Agreement"), pursuant to which the Company shall sell, and the
Purchasers shall acquire, shares of the Company's Series B Preferred Stock (the
"Preferred Shares").

     WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Purchasers to invest funds in the Company, the
parties desire that the Purchasers be granted registration rights and rights of
participation with respect to the Preferred Shares.

     WHEREAS, the Company and certain of the Purchasers are parties to a
Registration Rights Agreement dated March 20, 1996 (the "Former Agreement").

     WHEREAS, the parties to the Former Agreement desire to amend and restate
the agreement to read as set forth below and to include additional Purchasers as
set forth on Exhibit A hereto.

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

                                   SECTION 1

                       Restrictions on Transferability;
                       ------------------------------- 
                              Registration Rights
                              -------------------

      1.1 Certain Definitions.  As used in this Agreement, the following terms
          -------------------                                                 
shall have the following respective meanings:

          "Commission" shall mean the Securities and Exchange Commission or any
           ----------                                                          
other federal agency at the time administering the Securities Act.

          "Conversion Shares" means the Common Stock issued or issuable upon
           -----------------                                                
conversion of the Preferred Shares as defined herein.
<PAGE>
 
          "Holder" shall mean any Purchaser holding Registrable Securities and
           ------                                                             
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.

          "Initiating Holders" shall mean Holders in the aggregate of not less
           ------------------                                                 
than forty percent (40%) of the Registrable Securities.

          "Preferred Shares" shall mean the Series A Preferred Stock, the Series
           ----------------                                                     
B Preferred Stock, and any shares of Preferred Stock of the Company issuable
upon exercise of the Warrant issued to Synopsys, Inc. ("Synopsys").

          The terms "register," "registered" and "registration" refer to a
                     --------    ----------       ------------            
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

          "Registration Expenses" shall mean all expenses incurred by the
           ---------------------                                         
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

          "Registrable Securities" means (i) the Preferred Shares, (ii) the
           ----------------------                                          
Conversion Shares, and (iii) any Common Stock of the Company issued or issuable
in respect of the Preferred Shares or Conversion Shares or other securities
issued or issuable with respect to the Preferred Shares or Conversion Shares
upon any stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issued or issuable with respect to the Conversion Shares
or Preferred Shares; provided, however, that shares of Common Stock or other
                     --------  -------                                      
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(l) thereof so that all transfer restrictions
and restrictive legends with respect thereto are removed upon the consummation
of such sale.

          "Restricted Securities" shall mean the securities of the Company
           ---------------------                                          
required to bear the legend set forth in Section 1.3 of this Agreement.
 
          "Securities Act" shall mean the Securities Act of 1933, as amended, or
           --------------                                                       
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be
in effect at the time.

          "Selling Expenses" shall mean all underwriting discounts, selling
           ----------------                                                
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (except as
provided by Section 1.9).

                                      -2-
<PAGE>
 
          1.2  Restrictions.  The Preferred Shares and the Conversion Shares
               ------------                                                 
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act.  The Purchasers will cause any
proposed purchaser, assignee, transferee or pledgee of the Preferred Shares or
the Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.

          1.3  Restrictive Legend.  Each certificate representing (i) the
               ------------------                                        
Preferred Shares, (ii) the Conversion Shares, and (iii) any other securities
issued in respect of the securities referenced in clauses (i) and (ii) upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of Section 1.4 below)
be stamped or otherwise imprinted with legends in the following form (in
addition to any legend required under applicable state securities laws):

     "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
     INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
     SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
     REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH
     MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT
     SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
     DELIVERY REQUIREMENTS OF SAID ACT."

     "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
     ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
     SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."

     Each Purchaser and Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.

     1.4  Notice of Proposed Transfers.  The holder of each certificate
          ----------------------------                                 
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge.  Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be 

                                      -3-
<PAGE>
 
taken with respect thereto, whereupon the holder of such Restricted Securities
shall be entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by the holder to the Company. The Company will not
require such a legal opinion or "no action" letter (a) in any transaction in
compliance with Rule 144, (b) in any transaction in which a Purchaser which is a
corporation distributes Restricted Securities after six (6) months after the
purchase thereof solely to its majority-owned subsidiaries or affiliates for no
consideration, or (c) in any transaction in which a Purchaser which is a
partnership distributes Restricted Securities after six (6) months after the
purchase thereof solely to partners thereof for no consideration, provided that
each transferee agrees in writing to be subject to the terms of this Section
1.4. Each certificate evidencing the Restricted Securities transferred as above
provided shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legend set forth in Section 1.3 above, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for such holder and the Company, such legend is not required in order to
establish compliance with any provisions of the Securities Act.

      1.5 Requested Registration.
          ---------------------- 

          (a) Request for Registration.  In case the Company shall receive from
              ------------------------                                         
Initiating Holders a written request that the Company effect any qualification,
compliance or registration (which, in connection with the Company's initial
public offering, must reasonably anticipate an  aggregate price to the public
net of underwriting discounts and commissions, exceeding $10,000,000), the
Company will:

              (i)   promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and

              (ii)  as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
             --------                                                          
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:

                    (1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;

                    (2) Prior to the earlier of (i) six (6) months following the
Company's initial public offering or (ii) January 1, 2001.

                                      -4-
<PAGE>
 
                    (3) During the period ending on the date three (3) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan);

                    (4) After the Company has effected two (2) such
registrations pursuant to this subparagraph 1.5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold; or

                    (5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1. 5 shall be deferred for a single period
not to exceed one hundred-twenty (120) days from the date of receipt of written
request from the Initiating Holders.

     Subject to the foregoing clauses (1) through (5), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.

          (b) Underwriting.  In the event that a registration pursuant to
              ------------                                               
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.

     The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders (which managing underwriter shall
be reasonably acceptable to the Company).  Notwithstanding any other provision
of this Section 1.5, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement.  No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.  To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.

     If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders.  The
Registrable Securities and/or other securities so withdrawn shall also be

                                      -5-
<PAGE>
 
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.

      1.6 Company Registration.
          -------------------- 

          (a) Notice of Registration.  If at any time or from time to time, the
              ----------------------                                           
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or

(ii) a registration relating solely to a Commission Rule 145 transaction, the
Company will:

              (i)   promptly give to each Holder written notice thereof; and

              (ii)  include in such registration (and any related qualification
under  blue sky laws or other compliance), and in any underwriting involved in
such registration, all the Registrable Securities specified in a written request
or requests made within twenty (20) days after receipt of such written notice
from the Company by any Holder, but only to the extent that such inclusion will
not diminish the number of securities included by the Company or by holders of
the Company's securities who have demanded such registration.

          (b) Underwriting.  If the registration of which the Company gives
              ------------                                                 
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration).  Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration to a minimum of 30% of the total shares to be
included in such underwriting or exclude them entirely in the case of the
Company's initial public offering.  The Company shall so advise all Holders and
the other holders distributing their securities through such underwriting
pursuant to piggyback registration rights similar to this Section 1.6, and the
number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be first allocated among all
Purchasers in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Purchasers at the time of filing the
registration statement, and after satisfaction of the requirements of the
Purchasers, the remaining shares that may be included in the registration and
underwriting shall be allocated among the officers, directors and other
shareholders of the Company in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such officers and directors
of the Company at the time of filing of the registration statement.  To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder or other holder to the nearest 100 shares.  If any Holder or other holder
disapproves of the terms 

                                      -6-
<PAGE>
 
of any such underwriting, he or she may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration, and
shall not be transferred in a public distribution prior to one hundred eighty
(180) days after the effective date of the registration statement relating
thereto (the "Lock-Up Period"); provided, however, that if such registration is
not the Company's initial public offering such Lock-Up Period shall be one
hundred twenty (120) days unless the managing underwriter determines that
marketing factors require a longer period in which case the Lock-Up period shall
be specified by the managing underwriter but shall not exceed one hundred eighty
(180) days.

          (c) Right to Terminate Registration.  The Company shall have the right
              -------------------------------                                   
to terminate or withdraw any registration initiated by it under this Section 1.6
prior to the effectiveness of such registration, whether or not any Holder has
elected to include securities in such registration.

      1.7 Registration on Form S-3.
          ------------------------ 

          (a) If the Initiating Holder requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form; provided,
                                                                       -------- 
however, that the Company shall not be required to effect more than one
-------                                                                
registration pursuant to this Section 1.7 in any twelve (12) month period.  The
Company will (i) promptly give written notice of the proposed registration to
all other Holders, and (ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company.
The substantive provisions of Section 1.5(b) shall be applicable to each
registration initiated under this Section 1.7.

          (b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following the effective date of, a
registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), or (iii) if the Company shall furnish to such Holder a certificate
signed by the President of the Company stating that, in the good faith judgment
of the Board of Directors, it would be seriously detrimental to the Company or
its shareholders for registration 

                                      -7-
<PAGE>
 
statements to be filed in the near future, then the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a single
period not to exceed one hundred twenty (120) days from the receipt of the
request to file such registration by such Holder or Holders.

      1.8  Limitations on Subsequent Registration Rights.  From and after the
           ---------------------------------------------                     
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such holder derives its rights as
an additional Holder hereunder, or such shares or securities are entitled to be
included in registrations only to the extent that the inclusion of such
securities will not diminish the amount of Registrable Securities that are
included.

      1.9  Expenses of Registration.  All Registration Expenses incurred in
           ------------------------                                        
connection with any registration pursuant to Sections 1.5, 1.6 or 1.7 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders.  In such case, the
Holders of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered unless the Holders of a majority of the Registrable Securities agree
to forfeit their right to one demand registration pursuant to Section 1.5.
Notwithstanding the foregoing, however, if at the time of the withdrawal, the
Holders have learned of a material adverse change in the condition, business or
prospects of the Company from that known to the Holders at the time of their
request, of which the Company had knowledge at the time of the request, then the
Holders shall not be required to pay any of said Registration Expenses or to
forfeit the right to one demand registration.

      1.10 Registration Procedures.  In the case of each registration,
           -----------------------                                    
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof.  At its expense the Company will:

           (a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and

           (b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.

      1.11 Indemnification.
           --------------- 

           (a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, 

                                     -8-
<PAGE>
 
with respect to which registration, qualification or compliance has been
effected pursuant to this Section 1, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.

          (b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the liability
of a Holder for indemnification under this Section 1.11(b) shall not exceed the
gross proceeds from the offering received by such Holder.

          (c) Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may 

                                     -9-
<PAGE>
 
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section I unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

      1.12 Information by Holder.  The Holder or Holders of Registrable
           ---------------------                                       
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.

      1.13 Rule 144 Reporting.  With a view to making available the benefits of
           ------------------                                                  
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:

           (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");

           (b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and

           (c) So long as a Purchaser owns any Restricted Securities, furnish to
the Purchaser forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Purchaser to sell
any such securities without registration.

      1.14 Transfer of Registration Rights.  The rights to cause the Company to
           -------------------------------                                     
register securities granted Purchasers under Sections 1.5, 1.6 and 1.7 may be
assigned to a transferee or assignee 

                                     -10-
<PAGE>
 
reasonably acceptable to the Company in connection with any transfer or
assignment of Registrable Securities by a Purchaser (together with any
affiliate); provided, that (a) such transfer may otherwise be effected in
            --------
accordance with applicable securities laws, (b) notice of such assignment is
given to the Company, and (c) such transferee or assignee (i) is a wholly-owned
subsidiary or constituent partner (including limited partners) of such
Purchaser, or (ii) acquires from such Purchaser 20% or more of the shares of
Registrable Securities (as appropriately adjusted for stock splits and the like)
originally purchased by the Purchaser from the Company.

      1.15 Standoff Agreement. Each Holder agrees in connection with the initial
           ------------------
registration of the Company's securities that, upon request of the Company or
the underwriters managing any underwritten initial public offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days from the effective date of
such registration) as may be requested by the Company or such managing
underwriters; provided, however, that the officers and directors of the Company
who own stock of the Company also agree to such restrictions.

      1.16 Termination of Rights.  No Holder shall be entitled to exercise any
           ---------------------                                              
right provided for in this Section 1:

           (a) after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public, or

           (b) on or after the closing of a public offering of the Common Stock
of the Company, initiated by the Company, when all shares of the Holder's
Registrable Securities may be sold under Rule 144 during any 90-day period;
provided, however, that the provisions of this subsection (b) shall not apply
where the Holder owns more than two percent (2%) of the Company's outstanding
stock until such time as such Holder owns less than two percent (2%) of the
outstanding stock.

                                   SECTION 2

                            Right of Participation
                            ----------------------

      2.1  Purchasers' Right of Participation.
           ---------------------------------- 

           (a)  Right of Participation.
                ---------------------- 

                (i)  Subject to the terms and conditions contained in this
Section 2. 1, the Company hereby grants to each Purchaser the right of
participation to purchase its Pro Rata Portion of any New Securities (as defined
in subsection 2.1 (b)) which the Company may, from time to time, propose to sell
and issue. A Holder's "Pro Rata Portion" for purposes of this Section 2.1 is the
ratio that (x) the sum of the number of shares of the Company's Common Stock
then held by such Purchaser and 

                                     -11-
<PAGE>
 
the number of shares of the Company's Common Stock issuable upon conversion of
the Preferred Stock then held by such Holder, bears to (y) the sum of the total
number of shares of the Company's Common Stock then outstanding, the number of
shares of the Company's Common Stock issuable upon the exercise of any
outstanding rights, options or warrants, and the number of shares of the
Company's Common Stock issuable upon conversion of the then outstanding
Preferred Stock.

                (ii) Notwithstanding the foregoing, Synopsys' Pro Rata Portion
for purposes of this Section 2.1 is the ratio that (x) the sum of the number of
shares of the Company's Common Stock then held by Synopsys and the number of
shares of the Company's Common Stock issuable upon conversion of the Preferred
Stock then held by Synopsys and the number of shares of the Company's Common
Stock which would be issuable upon conversion of Preferred Stock then
purchasable by Synopsys assuming that Synopsys has exercised its Warrant to the
full extent then exercisable, bears to (y) the sum of the total number of shares
of the Company's Common Stock then outstanding and the number of shares of the
Company's Common Stock issuable upon conversion of the then outstanding
Preferred Stock.

          (b)   Definition of New Securities.  Except as set forth below, "New
                ----------------------------                                  
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock.  Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred Shares or the Conversion Shares,
(ii) securities offered to the public generally pursuant to a registration
statement under the Securities Act; provided, however, that this exclusion will
not apply to Synopsys solely with respect to the first sale by the Company of
its Common Stock to the public pursuant to a registration statement under the
Securities Act, (iii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets or shares or other reorganization whereby the Company or its shareholders
own not less than a majority of the voting power of the surviving or successor
corporation, (iv) up to 1,762,396 shares of the Company's Common Stock or
related options or warrants convertible into or exercisable for such Common
Stock issued to employees, officers and directors of, and consultants to, the
Company, pursuant to any arrangement approved by the Board of Directors of the
Company, (v) shares of the Company's Common Stock or related options convertible
into or exercisable for such Common Stock issued to banks, commercial lenders,
lessors and other financial institutions in connection with the borrowing of
money or the leasing of equipment by the Company, (vi) stock issued pursuant to
any rights or agreements, including, without limitation, convertible securities,
options and warrants, provided that the Company shall have complied with the
rights of participation established by this Section 2.1 with respect to the
initial sale or grant by the Company of such rights or agreements, (vii) stock
issued in connection with any stock split, stock dividend or recapitalization by
the Company, or (viii) any securities issued to Synopsys pursuant to any
exercise of the Warrant.

          (c)   Notice of Right.  In the event the Company proposes to undertake
                ---------------                                                 
an issuance of New Securities, it shall give each Purchaser written notice of
its intention, describing the type of New Securities and the price and terms
upon which the Company proposes to issue the same.  Each Purchaser shall have
twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of 

                                     -12-
<PAGE>
 
such New Securities (up to the amount referred to in subsection 2.1 (a)), for
the price and upon the terms specified in the notice, by giving written notice
to the Company and stating therein the quantity of New Securities to be
purchased. In the event Synopsys exercises its right to purchase New Securities
in connection with the first offering made to the public generally pursuant to a
registration statement under the Securities Act, the price paid by Synopsys for
such New Securities shall be the public offering price less any underwriting
discounts and commissions.

          (d)   Exercise of Right.  If any Purchaser exercises its right of
                -----------------                                          
participation under this Agreement, the closing of the purchase of the New
Securities with respect to which such right has been exercised shall take place
within ninety (90) calendar days after the Purchaser gives notice of such
exercise, which period of time shall be extended in order to comply with
applicable laws and regulations. Upon exercise of such right of participation,
the Company and the Purchaser shall be legally obligated to consummate the
purchase contemplated thereby and shall use their best efforts to secure any
approvals required in connection therewith.

          (e)   Lapse and Reinstatement of Right. In the event a Purchaser fails
                --------------------------------
to exercise the right of participation provided in this Section 2.1 within said
twenty (20) day period, the Company shall have ninety (90) days thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of said agreement) to sell the New Securities not elected to be purchased by
such Purchaser at the price and upon terms no more favorable to the purchasers
of such securities than specified in the Company's notice. In the event the
Company has not sold the New Securities or entered into an agreement to sell the
New Securities within said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within sixty (60) days from the date
of said agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Purchasers in the
manner provided above.

          (f)   Assignment.  The right of the Purchasers to purchase any part of
                ----------                                                      
the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 20% or more shares of Restricted
Securities (as adjusted for stock splits and the like) or (ii) all of the
Restricted Securities then owned by such Purchaser.

      2.2 Termination of Participation Right.  The rights of participation
          ----------------------------------                              
granted under Section 2.1 of this Agreement 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
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.

                                     -13-
<PAGE>
 
                                   SECTION 3

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

      3.1  Assignment. Except as otherwise provided in this Agreement, the terms
           ----------
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties to this Agreement.

      3.2  Third Parties.  Nothing in this Agreement, express or implied, is
           -------------                                                    
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

      3.3  Governing Law.  This Agreement shall be governed by and construed
           -------------                                                    
under the laws of the State of California in the United States of America
without giving effect to the conflicts of laws principles thereof.

      3.4  Counterparts. This Agreement may be executed in counterparts, each of
           ------------  
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

      3.5  Notices.  Any notice required or permitted by this Agreement shall be
           -------                                                              
in writing and shall be sent by prepaid registered or certified mail return
receipt requested, or otherwise delivered by hand or by messenger addressed to
the other party at the address shown below or at such other address for which
such party gives notice under this Agreement.  Such notice shall be deemed to
have been given when delivered if delivered personally, or, if sent by mail, at
the earlier of its receipt or three (3) days after deposit in the mail.

      3.6  Severability. If one or more provisions of this Agreement are held to
           ------------   
be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.

      3.7  Amendment and Waiver.  Any provision of this Agreement may be amended
           --------------------                                                 
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally.  Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company.  In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities.  In the event
that an underwriting agreement is entered into between the Company and any
Holder, and such underwriting agreement contains terms differing from this
Agreement, as to any such Holder the terms of such underwriting agreement shall
govern.

                                     -14-
<PAGE>
 
      3.8  Effect of Amendment or Waiver.  The Purchasers and their successors
           -----------------------------                                      
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.

      3.9  Rights of Holders.  Each holder of Registrable Securities shall have
           -----------------                                                   
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.

      3.10 Delays or Omissions.  No delay or omission to exercise any right,
           -------------------                                              
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party 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 party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made 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.

      3.11 Restatement of Prior Agreement.  The Company and certain of the
           ------------------------------                                 
Purchasers are parties to a Registration Rights Agreement dated March 20, 1996
(the "Prior Agreement").  Through their execution of this Agreement, the Company
and all of the Purchasers agree to terminate the Prior Agreement and restate the
terms thereof through this Agreement, with the result that this Agreement shall
constitute the sole agreement among the parties hereto with respect to the
registration of Registrable Securities.

                                     -15-
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year 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                      SECOND VENTURES II, L.P.
                                    By Presidio Management Group IV, L.P.
                                    Its General Partner


                                    By /s/ Michael P. Maher
                                       __________________________

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


                                    By /s/ Michael P. Maher
                                       __________________________

                                    2180 ASSOCIATES FUND                    
                                    By Michael P. Maher, Attorney-In-Fact 



                                    By /s/ Michael P. Maher
                                       __________________________

                                    SYNOPSYS, INC.


                                    By /s/ Steven K. Shevik
                                       __________________________

                                     -16-
<PAGE>
 
                                   EXHIBIT A


U.S. Venture Partners IV, L.P.

Second Ventures II, L.P.

USVP Entrepreneur Partners II, L.P.

2180 Associates Fund

Synopsys, Inc.
<PAGE>
 
                                                                     EXHIBIT 4.2

                          VLSI LIBRARIES INCORPORATED

                              FIRST AMENDMENT TO
              AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
                            DATED DECEMBER 17, 1996


     This Agreement is made as of the 11th day of March, 1997, by and among VLSI
Libraries Incorporated, a California corporation (the "Company") and the
purchasers set forth on the attached Exhibit A ("Schedule of Purchasers") (the
"Purchasers").

     WHEREAS, the Company wishes to increase the number of shares of Common
Stock reserved for issuance under the 1993 Stock Option Plan which requires
certain conforming changes to the Amended and Restated Registration Rights
Agreement (the "Rights Agreement");

     IT IS HEREBY AGREED THAT certain sections of the Rights Agreement as set
forth below, are hereby amended:

1.   Section 2.1(b) of the Rights Agreement shall be amended in its entirety to
read as follows, with the changes thereto underlined:

     "(b) Definition of New Securities.  Except as set forth below, "New
          ----------------------------                                  
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock.  Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred Shares or the Conversion Shares,
(ii) securities offered to the public generally pursuant to a registration
statement under the Securities Act; provided, however, that this exclusion will
not apply to Synopsys solely with respect to the first sale by the Company of
its Common Stock to the public pursuant to a registration statement under the
Securities Act, (iii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets or shares or other reorganization whereby the Company or its shareholders
own not less than a majority of the voting power of the surviving or successor
corporation, (iv) up to 4,324,792 shares of the Company's Common Stock or
                        ----------------                                 
related options or warrants convertible into or exercisable for such Common
Stock issued to employees, officers and directors of, and consultants to, the
Company, pursuant to any arrangement approved by the Board of Directors of the
Company, (v) shares of the Company's Common Stock or related options convertible
into or exercisable for such Common Stock issued to banks, commercial lenders,
lessors and other financial institutions in connection with the borrowing of
money or the leasing of equipment by the Company, (vi) stock issued pursuant to
any rights or agreements, including, without limitation, convertible securities,
options and warrants, provided that the Company shall have complied with the
rights of participation established by this Section 2.1 with respect to the
initial sale or grant by the Company of such rights or agreements, (vii) stock
issued in connection with any stock split, stock dividend or recapitalization by
the Company, or (viii) any securities issued to Synopsys pursuant to any
exercise of the Warrant."


2.   Except as amended as set forth above, the Rights Agreement shall continue
in full force and effect.

                                     -1-
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.


The Company:                        VLSI LIBRARIES INCORPORATED
                                    a California corporation


                                    By:  /s/ Mark R. Templeton
                                       ____________________________________
                                         Mark R. Templeton
                                         President

The Purchasers:

                                    U.S. VENTURE PARTNERS IV, L.P.
                                    By Presidio Management Group IV, L.P.
                                    Its General Partner


                                    By /s/ Michael P. Maher
                                       ____________________________________

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


                                    By /s/ Michael P. Maher
                                       ____________________________________

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


                                    By /s/ Michael P. Maher
                                       ____________________________________

                                    2180 ASSOCIATES FUND


                                    By /s/ Michael P. Maher
                                       ____________________________________

                                    SYNOPSYS, INC.


                                    By /s/ Steven K. Shevick
                                       ____________________________________

                                     -2-
<PAGE>
 
                                   EXHIBIT A


U.S. Venture Partners IV, L.P.

Second Ventures II, L.P.

USVP Entrepreneur Partners II, L.P.

2180 Associates Fund

Synopsys, Inc.