<PAGE>

                                                                    EXHIBIT 10.5

                               NASSDA CORPORATION

                        2001 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 2001 Employee Stock Purchase
Plan of NASSDA Corporation.

     1. Purpose. The purpose of the Plan is to provide employees of the Company
        -------
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.

     2. Definitions.
        -----------

        (a) "Board" shall mean the Board of Directors of the Company or any
             -----
committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.

        (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
             ----

        (c) "Common Stock" shall mean the common stock of the Company.
             ------------

        (d) "Company" shall mean NASSDA Corporation and any Designated
             -------
Subsidiary of the Company.

        (e) "Compensation" shall mean either (i) all base straight time gross
             ------------
earnings including any amounts contributed by the Employee to the Company's
401(k) Plan and the Company's flexible benefits plan from compensation otherwise
payable to the Employee by the Company, but exclusive of sales commissions,
payments for overtime, shift premiums, incentive compensation, incentive
payments and bonuses ("Base Salary"), or (ii) all cash compensation reportable
on Form W-2, including, without limitation, base straight time gross earnings,
sales commissions, payments for overtime, shift premiums, incentive
compensation, incentive payments and bonuses, plus any amounts contributed by
the Employee to the Company's 401(k) Plan and the Company's flexible benefits
plan from compensation otherwise payable to the Employee by the Company ("Cash
W-2 Compensation"), as determined by the Board from time to time and
communicated to Employees prior to the commencement of the applicable Offering
Period. Compensation shall initially be determined to be Base Salary.

        (f) "Designated Subsidiary" shall mean any Subsidiary that has been
             ---------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

        (g) "Employee" shall mean any individual who is an Employee of the
             --------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment

<PAGE>

relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the 91st day of such leave.

        (h) "Enrollment Date" shall mean the first Trading Day of each Offering
             ---------------
Period.

        (i) "Exercise Date" shall mean the last Trading Day of each Purchase
             -------------
Period.

        (j) "Fair Market Value" shall mean, as of any date, the value of Common
             -----------------
Stock determined as follows:

            (i)   If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;

            (ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock prior
to the date of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable;

            (iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board; or

            (iv)  For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").

        (k) "Offering Periods" shall mean the periods of approximately
             ----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later; provided, however, that the first Offering Period
                          --------  -------
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective and ending on the last Trading Day on or before April 30,
2003. The duration and timing of Offering Periods may be changed pursuant to
Section 4 of this Plan.

        (l) "Plan" shall mean this 2001 Employee Stock Purchase Plan.
             ----

        (m) "Purchase Period" shall mean the approximately six month period
             ---------------
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the

                                       -2-

<PAGE>

next Exercise Date; provided, however, that the first Purchase Period shall
                    --------  -------
continue until April 30, 2002 in the event that the Enrollment Date falls on or
before October 31, 2001.

        (n) "Purchase Price" shall mean 85% of the Fair Market Value of a share
             -------- -----
of Common Stock on the Enrollment Date or on the Exercise Date, whichever is
lower; provided, however, that the Purchase Price may be adjusted by the Board
       --------  -------
pursuant to Section 20.

        (o) "Reserves" shall mean the number of shares of Common Stock covered
             --------
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.

        (p) "Subsidiary" shall mean a corporation, domestic or foreign, of which
             ----------
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

        (q) "Trading Day" shall mean a day on which national stock exchanges and
             -----------
the Nasdaq System are open for trading.

     3. Eligibility.
        -----------

        (a) Any Employee (as defined in Section 2(g)) who shall be employed by
the Company on a given Enrollment Date shall be eligible to participate in the
Plan.

        (b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.

     4. Offering Periods. The Plan shall be implemented by consecutive,
        ----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
                                   --------  -------
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
April 30, 2003. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.

     5. Participation.
        -------------

                                       -3-

<PAGE>

        (a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
   ---------
to the applicable Enrollment Date. All eligible Employees shall be automatically
enrolled in the initial Offering Period under the Plan.

        (b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

     6. Payroll Deductions.
        ------------------

        (a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding fifteen percent (15%) of the
Compensation which he or she receives on each pay day during the Offering
Period. During the initial Purchase Period, no payroll deduction will be made
unless a participant files a supplemental enrollment form within 15 days after
written notice to participants of the effectiveness of a registration statement
covering the Common Stock and filed under the Securities Act of 1933, as
amended.

        (b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account;
provided, however, that in the initial Purchase Period, participants may also
--------  -------
purchase shares of stock by making a lump sum cash payment at the end of the
Purchase Period.

        (c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing or filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period, including allowing such
changes only at the beginning of each Purchase Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

        (d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

        (e) At the time the option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is disposed
of, the participant must make adequate provision for the Company's federal,
state, or other tax withholding obligations, if any,

                                       -4-

<PAGE>

which arise upon the exercise of the option or the disposition of the Common
Stock. At any time, the Company may, but shall not be obligated to, withhold
from the participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.

     7. Grant of Option. On the Enrollment Date of each Offering Period, each
        ---------------
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock (subject to any adjustment pursuant to
Section 19) on the Enrollment Date, and provided further that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 11 hereof.
The Board may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of the Company's Common Stock
an Employee may purchase during each Purchase Period of such Offering Period.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.

     8. Exercise of Option.
        ------------------

        (a) Unless a participant withdraws from the Plan as provided in Section
10 hereof, his or her option for the purchase of shares shall be exercised
automatically on the Exercise Date, and the maximum number of full shares
subject to option shall be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. No
fractional shares shall be purchased; any payroll deductions accumulated in a
participant's account which are not sufficient to purchase a full share shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

        (b) If the Board determines that, on a given Exercise Date, the number
of shares with respect to which options are to be exercised may exceed (i) the
number of shares of Common Stock that were available for sale under the Plan on
the Enrollment Date of the applicable Offering Period, or (ii) the number of
shares available for sale under the Plan on such Exercise Date, the Board may in
its sole discretion (x) provide that the Company shall make a pro rata
allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine

                                       -5-

<PAGE>

in its sole discretion to be equitable among all participants exercising options
to purchase Common Stock on such Exercise Date, and terminate any or all
Offering Periods then in effect pursuant to Section 20 hereof. The Company may
make pro rata allocation of the shares available on the Enrollment Date of any
applicable Offering Period pursuant to the preceding sentence, notwithstanding
any authorization of additional shares for issuance under the Plan by the
Company's stockholders subsequent to such Enrollment Date.

     9.  Delivery. As promptly as practicable after each Exercise Date on which
         --------
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.

     10. Withdrawal.
         ----------

         (a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan; provided, however, that in the initial
            ---------               --------  -------
Offering Period, participants may be deemed to withdraw from the Plan by
declining or failing to send timely payment for the shares. All of the
participant's payroll deductions credited to his or her account shall be paid to
such participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period shall be automatically terminated,
and no further payroll deductions for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.

         (b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

     11. Termination of Employment. Upon a participant's ceasing to be an
         -------------------------
Employee, for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.

     12. Interest. No interest shall accrue on the payroll deductions of a
         --------
participant in the Plan.


     13. Stock.
         -----

         (a) Subject to adjustment upon changes in capitalization of the Company
as provided in Section 19 hereof and as adjusted for the August 2001
four-for-three stock split, the maximum number of shares of the Company's Common
Stock which shall be made available for

                                       -6-

<PAGE>

sale under the Plan shall be 666,667 shares (post-split) together with an
annual increase to the number of shares reserved for issuance thereunder on the
first day of the Company's fiscal year beginning on October 1, 2002, equal to
the lesser of (i) 2,666,666 shares (post-split), (ii) five percent (5.0%) of the
outstanding shares of the Company on the last day of the prior fiscal year or
(iii) such amount as determined by the Board.

         (b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.

         (c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

     14. Administration. The Plan shall be administered by the Board or a
         --------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

     15. Designation of Beneficiary.
         --------------------------

         (a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.

         (b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.


     16. Transferability. Neither payroll deductions credited to a participant's
         ---------------
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 15 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.

                                       -7-

<PAGE>

     17. Use of Funds. All payroll deductions received or held by the Company
         ------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

     18. Reports. Individual accounts shall be maintained for each participant
         -------
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

     19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
         --------------------------------------------------------------------
         Merger or Asset Sale.
         ---------------------

         (a) Changes in Capitalization. Subject to any required action by the
             -------------------------
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
                              --------  -------
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.

         (b) Dissolution or Liquidation. In the event of the proposed
             --------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

         (c) Merger or Asset Sale. In the event of a proposed sale of all or
             --------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's

                                       -8-

<PAGE>

option has been changed to the New Exercise Date and that the participant's
option shall be exercised automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn from the Offering Period as provided
in Section 10 hereof.

     20. Amendment or Termination.
         ------------------------

         (a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as provided
in Section 19 and this Section 20 hereof, no amendment may make any change in
any option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain stockholder approval in such a manner
and to such a degree as required.

         (b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
change the method for calculating a participant's Compensation with respect to
prospective Offering Periods, limit the frequency and/or number of changes in
the amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a participant in order
to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation, and
establish such other limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent with the Plan.

         (c) In the event the Board determines that the ongoing operation of the
Plan may result in unfavorable financial accounting consequences, the Board may,
in its discretion and, to the extent necessary or desirable, modify or amend the
Plan to reduce or eliminate such accounting consequence including, but not
limited to:

             (i)   altering the Purchase Price for any Offering Period including
an Offering Period underway at the time of the change in Purchase Price;

             (ii)  shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and

             (iii) allocating shares.

         Such modifications or amendments shall not require stockholder approval
or the consent of any Plan participants.

     21. Notices. All notices or other communications by a participant to the
         -------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form

                                       -9-

<PAGE>

specified by the Company at the location, or by the person, designated by the
Company for the receipt thereof.

     22. Conditions Upon Issuance of Shares. Shares shall not be issued with
         ----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

         As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

     23. Term of Plan. The Plan shall become effective upon the earlier to occur
         ------------
of its adoption by the Board of Directors or its approval by the stockholders of
the Company; provided, however, the Plan shall not become effective until the
             --------  -------
effective date of the Company's initial public offering pursuant to a
registration statement filed with the Securities and Exchange Commission. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 20 hereof.

     24. Automatic Transfer to Low Price Offering Period. To the extent
         -----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules, if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.

                                      -10-

<PAGE>

                                    EXHIBIT A
                                    ---------

                               NASSDA CORPORATION

                        2001 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

_____ Original Application                          Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)


1.       ____________________ hereby elects to participate in the NASSDA
         Corporation Employee Stock Purchase Plan (the "Employee Stock Purchase
         Plan") and subscribes to purchase shares of the Company's Common Stock
         in accordance with this Subscription Agreement and the Employee Stock
         Purchase Plan.

2.       I hereby authorize payroll deductions from each paycheck in the amount
         of ____% of my Compensation on each payday during the Offering Period
         in accordance with the Employee Stock Purchase Plan. (Please note that
         the percentage withholding must be between 1% and 15% and that no
         fractional percentages are permitted.)

3.       I understand that said payroll deductions shall be accumulated for the
         purchase of shares of Common Stock at the applicable Purchase Price
         determined in accordance with the Employee Stock Purchase Plan. I
         understand that if I do not withdraw from an Offering Period, any
         accumulated payroll deductions will be used to automatically exercise
         my option.

4.       I have received a copy of the complete Employee Stock Purchase Plan. I
         understand that my participation in the Employee Stock Purchase Plan is
         in all respects subject to the terms of the Plan. I understand that my
         ability to exercise the option under this Subscription Agreement is
         subject to stockholder approval of the Employee Stock Purchase Plan.

5.       Shares purchased for me under the Employee Stock Purchase Plan should
         be issued in the name(s) of (Employee or Employee and Spouse only):
         _____________________________.

6.       I understand that if I dispose of any shares received by me pursuant to
         the Plan within 2 years after the Enrollment Date (the first day of the
         Offering Period during which I purchased such shares) or one year after
         the Exercise Date, I will be treated for federal income tax purposes as
         having received ordinary income at the time of such disposition in an
         amount equal to the excess of the fair market value of the shares at
         the time such shares were purchased by me over the price which I paid
         for the shares. I hereby agree to notify the Company in writing within
                         ------------------------------------------------------
         30 days after the date of any disposition of my shares and I will make
         ----------------------------------------------------------------------
         adequate provision for Federal, state or other tax withholding
         --------------------------------------------------------------
         obligations, if any, which arise upon the
         -----------------------------------------

<PAGE>

         disposition of the Common Stock. The Company may, but will not be
         -------------------------------
         obligated to, withhold from my compensation the amount necessary to
         meet any applicable withholding obligation including any withholding
         necessary to make available to the Company any tax deductions or
         benefits attributable to sale or early disposition of Common Stock by
         me. If I dispose of such shares at any time after the expiration of the
         2-year and 1-year holding periods, I understand that I will be treated
         for federal income tax purposes as having received income only at the
         time of such disposition, and that such income will be taxed as
         ordinary income only to the extent of an amount equal to the lesser of
         (1) the excess of the fair market value of the shares at the time of
         such disposition over the purchase price which I paid for the shares,
         or (2) 15% of the fair market value of the shares on the first day of
         the Offering Period. The remainder of the gain, if any, recognized on
         such disposition will be taxed as capital gain.

7.       I hereby agree to be bound by the terms of the Employee Stock Purchase
         Plan. The effectiveness of this Subscription Agreement is dependent
         upon my eligibility to participate in the Employee Stock Purchase Plan.

8.       In the event of my death, I hereby designate the following as my
         beneficiary(ies) to receive all payments and shares due me under the
         Employee Stock Purchase Plan:

         NAME: (Please print)__________________________________________________
                                 (First)           (Middle)            (Last)


         _________________________     ________________________________________
         Relationship
                                       ________________________________________
                                       (Address)

         Employee's Social
         Security Number:               ________________________________________
         Employee's Address:
                                        ________________________________________

                                        ________________________________________

                                        ________________________________________


I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:_________________________        ________________________________________
                                            Signature of Employee

                                       ________________________________________
                                        Spouse's Signature (If beneficiary
                                        other than spouse)

                                       -2-

<PAGE>

                                    EXHIBIT B
                                    ---------

                               NASSDA CORPORATION

                        2001 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

         The undersigned participant in the Offering Period of the NASSDA
Corporation Employee Stock Purchase Plan which began on ____________, ______
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.

                                       Name and Address of Participant:

                                       ________________________________________

                                       ________________________________________

                                       ________________________________________


                                       Signature:

                                       ________________________________________

                                       Date:___________________________________