Document:

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                                                                    EXHIBIT 10.5

                             SIMPLEX SOLUTIONS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

         The following constitute the provisions of the Employee Stock Purchase
Plan of Simplex Solutions, Inc..

         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 Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a uniform and
nondiscriminatory basis consistent with the requirements of Section 423.

         2. Definitions.

                  (a) "Administrator" shall mean the Board or any Committee
designated by the Board to administer the plan pursuant to Section 14.

                  (b) "Board" shall mean the Board of Directors of the Company.

                  (c) "Change of Control" shall mean the occurrence of any of
the following events:

                               (i) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities; or

                               (ii) The consummation of the sale or disposition
by the Company of all or substantially all of the Company's assets; or

                               (iii) The consummation of a merger or
consolidation of the Company, with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company, or such surviving
entity or its parent outstanding immediately after such merger or consolidation.

                               (iv) A change in the composition of the Board, as
a result of which fewer than a majority of the Directors are Incumbent
Directors. "Incumbent Directors" shall mean Directors who either (A) are
Directors of the Company, as applicable, as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of those Directors whose election or nomination was not in
connection with any transaction described
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in subsections (i), (ii) or (iii) or in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.

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

                  (e) "Committee" means a committee of the Board appointed by
the Board in accordance with Section 14 hereof.

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

                  (g) "Company" shall mean Simplex Solutions, Inc., a Delaware
corporation.

                  (h) "Compensation" shall mean all base straight time gross
earnings, bonuses and 50% of commissions but exclusive of payments for incentive
compensation, overtime, shift premium and other compensation.

                  (i) "Designated Subsidiary" shall mean any Subsidiary selected
by the Administrator as eligible to participate in the Plan.

                  (j) "Eligible Employee" shall mean any individual who is a
common law employee of the Company or any Designated Subsidiary and whose
customary employment with the Company or Designated Subsidiary 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 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.

                  (k) "Exercise Date" shall mean the first Trading Day on or
after May 1st and November 1st of each year. The first Exercise Date under the
Plan shall be the first Trading Day on or after May 1, 2001.

                  (l) "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 on 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 on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;

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                               (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 Offering 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").

                  (m) "Offering Date" shall mean the first Trading Day of each
Offering Period.

                  (n) "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 1st and
November 1st of each year and terminating on the first Trading Day on or after
the May 1st and November 1st Offering Period commencement date approximately
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 first Trading Day on or after the earlier
of (i) November 1st, 2002 or (ii) twenty-seven (27) months from the beginning of
the first Offering Period. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.

                  (o) "Plan" shall mean this 2000 Employee Stock Purchase Plan.

                  (p) "Purchase Period" shall mean the approximately six (6)
month period commencing on one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Offering Date and end with the next Exercise Date.

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

                  (r) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

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

         3. Eligibility.

                  (a) First Offering Period. Any individual who is an Eligible
Employee immediately prior to the first Offering Period shall be automatically
enrolled in the first Offering Period.

                  (b) Subsequent Offering Periods. Any Eligible Employee on a
given Offering Date shall be eligible to participate in the Plan.

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                  (c) Limitations. Any provisions of the Plan to the contrary
notwithstanding, no Eligible Employee shall be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Eligible Employee (or
any other person whose stock would be attributed to such Eligible 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 1st and November 1st 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 first Trading Day on or after
the earlier of (i) November 1, 2002 or (ii) twenty-seven (27) months from the
beginning of the first Offering Period. The Board shall have the power to change
the duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without shareholder approval if such change is
announced prior to the scheduled beginning of the first Offering Period to be
affected thereafter.

         5. Participation.

                  (a) First Offering Period. An Eligible Employee shall be
entitled to participate in the first Offering Period only if such individual
submits a subscription agreement authorizing payroll deductions in the form of
Exhibit A to this Plan (i) no earlier than the effective date of the Form S-8
registration statement with respect to the issuance of Common Stock under this
Plan and (ii) no later than five (5) business days from the effective date of
such S-8 registration statement (the "Enrollment Window"). An Eligible
Employee's failure to submit the subscription agreement during the Enrollment
Window shall result in the automatic termination of such individual's
participation in the Offering Period.

                  (b) Subsequent Offering Periods. 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 Offering Date.

         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 10% of the Compensation
which he or she receives on each pay day during the Offering Period; provided,
however, that should a pay day occur on an Exercise Date, a participant shall
have the payroll deductions made on such day applied to his or her account under
the new

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Offering Period or Purchase Period, as the case may be. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

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

                  (c) 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.

                  (d) 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 Administrator may, in its discretion, limit the
nature and/or number of participation rate changes during any Offering 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.

                  (e) 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.

                  (f) 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, 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 Eligible Employee.

         7. Grant of Option. On the Offering 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 Eligible 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 Eligible Employee be permitted to purchase during each
Purchase Period more than 10,000 shares of the Company's Common Stock (subject
to any adjustment pursuant to Section 19), and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 12
hereof. The

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Eligible Employee may accept the grant of such option by turning in a completed
Subscription Agreement (attached hereto as Exhibit A) to the Company on or prior
to an Offering Date, or with respect to the first Offering Period, prior to the
last day of the Enrollment Window. The Administrator may, for future Offering
Periods, increase or decrease, in its absolute discretion, the maximum number of
shares of the Company's Common Stock an Eligible 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 funds 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 Administrator 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 Offering Date of the applicable Offering Period, or (ii)
the number of shares available for sale under the Plan on such Exercise Date,
the Administrator 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 Offering 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 Offering 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 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 Offering 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
shareholders subsequent to such Offering Date.

         9. Delivery. As soon as reasonably practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant the shares purchased upon exercise of his or her option in a
form determined by the Administrator.

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         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. 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. In the event a participant ceases to be
an Eligible Employee of the Company or any Designated Subsidiary, as applicable,
his or her option shall remain exercisable for a period of three (3) months from
the date of such Eligible Employee's termination. Upon the expiration of such
three (3) month period or a date prior to the expiration of such three (3) month
period if requested by the participant, any payroll deductions credited to such
participant's account during the Offering Period but not yet used to purchase
shares under the Plan 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.

         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, the maximum number of shares of
the Company's Common Stock which shall be made available for sale under the Plan
shall be 500,000 shares plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2001, equal to the lesser of (i)
1,600,000 shares, (ii) 2% of the outstanding shares on such date or (iii) an
amount determined by the Administrator.

                  (b) Until the shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), a participant shall only have the rights of an unsecured
creditor with respect to such shares, and no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to such shares.

                  (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.

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         14. Administration. The Administrator shall administer the Plan and
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 Administrator 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.

                  (c) All beneficiary designations shall be in such form and
manner as the Administrator may designate from time to time.

         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.

         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. Until
shares are issued, participants shall only have the rights of an unsecured
creditor.

         18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Eligible 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.

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         19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Change of Control.

                  (a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan,
the maximum number of shares each participant may purchase each Purchase Period
(pursuant to Section 7), the number of shares that may be added annually to the
shares reserved under the Plan (pursuant to Section 13(a)(i)), 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 change 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 Administrator, 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 Administrator. The
New Exercise Date shall be before the date of the Company's proposed dissolution
or liquidation. The Administrator 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 Change of Control. In the event of a merger or
Change of Control, 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 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 merger or Change of Control. The
Administrator 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.

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         20. Amendment or Termination.

                  (a) The Administrator may at any time and for any reason
terminate or amend the Plan. Except as otherwise provided in the Plan, no such
termination can affect options previously granted, provided that an Offering
Period may be terminated by the Administrator on any Exercise Date if the
Administrator determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its shareholders. 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 shareholder approval in such a manner
and to such a degree as required.

                  (b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Administrator shall be entitled to change the 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 Administrator determines in its sole discretion advisable which are
consistent with the Plan.

                  (c) In the event the Administrator 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) increasing 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 and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.

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         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
shareholders of the Company. It shall continue in effect until 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 Offering 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.

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                                    EXHIBIT A

                             SIMPLEX SOLUTIONS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

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

1.       ____________________ hereby elects to participate in the Simplex
         Solutions, Inc. 2000 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 (from 0 to 10%) during the
         Offering Period in accordance with the Employee Stock Purchase Plan.
         (Please note 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 shareholder 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 (Eligible Employee or Eligible 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 Offering 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>   13
         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

         _________________________     _________________________________________
         Percentage Benefit                          (Address)

         NAME: (please print)
         _______________________________________________________________________
                               (First)              (Middle)           (Last)

         _________________________     _________________________________________
         Relationship

         _________________________     _________________________________________
         Percentage of Benefit                       (Address)

                                       -2-
<PAGE>   14
         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)

                                       -3-
<PAGE>   15
                                    EXHIBIT B

                             SIMPLEX SOLUTIONS, INC.

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

         The undersigned participant in the Offering Period of the Simplex
Solutions, Inc. 2000 Employee Stock Purchase Plan which began on ____________,
______ (the "Offering 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:___________________________________<PAGE>   1

                                                                    EXHIBIT 10.6

================================================================================

                             SIMPLEX SOLUTIONS, INC.

                       SERIES E PREFERRED STOCK AGREEMENT

                                 APRIL 6, 1998

================================================================================

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
 1. PURCHASE AND SALE OF PREFERRED STOCK .................................................1

      1.1 Sale and Issuance of Series E Preferred Stock ..................................1
      1.2 Closing.........................................................................1

 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................................2

      2.1 Organization, Good Standing and Qualification ..................................2
      2.2 Capitalization .................................................................2
      2.3 Subsidiaries ...................................................................3
      2.4 Authorization ..................................................................3
      2.5 Valid Issuance of Securities ...................................................4
      2.6 Governmental Consents ..........................................................4
      2.7 Litigation......................................................................4
      2.8 Patents and Trademarks .........................................................5
      2.9 Compliance with Other Instruments ..............................................5
      2.10 Agreements; Action ............................................................5
      2.11 Disclosure ....................................................................6
      2.12 Rights of Registration and First Offer ........................................6
      2.13 Corporate Documents ...........................................................6
      2.14 Title to Property and Assets ..................................................6
      2.15 Financial Statements ..........................................................7
      2.16 Changes........................................................................7
      2.17 Employee Benefit Plans ........................................................8
      2.18 Tax Returns and Payments ......................................................8
      2.19 Insurance .....................................................................8
      2.20 Labor Agreements and Actions ..................................................9
      2.21 Proprietary Information and Inventions Agreements .............................9
      2.22 Permits .......................................................................9
      2.23 Tax Elections ................................................................10
      2.24 Environmental Matters ........................................................10
      2.25 Interested Party Transactions ................................................10

 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ....................................10

      3.1 Authorization .................................................................11
      3.2 Purchase Entirely for Own Account .............................................11
      3.3 Disclosure of Information .....................................................11
      3.4 Restricted Securities .........................................................11
      3.5 No Public Market ..............................................................12
      3.6 Legends .......................................................................12
      3.7 Accredited Investor ...........................................................12
</TABLE>

<PAGE>   3
                               TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
      3.8 Brokers or Finders ............................................................12
      3.9 Foreign Investors .............................................................12

 4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT EACH CLOSING ...........................13

      4.1 First Closing .................................................................13

 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT EACH CLOSING .............................15

      5.1 Representations and Warranties ................................................15
      5.2 Qualifications ................................................................15
      5.3 Covenants......................................................................15
      5.4 Minimum Purchase ..............................................................15
      5.5 Minimum Purchase at Second Closing ............................................15
      5.6 Minimum Purchase at Third Closing .............................................15

 6. SPECIAL COVENANTS ...................................................................15

      6.1 Issuances of Additional Stock .................................................15
      6.2 Notice of Certain Corporate Transactions ......................................16

 6.3 RIGHT OF FIRST OFFER ON FIRST PUBLIC OFFERING ......................................17

      6.4 Termination of Covenants ......................................................17

 7. MISCELLANEOUS........................................................................18

      7.1 Survival of Warranties ........................................................18
      7.2 Transfer; Successors and Assigns ..............................................18
      7.3 Governing Law .................................................................18
      7.4 Counterparts ..................................................................18
      7.5 Titles and Subtitles ..........................................................18
      7.6 Notices .......................................................................18
      7.7 Finder's Fee ..................................................................19
      7.8 Attorney's Fees ...............................................................19
      7.9 Amendments and Waivers ........................................................19
      7.10 Severability .................................................................19
      7.11 Delays or Omissions ..........................................................19
      7.12 Entire Agreement .............................................................20
      7.13 Corporate Securities Law .....................................................20
      7.14 Waiver of Right of First Offer ...............................................20
      7.15 Waiver of Conflicts ..........................................................20
      7.16 Expenses .....................................................................21
      7.17 Aggregation of Stock .........................................................21
</TABLE>

                                      -ii-
<PAGE>   4
                                TABLE OF CONTENTS
                                   (continued)

Exhibits
       Exhibit A - Schedule of Purchasers
       Exhibit B - Form of Amended and Restated Certificate of Incorporation
       Exhibit C - Form of Addendum Agreement
       Exhibit D - Schedule of Exceptions
       Exhibit E - Form of Fourth Amended and Restated Rights Agreement
       Exhibit F - Form of Legal Opinion of Venture Law Group
       Exhibit G - Form of Series E Preferred Stock Warrant

                                     -iii-
<PAGE>   5
                             SIMPLEX SOLUTIONS, INC.

                   SERIES E PREFERRED STOCK PURCHASE AGREEMENT

       THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of April 6, 1998 by and among Simplex Solutions, Inc., a Delaware
corporation (the "COMPANY") and the investors listed on Exhibit A attached
hereto including Intel Corporation (the "CORPORATE INVESTOR"), (each, including
the Corporate Investor, a "PURCHASER" and together the "PURCHASERS").

       THE PARTIES HEREBY AGREE AS FOLLOWS:

       1. Purchase and Sale of Preferred Stock.

              1.1 Sale and Issuance of Series E Preferred Stock.

                    (a) On or before the First Closing (as defined below), the
Company will have authorized the issuance, pursuant to the terms of this
Agreement, of up to 3,253,336 shares of the Company's Series E Preferred Stock,
and will adopt and file with the Secretary of State of the State of Delaware the
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit B (the "RESTATED CERTIFICATE").

                    (b) Subject to the terms and conditions of this Agreement,
each Purchaser agrees to purchase at the Closing and the Company agrees to sell
and issue to each Purchaser at the Closing that number of shares of Series E
Preferred Stock set forth opposite each such Purchaser's name on Exhibit A
attached hereto at a purchase price of $3.75 per share (the "STOCK").

              1.2 Closing.

                    (a) The initial purchase and sale of the Stock shall take
place at the offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park,
California, at 1:00 p.m., on April 6, 1998, or at such other time and place as
the Company and the Purchasers mutually agree upon, orally or in writing (which
time and place are designated as the "FIRST CLOSING"). The second and third
purchase and sale of the Stock shall take place at the same place as the First
Closing and on the date that is thirty (30) and sixty (60) days after the date
of the First Closing, respectively (the "SECOND CLOSING" and the "THIRD
CLOSING", respectively) (The First, Second and Third Closings are each referred
to herein as the "CLOSING"). At each Closing, the Company shall deliver to each
of the Purchasers certificates representing the Series E Preferred Stock which
such Purchasers are purchasing against payment of the purchase price therefor by
check or wire transfer payable to the Company.

                    (b) If the full number of authorized shares of Series E
Preferred Stock are not sold at the First Closing, excluding shares to be sold
in the Second and Third Closings, the Company shall have the right, at any time
on or prior to the date thirty (30) days following

                                      -1-
<PAGE>   6
the First Closing, to sell the remaining authorized shares of Series E Preferred
Stock to one or more additional investors approved by the Company's Board of
Directors; provided, however, that any such additional investor shall be
required to execute an Addendum Agreement substantially in the form attached
hereto as Exhibit C. Any additional investors so acquiring shares of Series E
Preferred Stock shall be considered a "Purchaser" for purposes of this
Agreement, and any securities so acquired by such additional investors shall be
considered "Stock" for purposes of this Agreement and all other agreements
contemplated hereby.

       2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit D, specifically identifying
the relevant subsection hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:

              2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own its properties and assets and to carry on its business as now
conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business or
properties.

              2.2 Capitalization. The authorized capital of the Company
consists, or will consist, immediately prior to the First Closing, solely of:

                    (i) Preferred Stock. 14,000,000 shares of Preferred Stock,
of which (a) 4,278,854 shares have been designated Series A Preferred Stock, all
of which are issued and outstanding, (b) 1,625,924 shares have been designated
Series B Preferred Stock, 1,600,284 shares of which are issued and outstanding,
(c) 1,200,000 shares of which have been designated Series C Preferred Stock,
1,180,000 shares of which are issued and outstanding, (d) 2,250,000 shares of
which have been designated Series D Preferred Stock, 2,213,781 shares of which
are issued and outstanding and (e) 4,000,000 shares of which have been
designated Series E Preferred Stock, none of which are issued and outstanding
prior to the Closing. The rights, privileges and preferences of the Preferred
Stock are as stated in the Restated Certificate.

                    (ii) Common Stock. 34,000,000 shares of Common Stock, of
which 6,998,746 shares are issued and outstanding.

                    (iii) Except for (A) the conversion privileges of the
Preferred Stock, (B) 25,640 shares of Series B Preferred Stock subject to an
outstanding warrant to purchase such stock, (C) 20,000 shares of Series C
Preferred Stock subject to an outstanding warrant to purchase such stock, (D)
20,000 shares of Series D Preferred Stock subject to an outstanding warrant to
purchase such stock, (E) up to 533,333 shares of Series E Preferred Stock
subject to the warrant attached hereto as Exhibit G to be issued to the
Corporate Investor in connection with this Agreement, (F) options outstanding to
purchase 1,448,597 shares of the Company's Common Stock under the Company's 1995
Stock Plan, (G) the right of first offer held by certain security holders set
forth in Section 3 of the Rights Agreement (as defined below) and in

                                      -2-
<PAGE>   7
Section 6 of this Agreement, (H) the right of first refusal of the Company set
forth in Article XII of the Company's Bylaws, and (I) the Company's right to
repurchase shares of Common Stock held by certain employees, consultants and
directors of the Company upon the termination of their relationship as an
employee, consultant or director of the Company, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock. Apart from the exceptions noted in
this Section 2.2(iii) or in the Schedule of Exceptions, no shares (including the
Stock) of the Company's outstanding capital stock, or stock issuable upon
exercise or exchange of any outstanding options or other stock issuable by the
Company, are subject to any rights of first refusal or other rights to purchase
such stock (whether in favor of the Company or any other person), pursuant to
any agreement or commitment of the Company.

                    (iv) All issued and outstanding shares of the Company's
Common Stock and Preferred Stock have been duly authorized, fully paid and are
nonassessable and such shares of such capital stock and all options and other
securities have been issued in compliance with all applicable federal and state
securities laws including, without limitation, the anti-fraud provisions
thereof.

                    (v) The Company has reserved 4,000,000 shares of its Common
Stock for issuance upon conversion of the shares of Series E Preferred Stock and
has reserved 5,553,200 shares of its Common Stock for issuance under the
Company's 1995 Stock Plan.

                    (vi) Schedule 2.2 of the Schedule of Exceptions sets forth a
complete listing of all outstanding stockholders as of the date hereof.

              2.3 Subsidiaries. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.

              2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, and the Fourth Amended
and Restated Rights Agreement in the form attached hereto as Exhibit E (the
"RIGHTS AGREEMENT" and together with the Agreement, the "AGREEMENTS", the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance, reservation of issuance and delivery of the Stock and
the Common Stock issuable upon conversion of the Stock (the Stock and the Common
Stock issuable upon conversion of the Stock or any securities issuable upon
conversion of such securities are collectively referred to as the "SECURITIES")
has been taken or will be taken prior to the Closing, and the Agreements, when
executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditor's rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (ii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws. Except as noted

                                      -3-
<PAGE>   8
in Section 2.2(iii) or in the Schedule of Exceptions, the Stock is not subject
to any preemptive right or rights of first refusal.

              2.5 Valid Issuance of Securities. The Stock that is being issued
to such Purchasers hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement, the Rights
Agreement and applicable state and federal securities laws. Based in part upon
the representations of such Purchasers in this Agreement and subject to the
provisions of Section 2.6 below, the Stock will be issued in compliance with all
applicable federal and state securities laws. The Common Stock issuable upon
conversion of the Stock has been duly and validly reserved for issuance, and
upon issuance in accordance with the terms of the Restated Certificate, shall be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Rights
Agreement and applicable state and federal securities laws and will be issued in
compliance with all applicable federal and state securities laws.

              2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except (i) the filing of the Restated
Certificate with the Secretary of State of the State of Delaware and (ii) such
filings as may be required under applicable state and federal securities laws,
which filings will be timely filed within the applicable periods therefor.

              2.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company, its
activities, properties or assets or, to the best knowledge of the Company,
against any officer, director or employee of the Company in connection with such
officer's, director's or employee's relationship with, or actions taken on
behalf of the Company, that questions the validity of the Agreements or the
right of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition or
affairs of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. The Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company currently pending or which the Company intends to initiate.

              2.8 Patents and Trademarks. To the best of the Company's
knowledge, the Company has full title and ownership of, or license to, all
patents, patent applications, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights, formulas, designs,
know-how and processes (collectively the "PROPRIETARY ASSETS") necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement of the rights of others. There are no outstanding options,
licenses, or agreements of

                                      -4-
<PAGE>   9
any kind relating to the foregoing, nor is the Company bound by or a party to
any options, licenses or agreements of any kind with respect to Proprietary
Assets of any other person or entity. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity.

              2.9 Compliance with Other Instruments.

                    (a) The Company is not in violation or default of any
provisions of its Restated Certificate or Bylaws or of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound
or of any provision of federal or state statute, rule or regulation applicable
to the Company. The execution, delivery and performance of the Agreements and
the consummation of the transactions contemplated hereby or thereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company.

                    (b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution or other agreement.

              2.10 Agreements; Action.

                    (a) There are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.

                    (b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company is a party or by which it is bound
that (i) involve obligations (contingent or otherwise) of, or payments to, the
Company in excess of, $50,000, (ii) involve the license of any patent,
copyright, trade secret or other proprietary right to or from the Company, or
(iii) are not terminable upon thirty (30) days notice.

                    (c) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred any indebtedness for money borrowed
or incurred any other liabilities individually in excess of $50,000 or in excess
of $100,000 in the aggregate, (iii) assumed or guaranteed any indebtedness with
respect to which the Company may become directly or indirectly liable, (iv) made
any loans or advances to any person, other than ordinary advances for travel
expenses, or (v) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.

                     (d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws,

                                      -5-
<PAGE>   10
that adversely affects its business as now conducted or as proposed to be
conducted, its properties or its financial condition.

                     (e) The Company has not engaged in the past three (3)
months in any discussion (i) with any representative of any corporation,
partnership, association or other business entity or any individual regarding
the merger of the Company with or into any such corporation, partnership,
association or other business entity or any individual, (ii) with any
corporation, partnership, association or other business entity or any individual
regarding the sale, conveyance or disposition of all or substantially all of the
assets of the Company or a transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the Company is
disposed of, or (iii) regarding any other form of liquidation, dissolution or
winding up of the Company.

              2.11 Disclosure. The Company has fully provided such Purchasers
with all the information that such Purchasers have requested for deciding
whether to acquire the Securities and all information which the Company believes
is reasonably necessary to enable such Purchasers to make such decision. No
representation or warranty of the Company contained in this Agreement, the
Exhibits attached hereto or any certificate furnished or to be furnished to such
Purchasers at the Closing (when read together) contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.

              2.12 Rights of Registration and First Offer. Except as
contemplated herein, or in the Agreements hereto, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity.

              2.13 Corporate Documents. The Restated Certificate and Bylaws of
the Company are in the form provided to counsel for such Purchasers.

              2.14 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, pledges, security interests, liens,
loans and encumbrances, except such encumbrances and liens which arise in the
ordinary course of business and do not materially impair the Company's ownership
or use of such property or assets. With respect to the property and assets it
leases, the Company is in compliance with such leases and, to the best of its
knowledge, holds a valid leasehold interest in such property and assets free of
any liens, security interests, claims or encumbrances.

              2.15 Financial Statements. The Company has delivered to each
Purchaser unaudited financial statements (balance sheet, and profit and loss
statement) for the eleven-month period ended February 28, 1998 (the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and with each other, except that the Financial
Statements may not contain all footnotes required by generally accepted
accounting principles ("GAAP"). The Financial Statements fairly present the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein, subject to normal year-end

                                      -6-
<PAGE>   11
audit adjustments, which are neither individually nor in the aggregate material.
Except as set forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to February 28, 1998, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.

              2.16 Changes. Since February 28, 1998, there has not been:

                    (a) any change in the assets, liabilities, financial
condition, or operating results or business of the Company from that reflected
in the Financial Statements, except changes in the ordinary course of business
that have not been, either individually or in the aggregate, materially adverse;

                    (b) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the business, properties,
prospects, financial condition, operating results, prospects or business of the
Company (as such business is presently conducted and as it is proposed to be
conducted);

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

                    (d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects, financial condition, operating results or business of the Company (as
such business is presently conducted and as it is proposed to be conducted);

                    (e) any material change to a material contract or agreement
by which the Company or any of its assets is bound or subject;

                    (f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;

                    (g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                    (h) any resignation or termination of employment of any key
officer of the Company; and the Company, to the best of its knowledge, does not
know of any impending resignation or termination of employment of any such
officers;

                    (i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;

                                      -7-
<PAGE>   12
                    (j) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable;

                    (k) any loans or guarantees made by the Company to or for
the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

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

                    (m) to the best of the Company's knowledge, any other event
or condition of any character that might materially and adversely affect the
assets, operating results, business, properties, prospects or financial
condition of the Company (as such business is presently conducted and as it is
proposed to be conducted); or

                    (n) any arrangement or commitment by the Company to do any
of the things described in this Section 2.16.

              2.17 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.

              2.18 Tax Returns and Payments. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due.

              2.19 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.

              2.20 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company. To the best of its knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity laws and with other laws related to employment.

                                      -8-
<PAGE>   13
              2.21 Proprietary Information and Inventions Agreements. Each
employee, consultant and officer of the Company has executed an agreement with
the Company regarding confidentiality and proprietary information substantially
in the form or forms delivered to the counsel for such Purchasers. The Company,
after reasonable investigation, is not aware that any of its employees or
consultants is in violation thereof, and the Company will use its best efforts
to prevent any such violation. All consultants to or vendors of the Company with
access to confidential information of the Company are parties to a written
agreement substantially in the form or forms provided to counsel for such
Purchasers under which, among other things, each such consultant or vendor is
obligated to maintain the confidentiality of confidential information of the
Company. The Company, after reasonable investigation, is not aware that any of
its consultants or vendors are in violation thereof, and the Company will use
its best efforts to prevent any such violation. The Company is not aware that
any of its employees, officers, founders, consultants or contractors are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or are subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of his
or her best efforts to promote the interests of the Company or that would
conflict with the Company's business as conducted or as proposed to be conducted
or that would prevent any such employees, officers, consultants or contractors
from assigning inventions to the Company as set forth in the Proprietary
Information and Inventions Agreement.

              2.22 Permits. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, operating results or financial condition of the
Company and believes that it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
The Company is not in default in any material respect under any of such
franchises, permits, licenses or other similar authority.

              2.23 Tax Elections. The Company has not elected pursuant to the
Internal Revenue Code of 1986, as amended (the "Code"), to be treated as an "S"
corporation or a collapsible corporation pursuant to Section 341 (f) or Section
1362(a) of the Code, nor has it made any other elections pursuant to the Code
(other than elections which related solely to matters of accounting,
depreciation or amortization) which would have a material affect on the Company,
its financial condition, its business as presently conducted or presently
proposed to be conducted or any of its properties or material assets.

              2.24 Environmental Matters. During the period that the Company has
owned or leased its properties and facilities, (a) to the Company's best
knowledge, there have been no disposals, releases or threatened releases of
Hazardous Materials (as defined below) on, from or under such properties or
facilities, (b) neither the Company nor, to the Company's knowledge, any third
party, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials. The Company has no knowledge of any presence,
disposals, releases or threatened releases of Hazardous Materials on, from or
under any of such properties or facilities, which may have occurred prior to the
Company having taken possession of any of such properties or facilities.

                                      -9-
<PAGE>   14
For purposes of this Agreement, the terms "disposal", "release", and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et SEQ., as amended ("CERCLA"). For the purposes of this Section,
"Hazardous Materials" shall mean any hazardous or toxic substance, material or
waste which is regulated under, or defined as a "hazardous substance",
"pollutant", "contaminant", "toxic chemical", "hazardous material", "toxic
substance", or "hazardous chemical" under (1) CERCLA; (2) the Emergency Planning
and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (3) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; (4) the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (5) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.; (6)
regulations promulgated under any of the above statutes; or (7) any applicable
state or local statute, ordinance, rule, or regulation that has a scope or
purpose similar to those statutes identified above.

              2.25 Interested Party Transactions. To the best knowledge of the
Company, no officer or director of the Company or any "affiliate" or "associate"
(as those terms are defined in Rule 405 promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT") of any such person has had, either
directly or indirectly, a material interest in: (i) any person or entity which
purchases from or sells, licenses or furnishes to the Company any goods,
property, technology, intellectual or other property rights or services; or (ii)
any contract or agreement to which the Company is a party or by which it may be
bound or affected.

       3. Representations and Warranties of the Purchasers. Each Purchaser
hereby represents and warrants to the Company that:

              3.1 Authorization. This Agreement when executed and delivered by
such Purchaser will constitute a valid and legally binding obligation of such
Purchaser, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(ii) to the extent the indemnification provisions contained in the Rights
Agreement may be limited by applicable federal or state securities laws.

              3.2 Purchase Entirely for Own Account. This Agreement is made with
such Purchaser in reliance upon such Purchaser's representation to the Company,
which by such Purchaser's execution of this Agreement, such Purchaser hereby
confirms, that the Stock (or Common Stock issuable upon conversion thereof) to
be acquired by such Purchaser will be acquired for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Purchaser further
represents that such Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Stock (or the Common Stock issuable upon conversion thereof). Such Purchaser
represents that

                                      -10-
<PAGE>   15

it has full power and authority to enter into this Agreement. Such Purchaser has
not been formed for the specific purpose of acquiring the Stock (and the Common
Stock issuable upon conversion thereof).

              3.3 Disclosure of Information. Such Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs and
the terms and conditions of the offering of the Stock with the Company's
management and has had an opportunity to review the Company's facilities. Such
Purchaser understands that such discussions, as well as the written information
issued by the Company, were intended to describe the aspects of the Company's
business which it believes to be material. Such Purchaser further understands
that there can be no assurance that the Company will be able to achieve the
results contained in any financial projections or other forward-looking
information provided to the Purchaser.

              3.4 Restricted Securities. Such Purchaser understands that the
Stock (and the Common Stock issuable upon conversion thereof) has not been, and
will not be, registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of such Purchaser's representations as expressed herein. Such Purchaser
understands that the Stock (and the Common Stock issuable upon conversion
thereof) are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Stock (and the Common Stock issuable upon conversion
thereof) may be resold without registration under the Securities Act only in
certain limited circumstances. Such Purchaser acknowledges that the Stock (and
the Common Stock issuable upon conversion thereof) must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Such Purchaser is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a
"broker's transaction" or in transactions directly with a "market maker" (as
provided by Rule 144(f)) and the number of shares being sold during any
three-month period not exceeding specified limitations.

              3.5 No Public Market. Such Purchaser understands that no public
market now exists for any of the securities issued by the Company, that the
Company has made no assurances that a public market will ever exist for the
Stock or the underlying Common Stock.

              3.6 Legends. Such Purchaser understands that the Stock (and the
Common Stock issuable upon conversion thereof), and any securities issued in
respect thereof or exchange therefor, may bear one or all of the following
legends:

                    (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR

                                      -11-
<PAGE>   16
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

                    (b) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.

              3.7 Accredited Investor. Such Purchaser is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

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

              3.9 Foreign Investors. If the Purchaser is not a United States
person, such Purchaser hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale, or transfer of the Securities. Such
Purchaser's subscription and payment for, and his or her continued beneficial
ownership of the Securities, will not violate any applicable securities or other
laws of the Purchaser's jurisdiction.

       4. Conditions of the Purchasers' Obligations at each Closing.

              4.1 First Closing. The obligations of each Purchaser to the
Company under this Agreement are subject to the fulfillment, on or before the
First Closing, of each of the following conditions, unless otherwise waived:

                    (a) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
First Closing with the same effect as though such representations and warranties
had been made on and as of the date of the First Closing.

                    (b) Performance. The Company shall have performed and
complied with all covenants, agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the First Closing.

                    (c) Compliance Certificate. The President of the Company
shall deliver to such Purchasers at the First Closing a certificate, signed by
the President and Chief Financial Officer of the Company, certifying that the
conditions specified in Sections 4.1(a) and (b) have been fulfilled.

                                      -12-
<PAGE>   17
                    (d) Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Stock pursuant to, and in performance of, this Agreement shall
be obtained and effective as of the First Closing.

                    (e) Opinion of Company Counsel. Such Purchasers shall have
received from Venture Law Group, counsel for the Company, an opinion, dated as
of the First Closing, in substantially the form of Exhibit F.

                    (f) Board of Directors. As of the First Closing, the Board
shall be comprised of Aki Fujimura, Penelope Herscher, Harvey C. Jones, Jr., F.
Gibson Myers, Jr., Richard Newton, and Resve Saleh.

                    (g) Rights Agreement. The Company and each Purchaser shall
have executed and delivered the Rights Agreement in substantially the form
attached as Exhibit E.

                    (h) Restated Certificate. The Company shall have filed the
Restated Certificate with the Secretary of State of Delaware on or prior to the
First Closing Date, which shall continue to be in full force and effect as of
the First Closing Date.

                    (i) Minimum Purchase. At the First Closing, the Purchasers
(including the Corporate Investor) shall purchase Stock carrying an aggregate
purchase price of not less than $7 million, of which the Corporate Investor
shall purchase Stock carrying an aggregate purchase price of not less than $4
million.

                    (j) Warrant. The Company shall have issued the Series E
Preferred Stock Warrant in the form attached hereto as Exhibit G to the
Corporate Investor.

                    (k) Consents and Waivers. The Company shall have obtained
any and all consents and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement.

              4.2 Second and Third Closing. The obligations of the Corporate
Investor to the Company under this Agreement with respect to the Second and
Third Closings are subject to the fulfillment on the Second and Third Closings,
respectively, of the following conditions, unless otherwise waived:

                    (a) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 and made on and as of the date
of the First Closing shall remain true as of the date of the First Closing.

                    (b) Performance. The Company shall have performed and
complied with, and shall not be in breach of any covenants, agreements,
obligations and conditions contained in this Agreement and the Rights Agreement,
including without limitation, the confidentiality provisions set forth in
Section 4 of the Rights Agreement, that are required to be performed or complied
with in all material respects as of such Closing.

                    (c) Compliance Certificate. The President of the Company
shall deliver to the Corporate Investor at each such Closing a certificate,
signed by the President and Chief Executive Officer of the Company, certifying
that the conditions specified in Sections 4.2(a) and (b) have been fulfilled.

                                      -13-
<PAGE>   18
       5. Conditions of the Company's Obligations at each Closing. The
obligations of the Company to each Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

              5.1 Representations and Warranties. The representations and
warranties of each Purchaser contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.

              5.2 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.

              5.3 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by each Purchaser on or prior to the Closing
shall have been performed or complied with in all material respects.

              5.4 Minimum Purchase at First Closing. At, and as a condition to,
the First Closing, the Purchasers shall purchase Stock carrying an aggregate
purchase price of not less than $7 million, of which the Corporate Investor
shall purchase Stock carrying an aggregate purchase price of not less than $4
million.

              5.5 Minimum Purchase at Second Closing. At, and as a condition to,
the Second Closing, the Corporate Investor shall purchase Stock carrying an
aggregate purchase price of no less than $2 million.

              5.6 Minimum Purchase at Third Closing. At, and as a condition to,
the Third Closing, the Corporate Investor shall purchase Stock carrying an
aggregate purchase price of no less than $1 million.

       6. Special Covenants

              6.1 Issuances of Additional Stock. The Company agrees that it
shall not, without the prior written consent of the holders of a majority of the
Company's outstanding shares of Series E Preferred Stock, issue to officers,
directors and employees of, or consultants, advisors or other persons performing
services for, the Company any shares of Common Stock (including shares of Common
Stock deemed to have been issued pursuant to Article IV, Section B, subsection
3(c)(i)(E) of the Restated Certificate) such that the total number of shares
issued to all such persons (net of shares reissued under a Company plan after
the initial issuance and return of such shares to such Company plan, and
excluding 4,337,200 shares issued prior to the Company's adoption of its 1995
Stock Plan and any shares reissued in respect thereof) exceeds 7,553,200 shares
(each as adjusted to stock splits, stock dividends, recapitalizations, and the
like) without consideration or for a consideration per share less than the
Series E Conversion Price (as defined in the Restated Certificate) in effect
immediately prior to such issuance, excluding any shares of Common Stock issued
or issuable under subsections 3(c)(ii)(A), (C), (D)

                                      -14-
<PAGE>   19
or (E) of Article IV, Section B of the Restated Certificate, or issued in
respect of exercisable or convertible securities.

              6.2 Notice of Certain Corporate Transactions. In the event of a
Corporate Transaction (as defined below), the Company shall give written notice
(the "TRANSACTION NOTICE") to the Corporate Investor on the earlier of (i) a
date at least ten (10) business days prior to entering into a binding agreement
with respect to, or effecting the consummation of, a Corporate Transaction, or,
(ii) if applicable, a date no more than five (5) business days following the
date on which the Company (A) enters into a non-binding letter of intent
relating to a Corporate Transaction; (B) enters into an agreement with
non-solicitation or no-shop provisions which preclude the Company from engaging
in discussions with or soliciting a third-party with regard to a Corporate
Transaction; or (C) has reached substantial agreement on the material terms of a
Corporate Transaction with respect to price, form of consideration, structure of
transaction, indemnification and escrow, containing a description of the
Corporate Transaction in reasonable detail, including the names of the third
parties involved in the Corporate Transaction, in order to provide the Corporate
Investor an opportunity to make a competing bid. The Company shall allow
reasonable access to its officers and directors to discuss with the Corporate
Investor the proposed Corporate Transaction as soon as practicable, but in no
event later than three (3) business days after the Transaction Notice is given.
Within ten (10) business days after the Transaction Notice is given, the
Corporate Investor may deliver a competing bid in writing to the Company. The
Company shall give such competing bid due consideration consistent with the
fiduciary obligations of its Board of Directors, and shall in good faith either
approve or disapprove such competing bid before approving a Corporate
Transaction, or entering into any agreement with respect to a Corporate
Transaction, with any person or entity other than the Corporate Investor. During
such ten (10) business day notice period, the Corporate Investor shall be
entitled to conduct due diligence with the reasonable cooperation of the
Company. If the Corporate Investor has not delivered such bid within ten (10)
business days after the Transaction Notice is given, the Company shall be free
to enter into a binding agreement with respect to a Corporate Transaction with
such other person(s) or entity(ies) and subsequently consummate such Corporate
Transaction, provided that such binding agreement is entered into within sixty
(60) days following termination of such ten (10) business day notice period. The
Company shall not enter into a binding agreement with respect to, or effect the
consummation of, a Corporate Transaction until expiration of the ten (10)
business day notice period stated above, unless the Corporate Investor has
waived its right to the Transaction Notice. "CORPORATE TRANSACTION" shall mean
any of the following, whether accomplished through one or a series of related
transactions: (i) the sale of all or substantially all of the assets of the
Company, (ii) the acquisition of the Company by means of a merger,
consolidation, share purchase or exchange, or other form of corporate
reorganization or transaction in which the holders of the Company's outstanding
voting securities immediately prior to such transaction own immediately after
such transaction securities representing less than fifty percent (50%) of the
voting power of the corporation or other entity surviving such transaction, or
(iii) a transaction or series of related transactions that would result in a
greater than twenty-five percent (25%) change in ownership in the total
outstanding number of shares of the Company's voting securities.

                                      -15-
<PAGE>   20
              6.3 Right of First Offer on First Public Offering. In an IPO, each
holder of shares of Series E Preferred Stock shall be entitled to purchase that
portion of the Common Stock to be issued in such offering such that the number
of shares of Common Stock purchased by such holder in such offering constitutes
one-fourth of the number of shares of Common Stock held by such holder
immediately prior to the IPO (such shares of Common Stock to consist solely of
shares of Common Stock issued of issuable upon conversion of all shares of
Series E Preferred Stock held by such holder) (the "PROPORTIONATE SHARE");
provided, however, that the number of shares of Common Stock purchasable by all
holders of Series E Preferred Stock in the IPO shall not in any event exceed 3%
of the total number of shares to be sold in the IPO (with the Proportionate
Share for each holder of Series E Preferred Stock to be reduced proportionately
to the extent necessary to keep within such 3% limitation (the "ADJUSTED
PROPORTIONATE SHARE")). In the event that a holder of Series E Preferred Stock
does not elect to purchase his or its full Adjusted Proportionate Share, each
holder of Series E Preferred Stock that has elected to purchase his or its full
Adjusted Proportionate Share ("FULLY EXERCISING SERIES E HOLDER") shall be
entitled to purchase up to the lesser of (i) all of the remaining shares, (ii)
four times his or its Proportionate Share and (iii) a number of shares that when
divided by the fully-diluted shares of Common Stock of the Company (including
conversion and exercise of all convertible and exercisable securities)
("FULLY-DILUTED SHARES") after the IPO does not exceed the number of shares of
Common Stock held by such holder (including conversion and exercise of all
convertible and exercisable securities held by such holder) prior to the IPO
divided by the Fully-Diluted Shares. In the event of an oversubscription of such
remaining shares, such remaining shares shall be allocated among such Fully
Exercising Series E Holders pro rata based on the number of shares of Series E
Preferred Stock owned by the Fully Exercising Series E Holders. The price of
securities which each holder becomes entitled to purchase pursuant to this
paragraph shall be the same price at which such securities are proposed to be
offered to the public. Each holder of shares of Series E Preferred Stock
acknowledges that this Section 6.3 does not obligate such holder to purchase any
shares in an IPO. Each such holder further acknowledges that any offer by the
Company of shares of Common Stock pursuant to this Section 6.3 will be made
pursuant to a prospectus in accordance with the Securities Act.

              6.4 Termination of Covenants. The covenants contained in this
Section 6 shall terminate and be of no further force or effect upon the earlier
to occur of any of the following events: (i) the consummation of the sale of all
or substantially all of the assets of the Company, or the acquisition of the
Company by means of a merger, consolidation, share purchase or exchange, or
other form of corporate reorganization or transaction in which the holders of
the Company's outstanding voting securities immediately prior to such
transaction own immediately after such transaction securities representing less
than fifty percent (50%) of the voting power of the corporation or other entity
surviving such transaction, (ii) the consummation by the Company of the initial
sale of its Common Stock in a bona fide, firm commitment underwriting pursuant
to a registration statement on Form S-1 under the Securities Act (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or similar plan or a SEC
Rule 145 transaction) (an "IPO"); (iii) with respect to Sections 6.1 and 6.2
only, at such time as the Corporate Investor holds less than 500,000 shares of
the Company's Common Stock (as adjusted for stock splits, stock dividends,
recapitalization and the like, and assuming the conversion or

                                      -16-
<PAGE>   21
exercise of all securities convertible or exercisable for shares of Common
Stock); (iv) with respect to Sections 6.1 and 6.2 only, the termination or
expiration of the Software License and Technical Cooperation Agreement dated
April 6, 1998 between the Company and the Corporate Investor; or (v) the fifth
anniversary of the effective date of this Agreement.

       7. Miscellaneous.

              7.1 Survival of Warranties. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and such
Purchasers contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for a period of one (1)
year following the Closing.

              7.2 Transfer; Successors and Assigns. 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. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
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.

              7.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
entered into solely between residents of, and to be performed entirely within,
such state.

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

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

              7.6 Notices.

                    (a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
(i) such Purchasers to their respective addresses as set forth under their name
on Exhibit A attached hereto, (ii) to the Company at 521 Almanor Avenue.,
Sunnyvale, California, 94086, (408) 617-6100 (telephone), (408) 774-0285
(telefax), Attention: President, with a copy to Venture Law Group, 2800 Sand
Hill Road, Menlo Park, California, 94025, Attention: Michael W. Hall.

                    (b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.

                                      -17-
<PAGE>   22
                    (c) Any party may, by written notice to the other, alter its
address or respondent, and such notice shall be considered to have been given
five (5) days after the airmailing, telexing or telecopying thereof.

              7.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.

              7.8 Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the Addendum Agreement, the Rights Agreement or the Restated Certificate, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

              7.9 Amendments and Waivers. Any term of this Agreement may be
amended with the written consent of the Company and the holders of at least a
majority of the Common Stock issued or issuable upon conversion of the Stock.
Any amendment or waiver effected in accordance with this Section 7.9 shall be
binding upon the Purchasers and each transferee of the Stock (or the Common
Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.

              7.10 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 the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.

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

                                      -18-
<PAGE>   23
              7.12 Entire Agreement. This Agreement and the documents referred
to herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled; provided, however,
that nothing in this Agreement shall be deemed to terminate or supersede the
provisions of any confidentiality and nondisclosure agreements executed by the
parties hereto prior to the date hereof, which agreements shall continue in full
force and effect until terminated in accordance with their respective terms.

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

              7.14 Waiver of Right of First Offer. Each Purchaser, by the
execution hereof, waives any Right of First Offer that it may have with respect
to the sale and issuance of Stock contemplated by this Agreement pursuant to
Section 3.1 of that certain Third Amended and Restated Rights Agreement dated
March 20, 1997, as amended on May 1, 1997, by and among the Company, certain of
the Purchasers and certain other stockholders of the Company.

              7.15 WAIVER OF CONFLICTS. EXCEPT FOR THE CORPORATE INVESTOR, EACH
PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT VENTURE LAW GROUP, A PROFESSIONAL
CORPORATION, COUNSEL FOR THE COMPANY, HAS IN THE PAST PERFORMED AND MAY CONTINUE
TO PERFORM LEGAL SERVICES FOR CERTAIN OF THE PURCHASERS IN MATTERS UNRELATED TO
THE TRANSACTIONS DESCRIBED IN THIS AGREEMENT, INCLUDING THE REPRESENTATION OF
SUCH PURCHASERS IN VENTURE CAPITAL FINANCINGS AND OTHER MATTERS. ACCORDINGLY,
EXCEPT FOR THE CORPORATE INVESTOR, EACH PARTY TO THIS AGREEMENT HEREBY (1)
ACKNOWLEDGES THAT THEY HAVE HAD AN OPPORTUNITY TO ASK FOR INFORMATION RELEVANT
TO THIS DISCLOSURE; AND (2) GIVES ITS INFORMED CONSENT TO VENTURE LAW GROUP'S
REPRESENTATION OF CERTAIN OF THE PURCHASERS IN SUCH UNRELATED MATTERS AND TO
VENTURE LAW GROUP'S REPRESENTATION OF THE COMPANY IN CONNECTION WITH THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

              7.16. Expenses. Each party shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement and all agreements contemplated hereby.

              7.17. Aggregation of Stock. All shares of Stock held or acquired
by affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.

                                      -19-
<PAGE>   24
                            [Signature Page Follows]

                                      -20-
<PAGE>   25
       IN WITNESS WHEREOF, the parties have executed this Series E Preferred
Stock Purchase Agreement as of the date first above written.

THE COMPANY:                           SIMPLEX SOLUTIONS, INC.

                                       By:  /s/ [SIGNATURE ILLEGIBLE]
                                            ------------------------------------
                                       Title: CEO & PRESIDENT
                                              ----------------------------------
                                                          (print)

PURCHASERS:                            INTEL CORPORATION

                                       By:
                                            ------------------------------------
                                       Name:
                                              ----------------------------------
                                                          (print)

                                       MAYFIELD VII
                                       A California Limited Partnership

                                       By: Mayfield VII Management Partners,
                                       A California Limited Partnership,
                                       its General Partner

                                       By:
                                            ------------------------------------
                                       Name:
                                              ----------------------------------
                                                          (print)

[SIGNATURE PAGE TO SIMPLEX SOLUTIONS, INC. SERIES E PREFERRED STOCK PURCHASE
AGREEMENT]

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