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                                                                    EXHIBIT 10.1

                     FORM OF NUMERICAL TECHNOLOGIES, INC.

                           INDEMNIFICATION AGREEMENT



     This Indemnification Agreement ("Agreement") is made as of ______________
by and between Numerical Technologies, Inc., a Delaware corporation (which,
together with the California corporation which was its predecessor, is known
herein as the "Company"), and _______________ ("Indemnitee").

     WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;

     WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the coverage of liability
insurance has been limited;

     WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and

     WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.

     NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

     1.  Indemnification.
         ---------------

          (a) Third Party Proceedings.  The Company shall indemnify Indemnitee
              -----------------------
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other  enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) actually and reasonably incurred by Indemnitee in
connection with such action or proceeding if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful.  The termination of any action, suit or proceeding by judgment, order,
settlement
<PAGE>

conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
                              ---------------
itself, create a presumption that (i) Indemnitee did not act in good faith, (ii)
Indemnitee did not act in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company, or (iii) with respect to
any criminal action or proceeding, Indemnitee had no reasonable cause to believe
that Indemnitee's conduct was unlawful.

          (b) Proceedings By or in the Right of the Company.  The Company shall
              ---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement, in each case to the extent actually and reasonably incurred
by Indemnitee in connection with the defense or settlement of such action or
proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company
and its stockholders, except that no indemnification shall be made in respect of
any claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable to the Company in the performance of Indemnitee's duty to the Company and
its stockholders unless and only to the extent that the court in which such
action or suit is or was pending shall determine upon application that, in view
of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses and then only to the extent that the
court shall determine.

     2.  Agreement to Serve.  In consideration of the protection afforded by
         ------------------
this Agreement, if Indemnitee is a director of the Company, he agrees to serve
at least for the balance of the current term as a director and not to resign
voluntarily during such period without the written consent of a  majority of the
Board of Directors.  If Indemnitee is an officer of the Company not serving
under an employment contract, he agrees to serve in such capacity at least for
the balance of the current fiscal year of the Company and not to resign
voluntarily during such period without the written consent of a majority of the
Board of Directors.  Following the applicable period set forth above, Indemnitee
agrees to continue to serve in such capacity at the will of the Company (or
under separate agreement, if such agreement exists) so long as he is duly
appointed or elected and qualified in accordance with the applicable provisions
of the Bylaws of the Company or any subsidiary of the Company or until such time
as he tenders his resignation in writing.  Nothing contained in this Agreement
is intended to or shall create in Indemnitee any right to continued employment.

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     3.  Expenses; Indemnification Procedure.
         -----------------------------------

          (a) Advancement of Expenses.  The Company shall advance all expenses
              -----------------------
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action or proceeding referenced in Section
1(a) or (b) hereof (but not amounts actually paid in settlement of any such
action or proceeding).  Indemnitee hereby undertakes to repay such expenses
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby.  The advances to be made hereunder shall be paid by the Company to
Indemnitee within twenty (20) days following delivery of a written request
therefor by Indemnitee to the Company.

          (b) Notice/Cooperation by Indemnitee.  Indemnitee shall, as a
              --------------------------------
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee).  Notice shall be deemed received three business days after the date
postmarked if sent by domestic certified or registered mail, properly addressed;
otherwise notice shall be deemed received when such notice shall actually be
received by the Company.  In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.

          (c) Procedure.  Any indemnification provided for in Section 1 shall be
              ---------
made no later than forty-five (45) days after receipt of the written request of
Indemnitee.  If a claim under this Agreement, under any statute, or under any
provision of the Company's Certificate of Incorporation or Bylaws providing for
indemnification, is not paid in full by the Company within forty-five (45) days
after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter submit his claim
to arbitration as described in Section 14 to recover the unpaid amount of the
claim and, subject to Section 15 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys' fees) of bringing
such claim.  It shall be a defense to any such action (other than a claim
brought for expenses incurred in connection with any action or proceeding in
advance of its final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the Company to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Company, and Indemnitee shall be entitled to receive
interim payments of expenses pursuant to Subsection 3(a) unless and until such
defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists or an arbitration panel as described in Section
14.  It is the parties' intention that if the Company contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be for the court or arbitration panel to decide, and neither the failure
of the Company (including its Board of Directors, any committee or subgroup of
the Board of Directors, independent legal counsel, or its stockholders) to have
made a determination that indemnification of Indemnitee is proper in the
circumstances because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the Company
(including its Board of

                                      -3-
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Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.

          (d) Notice to Insurers.  If, at the time of the receipt of a notice of
              ------------------
a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies.  The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.

          (e) Selection of Counsel.  In the event the Company shall be obligated
              --------------------
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do.  After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ his own counsel in
any such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.

     4.  Additional Indemnification Rights; Nonexclusivity.
         -------------------------------------------------

          (a) Scope.  Notwithstanding any other provision of this Agreement, the
              -----
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute.  In the event of any
change, after the date of this Agreement, in any applicable law, statute or rule
which expands the right of a Delaware corporation to indemnify a member of its
Board of Directors or an officer, such changes shall be, ipso facto, within the
                                                         ---- -----
purview of Indemnitee's rights and Company's obligations under this Agreement.
In the event of any change in any applicable law, statute or rule which narrows
the right of a Delaware corporation to indemnify a member of its Board of
Directors or an officer, such changes, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement shall have no effect
on this Agreement or the parties' rights and obligations hereunder.

          (b) Nonexclusivity.  The indemnification provided by this Agreement
              --------------
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested directors, the

                                      -4-
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General Corporation Law of the State of Delaware, or otherwise, both as to
action in Indemnitee's official capacity and as to action in another capacity
while holding such office. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity even though he may have ceased to serve in such
capacity at the time of any action or other covered proceeding.

     5.  Partial Indemnification.  If Indemnitee is entitled under any provision
         -----------------------
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines, penalties or amounts paid in settlement actually or
reasonably incurred by him in the investigation, defense, appeal or settlement
of any civil or criminal action or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify  Indemnitee for the
portion of such expenses, judgments, fines or penalties to which Indemnitee is
entitled.

     6.  Mutual Acknowledgement.  Both the Company and Indemnitee acknowledge
         ----------------------
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise.  Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

     7.  Directors' and Officers' Liability Insurance.  The Company shall, from
         --------------------------------------------
time to time, make a good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement.  Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage.  In all
policies of directors' and officers' liability insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer; or of the
Company's key employees, if Indemnitee is not an officer or director but is a
key employee. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.

     8.  Severability.  Nothing in this Agreement is intended to require or
         ------------
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law.  The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement.  The provisions of this Agreement shall be severable as provided
in this Section 8.  If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent

                                      -5-
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permitted by any applicable portion of this Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.

     9.  Exceptions.  Any other provision herein to the contrary
         -----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

          (a) Excluded Acts. To indemnify Indemnitee for any acts or omissions
              -------------
or transactions from which a director may not be indemnified under the Delaware
General Corporation Law; or

          (b) Claims Initiated by Indemnitee.  To indemnify or advance expenses
              ------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such claim; or

          (c) Lack of Good Faith.  To indemnify Indemnitee for any expenses
              ------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction or the arbitration panel determines that each of the material
assertions made by the Indemnitee in such proceeding was not made in good faith
or was frivolous; or

          (d) Insured Claims.  To indemnify Indemnitee for expenses or
              --------------
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Company; or

          (e) Claims Under Section 16(b).  To indemnify Indemnitee for expenses
              --------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

     10.  Effectiveness of Agreement.  To the extent that the indemnification
          --------------------------
permitted under the terms of certain provisions of this Agreement exceeds the
scope of the indemnification provided for in the Delaware General Corporation
Law, such provisions shall not be effective unless and until the Company's
Certificate of Incorporation authorizes such additional rights of
indemnification. In all other respects, the balance of this Agreement shall be
effective as of the date set forth on the first page and may apply to acts or
omissions of Indemnitee which occurred prior to such date if Indemnitee was an
officer, director, employee or other agent of the Company, or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, at the time
such act or omission occurred.

                                      -6-
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     11.  Construction of Certain Phrases.
          -------------------------------

          (a) For purposes of this Agreement, references to the  "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

          (b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries.

     12.  Counterparts.  This Agreement may be executed in one or more
          ------------
counterparts, each of which shall constitute an original.

     13.  Successors and Assigns.  This Agreement shall be binding upon the
          ----------------------
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.

     14.  Arbitration.  It is understood and agreed that the Company and
          -----------
Indemnitee shall carry out this Agreement in the spirit of mutual cooperation
and good faith and that any differences, disputes or controversies shall be
resolved and settled amicably among the parties hereto.  In the event that the
dispute, controversy or difference is not so settled in the above manner within
forty-five (45) days, then the matter shall be exclusively submitted to
arbitration in Santa Clara County, California before three independent
technically qualified arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and under the laws of Delaware,
without reference to conflict of laws principles. Subject to Sections 1(b) and
6, arbitration shall be the exclusive forum and the decision and award by the
arbitrator(s) shall be final and binding upon the parties concerned and may be
entered in any state court of California having jurisdiction.

     15.  Attorneys' Fees.  In the event that any action is instituted or claim
          ---------------
is submitted to arbitration by Indemnitee under this Agreement to enforce or
interpret any of the terms  hereof, Indemnitee shall be entitled to be paid all
court costs and expenses, including reasonable attorneys' fees, incurred by
Indemnitee with respect to such action or arbitration, unless as a part of such
action, a court of competent jurisdiction or the arbitrator(s) determines that
each of the material assertions made by

                                      -7-
<PAGE>

Indemnitee as a basis for such claim were not made in good faith or were
frivolous. In the event of an action instituted or a claim submitted to
arbitration by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action or claim (including with respect to
Indemnitee's counterclaims and cross-claims made in such action or arbitration),
unless as a part of such action the court or the arbitrator(s) determines that
each of Indemnitee's material defenses to such action or claim were made in bad
faith or were frivolous.

     16.  Notice.  All notices, requests, demands and other communications under
          -------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked.  Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

     17.  Consent to Jurisdiction.  The Company and Indemnitee each hereby
          ------------------------
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California
in Santa Clara County and that any arbitration proceeding which arises out of or
relates to this Agreement shall be held in Santa Clara County, California.

     18.  Choice of Law.  This Agreement shall be governed by and its provisions
          -------------
construed in accordance with the laws of the State of Delaware as applied to
contracts between Delaware residents entered into and performed entirely within
Delaware.

     19.  Subrogation.  In the event of payment under this Agreement, the
          -----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the
corporation effectively to bring suit to enforce such rights.

     20.  Continuation of Indemnification.  All agreements and obligations of
          -------------------------------
the Company contained herein shall continue during the period that Indemnitee is
a director, officer or agent of the Company and shall continue thereafter so
long as Indemnitee shall be subject to any possible claim or threatened,
pending or completed action, suit or proceeding, whether civil,  criminal,
arbitrational, administrative or investigative, by reason of the fact that
Indemnitee was serving in the capacity referred to herein.

     21.  Amendment and Termination.  Subject to Section 20, no amendment,
          -------------------------
modification, termination or cancellation of this Agreement shall be effective
unless in writing signed by both parties hereto.

     22.  Integration and Entire Agreement.  This Agreement (a) sets forth the
          --------------------------------
entire understanding between the parties, (b) supersedes all previous written or
oral negotiations, commitments,

                                      -8-
<PAGE>

understandings and agreements relating to the
subject matter hereof and (c) merges all prior and contemporaneous discussions
between the parties.

                                      -9-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.


                              NUMERICAL TECHNOLOGIES, INC.


                              By:
                                  ____________________________

                              Title:
                                    __________________________

                              Address:  70 West Plumeria Drive
                                        San Jose, CA  95134


AGREED TO AND ACCEPTED:

INDEMNITEE:


______________________________
Signature

______________________________
Print Name

______________________________
______________________________
Address

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