Document:

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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                             CONFIDENTIAL TREATMENT
                       PDF SOLUTIONS, INC. HAS REQUESTED
                        THAT THE MARKED PORTIONS OF THIS
                       DOCUMENT BE ACCORDED CONFIDENTIAL
                      TREATMENT PURSUANT TO RULE 406 UNDER
                    THE SECURITIES ACT OF 1933, AS AMENDED.

                                                                   Exhibit 10.17

                                                             PROJECT: TOSHIBA --
                                                             *******************

                     YIELD IMPROVEMENT CONSULTING AGREEMENT

        This Yield Improvement Consulting Agreement dated as of ****** **, ****
(this "AGREEMENT") is entered into by and between Toshiba Corporation, a
corporation organized under the laws of Japan ("TOSHIBA") having its principal
place of business at 1-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan, and
PDF Solutions, Inc., a corporation organized under the laws of California
("PDF") having its principal place of business at 333 West San Carlos Street,
Suite 700, San Jose, California, U.S.A.

RECITALS

            A. PDF Solutions possesses technology and expertise useful in
discovering, analyzing, and fixing problems in the design and manufacturing
processes that cause low yields of useable integrated circuits.

            B. Toshiba desires to engage PDF Solutions and receive a license to
certain technology useful to analyze its internal integrated circuit
manufacturing process, identify problems therewith, and recommend solutions
thereto, by way of methodology or otherwise, upon the terms and conditions
contained herein.

            C. PDF Solutions desires to be so engaged upon the terms and
conditions contained herein.

DEFINITIONS

"Analysis" refers to all interpretations, recommendations, extractions,
statistical models or other yield and performance models developed by PDF
Solutions and derived in whole or in part from Toshiba's Raw Data; provided,
however, that Analysis does not include any information sufficiently detailed
that Raw Data could be feasibly re-constructed.

"Characterization Vehicle" or "CV" refers to the parameterized layout structures
or circuit elements, specific implementations of said structures or circuit
elements either in computer format or layout format (for example, GDS-II files),
and images of said structures or circuit elements, historically or hereafter
created or customized by PDF Solutions for the purposes of creating a test
vehicle used to characterize any given manufacturing process. Manufacturing
Designs are usually referenced in the process of generating CVs for the purposes
of optimizing or tuning the vehicle to the targeted designs and process. The CV
is used to create a Mask Set which is used by the fabrication facility to
generate test wafers.

"Foundry" refers to any facility Toshiba owns or operates to manufacture
products and any third party foundry with which Toshiba has a relationship that
manufactures products for Toshiba.

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"Manufacturing Designs" refers to all non-public information relating to
Toshiba's manufacturing processes and integrated circuit designs (structures and
elements) used in connection with the CV to generate Raw Data.

"Mask Set" refers to translucent glass plates used as a light filter to transfer
designs onto a wafer.

"Proprietary Rights" shall mean all intellectual property rights including, but
not limited to, patents, patent applications, copyrights, copyright
registrations, moral rights, mask work rights, rights of authorship, industrial
design rights, trademarks, tradenames, know-how and trade secrets, irrespective
of whether such rights arise under U.S. or international intellectual property,
unfair competition or trade secret laws.

"PDF Technology" refers to all historically, or hereafter developed
methodologies, techniques, software, designs, CVs, problem solving processes and
practices utilized by PDF Solutions, and any modifications, compilations or
works derivative of the foregoing, excluding know-how, methodologies, techniques
or practices that are commonly known or that Toshiba independently has the right
to use. PDF Technology also refers to the CV layout and the Design of
Experiments used in creating the CV layout.

"Raw Data" shall mean the data generated by PDF Solutions using the CV in
conjunction with Toshiba's Manufacturing Design.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the mutual promises herein
contained, the above recitals and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Toshiba and PDF
Solutions, intending to be legally bound, hereby agree as follows:

1.      YIELD IMPROVEMENT SERVICES.

        1.1 PROVISION OF SERVICES. During the term of this Agreement, PDF will
provide to Toshiba development work and services with respect to integrated
circuit yield management issues. The services and the Deliverables to be
delivered as a result thereof (the "PROJECT") are described in detail on a
statement of work (the "STATEMENT OF WORK") attached hereto as Exhibit A. The
Statement of Work shall be governed by the terms of this Agreement, and
specifies:

               (a)    Deliverables. The specific deliverables (the
                      "DELIVERABLES") to be delivered under the Project and
                      relevant milestones for delivering the Deliverables;

               (b)    Team Structure. The team members from PDF and Toshiba who
                      are to work on the Project and the expected time
                      contributions for each such member;

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               (c)    Tools. The required data, tools, hardware, software,
                      materials, access to personnel and facilities, and other
                      materials required for effectively completing the Project;

               (d)    Location. The geographic location where each component of
                      the Project will be completed;

               (e)    Fees and Expenses. The amount and structure of PDF's Fees
                      (as defined below) payable upon delivery of the
                      Deliverables and Expenses (as defined below).

        1.2 TOSHIBA INTELLECTUAL PROPERTY. Toshiba will disclose to PDF on a
timely basis such Proprietary Rights (as defined in Section 3.1) and such other
data and materials as PDF shall reasonably require in order to perform the
Project and/or prepare the Deliverables as defined in the Statement of Work.

        1.3 DELIVERABLES. In performing the Project, PDF shall develop and/or
make for Toshiba the Deliverables in accordance with any schedules set forth in
the Statement of Work. The Deliverables shall meet in all material respects the
description of the Deliverable (the "DELIVERABLE DESCRIPTION") set forth in the
Statement of Work.

        1.4 ACCEPTANCE. Upon delivery of any Deliverable by PDF to Toshiba,
Toshiba shall examine the Deliverable to determine whether it reasonably
conforms to the Deliverable Description. If the Deliverable does not reasonably
conform to such Deliverable Description, Toshiba shall have fifteen (15) days
from the date of delivery thereof to reject such Deliverable and specify in
writing why it does not reasonably conform to such Deliverable Description. Upon
such rejection the parties shall work together to determine what needs to be
done to bring such Deliverable up to such Deliverable Description. If the
Deliverable does not meet the Deliverable Description, PDF shall exercise
reasonable efforts to correct promptly such nonconformity of the Deliverable
with the Deliverable Description and redeliver the Deliverable to Toshiba upon
completion of such correction within one month following the parties' agreement
referenced in the preceding sentence but only if there are no limitations
outside of PDF's control. If there are limitations outside PDF's control, PDF
and Toshiba will negotiate in good faith a time for delivery of the Deliverable.
If a rejection of the Deliverable is not received by PDF within fifteen (15)
days after any delivery or redelivery of a Deliverable under this Section 1.4,
the Deliverable shall be deemed accepted. "ACCEPTANCE" (including with
correlative meaning the term "ACCEPT") shall mean any acceptance under this
Section 1.4. Toshiba agrees to deliver a notice of Acceptance (the "NOTICE OF
ACCEPTANCE") upon its decision to Accept any Deliverable hereunder within such
fifteen (15) days following such delivery or redelivery.

2.      FEES AND EXPENSES.

        2.1 SERVICES FEES AND EXPENSES. Upon delivery of each of the respective
Deliverables provided by PDF hereunder, Toshiba shall pay to PDF the fees
specified to the extent and in the manner set forth in the Statement of Work
("FEES"), and shall

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reimburse PDF for its out-of-pocket expenses incurred in carrying out its
obligations under this Agreement including, but not limited to, travel, hotel,
meal, document production, equipment and other expenses directly related to the
services performed hereunder further subject to the terms and conditions set
forth in the Statement of Work ("EXPENSES"). In no event shall the Expenses for
which Toshiba shall be liable hereunder exceed any limitation on Expenses
specified in the Statement of Work without written agreement from Toshiba. PDF
shall use reasonable and diligent efforts to deliver the Deliverables hereunder
within the estimated expenses and time schedule specified in the Statement of
Work.

        2.2 PAYMENT OF INVOICES If required by applicable law, PDF shall pay any
taxes and assessments levied or imposed by any Japanese tax or other
governmental body resulting from the services or the Deliverables to be provided
by PDF to Toshiba and the payment to be made by Toshiba to PDF hereunder,
including without limitation all personal property taxes on any of the foregoing
and any taxes or amounts in lieu of any of the foregoing paid or payable by PDF,
other than taxes based on PDF's net income. Toshiba agrees that PDF Solutions or
PDF Solutions' designated representative will have the right to participate and
negotiate in all discussions with the appropriate tax authorities regarding
taxes to be paid by PDF Solutions in the process of determining the required tax
burden, if any. The parties acknowledge that PDF Solutions shall be obligated to
pay any such tax at the reduced withholding income tax rate rather than the
ordinary rate by filing "Application Form for Income Tax Convention between the
United States and Japan" with the Japanese tax authorities. If applicable,
Toshiba shall send PDF the application form immediately after the execution of
this Agreement for PDF's signature and PDF shall promptly sign it and return it
to Toshiba so that Toshiba may file it with the applicable Japanese tax
authorities on behalf of PDF.

3.      PROPRIETARY RIGHTS

        3.1 OWNERSHIP. Toshiba and PDF Solutions acknowledge and agree that, as
between them, ownership shall be as follows:

                (a) PDF Solutions is the exclusive owner of all PDF Technology
and all Proprietary Rights in the PDF Technology;

                (b) Toshiba is the exclusive owner of all Analysis,
Manufacturing Designs, Raw Data and all Proprietary Rights in the Analysis,
Manufacturing Design and the Raw Data; and

                (c) Toshiba is the exclusive owner of Mask Sets.

        3.2 SOLELY DEVELOPED PROPRIETARY RIGHTS OWNERSHIP. Each party shall
solely own any Proprietary Rights solely developed by such party or the
employee(s) of such party, whether before, during or after the term of this
Agreement.

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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

 3.3 GRANT OF LICENSE BY PDF SOLUTIONS. Subject to the terms and conditions of
this Agreement, including the timely payment of Fees, PDF Solutions hereby
grants to Toshiba and its Subsidiaries, a perpetual, non-exclusive, irrevocable,
worldwide, non-transferable license (with the right of Toshiba to sublicense its
Subsidiaries) to use, copy for internal use, modify and/or enhance the
Deliverables (as set forth in the Statement of Work), any PDF Technology and
associated Proprietary Rights disclosed by PDF Solutions under this Agreement,
but only to the extent PDF Solutions has the right to grant such license;
provided that such license is solely for the development, manufacture,
fabrication and sale of all Toshiba's semiconductor products associated with
Toshiba's ***********. The foregoing license includes all PDF Technology
disclosed by PDF Solutions in its work for Toshiba hereunder; provided, however,
that specifically excluded from this license of PDF Technology is any and all
software or software tools used by PDF in connection with or during the course
of such services, or software manuals and documentation relating to such
software or tools. Notwithstanding the foregoing, Toshiba shall not be limited
to the *********** with respect to PDF Technology that consists of methodologies
or practices observed by Toshiba personnel in the course of PDF Solutions' work
hereunder. In particular, Toshiba shall have the right to create any ***** *****
***** ***** ***** ***** for the purpose of transferring to other semiconductor
****** than ****** by using PDF's know-how of ***** ***** ***** ***** by PDF
under this Agreement ("******"); provided that Toshiba shall not violate any
PDF's copyright or patent. In the event that Toshiba reasonably determines that
there is a possibility of violating PDF's copyright or patent in connection with
the modification of ****** to be implemented by Toshiba, Toshiba shall consult
PDF and PDF shall provide Toshiba with its views thereon and/or alternative
solution to avoid such possible violation. Toshiba shall be bound by and shall
cause its sublicensees to be bound by the confidentiality obligations contained
in Section 6 or obligations at least as restrictive as the confidentiality
obligations contained in Section 6. Except as specifically provided herein,
Toshiba shall not disclose or license PDF Technology to any third party. Toshiba
understands that PDF Solutions will not disclose to Toshiba certain proprietary
methods or trade secrets in connection with the services to be rendered by PDF
Solutions hereunder. To this end, PDF Solutions retains the right to take
industry standard measures to keep such proprietary methods or trade secrets
from Toshiba, unless the same defeats or substantially impedes the Scope of
Services and Technology under this Agreement.

        3.4 PDF SOLUTIONS SERVICES. PDF Solutions may do the following:

                (a) to use, copy, compile, manipulate, analyze or reproduce Raw
Data and the Mask Sets solely for the purpose of performing under this
Agreement; and (b) to use and rely upon Raw Data and Analysis for the purpose of
supporting Toshiba's yield ***. PDF Solutions shall be bound by and shall cause
its sublicensees to be bound by the confidentiality obligations contained in
Section 6 or obligations at least as restrictive as the confidentiality
obligations contained in Section 6.

        3.5 NO OTHER RIGHTS. Except as otherwise set forth in this Section 3,
neither this Agreement nor performance and delivery of the Services and
Technology shall give

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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

either PDF Solutions or Toshiba any ownership, interest in, or rights to, the
Proprietary Rights owned or provided by the other party.

        3.6 DEFINITION OF SUBSIDIARY. For the purpose of this Agreement and the
Statement of Work, the term "SUBSIDIARY" of any party shall mean any corporation
or other entity more than fifty percent (50%) of the Voting Stock of which is
beneficially owned or controlled, directly or indirectly, by such party;
provided that such corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists. "VOTING STOCK" of
any entity shall mean any stock or other equity interest entitled to vote for
the election of directors or any equivalent governing body of such entity.
Notwithstanding the above, ********** ********** ********* ************* *******
************* ************ *********** ********** ********** ******** ********
******** ********* *** **********.

4.      TERM AND TERMINATION.

        4.1 COMMENCEMENT. This Agreement shall commence as of the date first set
forth above and shall continue in force until completion of the Project, unless
sooner terminated as provided in this Section 4.

        4.2 TERMINATION.

            (a) If either party defaults in the performance of any material
obligation hereunder the non-defaulting party may give the defaulting party
written notice of such default within twenty (20) days following the
non-defaulting party's discovery of such default. If the defaulting party fails
to cure such default within forty-five (45) days (or such other time period as
the parties shall mutually agree) after the defaulting party's receipt of such
notice of default, then the non-defaulting party, at its option, may, terminate
this Agreement by giving the defaulting party written notice of termination of
this Agreement within ten days following the end of such 45-day period. If such
notice of default or notice of termination is not given within such period, then
the default shall no longer constitute cause for termination of this Agreement.

            (b) Either party may terminate this Agreement effective upon written
notice to the other party in the event the other party becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding relating to
insolvency, or assignment for the benefit creditors, if that petition or
proceeding is not dismissed within sixty (60) days after filing. Such written
notice of termination must be delivered no later than ten (10) days following
the expiration of such 60-day period. If such notice of termination is not given
within such 10-day period, then the default shall no longer constitute cause for
termination of this Agreement.

            (c) Either party may terminate this Agreement effective upon written
notice to the other party in the event that the other party is merged with or
into, or all or substantially all or the other party's assets are sold to, a
third party corporation or other entity, unless such acquiring corporation or
entity expressly agrees to assume the other

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party's obligations under this Agreement. Such written notice of termination
must be delivered no later than ten (10) days following the consummation of such
transaction. If such notice of termination is not given within such 10-day
period, then the default shall no longer constitute cause for termination of
this Agreement.

            (d) Toshiba shall be entitled to terminate this Agreement upon
forty-five (45) days prior written notice if (i) Toshiba reasonably rejects the
Deliverables due to their material nonconformity with the Deliverable
Description set forth in the Statement of Work (and clearly and properly
specifies the reason for such nonconformity), the Acceptance procedure set forth
in Section 1.4 shall have been exhausted without an Acceptance, and PDF does not
reasonably cure such material nonconformity within forty-five (45) days
following the final written rejection of such Deliverable, or (ii) Toshiba
reasonably and in good faith judges that the expected progress for the services
to be performed by PDF necessary to deliver the Deliverables hereunder cannot be
achieved within the mutually agreed time frame, and within forty-five (45) days
following such notice PDF cannot reasonably establish that such progress can be
achieved. This Agreement may then be terminated by a written notice of
termination delivered within ten (10) days following the applicable foregoing
forty-five (45) day period. If such written notice of termination is not given
within such 10-day period, then the default under this Section 4.2(d) shall no
longer constitute cause for termination of this Agreement.

        4.3 TERMINATION OF RIGHTS. Upon expiration or termination of this
Agreement, all rights and licenses granted and all obligations undertaken
hereunder shall forthwith terminate except the following:

            (a) Any and all licenses granted by PDF to Toshiba and its
Subsidiaries under this Agreement as to previously delivered, Accepted and paid
for Deliverables shall survive the expiration or termination of this Agreement
unless this Agreement is terminated by PDF in accordance with the provisions of
Section 4.2(a), (b) or (c) in which case none of such licenses shall survive and
all copies of such Deliverables shall be returned to PDF.

            (b) If Toshiba terminates this Agreement for the reason as stated in
Section 4.2, Toshiba shall pay to PDF, within thirty (30) days after the date of
termination, (i) the actual amount of unreimbursed Expenses incurred by PDF
through the date of termination by Toshiba, (ii) the amount of the Deliverables
Fees with respect to Deliverables delivered or otherwise accrued, and unpaid
through the date of termination; provided that payment of such Fees and Expenses
shall be subject to the provisions of Section 2.

            (c) If Toshiba terminates this Agreement for the reason specified in
Section 4.2, Toshiba shall pay to PDF:

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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                (i) the amount of any unpaid Product Fees accrued prior to the
date of termination; and

                (ii) the amount of any future Product Fees in accordance with
Paragraph (e)(iii) of the Statement of Work. Such Product Fees shall be payable
through the term of payment specified in such Paragraph (e)(iii); provided that
Product Fees to be accrued and paid following a date of termination shall
terminate only if the basis for termination of this Agreement shall be (A) an
involuntary bankruptcy under Section 4.2(b) or (B) the material default under
PDF's confidentiality obligations under Section 6 of this Agreement; provided
that payment of such Product Fees under this Section 4.3(c) shall be subject to
the provisions of Section 2.

            (d) The provisions of Sections 2 (including by reference Toshiba's
obligations to pay Fees and Expenses set forth in the Statement of Work but
subject to Section 4.3(b) and (c)), 3.1, 3.2, 3.4 (with respect to Deliverables
delivered by PDF to Toshiba and Accepted and paid for by Toshiba), 4, 6, 7, 8.4,
8.7 and 8.8 shall survive any expiration or termination of this Agreement.

5. INDEPENDENT CONTRACTORS. The relationship of PDF and Toshiba established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement shall be construed to (i) give either party the power to direct or
control the day-to-day activities of the other, (ii) constitute the parties as
agents, partners, joint venturers, co-owners or otherwise as participants in a
joint or common undertaking, or (iii) allow either party to create or assume any
obligation on behalf of the other for any purpose whatsoever.

6. CONFIDENTIALITY. Except as otherwise provided herein, each party agrees, at
all times during the term of this Agreement and for ** years after receipt of
Confidential Information, to hold in strictest confidence (and to cause its
Subsidiaries to hold in strictest confidence), and not to use, except for the
purposes contemplated herein, or to disclose to any person, firm or corporation
without written authorization of the other party, any Confidential Information
of the disclosing party. As used in this Agreement, "CONFIDENTIAL INFORMATION"
means any proprietary information, technical data, trade secrets or know-how,
including, but not limited to, research, software, developments, inventions,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, yield data or other information disclosed by one
party to the other, which is marked as "Confidential," and/or orally or in other
tangible form identified as confidential at the time of disclosure and confirmed
as Confidential Information in writing within thirty (30) days of its initial
disclosure, provided that any methodologies, practices or procedures used by PDF
and observed by Toshiba shall constitute "Confidential Information" within the
meaning of this Agreement without any such notification. Confidential
Information does not include any of the foregoing items which have become
publicly known and made generally available through no wrongful act of the
receiving party, or which is already known by the receiving party as evidenced
by the receiving party's files immediately prior to such disclosure, or which
the receiving party proves was independently developed, prior to the receiving
party's receipt of such

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Confidential Information, by employees or other representatives of such
receiving party who have not had access to such information or the ideas or
theories underlying such Confidential Information. Each party receiving
Confidential Information of the other party agrees to limit disclosure of
Confidential Information to only those of its officers and employees the
receiving party considers necessary to complete its services contemplated in
this Agreement and then only after such officers and employees have undertaken
by employment agreement or otherwise to comply with the obligations undertaken
by Recipient under this Agreement. Except as otherwise agreed by both parties,
PDF shall return to Toshiba all Confidential Information of Toshiba owned by
Toshiba and not licensed to PDF or jointly owned by PDF and Toshiba and copies
thereof, within thirty (30) days after completion of the Project or after
expiration or termination of this Agreement. Except as otherwise agreed by both
parties, Toshiba shall return to PDF all Confidential Information of PDF owned
by PDF and not licensed to Toshiba or jointly owned by PDF and Toshiba and
copies thereof, within thirty (30) days after completion of the Project or after
expiration or termination of this Agreement.

7.      WARRANTY. PDF warrants to Toshiba that PDF's Intellectual Property
utilized by PDF in performing the Project does not infringe any patent,
copyright, trade secret, and any other proprietary rights of any third party.
EXCEPT FOR THE FOREGOING, NOTHING UNDER THIS AGREEMENT, OR THE STATEMENT OF WORK
OR PROJECT SHALL BE DEEMED TO BE A WARRANTY OR REPRESENTATION AS TO THE OUTCOME
OF ANY PROJECT OR THE EFFICACY OF ANY RECOMMENDATIONS MADE BY PDF. NOTHING UNDER
THIS AGREEMENT OR THE STATEMENT OF WORK SHALL BE DEEMED TO CREATE ANY LIABILITY
ON THE PART OF PDF WITH RESPECT TO THE OUTCOME OF A PROJECT OR ANY ACTIONS TAKEN
BY TOSHIBA AS A CONSEQUENCE OF PDF'S RECOMMENDATIONS.

8.      MISCELLANEOUS.

        8.1 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Statement
of Work may be amended or waived only with the written consent by the
representatives of the parties.

        8.2 SOLE AGREEMENT. This Agreement and the Statement of Work constitute
the sole agreement of the parties and supersede all oral negotiations and prior
writings with respect to the subject matter hereof.

        8.3 NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by an internationally-recognized delivery service (such as Federal
Express or DHL), or after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address as set forth above or as subsequently
modified by written notice.

        8.4 CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California,

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without giving effect to the principles of conflict of laws.

        8.5 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of this Agreement shall be enforceable in accordance with its other
terms.

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

        8.7 ARBITRATION. The parties shall attempt in good faith to resolve any
dispute arising under this Agreement. If the parties are unable to resolve
dispute within a reasonable period then the dispute shall be finally settled by
binding arbitration (a) if brought by Toshiba, in San Jose, California, in
accordance with the Commercial Rules of the American Arbitration Association
and, (b) if brought by PDF, in Tokyo, Japan in accordance with the rules of the
International Chamber of Commerce. In either case such arbitration shall be
conducted by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply California law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any dispute.
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this paragraph,
without breach of this arbitration provision.

        8.8 EXPORT CONTROL. Neither party shall, directly or indirectly export
or re-export any technical data or information or data received from the other
party hereunder or the direct products thereof to any destination prohibited or
restricted by export control regulations of Japan and the United States,
including U.S. Export Administration Regulations, without proper authorization
from the appropriate governmental authorities. In addition, the parties agree
that no technology furnished to the other will be used for any purpose to
develop and/or manufacture nuclear, chemical or biological weapons and/or
missiles.

        8.9 NON-SOLICITATION. Toshiba shall not solicit or influence or attempt
to influence any person employed by PDF to terminate or otherwise cease his or
her employment with PDF or become an employee of Toshiba or any competitor of
PDF. A company's status as a competitor of PDF shall be determined by PDF in its
sole discretion.

        8.10 PUBLICITY. Neither party shall disclose the terms of this Agreement
to any third party, or in any manner advertise or publish statements to such
effect, without the prior written consent and mutual agreement as to the
content, medium, and manner of the public announcement of the other party.
Customer agrees during the term to work in good

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faith with PDF Solutions to produce mutually acceptable public announcements by
PDF Solutions of PDF Solutions' engagement with Customer under this Agreement.
Notwithstanding the above, should one of the parties be required to disclose
either the existence or terms of this Agreement to a court of law, a
governmental agency, an auditor or a bank, such party may do so without the
prior written consent of the other party provided that the disclosing party: (i)
notifies the recipient of the confidential nature of the information, (ii)
requests confidential treatment of such information, (iii) limits the disclosure
to only such information as is required under the circumstances, and (iv)
delivers prompt notice to the other party of such requested or actual
disclosure.

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

PDF SOLUTIONS, INC.                         TOSHIBA CORPORATION

By:                                         By:
   ----------------------------                ---------------------------------

Name:    John K. Kibarian                   Name:         Yasuo Morimoto

Title:       President                      Title:     President & CEO,
                                                     Semiconductor Company

DATE:                                       DATE:
     --------------------------                  -------------------------------

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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                    EXHIBIT A

                                STATEMENT OF WORK
                                  ************
                                       **
                                ****************

        This Statement of Work is made between PDF Solutions, Inc. ("PDF") and
Toshiba Corporation ("TOSHIBA") pursuant to and attached as an exhibit to that
certain Yield Improvement Consulting Agreement dated as of ****** **, **** (the
"AGREEMENT") between PDF and Toshiba. All terms and conditions contained in this
Statement of Work are subject to the terms and conditions set forth in the
Agreement. The date of commencement of services under this Agreement was ******
**, **** (the "ENGAGEMENT COMMENCEMENT DATE").

PROJECT DESCRIPTION & GOALS

        PDF Solutions agrees to provide Toshiba with ************ services for
Toshiba's **** developed as ************ ******* ******. Services in support of
this project described in this contract is consists with one major components:

            (1) ******* PROJECT

                (a) PROJECTS, DELIVERABLES AND FEE

            The section is outlined below that review the project services. The
section has Project Phases and Deliverables.

                                     SOW-1
<PAGE>   13
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        ***** PROJECT

                Two phases are included in this project;

                (i)   *****************************************

                (ii)  *****************************************

                ****  deliverables are included in this project;

                (i)   *****************************************

                (ii)  *****************************************

                (iii) *****************************************

                (iv)  *****************************************

                (v)   *****************************************

        (a) DESCRIPTION OF PHASES FOR EACH *** (START DATE: ******)

<TABLE>
<CAPTION>
-----------------  --------------------------------------  ---------------
  PROJECT PHASE        PDF SOLUTIONS WORK STEPS                DURATION
-----------------  --------------------------------------  ---------------
<S>                <C>                                     <C>
***************        - *******************************   **************
*                        ************                      *****

-----------------  --------------------------------------  ---------------

***************        - *******************************   **************
*                        *******************************   ***
                         ****
-----------------  --------------------------------------  ---------------
</TABLE>

        (b) DELIVERABLES

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                              MAINTENANCE    ESTIMATED
                                                      PLANED                      FEE        PERIOD OF
                                                     DELIVERY    DELIVERABLE    (per 6      MAINTENANCE
PHASE       DELIVERABLE          DESCRIPTION           MONTH        FEE         months)         FEE
---------------------------------------------------------------------------------------------------------
<S>         <C>                  <C>                <C>          <C>          <C>           <C>
****        *****                ***********        **********   ***********        *****   *************
                                 ***********
                                       *****
            -----------          -----------        ----------   -----------  -----------   -------------
            ***********          ***********        *********            **
---------------------------------------------------------------------------------------------------------
*****       *****                ***********        **********   ***********        *****   *************
                                 ***********
                                       *****
            -----------          -----------        ----------   -----------  -----------   -------------
            ***********          ***********        *********            **
---------------------------------------------------------------------------------------------------------
*****       *****                ***********        **********   ***********        *****   *************
                                 ***********
                                       *****
            -----------          -----------        ----------   -----------  -----------   -------------
            ***********          ***********        *********            **
---------------------------------------------------------------------------------------------------------
****        *****                ***********        **********   ***********        *****   *************
                                 ***********
                                       *****
            -----------          -----------        ----------   -----------  -----------   -------------
            ***********          ***********        *********            **
---------------------------------------------------------------------------------------------------------
******      *****                ***********        **********   ***********        *****   *************
     *                           ***********
                                       *****
---------------------------------------------------------------------------------------------------------
</TABLE>

                                     SOW-2
<PAGE>   14
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        (b) TEAM STRUCTURE

        The team is structured to divide the decision-making, project leadership
and analysis management between three bodies in the form of "TEAM STRUCTURE" in
the form attached to this Statement of Work as Exhibit C.

        Toshiba will establish a Steering Committee (the "STEERING COMMITTEE")
which will consist of (a) ****** ******* and any other Toshiba manager who is
necessary in order for yield improvement decisions to be made, and (b) ******
******* or another senior executive of PDF. The Steering Committee will be
limited to four representatives of Toshiba and one representative of PDF. The
Steering Committee will have sufficient authority to make the relevant decisions
concerning this Project. The Steering Committee is responsible for giving the
team its charter, deciding which yield improvement actions to take and who in
the Toshiba organization will be responsible for carrying out the improvement.

        Project leadership responsibility will be shared by ****** ******* (the
"TOSHIBA PROJECT MANAGER") on behalf of Toshiba, and ****** ******* (the "PDF
PROJECT MANAGER"), on behalf of PDF. Their primary responsibility will be to
ensure overall project status include delivery timing and the deliverables of
the work chartered by the Steering Committee. In order to maximize the
likelihood that the team is making good progress, the Project Managers will
monitor the team's work on a monthly basis and help reduce any organizational
obstacles which may impede the team's progress.

        Technical responsibility will be shared by the personnel assigned by
Toshiba and PDF(the "TOSHIBA ENGAGEMENT MANAGER", on behalf of Toshiba, the "PDF
ENGAGEMENT MANAGER", on behalf of PDF, respectively). Their primary
responsibility will be to ensure that the team is making good progress toward
delivery of the work. Engagement Managers will monitor the team's work on a
weekly basis and ensure the project from technical view point.

        The day-to-day analyses will be conducted by a ******** ******* Team
("******") of engineers from Toshiba and PDF. A PDF Engagement Manager will
manage the activities of the ****. The PDF Engagement Manager will be
responsible for directing all team members in their analyses as well as
aggregating and synthesizing the results of all the analyses conducted by the
entire team. In addition, the Engagement Managers will be the principal point of
contact for any technical questions regarding the project.

        ********** Toshiba engineers will be asked to participate actively with
the **** Toshiba team members should be assigned to **** and be skilled at
******* ******* ******* ******* *******. Toshiba engineers will be placed on the
Team after approval by PDF for the purpose of gathering data and conducting
analyses. The Toshiba team members will work at the direction of the Engagement
Managers.

        (c) TOOLS

                                     SOW-3
<PAGE>   15
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        Toshiba will provide PDF with office space and other reasonable and
customary business resources. In particular, Toshiba will provide PDF with
secure office space large enough to accommodate the required PDF personnel in
addition to the Toshiba engineers assigned to work on the ****. Toshiba will
provide PDF with office equipment reasonably requested by PDF from time to time
including **** international access telephones (including such analog lines as
PDF shall request), an international access Facsimile machine and line, and a
photocopier. Toshiba will provide PDF with 24-hour access to the team office so
work can continue at night and on weekends.

        Toshiba will provide PDF with computing resources that PDF reasonably
deems necessary to ***** ***** ***** *****. The details of such request will be
sent in a separate document to the Toshiba Engagement Manager but in general,
Toshiba will provide ******** engineering workstations connected to both the
Toshiba network and the Internet. Toshiba will also provide such other
accessories as PDF shall reasonably request including, but not limited to, a
removable data storage device, such as a tape drive, and a printer.

        (d) LOCATION

        The Project will be conducted by Toshiba's and PDF's personnel at
Toshiba's **** ********* in ************ and Toshiba's **** ********* in
*************, and PDF's facilities in San Jose, CA. In certain cases, PDF may
require Toshiba engineers to work at the PDF facility in San Jose, California.
PDF engineers may also work in ***** and ********* when the engagement manager
believes this is necessary to achieve progress. If Toshiba shall provide PDF
employees with an English version of the employee rules and regulations in force
at the Toshiba facilities, then PDF employees shall comply with such rules and
regulations in all material respects in an equivalent manner as other Toshiba
employees generally. Any failure to comply with such rules and regulations shall
not constitute a default of a material obligation constituting a basis for
termination of this Agreement unless (A) Toshiba has repeatedly given notices of
such failure to PDF and PDF has repeatedly failed to remedy such noncompliance
as specified in such notices, (B) Toshiba shall notify PDF in writing that
failure to cure such repeated non compliance within ** ***** shall constitute a
basis for termination of the Agreement and PDF shall fail to remedy such non
compliance, and (C) Toshiba gives final notice of termination within ** *****
following such ***** period. PDF shall take all reasonable steps necessary to
ensure that all employees resident at or visiting a Toshiba facility shall treat
as confidential in accordance with Section 6 all material information of a
proprietary nature observed by or disclosed to such employee, and shall comply
in all material respects with the all export control obligations contained in
Section 8.8.

                                     SOW-4
<PAGE>   16
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        (e) FEES AND EXPENSES.

        Toshiba will pay PDF Fees consisting of three components: (1) the
Deliverable Fees and (2) the Maintenance Fees and (3) the Product Fees, each as
defined below:

(i)     DELIVERABLE FEES. Toshiba will pay PDF a deliverable fee described in
        each deliverable tables after each deliverable are provided to Toshiba
        (the "DELIVERABLE FEES"). The payment will be made within *** days of
        receipt of an invoice covering such Deliverable Fees.

(ii)    MAINTENANCE FEE. *******************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************

(iii)   PRODUCT FEE.
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
****************

EXPENSES.

        Toshiba will reimburse PDF for all reasonable and customary Expenses
incurred by PDF in performing the services, delivering the Deliverables and
fulfilling its obligations under the Project. The Expenses will be billed to
Toshiba at PDF's cost and will not exceed an average of *** per calendar quarter
without the written consent of Toshiba. PDF will submit to Toshiba invoices
specifying the Expenses and Toshiba will pay the Expenses within ****** of the
receipt of the invoice. Invoices will be submitted to Toshiba no more frequently
than a monthly basis. Payments of invoices for PDF's expenses will be made in
accordance with the provisions of Section 2.2 of the Agreement. Notwithstanding
the foregoing

                                     SOW-5
<PAGE>   17

if PDF is entitled to receive reimbursement of the same travel, lodging and
other similar expenses from both Toshiba and other customers, then PDF will
allocate any expenses that are for the benefit of both Toshiba and such other
customers, among Toshiba and such other customers on a basis that PDF shall
determine is fair, just and equitable to Toshiba and such other customers taking
into account all relevant factors.

                                     SOW-6<PAGE>   1
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                             CONFIDENTIAL TREATMENT
                        PDF SOLUTIONS, INC. HAS REQUESTED
                        THAT THE MARKED PORTIONS OF THIS
                        DOCUMENT BE ACCORDED CONFIDENTIAL
                      TREATMENT PURSUANT TO RULE 406 UNDER
                     THE SECURITIES ACT OF 1933, AS AMENDED.

                                                                   EXHIBIT 10.18

                               PDF SOLUTIONS, INC.

                         SOFTWARE SITE LICENSE AGREEMENT

      This SOFTWARE SITE LICENSE AGREEMENT is made as of ************* (this
"AGREEMENT") between PDF SOLUTIONS, INC., a corporation organized and existing
under the laws of the State of California ("LICENSOR"), whose address is 333
West San Carlos Street, Suite 700, San Jose, California, U.S.A. and TOSHIBA
CORPORATION, a corporation organized and existing under the laws of Japan (the
"CUSTOMER"), whose address is 1-1 Shibaura 1-chome, Minato-ku, Tokyo 105-01,
Japan.

                                    RECITALS:

      WHEREAS, Licensor has previously licensed to Customer certain of the
computer software packages identified on Schedule A hereto (the "SOFTWARE
PRODUCT") including end-user manuals and documentation, for use on a single
central processing unit pursuant to prior agreements between Licensor and
Customer.

      WHEREAS, Licensor and Customer wish to enter into a site or enterprise
license providing for a license of the Software Product by all employees of
Customer on Customer's central processing units, and to have all copies of
Software Product used by Customer covered under this Agreement.

      WHEREAS, this Agreement shall govern the relationship between both parties
with regard to any Software Product used by Customer.

      NOW, THEREFORE, in consideration of the mutual promises contained herein,
Licensor and Customer agree as follows:

1.    SOFTWARE PRODUCT LICENSE.

      (a)   GRANT.

            (i)   Licensor hereby grants to Customer a non-exclusive and
non-transferable license, without the right to sublicense, to use the Software
Product solely on the central processing units and other equipment owned or
operated by Customer on which the Software Product is designated to be used and
set forth in Schedule A (the "DESIGNATED EQUIPMENT"), and only for Customer's
own internal business use in the integrated circuit manufacturing and design
business. This Software Product License shall govern the license of all Software
Product licensed or used by Customer whether previously or hereafter provided or
licensed by Licensor to

                                                                             -1-

<PAGE>   2
Customer and shall replace any prior agreements entered into between Licensor
and Customer relating to licensing of copies the Software Product previously
delivered.

            (ii)  Subject to the provisions of Section 8, the term of the
Software Product License shall be for a period of three (3) years commencing on
January 1, 2001 after which period the Software Product License shall terminate
unless extended by mutual agreement between the parties.

            (iii) Customer shall not make the Software Product available to any
other party except (i) its subsidiaries in which Customer maintains a fifty
percent (50%) or greater ownership interest (but only for so long as Customer
retains such a percentage interest), by time-sharing or otherwise or (ii) others
who use the Software Product on Designated Equipment on Customer's premises for
the purposes specified in this Agreement and who agree in writing to maintain
the confidentiality of Licensor Information (as defined in Section 3(a).
Customer shall not use the Software Product to process any data other than its
own.

            (iv)  Customer shall not operate the Software Product on any central
processing unit other than the Designated Equipment, without the prior written
consent of Licensor.

            (v)   Customer acknowledges that it is receiving only a limited
license to use the Software Product and related documentation and that Licensor
retains all right, title and interest in and to the Software Product and related
documentation, including all patent, copyright, trade secret and other
intellectual property rights and any corrections, bug fixes, enhancements,
updates or other modifications, whether made by Licensor, Customer or any third
party.

            (vi)  Licensor shall grant to Customer, free of additional charge, a
license to use the interface and the related documentation therefor which is
developed by Licensor only for Customer. Such interface and documentation shall
constitute Software Product licensed under this Agreement.

      (b)   RISK OF LOSS. Licensor assumes the risk of loss or injury to
the Software Product until delivered to Customer. Thereafter, the risk of loss
and damage to the Software Product (except for replacement of defective items as
set forth in Section 5 hereof relating to warranties) shall be upon Customer.
Customer hereby assumes full responsibility for the selection, installation and,
subject to Section 4, maintenance of the Software Product.

      (c)   COPIES. In addition to such copies as are installed on Designated
Equipment, Customer may make one (1) copy of each item of the Software Product
for backup purposes only.

      (d)   REVERSE ENGINEERING. Customer agrees that only Licensor shall have
the right to maintain, enhance or otherwise modify the Software Product.
Customer shall not cause or permit the decompilation, disassembly, modification
or reverse engineering of all or any part of the Software Product and shall not
attempt to do so. Customer further acknowledges that the Product Software
incorporates certain tracking software (the "TRACKING SOFTWARE") designed to
track use of the Product Software and the fees payable hereunder. Customer shall
not amend or modify

                                                                             -2-
<PAGE>   3
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

such tracking software or take any other action which might disable or alter
such tracking features or the results obtained therefrom.

2.    PAYMENTS TO BE MADE BY CUSTOMER.

      (a)   PAYMENTS. Customer shall pay the charges for the Software Product in
the amounts and at the times indicated in Schedule B hereto.
********************************************************************************
********************************************************************************
********************* Customer shall hold Licensor harmless from all claims and
liabilities arising from Customer's failure to report or pay any such taxes,
duties and assessments subject to the following conditions and procedures.
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
**********************************************. Licensor agrees that the
payment may be made by Toshiba America Incorporated on Customer's behalf
provided that such payment is made in accordance with the conditions required by
Customer under this Agreement.

      (b)   AUDITING. In furtherance of any and all of Licensor's rights under
this Agreement, Customer shall, upon forty-eight (48) regular business hours
prior notice and no more than once during any twelve (12) month period, provide
Licensor with sufficient access to the data generated by and results of the
Tracking Software and shall provide such materials, documentation, reports and
other information as Licensor shall request to support and prove the usage of
and number of copies made under this Agreement and Customer's compliance with
the other provisions of this Agreement. Following delivery of such data, results
and other materials, if Licensor is not reasonably satisfied with such proof and
should Licensor reasonably request, Customer shall permit an independent third
party mutually acceptable to Licensor and Customer to enter upon Customer's
premises to audit Customer's compliance with the terms of this Agreement at
Licensor's expense.

3.    CONFIDENTIALITY AND USE OF SOFTWARE PRODUCT.

      (a)   GENERAL. Customer acknowledges that it has no proprietary interest
in or right to use the Software Product except in accordance with the terms of
the Software Product License granted in this Agreement. Customer agrees that,
during the term of this Agreement and thereafter, it will hold the Software
Product, the terms of this Agreement and any other confidential information of
the Licensor that may come into Customer's possession ("LICENSOR INFORMATION")
in confidence, that it will not sell, license, sublicense, publish, display,
distribute, disclose or otherwise make the Licensor Information or any part
thereof available to any third party except employees of Customer within the
scope of their employment and to others under a duty of confidence to Customer
while on Customer's premises, and that it will take all reasonable steps and
precautions to maintain the confidentiality of the Licensor Information.

                                                                             -3-
<PAGE>   4

            Notwithstanding the foregoing, information received by Customer in
connection with this Agreement shall not be considered Licensor Information if:

            (i)   The information is known by written records to Customer at the
time of disclosure; or

            (ii)  The information is or becomes public knowledge other than
through the unauthorized disclosure by Customer; or

            (iii) The information is rightfully received from a third party who
has the right to disclose the information; or

            (iv)  The information is specifically excluded from Licensor
Information by Licensor's prior written approval; or

            (v)   The information is independently developed by Customer without
prior knowledge of the Licensor's information.

      (b)   SPECIFIC. Without limiting the foregoing, Customer further agrees as
follows:

            (i)   It will not use the Software Product or any part thereof on
any central processing unit other than Designated Equipment, or at any location
other than Customer's business addresses, except as indicated in Section 1(a) of
this Agreement.

            (ii)  It will not remove or permit to be removed from any item
included in the Software Product any notice placed thereon by Licensor
indicating the confidential or proprietary nature thereof.

            (iii) Other than copies installed pursuant to Section 1(a)(i) and
the backup copy permitted by Section 1(c), it will not copy or duplicate by any
means the Software Product or any part thereof without the prior written consent
of Licensor. Any copy made by Customer shall include all copyright or other
proprietary notices of Licensor included in or on the original Software Product
provided by Licensor. Customer shall keep a record of each copy made, where such
copy is located and in whose custody it is, and shall provide to Licensor a
monthly report specifying all additional central processing units on which the
Product Software is installed and designated to be used under Section 1(a).

            (iv)  It will restrict all use of the information provided hereunder
solely to the field of use defined and granted herein, and will not use any
information in tangible or intangible form which has been or may be delivered or
disclosed to Customer or Customer's employees by Licensor or Licensor's
employees for the purpose of creating or attempting to create, or permitting
others to create or attempt to create, any product similar to the Software
Product or any part thereof.

            (v)   It will limit access to the Software Product to only those
employees of Customers and others who who need access thereto for the purposes
specified in this Agreement

                                                                             -4-
<PAGE>   5

and who have agreed in writing to protect the confidentiality of the Licensor
Information in the manner set forth in this Section

            (vi)  It will not copy any source code received by it from Licensor,
and it will take all necessary steps to assure that no copies are made by
employees or third parties.

            (vii) To protect and maintain the confidentiality of the Licensor
Information, it will take precautions at least as stringent as it uses to
protect its own confidential information.

      (c)   DISCLOSURE. Licensor recognizes that under certain circumstances,
Customer may be required by judicial order, regulatory authority, or in order to
satisfy its auditors, to disclose certain information about the Software
Product, and Licensor hereby consents to such disclosure, provided that:

            (i)   If the disclosure is to be to a governmental authority or
pursuant to judicial order, Customer shall notify Licensor within forty-eight
(48) regular business hours after Customer receives such a notice, and

            (ii)  If such request is by Customer's auditors, then before any
disclosure is made, Customer shall obtain from such auditors a covenant and
agreement to respect the confidentiality required by this Section 3. Upon
request, Licensor shall provide forms for this purpose.

4.    UPDATES, SUPPORT AND MAINTENANCE. Customer shall receive modifications and
updates to the Software Product, including updates to user documentation, and
advice by telephone or mail and other support and maintenance services with
respect thereto in accordance with the terms of a separate Software Maintenance
Agreement executed simultaneously with the execution of this Agreement. Such
modifications, updates, support and maintenance will be provided without
additional charges beyond those set forth in this Agreement, except as
specifically provided in the Software Maintenance Agreement.

5.    EXPRESS WARRANTIES AND EXCLUSION OF IMPLIED WARRANTIES.

      (a)   AUTHORITY. Licensor warrants that it has the right to grant the
license of the Software Product granted in this Agreement.

      (b)   INFRINGEMENT ACTIONS. Licensor will defend at its expense any action
brought against Customer to the extent that it is based on a claim that the
Software Product constitutes infringement of any patent, copyright, or other
intellectual proprietary rights in the United States and Japan, and Licensor
will pay all damages and costs reasonably incurred by Customer in such action
which are attributable to such claims, provided that Licensor is informed in
writing and furnished a copy of each communication, notice or other action
relating to the alleged infringement and is given authority, information and
assistance (at Licensor's expense) necessary to defend or settle such claim.
Should the Software Product become, or in Licensor's opinion be likely to
become, the subject of a claim of infringement of any United States and/or
Japanese patent, copyright, or other intellectual proprietary rights, then
Licensor may at its option (i)

                                                                             -5-
<PAGE>   6

procure for Customer the right to use the Software Product free of any liability
for infringement or (ii) replace such Software Product with non-infringing
substitutes otherwise complying substantially with all of the requirements of
this contract. In the event that Licensor attempts in good faith but is unable
to resolve such infringement, Licensor may terminate this Agreement and shall
refund to Customer a prorated portion of the amount Customer has paid to
Licensor based upon the portion of the year that customer has had use of the
Software Product prior to such termination.

      Licensor will not be obligated to defend or be liable for costs and
damages if the infringement arises out of any software developed by Licensor in
compliance with the Customer's specifications or a modification of the Software
Product after delivery by Licensor.

      (c)   PATENTS AND COPYRIGHTS. If any action is brought against Licensor,
based on a claim that any software developed by Licensor in compliance with
Customer's specifications and supplied to Customer directly infringes any duly
issued United States patent, copyright, or other proprietary right in the United
States, then the indemnity obligation herein stated with respect to Licensor
shall reciprocally apply with respect to Customer with respect to such claim of
infringement.

      (d)   CONFORMITY AND DOCUMENTATION. Licensor warrants that the Software
Product will, when delivered, conform to the documentation therefor provided by
Licensor. If, within 60 days after delivery of the Software Product, Customer
reports an alleged defect in the Software Product, Licensor's qualified
personnel will attempt to verify the defect and, within thirty (30) days
(determined in light of the nature and scope of the alleged defect), after
confirming the existence of a defect, Licensor shall correct the defect in the
Software Product or provide Customer with an avoidance procedure to correct the
defect.

      (e)   EXTENT OF LIABILITY.

            (i)   THE PROVISIONS OF SECTIONS 5(b) AND (c) STATE THE SOLE AND
EXCLUSIVE LIABILITY OF THE PARTIES HERETO FOR PATENT AND COPYRIGHT INFRINGEMENT
AND IS IN LIEU OF ALL CONDITIONS OR WARRANTIES EXPRESSED, IMPLIED, STATUTORY OR
OTHERWISE IN REGARD THERETO.

            (ii)  THE FOREGOING WARRANTIES DO NOT APPLY TO THE SOFTWARE PRODUCT
IF LOCATED OR USED IN A MANNER INCONSISTENT WITH ANY TERMS OR LIMITATIONS OF
THIS AGREEMENT. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT,
LICENSOR DISCLAIMS ALL OTHER CONDITIONS AND WARRANTIES, WHETHER EXPRESSED,
IMPLIED OR STATUTORY INCLUDING ALL IMPLIED CONDITIONS OR WARRANTIES INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

6.    LIMITATION OF DAMAGES. In no event will Licensor be liable for any damages
arising from performance or non-performance of the Software Product or for any
lost profits, loss of use, loss of data, cost of procurement of substitute goods
or services, or other consequential,

                                                                             -6-
<PAGE>   7
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

incidental, special, indirect or exemplary damages, however caused and under any
theory of liability, even if Licensor has been advised of the possibility of
such damage, or for any claim against the Customer by any other party, except as
provided for in Section 5 with respect to infringement of the rights of others.
In no event shall Licensor's liability for any cause exceed the aggregate amount
paid by Customer to Licensor pursuant to this Agreement except for personal
injury or death resulting from Licensor's gross negligence or willful
misconduct. Customer acknowledges that the amounts payable hereunder are based
in part on these limitations and further agrees that these limitations shall
apply notwithstanding any failure of essential purpose of any limited remedy.

7.    NONTRANSFERABILITY. Customer shall not assign, sublicense, extend or
other-wise transfer in whole or in part this Agreement or any license granted
hereunder without written consent of Licensor to such transfer which consent
shall not be unreasonably withheld. Licensor will notify Customer in writing
prior to transferring or assigning this Agreement and Licensor will not be
released from its obligations hereunder without written consent of Customer to
such transfer or assignment. As used in the preceding sentence, "Customer" means
only the specific entity that has executed this Software License Agreement as
Customer.

8.    DEFAULT; EFFECT OF TERMINATION.

      (a)   DEFAULT; TERMINATION BY CUSTOMER. Customer shall be in default
hereunder upon the occurrence of any of the following events: (i) any sum of
money owed by Customer hereunder is not paid when due; (ii) Customer breaches
any provision of this Agreement relating to the non-disclosure or limited use of
confidential or proprietary information; or (iii) there occurs any material
violation of or failure to perform any other term of this Agreement to be
performed by Customer which is not remedied by Customer within thirty (30) days
after notice of such violation or failure has been given by Licensor to
Customer. Upon the occurrence of any such default, Licensor may terminate the
Software Product License granted in this Agreement and all sums of money owed by
Customer hereunder shall thereupon become due and payable to Licensor within
thirty (30) days. When the Software Product License granted in this Agreement
shall terminate due to violations of this Agreement without notice of
termination, such termination shall be effective as of the date upon which
Customer ceases to use the Software Product, and Licensor shall at all times
thereafter have the same rights and remedies as Licensor would have in the event
the Software Product License were terminated by virtue of a default by Customer
with notice having been given.

      (b)   NON-WAIVER. The exercise or non-exercise of any right granted to
Licensor or to Customer under the terms of this Section 8 or under any other
provision of this Agreement shall not operate as a waiver of any right which may
subsequently accrue to Licensor or Customer under any provision of this
Agreement and shall not preclude the exercise by Licensor or Customer of any
other rights or remedies which either Licensor or Customer may have in law or
equity or under the terms of this Agreement.

      (c)   SURVIVAL. The provisions of this Agreement relating to
confidentiality shall survive for a period of *********** after the termination
of the Software Product License. The

                                                                             -7-
<PAGE>   8
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

provisions of this Agreement relating to payments due, extent of liability,
limitation of damages, governing law and arbitration as well as this Section 8
shall survive the termination of the Software Product License.

      (d)   DISPOSITION OF SOFTWARE AND LICENSOR INFORMATION. Upon the
termination of the Software Product License, Customer agrees to return to
Licensor all copies of tangible portions of the Software Product and any
material containing or pertaining to the Licensor Information delivered or
disclosed to Customer by Licensor pursuant to the terms of this Agreement, or
otherwise, as well as any copies made by Customer. Title to the Software Product
and any changes, modifications or improvements made or developed with regard to
the Software Product, whether or not made or developed at Customer's request,
shall remain the property of Licensor and shall be deemed to have been part of
the Software Product, as of the date of this Agreement.

9.    ACCEPTANCE BY LICENSOR; ENTIRE AGREEMENT; AMENDMENTS. This Agreement shall
not be effective until accepted in writing by Licensor at its office set forth
in this Agreement. This Agreement constitutes the entire agreement and
understanding between Licensor and Customer concerning the subject matter
hereof, and cancels, terminates and supersedes all prior written and oral
understandings, agreements, proposals, promises and representations of the
parties respecting any and all subject matter contained herein. No
representation or promise hereafter made by a party, nor any modification or
amendment of this Agreement, shall be binding upon either party unless in
writing and signed by Customer and accepted in writing by an authorized agent of
Licensor at its office set forth in this Agreement.

10.   NOTICES. Any notices required or permitted to be given under the terms of
this Agreement shall be deemed given upon personal delivery or five days after
the day of postmark thereof if sent by mail, postage prepaid, registered or
certified mail, return receipt requested, and addressed to the other party at
the address as shown below or at such address as such party from time to time
may indicate by written notice given to the other party hereto.

If to Licensor:      PDF Solutions, Inc.
                     333 West San Carlos Street
                     Suite 700
                     San Jose, California 95110
                     U.S.A.
                     Attention:     President
                     Fax:           (408) 280-7915
                     Phone:         (408)280-7900

If to Customer:      Toshiba Corporation
                     *************************
                     *************************
                     Japan
                     Attention:   *************
                                  *************************
                     Fax:         *************

                                                                             -8-
<PAGE>   9
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                     Phone:       *************

11.   GOVERNING LAW. This Agreement is entered into in, and shall be governed by
and construed in accordance with the laws of, the State of California without
reference to conflicts of law provisions.

12.   SEVERABILITY. The invalidity of unenforceability of any particular
provisions of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted.

13.   HEADINGS AND CAPTIONS. The headings and captions used in this Agreement
are for convenience of the parties only and shall in no way define, limit,
expand or otherwise affect the meaning of construction of any provision of this
Agreement.

14.   BINDING EFFECT. Subject to all of the terms and conditions hereof, this
Agreement inures to the benefit of and is binding upon the parties hereto and
their successors and assigns.

15.   ARBITRATION. Any dispute arising in connection with this Agreement shall
be amicably settled. Should both parties fail to do so within *********** from
the date in which one party sends to the other party a letter describing the
dispute, such dispute shall be finally settled by arbitration in accordance of
the rules of the International Chamber of Commerce (ICC). Licensor and Customer
shall appoint one arbitrator each and the third arbitrator shall be appointed by
the other two arbitrators or, failing the agreement between them, by the
president of the International Chamber of Commerce within the time limits
provided for by the then existing rules of the International Chamber of
Commerce. The arbitration shall take place in Honolulu, Hawaii and the
arbitrator shall decide all disputes in accordance with equity and good
commercial practice and shall not be bound by the law of any jurisdiction of
process. The decision of the arbitrators shall be final and unappealable and may
be enforced in any country having jurisdiction over the parties or their assets.

16.   ESCROW.

      (a)   ESCROW AGENT. Immediately upon execution of this Agreement, Licensor
shall deposit with an escrow agent selected by Licensor ("ESCROW AGENT"), the
source code language of the Software Product, as well as source code
enhancements and modification to the Software Product (together referred to as
"SOURCE CODE") within ten (10) days after the same becomes available. Escrow
Agent shall act as custodian of the Source Code as long as this Agreement shall
be in effect

      Within one (1) month from the date of execution of this Agreement,
Licensor shall provide Customer with the evidence of the deposit of Source Code
and the copy of the escrow agreement between Licensor and Escrow Agent which
specifies the contingent events and procedure effecting disclosure of the
deposit to Customer.

      (b)   INSOLVENCY. Upon the occurrence of any one of the following events:

                                                                             -9-

<PAGE>   10

            (i)   Liquidation of Licensor or discontinuation of business by
Licensor without proper provisions for support to be provided by a third party
appointed by Licensor; or

            (ii)  Licensor's inability or failure to reasonably support all or
any portion of the Software Product within ninety (90) days after receiving
written notification of such failure;

Escrow Agent is hereby authorized to provide to Customer, upon Customer's
written request, a copy of the portion of the Source Code not so supported.

      (c)   USE OF SOURCE CODE. Upon provision by Escrow Agent of a copy of all
or any portion of the Source Code to Customer pursuant to Section 16(b),
Customer shall only have the right to use the Source Code for the purpose of
maintaining the Software Product and for support thereof but only for such
purpose and only for the term of this Agreement and for so long as the condition
set forth in such Section 16(b) is satisfied. The Source Code shall be deemed to
be confidential information as provided in Section 3 hereof with Customer
subject to all of the obligations set forth therein with regard to such Source
Code.

                                                                            -10-
<PAGE>   11
      (d)   AVAILABILITY OF SOURCE PRODUCT AND DIGITAL CONNECTION. Customer
shall have the right to continue to purchase the Software Product from Escrow
Agent or receiver per term's and conditions of this Agreement.

      IN WITNESS WHEREOF, the parties hereto executed this Agreement on the day
and year first written above.

LICENSOR:                              CUSTOMER:

PDF SOLUTIONS, INC.                    TOSHIBA CORPORATION

By:  /s/ P. Steven Melman              By:  /s/ Y. Morimoto
     -----------------------------          ---------------

Name:  P.S. Melman                     Name: Y. Morimoto
       ---------------------------           -----------

Title:  CFO                            Title: CEO Toshiba Semiconductor Company
        --------------------------            ---------------------------------

                                                                            -11-

<PAGE>   12
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                   SCHEDULE A

                                SOFTWARE PRODUCT

*************

*************

*************

*************

*************

*************

*************

*************

*************

                              DESIGNATED EQUIPMENT

1)    *************************

2)    *************************

3)    *************************

4)    *************************

                                                                             -1-
<PAGE>   13
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                   SCHEDULE B

                                  LICENSE FEES

      Pursuant to Section 2 of that certain Software Site License Agreement
dated as of ************* between PDF Solutions, Inc. and Toshiba Corporation,
Toshiba agrees to pay the fees set forth herein for use of the Software Product
licensed under the License Agreement:

      1.    DEFINITIONS. All defined terms used in this Schedule B shall have
the meanings ascribed to them in the Agreement; provided that for purposes of
this Schedule B, the following terms shall have the following respective
meanings:

            "AVERAGE ANNUAL PEAK USAGE" means the average of the Peak Monthly
Usage for the twelve (12) calendar months in any Usage Year.

            "PEAK MONTHLY USAGE" means the highest number of Usage Units
determined on any day during a specified Usage Month.

            "PRODUCT USES" with respect to any individual Software Product on
any day, shall mean the number of times on such day all users are using or
running such individual Software Product. For the purpose of this definition, a
time being used shall occur if on a particular day a particular user is using or
running a particular Software Product; provided that if at any given time on
that day such user is concurrently using or running such Software Product on
more than one central processing unit, then each such concurrent use shall count
as a separate time being used by such user; provided further that if on a day
such user is using or running a Software Product on more than one central
processing unit but such uses are at no time concurrent, then all such
nonconcurrent uses on such day by such user shall count as one time being used.
For example, if user A uses or has running ****** on two central processing
units and such uses are concurrent at any time during such day, user B uses or
has running ******** on three central processing units during such day but on
not more than two central processing units at any given time during such day,
and user C uses or has running ****** on two central processing units during
such day but such uses are not at any time concurrent, and there are no other
users of ********on such day then the number of ******** Product Uses on such
day is five (calculated as two times being used for user A, two times being used
for user B and one time being used for user C). As other examples, (a) the use
by user X of ****** on three separate occasions on the same central processing
unit on one day shall count as one time being used and (b) the nonconcurrent use
by user Y of ****** on three central processing units shall count as one time
being used. Uses of such Software Product shall include all copies of such
Software Product being used by Customer, including copies thereof delivered to
Customer prior to the execution of this Agreement.

            "USAGE DAY" shall mean the 24 hour period commencing at midnight and
ending at the following midnight, *************, Japan time.

            "USAGE MONTH" shall mean any calendar month during any
Usage Year.

<PAGE>   14
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

            "USAGE UNITS" accruing on any specific day shall mean a number equal
to (a) *********** of **** Product Uses for such day ****** (b) ***** multiplied
by ************************* Product Uses for such day ******* (c) ****
multiplied by ************* Product Uses for such day ***** (d) ***** multiplied
by ************************************* Product Uses ******* (e) *****
multiplied by ************************* Product Uses for such day ****** (f)
******* multiplied by ************************************* Product Uses for
such day **** (g) ****** multiplied by ************************* Product Uses
for such day ****** (h) ****************** Product Uses for such day (i)
************* ************************* Product uses for such day.

            "USAGE YEAR" shall mean the 12 month period commencing on any Usage
Year Commencement Date during the term of this Agreement and ending on the last
day of such twelfth month.

            "USAGE YEAR COMMENCEMENT DATE" shall mean January 1, 2001 (the
"FIRST USAGE YEAR COMMENCEMENT DATE") and each one year anniversary of such date
during the term of this Agreement.

           2. INITIAL LICENSE FEE; ADDITIONAL LICENSE FEE. Within 30 days of
each Usage Year Commencement Date during the term of this Agreement Toshiba
shall pay PDF the following initial license fee (the "INITIAL LICENSE FEE"): (a)
on the First Usage Year Commencement Date, an amount equal to equal to
$*************; and (b) on each subsequent Usage Year Commencement Date, an
amount equal to $*************. Within 30 days following the end of each Usage
Year, Toshiba shall pay, in addition to the Initial License Fee, the following
additional license fee (the "ADDITIONAL LICENSE FEE") for such just completed
Usage Year corresponding to the Average Annual Peak Usage for such Usage Year:

            AVERAGE ANNUAL
         PEAK USAGE FOR THE                               ADDITIONAL
              USAGE YEAR                                 LICENSE FEE
         ------------------                              -----------

     Greater than *** Usage Units but                   $*************
     less than or equal to *** Usage
     Units

     Greater than *** Usage Units but                   $*************
     less than or equal to **** Usage
     Units

     Greater than *** Usage Units but                   $*************
     less than or equal to **** Usage
     Units

<PAGE>   15
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

     Greater than *** Usage Units                       $*************

3.    U.S. DOLLARS. All Dollar ($) amounts shall refer to United States Dollars.
All payments shall be made by wire transfer of immediately available funds to an
account specified by Licensor.

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