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                                                                     EXHIBIT 4.2

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT

         THIS SECOND AMENDED AND RESTATED RIGHTS AGREEMENT (the "Agreement") is
entered into as of July 6, 2001, by and among PDF Solutions, Inc., a California
corporation (the "Company"), the holders of shares of Series A Preferred Stock
(the "Series A Purchasers"), the holders of Series B Preferred Stock (the
"Series B Purchasers") (the Series A Purchasers and Series B Purchasers are
referred to herein collectively as the "Preferred Purchasers,"), certain other
shareholders listed on Exhibit B hereto (the "Founders") and Applied Materials,
Inc., a Delaware corporation ("Applied"), (Applied, the Founders, the Series A
Purchasers and the Series B Purchasers are referred to herein collectively as
the "Purchasers" or the "Investors").

                                    RECITALS

         WHEREAS, the Company, the Series A Purchasers, the Series B Purchasers
and the Founders have entered into a First Amended and Restated Registration
Rights Agreement dated as of August 4, 2000 (the "Rights Agreement"). The
Company, the Founders, and a majority of the holders of Series A Preferred Stock
and Series B Preferred Stock desire to amend and restate in its entirety the
Rights Agreement in accordance with Section 3.7 thereof.

         WHEREAS, the Company and Applied have entered into a Stock Purchase
Agreement dated as of June 28, 2001 (the "Purchase Agreement"), pursuant to
which the Company shall sell, and Applied shall acquire, shares of the Company's
common stock, $0.0001 par value per share (the "Common Stock").

         WHEREAS, a condition to Applied's obligations under the Purchase
Agreement is that the Company and Applied shall enter into this Agreement in
order to provide Applied with (i) certain rights to register certain shares of
the Company's Common Stock held by Applied. The Company desires to induce
Applied to purchase shares of Common Stock pursuant to the Purchase Agreement by
agreeing to the terms and conditions set forth herein.

         NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS
HEREINAFTER SET FORTH, THE PARTIES AGREE that effective and contingent upon
execution of this Agreement by the Company and the holders of a majority of the
Registrable Securities, as that term is defined in the Rights Agreement, not
including any shares held by the Founders, and upon closing of the IPO (as that
term is defined in the Purchase Agreement), the Rights Agreement is hereby
amended and restated in its entirety to read as set forth in this Agreement, and
the Company and the Investors hereby agree to be bound by the provisions hereof
as the sole agreement of the Company and the Investors with respect to
registration rights of the Company's securities and certain other rights, as set
forth herein;

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         AND FURTHER AGREE AS FOLLOWS:

                                    SECTION 1

                        Restrictions on Transferability;
                               Registration Rights

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

               "Applied Shares" shall mean the 250,000 shares of Common Stock
referred to in Section 6(a)(i) of the Purchase Agreement issued to Applied as of
the date hereof.

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

               "Common Shares" shall mean all shares of Common Stock issued to
the Founders as of the date hereof.

               "Conversion Shares" shall means the Common Stock issued or
issuable upon conversion of the Preferred Shares as defined herein.

               "Holder" shall mean any Investor holding Registrable Securities
and any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.

               "Initiating Holders" shall mean Holders in the aggregate of not
less than fifty percent (50%) of the Registrable Securities as defined for
purposes of that particular section.

               "Major Purchaser" shall mean any Investor (together with its
affiliates) holding more than 100,000 shares of Registrable Securities, as
adjusted to reflect any stock split, stock dividend, recapitalization, or
similar event, or any Common Stock otherwise issued or issuable with respect to
the Common Shares, Conversion Shares or Preferred Shares.

               "Preferred Shares" shall mean shares of the Series A Preferred
and Series B Preferred Stock outstanding as of the date hereof.

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

               "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits

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incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

               "Registrable Securities" means (i) the Common Shares except that
all such Common Shares shall not be included in the definition of Registrable
Securities for the purposes of Sections 1.5, 1.7 and 3.7; (ii) the Applied
Shares except that all such Applied Shares shall not be included in the
definition of Registrable Securities for the purposes of Section 2.1; (iii) the
Conversion Shares; and (iv) any Common Stock of the Company issued or issuable
in respect of the Common Shares, Preferred Shares or Conversion Shares or other
securities issued or issuable with respect to the Preferred Shares, Conversion
Shares or Common Shares upon any stock split, stock dividend, recapitalization,
or similar event, or any Common Stock otherwise issued or issuable with respect
to the Common Shares, Conversion Shares or Preferred Shares; provided, however,
that shares of Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.

               "Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.

               "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

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

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

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

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
          INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECU-

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          RITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR
          PLEDGED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY
          RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY)
          REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
          EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
          SAID ACT."

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

          1.4  Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which an Investor which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority-owned
subsidiaries or affiliates for no consideration, or (c) in any transaction in
which an Investor which is a partnership distributes Restricted Securities after
six (6) months after the purchase thereof solely to partners thereof for no
consideration, provided that each transferee agrees in writing to be subject to
the terms of this Section 1.4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.

          1.5 Requested Registration.

              (a) Request for Registration. In case the Company shall receive
from Initiating Holders a written request that the Company effect any
qualification, compliance or registration the reasonably anticipated aggregate
price to the public of which net of underwriting discounts and commissions,
would exceed $7,500,000, the Company shall:

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

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

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

                       (2) Prior to the earlier of (i) six (6) months following
the Company's initial public offering or (ii) July 31, 2003;

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

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

                       (5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a single period
not to exceed one hundred-twenty (120) days from the date of receipt of written
request from the Initiating Holders.

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

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

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

         If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the managing underwriter. The Registrable Securities and/or
other securities so withdrawn shall also be withdrawn from registration, and
such Registrable Securities shall not be transferred in a public distribution
prior to one hundred eighty (180) days after the effective date of such
registration.

          1.6  Company Registration.

               (a) Notice of Registration. If at any time or from time to time,
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:

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

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

               (b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders

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as a part of the written notice given pursuant to Section 1.6(a)(i). In such
event, the right of any Holder to registration pursuant to Section 1.6 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company (or by the holders who have demanded such registration).
Notwithstanding any other provision of this Section 1.6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration to a minimum of 30% of the total
shares to be included in such underwriting or, in the case of the Company's
initial public offering, exclude them entirely. The Company shall so advise all
Holders and the other holders distributing their securities through such
underwriting pursuant to piggyback registration rights similar to this Section
1.6, and the number of shares of Registrable Securities and other securities
that may be included in the registration and underwriting shall be first
allocated among all Preferred Purchasers and Applied in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Preferred Purchasers and Applied at the time of filing the registration
statement, and after satisfaction of the requirements of the Preferred
Purchasers and Applied, the remaining shares that may be included in the
registration and underwriting shall be allocated among the Founders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Founders at the time of filing of the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest 100 shares. If any Holder
or other holder disapproves of the terms of any such underwriting, he or she may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities withdrawn from such underwriting shall be withdrawn
from such registration, and shall not be transferred in a public distribution
prior to one hundred eighty (180) days after the effective date of the
registration statement relating thereto (the "Lock-Up Period"); provided,
however, that if such registration is not the Company's initial public offering
such Lock-Up Period shall be one hundred twenty (120) days unless the managing
underwriter determines that marketing factors require a longer period in which
case the Lock-Up period shall be specified by the managing underwriter but shall
not exceed one hundred eighty (180) days.

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

          1.7 Registration on Form S-3.

               (a) If Initiating Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a

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

               (b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following the effective date of a registration
statement (other than with respect to a registration statement relating to a
Rule 145 transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities), or
(iii) if the Company shall furnish to such Holder a certificate signed by the
President of the Company stating that, in the good faith judgment of the Board
of Directors, it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed one hundred twenty
(120) days from the receipt of the request to file such registration by such
Holder or Holders.

               (c) Notwithstanding Section 1.7(a) above and subject to Section
1.7(b)(i) above, if during the period between (i) the first anniversary of the
closing of the Company's (d) initial public offering and (ii) the second
anniversary of the closing of the Company's initial public offering, Applied
requests that the Company file a registration statement on Form S-3 (or any
successor form to Form S-3) for a public offering of shares of the Registrable
Securities, the reasonably anticipated aggregate price to the public of which,
net of underwriting discounts and commissions, would exceed $1,000,000, and the
Company is a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall use its best efforts to cause
such Registrable Securities to be registered for the offering on such form;
provided, however, that the Company shall not be required to effect more than
one registration pursuant to this Section 1.7(c); and further, provided that, if
the Company makes a good faith determination that any such offering would be
detrimental to any other filed or pending offering, the requirement to register
Applied Shares pursuant to this Section 1.7(c) shall be waived to the extent,
and only to the extent, as to those Applied Shares as are permitted to be
included in such other

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offering. The Company will, as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request within twenty (20) days
after receipt of such written notice. In the event that a registration pursuant
to this Section 1.7(c) is for a registered public offering involving an
underwriting, the Company and Applied shall enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company and reasonably acceptable to Applied.

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

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

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

               (a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (120) days or until the distribution described in the registration
statement has been completed. The Company shall not be required to file, cause
to become effective or maintain the effectiveness of any registration statement
that contemplates

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a distribution of securities on a delayed or continuous basis pursuant to Rule
415 under the Securities Act; and

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

          1.11 Indemnification.

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

               (b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein

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not misleading, and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the liability of a Holder for indemnification under this
Section 1.11(b) shall not exceed the net proceeds from the offering received by
such Holder.

               (c) Each party entitled to indemnification under this Section
    1.11 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

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

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

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

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

                                      -11-
<PAGE>   12

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

          1.14 Transfer of Registration Rights. The rights to cause the Company
to register securities granted Investors under Sections 1.5, 1.6 and 1.7 may be
assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by an Investor (together with any
affiliate); provided, that (a) such transfer may otherwise be effected in
accordance with applicable securities laws, (b) notice of such assignment is
given to the Company, and (c) such transferee or assignee (i) is an affiliate of
such Investor or a constituent partner (including limited partners) of such
Investor, or (ii) acquires from such Investor the lesser of (a) 100,000 or more
shares of Restricted Securities (as appropriately adjusted for stock splits and
the like) or (b) all of the Restricted Securities then owned by such Investor.

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

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

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

                    (b) on or after the closing of a public offering of the
Common Stock of the Company when all shares of the Holder's Registrable
Securities may be sold under Rule 144 during any 90-day period; provided,
however, that the provisions of this subsection (b) shall not apply where the
Holder owns more than two percent (2%) of the Company's outstanding stock until
such time as such Holder owns less than two percent (2%) of the outstanding
stock; provided, however, that the rights of Applied set forth in Section 1.7(c)
shall terminate only after two (2) years following the consummation of the sale
of securities pursuant to a registration

                                      -12-
<PAGE>   13

statement filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.

                                    SECTION 2

                             Right of Participation

          2.1 Purchasers' Right of Participation.

               (a) Right of Participation. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Major Purchaser
the right of participation to purchase its Pro Rata Portion of any New
Securities (as defined in subsection 2.1(b)) which the Company may, from time to
time, propose to sell and issue. A Major Purchaser's "Pro Rata Portion" for
purposes of this Section 2.1 is the ratio that (x) the sum of the number of
shares of the Company's Common Stock then held by such Major Purchaser and the
number of shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock then held by such Major Purchaser, bears to (y) the sum of the
total number of shares of the Company's Common Stock then outstanding, the
number of shares of the Company's Common Stock issuable upon the exercise of any
issued and outstanding rights, options or warrants, and the number of shares of
the Company's Common Stock issuable upon conversion of the then outstanding
Preferred Stock.

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

                                      -13-
<PAGE>   14

rights or agreements, or (viii) shares of capital stock issued in connection
with any stock split, stock dividend or recapitalization by the Company.

               (c) Notice of Right. In the event the Company proposes to
undertake an issuance of New Securities, it shall give each Purchaser written
notice of its intention, describing the type of New Securities and the price and
terms upon which the Company proposes to issue the same. Each Purchaser shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1(a)), for the price and upon the terms specified in the notice, by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.

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

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

               (f) Assignment. The right of the Purchasers to purchase any part
of the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 100,000 or more shares of Restricted
Securities (as adjusted for stock splits and the like) or (ii) all of the
Restricted Securities then owned by such Purchaser.

          2.2 Termination of Participation Right. The rights of participation
granted under Section 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the earlier of (i) the consummation of the
Company's sale of its Common Stock in an underwritten public offering pursuant
to an effective registration statement filed under the Securities Act
immediately subsequent to which the Company shall be obligated to file annual
and quarterly reports with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.

                                      -14-
<PAGE>   15

                                    SECTION 3

                                  Miscellaneous

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

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

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

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

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

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

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

                                      -15-
<PAGE>   16

          3.8 Effect of Amendment or Waiver. The Investors and their successors
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement; provided that the rights and obligations of Applied may not be
adversely affected without its consent in accordance with Section 3.7 above.

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

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

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

                            [SIGNATURE PAGE FOLLOWS]

                                      -16-
<PAGE>   17

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

COMPANY:

PDF SOLUTIONS, INC.,
a California corporation

By:
   -------------------------------------------------------
   John K. Kibarian, President and Chief Executive Officer

FOUNDERS:

------------------------------------
JOHN K. KIBARIAN

------------------------------------
KIMON MICHAELS

------------------------------------
THOMAS COBOURN

------------------------------------
HOWARD READ

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
<PAGE>   18

SERIES A AND SERIES B HOLDERS:

U.S. VENTURE PARTNERS IV, L.P.

By: Presidio Management Group IV, L.P.
    Its General Partner

By:
   ------------------------------------
   Name:
   Title:

         2180 Sand Hill Road, Suite 300
         Menlo Park, CA 94025

SECOND VENTURES II, L.P.

By: Presidio Management Group IV, L.P.
    Its General Partner

By:
   ------------------------------------
   Name:
   Title:

         2180 Sand Hill Road, Suite 300
         Menlo Park, CA 94025

U.S.V.P. ENTREPRENEUR PARTNERS II, L.P.
A Delaware Limited Partnership

By: Presidio Management Group IV, L.P.
    Its General Partner

By:
   ------------------------------------
   Name:
   Title:

         2180 Sand Hill Road, Suite 300
         Menlo Park, CA 94025

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
<PAGE>   19

2180 ASSOCIATES FUND

By:
   ------------------------------------
   Name:
   Title:

         2180 Sand Hill Road, Suite 300
         Menlo Park, CA 94025

TELOS VENTURE PARTNERS, L.P.

By:
   ------------------------------------
   Name:
   Title:

         2350 Mission College Blvd., Suite 1070
         Santa Clara, CA 95054

THE CASSIN FAMILY TRUST U/D/T/
DTD 1/31/96, BRENDAN J. AND ISABEL
B. CASSIN, TRUSTEES

By:
   ------------------------------------
   Name:
   Title:

         3000 Sand Hill Road, Building 3, Suite 210
         Menlo Park, CA 94025

CASSIN FAMILY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP

By:
   ------------------------------------
   Name:
   Title:

         3000 Sand Hill Road, Building 3, Suite 210
         Menlo Park, CA 94025

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
<PAGE>   20

VLG INVESTMENTS 1995

By:
   ------------------------------------
   Name:
   Title:

         c/o Venture Law Group
         2800 Sand Hill Road
         Menlo Park, CA 94025

CRAIG W. JOHNSON

--------------------------------
Craig W. Johnson

         c/o Venture Law Group
         2800 Sand Hill Road
         Menlo Park, CA 94025

PETER COHN

---------------------------------
Peter Cohn

         c/o 1020 Marsh Road
         Menlo Park, CA 94025

PETER COHN, AS TRUSTEE OR THE
SUCCESSOR TRUSTEE OR TRUSTEES
U/A/D JUNE 29, 1995, AS AMENDED,
CREATING THE PETER COHN REVOCABLE TRUST

By:
   ------------------------------
   Peter Cohn
   Trustee

         1020 Marsh Road
         Menlo Park, CA 94025

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT

<PAGE>   21

ORRICK, HERRINGTON & SUTCLIFFE LLP

By:
   ------------------------------
   Peter Cohn
   Partner

         1020 Marsh Road
         Menlo Park, CA 94025

RICHARD M. LUCAS FOUNDATION

By:
   ------------------------------
   Name:
   Title:

         3000 Sand Hill Road, Suite 3-210
         Menlo Park, CA 94025

ST. MARY'S COLLEGE OF CALIFORNIA

By:
   ------------------------------
   Name:
   Title:

         1928 St Mary's Road
         Moraga, CA 94556

ST. FRANCIS GROWTH FUND

By:
   ------------------------------
   Name:
   Title:

         San Francis High School
         1885 Miramonte Avenue
         Mountain View, CA 94049

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
<PAGE>   22

LARRY YOSHIDA

---------------------------------
      Larry Yoshida

            Address:
                     --------------------------

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

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

DONALD L. LUCAS PROFIT SHARING TRUST

By:
   ------------------------------
   Name:
   Title:

         Attn:  Donald L. Lucas
         3000 Sand Hill Road, #3-210
         Menlo Park, CA 94025
         (650) 854-4223

RWI GROUP IV, L.P.
By:  RWI GROUP LLC
     Its General Partner

By:
   ------------------------------
   Name:
   Title:

         Attn:  Donald A. Lucas
         720 University Ave., # 103
         Palo Alto, CA 94301
         (650) 833-4980

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
<PAGE>   23

BRIAN BURR

------------------------------------
Brian Burr

         c/o 1020 Marsh Road
         Menlo Park, CA 94025

TETON CAPITAL COMPANY,
A CALIFORNIA LIMITED PARTNERSHIP

By:
   ------------------------------
   Name:
   Title:

         Attn:  Donald L. Lucas
         3000 Sand Hill Road, #3-210
         Menlo Park, CA 94025
         (650) 854-4223

THE RYDE REVOCABLE TRUST

DATED 12/15/94

By:
   ------------------------------
      Magnus Ryde
      Trustee

         39 Windchester Drive
         Atherton, CA 94027
         (650) 329-9638

APPLIED:

APPLIED MATERIALS, INC.,
a Delaware corporation

By:______________________________________________

   _____(name)_____, ___________(title)________

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT<PAGE>   1
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                                                    EXHIBIT 10.6

                             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.

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

                        TECHNOLOGY COOPERATION AGREEMENT

        This Technology Cooperation 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 1200, San Jose, California, U.S.A..

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;

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

                                      -1-
<PAGE>   2

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

                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 provide PDF on a timely
basis with such Intellectual Property (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 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

                                       -2-
<PAGE>   3

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 PAYMENTS. All payments by Toshiba hereunder shall be made by wire
transfer to the bank account to be designated by PDF. If required by applicable
law, Toshiba shall withhold and 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 shall promptly and timely effect the payment of any such taxes so
withheld to the appropriate tax or other governmental authorities. Upon payment
of such taxes so withheld, Toshiba shall, as promptly as possible, send to PDF
an official tax receipt, tax payment certificate or other evidence issued by the
applicable tax or governmental authorities. The parties acknowledge that PDF
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.      OWNERSHIP.

        3.1 SOLELY DEVELOPED INTELLECTUAL PROPERTY. Each party shall solely own
any Intellectual Property solely developed by such party or the employee(s) of
such party, whether before, during or after the term of this Agreement. For the
purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean the Confidential
Information (as defined in Section 6), patent and patent applications,
copyrights, trade secrets, know how, rights of authorship, and any other
intellectual property rights recognized by the law of any country or
jurisdiction of the world.

        3.2 JOINTLY DEVELOPED INTELLECTUAL PROPERTY. Any Intellectual Property
jointly developed by the employees of both parties in connection with or as a
result of the services provided by PDF hereunder shall be jointly-owned by PDF
and Toshiba; provided, however, that any such Intellectual Property so jointly
developed by PDF and Toshiba which consists of, effects or results in any
improvement, enhancement or derivative work of PDF's software and methodologies
including problem solving processes and practices shall be solely owned by PDF
but subject to the license provided in Section 3.4; provided, further, that any
such Intellectual Property so jointly developed by PDF and Toshiba in the manner
embodied in Toshiba's product designs, products,

                                      -3-
<PAGE>   4

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

fabrication facilities or fabrication processes shall be owned solely by
Toshiba. Each party shall have the right to use, exercise, disclose and license
to third parties such jointly developed Intellectual Property that is not solely
owned by the other party without accounting to or the consent of the other
party.

        3.3 TOSHIBA LICENSE. Toshiba hereby grants to PDF a non-exclusive,
royalty-free license to use and practice the Intellectual Property provided by
Toshiba hereunder, in order for PDF to perform the Project and develop or
prepare the Deliverables solely during the term of this Agreement.

        3.4 PDF LICENSE. PDF shall grant to Toshiba and its Subsidiaries a
non-exclusive, irrevocable, worldwide and fully-paid license (with the right of
Toshiba to sublicense to any Subsidiary) to use, have used for Toshiba and/or
its Subsidiaries ("HAVE-USED RIGHTS"), copy for internal use, modify and/or
enhance the Deliverables as set forth in the Statement of Work and any PDF-owned
methodologies or practices that Toshiba shall observe in the ordinary course of
the provision of services by PDF under this Agreement (collectively, the
"LICENSED PROPERTY") which license, sublicense, have-used rights or other rights
shall only be for any purpose in connection with sales, development,
manufacture, fabrication, and/or use of products of Toshiba and/or its
Subsidiaries, but only to the extent PDF has the right to grant such license;
provided that such have-used rights with respect to any Specified Deliverable
(as defined in Paragraph (a) of the Statement of Work) shall only be permitted
(a) if the have-used rights are solely for the purpose of establishing Toshiba's
Products on the applicable process at the fabrication facility of the partner of
Toshiba which is granted such have-used rights and for no other purpose or use,
and (b) once the Product on the applicable process is established at such
partner's fabrication facility, such partner must return or destroy all copies
of the Deliverables and have an appropriate officer of such partner certify that
all copies of such Specified Deliverable have been returned or destroyed;
provided, further, that such license shall not extend to any software or tools
used by PDF in connection with or during the course of such services or to any
software manuals or documents relating to such software or tools; provided,
further, that Toshiba shall be bound by and shall cause its Subsidiaries,
sublicensees or have-used or other partners to be bound by the confidentiality
obligations contained in Section 6; provided, further, that Toshiba shall not
disclose, license, sublicense or make available on a have-used basis any such
Licensed Property to any third party other than as a part of the third party's
sale, development, manufacturing, fabrication and/or use of semiconductor
products in connection with Toshiba technology or Toshiba products. Toshiba
understands that PDF will not disclose to Toshiba certain proprietary methods or
trade secrets in connection with the services to be rendered by PDF hereunder.
To this end, PDF retains the right to take industry standard measures to keep
such proprietary methods or trade secrets from Toshiba.

        3.5 NO OTHER OWNERSHIP. Except as otherwise set forth in this Section 3,
neither this Agreement nor performance of the Project shall give either PDF or
Toshiba any ownership, interest in or rights to the Intellectual Property owned
or provided by the other party.

                                      -4-
<PAGE>   5

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

        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, ******************** ****************************
shall be deemed a Subsidiary of Toshiba under this Agreement for so long as
Toshiba continues to hold **************** of the voting stock of
*******************.

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 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

                                      -5-
<PAGE>   6

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

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 ten (10) 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, (iii) the Incentive Fee if the Incentive Fee
remains unpaid; 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:

                  (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 with respect to any Product that
incorporates

                                      -6-
<PAGE>   7

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

any Deliverable delivered by PDF to Toshiba which 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 5 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 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.
Except as otherwise agreed by both parties, PDF shall return to

                                      -7-
<PAGE>   8

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

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, 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

                                      -8-
<PAGE>   9

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.

                                      -9-
<PAGE>   10

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

PDF SOLUTIONS, INC.                            TOSHIBA CORPORATION

By: /s/ P. Steven Melman                       By: /s/ Koichi Suzuki
   -------------------------------                 ----------------------------
        P. Steven Melman                               Koichi Suzuki, VP

Title: Chief Financial Officer                 Title:  Group Executive
       ---------------------------                     ------------------------
                                                       Semiconductor Group

                                      -10-
<PAGE>   11

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

                                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 Technology Cooperation 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").

        (a)     DELIVERABLES

        PDF will provide Toshiba with development work and other consulting
services to assist Toshiba in (a) **************************** of Toshiba's
************* processes referred to as **************** (and derivatives
thereof) for use with the specific ************* ("***********") or any other
device that Toshiba selects to use to verify the **************** and
**************** Processes (a "****************"), (b) effecting the transfer of
the ************** and ************ **************** from Toshiba's *****
facility to its **************** facility, and (c) improving the *************
***** of ****** manufactured utilizing the **************** (the
"****************"), ****** manufactured utilizing the **************** (the
"****************"), and any other devices manufactured utilizing the
**************** or the **************** such as **************** manufactured
utilizing the **************** (the "****************"), ****************
manufactured utilizing the **************** (the "****************"),
**************** manufactured utilizing the **************** (the
"****************"), ****************manufactured utilizing the ****************
(the "****************"). The ****************, the ****************, the
****************, the ****************, the ****************, the
****************, and each other Toshiba product manufactured utilizing the
**************** and the **************** are each individually referred to as a
"PRODUCT" and are collectively referred to as the "PRODUCTS". The parties
acknowledge and agree that a device (such as ****************) manufactured on
**************** is a different product than such device (****************,
respectively) manufactured on the ****************. During the engagement
Toshiba engineers will be invited to be part of the team and work at the
direction of the PDF engineers in conducting the data gathering and analyses
necessary to carry out PDF's holistic yield improvement methodology.

        In order to ensure that the work of the team will result in actions and
subsequent measurable improvements in *******************, the team will report
its recommendations directly to a management steering committee consisting of
the set of Toshiba managers who are necessary to make all decisions regarding
the Product (the "TOSHIBA MANAGEMENT GROUP").

                                     SOW-1
<PAGE>   12

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

        In providing the Services to Toshiba, PDF, working with Toshiba
engineers, will recommend specific actions to be taken to improve *************
***** of each Product. Where determined by PDF to be necessary, PDF will present
a business case stating the expected size of the potential yield improvements,
the likely cost of making the improvements and the relative likelihood of
success.

        The objective of the Project and the result of the activities above will
be to deliver the following Deliverables:

                                  DELIVERABLES
<TABLE>
<CAPTION>
                                                                                                   Anticipated
   No.      Description                                                       Payment             Delivery Date
   ---      -----------                                                       -------             -------------
<S>        <C>                                                              <C>                 <C>
    1.      Detailed Project Plan and Schedule.                              $********           ****************

    2.      *************************************************                $********           ****************
            ********.

    3.      *************************************************                $********           ****************
            *************************************************

    4.      ***************************************.                         $********           ****************

    5.      *************************************************               $********           ****************
            *****************************

    6.      ****************************************.                        $********           ****************

    7.      ******************************************************           $********           ****************
            ********************************.

    8.      ********************************************************         $********           ****************
            ***********************************
</TABLE>

                                     SOW-2
<PAGE>   13
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

<TABLE>
<S>                                                                              <C>               <C>
            ************************************************************ in
            **********************************************************
            ********************

    9.      ********************************************************             $********           ****************
            ********************************************************
            ****************************************************
            ************************************************
            ********************
</TABLE>

        For the purpose of this Agreement, "SPECIFIED DELIVERABLES" (for
example, as used in Section 3.4 of the Agreement) shall mean Deliverable Numbers
2, 3, 4, 5, 6 and 7.

        The parties acknowledge that the Analysis Software comprising a part of
the Deliverables requires the use of pdFab, pdEx and/or other PDF software
products that PDF separately sells or licenses (the "UNDERLYING SOFTWARE"). This
Analysis Software consists solely of the specifically and custom designed
Analysis Software applicable to Toshiba, and specifically excludes any of the
Underlying Software. Any licensee , sublicensee or other user of the Analysis
Software must have appropriate licenses to use such Underlying Software. No
license, sublicense or other right to use or other right in any Underlying
Software is granted under this Agreement and Statement of Work.

               PDF will present the findings to the Toshiba Management Group
during pre-arranged review meetings. The purpose of these review meetings will
be for the Toshiba Management Group to review recommendations, seek
clarifications where necessary and decide which yield improvement actions to
take.

        Within ******** following the delivery of any Deliverable listed above,
Toshiba will deliver to PDF such test data and other data and materials as shall
be reasonably necessary to enable PDF to prepare and deliver the next
Deliverable (the "TOSHIBA DELIVERABLES").

        (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.

                                     SOW-3
<PAGE>   14

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

        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. Toshiba and PDF will make
all such personnel available for performance under the Agreement and this
Statement of Work. The Steering Committee will be limited to four
representatives of Toshiba and one representative of PDF in order to allow
decisions to be reached in a timely fashion but will have sufficient authority
to make the relevant decisions. 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 LEADER"), on behalf of Toshiba, and ************* (the "PDF
PROJECT LEADER"), on behalf of PDF. The Toshiba Project Leader and the PDF
Project Manager will consult with ************ of PDF as they together shall
deem necessary and appropriate. Their primary responsibility will be to ensure
that the team is making good progress toward delivery of the work chartered by
the Steering Committee. In order to maximize the likelihood that the team is
making good progress, the Toshiba Project Leader and the PDF Project Leader will
monitor the team's work on a weekly basis and help reduce any organizational
obstacles which may impede the team's progress.

        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. The
PDF Engagement Manager will be available for all communications at reasonable
times with the project leaders. In addition, the PDF Engagement Manager will be
the principal point of contact for any questions that Toshiba personnel not on
the **** may have during the course of the engagement.

        In addition to the PDF Engagement Manager, PDF will make a total of
************** available to this engagement. PDF may staff additional engineers
during critical points during the term of this Agreement.

        Also, ************** Toshiba engineers will be asked to participate
actively with the ****. Toshiba team members should be assigned to one of the
Subgroups and be skilled at one of the principal analytical streams of the PDF
yield improvement methodology. They will be placed on the Team and Subgroups
after approval by PDF for the purpose of gathering data and conducting analyses
to improve yield on the Product. The Toshiba team members will work at the
direction of a PDF engineer responsible for one of the Subgroups and principal
analytical streams of the engagement.

        (c)     TOOLS

        Toshiba will provide PDF with office space and other typical business
resources reasonably requested from time to time by PDF. In particular, Toshiba
will provide PDF with secure office space large enough to accommodate up to **
PDF personnel in addition to 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 Facsimile machine and line and
a photo copier. Toshiba will provide PDF with 24-hour access to the team office
so work can continue at night and on weekends.

                                     SOW-4
<PAGE>   15

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

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

        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 Project Leader 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 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 by PDF's personnel at PDF's facilities. 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 ******** factory 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.

        (e)     FEES AND EXPENSES.

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

                  (i) DELIVERABLES FEES. Toshiba will pay PDF a fixed fee upon
delivery of each of the Deliverables equal to the "Payment" with respect to each
such Deliverable specified under (a) above (the "DELIVERABLES FEES"). Toshiba
acknowledges that PDF delivered Deliverable No. 1 to Toshiba on *************
and hereby Accepts Deliverable No. 1. Upon Acceptance by Toshiba of each other
Deliverable, PDF will submit to Toshiba an invoice specifying the

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

Deliverable delivered and the Deliverable Fee due. Toshiba shall pay the
Deliverable Fees within ***** days following the date of the invoice. Payment
shall be made in accordance with the provisions of Section 2.2 of the Agreement.
If Toshiba shall fail to deliver a Toshiba Deliverable with respect to a PDF
Deliverable within the time period specified in the last paragraph of Paragraph
(a) of this Statement of Work and as a result, the delivery of the Deliverable
by PDF is delayed by more than six weeks after the "Anticipated Delivery Date"
referenced in the table in Paragraph (a) of this Statement of Work above, then
the parties hereby agree that such Deliverable shall be deemed to have been
delivered by PDF upon PDF's delivery of such Deliverable to the extent developed
through such date, Toshiba shall be obligated to deliver the respective
Deliverable Fee, and upon payment of such Deliverable Fee and delivery of the
applicable Toshiba Deliverable, PDF shall complete delivery of the Deliverable;
provided that if Toshiba shall wish to modify or alter the Toshiba Deliverable,
then the parties shall work together in good faith to mutually agree upon a
substitute Toshiba Deliverable in which case, if appropriate, the Deliverable
specifications, the Deliverable Fees, time for delivery of Deliverables and due
date for completion of Deliverables necessary to satisfy the requirements to
receive the Incentive Fee, and the Product Fees applicable to such altered
Deliverables shall be appropriately adjusted as well.

                  (ii) INCENTIVE FEE. PDF shall deliver to Toshiba an analysis
report and shall work with Toshiba with the objective of enabling Toshiba to
achieve an average yield of ***** shippable die per wafer (based on a die size
of ***** square millimeters or smaller), over all lots (excluding lots deemed
adversely affected by material operational errors such as equipment
malfunctions, misprocessing (such as operating the recipe not in accordance with
the specifications) and other similar reasons) of the ************** meeting the
Functional Tests and Specifications (as defined below) for which production is
completed during any two-week period of Mass Production commencing on or prior
to ************* (the last date that two weeks of Mass Production can be
completed to achieve the Incentive Fee is referred to as the "INCENTIVE FEE
DATE"). Such average number of shippable die per wafer referenced in the
preceding sentence, as adjusted pursuant to the last sentence of this Paragraph
(e)(ii), shall be referred to as the (the "INCENTIVE TARGET YIELD"). Upon
Toshiba achieving the Incentive Target Yield on or prior to the Incentive Fee
Date as described above, Toshiba shall be obligated to pay PDF an incentive fee
equal to ******** (the "INCENTIVE FEE"); provided, however, that the Incentive
Target Yield shall not be considered achieved and Toshiba shall have no
obligation to pay the Incentive Fee unless Toshiba shall have achieved (in the
manner provided above) the Incentive Target Yield on or prior to the Incentive
Fee Date. In the event the Functional Tests and Specifications for the
*************** change then the Incentive Target Yield will be appropriately
adjusted to account for the change in specifications.

        Upon commencement of Mass Production of the **************** Toshiba
will provide PDF with regular, ongoing data as to the yield on the wafers for
such Product to enable PDF to assess the average yield on the wafers for such
Product for any two-week period commencing on or prior to ***************** and
will provide PDF with such average yield every two-weeks. Upon achievement of
the Incentive Target Yield, Toshiba will notify PDF and PDF will submit to
Toshiba an invoice for the Incentive Fee. Toshiba shall pay the Incentive Fee
within thirty (30) days following the date of the invoice. Payment shall be made
in accordance with the provisions of Section 2.2 of the Agreement.

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

        PDF's failure to deliver the materials necessary to enable Toshiba to
achieve the Incentive Target Yield referenced above on or prior to the Incentive
Fee Date shall not constitute a basis for termination of the Agreement under
Section 4 of the Agreement.

                  (iii) PRODUCT FEES. Toshiba will pay PDF a separate Quarterly
fee with respect to each separate Product (as defined in the first paragraph in
Paragraph (a) of this Statement of Work above) manufactured ** **** ******* ***
**** ***** ************ ******** ** ***** **** ******* is manufactured (the
"PRODUCT FEES"). If Toshiba determines to ******** * ******* ** *******
*********** ******** ******** ***** ** ******* ** ****, upon Toshiba's request
PDF shall assist in assessing such facility's yield ramp methodologies and
process transfer data if such facility is to receive ***** of the scheduled
production of such Product. If PDF's services in designing new procedures
(including without limitation development of test structures, TEGs, analysis
models, or other similar services) are necessary to help achieve the targeted
yield ** **** ***** *********** ******** ********* ******** shall not be covered
by this Agreement but shall be provided pursuant to a separate agreement to be
agreed upon between PDF and either Toshiba or the owner of such other facility.
The Product Fees shall be calculated separately *** **** *********** ******** **
***** **** Product is produced, provided that all *********** ********** with
respect to which PDF provides services or advice under an agreement with PDF
(including this Agreement) shall ************ ** ********** *** ******** ****
******** ********** for purposes of such calculation so long as PDF agrees to
include such ******** as a part of such ****************. No Product Fees shall
be payable with respect to any ******** ***** ** ** ************ ***** *****
***** ******** ******** *** **** **** ***** ** *** ***** ****** ** ***** ** ****
Product produced. In making such calculations and paying such amounts, the
foregoing terms (and certain other terms) are defined as follows:

                  "AVERAGE UNIT SALES PRICE" for any Product during any Quarter
                  shall mean the Net Sales of such Product during such Quarter
                  divided by the total number of units of such Product sold
                  during such Quarter which comprise such Net Sales.

                  "BASE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product
                  during any Quarter shall mean a number of die per wafer to be
                  determined by agreement between PDF and Toshiba. With respect
                  to the **************, Base Number of Shippable Die Per Wafer
                  shall initially be **** shippable die per wafer (based on a
                  die size of ***** square millimeters or smaller), subject to
                  adjustment pursuant to a ramp schedule to be mutually agreed
                  upon in writing between Toshiba and PDF before *************.
                  Such ramp schedule shall adjust the Base Number of Shippable
                  Die per Wafer no more frequently than quarterly. For each
                  other Product, within 30 days following the first tape out of
                  such Product, PDF and Toshiba shall meet and agree upon what
                  shall constitute such Base Number of Shippable Die per Wafer
                  for such Product. The adjustments to the Base Number of
                  Shippable Die per Wafer established in the ramp schedule for
                  the ******** Product and with respect to any other Product
                  shall be mutually agreed upon and shall be based upon analysis
                  of the following factors: (a) the defect limited yield used
                  from Toshiba's targets; (b) an estimation of the parametric
                  yield based on static timing analysis and other design
                  factors; (c) an estimation of the typical

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

                  systematic yield based on Toshiba and industry typical yield
                  improvement rates for systematic yield; and (d) the
                  profitability of the Product. The Base Number of Shippable Die
                  Per Wafer for any Product shall be the same for all
                  fabrication facilities.

                  "FIRST QUALIFYING MONTH" for any Product shall mean the
                  calendar month beginning on the later of (a) the first day of
                  the calendar month immediately following the calendar month in
                  which Mass Production units of such Product are first sold to
                  Customers (unless such first sale occurs on the first day of a
                  calendar month in which case the First Qualifying Month shall
                  commence on the date of such first sale) or (b)
                  **************.

                  "FUNCTIONAL TESTS AND PERFORMANCE SPECIFICATIONS" for any
                  Product shall mean the functional tests and performance
                  specifications at wafer probe test and at die sort test, as
                  the case may be, as are specified for qualification by the
                  client of Toshiba with respect to such Product, or such other
                  less stringent functional tests and performance specifications
                  that such client shall accept, or such other functional tests
                  and performance specifications as are otherwise mutually
                  agreed upon by Toshiba and PDF.

                  "NET SALES" for any Product during any Quarter shall mean the
                  actual gross sales of such Product (a) by Toshiba to any
                  customer, distributor or other third party; and (b) by any
                  such customer, distributor or other third party which is
                  controlling, controlled by or under common control
                  ("AFFILIATED") with Toshiba to any other person; during such
                  Quarter, less returns of such Product during such Quarter. Any
                  sales by an affiliated customer, distributor or other third
                  party shall be reduced by the amount paid for such product to
                  Toshiba by such affiliated customer, distributor or other
                  third party under clause (a) above so as to avoid double
                  counting of sales by such parties. Such amounts shall be
                  determined in accordance with generally accepted accounting
                  principles consistently applied. All persons to whom sales of
                  Products are made under clauses (a) and (b) above or otherwise
                  are collectively referred to as "CUSTOMERS."

                  "MASS PRODUCTION" units shall mean units of a Product that are
                  sold to Customers in mass commercial quantities for use in
                  commercial systems (and not merely for evaluation) or
                  otherwise than for commercial use.

                  "NUMBER OF QUALIFYING UNITS" for any Product during any
                  Quarter shall mean the amount, if any, by which (a) the total
                  number of units of such Product which are produced during such
                  Quarter which meet the Functional Tests and Performance
                  Specifications for such Product upon completion of the die
                  sort test (hereinafter referred to as "PRODUCED"), exceeds (b)
                  the Base Number of Shippable Die Per Wafer for such Product
                  during such Quarter multiplied by the total number of wafers
                  from which die for such Product are produced during such
                  Quarter. (This explicitly excludes zero-yielding wafers since
                  zero-yielding wafers are indicative of operational problems
                  like equipment malfunctions or

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
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                        ASTERISKS DENOTE SUCH OMISSIONS.

                  misprocessing; not process or design related problems which
                  PDF has the ability to affect.)

                  "QUARTER" with respect to any Product shall mean each
                  successive three month period commencing on the later of
                  *************** or the First Qualifying Month for such
                  Product.

        Amount of Product Fee. The Product Fee for each Product shall be
calculated with respect to each Quarter and shall equal the product of:

                        (a)     the product fee multiplier of ******, multiplied
                                by,

                        (b)     the Average Unit Sales Price for such product in
                                such Quarter, multiplied by,

                        (c)     the Number of Qualifying Units in such Quarter.

        The Product Fee for all Products at all fabrication facilities shall
collectively not exceed *********** in the aggregate.

        Calculation of Product Fee. The Product Fee for each Product (as defined
in the first paragraph in Paragraph (a) of this Statement of Work above) will be
calculated with respect to each such Product for each Quarter commencing with
the First Qualifying Month for such Product, and for each additional Quarter
thereafter for an aggregate of *** consecutive Quarters (or *** months) (each,
the "PRODUCT PAYMENT PERIOD"). The First Qualifying Month and the Product
Payment Period shall be calculated separately for each separate Product (as
defined above). In the event of a suspension in the production of such Product
or the reduction of quantities of production of such Product to less than Mass
Production quantities for any reason, the Product Payment Period for which the
Product Fee is being calculated and the calculation of the Base Number of Die
Per Wafer shall be extended for a period of time equal to the period during
which production is suspended or such commercial quantities are not being
produced. Notwithstanding the foregoing, no Product Payment Period shall extend
beyond, and no Product Fee shall be calculated or payable with respect to any
period after, ****************.

        Payment of Product Fee. The Product Fee will be paid for each Product
with respect to each successive Quarter commencing with the Quarter beginning
with the First Qualifying Month and continuing through the end of the Product
Payment Period. Toshiba will make such payment to PDF within forty-five (45)
days following the last day of each such Quarter with respect to which the
Product Fee is determined. Payment will be delivered in accordance with the
provisions of Section 2.3 of the Agreement.

        Verification. Within thirty (30) days following the end of each Quarter,
Toshiba will provide PDF with a report containing the following information with
respect to each Product during such Quarter:

                        (a)     the "Net Sales";

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

                        (b)     the total number of units sold which comprise
                                such Net Sales;

                        (c)     the "Average Sales Price;"

                        (d)     the total number of units which are produced
                during such Quarter which meet the applicable Functional Tests
                and Performance Specifications upon completion of the wafer
                probe test;

                        (e)     the "Base Number of Shippable Die Per Wafer;"

                        (f)     the total number of wafers from which Mass
                Production Units are produced during such Quarter; and

                        (g)     the "Number of Qualifying Units."

        Upon the reasonable request of PDF but no more often than once in any
year, PDF may have its independent auditors inspect the accuracy of Toshiba's
reports. If there are inconsistencies found in PDF's favor, Toshiba agrees to
pay the difference within thirty (30) days of the finding. Any information
contained in the report and the results of the inspection shall be considered
Confidential Information under Section 6 of the Agreement.

        (iv)    EXPENSES.

        Toshiba will reimburse PDF for all 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 Deliverable Fees within thirty (30) days
following the date 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 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.

        (v)     VERIFICATION.

        Toshiba will provide PDF access to all other relevant information and
documentation (or will provide PDF with copies of all relevant documentation)
necessary to confirm and verify the Deliverables Fees, the Incentive Fee and
Product Fees payable to PDF hereunder.

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

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

                                 AMENDMENT NO. 1
                                       TO
                        TECHNOLOGY COOPERATION AGREEMENT

        This Amendment No. 1 to the Technology Cooperation Agreement (the
"AMENDMENT") is made as of the ************************ 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 1200, San Jose, California, U.S.A.

                                    RECITALS

        WHEREAS, on ****************, Toshiba and PDF entered into a Technology
Cooperation Agreement (the "AGREEMENT") relating to the provision of services by
PDF to Toshiba.

        WHEREAS, the Agreement contained a Statement of Work which detailed the
specific obligations of PDF and Toshiba with respect to the Project; and

        WHEREAS, the schedule for the mass production of the products covered by
the Agreement has been delayed by certain circumstances, and the parties desire
to amend the Statement of Work to change the terms and conditions relating to
the Incentive Fee and the Product Fee sections in the Statement of Work to more
accurately reflect the parties' intentions.

        NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, the adequacy of which is hereby acknowledged, the
parties hereto mutually agree as follows:

        1. Definitions. All capitalized terms unless defined elsewhere in this
Amendment shall have the meanings ascribed to them in the Agreement

        2. Statement of Work. Paragraphs (e)(ii) and e(iii) of the Statement of
Work are hereby amended and restated their entirety as follows:

        "(ii) INCENTIVE FEE. PDF shall deliver to Toshiba analysis reports and
shall work with Toshiba with the objective of enabling Toshiba to achieve the
First, Second and Third Incentive Target Yield (each as defined below)
(collectively, the "INCENTIVE TARGET YIELDS"). Upon Toshiba achieving any of the
First, Second or Third Incentive Target Yields, Toshiba shall pay PDF the First,
Second or Third Incentive Fee (each as defined below), respectively, which Fees
shall total ******** (collectively, the "INCENTIVE FEES"). The Incentive Fees
and Incentive Target Yields shall be determined as follows:

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                      -1-
<PAGE>   22

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

        (a)     FIRST INCENTIVE FEE. Toshiba shall pay PDF ******** (the "FIRST
                INCENTIVE FEE") upon achieving a yield of *** shippable die
                (based on a die size of **** square millimeters or smaller) on
                any single wafer of the *********** Product produced and meeting
                the Functional Tests and Specifications (as defined below)
                measured at wafer probe test at any time on or prior to
                ************ (the "FIRST INCENTIVE TARGET YIELD");

        (b)     SECOND INCENTIVE FEE. Toshiba shall pay PDF ******** (the
                "SECOND INCENTIVE FEE") upon achieving an average yield of
                ****** shippable die per wafer (based on a die size of ****
                square millimeters or smaller), on any single lot of wafers of
                the ******** Product meeting the Functional Tests and
                Specifications measured at wafer probe test or prior to
                ************* (the "SECOND INCENTIVE TARGET YIELD"); and

        (c)     THIRD INCENTIVE FEE. Toshiba shall pay PDF ******** (the "THIRD
                INCENTIVE FEE") upon achieving an average yield of ****
                shippable die per wafer (based on a die size of **** square
                millimeters or smaller), over all lots (excluding lots deemed
                adversely affected by material operational errors such as
                equipment malfunctions, misprocessing (such as operating the
                recipe not in accordance with the specifications) and other
                similar reasons) of the ************* Product meeting the
                Functional Tests and Specifications measured at final test for
                which production is completed during any two-week period of Mass
                Production commencing on or prior to ************* (the last
                date that two weeks of Mass Production can be completed to
                achieve the Third Incentive Fee is referred to as the "INCENTIVE
                FEE DATE") (the "THIRD INCENTIVE TARGET YIELD");

        provided, however, that no Incentive Target Yield shall be considered
achieved and Toshiba shall have no obligation to pay the Incentive Fee
corresponding to achievement of such Incentive Target Yield unless Toshiba shall
have achieved (in the manner provided above) such Incentive Target Yield on or
prior to the Incentive Fee Date. In the event the Functional Tests and
Specifications for the ************* Product change then the respective
Incentive Target Yields will be appropriately adjusted to account for the change
in specifications.

        Upon commencement of Mass Production of the ************* Product
Toshiba will provide PDF with regular, ongoing data as to the yield on the
wafers for such Product on a periodic basis to enable PDF to assess each
Incentive Target Yield. Upon achievement of each Incentive Target Yield, Toshiba
will notify PDF and PDF will submit to Toshiba an invoice for the respective
Incentive Fee. Toshiba shall pay each Incentive Fee within thirty (30) days
following the date of the invoice. Payment shall be made in accordance with the
provisions of Section 2.2 of the Agreement.

        PDF's failure to deliver the materials necessary to enable Toshiba to
achieve the Incentive Target Yields referenced above on or prior to the
respective Incentive Fee Dates shall not constitute a basis for termination of
the Agreement under Section 4 of the Agreement.

                                      -2-
<PAGE>   23

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

        (iii) PRODUCT FEES. Toshiba will pay PDF a separate Quarterly fee with
respect to each separate Product (as defined in the first paragraph in Paragraph
(a) of this Statement of Work above) manufactured at each Toshiba and each other
fabricator's facility at which such Product is manufactured (the "PRODUCT
FEES"). If Toshiba determines to *****************************************
****************************************************************************
****************************************************************************
****************************************************************************
************. If PDF's services in designing new procedures (including without
limitation development of test structures, TEGs, analysis models, or other
similar services) are necessary to help achieve the targeted yield *************
******************** then such services shall not be covered by this Agreement
but shall be provided pursuant to a separate agreement to be agreed upon between
PDF and **************************************************. The Product Fees
shall be calculated separately for ************************* at which such
Product is produced, provided that all fabrication facilities with respect to
which PDF provides services or advice under an agreement with PDF (including
this Agreement) shall collectively be considered one facility (the "PRIMARY
FACILITY") for purposes of such calculation so long as PDF agrees to include
such facility as a part of such Primary Facility. No Product Fees shall be
payable with respect to any facility owned by an unaffiliated third party which
facility accounts for less than 25% of the total number of units of such Product
produced. In making such calculations and paying such amounts, the foregoing
terms (and certain other terms) are defined as follows:

                "AVERAGE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product
        during any Quarter shall mean the average number of shippable die per
        wafer (based on a die size of **** square millimeters or smaller), over
        all lots (excluding engineering lots and lots deemed adversely affected
        by material operational errors such as equipment malfunctions,
        misprocessing (such as operating the recipe not in accordance with the
        specifications) and other similar reasons) of such Product during such
        Quarter meeting the Functional Tests and Specifications measured at
        final test for which production is completed during such Quarter.

                "BASE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product during
        any Quarter shall mean a number of die per wafer to be determined by
        agreement between PDF and Toshiba.

        (a)     With respect to the ******** Product, Base Number of Shippable
                Die Per Wafer shall initially be **** shippable die per wafer in
                the Quarter commencing ******** through **************, ***
                shippable die per wafer in the Quarter commencing
                *************** through ****************** and *** shippable die
                per wafer in the Quarter commencing ************* through
                ************** and thereafter (based on a die size of ****
                square millimeters or smaller).

        (b)     With respect to the Base Number of Shippable Die Per Wafer for
                the ******* Product, the Base Number of Shippable Die per Wafer
                shall be

                                      -3-
<PAGE>   24

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

                mutually agreed upon by the parties within *** days of the date
                of execution of the Amendment.

        (c)     For each other Product, within *** days following the first tape
                out of such Product, PDF and Toshiba shall meet and agree upon
                what shall constitute such Base Number of Shippable Die per
                Wafer for such Product. The adjustments to the Base Number of
                Shippable Die per Wafer established in the ramp schedule for the
                ************ Product and with respect to any other Product shall
                be mutually agreed upon and shall be based upon analysis of the
                following factors: **************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************

                 "CURRENT WAFER PRICE" shall mean the following:

        (a)     With respect to ************* Products, the "Current Wafer
                Price" in the Quarter commencing ************ though
                ************** shall be ********. Such price shall be reduced by
                ******** percent in the Quarter commencing ************* through
                ***********. On a quarterly basis thereafter determined one week
                prior to the commencement of such Quarter, the price will be
                adjusted to reflect then current market prices for such wafers
                and other relevant market conditions, provided that such
                reductions shall not exceed ************ percent in any
                consecutive 12-month period. If market prices for such wafers
                vary more than plus or minus ************ in any consecutive
                12-month period, the parties agree to re-examine the prices and
                to make alterations accordingly, as mutually agreed upon.

        (b)     With respect to ******** Products, the "Current Wafer Price" in
                the Quarter commencing ******** though ******** shall be
                ********. Such price shall be reduced by ******** percent in the
                Quarter commencing ************ through **************. On a
                quarterly basis thereafter determined one week prior to the
                commencement of such Quarter, the price will be adjusted to
                reflect then current market prices for such wafers and other
                relevant market conditions, provided that such reductions shall
                not exceed ************ percent in any consecutive 12-month
                period. If market prices for such wafers vary more than
                plus or minus ************ in any consecutive 12-month period,
                the parties agree to re-examine the prices and to make
                alterations accordingly, as mutually agreed upon.

                                      -4-
<PAGE>   25
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                        "FIRST QUALIFYING MONTH" for any Product shall mean the
                calendar month beginning on the later of (a) the first day of
                the calendar month immediately following the calendar month in
                which Mass Production units of such Product are first sold to
                Customers (unless such first sale occurs on the first day of a
                calendar month, the First Qualifying Month shall commence on the
                date of such first sale) or (b) ************.

                        "FUNCTIONAL TESTS AND PERFORMANCE SPECIFICATIONS" for
                any Product shall mean the functional tests and performance
                specifications at wafer probe test, at die sort test and at
                final test, as the case may be, as are specified for
                qualification by the client of Toshiba with respect to such
                Product, or such other less stringent functional tests and
                performance specifications that such client shall accept, or
                such other functional tests and performance specifications as
                are otherwise mutually agreed upon by Toshiba and PDF.

                        "MASS PRODUCTION" units shall mean units of a Product
                that are sold to Customers in mass commercial quantities for use
                in commercial systems (and not merely for evaluation) or
                otherwise than for commercial use, and/or when the final mark
                set has been approved for mass production.

                        "QUARTER" with respect to any Product shall mean each
                successive three month period commencing on the later of
                ************* or the First Qualifying Month for such Product.

        Amount of Product Fee. The Product Fee for each Product shall be
calculated with respect to each Quarter and shall equal the product of:

                        (a)     the Current Wafer Price for such Product during
                                such Quarter multiplied by *****;

                        (b)     multiplied by *****;

                        (c)     multiplied by the difference determined by (x)
                                the quotient of the Average Number of Shippable
                                Die per Wafer divided by the Base Number of
                                Shippable Die per Wafer for such Product during
                                such Quarter minus (y) one (1);

                        (d)     multiplied by the number of Mass Production
                                wafers for such Product during such Quarter.

        The Product Fee for all Products at all fabrication facilities shall
collectively not exceed ******** in the aggregate.

        Calculation of Product Fee. The Product Fee for each Product (as defined
in the first paragraph in Paragraph (a) of this Statement of Work above) will be
calculated with respect to each such Product for each Quarter commencing with
the First Qualifying Month for such

                                      -5-
<PAGE>   26
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

Product, and for each additional Quarter thereafter for an aggregate of 8
consecutive Quarters (or 24 months) (each, the "PRODUCT PAYMENT PERIOD"). The
First Qualifying Month and the Product Payment Period shall be calculated
separately for each separate Product (as defined above). In the event of a
suspension in the production of such Product or the reduction of quantities of
production of such Product to less than Mass Production quantities for any
reason, the Product Payment Period for which the Product Fee is being calculated
and the calculation of the Base Number of Die Per Wafer shall be extended for a
period of time equal to the period during which production is suspended or such
commercial quantities are not being produced. Notwithstanding the foregoing, no
Product Payment Period shall extend beyond, and no Product Fee shall be
calculated or payable with respect to any period after, ************.

        Payment of Product Fee. The Product Fee will be paid for each Product
with respect to each successive Quarter commencing with the Quarter beginning
with the First Qualifying Month and continuing through the end of the Product
Payment Period. Toshiba will make such payment to PDF within *** days following
the last day of each such Quarter with respect to which the Product Fee is
determined. Payment will be delivered in accordance with the provisions of
Section 2.3 of the Agreement.

        Verification. Within thirty (30) days following the end of each Quarter,
Toshiba will provide PDF with a report containing the following information with
respect to each Product during such Quarter:

                (a) the Average Number of Shippable Die per Wafer (including
        method of calculating such number);

                (b) the total number of units which are produced which meet the
        applicable Functional Tests and Performance Specifications upon
        completion of the wafer probe test; and

                (c) the total number of Mass Production wafers produced.

        Upon the reasonable request of PDF but no more often than once in any
year, PDF may have its independent auditors inspect the accuracy of Toshiba's
reports and the underlying data. If there are inconsistencies found in PDF's
favor, Toshiba agrees to pay the difference within thirty (30) days of the
finding. Any information contained in the report and the results of the
inspection shall be considered Confidential Information under Section 6 of the
Agreement.

        3. Counterparts. This Amendment may be executed in any number of
counterparts, all of which together shall constitute one instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                      -6-
<PAGE>   27

        The parties hereto have executed this Amendment as of the date first set
forth above.

PDF SOLUTIONS, INC.                          TOSHIBHA

By: /s/ John K. Kibarian                     By:    /s/ Shigen Komats
    -----------------------------                   ---------------------------
    Title:  President & CEO                  Title: Vice President
                                                    Micro & Custom LSI Division
                                                    Semiconductor Company

                                      -7-

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