Document:

EXHIBIT 4(ii)

                                   IMPATH INC.
                          2000 LONG TERM INCENTIVE PLAN

     SECTION 1. Purpose. The purposes of this IMPATH Inc. 2000 Long Term
Incentive Plan (the "Plan") are to encourage selected employees, officers,
directors and consultants of, and other individuals providing services to,
IMPATH Inc. (together with any successor thereto, the "Company") and its
Affiliates (as defined below) to acquire a proprietary interest in the growth
and performance of the Company, to generate an increased incentive to contribute
to the Company's future success and prosperity thus enhancing the value of the
Company for the benefit of its stockholders, and to enhance the ability of the
Company and its Affiliates to attract and retain exceptionally qualified
individuals upon whom, in large measure, the sustained progress, growth and
profitability of the Company depend.

     SECTION 2. Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:

     "Affiliate" shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the
Company has a significant equity interest, as determined by the Committee.

     "Award" shall mean any Option or Restricted Security granted under the
Plan.

     "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.

     "Board" shall mean the Board of Directors of the Company.

     "Cause", as used in connection with the termination of a Participant's
employment, shall mean (i) with respect to any Participant employed under a
written employment agreement with the Company or an Affiliate of the Company
which agreement includes a definition of "cause," "cause" as defined in such
agreement or, if such agreement contains no such definition, a material breach
by the Participant of such agreement, or (ii) with respect to any other
Participant, the failure to perform adequately in carrying out such
Participant's employment responsibilities, including any directives from the
Board, or engaging in such behavior in his personal or business life as to lead
the Committee in its reasonable judgment to determine that it is in the best
interests of the Company to terminate his employment.

     "Common Stock" shall mean the common stock of the Company, $.005 par value.

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.

     "Committee" shall mean the Compensation Committee or any other committee of
the Board designated by the Board to administer the Plan and composed of not
less than two directors.

     "Common Shares" shall mean any or all, as applicable, of the Common Stock
and such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 4(b) of
the Plan and any other securities of the Company or any Affiliate or any
successor that may be so designated by the Committee.

     "Employee" shall mean any employee of the Company or of any Affiliate.

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     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

     "Fair Market Value" shall mean (A) with respect to any property other than
the Common Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee; and (B) with respect to the Common Shares, the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the high bid and low asked prices, in either case on the
principal national securities exchange on which the Common Shares are listed or
admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or the average of the
closing high bid and low asked prices in the over-the-counter market reported on
NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the Fair
Market Value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.

     "Good Reason", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company, "good reason" as defined in such written agreement or, if such
agreement contains no such definition, a material breach by the Company of such
agreement, or (ii) with respect to any other Participant, a failure by the
Company to pay such Participant any amount otherwise vested and due and a
continuation of such failure for 30 business days following notice to the
Company thereof.

     "Incentive Stock Option" shall mean an option granted under Section 6(a) of
the Plan that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.

     "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option. Any stock
option granted by the Committee which is not designated an Incentive Stock
Option shall be deemed a Non-Qualified Stock Option.

     "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.

     "Participant" shall mean any individual granted an Award under the Plan.

     "Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.

     "Released Securities" shall mean securities that were Restricted Securities
but with respect to which all applicable restrictions have expired, lapsed or
been waived in accordance with the terms of the Plan or the applicable Award
Agreement.

     "Restricted Securities" shall mean any Common Shares granted under Section
6(b) of the Plan, any right granted under Section 6(b) of the Plan that is
denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.

     "Rule 16a-1" and "Rule 16b-3" shall mean, respectively, Rule 16a-1 and Rule
16b-3 promulgated by the Securities and Exchange Commission under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.

     "Securities Act" shall mean the Securities Act of 1933, as amended.

<PAGE>

     SECTION 3. Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an eligible Employee
or other individual under the Plan; (iii) determine the number of Common Shares
to be covered by Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised, or canceled, forfeited or suspended, and the method or
methods by which Awards may be settled, exercised, canceled, forfeited or
suspended; (vi) determine requirements for the vesting of Awards or performance
criteria to be achieved in order for Awards to vest; (vii) determine whether, to
what extent and under what circumstances Common Shares payable with respect to
an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (viii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (x) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any stockholder and any Employee.
Notwithstanding the foregoing, the maximum number of Awards which may be granted
to any one Participant under this Plan in any one-year period shall not exceed
100,000 Common Shares, subject to the adjustments provided in Section 4(b)
hereof and no Awards under this Plan shall be granted after December 31, 2009.

     SECTION 4. Common Shares Available for Awards.

     (a) Common Shares Available. Subject to adjustment as provided in Section
4(b):

          (i) Calculation of Number of Common Shares Available. The number of
     Common Shares available for granting Awards under the Plan shall be
     800,000, any or all of which may be or may be based on Common Stock, any
     other security which becomes the subject of Awards, or any combination
     thereof. Initially 800,000 shares of Common Stock shall be reserved for
     Awards hereunder. Further, if, after the effective date of the Plan, any
     Common Shares covered by an Award granted under the Plan or to which such
     an Award relates, are forfeited, or if an Award otherwise terminates or is
     canceled without the delivery of Common Shares, then the Common Shares
     covered by such Award or to which such Award relates, or the number of
     Common Shares otherwise counted against the aggregate number of Common
     Shares available under the Plan with respect to such Award, to the extent
     of any such forfeiture, termination or cancellation, shall again be, or
     shall become, available for granting Awards under the Plan.

          (ii) Sources of Common Shares Deliverable Under Awards. Any Common
     Shares delivered pursuant to an Award may consist, in whole or in part, of
     authorized and unissued Common Shares or of treasury Common Shares.

     (b) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Common Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Shares or other securities of the
Company, issuance of warrants or other rights to purchase Common Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Common Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of Common Shares (or other securities or property)

<PAGE>

which thereafter may be made the subject of Awards, (ii) the number and kind of
Common Shares (or other securities or property) subject to outstanding Awards,
and (iii) the grant or exercise price with respect to any Award or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, however, that the number of Common Shares subject to any Award
denominated in Common Shares shall always be a whole number.

     In connection with any merger or consolidation in which the Company is not
the surviving corporation and which results in the holders of the outstanding
voting securities of the Company (determined immediately prior to such merger or
consolidation) owning less than a majority of the outstanding voting securities
of the surviving corporation (determined immediately following such merger or
consolidation), or any sale or transfer by the Company of all or substantially
all its assets or any tender offer or exchange offer for or the acquisition,
directly or indirectly, by any person or group of all or a majority of the then
outstanding voting securities of the Company, all outstanding Options under the
Plan shall become exercisable in full, notwithstanding any other provision of
the Plan or of any outstanding Options granted thereunder, on and after (i) the
fifteenth day prior to the effective date of such merger, consolidation, sale,
transfer or acquisition or (ii) the date of commencement of such tender offer or
exchange offer, as the case may be. The provisions of the foregoing sentence
shall apply to any outstanding Options which are Incentive Stock Options to the
extent permitted by Section 422(d) of the Code and such outstanding Options in
excess thereof shall, immediately upon the occurrence of the event described in
clause (i) or (ii) of the foregoing sentence, be treated for all purposes of the
Plan as Non-Qualified Stock Options and shall be immediately exercisable as such
as provided in the foregoing sentence.

     SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any consultant of, or
other individual providing services to, the Company or any Affiliate shall be
eligible to be designated a Participant. A non-employee director shall be
eligible to receive Non-Qualified Stock Options under the Plan.

     SECTION 6. Awards.

     (a) Options. The Committee is hereby authorized to grant to eligible
individuals options to purchase Common Shares (each, an "Option") which shall
contain the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan, as
the Committee shall determine:

          (i) Exercise Price. The purchase price per Common Share purchasable
     under an Option shall be determined by the Committee; provided, however,
     that such purchase price shall not be less than one hundred percent (100%)
     of the Fair Market Value of a Common Share on the date of grant of such
     Option, or such higher price as required under Subsection 6(a)(iv) or (v)
     hereof.

          (ii) Time and Method of Exercise. Subject to the terms of Section
     6(a)(iii), the Committee shall determine the time or times at which an
     Option may be exercised in whole or in part, and the method or methods by
     which, and the form or forms (including, without limitation, cash, Common
     Shares, outstanding Awards, or other property, or any combination thereof,
     having a Fair Market Value on the exercise date equal to the relevant
     exercise price) in which, payment of the exercise price with respect
     thereto may be made or deemed to have been made.

          (iii) Exercisability Upon Death, Retirement and Termination of
     Employment. Subject to the condition that no Option may be exercised in
     whole or in part after the expiration of the Option period specified in the
     applicable Award Agreement:

<PAGE>

               (A) Upon the death of a Participant while employed or within 3
          months of retirement or disability as defined in paragraph (B) below,
          the Person or Persons to whom such Participant's rights with respect
          to any Option held by such Participant are transferred by will or the
          laws of descent and distribution may, prior to the expiration of the
          earlier of: (1) the outside exercise date determined by the Committee
          at the time of granting the Option, or (2) nine months after such
          Participant's death, purchase any or all of the Common Shares with
          respect to which such Participant was entitled to exercise such Option
          immediately prior to such Participant's death, and any Options not so
          exercisable will lapse on the date of such Participant's death;

               (B) Upon termination of a Participant's employment with the
          Company (x) as a result of retirement pursuant to a retirement plan of
          the Company or an Affiliate or disability (as determined by the
          Committee) of such Participant, (y) by the Company other than for
          Cause, or (z) by the Participant with Good Reason, such Participant
          may, prior to the expiration of the earlier of: (1) the outside
          exercise date determined by the Committee at the time of granting the
          Option, or (2) three months after the date of such termination,
          purchase any or all of the Common Shares with respect to which such
          Participant was entitled to exercise any Options immediately prior to
          such termination, and any Options not so exercisable will lapse on
          such date of termination;

               (C) Upon termination of a Participant's employment with the
          Company under any circumstances not described in paragraphs (A) or (B)
          above, such Participant's Options shall be canceled to the extent not
          theretofore exercised;

               (D) Upon expiration of the respective periods set forth in each
          of paragraphs (A) through (C) above, the Options of a Participant who
          has died or whose employment has been terminated shall be canceled to
          the extent not theretofore canceled or exercised; and

               (E) For purposes of paragraphs (A) through (C) above, the period
          of service of an individual as a director or consultant of the Company
          or an Affiliate shall be deemed the period of employment.

          (iv) Incentive Stock Options. The following provisions shall apply
     only to Incentive Stock Options granted under the Plan:

               (A) No Incentive Stock Option shall be granted to any eligible
          Employee who, at the time such Option is granted, owns securities
          possessing more than ten percent (10%) of the total combined voting
          power of all classes of securities of the Company or of any Affiliate,
          except that such an Option may be granted to such an Employee if at
          the time the Option is granted the option price is at least one
          hundred ten percent (110%) of the Fair Market Value of the Common
          Shares (determined in accordance with Section 2) subject to the
          Option, and the Option by its terms is not exercisable after the
          expiration of five (5) years from the date the Option is granted; and

               (B) To the extent that the aggregate Fair Market Value of the
          Common Shares with respect to which Incentive Stock Options (without
          regard to this subsection) are exercisable for the first time by any
          individual during any calendar year (under all plans of the Company
          and its Affiliates) exceeds $100,000, such Options shall be treated as
          Non-Qualified Stock Options. This subsection shall be applied by
          taking Options into account in the order in which they were granted.
          If some but not all Options granted on any one day are subject to this
          subsection, then such Options shall be apportioned between Incentive
          Stock Option and Non-Qualified Stock Option treatment in such manner
          as the Committee shall determine. For purposes of this subsection, the
          Fair Market Value of any Common Shares shall be

<PAGE>

          determined, in accordance with Section 2, as of the date the Option
          with respect to such Common Shares is granted.

          (v) Other Terms and Conditions of Options. Notwithstanding any
     provision contained in the Plan to the contrary, during any period when any
     member of the Committee shall not be a "nonemployee director" as defined in
     Rule 16b-3, then, the terms and conditions of Options granted under the
     Plan to any director or officer, as defined in Rule 16a-1, of the Company
     during such period, unless other terms and conditions are approved in
     advance by the Board, shall be as follows:

               (A) The price at which each Common Share subject to an option may
          be purchased shall, subject to any adjustments which may be made
          pursuant to Section 4, in no event be less than the Fair Market Value
          of a Common Share on the date of grant, and provided further that in
          the event the option is intended to be an Incentive Stock Option and
          the optionee owns on the date of grant securities possessing more than
          ten percent (10%) of the total combined voting power of all classes of
          securities of the Company or of any Affiliate, the price per share
          shall not be less than one hundred ten percent (110%) of the Fair
          Market Value per Common Share on the date of grant; and

               (B) The Option may be exercised to purchase Common Shares covered
          by the Option not sooner than six (6) months following the date of
          grant. The Option shall terminate and no Common Shares may be
          purchased thereunder more than ten (10) years after the date of grant,
          provided that if the Option is intended to be an Incentive Stock
          Option and the Optionee owns on the date of grant securities
          possessing more than ten percent (10%) of the total combined voting
          power of all classes of securities of the Company or of any Affiliate,
          the Option shall terminate and no Common Shares may be purchased
          thereunder more than five (5) years after the date of grant.

     (b) Restricted Securities.

          (i) Issuance. The Committee is hereby authorized to grant to eligible
     Employees "Restricted Securities" which shall consist of the right to
     receive, by purchase or otherwise, Common Shares which are subject to such
     restrictions as the Committee may impose (including, without limitation,
     any limitation on the right to vote such Common Shares or the right to
     receive any dividend or other right or property), which restrictions may
     lapse separately or in combination at such time or times, in such
     installments or otherwise, as the Committee may deem appropriate.

          (ii) Registration. Restricted Securities granted under the Plan may be
     evidenced in such manner as the Committee may deem appropriate, including,
     without limitation, book-entry registration or issuance of a stock
     certificates or certificates. In the event any stock certificate is issued
     in respect of Restricted Securities granted under the Plan, such
     certificate shall be registered in the name of the Participant and shall
     bear an appropriate legend referring to the terms, conditions and
     restrictions applicable to such Restricted Securities.

          (iii) Forfeiture. Except as otherwise determined by the Committee,
     upon termination of a Participant's employment for any reason during the
     applicable restriction period, all of such Participant's Restricted
     Securities which had not become Released Securities by the date of
     termination of employment shall be forfeited and reacquired by the Company;
     provided, however, that the Committee may, when it finds that a waiver
     would be in the best interests of the Company, waive in whole or in part
     any or all remaining restrictions with respect to such Participant's
     Restricted Securities. Unrestricted Common

<PAGE>

     Shares, evidenced in such manner as the Committee shall deem appropriate,
     shall be issued to the holder of Restricted Securities promptly after such
     Restricted Securities become Released Securities. (c) General.

          (i) Limits on Transfer of Awards.

               (A) No Award (other than Released Securities), and no right under
          any such Award, may be assigned, alienated, pledged, attached, sold or
          otherwise transferred or encumbered by a Participant otherwise than by
          will or by the laws of descent and distribution (or, in the case of
          Restricted Securities, to the Company) and any such purported
          assignment, alienation, pledge, attachment, sale or other transfer or
          encumbrance shall be void and unenforceable against the Company or any
          Affiliate.

               (B) Each Award, and each right under any Award, shall be
          exercisable, during the Participant's lifetime only by the Participant
          or if permissible under applicable law, by the Participant's guardian
          or legal representative.

          (ii) Terms of Awards. The term of each Award shall be for such period
     as may be determined by the Committee; provided, however, that in no event
     shall the term of any Option exceed a period of ten years from the date of
     its grant.

          (iii) Rule 16b-3 Six-Month Limitations. To the extent required in
     order to maintain the exemption provided under Rule 16b-3 only, any equity
     security offered pursuant to the Plan must be held for at least six months
     after the date of grant, and with respect to any derivative security issued
     pursuant to the Plan, at least six months must elapse from the date of
     acquisition of such derivative security to the date of disposition of the
     derivative security (other than upon exercise or conversion) or its
     underlying equity security. Terms used in the preceding sentence shall, for
     the purposes of such sentence only, have the meanings, if any, assigned or
     attributed to them under Rule 16a-1 and Rule 16b-3.

          (iv) Common Share Certificates. All certificates for Common Shares
     delivered under the Plan pursuant to any Award or the exercise thereof
     shall be subject to such stop transfer orders and other restrictions as the
     Committee may deem advisable under the Plan or the rules, regulations, and
     other requirements of the Securities and Exchange Commission, any stock
     exchange upon which such Common Shares are then listed, and any applicable
     Federal or state securities laws, and the Committee may cause a legend or
     legends to be put on any such certificates to make appropriate reference to
     such restrictions.

          (v) Delivery of Common Shares or Other Securities and Payment by
     Participant of Consideration. No Common Shares or other securities shall be
     delivered pursuant to any Award until payment in full of any amount
     required to be paid pursuant to the Plan or the applicable Award Agreement
     is received by the Company. Such payment may be made by such method or
     methods and in such form or forms as the Committee shall determine,
     including, without limitation, cash, Common Shares, other securities, other
     Awards or other property, or any combination thereof; provided that the
     combined value, as determined by the Committee, of all cash and cash
     equivalents and the Fair Market Value of any such Common Shares or other
     property so tendered to the Company, as of the date of such tender, is at
     least equal to the full amount required to be paid pursuant to the Plan or
     the applicable Award Agreement to the Company.

     SECTION 7. Amendments. Except to the extent prohibited by applicable law:

<PAGE>

     (a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or other Person; provided,
however, that any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant, or any other holder
or beneficiary of any Award theretofore granted, shall not to that extent be
effective without the consent of such Participant, other holder or beneficiary
of an Award, as the case may be; and provided further, however, that
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no such amendment, alteration,
suspension, discontinuation, or termination shall be made that would:

          (i) increase the total number of Common Shares available for Awards
     under the Plan, except as provided in Section 4(b) hereof; or

          (ii) otherwise cause the Plan to cease to comply with any tax or
     regulatory requirement, including for these purposes any approval or other
     requirement which is or would be a prerequisite for exemptive relief from
     Section 16(b) of the Exchange Act.

     (b) Amendments to Awards. The Committee may amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Award theretofore granted,
prospectively or retroactively; provided, however, that any amendment,
alteration, suspension, discontinuation, cancellation or termination that would
impair the rights of any Participant or holder or beneficiary of any Award
theretofore granted, shall not to that extent be effective without the consent
of such Participant or holder or beneficiary of an Award, as the case may be.

     SECTION 8. General Provisions.

     (a) No Right to Awards. No Employee or other Person shall have any claim to
be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Employees, or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect to each
recipient.

     (b) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.

     (c) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted, from any payment due or transfer made under any
Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Common Shares, other securities, other Awards,
or other property) of withholding taxes due in respect of an Award, its
exercise, or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.

     (d) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

     (e) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable Federal law.

     (f) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any Person or Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable

<PAGE>

laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

     (g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

     (h) No Fractional Common Shares. No fractional Common Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Common Shares or whether such fractional
Common Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.

     (i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

     SECTION 9. Adoption, Approval and Effective Date of the Plan. The Plan was
adopted by the Board on April 25, 2000 subject to stockholder approval. The Plan
shall be void if the stockholders of the Company shall not have approved the
adoption of the Plan within twelve (12) months after April 25, 2000, by a
majority of votes cast thereon at a meeting of stockholders duly called and held
for such purpose.<PAGE>

                                                                   EXHIBIT 10.40

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [***]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

INTEL/NUMERICAL CONFIDENTIAL
FINAL EXECUTION VERSION

                        PATENT CROSS LICENSE AGREEMENT

                     BETWEEN NUMERICAL TECHNOLOGIES, INC.

                             AND INTEL CORPORATION

This Patent License Agreement ("Agreement") is entered into as of April 17, 2001
("Effective Date") by and between Numerical Technologies, Inc., a Delaware
corporation, having an office at 70 West Plumeria Drive, San Jose, CA 95134-
2134, U.S.A. ("Numerical") and Intel Corporation, a Delaware corporation, having
an office at 2200 Mission College Blvd., Santa Clara, California 95052, U.S.A.
("Intel") (individually or collectively "party" or "parties").

IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED HEREIN, THE
PARTIES AGREE AS FOLLOWS:

1.   DEFINITIONS
     -----------

          1.1.  "Capture Period" shall mean any time on or prior to the [***]
                anniversary of the Effective Date.

          1.2.  "Change of Control" shall mean a transaction or a series of
                related transactions in which (i) one or more related parties
                who did not previously own at least a fifty percent (50%)
                interest in a party to this Agreement obtain at least a fifty
                percent (50%) interest in such party, and, in the reasonable
                business judgment of the other party to this Agreement, such
                change in ownership will have a material effect on the other
                party's business, or (ii) a party acquires, by merger,
                acquisition of assets or otherwise, all or any portion of
                another legal entity such that the market capitalization value
                of such party on the Change of Control Date is greater than 200%
                of the Measure Market Value. For the purposes of this Section
                1.2, "Measure Market Value" means the highest closing market
                value of such party over the previous twelve month period as
                measured from the day prior to the signing of the agreement for
                the transaction resulting in the Change of Control.

          1.3.  "Design" means any information used to describe or represent an
                Integrated Circuit (or part thereof) for the purpose of
                manufacturing such Integrated Circuit, including, without
                limitation, layouts, netlists, floor plans, logical or
                electrical descriptions and schematics.

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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INTEL/NUMERICAL CONFIDENTIAL

          1.4.  "Flash Memory Products" shall mean non-volatile Integrated
                Circuits capable of storing data that are electrically
                programmable and electrically erasable.

          1.5.  "Information System Product" shall mean any active circuit
                element, apparatus, appliance, circuit assembly, computer,
                device, equipment, firmware, housing, Integrated Circuit,
                instrumentality, material, method, passive circuit element,
                process, service, software, substrate or other means for
                calculating, classifying, combining, computing, detecting,
                displaying, handling, hosting, imaging, inputting, manifesting,
                measuring, modifying, networking, originating, photographing,
                playing, printing, processing, providing, receiving, recording,
                reproducing, retrieving, scanning, serving, storing, switching,
                transmitting or utilizing data or other information for
                business, scientific, control or other purposes, including
                components and subsystems thereof or supplies therefore.

          1.6.  "Integrated Circuit" shall mean an integrated unit comprising
                (a) one or more active and/or passive circuit elements
                associated on one or more substrates, such unit forming, or
                contributing to the formation of, a circuit for performing
                electrical functions (including, if provided therewith, housing
                and/or supporting means) in combination with (b) any and all
                firmware, microcode or drivers, if needed to cause such circuit
                to perform substantially all of its intended hardware
                functionality, whether or not such firmware, microcode or
                drivers are shipped with such integrated unit or installed at a
                later time.

          1.7.  "Integrated Circuit Manufacturing Process Technology" shall mean
                methods and processes performed during the actual fabrication of
                Integrated Circuits and Masks except to the extent that such
                methods and processes are: (1) performed by the use or creation
                of Numerical Software, and/or (2) the creation of Numerical Mask
                Portions and the use of such Numerical Mask Portions during the
                process of imaging, modeling, testing, analysis and inspection
                of Numerical Integrated Circuit Portions; regardless of whether
                or not the foregoing activities (set forth in subparts (1) and
                (2) of this Section 1.7) are performed as Numerical Consulting
                Services.

          1.8.  "Intel Architecture Emulator" shall mean software that, through
                emulation, simulation or any other process, allows a computer
                that does not contain an Intel Compatible Processor (or a
                processor that is not an Intel Compatible Processor) to execute
                binary code that is capable of being executed on an Intel
                Compatible Processor.

          1.9.  "Intel Compatible Chipsets" shall mean one or more Integrated
                Circuits that alone or together are capable of (i) electrically
                interfacing directly (with or without buffering or pin
                reassignment) with an Intel Processor to form the connection
                between an Intel Processor and any other device including,
                without limitation, Processors,

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INTEL/NUMERICAL CONFIDENTIAL

                input/output devices, and memory; or (ii) communicating directly
                with any Intel Compatible Processor through an Intel Interface.

          1.10. "Intel Compatible Compiler" shall mean a compiler that generates
                object code that can, with or without additional linkage
                processing, be executed on any Intel Processor.

          1.11. "Intel Compatible Processor" shall mean any Processor that (a)
                can perform substantially the same functions as an Intel
                Processor by compatibly executing or otherwise processing (i) a
                substantial portion of the instruction set of an Intel Processor
                or (ii) object code versions of applications or other software
                targeted to run on or with an Intel Processor, in order to
                achieve substantially the same result as an Intel Processor; or
                (b) is substantially compatible with an Intel Processor Bus.

          1.12. "Intel Interface" shall mean a proprietary bus or other data
                path first introduced by Intel that (a) is capable of
                transmitting and/or receiving information inside an Integrated
                Circuit or between two or more Integrated Circuits, together
                with the set of protocols defining the electrical, physical,
                timing and functional characteristics, sequences and control
                procedures of such bus or data path; and (b) Intel has not
                granted a license to or committed to grant a license to through
                participation in a formal or informal Standard Industry Group or
                other standard setting body; and (c) Intel has not publicly
                disclosed with no obligation of confidentiality.

          1.13. "Intel Licensed Products" shall mean any Intel product that
                constitutes: (a) an Information System Product (b) software or
                (c) any combination thereof, that are sold by Intel as Intel's
                own product (subject to the limitations set forth in Section
                3.4) and not on behalf of another, provided that Intel Licensed
                Products shall not include any Numerical Proprietary Products.

          1.14. "Intel Processor" shall mean a Processor first developed by, for
                or with substantial participation by Intel, or the design of
                which has been purchased or otherwise acquired by Intel,
                including without limitation the Intel 8086, 80186, 80286,
                80386, 80486, Pentium(R), Pentium Pro, Pentium(R) II, Pentium(R)
                III, StrongARM, Xscale, Frio, Itanium(R) processor, 80860 and
                80960 microprocessor families, and the 8087, 80287, and 80387
                math coprocessor families.

          1.15. "Intel Processor Bus" shall mean an Intel Interface that is
                capable of connecting one or more Intel Processors to each
                other, to an Intel Compatible Chipset or to a main memory or
                cache.

          1.16. "Intel Proprietary Product" shall mean Integrated Circuits
                (except Numerical Integrated Circuit Portions), Integrated
                Circuit Manufacturing Process Technology,

                                       3
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INTEL/NUMERICAL CONFIDENTIAL

                Intel Compatible Processors, Intel Architecture Emulators, Intel
                Compatible Compilers, Intel Compatible Chipsets, Intel
                Interfaces (including Intel Processor Buses) and Flash Memory
                Products.

          1.17  "Licensed Party" shall mean a party which is licensed under this
                Agreement.

          1.18  "Mask" shall mean a plate that has been patterned to modulate
                the intensity or phase of light in order to project an optical
                image onto silicon wafers as part of the process for
                manufacturing Integrated Circuits. The definition of Mask shall
                not include the electronic circuits of the Integrated Circuit.

          1.19  "Numerical Consulting Services" shall mean services and business
                methods directly performed by employees or subcontractors of
                Numerical, to the extent that such services and business methods
                consist of:

                (a)  training customers (or otherwise consulting with customers)
                     on the use of, Numerical Software; and/or

                (b)  using Numerical Software to create Numerical Mask Portions
                     on behalf of customers; and/or

                (c)  assisting customers in using Numerical Software to create
                     Numerical Mask Portions; and/or

                (d)  assisting customers in using Numerical Software to create
                     Numerical Integrated Circuit Portions from Numerical Mask
                     Portions.

          1.20. "Numerical Integrated Circuit Portion" shall mean any portion of
                an Integrated Circuit that is directly attributable to a
                Numerical Mask Portion and not any other portion of a Mask.

          1.21  "Numerical Licensed Products" shall mean (a) Numerical Software,
                and/or (b) Numerical Mask Portions, and/or (c) Numerical
                Integrated Circuit Portions and/or (d) Numerical Consulting
                Services that are sold, provided or licensed by Numerical
                (directly or indirectly) as Numerical's own product or service
                (subject to the limitations set forth in Section 3.4) and not as
                a third party's product or service. Numerical Licensed Products
                excludes Intel Proprietary Products.

          1.22. "Numerical Mask Portion" shall mean any portions of any Mask
                that (a) are altered by the use of Numerical Software, and (b)
                contain information about the layout and/or location of active
                or passive circuit elements (but not the active and/or passive
                circuit elements themselves). For purposes of clarification, the
                parties intend that the definition of Numerical Mask Portion
                does not include any element that is attributable

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INTEL/NUMERICAL CONFIDENTIAL

                to a Design provided by a third party, except to the extent that
                such element satisfies subparts (a) and (b) of this Section
                1.22.

          1.23  "Numerical Proprietary Product" means those portions of software
                offered or provided (as a software product, or on a application
                service provider basis (or other service bureau basis) or on a
                consulting basis) to third parties having any of the following
                functionality: phase shifting, optical proximity correction,
                lithography process correction, cell library generation, mask
                data preparation, lithography simulation, and silicon vs. layout
                checking. Numerical Proprietary Product shall not include those
                portions of software provided by Intel to its bona fide foundry
                customers solely to enable such foundry customers to use Intel
                as a foundry for such foundry customer's Integrated Circuits but
                only to the extent that such software provides the functionality
                of cell library generation.

          1.24  "Numerical Software" shall mean any portions of any Numerical
                product that (a) are software, and (b) are offered or provided
                (as a software product, application service provider (or other
                service bureau basis) or on a consulting basis) directly or
                indirectly to third parties as Numerical's product, and (c)
                provide for the design (including modification or enhancement
                thereof), computer modeling, simulation, analysis and/or testing
                (except for that portion of the software that controls
                electrical hardware testers and/or analyzers)and inspection (as
                opposed to the manufacture) of any aspect of an Integrated
                Circuit or Mask, including, without limitation, phase shifting,
                optical proximity correction, lithography process correction,
                cell library generation, mask data preparation, lithography
                simulation and/or layout checking.

          1.25  "Patents" shall mean all classes or types of patents other than
                design patents (including, without limitation, originals,
                divisions, continuations, continuations-in-part, extensions or
                reissues as well as the patent applications for such patents to
                the extent patent rights attach to such applications), and
                applications for these classes or types of patent rights in all
                countries of the world (collectively "Patent Rights") that have
                a first effective filing date during the Capture Period and
                which, at any time during the term of this Agreement, are (a)
                owned by the applicable party (or any of its Subsidiaries) or
                (b) to which the applicable party (or any of its Subsidiaries)
                has the right to enforce or to grant licenses within and of the
                scope set forth herein and without the requirement to pay
                consideration to any third party (other than an employee
                inventor or consultant inventor of the applicable party or its
                Subsidiaries) for the grant of a license under this Agreement.

          1.26  "Processor" shall mean any Integrated Circuit or combination of
                Integrated Circuits capable of processing digital data,
                including, without limitation, a microprocessor or coprocessor,
                a math coprocessor, a network processor or coprocessor, a
                graphics controller or a digital signal processor.

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INTEL/NUMERICAL CONFIDENTIAL

          1.27  "Subsidiary" shall mean any corporation, partnership, joint
                venture, limited liability company or other entity, now or
                hereafter, in which a party:

                (a)  owns or controls (either directly or indirectly) or
                     originally contributed (either directly or indirectly) at
                     least fifty percent (50%) of the tangible and intangible
                     assets of such entity; and

                (b)  owns or controls (either directly or indirectly) either of
                     the following:

                     (1)  if such entity has voting shares or other securities,
                          at least fifty percent (50%) of the outstanding shares
                          or securities entitled to vote for the election of
                          directors or similar managing authority and such
                          entity is under no obligation (contractual or
                          otherwise ) to directly or indirectly distribute more
                          than seventy percent (70%) of its profits to a third
                          party, or

                     (2)  if such entity does not have voting shares or other
                          securities, at least fifty percent (50%) of the
                          ownership interest that represents the right to make
                          decisions for such entity and an interest sufficient
                          to receive at least thirty percent (30%) of the
                          profits and/or losses of such entity.

                (c)  An entity shall be deemed to be a Subsidiary of a party
                     under this Agreement only so long as all requisite
                     conditions of being a Subsidiary under this Section 1.27
                     are met.

2.   MUTUAL RELEASES
     ---------------

          2.1.  Numerical.  Subject to Intel's payment of License Fees and
                ---------
                Maintenance Payments under Section 4, Numerical, on behalf of
                itself and its Subsidiaries, hereby releases, acquits and
                forever discharges Intel, its Subsidiaries that are Subsidiaries
                as of the Effective Date or become Subsidiaries during the term
                of this Agreement, and its and their distributors and customers,
                direct and indirect, from any and all claims or liability for
                infringement (direct, induced, indirect or contributory) of any
                Numerical Patents that arise prior to the expiration of this
                Agreement, to the extent such infringement would have been
                licensed under the license granted to Intel hereunder if such
                license had been in existence at the time of such infringing
                activity.

          2.2.  Intel.  Intel, on behalf of itself and its Subsidiaries, hereby
                -----
                releases, acquits and forever discharges Numerical, its
                Subsidiaries that are Subsidiaries as of the Effective Date or
                become Subsidiaries during the term of this Agreement, and its
                and their distributors and customers, direct and indirect, from
                any and all claims or liability for infringement (direct,
                induced, indirect or contributory) of any Intel Patents that
                arise prior to the expiration of this Agreement, to the extent
                such infringement would have

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INTEL/NUMERICAL CONFIDENTIAL

          been licensed under the license granted to Numerical hereunder if such
          license had been in existence at the time of such infringing activity.
          Intel, on behalf of itself and its Subsidiaries, further hereby
          releases, acquits and forever discharges Numerical, its Subsidiaries
          that are Subsidiaries as of the Effective Date from any and all claims
          of trade secret misappropriation.

3.   GRANT OF RIGHTS
     ---------------

     3.1. Numerical License to Intel.  Subject to the terms and conditions of
          --------------------------
          this Agreement including the payment of fees under Section 4 (and no
          other payments), Numerical hereby grants to Intel a non-exclusive,
          non-transferable worldwide license, without the right to sublicense,
          under Numerical's Patents to:

          (a)  make, use, sell (directly or indirectly), offer to sell, import
               and otherwise dispose of all Intel Licensed Products; and

          (b)  make, have made, use and/or import any equipment and practice any
               method or process for the manufacture, use, sale and/or offer for
               sale of Intel Licensed Products; and

          (c)  have made (subject to the limitations set forth in Section 3.4)
               Intel Licensed Products by another manufacturer for supply solely
               to Intel for use, import, sale, offer for sale or disposition by
               Intel pursuant to the license granted above in Section 3.1(a).

     3.2. Intel License to Numerical.  Subject to the terms and conditions of
          --------------------------
          this Agreement, Intel hereby grants to Numerical a non-exclusive, non-
          transferable (except as expressly allowed under Section 5.3), royalty-
          free, fully paid up, worldwide license, without the right to
          sublicense, under Intel's Patents to:

          (a)  make, use, sell (directly or indirectly), offer to sell, import
               and otherwise dispose of all Numerical Licensed Products; and

          (b)  make, have made, use and/or import any equipment and practice any
               method or process for the manufacture, use sale, and/or offer for
               sale of all Numerical Licensed Products; and

          (c)  have made (subject to the limitations set forth in Section 3.4)
               Numerical Licensed Products by another manufacturer for supply
               solely to Numerical for use, import, sale, offer for sale or
               disposition by Numerical pursuant to the license granted above in
               Section 3.2(a).

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INTEL/NUMERICAL CONFIDENTIAL

     3.3. Duration and Extent of Licenses.  All licenses granted in this
          -------------------------------
          Section 3 as to any Intel Patent or Numerical Patent shall continue
          for the entire unexpired term of such Patent.

     3.4. Have Made Rights.
          ----------------

          (a)  Each party's rights to have Licensed Products manufactured for it
               by third parties under the licenses granted under Sections 3.1
               and 3.2 above shall apply only when the designs, specifications
               and working drawings for the Licensed Product to be manufactured
               by such third party are furnished to the third party manufacturer
               by the Licensed Party for distribution as a Licensed Party's
               product without the intent (in whole or part) or the effect (in
               whole or part) of circumvention of the anti-laundering provisions
               of this Agreement.

          (b)  The parties understand and acknowledge that either party's
               Licensed Products may consist of software, and that software is
               often distributed to end users by providing a single master copy
               of such software to a distributor, replicator, VAR, OEM or other
               agent and authorizing such agent to reproduce such software in
               substantially identical form.  Accordingly, the parties agree
               that the licenses granted in this Section 3 are intended to apply
               to the reproduction and subsequent distribution of such Licensed
               Products in a form substantially identical form to that provided
               by the Licensed Party to such authorized agent.  Nothing in this
               Section 3.4(b) shall be deemed to be a license for Intel to
               distribute or otherwise provide or make available to third
               parties, any Numerical Proprietary Products.

          (c)  Upon written request of the party to this Agreement that grants
               the relevant license to the Licensed Party ("Requesting Party"),
               the Licensed Party shall, within 30 days of receiving such
               request, and to the extent not prohibited by written agreement
               with a third party, inform the Requesting Party in writing
               whether, any manufacturer identified by the Requesting Party is
               manufacturing any Licensed Product for the Licensed Party
               pursuant to the "have made" rights granted under this Agreement.

     3.5. Clarification Regarding Patent Laundering. The parties understand and
          -----------------------------------------
          acknowledge that the licenses granted hereunder are intended to cover
          only the products of the two parties to this Agreement, and are not
          intended to cover manufacturing activities that either party may
          undertake on behalf of third parties (patent laundering activities).
          Similarly, the licenses provided under this Agreement are not intended
          to cover services provided by the parties to the extent that such
          services are provided to or on behalf of a third party using tangible
          or intangible materials provided by or on behalf of the third party.
          Accordingly, by way of clarification, the following guidelines are

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INTEL/NUMERICAL CONFIDENTIAL

          provided to aid the determination of whether a party's product is a
          Licensed Product as defined herein or whether such product is
          disqualified from being a Licensed Product because circumstances
          surrounding the manufacture of the product suggest patent laundering.

          (a)  Products of either party that otherwise meet the definition of
               Licensed Product are disqualified as Licensed Products if such
               products are manufactured on behalf of a third party from designs
               received in a substantially completed form from a third party for
               resale to or on behalf of that party.

          (b)  Products of either party that otherwise meet the definition of
               Licensed Product are not disqualified as Licensed Products under
               the prohibition against patent laundering set forth in this
               Section 3.5 if:

               (1)  the Licensed Party selling or licensing such Licensed
                    Product owns the design of such Licensed Product and is
                    under no obligation (other than that imposed by applicable
                    law) that restricts the sale and/or distribution of such
                    Licensed Product only to specific parties; or

               (2)  the Licensed Party distributing such Licensed Product has an
                    unrestricted, royalty-free ownership or license right to the
                    design of the Licensed Product.

          (c)  Notwithstanding anything is this Section 3.5, it shall not be
               considered "patent laundering" and it shall be permissible for
               Numerical to provide bona fide Numerical Consulting Services to
               third parties in accordance with the license granted in Section
               3.2.

     3.6.  Limited Right to Suspend Patent License for Sales to Affiliates.
           ---------------------------------------------------------------

          (a)  For purposes of this Section 3.6, "Affiliate" means any entity
               that is directly or indirectly Controlled by, under common
               Control with or that Controls the subject party.  For purposes of
               this definition, "Control" means direct or indirect ownership of
               or the right to exercise (i) at least fifty percent (50%) of the
               outstanding shares or securities entitled to vote for the
               election of directors or similar managing authority of the
               subject entity; or (ii) at least fifty percent (50%) of the
               ownership interest representing the right to make the decisions
               for the subject entity.

          (b)  Notwithstanding anything herein to the contrary, a party
               ("Licensing Party") shall have the limited right to suspend the
               licenses granted under this Agreement to the Licensed Party with
               respect to sales to an Affiliate of the Licensed Party if:

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INTEL/NUMERICAL CONFIDENTIAL

               (1)  The Affiliate is a direct or indirect customer of the
                    Licensed Party; and

               (2)  the Affiliate initiates a legal or administrative proceeding
                    against the Licensing Party and/or any of its Subsidiaries
                    alleging that the Licensing Party infringes a patent right
                    of the Affiliate, and

               (3)  the alleged infringing activity would have been licensed had
                    the identified patent right been owned or controlled by the
                    Licensed Party, and

               (4)  the Licensing Party did not first assert a patent claim
                    against the Affiliate or any of its Subsidiaries.

          (c)  If the Licensing Party elects to suspend the licenses granted
               under this Agreement pursuant to Section 3.6(b), the Licensing
               Party shall give written notice of its intent to suspend the
               licenses to the Licensed Party, which notice shall set forth the
               facts known to the Licensing Party that support its decision to
               suspend the license.  The Licensed Party shall have sixty (60)
               days from the date of such written notice to cure the
               circumstances that prompted such notice.  Such suspension shall
               be effective sixty (60) days following the date of such written
               notice, and shall be solely for the purpose of allowing the
               Licensing Party to assert a claim of infringement against the
               Affiliate that brought the original claim against the Licensing
               Party.  During the sixty (60) day period preceding the
               suspension, the Licensed Party is encouraged to engage in the
               dispute resolution procedure set forth in Section 7.15, it being
               understood and agreed that a Licensing Party has not waived its
               claim for damages during such cure period or dispute resolution
               process.  Suspension of license rights under this Section 3.6
               shall apply only with respect to the Licensed Products of the
               Licensed Party that are sold or licensed to such Affiliate.

          (d)  In the event the Licensing Party opts to assert a claim for
               infringement against the Affiliate, the Licensing Party agrees
               that it shall not seek monetary damages against the Licensed
               Party but rather shall look to the Affiliate for monetary
               damages.  The Licensing Party shall not assert a patent claim
               directly against the Licensed Party until it has first exhausted
               its legal remedies directly against the Affiliate. If the
               Licensing Party resolves its patent dispute with the Affiliate,
               either through entrance of a judgment or by settlement of the
               dispute, the Licensing Party agrees that it shall not bring a
               separate action against the Licensed Party with respect to
               products sold or licensed to such Affiliate.

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INTEL/NUMERICAL CONFIDENTIAL

     3.7.  Licenses and Subsidiaries.
           -------------------------

           (a) Intention for Subsidiaries to be Bound.
               --------------------------------------

               (1)  Except as expressly set forth herein, the parties intend
                    that this Agreement shall extend to all of each party's
                    Subsidiaries.  The parties agree that to the extent they are
                    not already bound, each party shall use reasonable and
                    diligent efforts to ensure that all such Subsidiaries are
                    bound by the terms of this Agreement.

               (2)  Each party agrees to take all steps that are reasonable and
                    in good faith under the circumstances to ensure that all
                    Patents directed to inventions that are made by its
                    employees and/or contractors either alone or in conjunction
                    with the employees and/or contractors of one or more of its
                    Subsidiaries are licensed under this Agreement.  Each party
                    further agrees to take all steps that are reasonable and in
                    good faith under the circumstances to ensure that all
                    Patents directed to inventions that are made in substantial
                    part using funding provided directly or indirectly by that
                    party and/or its Subsidiaries are licensed under this
                    Agreement.

               (3)  Notwithstanding Section 3.7(a)(2) above, however, both
                    parties understand and intend that there are circumstances
                    in which a party could reasonably agree in good faith with a
                    third party that the party would not have rights to license
                    and/or enforce Patents directed to inventions developed in
                    conjunction with employees and/or contractors of such third
                    party.  For example, both parties understand that it could
                    be reasonable under the circumstances for a party to agree
                    in good faith not to have rights to license and/or enforce
                    Patents directed to inventions that arise out of: (i) bona
                    fide joint development projects based in substantial part on
                    the pre-existing technology of an independent third party;
                    or (ii) bona fide joint development projects undertaken with
                    the significant assistance of the employees and/or
                    contractors of an independent third party.

               (4)  Either party to this Agreement shall have the right to
                    request a written confirmation or denial from the other
                    party to this Agreement that a specific Subsidiary is (or is
                    not) bound by this Agreement.  A party receiving such a
                    request shall provide such written confirmation (including a
                    full explanation in support of such confirmation or denial)
                    within 30 days after the receipt of the request.

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INTEL/NUMERICAL CONFIDENTIAL

          (b)  In the event that neither a party nor any of its Subsidiaries has
               the right to grant a license under any particular Patent Right of
               the scope set forth herein, then the license granted herein under
               such Patent shall be of the broadest scope which the licensing
               party or any of its Subsidiaries has the right to grant.

          (c)  The parties represent, warrant and covenant that they shall not
               participate in the creation of Subsidiaries where a primary
               purpose of such creation is to extend the benefits of this
               Agreement to a third party.

          (d)  If either party or one of their Subsidiaries ("First Party") owns
               or has the right to enforce or control the enforcement of any
               rights in any Patent, but such First Party does not have the
               right to license those rights to the other party to this
               Agreement (the "Second Party") hereunder ("Restricted Patent
               Rights"), then, if and to the extent that such Restricted Patent
               Rights would have been licensed to the Second Party under this
               Agreement if the First Party had the right to license such
               patents:

               (1)  the First Party will not sue the Second Party for infringing
                    the Restricted Patent Rights;

               (2)  the First Party shall not give its assent if that assent is
                    required to allow a third party entity to assert the
                    Restricted Patent Rights against the Licensed Products of
                    the Second Party; provided that (i) this restriction shall
                    be dropped if the Second Party first initiates litigation
                    against the holder of the Restricted Patent Rights, and (ii)
                    in any event the First Party shall be free to fulfill its
                    contractual obligations to provide assistance and support as
                    may be required under the relevant contractual agreement;
                    and

               (3)  the First Party promises to off-set or repay over to the
                    Second Party any monetary awards for damages and/or
                    royalties actually to be paid or paid by the Second Party
                    and owing to said First Party as a result of litigation by
                    the holder of the Restricted Patent Rights against the
                    Licensed Products of the Second Party to the extent
                    attributable to such Restricted Patent Rights.

          (e)  The extension of license rights to a Subsidiary under this
               Agreement shall apply only during the time period when such
               Subsidiary meets all requirements of a Subsidiary.  However, if a
               Subsidiary of a party that holds any Patents that are licensed to
               the other party hereunder ceases to meet all requirements of
               being a Subsidiary, the licenses granted by such Subsidiary to
               the other party under this Agreement shall continue for the life
               of such Patents

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INTEL/NUMERICAL CONFIDENTIAL

               even after such entity ceases to meet all the requirements of
               being a Subsidiary.

          (f)  Notwithstanding anything to the contrary contained in this
               Agreement, in the event that either party or any of its
               Subsidiaries obtains rights to any Patents that would be included
               within the Patents licensed hereunder but for the fact that such
               a license would require the party granting such license to make
               payments to a third party, such Patents shall be included within
               the Numerical Patents or the Intel Patents, as the case may be,
               if the party to whom such would be licensed under this Agreement
               agrees in a separate written agreement to be bound by, and
               protect such grantor against, those payment obligations.

     3.8. Waiver of Indirect Infringement Liability.
          -----------------------------------------

          (a)  For purposes of this Section 3.8, "Indirect Infringement" means a
               claim for infringement where the accused infringer is not
               directly infringing the subject Patents, but is in some manner
               contributing to a third party's direct infringement of the
               subject Patents by, for example, supplying parts or instructions
               to the third party that as a result of such parts or instructions
               enable such third party to infringe directly the subject Patents.
               Indirect Infringement includes without limitation contributory
               infringement and inducing infringement.

          (b)  Each party agrees that during the term of this Agreement, it will
               not assert a claim of Indirect Infringement against a Licensed
               Party where such a claim would be based in any part or in any way
               upon (i) any activity for which the Licensed Party is licensed
               under this Agreement if such activity had been performed by the
               Licensed Party directly, or (ii) the Licensed Party providing
               instructions regarding or sample designs related to its Licensed
               Products.  The parties agree that the foregoing sentence does not
               and shall not in any way limit their respective rights to assert
               direct or indirect claims of infringement against third parties.

     3.9. No Other Rights.  No other rights are granted hereunder, by
          ---------------
          implication, estoppel, statute or otherwise, except as expressly
          provided herein.  Specifically, (i) except as expressly provided in
          Section 3, nothing in the licenses granted hereunder or otherwise
          contained in this Agreement shall expressly or by implication,
          estoppel or otherwise give either party any right to license the other
          party's Patents to others, and (ii) no license or immunity is granted
          by either party hereto directly or by implication, estoppel or
          otherwise to any third parties acquiring items from either party for
          the

                                       13
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

               combination of Licensed Products with other items or for the use
               of such combination.

4.   BUSINESS TERMS
     --------------

       4.1.    Numerical shall provide Intel with certain Numerical Software
               under the terms set forth in Exhibit A hereto.
                                            ---------

       4.2.    In consideration for the rights and licenses granted by Numerical
               under this Agreement and the Intel Corporation Purchase Agreement
               attached hereto as Exhibit A, Intel shall make payments to
                                  ---------
               Numerical in accordance with the schedule set forth in Exhibit B
                                                                      ---------
               to this Agreement. Payments shall be made via FEDWIRE to

                                     [***]

       4.3     Intel shall have the option, in its sole discretion, of receiving
               Maintenance Services from Numerical under this Agreement and
               Intel shall have the right to cancel such Maintenance Services at
               any time in its sole discretion subject to the terms of this
               Agreement. For the purpose of this Agreement "Maintenance
               Services" is provided on an annual basis and shall mean (a)
               support and maintenance of the Numerical Software received by
               Intel pursuant to the terms of Exhibit A, and (b) licenses, under
               this Agreement, to all filings for Numerical Patents (and
               Numerical Patents issued therefrom) during the corresponding
               Maintenance Services period. The payments for Maintenance
               Services are owing in advance on an annual basis and payments
               will be made as set forth in Exhibit B. Commencing after the end
               of the first year of the first Payment Due Date in Exhibit B,
               such Maintenance Service is non-refundable and non-cancelable for
               each annual period, upon Intel's commencement of the first
               quarterly payment for such annual period.

       4.4.    Intel shall not provide Support to a challenge in a legal
               proceeding by a third party to the validity of any of Numerical's
               Patents that are issued as of the Effective Date. "Support" means
               (1) providing paid consulting services in support of such a
               challenge to the Patents, or (2) providing direct financial
               support or legal advice to such a challenge of the Patents of the
               licensing party. Notwithstanding the foregoing, neither party
               shall be prohibited from fulfilling its obligations under a
               subpoena or as otherwise compelled under applicable law, even if
               performance of those obligations tends to cast doubt on the
               validity of one or more of the other party's Patents.

5.     EFFECTIVE DATE, TERM AND TERMINATION
       ------------------------------------

       5.1.    Term. This Agreement and the rights and licenses granted
               ----
               hereunder shall become effective on the Effective Date, and shall
               continue in effect until terminated by one of

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       14
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

           the parties pursuant to Section 5.2 or until the expiration of last
           to expire Patent that is licensed under this Agreement.

     5.2.  Termination for Cause.
           ---------------------

           (a)   A party may terminate the other party's rights and licenses
                 hereunder upon notice if the other party hereto commits a
                 material breach of this Agreement and does not correct such
                 breach within sixty (60) days after receiving written notice
                 complaining thereof. In the event of such termination, the
                 rights and licenses granted to the defaulting party shall
                 terminate, but the rights and licenses granted to the party not
                 in default shall survive such termination of this Agreement
                 subject to its continued compliance with the terms and
                 conditions of this Agreement.

          (b)    A party hereto may terminate this Agreement upon sixty (60)
                 days written notice of termination to the other party given at
                 any time upon or after:

                 (1)  the filing by the other party of a petition in bankruptcy
                      (other than reorganization) or insolvency which petition
                      is not dismissed within sixty (60) days of its filing;

                 (2)  any final adjudication that the other party is bankrupt or
                      insolvent;

                 (3)  the appointment of a receiver for all or substantially all
                      of the property of the other party which appointment is
                      not discharged within sixty (60) days of making; or

                 (4)  the institution of any proceedings for the liquidation or
                      winding up of the other party's business or for the
                      termination of its corporate charter which proceedings are
                      not dismissed within sixty (60) days of their
                      commencement.

          (c)  In the event of termination pursuant to Sections 5.2(a) and
               5.2(b), the rights and licenses granted to the terminated party
               shall terminate, but the rights and licenses granted to the other
               shall survive such termination of this Agreement subject to its
               continued compliance with the terms and conditions of this
               Agreement.

     5.3. Effect on License Grants Following a Change of Control. If one party
          ------------------------------------------------------
          to this Agreement (the "Changed Party") undergoes a Change of Control
          with a third party  (the "New Party"), then the Changed Party shall
          promptly give notice of such Change of Control to the other party to
          this Agreement (the "Unchanged Party") in writing within fifteen (15)
          days after the effective date of the closing of such Change of

                                       15
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

          Control. In the event of a Change of Control, this Agreement shall be
          deemed to have been automatically amended as of the effective date of
          the closing of such Change of Control ("Change of Control Date") as
          follows:

          (a)  Capture Period.  The Capture Period for the Patents of both
               --------------
               parties shall terminate effective on the Change of Control Date.

          (b)  Unchanged Party.  The license set forth in Section 3 to the
               ---------------
               Unchanged Party shall survive with respect to the Patents falling
               within the Capture Period in accordance with the terms of this
               Agreement.

          (c)  Intel as Changed Party.  In the event of termination pursuant to
               ----------------------
               a Change of Control in which Intel is the Changed Party, the
               license granted to Intel under Section 3 of this Agreement shall
               terminate, and New Party shall continue to pay fees to Numerical
               pursuant Article 4 of the Agreement.

          (d)  Numerical as Changed Party.
               --------------------------

               (1)  In the event of a Change of Control in which Numerical is
                    the Changed Party:

                       i.  The definition of Numerical Software shall be amended
                           to read as follows:

               "Numerical Software" shall mean any portions of any New Party
               product that (a) are software, and

               (b) are offered or provided (as a software product, application
               service provider (or other service bureau basis) or on a
               consulting basis) directly or indirectly to third parties as the
               New Party's product, and

               (c) provide for the design (including modification or enhancement
               thereof), computer modeling, simulation, analysis and/or testing
               (except for that portion of the software that controls electrical
               hardware testers and analyzers) and inspection (as opposed to the
               manufacture) of any aspect of an Integrated Circuit or Mask,
               including, without limitation, phase shifting, optical proximity
               correction, lithography process correction, cell library
               generation, mask data preparation, lithography simulation and/or
               layout checking, and

               (d) are (1) commercially available as Numerical Software by
               Numerical (i.e. not a custom product) on the Change of Control
               Date or had been significantly developed by Numerical prior to
               the Change of Control Date without the use of any resources of
               the New Party and are made commercially available within

                                       16
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

               nine (9) months of the Change of Control Date (collectively the
               "New Numerical Software"), and (2) subsequent changes that
               constitute bug fixes and minor modifications, but such license
               shall not extend or apply to any changes that constitute the
               addition of substantial new features or substantial new
               functionality, provided that the unchanged portion and bug fixes
               and minor modifications of any such New Numerical Software shall
               remain licensed even if substantial new features or substantial
               new functionality is added.

                       ii.   The definition of Numerical Licensed Products shall
               be amended to include the revised definition of Numerical
               Software provided under Section 5.3(d)(1)(i).

                       iii.  The license granted to Numerical under Section 3 of
               this Agreement shall survive only with respect to those Numerical
               Licensed Products that fall within the revised definition of
               Numerical Licensed Products (including with respect to Numerical
               Mask Portions, Numerical Integrated Circuit Portions and
               Numerical Consulting Services to the extent that those
               definitions are modified by the modification to the definition of
               Numerical Software set forth in Section 5.3(d)(1)(i)).

               (2)  In the event that: (i) Numerical is subject to a Change of
                    Control by a nonaffiliated party that is already (as
                    measured on the Change of Control Date) licensed to the
                    Intel Patents (in a scope of license similar to that granted
                    under this Agreement); and (ii) the Change of Control Date
                    occurs within ninety (90) days of the Effective Date of this
                    Agreement, Intel's obligation to make payments under Section
                    4, shall be discounted by an amount equal to one-third (1/3)
                    of the remaining amounts owing under Exhibit B to this
                                                         ---------
                    Agreement as such amounts are measured on the Change of
                    Control Date.

               (3)  Intel shall continue to pay fees to Numerical pursuant
                    Article 4 of the Agreement (except as expressly provided
                    otherwise in Section 5.3(d)(2)).

     5.4.      Survival. The provisions of Sections 1, 2, 5, 6 and 7, payment
               --------
obligations under Article 4 shall survive any termination or expiration of this
Agreement, and Exhibit A shall survive in accordance with its own terms and
               ---------
conditions.

6. LIMITED WARRANTIES AND DISCLAIMER
   ---------------------------------

     6.1.  Limited Warranties.  Each of the parties hereto represents and
           ------------------
          warrants that:

                                       17
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

           (a)  it has the right to grant the other the licenses granted
                hereunder;

           (b)  it has the full right and power to enter into and perform this
                Agreement and that there are no outstanding agreements,
                assignments or encumbrances inconsistent with any provisions of
                this Agreement; and

           (c)  this Agreement constitutes a valid and legally binding
                obligation of each party enforceable against each party in
                accordance with its terms.

     6.2.  Disclaimer.  Nothing contained in this Agreement shall be construed
           ----------
           as:

           (a)  a warranty or representation by either of the parties to this
                Agreement as to the validity, enforceability or scope of any
                class or type of Patent; or

           (b)  a warranty or representation that any manufacture, sale, lease,
                use or other disposition of Licensed Products hereunder will be
                free from infringement of any patent rights or other
                intellectual property rights of any third party or will be free
                from infringement of intellectual property rights (other than
                Patents) of the other party; or

           (c)  an agreement to bring or prosecute actions or suits against
                third parties for infringement or conferring any right to bring
                or prosecute actions or suits against third parties for
                infringement; or

           (d)  except in the context of a press release to be issued pursuant
                to Section 7.17 conferring any right to use in advertising,
                publicity, or otherwise, any trademark, trade name or names, or
                any contraction, abbreviation or simulation thereof, of either
                party; or

           (e)  conferring by implication, estoppel or otherwise, upon any party
                licensed hereunder, any license or other right under any Patent,
                copyright, mask work, trade secret, trademark other intellectual
                property right except the licenses and rights expressly granted
                hereunder; or

           (f)  an obligation to furnish any technical information or know-how.

     6.3.  NO IMPLIED WARRANTIES.  EACH PARTY HEREBY DISCLAIMS ANY IMPLIED
           ---------------------
           WARRANTIES WITH RESPECT TO THE PATENTS LICENSED HEREUNDER, INCLUDING
           WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY, NON-
           INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

                                       18
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

7.   MISCELLANEOUS PROVISIONS
     ------------------------

       7.1.  Infringement Claims. During the term of this Agreement, Numerical
             -------------------
             shall have no obligation to defend or indemnify any third party
             patent infringement claims asserted against Intel or any Intel
             Subsidiaries relating to Intel Licensed Products (except as set
             forth in the Intel Corporate Purchase Agreement attached as Exhibit
             A). During the term of this Agreement, Intel shall have no
             obligation to defend or indemnify any third party patent
             infringement claims asserted against Numerical or any Numerical
             Subsidiaries relating to Numerical Licensed Products.

       7.2.  Relationship of the Parties.  Numerical and Intel shall be
             ---------------------------
             independent contractors and neither of them shall be nor represent
             themselves to be the legal agent, partner or employee of the other
             party for any purpose; (i) neither party has the authority to make
             any warranty or representation on behalf of the other party nor to
             execute any contract or otherwise assume any obligation or
             responsibility in the name of or on behalf of the other party; and
             (ii) neither party shall be bound by, nor liable to, any third
             party for any act or any obligations or debt incurred by the other
             party, except to the extent specifically agreed to in writing by
             the parties.

       7.3.  Injunction.  Except as expressly provided herein, either party may
             ----------
             seek a preliminary injunction or other preliminary judicial relief
             if, in its judgment, such action is necessary to avoid irreparable
             damage or to compel compliance by the other with the terms of this
             Agreement.

       7.4.  Enforcement Rights.  There may be countries in which a party hereto
             ------------------
             may have, as a consequence of this Agreement, rights against
             infringers of the other party's Patents licensed hereunder. Each
             party hereby waives any such right it may have by reason of such
             third party's infringement or alleged infringement of the other
             party's Patents.

       7.5.  Headings. The Article headings in this Agreement are for
             --------
             convenience only, and shall not be considered a part of, or affect
             the interpretation of, any provision of this Agreement.

       7.6.  Counterparts.  This Agreement may be executed in any number of
             ------------
             counterparts, each of which shall be an original, with the same
             effect as if the signatures thereto and to this Agreement were upon
             the same instrument.

       7.7.  Non-assignability of this Agreement. Except as provided under
             -----------------------------------
             Section 5.3, this Agreement is personal to the parties, and the
             Agreement or any right or obligation hereunder is not assignable
             whether in conjunction with a change in ownership, merger,
             acquisition, the sale or transfer of all, or substantially all or
             any part of a party's business or assets or

                                       19
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

             otherwise, either voluntarily, by operation of law, or otherwise,
             without the prior written consent of the other party, which consent
             may be withheld at the sole discretion of such other party. Any
             such purported assignment or transfer shall be deemed a breach of
             this Agreement and shall be null and void. This Agreement shall be
             binding upon and inure to the benefit of the parties and permitted
             successors.

       7.8.  Notice.  All notices required or permitted to be given hereunder
             ------
             shall be in writing and shall be delivered by hand, or if
             dispatched by prepaid air courier or by registered or certified
             airmail, postage prepaid, addressed as follows:

             If to Numerical:                         If to Intel:

             Numerical Technologies, Inc.             General Counsel
             70 West Plumeria Drive                   Intel Corporation
             San Jose, CA 95134-2134                  2200 Mission College Blvd.
             United States of America                 Santa Clara, CA 95052
               Attn.: General Counsel                 United States of America

             With a required copy to:
              Wilson, Sonsini Goodrich & Rosati
              650 Page Mill Road
              Palo Alto, CA U.S.A.
              Attn: John Roos

             Such notices shall be deemed to have been served when received by
             addressee or, if delivery is not accomplished by reason of some
             fault of the addressee, when tendered for delivery. Either party
             may give written notice of a change of address and, after notice of
             such change has been received, any notice or request shall
             thereafter be given to such party as above provided at such changed
             address.

       7.9.  No Rule of Strict Construction.  Regardless of which party may have
             ------------------------------
             drafted this Agreement, no rule of strict construction shall be
             applied against either party.

       7.10. Severability. If any provision of this Agreement is determined by a
             ------------
             court to be unlawful or otherwise unenforceable, the provision will
             be severed and deleted from this Agreement, and the remainder of
             the Agreement will continue in effect. The Parties shall negotiate
             in good faith an enforceable substitute provision that most nearly
             achieves the intent and economic effect of such invalid or
             unenforceable provision.

                                       20
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

       7.11. Taxes.  Each party shall be responsible for the payment of its own
             -----
             tax liability arising from this transaction.

       7.12. Modification; Waiver.  No modification or amendment to this
             --------------------
             Agreement, nor any waiver of any rights, will be effective unless
             assented to in writing by the party to be charged, and the waiver
             of any breach or default will not constitute a waiver of any other
             right hereunder or any subsequent breach or default.

       7.13. Governing Law.  This Agreement and matters connected with the
             -------------
             performance thereof shall be construed, interpreted, applied and
             governed in all respects in accordance with the laws of the United
             States of America and the State of New York, without reference to
             conflict of laws principles.

       7.14. Jurisdiction.  Intel and Numerical agree that all disputes and
             ------------
             litigation regarding this Agreement and matters connected with its
             performance shall be subject to the exclusive jurisdiction of the
             federal courts of the Northern District of California or of the
             state courts sitting therein.

       7.15. Dispute Resolution. All disputes arising directly under the express
             ------------------
             terms of this Agreement or the grounds for termination thereof
             shall be resolved as follows: First, the senior management of both
             parties shall meet to attempt to resolve such disputes. If the
             senior management cannot resolve the disputes, either party may
             make a written demand for formal dispute resolution. Within thirty
             (30) days after such written demand, the parties agree to meet for
             one (1) day with an impartial, independent mediator to be mutually
             agreed to by the parties and consider dispute resolution
             alternatives other than litigation. If an alternative method of
             dispute resolution is not agreed upon within sixty (60) days after
             the one-day mediation, either party may begin litigation
             proceedings.

       7.16. Confidentiality of Terms.  The parties hereto shall keep the terms
             ------------------------
             of this Agreement confidential and shall not now or hereafter
             divulge these terms to any third party except:

             (a)  with the prior written consent of the other party; or

             (b)  to any governmental body having jurisdiction to call therefor;
                  or

             (c)  as otherwise may be required by law or legal process,
                  including to legal and financial advisors in their capacity of
                  advising a party in such matters; or

             (d)  to the minimum extent necessary to comply with United States
                  law in a filing with the Securities and Exchange Commission;
                  or

                                       21
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

             (e)  during the course of litigation so long as the disclosure of
                  such terms and conditions are restricted in the same manner as
                  is the confidential information of other litigating parties
                  and so long as (a) the restrictions are embodied in a court-
                  entered Protective Order and (b) the disclosing party informs
                  the other party in writing at least ten (10) days in advance
                  of the disclosure; or

             (f)  in confidence to legal counsel, accountants, banks and
                  financing sources and their advisors solely in connection with
                  financial transactions or other corporate transactions.

       7.17. Press Release.  Numerical shall be entitled to issue the press
             -------------
             release set forth in Exhibit C.  Such press release shall be made
                                  ---------
             public as soon as reasonably possible after the Effective Date.

       7.18. Compliance with Laws.  Anything contained in this Agreement to the
             --------------------
             contrary notwithstanding, the obligations of the parties hereto and
             of the Subsidiaries of the parties under this Agreement shall be
             subject to all laws, present and future, of any government having
             jurisdiction over the parties hereto or the Subsidiaries of the
             parties, and to orders, regulations, directions or requests of any
             such government.

       7.19. Force Majeure. The parties hereto shall be excused from any failure
             -------------
             to perform any obligation hereunder to the extent such failure is
             caused by war, acts of public enemies, strikes or other labor
             disturbances, fires, floods, acts of God, electrical interruption,
             earthquakes or any causes of like or different kind beyond the
             control of the parties.

       7.20. Nothing in this Agreement shall be construed to grant to Intel the
             right to distribute or otherwise make available to any third party
             any Numerical Software.

       7.21. Entire Agreement.  This Agreement, the Exhibits hereto, the Non-
             ----------------
             Disclosure Agreement between the parties dated October 18, 2000
             (Intel CNDA #4113864) and any addenda and amendments executed by
             the parties embody the entire understanding of the parties with
             respect to the subject matter hereof, and merges all prior
             discussions between them, and neither of the parties shall be bound
             by any conditions, definitions, warranties, understandings, or
             representations with respect to the subject matter hereof other
             than as expressly provided herein. No oral explanation or oral
             information by either party hereto shall alter the meaning or
             interpretation of this Agreement.

                                       22
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

     WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date below written.

     INTEL CORPORATION               NUMERICAL TECHNOLOGIES, INC.

     By: /s/ S. Chou                    By: /s/ Yagyensh C. Pati
        -------------------------          -------------------------

     Sunlin Chou                         Yagyensh C. Pati
     ----------------------------       ---------------------------
     Printed Name                       Printed Name

     Senior Vice President              CEO
     ----------------------------       ---------------------------
     Title                              Title

     April 17, 2001                     April 19, 2001
     ----------------------------       ---------------------------
     Date                               Date

                                       23
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                   EXHIBIT A
                     Intel Corporation Purchase Agreement

                                       24
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL
FINAL EXECUTION VERSIONS

                     INTEL CORPORATION PURCHASE AGREEMENT
                       --SOFTWARE AND RELATED SERVICES--

                                              Agreement No.     C-9627
                                                              ----------------
                                              Effective Date    April 17, 2001
                                                              ----------------
                                              Expiration Date   [***]
                                                              ----------------
                                              CNDA No.          4113864
                                                              ----------------

INTEL:      Intel Corporation (and all Intel Divisions and Subsidiaries,
            hereinafter "Buyer" or "Intel")

Located at: 5200 NE Elam Young Parkway, Hillsboro, OR, 97124

SUPPLIER:   Numerical Technologies, Inc.  (hereinafter "Supplier")

Located at: 70 West Plumeria Drive, San Jose CA    95134-2134

<TABLE>
<S>                                    <C>
Addenda: attached to this Agreement    X  General  Terms and Conditions - Software & Related Services
                                      ---
(Mark "X" where applicable.)           X  A.  Software & Services Description/Specifications/Price
                                      ---
                                       X  B.  Software Maintenance and Support
                                      ---
                                      ___ C.  Alcohol and Drug Free Workplace
                                       X  D.  Protection of Buyer's Information Assets
                                      ---
                                       X  E.  Certificate of Originality
                                      ---
                                      ___ F.  Assignment of Intellectual Property
                                       X  G.  Source Code Escrow
                                      ---
                                      ___ H.  Supplemental Provisions
</TABLE>

Buyer may license Software or purchase Services and Supplier shall provide the
Software and/or Services as described in Addendum A, at prices specified, and in
accordance with the Terms and Conditions of this Agreement. Patents are licensed
under the terms and conditions set forth in the Patent Cross License Agreement
between the Parties to which this Intel Corporation Purchase Agreement is
attached. All Purchase Orders regarding Supplier's in-Phase software product
issued to Supplier by Buyer during the term of this Agreement shall be governed
only by the Terms and Conditions of this Agreement notwithstanding any
preprinted terms and conditions on Supplier's acknowledgment or Buyer's Purchase
Order. Any additional or different terms in Supplier's documents are hereby
deemed to be material alterations and notice of objection to and rejection of
them is hereby given.

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       1
<PAGE>

     INTEL/NUMERICAL CONFIDENTIAL

     GENERAL TERMS AND CONDITIONS

1.  DEFINITIONS
    -----------

  A.  "Acceptance Date" means the date on which Intel accepts or is deemed to
      have accepted the Software under Section 9 herein.
  B.  "Authorized Subcontractor" means an individual which has entered into an
      agreement which provides for restrictions on the use and disclosure of
      confidential information which is at least as protective of Suppliers'
      intellectual property and confidential information as this Agreement.
  C.  "Business Day" means any day, other than a Saturday or Sunday, on which
      banks are open for business in San Francisco, California.
  D.  "Change of Control" is (i) a reorganization, merger or consolidation or
      sale or other disposition of substantially all of the assets of a Party,
      or (ii) an acquisition by any individual, entity or group (within the
      meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
      1933, as amended) of beneficial ownership (within the meaning of Rule 13d-
      3 promulgated under such Act) of more than fifty percent of either (x) the
      then outstanding shares of common stock of such Party; or (y) the combined
      voting power of the then outstanding voting securities of such Party
      entitled to vote generally in the election of directors.
  E.  "Derivative Works" means only those software programs: (1) which are based
      on the scripting interfaces available within the Software, and (2) have
      functionality that is limited to configuration of the manufacturing
      process and tools.
  F.  "Expiration Date" means the [***] of the Effective Date unless earlier
      terminated in accordance with the terms of this Agreement.
  G.  "Field of Use" means the manufacture, use and sale of integrated circuit
      products (and the use of manufacturing processes therefore) that will be
      sold directly or indirectly under the Intel name or Intel owned trademark;
      or if expressly indicated in an accepted Purchase Order as "For Production
      Purposes", the production of integrated circuit products that will be sold
      under the Intel name or Intel owned trademark.
  H.  "Purchase Order" means Intel's written release placed with Supplier to
      order and schedule delivery of the Software and/or Services specified in
      this Agreement. Intel's Purchase Order may be transmitted to Supplier by
      mail, facsimile, or electronic data interchange.
  I.  "Release" means a substantial improvement in user functionality that is
      marketed by Supplier as a new and improved Software product, or a version
      of the Software which replaces previous Releases. Substantial improvement
      must include more than just new hardware support (i.e., devices, drivers,
      ports to the Software) and fixes to program errors in a previous Release.
      Such Releases are typically identified by a change in the first digit
      [(x).x.x] (i.e.-2.0, 3.0, 4.0).
  J.  "Services" means the designated work provided by Supplier, in accordance
      with Addendum A hereto or a mutually agreed upon, written, and pre-defined
      scope of work, which may include development, training, consulting,
      support, and/or maintenance.
  K.  "Software" means the object code form (unless expressly stated otherwise)
      of Supplier's software and/or firmware products (including documentation
      that are, at a minimum, customarily provided with the Software) described
      in Addendum A, and any Releases, Updates, and Upgrades, licensed to Intel
      under the terms of this Agreement. All such items shall be included in the
      License Fee and/or pricing set forth in Addendum A.
  L.  "Source Code" means the source code version of the Software, along with
      all available information, proprietary information, technical
      documentation, specifications, and schematics which are necessary to
      enable Intel to develop, maintain, support, and/or enhance the Software
      without assistance of any other third person or reference to any other
      materials, including maintenance tools (test programs and program
      specifications), proprietary or third party system utilities (compiler and
      assembler descriptions), and a description of the system/program
      generation.
  M.  "Time Period" means the period of time designated in Addendum A for the
      designated Software. If no Time Period is designated in Addendum A for
      Software, the Time Period shall be one year from the date of delivery to
      Buyer.
  N.  "Update" means functional and/or feature improvements made, at Supplier's
      discretion or at Intel's reasonable request, to the Software, when and if
      available, including but not limited to performance enhancements or
      improvements (including bug fixes and/or error corrections). Such Updates
      are typically identified by a change in the digit(s) to the right of the
      tenths digit [x.x.(x)] (i.e.-1.01, 1.02, 1.03).
  O.  "Upgrade" means the unique functional and/or feature improvements made at
      Supplier's discretion or at Intel's reasonable request, which may be made
      to the Software, when and if available. Such Upgrades are typically
      identified by a change in the tenths digit [x.(x).x] (i.e.-1.10, 1.20,
      1.30).

2.  TERM OF THE AGREEMENT
    ---------------------

      The term of this Agreement shall begin on the Effective Date and continue
      to the Expiration Date, unless earlier terminated pursuant to Section 6 or
      extended on mutual agreement of the parties in writing.

3.  LICENSE GRANT
    -------------

  A.  In addition to the rights granted in the Patent Cross License Agreement
      (to which this Agreement is Exhibit "A", Supplier grants to Intel a non-
      exclusive, nontransferable, royalty-free, worldwide, perpetual, not
      sublicenseable license, under all intellectual property rights owned or
      licensed by Supplier and embodied in the Software and associated
      documentation and technical materials listed in Addendum A, to use, copy,
      and distribute internally only the Software for the express purpose of
      practicing the Field of Use for the term for Intel's internal purposes
      only and not for resale or redistribution to any third party. Supplier's
      license is limited to the Time Period and the number of users set forth in
      Addendum A hereto. Buyer shall have the right to (i) use copies of the
      Software for internal training, (ii) permit Intel's Authorized
      Subcontractors to exercise Intel's rights under this Agreement solely in
      performance of work for Intel; and (iii) make archival copies which shall
      only be used in the event of failure of the original.
  B.  Supplier shall make available to Intel, when and if available, the latest
      Releases, Updates, and Upgrades made to each Software program licensed
      herein as soon as they are made generally available to Supplier's other
      customers, provided (i)

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INTEL/NUMERICAL CONFIDENTIAL

      the Software or Services are under the Warranty Period (at no additional
      charge) or (ii) if the Warranty Period has expired and Buyer is paying for
      and is current in its payments for support and maintenance in accordance
      with Addendum A of this Agreement.
  C.  Title to and ownership of the Software shall at all times remain with
      Supplier and its suppliers. Intel will include on any authorized copies
      the copyright notices, patent marks or other proprietary legends contained
      within or upon the Software or upon the associated documentation. Intel
      agrees that it will not remove any copyright notices, proprietary
      markings, trademarks or trade names from the Software. Supplier shall have
      the right to disable the Software in the event that Buyer exceeds the
      scope of this license, in accordance with Section 6B of this Agreement.
      All rights in the Software not expressly granted herein are reserved by
      Supplier.
  D.  Supplier also grants to Intel the right to prepare (by means of its own
      employees or Authorized Subcontractors) Derivative Works for its own
      internal purposes and internal use and not for further distribution
      outside of Intel. Intel shall own all right, title, and interest in the
      Derivative Works; provided however that the Derivative Works shall be
      subject to Supplier's underlying ownership of and intellectual property
      rights and the licenses granted hereunder.
  E.  Buyer agrees that it will not, and will not authorize a third party to:
      (1) create derivative works of the Software (as the term "derivative work"
      is defined under the United States copyright laws) (provided that this
      Section 3(E)(1) shall in no way limit Intel's express rights Section 3(D)
      to prepare Derivative Works as such term is defined in Section 1(E)), or
      (2) alter or in any way modify the Software without the prior written
      consent of Supplier, which will not be unreasonably withheld; or (3)
      translate, decompile, disassemble, reverse compile, reverse engineer,
      interrogate, or decode the Software or in any other manner reduce the
      Software to human perceivable form (except to the extent that such
      restrictions are not permitted under applicable law); or (4) use the
      Software to provide processing services to third parties or otherwise make
      the Software available for third party use or access (e.g. on a service
      bureau basis); or (5) use the Software, except as set forth under this
      Agreement. Supplier shall not use or incorporate Intel's Derivative Works
      into Supplier's Software without the express written permission of Intel.

4.  PRICING
    -------

  A.  License Fees and Service Rates (hereinafter "Prices") are set forth in
      Addendum A and shall remain fixed for the duration of this Agreement
      except as provided herein.
  B.  For any Software or Services purchased by Intel under this Agreement after
      the initial purchase of the Software described on Addendum A but in no
      event for the Software described in Addendum A, the price charged Intel
      for any such Software or Service shall always be Supplier's lowest price
      charged any customer for similar Software or a similar Service supplied in
                                                   -
      similar volumes provided that prices must be compared based on similar
      terms and conditions, taking into account all of the terms and conditions
      of the transaction at the time it was entered into, and with reference to
      the totality of consideration received by Supplier for such Software or
      Services including any special terms, conditions, rebates, or allowances
      of any nature and regardless of the type (whether stock, technology, cash
      or otherwise) ("Comparable Software or Services"). If, prior to invoicing
      Intel for certain Software or Services Supplier licenses Comparable
      Software or Service to any customer at a price less than that quoted to
      Intel, Supplier shall adjust its price to the lower price for any un-
      invoiced Software or Services and for all outstanding and future invoices
      for such Software or Services. In no event shall Intel be entitled to
      receive retroactive discounts for Software or Services for which Supplier
      has already issued an invoice to Intel even if another Supplier customer
      thereafter pays a lower price than Intel for Comparable Software or
      Services. The rights granted to Intel under this Section 4B shall
      terminate on the [***] anniversary of the Effective Date, or termination
      of the Agreement, whichever is earlier.
  C.  All applicable taxes and other charges such as duties, customs, tariffs,
      imposts, and government imposed surcharges shall be stated separately on
      Supplier's invoice and where Supplier has a legal obligation to pay the
      tax, it shall paid by Supplier and fully reimbursed by Buyer. In the event
      that Intel is prohibited by law from remitting payments to the Supplier
      unless Intel deducts or withholds taxes therefrom on behalf of the local
      taxing jurisdiction, then Intel shall duly withhold such taxes and shall
      remit the remaining net invoice amount to the Supplier. Intel shall not
      reimburse Supplier for the amount of such taxes withheld. If Supplier
      reasonably believes it is required by law, upon Supplier's reasonable
      request, Intel shall provide to Supplier all documentation necessary for
      Supplier to confirm Intel's payment of applicable taxes.
  D.  Additional costs, except those described on Addendum A, will not be
      reimbursed without Buyer's prior written approval.

5.  INVOICING AND PAYMENT
    ---------------------

  A.  Except for the payments provided under the Patent Cross License, original
      invoices shall be submitted and shall include: Purchase Agreement number
      from the Purchase Order, Purchase Order number, line item number, listing
      of and dates of Service provided (if applicable), complete bill to
      address, description of incidental items, quantities, unit price, extended
      totals, and any applicable taxes or other charges. Intel's payment shall
      not constitute acceptance.
  B.  Supplier shall be solely responsible for and hold Intel harmless for any
      and all payments to Supplier's vendors or subcontractors utilized in the
      performance of the Services.
  C.  Except for the payments provided under the Patent Cross License, Supplier
      agrees to invoice Intel no later than one hundred eighty (180) days after
      completion of Services or shipment of items.
  D.  Except for the payments provided under the Patent Cross License, Buyer
      shall make payment within forty-five (45) days after the receipt of the
      proper original invoice or Intel's receipt of Software or performance of
      Services, whichever is later.

6.  TERMINATION
    -----------

  A.  Except for the purchases of licenses and maintenance reflected on Addendum
      A to this Agreement, Intel may terminate this Agreement at any time for
      its sole convenience by giving thirty (30) days' prior written notice of
      termination to Supplier. Upon such notice of termination, Buyer shall have
      no right to issue Purchase Orders under this Agreement, but all Purchase
      Orders which have been issued by Buyer and then accepted by Supplier prior
      to the effective date of such termination, shall survive in accordance
      with their terms (along with the terms and conditions within this
      Agreement for the duration of such Purchase Order). In the event that
      Intel has been granted a license which by it terms expressly grants a
      right of survival beyond any termination of this Agreement, such license
      shall also survive termination or expiration of this Agreement in
      accordance with its terms.
  B.  For cause. Either party may terminate this Agreement for the material
      default by the other party of a material obligation related to this
      agreement which is not cured within thirty (30) days after notice.
  C.  In the event one of the Parties signs a binding letter of intent (or
      similar document) or executes an agreement (subject to conditions of
      closing) that contemplates a Change of Control

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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INTEL/NUMERICAL CONFIDENTIAL

    the other Party (that is, the Party not contemplating a Change of Control)
    may terminate this Agreement upon giving thirty days prior written notice to
    the Party contemplating the Change of Control. In the event of a termination
    by Intel for a Change of Control of Supplier, (1) the licenses to the
    Software delivered prior to the effective date of such termination shall
    survive in accordance with their terms and (2) Supplier shall continue to
    provide support and maintenance in accordance with the terms of this
    Agreement to the extent that Intel has prepaid for such services, and (3)
    upon mutual agreement of the parties, shall have the right to purchase
    additional support and maintenance for Software and additional Software from
    Supplier. The parties acknowledge and agree that this Section 6 applies to
    Software and Services obtained under this Agreement, and not the rights
    obtained under the Patent Cross License Agreement.
 D. Intel will be responsible for payment for authorized Services and Software
    already provided by Supplier or for fees, costs and expenses incurred by
    Supplier within a reasonable time after any such written notice of
    termination by Buyer (not to exceed 10 days), but not yet invoiced provided
    all charges are pursuant to a mutually agreed upon, pre-defined, and written
    scope of work, and the Services for which such charges were incurred have
    not been initiated after receipt by Supplier of Buyer's written notice of
    termination.
 E. Before assuming any payment obligation under this section, Intel may inspect
    Supplier's work in process and audit all relevant documents prior to paying
    Supplier's invoice.

7.  CONTINGENCIES
    -------------

    Neither party shall be responsible for its failure to perform due to causes
    beyond its reasonable control such as acts of God, fire, theft, war, riot,
    embargoes or acts of civil or military authorities. If delivery of Software
    or performance of Services are to be delayed by such contingencies, Supplier
    shall immediately notify Intel in writing and if such delay is reasonably
    expected to last beyond ten (10) days Intel may either: (i) extend time of
    performance; or (ii) terminate all or part of the uncompleted portion of the
    Purchase Order at no cost to Intel. Nothing in this Section 7 shall affect
    the parties' rights and obligations under Section 6(c) of this Agreement.

8.  DELIVERY, PURCHASE ORDERS, AND SCHEDULING
    -----------------------------------------

 A. Supplier shall notify Buyer in writing within ten (10) Business Days of
    receipt of Buyer's Purchase Order if Supplier is unable to make any
    scheduled delivery and state the reasons therefor. The absence of such
    notice constitutes acceptance of the Purchase Order and commitment to the
    release terms set forth in the applicable Purchase Order.
 B. Supplier shall deliver Software per the release schedule as indicated in the
    accepted Purchase Order, and Buyer may return non-conforming shipments at
    Supplier's risk and expense. At Intel's request, Supplier shall deliver the
    Software in electronic form.
 C. Supplier shall promptly perform Services as scheduled in the accepted
    Purchase Order or shall promptly notify Buyer if unable to perform any
    scheduled Services and shall state the reasons.
 D. Without penalty, Buyer may place any portion of a Purchase Order on hold for
    a maximum of thirty (30) days by providing reasonable notice (one (1)
    Business Day in the case of Software and ten (10) Business Days in the case
    of Services) to Buyer.
 E. Buyer shall have no obligation with respect to the purchase of Software or
    Services under this Agreement until such Software or Services are specified
    in an issued Purchase Order which contains specific release dates for
    specific Software or Services. Supplier shall have no obligation to provide
    Software or Services under this Agreement until such Software or Services
    are specified in an accepted Purchase Order which contains specific release
    dates for specified Software or Services.

9.  WARRANTY
    --------

 A. To Supplier's knowledge as of the Effective Date of the Agreement, Supplier
    represents and warrants that the Software does not infringe any intellectual
    property right of any third party.
 B. Supplier makes the following warranties regarding Software and Services
    furnished hereunder, which warranties shall survive for a period of ninety
    (90) days from the date upon which the Software is delivered ("Delivery
    Date") or the date upon which the Services were provided ("Warranty
    Period"):
    (i)    Supplier has all necessary rights, title, and interest in and to the
           Software to grant the rights set forth herein to Buyer, free of any
           claims, liens, or conflicting rights in favor of any third party;
    (ii)   The Software licensed in this Agreement is free from material
           programming errors and defects in workmanship and materials, and
           substantially complies with functionality and performance set forth
           in Supplier's published specifications or as otherwise expressly
           agreed in writing.
    (iii)  The Software is free from any viruses at the time of delivery to
           Intel;
    (iv)   The Software (i) will function without error or interruption related
           to Date Data from more than one century; (ii) the Software requires
           all Date Data (whether received from users, systems, applications or
           other sources) include an indication of century in each instance; and
           (iii) all date output and results, in any form, shall include an
           indication of century in each instance. As used herein, "Date Data"
           means any data or input which includes an indication of or reference
           to date.
    (v)    There will be no disruption in the delivery of Software or Services
           under this Agreement as a result of or due to the date change from
           and between December, 1999, and January, 2000, nor due to the year
           2000 being a leap year.
    (vi)   Services shall be provided in a workmanlike and competent manner in
           accordance with the professional standards in Supplier's trade or
           industry, and shall meet the descriptions.
 C. During the Warranty Period and without additional charge, Supplier shall
    provide Intel with at least the same level of Software support as provided
    to its other customers under warranty with no additional charge. Buyer may
    purchase additional support at the prices set forth in Addendum A of this
    Agreement
 D. If Supplier breaches any of the foregoing warranties, or Software or
    Services are otherwise defective or non-conforming, during the Warranty
    Period, Supplier shall promptly correct any non-conforming Software,
    Service, or defective workmanship in accordance with Addendum B of this
    Agreement, Buyer's sole remedy for a breach of the warranties set forth in
    this Section 9 shall be Supplier's repair or replacement of the Software or
    Services
 E. Warranty Disclaimer. SUPPLIER AND ITS SUPPLIERS MAKE NO WARRANTIES,
    -------------------
    REPRESENTATION OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
    OTHER THAN THE EXPRESS LIMITED WARRANTIES MADE BY SUPPLIER IN THIS SECTION 9
    AND SUPPLIER AND ITS SUPPLIERS HEREBY DISCLAIM ALL OTHER EXPRESS, STATUTORY
    AND IMPLIED WARRANTIES, REPRESENTATIONS AND CONDITIONS, INCLUDING THE

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INTEL/NUMERICAL CONFIDENTIAL

IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-
INFRINGEMENT AND THE IMPLIED CONDITION OF SATISFACTORY QUALITY. Nothing in this
Section 9(E) shall limit Buyer's remedies under Section 11 of this Agreement.

10.  CONFIDENTIALITY AND PUBLICITY
     -----------------------------

 A.  During the course of this Agreement, either party may have or may be
     provided access to the other's confidential information and materials.
     Additionally, Supplier may be engaged to develop new information for Intel
     (by entering into a mutually agreeable, predefined, and written scope of
     work), or may develop such information during the performance of Services,
     which information will become, upon creation, confidential information of
     the party as set forth in such scope of work.
 B.  Provided information and materials are marked in a manner reasonably
     intended to make the recipient aware, or the recipient is sent written
     notice within forty-eight (48) hours of disclosure, that the information or
     materials are "Confidential", each party agrees to maintain the
     "Confidential" information of the other party in accordance with the terms
     of this Agreement and the CNDA referenced on the signature page of this
     Agreement and any other applicable separate nondisclosure agreement between
     Intel and Supplier. At a minimum each party agrees to maintain such
     information in confidence and limit disclosure on a need to know basis, to
     take all reasonable precautions to prevent unauthorized disclosure, and to
     treat such information as it treats its own information of a similar
     importance, until the information becomes publicly available through no
     fault of the receiving party.
 C.  Supplier will furnish a copy of Addendum D to each of its employees and
     subcontractors assigned to or contracted for Intel work and will take
     reasonable steps to assure Intel that all such have read and understood
     Addendum D. Neither party shall use the confidential information of the
     other except to fulfill its obligations or exercise the rights granted to
     it under this Agreement.
 D.  The parties agree that neither party will disclose the existence of this
     Agreement, nor any of its details or the existence of the relationship
     created by this Agreement, to any third party without the specific, written
     consent of the other. If disclosure of the existence or the relationship of
     the parties created by this Agreement or any of the terms hereof is
     required by applicable law, rule, or regulation, or is compelled by a court
     or governmental agency, authority, or body: (i) the parties shall use all
     legitimate and legal means available to minimize the disclosure to third
     parties of the content of the Agreement, including without limitation
     seeking a confidential treatment request or protective order; (ii) the
     disclosing party shall inform the other party at least ten (10) Business
     Days in advance of the disclosure (if possible in the disclosing party's
     reasonable judgment); and (iii) (if possible in the disclosing party's
     reasonable judgment), the disclosing party shall give the other party a
     reasonable opportunity to review and comment upon the disclosure, and any
     request for confidential treatment or a protective order pertaining
     thereto, prior to making such disclosure. The parties may disclose this
     Agreement (a) in confidence to their respective legal counsel, accountants,
     bankers, and financing sources as necessary in connection with obtaining
     services from such third parties (b) in confidence (except to the extent
     required to comply with law), in connection with the requirements of a
     securities filing; (c) in confidence, in connection with the enforcement of
     this Agreement or rights under this Agreement; or (d) in confidence, in
     connection with a merger or acquisition or proposed merger or acquisition,
     or the like. The obligations stated in this section shall survive the
     expiration or termination of this Agreement. Neither party may use the
     other party's name or trademarks in advertisements, brochures, banners,
     letterhead, business cards, reference lists, or similar advertisements
     without the other's written consent.
 E.  Supplier acknowledges that Intel's receipt of Confidential Information
     under this Agreement shall not create any obligation in any way limiting or
     restricting the assignment of employees or contractors within Intel.
 F.  Either party may re-assign employees who have Residuals without
     restriction; provided that this right to use Residuals does not represent a
     license under any current or future patents, copyrights or other
     intellectual property rights of the disclosing party. The term "Residuals"
     means any information retained in the unaided memories of the receiving
     party's employees who have had permitted access to the disclosing party's
     Confidential Information pursuant to the terms of this Agreement. An
     employee's memory is unaided if the employee has not intentionally
     memorized the Confidential Information for the purpose of retaining and
     subsequently using or disclosing it.

11.  INTELLECTUAL PROPERTY INDEMNIFICATION
     -------------------------------------

     Supplier shall defend, indemnify and hold Intel harmless from any costs,
  expenses (including reasonable attorneys' fees), losses, damages or liability
  incurred because of actual or alleged infringement of any patent, copyright,
  trade secret, trademark, mask work arising out of Intel's use of the licensed
  Software or Services as provided by Supplier in accordance with the terms of
  this Agreement; provided that Supplier is (i) promptly informed in writing of
  such claim and action (as soon as is reasonably possible after Buyer's
  notification of such claim and action); (ii) given exclusive authority and
  control to defend, settle or otherwise remove or avoid such claim and action;
  and (iii) provided with all reasonable assistance that it requests in
  connection with such claim and action (at Supplier's cost and expense). With
  respect to Software, Supplier's indemnification under this subsection does not
  apply to the extent that such claim arises from: (i)  Software modified
  without Supplier's prior express written permission; (ii) Derivative Works;
  (iii) modifications made at the Buyer's request (except to the extent that
  such claim would arise from the use of the Software without such
  modifications) (iv) use of the Software in combination with other Software or
  products not supplied by Supplier (except to the extent the such claim would
  arise from the use of the Software alone); (v) use of the Software in
  violation of the terms of this Agreement or applicable law, (vi) use of the
  Software after Supplier's written instructions to cease such use, (vii) use of
  other than a current unaltered release of the Software to the extent that the
  infringement would have been avoided by such current unaltered release where
  such current unaltered release was made available to Buyer at no additional
  cost or (viii) willful infringement of Buyer.  With respect to Services,
  Supplier's indemnification under this subsection does not apply to the extent
  that such claim arises from: (i)  materials or software which are delivered in
  accordance with Buyer's specifications or directions; (ii) Derivative Works;
  or (iii) use of the materials or software delivered pursuant to Service in
  violation of the terms of this Agreement or applicable law. Supplier shall
  have no obligation to indemnify Buyer under this Agreement for costs or
  expenses incurred without its prior written authorization, unless Supplier
  fails to defend Intel in a timely and proper manner.
     If a third party's claim endangers or disrupts Intel's use of the Software,
  or Services provided by Supplier, Supplier may, (a) obtain a license so Intel
  may continue use of the Software or Supplier may continue to provide the
  Service (at no additional cost to Intel); (b) replace or modify the Software
  or Service with a compatible, functionally equivalent and non-infringing
  product or service; or if these options are commercially unreasonable (d)
  terminate the license to the Software and refund to Intel the pro

                                       5
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INTEL/NUMERICAL CONFIDENTIAL

  rata amount paid for the Software or Service.

     THIS SECTION 11 STATES THE ENTIRE LIABILITY AND OBLIGATION OF SUPPLIER AND
     THE EXCLUSIVE REMEDY OF BUYER, ITS SUB-DISTRIBUTORS AND END USERS WITH
     RESPECT TO INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BY THE SOFTWARE
     OR SERVICES.

12.  COMPLIANCE WITH LAWS AND RULES
     ------------------------------

 A.  Each party shall comply with all national, state, and local laws and
     regulations relating to its performance under this Agreement, governing the
     manufacture, transportation, and/or sale of items and/or the performance of
     Services in the course of this Agreement. In the United States, these may
     include, but are not limited to, Department of Commerce, Environmental
     Protection Agency, and Department of Transportation regulations applicable
     to Hazardous Materials.
 B.  Supplier shall abide by all Buyer's rules and regulations while on Buyer's
     premises or performing Services including, but not limited to, safety,
     health and Hazardous Material management rules, and rules prohibiting
     misconduct on Buyer's premises including, but not limited to, use of
     physical aggression against persons or property, harassment, and theft.
     Supplier shall perform only those Services identified on Addendum "A" and
     will work only in areas designated for such Services.
 C.  Supplier represents and agrees that it is in compliance with Executive
     Order 11246 and implementing Equal Employment Opportunity regulations and
     the Immigration Act of 1987, unless exempted or inapplicable.

13.  INSURANCE
     ---------

 A.  Without limiting or qualifying Supplier's liabilities, obligations, or
     indemnities otherwise assumed by Supplier pursuant to this Agreement,
     Supplier shall maintain, at its sole cost and expense, with companies
     acceptable to Buyer, Commercial General Liability and Automobile Liability
     Insurance with limits of liability not less than $1,000,000.00 per
     occurrence and including liability coverage for bodily injury or property
     damage (1) assumed in a contract or agreement pertaining to Supplier's
     business and (2) arising out of Supplier's product, Services, or work.
     Supplier's insurance shall be primary, and any applicable insurance
     maintained by Buyer shall be excess and non-contributing. The above
     coverages shall name Buyer as additional insured.

 B.  Supplier shall also maintain statutory Workers' Compensation coverage,
     including a Broad Form All States Endorsement in the amount required by
     law, and Employers' Liability Insurance in the amount of $1,000,000.00 per
     occurrence. Such insurance shall include an insurer's waiver of subrogation
     in favor of Buyer.

 C.  If Supplier is providing any professional service to Buyer, Supplier shall
     maintain Professional Liability Insurance (including errors and omissions
     coverage) with liability limits not less than $1,000,000.

 D.  Supplier shall provide Buyer with properly executed Certificate(s) of
     Insurance prior to commencement of any operation hereunder and shall notify
     Buyer, no less than 30 days in advance, of any reduction or cancellation of
     the above coverages.

14.  INDEMNIFICATION
     ---------------

        Except for claims of intellectual property infringement which are the
        subject of Section 11, Supplier shall, to the fullest extent permitted
        by law, protect, defend, indemnify, and hold Buyer harmless from and
        against any and all claims, liabilities, demands, penalties,
        forfeitures, suits, judgments, and the associated costs and expenses
        (including attorney's fees), which Buyer may hereafter incur, become
        responsible for, or pay out as a result of: death or personal injury
        (including bodily injury) to any person, destruction or damage to any
        property, contamination of or adverse effects on the environment, and
        any clean up costs in connection therewith, or any violation of law,
        governmental regulation or orders, to the extent caused by (i) any
        negligent or willful acts, errors, or omissions by Supplier, its
        employees, officers, agents, representatives, or subcontractors in the
        performance of this Agreement; or (ii) dangerous defects in Software or
        Services provided that Supplier is (1) promptly informed in writing of
        such claim or action (not to exceed ten (10) days); (2) given exclusive
        authority and control to defend, settle or otherwise remove or avoid
        such claim or action; and (3) provided with all reasonable assistance
        (at Supplier's cost and expenses) that it requests in connection with
        such claim and action. Supplier shall not be responsible for any costs
        or expenses incurred by Buyer under this Section 14 without Supplier's
        prior written permission, which shall not be unreasonably withheld.

15.  RETENTION AND AUDITS
     --------------------

        Supplier will maintain complete and accurate records of the Services
        performed under this Agreement for a period of five (5) years after the
        completion of these Services.

16.  INDEPENDENT  CONTRACTOR
     -----------------------

        In performing Services under this Agreement, Supplier is an independent
        contractor and its personnel and other representatives shall not act as
        nor be agents or employees of Buyer. As an independent contractor,
        Supplier will be solely responsible for determining the means and
        methods for performing the required Services. Supplier shall have
        complete charge and responsibility for personnel employed by Supplier;
        however, Buyer reserves the right to instruct Supplier to remove from
        Buyer's premises immediately any of Supplier's personnel who is in
        breach of Section 12 or 17 of this Agreement. Such removal shall not
        affect Supplier's obligation to provide Services under this Agreement.

17.  SECURITY
     --------

        Supplier acknowledges Intel's requirement that employees of Supplier
        performing work at Buyer's facilities, who require unescorted access to
        those facilities, shall have no record of criminal convictions involving
        drugs, assaultive or combative behavior, or theft within the last five
        years. Supplier understands that such employees may be subject to
        criminal history investigations by Buyer at Buyer's expense and will be
        denied access to Buyer's facilities if any such criminal convictions are
        discovered. Supplier represents that it has not done background checks
        or drug testing on its employees, and agrees that it shall instruct its
        employees not to accept unescorted access to Intel facilities.

18.  MERGER, MODIFICATION, WAIVER, AND REMEDIES
     ------------------------------------------

                                       6
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

 A.  This Agreement contains the entire understanding between Intel and Supplier
     with respect to the subject matter hereof and merges and supersedes all
     prior and contemporaneous agreements, dealings and negotiations. No
     modification, alteration, or amendment shall be effective unless made in
     writing, dated and signed by duly authorized representatives of both
     parties.

 B.  No waiver of any breach hereof shall be held to be a waiver of any other or
     subsequent breach.

 C.  Each party's rights and remedies herein are in addition to any other rights
     and remedies provided by law or in equity.

 D.  If any provision of this Agreement is determined by a court of competent
     jurisdiction to be invalid, illegal, or unenforceable, such determination
     shall not affect the validity of the remaining provisions unless Intel
     determines in its discretion that the court's determination causes this
     Agreement to fail in any of its essential purposes.

19.  ASSIGNMENT

     Neither party may assign or factor any rights in nor delegate any
     obligations under this Agreement or any portion thereof without the written
     consent of the other. Each party may cancel this Agreement for cause should
     the other party attempt to make an unauthorized assignment of any right or
     obligation arising hereunder. Notwithstanding the foregoing, such other
     party's consent will not be required for any assignment by a party of this
     Agreement to a third party in connection with a Change of Control provided
     that the foregoing does not limit either Party's termination rights under
     Section 6(c) of the Agreement. Any attempted assignment, delegation or
     transfer by Party in derogation of the foregoing shall be null and void.
     Subject to the foregoing, this Agreement shall be fully binding upon, inure
     to the benefit of and be enforceable by the Parties hereto and their
     respective permitted successors and assigns.

20.  APPLICABLE LAW
     --------------

     This Agreement shall be governed by the laws of the State of New York,
     excluding its conflict of laws provision. The provisions of the United
     Nations Convention on Contracts for the International Sale of Goods shall
     not apply to this Agreement.

21.  HEADINGS
     --------

     The headings provided in this Agreement are for convenience only and shall
     not be used in interpreting or construing this Agreement.

22.  SPECIFIC PERFORMANCE
     --------------------

     Notwithstanding anything else contained in this Agreement, Intel and
     Supplier specifically agree that failure to perform certain obligations
     undertaken in connection with this Agreement may cause irreparable damage,
     and that monetary damages may not provide an adequate remedy in such event.
     The parties further agree that Supplier's failure to complete performance
     of the Services called for in this Agreement or on any project released
     under this Agreement or to deliver or effect delivery of Services and/or
     materials as contracted may be such certain obligations. Accordingly, it is
     agreed that, in addition to any other remedy to which the non-breaching
     party may be entitled, at law or in equity, the non-breaching party shall
     be entitled to seek an order of specific performance to compel performance
     of such obligations in any action instituted in any court of the United
     States or any state thereof having subject matter jurisdiction.

23.  RIGHT TO DEVELOP
     ----------------

     Subject to the provisions of Section 10, Intel reserves the right to
     independently develop (without reference to the Software or other
     intellectual property of Supplier) (subject to the Patent Cross License
     Agreement (to which this Agreement is Exhibit "A", market, distribute, and
     otherwise commercially exploit software and/or firmware products of any
     type whatsoever, including without limitation software and/or firmware that
     are similar to or compete with the Software (but subject in each case to
     the Patent Cross License Agreement (to which this Agreement is Exhibit A)).
     Further, nothing in this Agreement shall be interpreted to create an
     obligation on the part of Intel to use the Software for any purpose
     whatsoever. Nothing in this Section 23 shall be deemed to provide Intel
     with a license (whether express or implied) to the intellectual property of
     Supplier.

24.  LIMITATION OF LIABILITY
     -----------------------

     IN NO EVENT SHALL EITHER PARTY OR THEIR SUPPLIERS BE LIABLE FOR ANY
     INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, LOSSES, COSTS OR
     EXPENSES OF ANY KIND, HOWEVER CAUSED AND WHETHER BASED IN CONTRACT, TORT
     (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR ANY OTHER THEORY OF LIABILITY,
     INCLUDING BUT NOT LIMITED TO LOST PROFITS, COSTS OF PROCUREMENT OF
     SUBSTITUTE GOODS, LOSS OF GOODWILL, LOSS OF DATA OR SYSTEM USE, AND OTHER
     BUSINESS LOSS, REGARDLESS OF WHETHER SUCH PARTY KNOWS OR HAS BEEN ADVISED
     OF THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS, OR EXPENSES. IN NO EVENT
     SHALL SUPPLIERS' AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL
     AMOUNT PAID BY BUYER FOR THE SOFTWARE AND SERVICES UNDER THIS AGREEMENT.
     NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
     TO LIMIT EITHER PARTY'S LIABILITY FOR PERSONAL INJURY (INCLUDING BODILY
     INJURY) OR DEATH, PROPERTY DAMAGE, OR ANY INDEMNIFICATION PROVIDED BY
     EITHER PARTY TO THE OTHER PARTY UNDER THIS AGREEMENT. SUPPLIER'S TOTAL,
     CUMULATIVE LIABILITY UNDER SECTION 11 FOR ANY AND ALL CLAIMS OF
     INFRINGEMENT OF PATENTS WILL BE LIMITED TO THE AGGREGATE AMOUNT OF $[***]

     25.  DERIVATIVE WORKS AND INVENTIONS
          -------------------------------

 A.  The Parties agree that the ownership of all works of authorship,
     inventions, improvements, developments and discoveries conceived, made or
     discovered by Supplier, solely or in collaboration with others, in the
     course of performance of the Services provided for Buyer as well as any
     Derivative Works (except as provided in Section 3D), as well as all
     patents, trade secrets, trademarks and other intellectual property rights
     therein and thereto (collectively, the "Inventions") shall be agreed upon
     by the Parties in a separate writing, including without limitation any
     applicable Statement of Work for Services prior to the start of any such
     Services.

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       7
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

26.  CUSTOMS AND EXPORT CONTROL
     --------------------------

     Intel and Supplier shall take appropriate steps to ensure that the
     distribution and export/re-export of the Software will be in compliance
     with the laws, regulations, orders, or other restrictions of the U.S.
     Export Administration Regulations. Supplier will provide, upon Intel's
     Customs Department reasonable request, all necessary import and export
     related information regarding the Software to meet any applicable export or
     import regulation, including, without limitation, a statement of origin for
     all Software and applicable customs documentation for Software which is
     wholly or partially developed and/or packaged outside of the country of
     import.

27.  SURVIVABILITY
     -------------

     The following sections shall survive termination or expiration of this
     Agreement: Sections 1, 6, 7, 9, 10, 11, 14, 15, 16, 18, 20, 21, 22, 23, 24,
     25, and 27, and Paragraphs 3C, 3E and 5D, the provisions of Addendum A,
     Addendum B and the provisions of any and all Certificates of Originality
     and Assignments of Intellectual Property which are executed by Supplier,
     will survive any termination or expiration of this Agreement. In addition,
     to the extent Addendum A indicates that the Time Period for designated
     Software is "perpetual," Section 3A and 3D shall survive any termination or
     expiration of this Agreement.

                                       8
<PAGE>

NTI and INTEL CONFIDENTIAL

                                 ADDENDUM "A"
                                 ------------

                  SOFTWARE DESCRIPTION, SPECIFICATION, PRICE

  NAME /
  ------
DESCRIPTION              SPECIFICATIONS                     PRICE
-----------              --------------                     -----

[***] user licenses      iNPhase phase shifting software    See Exhibit B
                                                            to the Patent Cross
                                                            License Agreement.

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

                            SUPPORT AND MAINTENANCE

     LIST OF
  SERVICES PROVIDED                                FEES
  -----------------                                ----

Software Support and Maintenance                Set forth in Exhibit B to Patent
including Software Updates, telephone       Cross License Agreement for pricing.
and applications support                      Pricing for the period beyond that
                                          reflected in such Exhibit B is subject
                                                to the parties mutual agreement.

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       9
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

             DESCRIPTION OF SERVICES - STATEMENT OF WORK TEMPLATE:

1.   PROJECT DURATION, PHASES, AND PAYMENT
     -------------------------------------

     1.1  Project Duration. The Project Duration will be for a period of_______
          from the Effective Date.

     1.2  Project Phases. The Project will be developed in ____ Phases. The
          Phases and the work to be performed in each Phase are specified below:

          Phase 1:
          --------

          (1) Statement of Work for Phase (General description of work to be
              performed in this phase, including ownership of Intellectual
              Property, etc. in accordance with Section 25 of this Agreement):

          (2) Site where Work will be performed:

          (3) Intel Deliverables needed for Phase (Specific description of what
              Intel will provide to Supplier):

          (4) Product Deliverable (Specific description of what Supplier will
              deliver to Intel and what Intel will pay for):

          (5)  Due Date for Phase 1:

          (6) Acceptance Criteria (Describe how Intel will determine that the
              Product Deliverable meets Intel expectations):

          (7) Submission of Materials Upon Completion of Phase: When the work
              for this Phase is completed, Supplier will submit signed milestone
              payment request and Certificate of Originality in the form of
              Addendum ___ and the following: (insert description of other
              materials such as test reports, data, etc.):

          (8) Amount to be paid to Supplier by Intel upon completion of phase
              and acceptance by Intel in accordance with Paragraph 6 of this
              Statement of Work):

              $____________(If time and material payment basis, describe amounts
              payable for completion of each deliverable during this Phase,
              applicable rates, maximum amount if applicable.)

          Phase 2, 3, etc:  (Repeat above format for each Phase)
          ----------------

     1.3  Final Phase: Within seven (7) days after completion of the final phase
          of the Project, or the termination of the Project, Supplier will
          deliver to Intel the following:

          (1) All Product Deliverables, either in whole, or partially completed
              as of the termination of the Project;

          (2) Completed and signed Assignment of Intellectual Property for all
              Product Deliverables;

          (3) Completed Certificate of Originality for Product Deliverables

2.   PROJECT MANAGEMENT
     ------------------

          2.1  Project Managers:  The project managers for the Project are
               ----------------

          For Intel:                For Developer:

3.   ACCEPTANCE TEST PLAN. After Supplier has delivered the Product and the
     --------------------
     other materials to Intel, Intel shall test the Product for acceptance in
     accordance with the criteria set forth in the applicable Phase ("Acceptance
     Test Plan"). If the Product does not pass the Acceptance Test Plan, Intel
     will advise Supplier promptly and provide Supplier with a description of
     any defects and nonconformities. Supplier must correct any defect or
     nonconformities within ten (10) days and resubmit the Product and such
     other material as Intel may reasonably request. Intel will then retest the
     Product for acceptance using the Acceptance Test Plan.

                                      10
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

     If the Product still does not meet the Acceptance Test Plan, Supplier will
     attempt to correct any remaining defects or nonconformities, but after the
     second failure of the Product to pass the Acceptance Test Plan Supplier
     will be in default and at any time Intel may terminate the Project and
     exercise any of its rights under the Agreement.

                                      11
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                 ADDENDUM "B"
                        SUPPORT AND MAINTENANCE SERVICE

 1. COMPENSATION:  Supplier shall provide Services specified in Addendum A to
    -----------
    Intel.  Intel and Supplier agree that the compensation which Supplier will
    receive for Services provided to Intel is listed on Addendum A.  Intel shall
    not be responsible for any amount greater than the amount listed in Addendum
    A. Supplier shall be responsible for any and all payments to Supplier's
    subcontractors utilized in the performance of these Services.  No additional
    billable activities will occur until and unless Intel issues a purchase
    order requesting such activities.

 2. SOFTWARE SUPPORT AND ERROR LISTINGS:  Supplier agrees to provide Intel with:
    A. The Releases, Updates and Upgrades for each Software program as provided
       in Addendum A. Software Releases, Updates and Upgrades shall (if
       obligated to be provided) be provided on CD-ROM or other formats as
       mutually acceptable to the parties.
    B. All necessary system reconfiguration Releases for hardware compatibility
       and support to ensure that the Software remains compatible with
       manufacturer's operating system software.
    C. Qualified telephone support available 8x5 Pacific Time(5) days a week,
       Monday through Friday, for the Software.
    D. Supplier's hotline telephone number is: (408) 919-1910
                                               --------------

     If the Software fails to conform to the specifications set forth in
       Addendum A, Supplier agrees to use reasonable efforts to modify the
       Software to conform to the Specifications, and to respond to general
       questions from Buyer regarding the use and functionality of the Software,
       according to the procedure and priority levels set forth below, as
       determined by Buyer.

<TABLE>
<CAPTION>
  ----------------------------------------------------------------------------------------------------
   Priority Level             Critical                     Urgent                     Routine
  ----------------------------------------------------------------------------------------------------
<S>                  <C>                         <C>                         <C>
   Priority Level     A problem preventing the    A problem impairing the      A problem impacting a
     Definition         operation of a major        operation of a major        minor, yet desired,
                     function of the Software.   function of the Software.     specified function or
                                                                             feature of the Software.
  ----------------------------------------------------------------------------------------------------
  Required Response  Supplier shall respond      Supplier shall respond      Supplier shall respond
                     within 1 hour and make      within 24 hours and make    within 72 hours and make
                     commercially reasonable     commercially reasonable     commercially reasonable
                     effort to provide a         effort to provide a         effort to provide a
                     correction to the error     correction to the error     correction to the error
                     within 24 hours from        within 72 hours from        within 30 business days
                     notice.                     notice.                     from notice.
  ----------------------------------------------------------------------------------------------------
</TABLE>

    E. To the extent provided for in Addendum A, Supplier will promptly supply
       Intel's designated contact person (listed in Section 13) with all
       revisions or upgrades of Software application manuals and guides issued
       on a priority basis, together with a list of known Software errors and
       their respective solutions.  This list will be distributed by Intel to
       its employees with a need to know.

 3. APPLICATION SUPPORT:  Supplier agrees to provide Intel with:
    --------------------
    A. Qualified telephone support available for Software and applications
       inquiries, with responses provided within one (1) business day.
       Supplier's hotline telephone number is: (408) 919-1910.
                                               ---------------
    B. Supplier's commercially reasonable efforts to verify any Software error
       within ten (10) business days after receiving notification of the error
       by Intel. If Supplier requires a test case to verify a Software error,
       Supplier shall verify the error within one (1) business day after receipt
       of a test case from Intel.
    C. On-site visits for applications support within two (2) business days when
       an on-site visit is required to remedy any Software error(s) due to non-
       compliance with Supplier's performance specifications described in
       Addendum B.
    D. If Supplier decides to cease production and/or support for any Software,
       Supplier shall promptly notify Intel and provide (to the extent it
       exists) a Software conversion methodology to any new or replacement
       product(s) Supplier will offer. Upon Supplier's discontinuance of the
       Software offering, Supplier will continue to fully support the current
       Software for a period of time ninety (90) days.

 4. DEFAULT:  Supplier and Buyer shall negotiate in good faith the terms and
    -------
    conditions of an escrow agreement by and among Buyer, Supplier and Data
    Securities International ("DSI") which shall upon completion become Addendum
    G to this Agreement.  Pursuant to such  escrow agreement, Supplier will make
    regular deposits of Source Code for the Software (excluding only those third
    party components which it does not have a right to deposit).  The escrow
    agreement will provide for the release of the deposited material only on the
    conditions set forth in this section 4.  In the event that Supplier defaults
    on the support obligations set forth above, Supplier agrees that the most
    current version of the Software and necessary documentation will be

                                      12
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

     released to Buyer for the sole and limited purpose of correcting an error
     reported to Supplier and returning operation of the Software as originally
     provided for in the specifications. Intel's receipt of Source Code shall
     not vitiate Supplier's duty to perform under this Agreement.

 5.  CONTACTS
     --------

     The following initial contact persons will facilitate Service scheduling,
     communications and notifications between Intel and Supplier. Either party
     may change its contact person by written notice to the other party.

     INTEL:  Richard Schenker          SUPPLIER:  Atul Sharan
             ----------------                     -----------

5200 NE Elam Young Parkway, RA1-240    70 West Plumeria Drive
Hillsboro, OR 97124                    San Jose CA 95134-2134

  (503) 613-8392 (tel)                 (408) 919-1910 (tel)
  (503) 613-8964 (fax)                 (408) 919-1920 (fax)

                                      13
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                  ADDENDUM C
                                  ----------

                        ALCOHOL AND DRUG FREE WORKPLACE

                                Not applicable.

                                      14
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                  ADDENDUM D
                                  ----------

                          PROTECTION OF INTEL'S ASSETS

     Supplier agrees to safeguard Intel's classified (i.e., Intel Confidential,
Intel Secret, Intel Restricted Secret and Intel Top Secret) and proprietary
information as provided for in the body of the parties' Agreement. Supplier also
agrees to use and apply Intel's information protection methods stated below in
this Addendum in the performance of Services. Supplier agrees that this
performance standard applies to all Confidential Information, regardless of the
medium (Intel's or Supplier's) in or on which it is retained or communicated and
to software that is licensed by Intel for its internal use.

     Supplier is not automatically granted access to Intel Confidential
Information. However, authorization to use or access Intel Confidential
Information may be granted by Intel if access is necessary and directly related
to Supplier's scope of work or duties. Unless specifically authorized, Supplier
may not use or access Intel Confidential Information that may be happened upon
or inadvertently discovered except as provided for under the terms of this
Agreement. Neither may a Supplier or Supplier's employee control an Intranet web
site at Intel.

     Supplier shall not modify Intel Confidential Information except as provided
for under the terms of the Agreement or with the explicit permission of the
Intel, with the exception of contract-related requirements or resources that
allow for individual customization (e.g., Microsoft Windows user features). The
Supplier's employees, agents, or subcontractors may not disclose Intel
Confidential Information to their co-workers, except for disclosure to those
similarly bound to protect Intel's intellectual property with a need to know to
fulfill this Agreement.

                     INTEL INFORMATION PROTECTION METHODS
                     ------------------------------------

     This section outlines the Intel's minimum requirements for protection
methods for all Intel Confidential Information that the Supplier's personnel may
come in contact with. Intel recognizes that the correct and proper protection of
its information rests with its employees and Suppliers who have been authorized
access. Failure to comply with these requirements will provide grounds for
immediate termination of this Agreement by Intel. Intel shall notify Supplier in
the event it wishes to modify or amend this Addendum D.

     For further information or questions, contact your Intel management
sponsor.

                                      15
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                  ADDENDUM E
                                  ----------

                          CERTIFICATE OF ORIGINALITY
                          --------------------------

          This Certificate of Originality must be completed by Supplier when
furnishing software material (program product or offering and related
documentation, or other software material) for Intel.

          One Certificate of Originality can cover one complete product, even if
that product includes multiple modules. However, a separate Certificate of
Originality must be completed for the code and another for its related
documentation (if any.)

          Please leave no questions blank. Write "not applicable" or "N/A" if a
question is not relevant to the furnished software material.

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

1.   Name of the software material (provide complete identification, including
     version, release and modification numbers for programs and documentation):

2.   Was the software material or any portion thereof written by any party other
     than you, or your employees working within their job assignment?

               Yes ______       No  ______

               If Yes, provide the following information:

     (a)  Indicate if the whole software material or only a portion thereof was
          written by such party, and identify such portion:

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

               (b)   Specify for each involved party:

               (i)   Name:

               (ii)  Company:

               (iii) Address:

     (iv) If the party is a company, how did it acquire title to the software
          material (e.g., software material was written by company's employees
          as part of their job assignment)?

                                      16
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

          (v)  If the party is an individual, did s/he create the software
               material while employed by or under contractual relationship with
               another party?

                         Yes  ______  No  ______

               If Yes, provide name and address of the other party and explain
               the nature of the obligations:

          (c)  How did you acquire title to the software material written by the
               other party?

3.   Was the software material or any portion thereof derived from any third
     party's pre-existing material(s)?

          Yes  ______    No  ______

          If Yes, provide the following information for each of the pre-existing
materials:

          (a)  Name of the materials:

          (b)  Owner:

          (c)  How did you get the right to use the pre-existing material (s) ?

4.   Identify below, or in an attachment, any other circumstances which might
     affect Intel's ability to reproduce and market this software product,
     including:

          (a)  Confidentiality or trade secrecy of pre-existing materials:

          (b)  Known or possible royalty obligations to others:

          (c)  Pre-existing material developed for another party or customer
               (including government) where you may not have retained full
               rights to the material:

          (d)  Materials acquired from a person or company possibly not having
               title to them:

          (e)  Other circumstances:

     SUPPLIER: _________________________

     Signature: ________________________

     Printed Name ______________________

     Title: ____________________________

     Date: _____________________________

                                      17
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

     Date: ______________________________

                                  ADDENDUM F
                                  ----------

                      ASSIGNMENT OF INTELLECTUAL PROPERTY

                                Not applicable.

                                      18
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                  ADDENDUM G
                                  ----------

                              SOURCE CODE ESCROW

                                Not applicable.

                                      19
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                  ADDENDUM H
                                  ----------

                            SUPPLEMENTAL PROVISIONS

                                Not applicable.

                                      20
<PAGE>

NTI and INTEL CONFIDENTIAL

                                   EXHIBIT B
                               Payment Schedule

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

   Payment       License        Maintenance        Payment        Yearly Total
  Due Date   in ($ Millions)  in ($ Millions)  in ($ Millions)  in ($ Millions)
--------------------------------------------------------------------------------
    [***]         [***]            [***]            [***]            [***]

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

[***] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

                                   EXHIBIT C
                                 Press Release

    INTEL ENTERS TECHNOLOGY LICENSING AGREEMENT WITH NUMERICAL TECHNOLOGIES

     San Jose, CA -- (INSERT DATE), 2001 -- Numerical Technologies, Inc.
(NASDAQ: NMTC) today announced a multi-year, multi-million dollar technology
cross-licensing agreement with the Intel Corporation for advanced
photolithography solutions used in the production of high-end semiconductors.

     The agreement gives Intel the rights to use the Numerical patented phase-
shifting technology and software for the production of advanced integrated
circuits (ICs).  In addition, Numerical gains access to Intel's patents related
to advanced lithography, including phase shift mask technology.

     "Intel has always recognized the competitive value of leading edge process
technologies," stated Dr. Jai Hakhu, Vice President, Technology and
Manufacturing Group, General Manager, Technology Manufacturing Engineering,
Intel Corporation.  "We are pleased that this licensing relationship has
significant value for both of us."

     "Intel is the recognized industry leader in semiconductor manufacturing,"
stated Y. C. (Buno) Pati, president and CEO of Numerical Technologies.  "They
have consistently been early developers and adopters of the most advanced
process technology solutions and we are very excited that our successful ongoing
relationship has resulted in this agreement."

     Numerical's production-proven phase-shifting technology enables
semiconductor manufacturers to reliably and cost-effectively fabricate
subwavelength ICs using available optical lithography equipment.  Numerical's
phase-shifting technology is the only commercially available strong phase-
shifting technology that is currently used in IC production. It has been used to
fabricate transistors as small as 25 nm-the world's smallest transistors
manufactured with 248-nm lithography equipment.  Numerical's phase-shifting
technology is covered under US Patent #5,858,580.

About Numerical:

     Numerical Technologies Inc. develops and markets proprietary technology,
software tools and services that enable the semiconductor industry to produce
subwavelength integrated circuits, i.e., integrated circuits with components
smaller than the wavelength of light used to create circuit patterns on silicon.
Numerical's products and industry alliances form a comprehensive design-to-
silicon solution that enables the creation of smaller, faster and more power-
efficient semiconductors using available manufacturing equipment.  Numerical's
customers include the world's leading semiconductor companies, design automation
tool vendors, semiconductor equipment suppliers and photomask manufacturers.
Additional information about the company is available on the Web at
http://www.numeritech.com,
-------------------------
<PAGE>

INTEL/NUMERICAL CONFIDENTIAL

             (Safe Harbor paragraph to be inserted by Numerical.)

     CONTACTS:

     Numerical Technologies: Susan Lippincott, (408) 273-4474,
                             susan@numeritech.com

     MCA:  Chris Castillo, (650) 968-8900 x 118, ccastillo@mcapr.com

                                      ###

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