Document:

<PAGE>

                                                                  EXHIBIT 10.7.1

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
       BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                                   AGREEMENT

THIS AGREEMENT made and entered into on the fourteenth day of September, 1992

BY AND BETWEEN

NORTHERN TELECOM LIMITED, a corporation duly incorporated under the laws of
Canada, having its executive offices at 3 Robert Speck Parkway, Mississauga,
Ontario, Canada,

                    (hereinafter called "Northern Telecom")

AND:

LV SOFTWARE, INC., a California corporation having its principal offices at 755
Page Mill Road, Palo Alto, California, 94304,

                        (hereinafter called "Licensee")

WHEREAS Northern Telecom has developed, and has the right to license, software
programs, known as the Design For Testability tool suite (DFT); and

WHEREAS Northern Telecom is prepared to license and to grant the use of the
Design For Testability tool suite (DFT) and the right to sub-license on a
commercial basis under the provisions of this Agreement.

NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, IN CONSIDERATION OF THE MUTUAL
PROMISES HEREINAFTER SET FORTH, THE PARTIES AGREE AS FOLLOWS:

                                   ARTICLE 1
                                   ---------

                                  DEFINITIONS

As used herein, unless otherwise defined:

     (a) "Affiliate" shall mean a company which a Party hereto, or its parent,
effectively controls, directly or indirectly, other than a Subsidiary, through
the ownership or control of shares in the company;

     (b) "Associated Utilities" shall mean the software elements, cells, or
models described in Schedule C attached hereto and forming a part hereof;

     (c) "Derivative Works" shall mean any software produced by Licensee
incorporating all or a portion of the Licensed Product;

     (d) "Documentation" shall mean those documents and other written materials
related to the Licensed Product, as described in and subject to certain
conditions outlined in Schedule B attached hereto and forming a part hereof;

                                      -1-
<PAGE>

     (e) "Distributor" shall mean any person to whom Licensee provides the
Licensed Product for sublicensing to End-Users;

     (f) "Effective Date" shall mean the date first above mentioned;

     (g) "End-Users" shall mean all persons or companies, other than Northern
Telecom, its Affiliates, Subsidiaries and Manufacturing Licensees, which
acquire, directly from Licensee or indirectly through a Distributor, the right
to use a Licensed Product or Derivative Works, as contemplated in this
Agreement;

     (h) "Licensed Product" shall mean the Design for Testability tool suite
(DFT) and any portion or modification thereof, as described in and subject to
certain conditions identified in Schedule A attached hereto and forming a part
hereof;

     (i) "Manufacturing Licensee" shall mean a third party with whom Northern
Telecom or any of its Affiliates or Subsidiaries has entered into an agreement
permitting such third party to make and sell or lease products based on products
designed by or for and sold or leased by Northern Telecom, its Affiliates, or
Subsidiaries;

     (j) "Subsidiary" shall mean a company which a Party hereto effectively owns
or controls, and continues to own or control, directly or indirectly, more than
fifty percent (50%) of the voting stock or shares.

                                   ARTICLE 2
                                   ---------

                                    LICENSE

Northern Telecom hereby, as of the Effective Date, grants to Licensee subject to
the terms and conditions of this Agreement personal, non-exclusive, non-
transferable, non-assignable, indivisible, worldwide rights and license:

          (i)   to use, copy, translate, improve, enhance, and modify the
     Licensed Product object code and source code, to merge or have merged such
     translations, modifications, improvements or enhancements into other
     programming material, to sub-license and distribute object code versions of
     Licensed Product or Derivative Works to End-Users, to copy, translate and
     modify the Documentation and to use, sell or distribute copies of such
     Documentation;

          (ii)  to appoint and to sub-license Distributors to sublicense for use
     and to distribute to End-Users object code versions of Licensed Product or
     Derivative Works under terms and conditions no less stringent than those
     set out in this Agreement; and

          (iii) to place Licensed Product and Derivative Works source code in
     escrow for the benefit of End-Users and Distributors and grant source code
     licenses to such End-Users and Distributors pursuant to which, in the event
     of a bankruptcy or similar proceeding against Licensee or in the event of
     termination of this Agreement and the refusal of Northern Telecom to assume
     Licensee's support obligations, such End-User or

                                      -2-
<PAGE>

     Distributor would be granted a license to use such source code solely to
     maintain and support the Licensed Product or Derivative Works.

Northern Telecom also grants to Licensee the right to use Associated Utilities
as models in the development and debugging of software produced by Licensee or
for demonstration purposes. Associated Utilities must not be delivered to End-
Users.

No provision or term or condition of this Agreement shall affect the rights of
Northern Telecom or any Subsidiary or Affiliate or Manufacturing Licensee to use
the Licensed Product or Associated Utilities in the normal course of its and
their businesses.

Nothing contained herein shall transfer, or be deemed to transfer, or
contemplate the transfer of, any rights in or to the Licensed Product,
Associated Utilities, or Documentation other than those rights specifically
granted herein, and in particular but without restricting the generality of the
foregoing, Northern Telecom does not in any way transfer any right, title, or
interest in or to the Licensed Product, Associated Utilities, or Documentation,
or any element constituting a portion thereof to Licensee or Distributors or
End-Users, other than the limited right granted herein.

                                   ARTICLE 3
                                   ---------

                                   GRANTBACK

Licensee hereby grants to Northern Telecom, its Subsidiaries, Affiliates and
Manufacturing Licensees, a perpetual, irrevocable, transferable, assignable,
worldwide, paid-up right to use Derivatives Works. Such right includes the right
to modify the Derivative Works and to incorporate them into software or product
for their own internal use in the normal course of their business.

Source code for Derivative Works shall be delivered to Northern Telecom at such
times as Licensee initially makes such Derivative Works available to an End-User
and every twelve (12) month period thereafter to the extent that additional
Derivative Works have been made available to an End-User within the immediately
preceding twelve (12) month period.

Ownership in and to the Derivative Works (exclusive of any source code of the
Licensed Product contained therein) and in and to any and all ideas, inventions,
discoveries, creations, processes, techniques, designs, methods, improvements or
know-how that Licensee may make, conceive, develop or reduce to practice
(collectively, "Innovations"), regardless of whether such Innovations are
developed as a result of Licensee's access to the Licensed Product, shall remain
with and be vested in Licensee.

                                   ARTICLE 4
                                   ---------

                        FURNISHING OF LICENSED PRODUCTS

Northern Telecom shall furnish to Licensee Licensed Product, Associated
Utilities, and Documentation as set out in Schedules A , B, and C within thirty
(30) days of the Effective Date.

                                      -3-
<PAGE>

Northern Telecom shall furnish to Licensee for a period of thirty (30) months
after the Effective Date all new versions and releases of the Licensed Product,
Associated Utilities, and Documentation developed and used in its day to day
operations (hereinafter "Updates"), however Northern Telecom shall not be
obliged to develop or produce any new or unavailable versions or releases of
Licensed Product, Associated Utilities, or Documentation to perform its
obligations under this Agreement. Provided however that Northern Telecom shall
not be obligated to furnish versions or releases co-developed with a third
party.

Licensee shall delete, as directed by Northern Telecom, all information,
including reference to applications or interfaces, which is specific to Northern
Telecom's, its Affiliates, or Subsidiaries development or user environment.
Northern Telecom shall have the right to review and approve such deletions and
modifications.

                                   ARTICLE 5
                                   ---------

                                    ROYALTY

In partial consideration of the rights granted hereunder Licensee shall make the
following royalty payments (hereinafter "Royalties") to Northern Telecom:

     (i)   ***, and

     (ii)  ***.

Royalties shall become payable to Northern Telecom ***.

                                   ARTICLE 6
                                   ---------

                            MAINTENANCE AND SUPPORT

Licensee shall offer technical, product, and other support to Licensee's
Distributors and End-Users to facilitate the use of the Licensed Product and
Derivative Works. Royalties shall not be paid on *** by Licensee, including
without limitation, the ***, *** or ***.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

                                      -4-
<PAGE>

                                   ARTICLE 7
                                   ---------

                             TECHNICAL ASSISTANCE

Except as provided in Article 4, Northern Telecom support to Licensee will be
limited to demonstrating Licensed Product capabilities to potential End-Users at
Northern Telecom's convenience and discretion.

                                   ARTICLE 8
                                   ---------

                            RECORDS AND REMITTANCES

Licensee shall keep, and shall require all Distributors to keep, clear and
accurate records with respect to the Licensed Product. Northern Telecom shall
have the right, through its internal auditing experts, to examine and audit,
during normal hours, annually (or at less frequent intervals upon reasonable
notice to Licensee) all such records and such other records and accounts as may
under recognized accounting practices contain information bearing upon the
amount of Royalties payable to it under this Agreement solely to verify
compliance by Licensee of its obligation to pay Royalties to Northern Telecom.
Prompt adjustment shall be made by the proper Party to compensate for any errors
or omissions disclosed by such examination or audit. Neither such right to
examine and audit, nor the right to receive such adjustments, shall be affected
by statements to the contrary appearing on cheques or otherwise, unless any such
right is expressly waived by the Party having such right. Licensee shall
furnish, and shall require all Distributors to furnish, whatever additional
information Northern Telecom may reasonably prescribe from time to time to
enable Northern Telecom to ascertain amounts payable thereon.

Within thirty (30) days following the end of each quarterly period ending on
March 31, June 30, September 30, and December 31 commencing with the period
which ends on December 31, 1992, and continuing thereafter until all Royalties
payable hereunder shall have been reported and paid, Licensee shall furnish to
Northern Telecom a statement, in a form reasonably acceptable to Northern
Telecom, certified by an authorised official of Licensee, recording all Licensed
Product *** and the ***. If no ***, that fact shall be shown on such statement.
In the event of a *** or such other event that shall result in ***. Licensee may
deduct such amount from the next Royalty payment to Northern Telecom. Within the
same period of thirty (30) days, Licensee shall, irrespective of terms granted
or collections made on account of any items subject to Royalties, remit to
Northern Telecom the Royalties payable hereunder for such quarterly period.

All payments to be made by Licensee to Northern Telecom shall be made in U.S.
dollars at Northern Telecom's address as shown in Article 16 hereof, or at such
other address in Canada or the USA as Northern Telecom shall have specified by
written notice. Payments related to Licensee's licensing activities in the USA
shall be made to:

Northern Telecom Inc.
200 Athens Way,
Nashville, Tennessee,

*** CONFIDENTAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMISSION.

                                      -5-
<PAGE>

U.S.A. 37228

     Attention:  Sue Kane, Dept. 8452.

Licensee shall pay either to the appropriate taxing authority or to Northern
Telecom upon receipt of an invoice therefor, all taxes or other levies imposed
as a result of the existence or operation of this Agreement including, but not
restricted to, registration fees, stamp taxes, remittance fees, sales, value
added or use taxes, customs duties or other governmental charges of any kind
whatsoever, resulting from the granting or transfer of the License hereunder,
all such taxes or levies, sales, value added, goods and services taxes and/or
withholding taxes, due or imposable with respect to Royalties, shall be borne by
Northern Telecom. Nothing herein contained shall make either party responsible
for any tax on income imposed on the other by the laws of any country or any
political subdivision thereof on the income or profits of such party.

To assist either party in obtaining a credit or deduction with respect to
withholding taxes, each party shall furnish the other with such evidence as may
be required by Canadian or USA taxing authorities to establish that such tax has
been paid.

Payments when provided for in this Agreement shall, when overdue, bear interest
at a rate of two percent (2%) over the Canadian prime rate as quoted by the
Royal Bank of Canada at Toronto, Canada computed on a daily basis.

                                   ARTICLE 9
                                   ---------

                                 SUBLICENSING

In exercising its right to grant sublicenses as set out in Article 2 of this
Agreement, Licensee shall, and shall oblige all Distributors to, enter into sub-
license agreements with End-Users which shall contain substantially the
following provisions:

     (a) End-User shall acquire no right, title or interest in or to the
Licensed Product or Documentation other than the right to use the Licensed
Product and Documentation and such use shall be limited to specific individual
central processing units bearing a specific serial number and having a specific
location;

     (b) End-User shall hold the Licensed Product and Documentation in
confidence for Northern Telecom and Licensee and shall not at any time use or
reproduce the Licensed Product or Documentation except as expressly permitted
hereunder or divulge the Licensed Product and Documentation to any person other
than employees of End-User with a need to know, without the prior written
consent of Northern Telecom and Licensee; and

     (c) the right to use the Licensed Product and Documentation shall be in
accordance with the laws applicable in the countries of the End-Users but so as
not to affect, but to preserve, the proprietary and confidential nature of the
Licensed Product and Documentation and any patent, copyright or other rights of
Northern Telecom, its Subsidiaries and Affiliates applicable to the Licensed
Product and Documentation.

                                      -6-
<PAGE>

Licensee or its Distributors, as applicable, shall negotiate, execute,
administer and monitor each of the Licensed Product and Documentation sublicense
agreements to ensure compliance with all the relevant provisions of this
Agreement. The form normally used by Northern Telecom for such purposes is
attached, as an example, hereto as Schedule D.

Nothing in this Agreement shall be construed as granting the right for any
Distributor, or any End-User to disassemble, decompile, or otherwise reverse
engineer the object code versions of the Licensed Product delivered by Northern
Telecom pursuant to this Agreement.

In the event an End-User is in default under its sublicense agreement, Licensee
shall so advise Northern Telecom in writing promptly upon discovery thereof, and
exercise as soon as reasonably possible, such rights and recourses, using
commercially reasonable efforts, as Northern Telecom may have in the
circumstances with particular emphasis on preserving the proprietary and
confidential nature of the Licensed Product and Documentation and any patent,
copyright or other rights of Northern Telecom, its Subsidiaries or Affiliates
applicable to Licensed Product and Documentation.

                                  ARTICLE 10
                                  ----------

                           CONFIDENTIAL INFORMATION

Licensee or its Distributors, as applicable, acknowledges that the Licensed
Product and any information communicated to or acquired by Licensee as a result
of the provision of technical assistance pursuant hereto (hereinafter
collectively "Northern Telecom Confidential Information") is and shall continue
to be the exclusive property of Northern Telecom, and is proprietary and
constitutes a trade secret of Northern Telecom. Licensee shall hold the Northern
Telecom Confidential Information in confidence for Northern Telecom and only
make use of, or disclose, it as permitted by this Agreement.

Northern Telecom acknowledges that the Derivative works (exclusive of any
Licensed Product source code contained therein) and any information communicated
to or acquired by Northern Telecom as a result of the provision of technical
assistance pursuant hereto (herein collectively "Licensee Confidential
Information") is and shall continue to be the exclusive property of Licensee.
and is proprietary and constitutes a trade secret of Licensee. Northern Telecom
shall hold the Licensee Confidential Information in confidence for Licensee and
only make use of, or disclose it as permitted by this Agreement.

The Northern Telecom Confidential Information and the Licensee Confidential
Information is herein collectively referred to as "Confidential Information".

Each party shall, during the full term of this Agreement and for five (5) years
thereafter hold secret and not disclose, to any person (except to such of its
employees as are required to use the Confidential information of the other
party, and then only under an obligation of non-disclosure and non-use binding
upon such employee) any of the Confidential Information of the other party
except as follows:

                                      -7-
<PAGE>

     (a)  to Distributors and End-Users pursuant to Article 2 of this Agreement,
provided such persons agree to be bound by the confidentiality provisions of
this Article 10;

     (b)  to Northern Telecom's Affiliates, Subsidiaries, and Manufacturing
Licensees pursuant to Article 3 of this Agreement, provided however that such
Affiliates, Subsidiaries, and Manufacturing Licensees have been bound by the
confidentiality provisions of this Article 10; and

     (c)  to the extent the Confidential Information of the other party:

          (i)   becomes available to the public from a source other than the
     recipient of such Confidential Information before or during the period of
     this Agreement;

          (ii)  is lawfully obtained by the recipient of such Confidential
     Information from a third party or parties without breach of confidentiality
     obligations; or

          (iii) is documented as being known to the recipient of such
     Confidential Information prior to its disclosure.

Neither party shall make or have made or permit to be made, any copies of the
Confidential Information of the other party except those copies which are
expressly permitted hereunder, and all such copies shall, upon reproduction and
whether or not in the same form or format as the Confidential Information of the
other party, contain the same proprietary and confidentiality notices or legends
which appear on such Confidential Information provided pursuant hereto.

                                  ARTICLE 11
                                  ----------

                          MARKETING AND SUBLICENSING

Licensee shall use reasonable efforts to, as soon as possible after the
Effective Date, begin the marketing and sublicensing of the Licensed Products as
contemplated by this Agreement.

Licensee shall for the duration of this Agreement use its best efforts to
develop, supply and service as extensive a market as possible for the Licensed
Product throughout the world.

                                  ARTICLE 12
                                  ----------

                                   LIABILITY

Northern Telecom has developed the Licensed Product and Associated Utilities
independently and to the best of Northern Telecom's knowledge they constitute
original concepts and ideas not derived from the unauthorised use of any party's
proprietary information. Other than the preceding, Northern Telecom makes no
other representations in respect to and does not warrant the Licensed Products
or Associated Utilities furnished pursuant hereto, but shall furnish same in
good faith to the best of its knowledge and ability to perform in accordance
with the Documentation.  Northern Telecom shall not be liable for any claims,
injuries, or damages, direct, indirect, or consequential, arising from the use
of, or the inability to use, the Licensed Product or Associated Utilities.
Without restricting the generality of the foregoing, Northern

                                      -8-
<PAGE>

Telecom makes no representations or warranties as to the merchantability or
fitness for a particular purpose, or as to whether or not the use of the
Licensed Product or Associated Utilities supplied hereunder may infringe any
patent or other rights of any other person.

Licensee shall indemnify and hold Northern Telecom harmless from any and all
claims for damages, losses, expenses or costs (including counsel fees and
expenses) arising out of Licensee's distribution and sublicensing, directly or
indirectly, of the Licensed Products and Derivative Works.

Northern Telecom shall indemnify and hold Licensee harmless from any and all
claims for damages, losses, expenses or costs (including counsel fees and
expenses) arising out of the use of the Derivative Works by Northern Telecom,
its Affiliates, Subsidiaries or Manufacturing Licensees.

                                  ARTICLE 13
                                  ----------

                                 FORCE MAJEURE

Neither Party shall be in default or liable for any loss or damage resulting
from delays in performance or from failure to perform or comply with terms of
this Agreement due to any causes beyond its reasonable control, which causes
include but are not limited to Acts of God or the public enemy, riots and
insurrections, war, accidents, fire, strikes and other labor difficulties
(whether or not the Party is in a position to concede to such demands),
embargoes, judicial action, lack of or inability to obtain export permits or
approvals, necessary labor, materials, energy, components, or machinery, acts of
civil or military authorities.

                                  ARTICLE 14
                                  ----------

                        DURATION AND CONTINUING RIGHTS

This Agreement shall continue until the earlier of ten (10) years after the
Effective Date and the full and final payment of all sums due Northern Telecom
hereunder, or, until terminated pursuant to Article 15 hereof.

Provided this Agreement is not terminated prior to ten (10) years after the
Effective Date, Licensee shall on that date, possess a fully paid up license to
exercise the rights granted in Article 2 without, however, having the obligation
of providing statements and making payments as prescribed in Articles 5 and 8
hereof.

                                  ARTICLE 15
                                  ----------

                                  TERMINATION

In the event either Party shall be in material breach of this Agreement or fail
to perform one or more of its material obligations under this Agreement, the
other Party may, by written notice to the party in default, require the remedy
of the breach or the performance of the obligation and, if the Party so notified
fails to remedy such breach or to perform such obligation within one

                                      -9-
<PAGE>

hundred and twenty (120) days of the forwarding of a notice so to do, the first
such Party may, by written notice, terminate this Agreement.

Any termination of this Agreement by or against one Party shall be termination
of this Agreement by or against the other Party hereto.

In the event of an enforceable decision or directive declaring invalid an
essential part of this Agreement, without which this Agreement would not have
been entered into, this Agreement may, at the option of either Party, be
terminated upon the giving of notice to the other Party. Save as before set
forth, in the event that any term, clause, provision or condition of this
Agreement shall be similarly adjudged invalid for any reason whatsoever, such
invalidity shall not affect the validity or operation of any other term, clause,
provision or condition and such invalid term, clause, provision or condition
shall be deemed to have been deleted from this Agreement.

In the event Licensee becomes insolvent or is the object of bankruptcy or
insolvency proceedings, or makes an assignment for the benefit of its creditors,
or is placed in receivership or liquidation, or fails to satisfy any final
judgement rendered against it within the period so permitted, then, Northern
Telecom may, without any delay, by written notice, terminate this Agreement.

In the event that a producer of products similar or related to Northern
Telecom's products acquires a controlling interest (controlling not necessarily
requiring greater than 50%) or a major equity participation in Licensee, without
first having obtained the written consent of Northern Telecom, Northern Telecom
may, without any delay, by written notice, terminate this Agreement.

In the event of termination prior to the expiration of this Agreement Licensee
shall discontinue the exercise of the rights granted hereunder, and shall render
an immediate accounting and make payment of all royalties and other sums due
hereunder or to become due upon the sublicensing of the Licensed Products.
Licensee shall promptly deliver to Northern Telecom all the Licensed Products,
Associated Utilities, and Documentation supplied pursuant hereto, and shall
erase all electronically stored copies thereof, and shall certify, in writing to
Northern Telecom, that such destruction has taken place.

Notwithstanding anything else contained herein, in the event this Agreement is
terminated, End-Users shall continue to have the right to use such software
provided:

     (a)  such End-User is not in default under its written End-User sublicense
agreement with Licensee;

     (b)  such End-User sublicense is not inconsistent with the terms of this
Agreement;

     (c)  the rights of Licensee as sublicensor are assigned to Northern Telecom
if Northern Telecom so requests; and

     (d)  the rights and obligations of Licensee as sublicensor to End-Users
pursuant to maintenance agreements as contemplated in Article 6 herein which are
in full force and effect

                                      -10-
<PAGE>

without default are assigned to Northern Telecom if Northern Telecom so
requests; provided, however, notwithstanding anything to the contrary contained
in this Agreement, in the event that Northern Telecom shall not assume all
rights and obligations of Licensee as sublicensor to End Users pursuant to
maintenance agreements which are in full force and effect, Licensee shall be
permitted to retain the Licensed Product source code and to distribute object
code versions of such improvements, modifications and enhancements pursuant to
Licensee's maintenance obligations.

Notwithstanding the expiry or termination of this Agreement, the provisions of
Article 10 related to confidentiality and non-use, the provisions of Article 12
related to liability and indemnification, and the provisions of Article 14
related to the grant of a perpetual license shall survive as though this
Agreement had continued.

                                  ARTICLE 16
                                  ----------

                                    NOTICES

Any and all notices or other information to be given by one of the Parties to
any other shall be deemed sufficiently given when forwarded by mail, cable ,
telegram, telex, facsimile or hand delivery to such other Party at the following
addresses:

If to Licensee:

LV Software, Inc.
1175 Senecal,
Brossard, Quebec,
Canada, J4X 1L3

     Attention: Chief Executive Officer (Dr. V.K. Agarwal)
     Facsimile Number: 514-923-9993

If to Northern Telecom:

Northern Telecom Limited
P.O. Box 458, Station A,
Mississauga, Ontario
Canada
L5A 3A2
Attention: Secretary

     with a copy to:

     Bell-Northern Research Ltd..
     3500 Carling Avenue,
     Nepean, Ontario, Canada
     K2H 8E9

     Attention: Secretary

                                      -11-
<PAGE>

     Facsimile Number: 613-763-5920

and such notice shall be deemed to have been received five (5) business days
after mailing it forwarded by mail, and the following business day if forwarded
by cable, telegram, telex, facsimile or hand.

The aforementioned address of any Party may be changed at any time by giving
five (5) business days prior notice to the other Parties in accordance with the
foregoing.

In the event of a generally prevailing labor dispute or other situation which
will either delay or impede the giving of notice by any such means, the notice
shall be given by such specified mode as will be most reliable and expeditious
and least affected by such dispute or situation.

                                  ARTICLE 17
                                  ----------

                              GENERAL PROVISIONS

This Agreement shall not be assigned or transferred by either Party except with
the written consent of the other. Notwithstanding the foregoing, this Agreement
may be assigned by Northern Telecom to any of its Subsidiaries or Affiliates
upon notification to Licensee.

The Parties recognize that the transfer of Licensed Product or Associated
Utilities to certain countries may be subject to the prior specific approval of
the Government of Canada, or various agencies thereof, and international control
organizations in which the Government of Canada participates, including in
particular the Free World Co-ordinating Committee (sometimes known as "CoCom").
Accordingly, Licensee shall not sublicense, use, or otherwise communicate or
transfer Licensed Products or any technical information to such countries
without receiving the necessary prior specific approvals.

Nothing in this Agreement shall be construed as requiring Northern Telecom to
disclose technical information, or to grant rights under licenses, or to render
any technical assistance, which would violate any confidentiality undertakings
which it has towards third persons or which would violate any present or future
law or decree of any government or governmental officer or agency, and nothing
contained herein shall require the disclosure of technical information which
would increase or impose any obligations on Northern Telecom with respect to
third parties.

Nothing in this Agreement shall be construed as

     (a)  requiring Northern Telecom to file any patent application, to secure
any patent or to maintain any patent in force;

     (b)  constituting a warranty that or representation by Northern Telecom as
to the validity or scope of any patent licensed hereunder;

     (c)  constituting a warranty or representation that any sublicensing by
Licensee hereunder will be free from infringement of patents other than those
under which and to the extent to which licenses are granted hereunder;

                                      -12-
<PAGE>

     (d)  constituting an agreement to bring or prosecute actions or suits
against third parties for infringements;

     (e)  conferring upon Licensee any right to use, in advertising or
publicity, any name, trade name or trademark, or any contraction, abbreviation
or simulation thereof without the prior written approval of Northern Telecom.
Licensee may, however, disclose to potential End-Users and Distributors the fact
that the original Licensed Product was developed by Bell-Northern Research Ltd.,
an affiliate of Northern Telecom; or

     (f)  conferring by implication, estoppel, or otherwise upon Licensee any
license or other right under any patent, except the licenses and rights
expressly granted hereunder to Licensee.

Nothing contained in this Agreement shall limit, in any manner, Northern
Telecom's right to discontinue or change the design or characteristics of the
Licensed Product at any time without notice and liability.

The failure of any Party to give notice to any other Party of the breach or non-
fulfillment of any term, clause, provision or condition of this Agreement shall
not constitute a waiver thereof, nor shall the waiver of any breach or non-
fulfillment of any term, clause, provision or condition of this Agreement
constitute a waiver of any other breach or non-fulfillment of any term, clause,
provision of condition of this Agreement.

This Agreement sets forth the entire agreement and understanding between the
Parties with respect to the licensing of Licensed Products and Associated
Utilities and supersedes and cancels all previous negotiations, agreements,
commitments and writings in respect of the subject matter hereof, and no Party
hereto shall be bound by any term, clause, provision or condition save as
expressly provided in this Agreement or as duly set forth on or subsequent to
the date hereof in writing, signed by duly authorised officers of the Parties.
The Parties may, however, modify Schedules A, B, and C hereto, from time to
time, by written instrument signed by representatives of both Parties, provided
any such modification does not materially change the scope and substance of this
Agreement.

Nothing in this Agreement shall be construed as establishing or implying any
partnership between the Parties hereto, and nothing in this Agreement shall be
deemed to constitute any of the Parties hereto as the agent of any other Party
or authorize any Party to incur any expenses on behalf of any other Party or to
commit any other Party in any way whatsoever, without obtaining the other
Parties' prior written consent.

Terms, conditions and general terms of this Agreement shall be held in
confidence by all Parties and only disclosed as may be agreed to by all Parties
or as may be required to meet securities disclosure or export permit
requirements. Neither Party shall make public statements or issue publicity or
media releases with regard to this Agreement or the relationship between the
Parties without the prior written approval of the other Party.

If any action at law or in equity is brought relating to this Agreement or the
breach hereof, the prevailing Party in any final judgment or arbitration award,
or the non-dismissing Party in the event of a dismissal without prejudice, shall
be entitled to the full amount of all reasonable

                                      -13-
<PAGE>

expenses, including all court costs, arbitration fees and actual attorney's fees
paid or incurred in good faith.

This Agreement shall be construed in accordance with and governed by the laws of
the Province of Ontario, Canada.

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement.

LV SOFTWARE, INC.                       NORTHERN TELECOM LIMITED

Per: /s/ V. K. Agarwal                  Per: /s/ G. C. Smyth

Name: V. K. Agarwal                     Name: G. C. Smyth

Title: Chief Executive Officer          Title: Executive Vice-President

                                        Per: /s/ D. J. DeGrandis

                                        Name: D. J. DeGrandis

                                        Title: Secretary

                                      -14-
<PAGE>

                                  SCHEDULE A

                               LICENSED PRODUCT

Licensed Product consists of a Design for Testability tool suite which includes
the following tools delivered in source code form:

        (1)    SCANCHEK, Version 5 Release 3 (5.03):

               SCANCHEK compiles a circuit description from Verilog structural
               netlists and checks the logic for compliance to a set of Scan
               rules. It also extracts the combinational logic driven by the
               scan chain as well as a description of the Scan chain connections
               and pin types.

        (2)    ATPG. Version 5 Release 3 (5.03):

               Automatic Test Pattern Generator (ATPG) generates and/or
               evaluates a set of test vectors for the faults in the
               combinational part of the logic of a circuit. ATPG applies random
               patterns to detect most faults and switches to deterministic
               algorithms to find the remaining one. Optionally, the random
               patterns can be generated by a Linear-Feedback Shift-Register
               (LFSR) and the expected responses for the circuit are compressed
               and expressed in terms of a 32-bit signature.

        (3)    SEQUENCE, Version 5 Release 3 (5.03):

               SEQUENCE populates a test pattern data base with the test
               patterns generated by ATPG for the combinational portion of the
               circuit. SEQUENCE automatically adds generic test patterns for
               the scan chain itself and asynchronous set/reset pins, if
               applicable.

        (4)    TPI, Version 5 Release 2 Maintenance Release 1 (5.02.01):

               A Test Point Insertion tool.

        (5)    RamBist, Version 5 Release 2 (5.02):

               A tool to perform built-in self test for memories.

        (6)    ScanBist, as available for Version (5.00):

               A tool to perform built-in self test for Scan-based designs

        (7)    IATPG, as available for Version 5 (5.00):

               A tool to perform interconnect ATPG.

   NOTE:       Included in the above are software elements or modules which must
        be modified by Licensee. Such modification must be approved by Northern
        Telecom or its agent, Bell-Northern Research Ltd. (BNR), before Licensee
        delivers such modifications or Derivative Works to End Users. The
        software elements or modules are known as:

                                      -15-
<PAGE>

             a.  In SCANCHEK;
                         - Cadence menus
                         - ScanBist support
                         - BNR specific options
             b.  In ATPG:
                         - Cadence menus
                         - ScanBist support
                         - BNR specific options
             c.  In SEQUENCE
                         - Cadence menus
                         - "Fast simulation"
                         - BNR specific options

Licensed Product also includes the following utility delivered in object code
form only and may be delivered to End-Users in object code form:

             i.    dh2tif, Version 5 Release 2 (5.02):
                   A utility to extract test patterns from a DATAHUB file and
             convert into a TIF (Tool Interchange Format).

                                      -16-
<PAGE>

                                  SCHEDULE B

                                 DOCUMENTATION

Documentation associated with Licensed Product consists of the following:

       (1)  Scan Reference Guide, Version 5 Release 3 (5.03):          CCP 143.1

       (2)  DFT Application Notes, Version 5 Release 2 (5.02):         CCP 146.1

       (3)  DFT Guidelines, Version 5 Release 1 (5.01):                CCP 146.2

       (4)  Memory Bist guidelines, as available for Version 5 (5.00):

       (5)  ScanBist documentation, as available for Version 5 (5.00):

       (6)  TIF format description, as available for Version 5 (5.00):

  NOTE:     The above documentation must be modified by Licensee. Such
       modification must be approved by Northern Telecom or its agent, Bell-
       Northern Research Ltd., before Licensee delivers such modifications to
       End-Users.

                                      -17-
<PAGE>

                                  SCHEDULE C

                             ASSOCIATED UTILITIES

Associated Utilities include the following software elements, cells, or models
which are delivered to Licensee in object code form or as ASCII files. They can
be used by Licensee as models for developing and debugging new software or for
demonstration purposes but must not be delivered to End-Users.

        (1)    mx (Version 5, Release 2)
               A general purpose macro preprocessor.

        (2)    syntran (As available for Version 5)
               A utility to convert a FML2 file to a Verilog HDL file.

        (3)    cells
               A subset of simple BATMOS gates including Verilog nominal and
               SCAN models only.

        (4)    BSCAN macros
               A collection of cells for implementing Boundary Scans

        (5)    TAP macros
               A collection of cells for implementing Test Access Port

        (6)    memory macros

                                      -18-
<PAGE>

                                  SCHEDULE D
                            SOFTWARE USE AGREEMENT

Subject to the provisions contained herein _________ ("Grantor") grants a non
exclusive license to use the proprietary Software defined below to the "User"
whose duly authorized signature appears below.

                                   SOFTWARE

"Software" furnished under this Agreement shall mean each set of programs in
machine-readable code, provided on magnetic tape or other storage media, which
provides basic logic, operating instructions and user related application
instructions (as well as associated software documentation) that is incorporated
in or furnished for use with the system designated below ("System").

                           LICENSE TERM AND CHARGES

The User shall pay the sum of $______ or separate payments of $____________
payable monthly/quarterly/annually for a period of __________ year(s) to Grantor
giving the User the right to use the Software for _____ years from the date
hereof, under the conditions set out herein and the reverse side hereof.

Thereafter, provided the User has paid the sum or sums specified above and
observes all other provisions of this Agreement, the User shall have the option
to renew this Agreement for successive one year periods in consideration of the
payment of $_______ per annum. Notwithstanding the foregoing, this Agreement
shall not extend beyond the discontinuance by the User or its assignee of the
use of the System or the Software, whichever comes first.

The User shall limit the use of the Software to itself, for installation,
operation and maintenance of the specific individual processing unit(s) forming
part of the System designated as follows:

System (including Serial No.):      _______________________
Software:                           _______________________
Location:                           _______________________

This Agreement, including the attached Conditions, represents the sole and
                ---------------------------------
entire agreement between the parties in regard to the Software supplied for the
above single System, and supersedes all prior agreements and representations
between them. This Agreement is binding upon the parties upon execution by
Grantor and User.

Executed this ____ day of __________, 19___ at __________________:

____________________________________     ___________________________
     ("Grantor")                               ("User")

Per: ____________________________  Per:  ___________________________

     ____________________________        ___________________________

     (Title of Signatory)                (Title of Signatory)

                                      -19-
<PAGE>

                                  CONDITIONS

     (1)  Title

        Title and ownership rights to the Software shall remain in Grantor's
        licensors and shall in no circumstances be acquired by User.

     (2)  Assignment

        In the event of the bona fide lease or sale of the System by the User to
                            ---------
        any third party, the User shall have the right to assign this Agreement
        to such third party, provided that the third party agrees in writing to
        abide by the terms and conditions of this Agreement and that Grantor is
        furnished with a signed copy of the assignment including the undertaking
        of the third party required under this Section.

     (3)  Confidentiality and Security

        The User shall hold the Software in confidence for Grantor and Grantor's
        licensors and shall not, during the course of this Agreement or at any
        time thereafter, use, modify or reproduce the Software except as
        expressly permitted in this Agreement, or divulge the Software to any
        person other than employees of the User with a need to know, without the
        prior written consent of Grantor. This obligation shall continue if the
        Software is removed from service or this Agreement is terminated for any
        reason.

        The obligation to the User hereunder shall not extend to that portion of
        the Software which has become part of the public domain by acts not
        attributable to the User.

        The User shall not reproduce the Software in whole or in part, without
        the prior written consent of Grantor, which consent will not be
        unreasonable withheld. The User shall not modify the Software except as
        authorized in writing by Grantor.

        The User shall issue appropriate instructions to its employees to
        satisfy it obligations hereunder.

     (4)  Payment

        The User shall make payment(s) as required herein and/or by the sales
        agreement related to the System ("Sales Agreement").

     (5)  Warranty and Limits of Liability

        Grantor warrants that, as of the date of delivery of Software to User,
        the Software shall conform to the relevant System documentation. This
        warranty shall cease upon the date when the System incorporating the
        Software is first

                                      -20-
<PAGE>

        placed in service by User. With the view of supporting Software
        operation after that date, Grantor's sole obligation shall be to provide
        or cause to be provided, without charge to User during the period of one
        (1) year from the System in-service date, or of fourteen (14) months
        from the date of delivery of the Software to User, whichever period
        first expires, technical assistance service upon the conditions stated
        in the relevant System documentation, with the objective of diagnosing
        and correcting errors in Software.

        Neither Grantor nor Grantor's licensor shall be liable for any claims,
        injuries or damages, direct. indirect or consequential, arising from the
        use of, or the inability to use, the Software. Grantor disclaims all
        warranties including those of merchantability or fitness for use except
        as specifically set forth herein.

     (6)  Support Service Agreement

        Within six months from the date of this Agreement, User shall enter into
        a support service agreement with Grantor, in accordance with Grantor's
        standard terms and conditions and at its then prevailing rates,
        providing for support services, in relation to the Software licensed for
        use hereunder, during the period when Grantor ceases to be obligated to
        provide technical assistance services under section 5 above.

     (7)  Assignment

        The rights and obligations of Grantor under this Agreement may be
        assigned to such firm or corporation as may be specified in written
        notice given to User by Grantor or by Grantor's licensor.

     (8)  Termination

        In the event the User shall be in breach of this Agreement or fail to
        perform one of more of its material obligations under this Agreement,
        and in the event such breach is not remedied by the User within sixty
        (60) days of the giving of notice of such breach, in addition to any
        remedies permitted by law or otherwise, Grantor shall have the right to
        terminate this Agreement. In the event of such termination the User
        shall, unless Grantor approved otherwise, return the Software to Grantor
        (including all permitted reproductions).

                                      -21-<PAGE>

                                                                  EXHIBIT 10.7.2

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
       BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                          AMENDMENT TO THE AGREEMENT

THIS AGREEMENT is made and entered into as of the 1st day of October 1993 (the
"Amendment Date")

BY AND BETWEEN

NORTHERN TELECOM LIMITED, a corporation duly Incorporated under the laws of
Canada, having its executive offices at 3 Robert Speck Parkway, Mississauga,
Ontario, Canada, (hereinafter called "Northern Telecom")

AND,

LV SOFTWARE, INC., a California corporation having its principal offices at
Suite B-205, 1590 Oakland Road, San Jose, California, 95131, (hereinafter,
called "Licensee")

WHEREAS the Parties entered into an Agreement with an Effective Date of the
fourteenth day of September 1992 concerning software known as the Design For
Testability tool suite (the "Agreement"); and

WHEREAS the Parties wish to amend the Agreement as provided herein:

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

1.   For the purpose of this Amendment, unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth in the
Agreement. The term "License Fee" shall mean ***, after giving effect to
quantity or other discounts, for the ***. The term "Net License Fee" shall mean
the License Fee less taxes, tariffs or duties, interest, finance charges,
insurance, shipping, and reasonable handling costs.

2.   IN ARTICLE 5 ROYALTY replace the existing paragraphs with the following:

"In partial consideration of the rights granted hereunder Licensee shall make
the following royalty payments (hereinafter "Royalties") to Northern Telecom:

        (i)   ***; and

        (ii)  ***:

              a)  ***,

              b)  ***, and

              c)  ***.

Royalties shall become payable to Northern Telecom ***."

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have duly executed this amending
agreement.

LV SOFTWARE, INC.                  NORTHERN TELECOM LIMITED

Per: /s/ V. K. Agarwal             Per: /s/ G. C. Smyth

Name: V. K. Agarwal                Name: G. C. Smyth

Title: Chief Executive Officer     Title: Senior Vice-President

                                   Per: /s/ D. J. DeGrandis

                                   Name: D. J. DeGrandis

                                   Title: Secretary

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