Document:

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                                                                   EXHIBIT 10.20

                          NUMERICAL TECHNOLOGIES, INC.

                                 1997 STOCK PLAN

                    STOCK OPTION AGREEMENT -- EARLY EXERCISE

     Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT
   ----------------------------

Harvey Jones

     You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

         Date of Grant:                       July 15, 1998

         Vesting Commencement Date:           June 24, 1998

         Exercise Price per Share:            $0.50

         Total Number of Shares Granted:      100,000

         Total Exercise Price:                $50,000.00

         Type of Option:                            Incentive Stock Option
                                              -----

                                                X   Nonstatutory Stock Option
                                              -----

         Term/Expiration Date:                Ten Years/July 15, 2008*

---------------
* Or earlier, pursuant to the termination period set forth below.

     Exercise and Vesting Schedule:
     -----------------------------

     This Option is exercisable immediately, in whole or in part, and shall vest
according to the following vesting schedule:

<PAGE>

     One-fourth (1/4th) of the Shares subject to the Option shall vest twelve
months after the Vesting Commencement Date, and one-sixteenth (1/16th) of the
Shares subject to the Option shall vest on the last day of each three month
anniversary thereafter, subject to your continuing to be a Service Provider on
such dates. Notwithstanding the foregoing, if the Company merges with or into
another entity, sells all or substantially all of its assets, or enters into any
other similar transaction or reorganization as a result of which the
shareholders of the Company immediately prior to such transaction will not hold
at least 50% of the voting power of the surviving, purchasing or continuing
entity, as applicable (taking into account any securities issued to the
shareholders of the Company in the transaction) (a "Change of Control
Transaction"), then the Option shall become fully vested and exercisable
simultaneously with the closing of the Change of Control Transaction (or, in the
case of a merger, as of any earlier date that is necessary to permit the
Optionee, if he exercises the Option in whole or in part, to receive the same
per Share merger consideration (to the extent of Optioned Shares acquired upon
exercise) that will be paid to the other holders of Shares). The Board shall
notify the Optionee at least fifteen (15) days prior to the closing of a Change
of Control Transaction (or at such earlier time as the Board, in its reasonable
judgment, deems necessary to give effect to the intent of this provision), and
such notification shall include a statement as to whether or not the Option will
be assumed by the surviving or purchasing entity or whether an equivalent, fully
vested, substitute option will be provided by such entity.

     Termination Period:
     ------------------

     You may exercise this Option for thirty days after you cease to be a
Service Provider. Upon your death or disability, this Option may be exercised
for one year after you cease to be a Service Provider. In no event may you
exercise this Option after the Term/Expiration Date as provided above.

II. AGREEMENT
    ---------

     1. Grant of Option. The Plan Administrator of the Company hereby grants to
        ---------------
the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan and
except as set forth above under "Exercise and Vesting Schedule", in the event of
a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

     If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").

     2. Exercise of Option. This Option shall be exercisable during its term in
        ------------------
accordance with the provisions of Section 9 of the Plan as follows:

                                       -2-
<PAGE>

         (a) Right to Exercise.
             -----------------

             (i) Subject to subsections 2(a)(ii) and 2(a)(iii) below, this
Option shall be exercisable cumulatively according to the vesting schedule set
forth in the Notice of Grant. Alternatively, at the election of the Optionee,
this option may be exercised in whole or in part at any time as to Shares which
have not yet vested. For purposes of this Stock Option Agreement, Shares subject
to the Option shall vest based on continued employment of Optionee with the
Company. Vested Shares shall not be subject to the Company's repurchase right
(as set forth in the Restricted Stock Purchase Agreement, attached hereto as
Exhibit C-1).
-----------
             (ii) As a condition to exercising this Option for unvested Shares,
the Optionee shall execute the Restricted Stock Purchase Agreement.

             (iii) This Option may not be exercised for a fraction of a Share.

         (b) Method of Exercise. This Option shall be exercisable by delivery of
             ------------------
an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
                                           ---------
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.

     No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

     3. Optionee's Representations. In the event the Shares have not been
        --------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
                                                                       -------
B.
-
     4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
        --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under

                                       -3-
<PAGE>

the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.

     5. Method of Payment. Payment of the aggregate Exercise Price shall be by
        -----------------
any of the following, or a combination thereof, at the election of the Optionee:

        (a) cash;

        (b) check;

        (c) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or

        (d) surrender of other Shares which, (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

     6. Restrictions on Exercise. This Option may not be exercised until such
        ------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

     7. Non-Transferability of Option. This Option may not be transferred in any
        -----------------------------
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     8. Term of Option. This Option may be exercised only within the term set
        --------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

     9. Tax Consequences. Set forth below is a brief summary as of the date of
        ----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

        (a) Exercise of ISO. If this Option qualifies as an ISO, there will be
            ---------------
no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

                                       -4-
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        (b) Exercise of ISO Following Disability. If the Optionee ceases to be
            ------------------------------------
an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.

        (c) Exercise of Nonstatutory Stock Option. There may be a regular
            -------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.

        (d) Disposition of Shares. In the case of an NSO, if Shares are held for
            ---------------------
at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the Date of Grant,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the
date of exercise, or (ii) the sale price of the Shares. Any additional gain will
be taxed as capital gain, short-term depending on the period that the ISO Shares
were held.

        (e) Notice of Disqualifying Disposition of ISO Shares. If the Option
            -------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (i) the date two years after the Date of Grant, or (ii) the
date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

         (f) Section 83(b) Election for Unvested Shares Purchased Pursuant to
             ----------------------------------------------------------------
Options. With respect to the exercise of an Option for unvested Shares, an
-------
election may be filed by the Optionee with the Internal Revenue Service, within
                                                                         ------
30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the
-------
Code to be taxed currently on any difference between the purchase price of the
Shares and their Fair Market Value on the date of purchase. In the case of a
Nonstatutory Stock Option, this will result in a recognition of taxable income
to the Optionee on the date of exercise, measured by the excess, if any, of the
fair market value of the Shares, at the time the Option is exercised over the
purchase price for the Shares. Absent such an election, taxable income will be
measured and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. In the case of an Incentive Stock Option, such an
election will result in a

                                       -5-
<PAGE>

recognition of income to the Optionee for alternative minimum tax purposes on
the date of exercise, measured by the excess, if any, of the fair market value
of the Shares, at the time the option is exercised, over the purchase price for
the Shares. Absent such an election, alternative minimum taxable income will be
measured and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of
his or her own tax consultants in connection with the purchase of the Shares and
the advisability of filing of the Election under Section 83(b) of the Code. A
form of Election under Section 83(b) is attached hereto as Exhibit C-5 for
                                                           -----------
reference.

     OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S
BEHALF.

     10. Entire Agreement; Governing Law. The Plan is incorporated herein by
         -------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.

     11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
         ---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

                                       -6-
<PAGE>

     Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

OPTIONEE:                                   NUMERICAL TECHNOLOGIES, INC.

--------------------------------            ----------------------------------
Signature                                   By

--------------------------------            ----------------------------------
Print Name                                  Title

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

--------------------------------
Residence Address

                                      -7-
<PAGE>

                                   EXHIBIT A
                                   ---------

                                 1997 STOCK PLAN

                                 EXERCISE NOTICE

Numerical Technologies, Inc.
2630 Walsh Avenue
Santa Clara, CA   95051

Attention:  Secretary

     1. Exercise of Option. Effective as of today, __________, ____, the
        ------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_______ shares of the Common Stock (the "Shares") of Numerical Technologies,
Inc. (the "Company") under and pursuant to the 1997 Stock Plan (the "Plan") and
the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated __________,
19__ (the "Option Agreement").

     2. Delivery of Payment. Purchaser herewith delivers to the Company the full
        -------------------
purchase price of the Shares, as set forth in the Option Agreement.

     3. Representations of Optionee. Optionee acknowledges that Optionee has
        ---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by
        ---------------------
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.

     5. Company's Right of First Refusal. Before any Shares held by Optionee or
        --------------------------------
any transferee (either being sometimes referred to herein as the "Holder") may
be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

         (a) Notice of Proposed Transfer. The Holder of the Shares shall deliver
             ---------------------------
to the Company a written notice (the "Notice") stating: (i) the Holder's bona
fide intention to sell or otherwise transfer such Shares; (ii) the name of each
proposed purchaser or other transferee

<PAGE>

("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the "Offered Price"), and
the Holder shall offer the Shares at the Offered Price to the Company or its
assignee(s).

         (b) Exercise of Right of First Refusal. At any time within thirty (30)
             ----------------------------------
days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

         (c) Purchase Price. The purchase price ("Purchase Price") for the
             --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

         (d) Payment. Payment of the Purchase Price shall be made, at the option
             -------
of the Company or its assignee(s), in cash (by check), by cancellation of all or
a portion of any outstanding indebtedness of the Holder to the Company (or, in
the case of repurchase by an assignee, to the assignee), or by any combination
thereof within 30 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

         (e) Holder's Right to Transfer. If all of the Shares proposed in the
             --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

         (f) Exception for Certain Family Transfers. Anything to the contrary
             --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

                                      -2-

<PAGE>

         (g) Termination of Right of First Refusal. The Right of First Refusal
             -------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

     6. Tax Consultation. Optionee understands that Optionee may suffer adverse
        ----------------
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

     7. Restrictive Legends and Stop-Transfer Orders.
        --------------------------------------------

         (a) Legends. Optionee understands and agrees that the Company shall
             -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
         OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
         REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
         SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
         TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

         THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
         RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
         ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
         THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
         BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
         RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
         THESE SHARES.

         (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
             ---------------------
compliance with the restrictions referred  to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

                                      -3-
<PAGE>

         (c) Refusal to Transfer. The Company shall not be required (i) to
             -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     8. Successors and Assigns. The Company may assign any of its rights under
        ----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     9. Interpretation. Any dispute regarding the interpretation of this
        --------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.

     10. Governing Law; Severability. This Agreement is governed by the internal
         ---------------------------
substantive laws, but not the choice of law rules, of California.

     11. Entire Agreement. The Plan and Option Agreement are incorporated herein
         ----------------
by reference. This Agreement, the Plan, the Restricted Stock Purchase Agreement,
the Option Agreement and the Investment Representation Statement constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee.

Submitted by:                                   Accepted by:

OPTIONEE:                                       NUMERICAL TECHNOLOGIES, INC.

---------------------------------               -------------------------------
Signature                                       By

---------------------------------               -------------------------------
Print Name                                      Its

Address:                                        Address:
-------                                         -------
                                                2630 Walsh Avenue
---------------------------------               Santa Clara, CA 95051

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

                                                ------------------------------
                                                Date Received

                                      -4-

<PAGE>

                                    EXHIBIT B
                                    ---------

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE               :

COMPANY                :      NUMERICAL TECHNOLOGIES, INC.

SECURITY               :      COMMON STOCK

AMOUNT                 :

DATE                   :

     In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:

         (a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

         (b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, and any other legend
required under applicable state securities laws.

         (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to

<PAGE>

the satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

         (d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                      Signature of Optionee:

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

                                      Date: _______________________, 19__

                                      -2-
<PAGE>

                                   EXHIBIT C-1
                                   -----------

                          NUMERICAL TECHNOLOGIES, INC.

                                 1997 STOCK PLAN

                       RESTRICTED STOCK PURCHASE AGREEMENT

     THIS AGREEMENT is made between __________________ (the "Purchaser") and
Numerical Technologies, Inc. (the "Company") as of __________, 199_.

                                    RECITALS
                                    --------

     (1) Pursuant to the exercise of the stock option granted to Purchaser under
the Company's 1997 Stock Plan (the "Plan") and pursuant to the Stock Option
Agreement (the "Option Agreement") dated __________, 199_ by and between the
Company and Purchaser with respect to such grant, which Plan and Option
Agreement are hereby incorporated by reference, Purchaser has elected to
purchase         of those shares which have not become vested under the
         -------
vesting schedule set forth in the Option Agreement ("Unvested Shares"). The
Unvested Shares and the shares subject to the Option Agreement which have become
vested are sometimes collectively referred to herein as the "Shares".

     (2) As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Restricted Stock
Purchase Agreement, which sets forth the rights and obligations of the parties
with respect to Shares acquired upon exercise of the Option.

     1.  Repurchase Option.
         -----------------

         (a) If Purchaser's status as a Service Provider is terminated for any
reason, including for cause, death, and disability, the Company shall have the
right and option to purchase from Purchaser, or Purchaser's personal
representative, as the case may be, all of the Purchaser's Unvested Shares as of
the date of such termination at the price paid by the Purchaser for such Shares
(the "Repurchase Option").

         (b) Upon the occurrence of a termination, the Company may exercise its
Repurchase Option by delivering personally or by registered mail, to Purchaser
(or his transferee or legal representative, as the case may be), within ninety
(90) days of the termination, a notice in writing indicating the Company's
intention to exercise the Repurchase Option and setting forth a date for closing
not later than thirty (30) days from the mailing of such notice. The closing
shall take place at the Company's office. At the closing, the holder of the
certificates for the Unvested Shares being transferred shall deliver the stock
certificate or certificates evidencing the Unvested Shares, and the Company
shall deliver the purchase price therefor.

<PAGE>

         (c) At its option, the Company may elect to make payment for the
Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.

         (d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.

         (e) The Repurchase Option shall terminate in accordance with the
Vesting Schedule in Optionee's Option Agreement.

     2. Transferability of the Shares; Escrow.
        -------------------------------------

         (a) Purchaser hereby authorizes and directs the secretary of the
Company, or such other person designated by the Company, to transfer the
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.

         (b) To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the secretary, or any other person
designated by the Company as escrow agent, as its attorney-in-fact to sell,
assign and transfer unto the Company, such Unvested Shares, if any, repurchased
by the Company pursuant to the Repurchase Option and shall, upon execution of
this Agreement, deliver and deposit with the secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall
                   -----------
be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of
the Company and Purchaser attached as Exhibit C-3 hereto, until the Company
                                      -----------
exercises its purchase right as provided in Section 1, until such Unvested
Shares are vested, or until such time as this Agreement no longer is in effect.
As a further condition to the Company's obligations under this Agreement, the
spouse of the Purchaser, if any, shall execute and deliver to the Company the
Consent of Spouse attached hereto as Exhibit C-4. Upon vesting of the Unvested
                                     -----------
Shares, the escrow agent shall promptly deliver to the Purchaser the certificate
or certificates representing such Shares in the escrow agent's possession
belonging to the Purchaser, and the escrow agent shall be discharged of all
further obligations hereunder; provided, however, that the escrow agent shall
nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.

         (c) The Company, or its designee, shall not be liable for any act it
may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.

         (d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any

                                      -2-
<PAGE>

Unvested Shares purchased by Purchaser and shall acknowledge the same by signing
a copy of this Agreement.

     3. Ownership, Voting Rights, Duties. This Agreement shall not affect in any
        --------------------------------
way the ownership, voting rights or other rights or duties of Purchaser, except
as specifically provided herein.

     4. Legends. The share certificate evidencing the Shares issued hereunder
        -------
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.

     5. Adjustment for Stock Split. All references to the number of Shares and
        --------------------------
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

     6. Notices. Notices required hereunder shall be given in person or by
        -------
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.

     7. Survival of Terms. This Agreement shall apply to and bind Purchaser and
        -----------------
the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

     8. Section 83(b) Election. Purchaser hereby acknowledges that he or she has
        ----------------------
been informed that, with respect to the exercise of an Option for unvested
Shares, an election may be filed by the Purchaser with the Internal Revenue
Service, within 30 days of the purchase of the Shares, electing pursuant to
         --------------
Section 83(b) of the Code to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of
purchase. In the case of a Nonstatutory Stock Option, this will result in a
recognition of taxable income to the Purchaser on the date of exercise, measured
by the excess, if any, of the fair market value of the Shares, at the time the
Option is exercised over the purchase price for the Shares. Absent such an
election, taxable income will be measured and recognized by Purchaser at the
time or times on which the Company's Repurchase Option lapses. In the case of an
Incentive Stock Option, such an election will result in a recognition of income
to the Purchaser for alternative minimum tax purposes on the date of exercise,
measured by the excess, if any, of the fair market value of the Shares, at the
time the option is exercised, over the purchase price for the Shares. Absent
such an election, alternative minimum taxable income will be measured and
recognized by Purchaser at the time or times on which the Company's Repurchase
Option lapses. Purchaser is strongly encouraged to seek the advice of his or her
own tax consultants in connection with the purchase of the Shares and the
advisability of filing of the Election under Section 83(b) of the Code. A form
of Election under Section 83(b) is attached hereto as Exhibit C-5 for reference.
                                                      -----------

                                      -3-
<PAGE>

     PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

     9. Representations. Purchaser has reviewed with his own tax advisors the
        ---------------
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. Purchaser is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. Purchaser understands that he (and not the Company) shall be
responsible for his own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.

     10. Governing Law. This Agreement shall be governed by the internal
         -------------
substantive laws, but not the choice of law rules, of California.

     Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.

                                      -4-
<PAGE>

     IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.

                                    "COMPANY"

                                    NUMERICAL TECHNOLOGIES, INC

                                    ------------------------------------
                                    By

                                    ------------------------------------
                                    Title

                                    "PURCHASER"

                                    -----------------------------------
                                    Signature

                                    -----------------------------------
                                    Printed Name

                                    -----------------------------------
                                    Soc. Sec. No.

                                    Address:
                                    -------

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

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

                                      -5-

<PAGE>

                                   EXHIBIT C-2
                                   -----------

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED I, __________________________, hereby sell, assign and
transfer unto Numerical Technologies, Inc. (__________) shares of the Common
Stock of Numerical Technologies, Inc. standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint ________________________ to transfer the said
stock on the books of the within named corporation with full power of
substitution in the premises.

     This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between Numerical Technologies, Inc. and the
undersigned dated ______________, 19__.

Dated: _______________, 19__

       Signature:
                 --------------------------------

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.

<PAGE>

                                   EXHIBIT C-3
                                   -----------

                            JOINT ESCROW INSTRUCTIONS

                                                                    _____, 19__

Numerical Technologies, Inc.
2630 Walsh Avenue
Santa Clara, CA 95051

Attention:  Secretary

Dear       :

     As Escrow Agent for both Numerical Technologies, Inc. (the "Company"), and
the undersigned purchaser of stock of the Company (the "Purchaser"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Purchase Agreement ("Agreement")
between the Company and the undersigned, in accordance with the following
instructions:

     1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.

     2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.

     3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.

<PAGE>

     4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.

     5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.

     6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.

     7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

     8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

     9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

     10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

     11. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.

     12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.

                                      -2-

<PAGE>

     13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

     14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

     15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.

                  COMPANY:                  Numerical Technologies, Inc.
                                            2630 Walsh Avenue
                                            Santa Clara, CA 95051
                                            Attention:  Secretary

                  PURCHASER:

                  ESCROW AGENT:             Wilson, Sonsini, Goodrich & Rosati
                                            650 Page Mill Road
                                            Palo Alto, CA  94304

     16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

     17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

                                      -3-
<PAGE>

     18. These Joint Escrow Instructions shall be governed by the internal
substantive laws, but not the choice of law rules, of California.

                                       NUMERICAL TECHNOLOGIES, INC.

                                       ------------------------------------
                                       By

                                       ------------------------------------
                                       Title

                                       PURCHASER

                                       -----------------------------------
                                       Signature

                                       -----------------------------------
                                       Typed or Printed Name

                                       ESCROW AGENT

                                       WILSON SONSINI GOODRICH & ROSATI

                                       -----------------------------------
                                       By

                                       -----------------------------------
                                       Title

                                      -4-
<PAGE>

                                   EXHIBIT C-4
                                   -----------

                                CONSENT OF SPOUSE
                                -----------------

         I,                     ,  spouse of                        , have read
            --------------------             ---------------------
and approve the foregoing Agreement. In consideration of granting of the right
to my spouse to purchase shares of                              , as set forth
                                   ---------------------------
in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any shares issued pursuant thereto under the community property laws or
similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Agreement.

Dated:              ,  19
       -------------     --

<PAGE>

                                   EXHIBIT C-5
                                   -----------

                          ELECTION UNDER SECTION 83(b)
                          ----------------------------
                      OF THE INTERNAL REVENUE CODE OF 1986
                      ------------------------------------

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
or  alternative  minimum  taxable  income,  as the case may be, for the  current
taxable year the amount of any  compensation  taxable to taxpayer in  connection
with taxpayer's receipt of the property  described below:

1.   The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

     NAME:                      TAXPAYER:                 SPOUSE:

     ADDRESS:

     IDENTIFICATION NO.:        TAXPAYER:                 SPOUSE:

     TAXABLE YEAR:

2.   The property with respect to which the election is made is described as
follows:                shares (the "Shares") of the Common Stock of
         --------------
                             (the "Company").
---------------------------

3.   The date on which the property was transferred is:            19  .
                                                        --------     --

4.   The property is subject to the following restrictions:

     The Shares may not be transferred and are subject to forfeiture under the
terms of an agreement between the taxpayer and the Company. These restrictions
lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never lapse, of
such property is: $               .
                    --------------

6. The amount (if any) paid for such property is: $               .
                                                    --------------

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The  undersigned  understands  that the  foregoing  election  may not be revoked
--------------------------------------------------------------------------------
except with the consent of the Commissioner.
-------------------------------------------

Dated:           , 19
       ----------    --                  ------------------------------------
                                             Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated:           , 19
       ----------    --                  ------------------------------------<PAGE>

                                                                   EXHIBIT 10.13

                                ALTAVISTA COMPANY
                        1999 EMPLOYEE STOCK PURCHASE PLAN

1. PURPOSE.
   -------

     The purpose of the AltaVista Company 1999 Employee Stock Purchase Plan (the
"Plan") is to provide an opportunity for Employees (as defined below) to
purchase Common Stock (as defined below) of AltaVista (as defined below) and
thereby to have an additional incentive to contribute to the prosperity of
AltaVista. It is the intention of AltaVista that the Plan qualify as an
"employee stock purchase plan" under section 423 of the Internal Revenue Code of
1986, as amended, although AltaVista makes no undertaking nor representation to
maintain such qualification. In addition, this Plan authorizes the grant of
options and issuance of Common Stock which do not qualify under section 423 of
the Code pursuant to sub-plans that may be adopted by the Committee, from time
to time, which sub-plans are designed to achieve desired tax or other objectives
in particular locations outside the United States.

2. DEFINITIONS.
   -----------

(a) "AltaVista" shall mean AltaVista Company, together with any successor
     ---------
thereto.

(b) "Board" shall mean the board of directors of AltaVista.
     -----

(c) "Code" shall mean the United States Internal Revenue Code of 1986, as
     ----
amended from time to time and the regulations thereunder.

(d) "Committee" shall mean a committee appointed by the Board in accordance with
     ---------
Section 13 of the Plan to administer the Plan and to perform the functions set
forth herein.

(e) "Common Stock" shall mean the common stock of AltaVista, par value $0.01, or
     ------------
such other securities of AltaVista as may be designated by the Committee from
time to time.

(f) "Continuous Status as an Employee" shall mean the absence of any
     --------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by AltaVista or a Designated Subsidiary, as appropriate,
provided that (1) such leave is for a period of not more than 90 days or (2)
reemployment with AltaVista or the Designated Subsidiary, as appropriate, is
guaranteed by contract or statute upon expiration of such leave.

(g) "Designated Subsidiary" shall mean a Subsidiary that has been designated by
     ---------------------
the Committee as eligible to participate in the Plan with respect to such
Subsidiary's Employees.

(h) "Employee" shall mean any individual classified as an employee by AltaVista
     --------
or a Designated Subsidiary, as the case may be, on the payroll records of
AltaVista or the Designated Subsidiary during the relevant Offering Period and
who is customarily employed by AltaVista or
<PAGE>

the Designated Subsidiary for at least twenty (20) hours per week and more than
five (5) months in a calendar year. The Committee may, in its sole discretion,
provide that a designated group of "highly compensated" Employees within the
meaning of section 414(q) of the Code are ineligible to participate in the Plan.

(i) "Fair Market Value" shall mean the value of one share of Common Stock on the
     -----------------
relevant date, determined as follows:

     (1) If the shares of Common Stock are traded on an exchange (including the
Nasdaq National Market System), the reported "closing price" on the relevant
date (e.g., the Offering Date or Purchase Date);

     (2) If the shares of Common Stock are traded over-the-counter with no
reported closing price, the mean between the lowest bid and the highest asked
prices on said system on the relevant date; and

     (3) If neither (1) nor (2) applies, the fair market value as determined by
the Committee in good faith. Such determination shall be conclusive and binding
on all persons.

     (4) Notwithstanding anything to the contrary contained herein, for purposes
of the Offering Date of the first Offering Period under the Plan, the Fair
Market Value of one share of Common Stock shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial underwritten public offering of the Common Stock (the "Registration
Statement").

(j) "Offering Date" shall mean the first Trading Day of each Offering Period.
     -------------

(k) "Offering Period" shall mean a three-month, six-month or other period as
     ---------------
determined by the Committee (but in no event for a period of longer than
twenty-seven (27) months) during which an option granted pursuant to the Plan
may be exercised, commencing on the first Trading Day on or after April 1 and
October 1 of each year; provided, however, that the first Offering Period under
the Plan shall commence with the first Trading Day on or after the date on which
the Securities and Exchange Commission declares AltaVista's Registration
Statement effective and ending on the last Trading Day on or before March 31,
2001.

(l) "Participant" shall mean a participant in the Plan as described in Section 4
     -----------
of the Plan.

(m) "Pay" shall mean an Employee's base cash pay (excluding variable cash
     ---
payments, unless otherwise determined by the Committee) paid on account of
personal services rendered by the Employee to AltaVista or a Designated
Subsidiary, plus pre-tax contributions made by or on behalf of the Employee that
are part of deferred pay or benefit plans maintained by AltaVista or a
Designated Subsidiary, with any modifications determined by the Committee. The
Committee shall have the authority to determine and approve all forms of pay
(such as commissions) to be included in the definition of Pay and may change the
definition of Pay on a prospective basis.

(n) "Purchase Date" shall mean the last Trading Day of each Purchase Period.
     -------------

                                       2
<PAGE>

(o) "Purchase Period" shall mean the approximately six-month period commencing
     ---------------
after one Purchase Date and ending with the next Purchase Date, except that the
first Purchase Period of any Offering Period shall commence on the Offering
Date.

(p) "Stockholder" shall mean a record holder of shares entitled to vote shares
     -----------
of Common Stock under AltaVista's bylaws.

(q) "Subsidiary" shall mean any subsidiary corporation (other than AltaVista) in
     ----------
an unbroken chain of corporations beginning with AltaVista, as described in Code
section 424(f).

(r) "Trading Day" shall mean a day on which national stock exchanges and the
     -----------
Nasdaq National Market System are open for trading.

     3. ELIGIBILITY.
        -----------

     Subject to the limitations contained herein, any person who is an Employee
as of an Offering Date shall be eligible to participate in the Plan in
accordance with Section 4 hereof and shall be granted an option for the Offering
Period commencing on such Offering Date; provided, that the Committee may impose
an eligibility period on participation of up to two years employment with
AltaVista and/or a Designated Subsidiary with respect to participation on any
prospective Offering Date.

     Notwithstanding any provision of the Plan to the contrary, no Employee may
participate in the Plan if, immediately after an option is granted, the Employee
owns or is considered to own (within the meaning of Code section 424(d)), shares
of capital stock, including stock which the Employee may purchase by conversion
of convertible securities or under outstanding options granted by AltaVista,
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of AltaVista or of any of its Subsidiaries. Any amounts
received from an Employee that cannot be used to purchase shares of Common Stock
as a result of this limitation shall be returned as reasonably practicable to
the Employee without interest.

     All Employees who participate in the Plan shall have the same rights and
privileges under the Plan except for differences which may be mandated by local
law and which are consistent with Code section 423(b)(5); provided, however,
that Employees participating in a sub-plan adopted pursuant to Section 14 which
is not designed to qualify under Code section 423 need not have the same rights
and privileges as Employees participating in the Code section 423 Plan. The
Committee may impose restrictions on eligibility and participation of Employees
who are officers and directors to facilitate compliance with federal or state
securities laws or foreign laws.

4. PARTICIPATION AND WITHDRAWAL.
   ----------------------------

     4.1 An Employee who is eligible to participate in the Plan in accordance
with Section 3 may become a Participant by filing, on a date prescribed by the
Committee prior to an applicable Offering Date, a completed payroll deduction
authorization and Plan enrollment form pro-

                                       3
<PAGE>

vided by AltaVista or by following an electronic or other enrollment process as
prescribed by the Committee. An eligible Employee may authorize payroll
deductions at the rate of any whole percentage of the Employee's Pay, not to
exceed ten percent (10%) of the Employee's Pay, or such greater percentage, as
specified by the Committee. The Committee may provide for a separate election
(of a different percentage) for a specified item or items of Pay, including
profit sharing payments, if any. Payroll deductions shall commence on the first
day of the first payroll period commencing immediately following the Offering
Date, and shall end on the last day of the last payroll period ending prior to
the Purchase Date of the Purchase Period to which the subscription agreement is
applicable, unless sooner terminated by the Participant's withdrawal from the
Plan or termination of employment with AltaVista or a Designated Subsidiary or
of Participant's Continuous Status as an Employee or otherwise, as determined by
the Committee in its discretion. All payroll deductions may be held by AltaVista
and commingled with its other corporate funds. No interest shall be paid or
credited to the Participant with respect to such payroll deductions except where
required by local law as determined by the Committee. A separate bookkeeping
account for each Participant shall be maintained by AltaVista under the Plan and
the amount of each Participant's payroll deductions shall be credited to such
account. A Participant may not make any additional payments into such account.
Unless otherwise specified by the Committee, payroll deductions made with
respect to Employees paid in currencies other than U.S. dollars shall be
accumulated in local (non-U.S.) currency and converted to U.S. dollars as of the
Purchase Date.

     4.2 Unless otherwise determined by the Committee, a Participant may
decrease his or her rate of payroll deductions at any time in accordance with
procedures prescribed by the Committee. A Participant may increase his or her
rate of payroll deductions only effective on the first payroll date following
commencement of the next Purchase Date by filing a new payroll deduction
authorization and Plan enrollment form or by following electronic or other
procedures prescribed by the Committee. If a Participant has not followed such
procedures to change the rate of payroll deductions, the rate of payroll
deductions shall continue at the originally elected rate throughout the Offering
Period and future Offering Periods (or any lower maximum rate then in effect)
unless the Participant discontinues participation in the Plan or terminates
employment with AltaVista or a Designated Subsidiary or upon termination of
Participant's Continuous Status as an Employee.

     4.3 (a) Under procedures established by the Committee, a Participant may
discontinue participation in the Plan at any time during an Offering Period by
completing and filing a new payroll deduction authorization and Plan enrollment
form with AltaVista or by following electronic or other procedures prescribed by
the Committee. If a Participant has not followed such procedures to discontinue
the payroll deductions, the rate of payroll deductions shall continue at the
originally elected rate throughout the Offering Period and future Offering
Periods (or any lower maximum rate then in effect) unless the Participant
changes his or her rate of payroll deductions or terminates employment with
AltaVista or a Designated Subsidiary or upon termination of Participant's
Continuous Status as an Employee.

         (b) If a Participant discontinues participation during an Offering
Period, his or her accumulated payroll deductions will remain in the Plan for
purchase of shares as specified in Section 6 on the following Purchase Date, but
the Participant will not again participate until he

                                       4
<PAGE>

or she re-enrolls in the Plan. Alternatively, Participants may request a cash
distribution of monies accumulated but not yet distributed by following such
procedures, electronic or otherwise, as specified by the Committee. The
Committee may establish rules limiting the frequency with which Participants may
discontinue and resume payroll deductions under the Plan and may impose a
waiting period on Participants wishing to resume payroll deductions following
discontinuance. The Committee also may change the rules regarding discontinuance
of participation or changes in participation in the Plan.

         (c) In the event any Participant terminates employment with AltaVista
or any Designated Subsidiary for any reason (excluding death or disability), the
Participant's participation in the Plan shall terminate and all accumulated
payroll deductions credited to the Participant's account shall be paid to the
Participant or the Participant's estate, as applicable, without interest (except
where required by local law). Whether a termination of employment has occurred
shall be determined by the Committee.

         (d) In the event any Participant terminates employment with AltaVista
or any Designated Subsidiary by reason of death or disability, the Participant's
accumulated payroll deductions will remain in the Plan for purchase of shares as
specified in Section 6 on the following Purchase Date. Alternatively, such
Participant (or the Participant's estate, as applicable) may request a cash
distribution of monies accumulated but not yet distributed by following such
procedures, electronic or otherwise, as specified by the Committee.

         (e) Upon termination of a Participant's Continuous Status as an
Employee, all the payroll deductions credited to such Participant's account
(that have not been used to purchase shares of Common Stock) shall be returned
to such Participant, and such Participant's option shall be automatically
terminated. Such termination shall be deemed a termination of employment with
AltaVista or a Designated Subsidiary for purposes of the Plan.

5. OFFERING.
   --------

     5.1 Subject to adjustment pursuant to Section 8, the maximum aggregate
number of shares of Common Stock which shall be reserved for sale under the Plan
for all Offering Periods that commence during each fiscal year of the Company
occurring during the term of the Plan shall be two million shares. Such shares
shall be available as of the first day of the first Offering Period that
commences in each such fiscal year. The shares of Common Stock may consist, in
whole or in part, of authorized and unissued shares or treasury shares. If the
total number of shares of Common Stock which would otherwise be subject to
options granted hereunder on an Offering Date exceeds the number of shares of
Common Stock then available under the Plan (after deduction of all shares for
which options have been exercised or are then outstanding), the Committee shall
make a pro rata allocation of the shares of Common Stock remaining available for
option grant in as uniform a manner as shall be practicable and as it shall
determine to be equitable. In such event, the Committee shall give written
notice to each Participant of such reduction of the number of option shares
affected thereby and shall similarly reduce the rate of payroll deductions, if
necessary.

                                       5
<PAGE>

     5.2 Each Offering Period shall be determined by the Committee. Unless
otherwise determined by the Committee, the Plan will operate with successive
one-year Offering Periods. The Committee shall have the power to change the
duration of future Offering Periods, without Stockholder approval, and without
regard to the expectations of any Participants.

     5.3 With respect to each Offering Period, each eligible Employee who has
elected to participate as provided in Section 4.1 shall be granted an option to
purchase the number of shares of Common Stock which may be purchased with the
payroll deductions accumulated in an account maintained on behalf of such
Employee during each Purchase Period, at the purchase price specified in Section
5.4 below, subject to the limitations contained in this Section 5.3.
Notwithstanding any other provision of the Plan to the contrary, (i) no Employee
participating in the Code section 423 Plan shall be granted an option to
purchase Common Stock under the Plan and all employee stock purchase plans of
AltaVista and its Subsidiaries at a rate which exceeds $25,000 of the Fair
Market Value of such Common Stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at any time
and (ii) no Employee shall be permitted to purchase during any Purchase Period
more than 2,500 shares of Common Stock) subject to any adjustment pursuant to
Section 8 hereof). Notwithstanding anything to the contrary contained herein, to
the extent necessary to comply with the limitations set forth in this Section
5.3, a Participant's rate of payroll deductions may be decreased by AltaVista to
zero percent (0%) at any time during an Offering Period. Payroll deductions
shall recommence at the rate provided for in such Participant's subscription
agreement at the beginning of the first Offering Period that is scheduled to end
the following calendar year, unless a Participant otherwise increases or
decreases the rate of his or her payroll deductions, or discontinues his or her
participation in the Plan.

     5.4 The option price under each option shall be the lower of: (i) a
percentage (which percentage may not be less than eighty-five percent (85%))
established by the Committee (the "Designated Percentage") of the Fair Market
Value of the Common Stock on the Offering Date on which an option is granted, or
(ii) the Designated Percentage of the Fair Market Value of the Common Stock on
the Purchase Date. Notwithstanding anything to the contrary contained herein,
for purposes of the Offering Date of the first Offering Period under the Plan,
the Fair Market Value of one share of Common Stock shall be the initial price to
the public as set forth in the final prospectus included within the Registration
Statement. The Committee may change the Designated Percentage with respect to
any future Offering Period, and the Committee may determine with respect to any
prospective Offering Period that the option price shall be the Designated
Percentage of the Fair Market Value of the Common Stock on the Purchase Date.
Unless otherwise established by the Committee, the Designated Percentage shall
be equal to eighty-five percent (85%).

     5.5 To the extent permitted by applicable laws, if the Fair Market Value of
a share of Common Stock on any Purchase Date in an Offering Period is lower than
the Fair Market Value of a share of Common Stock on the Offering Date of such
Offering Period, then all Participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Purchase Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.

                                       6
<PAGE>

6. PURCHASE OF STOCK.
   -----------------

     Subject to the limitations set forth in Sections 5.1 and 5.3, upon the
expiration of each Purchase Period, a Participant's option shall be exercised
automatically for the purchase of that number of full and fractional shares of
Common Stock which the accumulated payroll deductions credited to the
Participant's account at that time shall purchase at the applicable price
specified in Section 5.4. Shares of Common Stock purchased on behalf of a
Participant under the Plan shall be registered in the name of the Participant
or, if requested in writing by the Participant, in the names of the Participant
and the Participant's spouse.

7. PAYMENT AND DELIVERY.
   --------------------

     Upon the exercise of an option on each Purchase Date, AltaVista shall
deliver (by electronic or other means) to the Participant a record of the Common
Stock purchased, except as specified below. The Committee may permit or require
that shares be deposited directly with a broker designated by the Committee (or
a broker selected by the Committee) or to a designated agent of AltaVista, and
the Committee may utilize electronic or automated methods of share transfer. The
Committee may require that shares be retained with such broker or agent for a
designated period of time (and may restrict dispositions during that period)
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares or to restrict transfer of such shares. The
Committee may require that shares purchased under the Plan shall automatically
participate in a dividend reinvestment plan or program maintained by AltaVista.
AltaVista shall retain the amount of payroll deductions used to purchase Common
Stock as full payment for the Common Stock and the Common Stock shall then be
fully paid and non-assessable. No Participant shall have any voting, dividend,
or other Stockholder rights with respect to shares subject to any option granted
under the Plan until the shares subject to the option have been purchased and
delivered to the Participant as provided in this Section 7.

8. RECAPITALIZATION.
   ----------------

     8.1 If after the grant of an option, but prior to the purchase of Common
Stock under the option, there is any increase or decrease in the number of
outstanding shares of Common Stock because of a stock split, stock dividend,
combination or recapitalization of shares subject to options, the number of
shares to be purchased pursuant to an option, the share limits of Section 5.3
and the maximum number of shares specified in Section 5.1 shall be
proportionately increased or decreased, the terms relating to the purchase price
with respect to the option shall be appropriately adjusted by the Board, and the
Board shall take any further actions which, in the exercise of its discretion,
may be necessary or appropriate under the circumstances.

     8.2 The Board, if it so determines in the exercise of its sole discretion,
also may adjust the number of shares specified in Section 5.1, as well as the
price per share of Common Stock covered by each outstanding option and the
maximum number of shares subject to any individual option, in the event
AltaVista effects one or more reorganizations, recapitalizations, spin-offs,
split-ups, rights offerings or reductions of shares of its outstanding Common
Stock.

                                       7
<PAGE>

     8.3 The Board's determinations under this Section 8 shall be conclusive and
binding on all parties.

9. MERGER, LIQUIDATION, OTHER CORPORATION TRANSACTIONS.
   ---------------------------------------------------

     9.1 In the event of the proposed liquidation or dissolution of AltaVista,
the Offering Period then in progress will terminate immediately prior to the
consummation of such proposed liquidation or dissolution, unless otherwise
provided by the Board in its sole discretion, and all outstanding options shall
automatically terminate and the amounts of all payroll deductions will be
refunded without interest to the Participants.

     9.2 In the event of a proposed sale of all or substantially all of the
assets of AltaVista, or the merger or consolidation of AltaVista with or into
another corporation, then in the sole discretion of the Board, (1) each option
shall be assumed or an equivalent option shall be substituted by the successor
corporation or parent or subsidiary of such successor corporation or (2) a date
established by the Board on or before the date of consummation of such merger,
consolidation or sale shall be treated as a Purchase Date, and all outstanding
options shall be deemed exercisable on such date.

10. TRANSFERABILITY.
    ---------------

     Options granted to Participants may not be voluntarily or involuntarily
assigned, transferred, pledged, or otherwise disposed of in any way other than
by will or the laws of descent and distribution, and any other attempted
assignment, transfer, pledge, or other disposition shall be null and void and
without effect. If a Participant in any manner attempts to transfer, assign or
otherwise encumber his or her rights or interest under the Plan, other than as
permitted by the Code, such act shall be treated as an election by the
Participant to discontinue participation in the Plan pursuant to Section 4.3.

11. REPORTS.
    -------

     Individual accounts shall be maintained by AltaVista for each Participant
in the Plan. Statements of account shall be given to each Participant at least
annually which statements shall set forth the amounts of payroll deductions, the
Purchase Price, the number of Shares of Common Stock purchased and the remaining
cash balance, if any.

12. AMENDMENT OR TERMINATION OF THE PLAN.
    ------------------------------------

     12.1 The Plan shall continue until the tenth anniversary of the effective
date as set forth in Section 20 of the Plan, unless previously terminated in
accordance with Section 12.2.

     12.2 The Board or the Committee may, in its sole discretion, insofar as
permitted by law, terminate or suspend the Plan, or revise or amend it in any
respect whatsoever, except that, without approval of the Stockholders, no such
revision or amendment shall:

                                       8
<PAGE>

         (a) increase the number of shares subject to the Plan, other than an
adjustment under Section 8 of the Plan; or

         (b) modify the requirements as to eligibility for participation in the
Plan, except as otherwise specified in this Plan.

13. ADMINISTRATION.
    --------------

     The Board shall appoint a Committee consisting of at least two members who
will serve for such period of time as the Board may specify and who may be
removed by the Board at any time. The Committee will have the authority and
responsibility for the day-to-day administration of the Plan, the authority and
responsibility specifically provided in this Plan and any additional duties,
responsibility and authority delegated to the Committee by the Board, which may
include any of the functions assigned to the Board in this Plan. The Committee
may delegate to one or more individuals the day-to-day administration of the
Plan. The Committee shall have full power and authority to promulgate any rules
and regulations which it deems necessary for the proper administration of the
Plan, to interpret the provisions and supervise the administration of the Plan,
to make factual determinations relevant to Plan entitlements, to adopt sub-plans
applicable to specified Subsidiaries or locations and to take all action in
connection with administration of the Plan as it deems necessary or advisable,
consistent with the delegation from the Board. Decisions of the Board and the
Committee shall be final and binding upon all participants. Any decision reduced
to writing and signed by a majority of the members of the Committee shall be
fully effective as if it had been made at a meeting of the Committee duly held.
AltaVista shall pay all expenses incurred in the administration of the Plan. No
Board or Committee member shall be liable for any action or determination made
in good faith with respect to the Plan or any option granted thereunder.

14. COMMITTEE RULES FOR FOREIGN JURISDICTIONS.
    -----------------------------------------

     14.1 The Committee may adopt rules or procedures relating to the operation
and administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the
Committee is specifically authorized to adopt rules and procedures regarding
handling of payroll deductions, payment of interest, conversion of local
currency, payroll tax, withholding procedures and handling of stock certificates
which vary with local requirements.

     14.2 The Committee may also adopt sub-plans applicable to particular
Subsidiaries or locations, which sub-plans may be designed to be outside the
scope of Code section 423. The rules of such sub-plans may take precedence over
other provisions of this Plan, with the exception of Section 5.1, but unless
otherwise superseded by the terms of such sub-plan, the provisions of this Plan
shall govern the operation of such sub-plan.

                                       9
<PAGE>

15. SECURITIES LAWS REQUIREMENTS.
    ----------------------------

     AltaVista shall not be under any obligation to issue Common Stock upon the
exercise of any option unless and until AltaVista has determined that: (i) it
and the Participant have taken all actions required to register the Common Stock
under the Securities Act of 1933, or to perfect an exemption from the
registration requirements thereof; (ii) any applicable listing requirement of
any stock exchange on which the Common Stock is listed has been satisfied; and
(iii) all other applicable provisions of state, federal and applicable foreign
law have been satisfied.

16. GOVERNMENTAL REGULATIONS.
    ------------------------

     This Plan and AltaVista's obligation to sell and deliver shares of its
stock under the Plan shall be subject to the approval of any governmental
authority required in connection with the Plan or the authorization, issuance,
sale, or delivery of stock hereunder.

17. WITHHOLDING OF TAXES.
    --------------------

     If the Participant makes a disposition, within the meaning of section
424(c) of the Code of any share or shares of Common Stock issued to Participant
pursuant to Participant's exercise of an option, and such disposition occurs
within the two-year period commencing on the day after the Offering Date or
within the one-year period commencing on the day after the Purchase Date,
Participant shall, within ten (10) days of such disposition, notify AltaVista
thereof and thereafter immediately deliver to AltaVista any amount of Federal,
state or local income taxes and other amounts which AltaVista informs the
Participant AltaVista may be required to withhold.

18. NO ENLARGEMENT OF EMPLOYEE RIGHTS.
    ---------------------------------

     Nothing contained in this Plan shall be deemed to give any Employee the
right to be retained in the employ of AltaVista or any Designated Subsidiary or
to interfere with the right of AltaVista or Designated Subsidiary to discharge
any Employee at any time.

19. GOVERNING LAW.
    -------------

     This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of California
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by Federal law.

20. EFFECTIVE DATE.
    --------------

         This Plan shall be effective  upon the closing of  AltaVista's  initial
public offering, subject to approval of the Stockholders within 12 months of its
adoption by the Board.

                                       10

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