The study of optical parametric amplifiers (OPAs) has been successful in describing and creating nonclassical light for use in fields such as quantum metrology and quantum lithography [Agarwal, et al., J. Opt. Soc. Am. B, 24, 2 (2007)]. In this paper we present the theory of an OPA scheme utilizing an entangled state input. The scheme involves two identical OPAs seeded with the maximally path-entangled N00N state (|2,0>+|0,2>)/sqrt{2}. The stimulated amplification results in output state probability amplitudes that have a dependence on the number of photons in each mode, which differs greatly from two-mode squeezed vacuum. The output contains a family of entangled states directly applicable to quantum key distribution. Specific output states allow for the heralded creation of N=4 N00N states, which may be used for quantum lithography, to write sub-Rayleigh fringe patterns, and for quantum interferometry, to achieve Heisenberg-limited phase measurement sensitivity.
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