Exhibit 10.12

STANDARD FORM LEASE

Parties: This Lease, executed in duplicate on December 22, 2006 (the “Effective
Date”), by and between Mission West Properties, L.P., a Delaware limited
partnership, and Nextest Systems Corporation, a Delaware Corporation,
hereinafter called respectively Lessor and Lessee, without regard to number or
gender.

Use: Witnesseth: That Lessor hereby leases to Lessee, and Lessee hires from
Lessor, for the purpose of conducting therein office, research and development,
assembly and light manufacturing, warehouse activities, and any other legal
activity; and for no other purpose without obtaining the prior written consent
of Lessor.

Premises: The real property with appurtenances as shown on Exhibit A (the
“Premises”) situated in the City of San Jose, County of Santa Clara, State of
California, and more particularly described as follows:

The Premises shall be (i) approximately 125,000 rentable square feet of the
building located at 5345 Hellyer Avenue, San Jose, California, including all
improvements thereto, as shown on Exhibit A including the right to use up to 475
unreserved parking spaces (“Building II”), and (ii) approximately 3,000 rentable
square feet of dock space (“Dock Space”) in the building located at 5325 Hellyer
Avenue, San Jose, California (“Building I” ), as shown on Exhibit A-1 for a
total of 128,000 sq. ft. Building I, Building II and an adjacent vacant parcel
(the “Vacant Parcel” ) comprise the relevant property owned by Lessor
(collectively, the “Project” ) as shown on Exhibit A-2 attached hereto.

Term: The term (the “Lease Term”) shall be for five (5) years, commencing on
January 1, 2012 (the “Commencement Date”), and ending December 31, 2016 (the
“Expiration Date”), unless earlier terminated pursuant to the terms hereof.

Rent: Annual base rent (“Base Rent”) shall be payable in monthly installments
(“Monthly Base Rent”) as follows:

 

Period

   Monthly Base Rent
Per Rentable Square
Foot   

Monthly

Base Rent

   Monthly
CAC*    Total
Monthly Rent

01/01/12-12/31/12

   $ 0.85    $ 108,800.00    $ 54,272    $ 163,072

01/01/13-12/31/13

   $ 0.90    $ 115,200.00    $ 55,898    $ 171,098

01/01/14-12/31/14

   $ 0.95    $ 121,600.00    $ 57,575    $ 179,175

01/01/15-12/31/15

   $ 1.00    $ 128,000.00    $ 59,302    $ 187,302

01/01/15-12/31/16

   $ 1.05    $ 134,400.00    $ 61,081    $ 195,481

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* CAC is an estimate of Common Area Charges (which estimate shall include an
estimate of the cost of electricity for the Premises). The estimated CAC shall
be adjusted on the Commencement Date and annually thereafter based on actual
costs of Common Area Charges.

Commencing on the Commencement Date, Monthly Base Rent as scheduled above,
together with CAC (hereinafter defined) shall be payable monthly in advance on
or before the first day of each calendar month during the Lease Term. The term
“Rent,” as used herein, shall be deemed to be and to mean the Monthly Base Rent
and all other sums required to be paid by Lessee pursuant to the terms of this
Lease. Rent shall be paid in lawful money of the United States of America,
without offset or

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deduction, and shall be paid to Lessor at the address set forth in Section 17
hereof or at such other place or places as may be designated in writing from
time to time by Lessor. Rent for any period less than a calendar month shall be
a pro rata portion of the monthly installment. Upon the Commencement Date of
this Lease, Lessee shall deposit with Lessor the first month's rent including
the estimated CAC.

Security Deposit: Lessor waives the Security Deposit of $150,000 provided the
Lessee has substantially completed the improvements on Exhibit B, attached
hereto, by or on the Commencement Date of this Lease.

Common Area Charges: Lessee shall pay to Lessor, as additional Rent, an amount
equal to Lessee’s pro-rate share, which is stipulated to be 50 percent of the
total common area charges or an equitable amount of the Project as defined below
(the common area charges for the Project is referred to herein as (“CAC”)).
Lessee shall pay to Lessor as Rent, on or before the first day of each calendar
month during the Lease Term, subject to adjustment and reconciliation as
provided hereinbelow, the amount set forth above as the monthly payment of CAC,
said sum representing Lessee's estimated monthly payment of Lessee's percentage
share of CAC and includes a fixed monthly sum of Two Thousand Five Hundred Sixty
and no/100 ($2,560.00) which represents the long term capital reserve for
replacement of the parking lot, roof, and painting of the exterior of the
Premises (“Capital Reserves”). It is understood and agreed that Lessee's
obligation under this paragraph shall be prorated to reflect the Commencement
Date and the end of the Lease Term.

Lessee's estimated monthly payment of CAC payable by Lessee during the calendar
year in which the Lease commences is set forth above. At or prior to the
commencement of each succeeding calendar year term (or as soon as practical
thereafter), Lessor shall provide Lessee with Lessee's estimated monthly payment
for CAC, which Lessee shall pay to Lessor as Rent. Within the first 90 days of
each calendar year and the end of the Lease Term, Lessor shall provide Lessee a
statement of actual CAC incurred for the preceding calendar year or other
applicable period in the case of a termination year plus Capital Reserves. If
such statement shows that Lessee has paid less than its actual percentage, then
Lessee shall on demand pay to Lessor the amount of such deficiency. If such
statement shows that Lessee has paid more than its actual percentage, then
Lessor shall, at its option, promptly refund such excess to Lessee or credit the
amount thereof to the Rent next becoming due from Lessee. Lessor reserves the
right to revise any estimate of CAC if the actual or projected CAC show an
increase or decrease in excess of 10% from an earlier estimate for the same
period. In such event, Lessor shall provide a revised estimate to Lessee in
writing, together with an explanation of the reasons therefore, and Lessee shall
revise its monthly payments accordingly. Lessor's and Lessee's obligation with
respect to adjustments at the end of the Lease Term or earlier expiration of
this Lease shall survive the Lease Term or earlier expiration.

As used in this Lease, CAC shall include but is not limited to: (i) items as
specified in Sections 5(b), 6, 16 and 31; (ii) all reasonable and customary
costs and expenses including but not limited to supplies, materials, equipment
and tools used or required in connection with the operation and maintenance of
the Premises excluding window cleaning and janitorial; (iii) licenses, permits
and inspection fees; (iv) all other reasonable and customary costs incurred by
Lessor in maintaining and operating the Premises; (v) Capital Reserves and
government regulations imposed on the Premises not related to Lessee’s use and
occupancy of the Premises; and (vi) an amount equal to five percent (5%) of the
aggregate of all CAC, as compensation for Lessor's accounting, processing
services and management fee. Lessee shall have the right to review the basis and
computation analysis used to derive the CAC applicable to this Lease annually.
Notwithstanding the foregoing, the following costs shall be not included in CAC:
(a) any cost for a single item capital repair or replacement that exceeds Ten
Thousand Dollars ($10,000) (“Capital Expense”) that is not amortized over its
useful life (not to exceed 20 years) at Wells Fargo prime rate plus 1% other
than those enumerated in Section 5(b) (the monthly amortized portion of the
Capital Expense may be added to the CAC during Lease Term), (b) all costs
necessitated by the negligence or willful misconduct of Lessor or its agents,
employees or contractors, (c) all costs necessary to comply with legal
requirements prior to Commencement Date, (d) all costs for which Lessor recovers
payment or reimbursement from insurance proceeds, condemnation award, any tenant
or any other person, (e)

 

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all costs paid to affiliates of Lessor to the extent such costs exceed market
value, (f) any cost for replacement of Capital Reserves items except for the
monthly fixed amount, (g) any costs or expenses associated with the ownership,
maintenance or operation of the Vacant Parcel or any improvements thereon.
Lessee shall have the right to inspect and/or audit the books and records of
Lessor to review and/or confirm the amount of CAC. If the amount paid by Lessee
during any year for CAC shall be greater than 103% of the actual CAC plus
Capital Reserve, Lessor shall return such overpayment to Lessee together with
interest at prime plus 1%. If the amount paid by Lessee during any year for CAC
shall be more than 103% of the actual CAC plus Capital Reserve, Lessor shall
return such overpayment together with interest at prime plus 2%. If any actual
overpayment of 5% or more is discovered as a result of Lessee’s audit that was
not shown on Lessor’s annual statement, Lessor shall reimburse Lessee for all
costs and expenses incurred by Lessee in reviewing and/or auditing the books and
records of Lessor. Any dispute concerning CAC shall be resolved by baseball
arbitration administered by the American Arbitration Association in accordance
with its applicable rules, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. As used
herein, “baseball arbitration” shall mean that Lessor and Lessee shall each
submit to the arbitrator and exchange with each other in advance of the hearing
the amount that is in dispute that each such party maintains is the accurate
amount. The arbitrator shall be limited to awarding only one or the other of the
two figures submitted.

Late Charges: Lessee hereby acknowledges that a late payment made by Lessee to
Lessor of Rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges, which may be imposed on Lessor
according to the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Lessee is not
received by Lessor or Lessor’s designee within five (5) days after such amount
is due, Lessee shall pay to Lessor a late charge equal to five (5%) percent of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payments made by Lessee. Acceptance of such late charges by Lessor shall in no
event constitute a waiver of Lessee’s default with respect to such overdue
amount, nor shall it prevent Lessor from exercising any of the other rights and
remedies granted hereunder. Lessor agrees to waive late charge on up to two
(2) late payments in any twelve (12) month period as a result of accounting
errors, if payment is made within five (5) days of telephone notice followed by
fax notice to Lessee from Lessor.

Quiet Enjoyment: Lessor covenants and agrees with Lessee that upon Lessee paying
Rent and performing its covenants and conditions under this Lease, Lessee shall
and may peaceably and quietly have, hold and enjoy the Premises for the Lease
Term, subject, however, to the rights reserved by Lessor hereunder.

It Is Further Mutually Agreed Between The Parties As Follows:

1. Lease Term. This Lease shall be effective as of the date hereof. The Lease
term shall commence on the Commencement Date and expire at midnight on the
Expiration Date. Lessor acknowledges that Lessee and Celestica Asia Inc.
(“Celestica”) have entered into that certain Sublease Agreement dated December
22, 2006, as supplemented by that certain Consent of Master Lessor dated as of
December 22, 2006, between Lessor, Lessee and Celestica, and that certain
Non-Disturbance and Attornment Agreement dated December 22, 2006, between
Lessor, Lessee and Celestica (collectively, the “Sublease”). Pursuant to the
Sublease and with the express consent of Lessor, Lessee will have occupied the
Premises prior to the Commencement Date. Lessor agrees that upon expiration of
the Sublease, Lessee shall continue to use and occupy the Premises for the Lease
Term in connection with the terms and conditions herewith.

2. Lessee Improvements; Allowance; Acceptance of Premises.

2.1 Lessee Improvements. Lessee shall construct, furnish or install all
improvements, equipment or fixtures, that are necessary for Lessee’s use and
occupancy of the Premises (collectively, the “Tenant Improvements”). Lessor
hereby

 

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consents to those Tenant Improvements listed on the attached Exhibit B (the
“Approved Tenant Improvements”) which Lessee will be constructing in the
Premises either during the term of the Sublease or prior to December 21, 2013 of
the Lease Term, at Lessee’s sole cost and expense, subject to the application of
the Improvement Allowance (hereinafter defined).

2.2 Improvement Allowance. Lessor acknowledges that pursuant to the Consent of
Master Lessor referred to above, Lessor agreed to provide Lessee with an
allowance of up to Fourteen Dollars ($14) per square foot (or $1,750,000 in the
aggregate) to be used toward construction of Lessee Improvements in the Premises
(the “ Improvement Allowance”). Commencing on the Effective Date and continuing
throughout the Lease Term, provided Lessee has incurred out-of-pocket expenses
and costs with respect to improvements of the Premises and has delivered a
written request for payment of such costs and expenses to Lessor (an “Allowance
Request”) together with paid receipts or invoices evidencing the same, Lessor
hereby agrees to pay the Improvement Allowance (or portion requested thereof)
directly to Lessee in immediately available funds within thirty (30) days after
receipt of the Allowance Request (and satisfaction of the foregoing conditions).
Lessee may deliver to Lessor one or more Allowance Requests from time to time,
and Lessor shall pay to Lessee the amount covered by each such Allowance Request
pursuant to this Section 2.2; but in no event shall Lessor be required to pay
Lessee for any amount in excess of the then available Improvement Allowance.

2.3 Acceptance Of Premises And Covenants To Surrender: Lessee accepts the
Premises in an “AS IS” condition and “AS IS” state of repair, subject to any
representations made by Lessor herein. Lessee agrees on the last day of the
Lease Term, or on the sooner termination of this Lease, to surrender the
Premises to Lessor in Good Condition and Repair, subject to casualty, damage or
destruction. “Good Condition and Repair” shall generally mean that the Premises
are in the condition that one would expect the Premises to be in, if throughout
the Lease Term Lessee (i) uses and maintains the Premises in a commercially
reasonable manner and in an accordance with the requirements of this Lease and
(ii) makes all Required Replacements. “Required Replacements” are the
replacements to worn-out equipment, fixtures, and improvements that a
commercially reasonable owner-user would make excluding roof replacement,
exterior painting and parking lot replacement. Notwithstanding the above Good
Condition and Repair shall not mean in a new condition. All of the following
shall be in Good Condition and Repair: (i) the interior walls and floors of all
interior areas, (ii) all suspended ceilings and any carpeting shall be clean and
in good condition, (iii) all glazing, windows, doors and door closures, plate
glass, and (iv) all electrical systems including light fixtures and ballasts,
HVAC system, plumbing, and temperature control systems. Lessee, on or before the
end of the Lease Term or sooner termination of this Lease, shall remove all its
personal property and trade fixtures from the Premises, and all such property
not so removed shall be deemed to be abandoned by Lessee. Lessee shall reimburse
Lessor for all disposition costs incurred by Lessor relative to Lessee’s
abandoned property. If the Premises are not surrendered at the end of the Lease
Term or earlier termination of this Lease, Lessee shall indemnify Lessor against
loss or liability resulting from any delay caused by Lessee in surrendering the
Premises including, without limitation, any claims made by any succeeding Lessee
founded on such delay.

3. Uses Prohibited: Lessee shall not commit, or suffer to be committed, any
waste upon the Premises, or any nuisance, or other act or thing which may
disturb the quiet enjoyment of any other tenant in or around the buildings in
which the subject Premises are located or allow any sale by auction upon the
Premises, or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, or place any loads upon the floor, walls, or ceiling
which will endanger the structure, or use any machinery or apparatus which will
in any manner unreasonably vibrate or shake the Premises or the building of
which it is a part, or place any harmful liquids in the drainage system of the
building. No waste materials or refuse shall be dumped upon or permitted to
remain upon any part of the Premises outside of the building proper. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
on any portion of the Premises outside of the building structure, unless
approved by the local, state federal or other applicable governing authority.
Lessor consents to Lessee’s use of materials which are part of the normal,
day-to-day operations of Lessee’s business at the Premises provided Lessee has
all required governmental approvals but this does not relieve Lessee of any of
its obligations not to contaminate the Premises and related real property or
violate any Hazardous Materials Laws.

 

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4. Alterations And Additions: Except for the Approved Tenant Improvements,
Lessee shall not make, or suffer to be made, any alteration or addition to said
Premises, or any part thereof, without the express, advance written consent of
Lessor. Any addition or alteration to said Premises, except movable furniture
and trade fixtures, shall become at once a part of the realty and belong to
Lessor at the end of the Lease Term or earlier termination of this Lease.
Alterations and additions which are not deemed as trade fixtures shall include
HVAC systems, lighting systems, electrical systems, partitioning, carpeting, or
any other installation which has become an integral part of the Premises. Lessee
agrees that it will not proceed to make such alterations or additions until all
required government permits have been obtained with respect to the alteration
and after having obtained consent from Lessor to do so, until five (5) days from
the receipt of such consent, so that Lessor may post appropriate notices to
avoid any liability to contractors or material suppliers for payment for
Lessee’s improvements. Lessee shall at all times permit such notices to be
posted and to remain posted until the completion of work. Notwithstanding the
above, Lessor agrees to allow any reasonable alterations and improvements and
will use its best efforts to notify Lessee at the time of approval if such
improvements or alterations are to be removed at the end of the Lease Term or
earlier termination of this Lease. Subject to the above, Lessee may without the
consent of Lessor, (a) make nonstructural alterations costing up to Fifty
Thousand Dollars ($ 50,000) or (b) perform any painting, carpeting or other
decorative work (regardless of amount).

5. Maintenance Of Premises:

(a) Lessee shall at its sole cost and expense keep, repair, and maintain the
interior of the Premises and the HVAC system in Good Condition and Repair,
including, but not limited to, the interior walls and floors of all offices and
other interior areas, doors and door closures, all lighting systems, temperature
control systems, HVAC system including regular quarterly maintenance and
plumbing systems, including any Required Replacements. Lessee shall provide
interior and exterior window washing as needed.

(b) Lessor shall, at Lessor’s expense, keep, repair, and maintain in Good
Condition and Repair but subject to reimbursement by Lessee pursuant to this
Lease (based on a pro-rata share of (i) costs based on square footage or
(ii) costs directly related to Lessee’s use of the Premises as reasonably
determined by Lessor) the following, which shall be included in the monthly CAC:

1. The exterior of the building, any appurtenances and every part thereof,
including but not limited to, glazing, sidewalks, parking areas, electrical
systems, and painting of exterior walls. The parking lot to receive a finish
coat every five to seven years.

2. The landscaping by a landscape contractor to water, maintain, trim and
replace, when necessary, any shrubbery, irrigation parts, and landscaping at the
Premises.

3. The roof membrane by a service contract with a licensed reputable roofing
contractor which contract shall provide for a minimum of semi-annual
maintenance, cleaning of storm gutters, drains, removing of debris, and trimming
overhanging trees, repair of the roof and application of a finish coat every
five years to the building at the Premises.

4. Exterior pest control.

5. Fire monitoring services.

6. Parking lot sweeping.

(c) Lessee hereby waives any and all rights to make repairs at the expense of
Lessor as provided in Section 1942 of the Civil Code of the State of California,
and all rights provided for by Section 1941 of said Civil Code.

(d) Lessor shall be responsible and pay for the repair of any structural defects
in the Premises including the roof structure (not membrane), exterior walls and
foundation during the Lease Term.

 

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6. Insurance:

A) Hazard Insurance: Lessee shall not use, or permit said Premises, or any part
thereof, to be used, for any purpose other than that for which the Premises are
hereby leased; and no use shall be made or permitted to be made of the Premises,
nor acts done, which may cause a cancellation of any insurance policy covering
the Premises, or any part thereof, nor shall Lessee sell or permit to be kept,
used or sold, in or about said Premises, any article which may be prohibited by
a fire and extended coverage insurance policy. Lessee shall comply with any and
all reasonable requirements, pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
extended coverage insurance, covering the Premises. Lessor shall, at Lessee’s
sole cost and expense, as part of CAC, purchase and keep in force fire and
extended coverage insurance, covering loss or damage to the Premises in an
amount equal to the full replacement cost of the Premises, as reasonably
determined by Lessor, with proceeds payable to Lessor. In the event of a loss
per the insurance provisions of this paragraph, Lessee shall be responsible for
deductibles up to a maximum of $5,000 per occurrence. Lessee acknowledges that
the insurance referenced in this paragraph does not include coverage for
Lessee’s personal property. Lessor covenants and agrees to obtain casualty
insurance in such amounts and with such coverages as owners of properties
similar to the Premises customarily obtain, with insurance companies reasonably
satisfactory to Lessee.

B) Loss of Rents Insurance: Lessor shall, at Lessee’s cost and expense as part
of CAC, purchase and maintain in full force and effect, a policy of rental loss
insurance, in an amount equal to the amount of Rent payable by Lessee commencing
within sixty (60) days of the date of the loss or on the date of loss if
reasonably available for the next ensuing one (1) year, as reasonably determined
by Lessor with proceeds payable to Lessor (“Loss of Rents Insurance”).

C) Liability and Property Damage Insurance: Lessee, as a material part of the
consideration to be rendered to Lessor, hereby waives all claims against Lessor
and Lessor’s Agents for damages to goods, wares and merchandise, and all other
personal property in, upon, or about the Premises, and for injuries to persons
in, upon, or about the Premises, from any cause arising at any time, and Lessee
will hold Lessor and Lessor’s Agents exempt and harmless from any damage or
injury to any person, or to the goods, wares, and merchandise and all other
personal property of any person, arising from the use or occupancy of the
Premises by Lessee, or from the failure of Lessee to keep the Premises in Good
Condition and Repair, as herein provided. Lessee shall, at Lessee’s sole cost
and expense, purchase and keep in force a standard policy of commercial general
liability insurance and property damage policy covering the Premises and all
related areas insuring the Lessee having a combined single limit for both bodily
injury, death and property damage in an amount not less than five million
dollars ($5,000,000.00) and Lessee’s insurance shall be primary. The limits of
said insurance shall not, however, limit the liability of Lessee hereunder.
Lessee shall, at its sole cost and expense, comply with all of the insurance
requirements of all local, municipal, state and federal authorities now in
force, or which may hereafter be in force, pertaining to Lessee’s use and
occupancy of the said Premises.

D) Personal Property Insurance: Lessee shall obtain, at Lessee’s sole cost and
expense, a policy of fire and extended coverage insurance including coverage for
direct physical loss special form, and a sprinkler leakage endorsement insuring
the personal property of Lessee. The proceeds from any personal property damage
policy shall be payable to Lessee.

All insurance policies required in 6 C) and 6 D) above shall: (i) provide for a
certificate of insurance evidencing the insurance, which may be part of a
blanket policy provided it meets the requirements herein, being deposited with
Lessor ten (10) days prior to the Commencement Date, and upon each renewal, such
certificates shall be provided 30 days prior to the expiration

 

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date of such coverage, (ii) be in a form reasonably satisfactory to Lessor and
shall provide the coverage required by Lessee in this Lease, (iii) be carried
with companies with a Best Rating of A minimum, (iv) specifically provide that
such policies shall not be subject to cancellation, reduction of coverage, or
other change except after 30 days prior written notice to Lessor, (v) name
Lessor, Lessor’s lender, and any other party with an insurable interest in the
Premises as additional insureds by endorsement to policy, and (vi) shall be
primary.

Lessee agrees to pay to Lessor, as part of CAC, the full cost of the insurance
polices referenced in 6 A) and 6 B) above as evidenced by insurance billings to
Lessor. If Lessee does not occupy the entire Premises, the insurance premiums
shall be allocated to the portion of the Premises occupied by Lessee on a
pro-rata square footage or other equitable basis, as reasonably determined by
Lessor. It is agreed that Lessee’s obligation under this paragraph shall be
prorated to reflect the Commencement Date and the end of the Lease Term.

Lessor and Lessee hereby waive and release any rights each may have against the
other related to any loss or damage caused to Lessor or Lessee as the case may
be, or to the Premises or its contents, and which may arise from any risk
covered by fire and extended coverage insurance and those risks required to be
covered under Lessee’s personal property insurance. The parties shall provide
that their respective insurance policies insuring the property or the personal
property include a waiver of any right of subrogation which said insurance
company may have against Lessor or Lessee, as the case may be.

7. Abandonment: Lessee shall not vacate or abandon the Premises at any time
during the Lease Term; and if Lessee shall abandon, vacate or surrender said
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee and left on the Premises shall be deemed to be
abandoned, at the option of Lessor. Notwithstanding the above, the Premises
shall not be considered vacated or abandoned if Lessee maintains the Premises in
Good Condition and Repair, has building alarm system and is not in default.

8. Free From Liens: Lessee shall keep the subject Premises and the property in
which the subject Premises are situated, free from any and all liens incurred by
Lessee. However, the Lessor shall allow Lessee to contest a lien claim, so long
as the claim is discharged prior to any foreclosure proceeding being initiated
against the property and provided Lessee provides Lessor a bond if the lien
exceeds $100,000.

9. Compliance With Governmental Regulations: Lessee shall, at its sole cost and
expense, comply with all of the requirements of all local, municipal, state and
federal authorities now in force, or which may hereafter be in force, pertaining
to the Premises, and shall faithfully observe in the use and occupancy of the
Premises all local and municipal ordinances and state and federal statutes now
in force or which may hereafter be in force. Notwithstanding the foregoing,
Lessee shall not be required to pay for the construction of any single
improvement required under this paragraph in excess of Ten Thousand Dollars
($10,000), unless such improvement is required to comply with Lessee’s
particular use of the Premises. If such improvement is not required due to
Lessee’s particular use of the Premises or such improvement cost exceeds Ten
Thousand Dollars ($10,000), Lessor shall pay for the construction of such
improvement and the cost thereof shall be amortized over the estimated useful
life of the improvement at Wells Fargo prime rate plus one percent (1%). Lessee
shall pay to Lessor the amortized costs of such improvement on a monthly basis
over the Lease Term as part of the CAC.

10. Intentionally Omitted.

11. Advertisements And Signs: Except for reasonable monument, directional and
Building signage identifying Lessee’s name, Lessee shall not place or permit to
be placed, in, upon or about the Premises any unusual or extraordinary signs, or
any signs not approved by the city, local, state, federal or other applicable
governing authority. Lessee shall not place, or permit to be

 

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placed upon the Premises and exterior of building, any signs, advertisements or
notices without the written consent of the Lessor, and such consent shall not be
unreasonably withheld. A sign so placed on the Premises shall be so placed upon
the understanding and agreement that Lessee will remove same at the end of the
Lease Term or earlier termination of this Lease and repair any damage or injury
to the Premises caused thereby, and if not so removed by Lessee, then Lessor may
have the same removed at Lessee’s expense. Notwithstanding the above, Lessee
shall have the right to place signs on the exterior of the buildings without
Lessor’s consent provided such signs comply with all laws.

12. Utilities: Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities supplied to the Premises. Any charges for sewer
usage, PG&E and telephone site service or related fees shall be the obligation
of Lessee and paid for by Lessee. If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion of all charges which
are jointly metered, the determination to be made by Lessor acting reasonably
and on any equitable basis. Lessor and Lessee agree that Lessor shall not be
liable to Lessee for any disruption in any of the utility services to the
Premises. Lessor shall not charge any fee, mark up or any other amount with
respect to utility charges.

13. Attorney’s Fees: In case suit should be brought for the possession of the
Premises, for the recovery of any sum due hereunder, because of the breach of
any other covenant herein, or to enforce, protect, or establish any term,
conditions, or covenant of this Lease or the right of either party hereunder,
the losing party shall pay to the Prevailing Party reasonable attorney’s fees
which shall be deemed to have accrued on the commencement of such action and
shall be enforceable whether or not such action is prosecuted to judgment. The
term “Prevailing Party” shall mean the party that received substantially the
relief requested, whether by settlement, dismissal, summary judgment, judgment,
or otherwise.

14. Default; Termination.

14.1 Default: The occurrence of any of the following shall constitute a default
and breach of this Lease by Lessee: a) Any failure by Lessee to pay Rent or to
make any other payment required to be made by Lessee hereunder when due if not
cured within ten (10) days after written notice thereof by Lessor to Lessee; b)
The abandonment or vacation of the Premises by Lessee except as provided in
Section 7; c) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee, where such failure continues
for thirty days after written notice thereof by Lessor to Lessee; provided,
however, that if the nature of such default is such that the same cannot be
reasonably cured within such thirty (30) day period, Lessee shall not be deemed
to be in default if Lessee shall, within such period, commence such cure and
thereafter diligently prosecute the same to completion; d) The making by Lessee
of any general assignment for the benefit of creditors; the filing by or against
Lessee of a petition to have Lessee adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy and in the
case of any filings against Lessee the filings not being dismissed within ninety
(90) days; e) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets or Lessee’s interest in this Lease, or the
attachment, execution or other judicial seizure of substantially all of Lessee’s
assets located at the Premises or of Lessee’s interest in this Lease if not
dismissed within thirty (30) days.

14.2 Surrender Of Lease: In the event of any such default by Lessee beyond the
applicable cure periods set forth herein, then in addition to any other remedies
available to Lessor at law or in equity, Lessor shall have the immediate option
to terminate this Lease before the end of the Lease Term and all rights of
Lessee hereunder, by giving written notice of such intention to terminate. In
the event that Lessor terminates this Lease due to a default of Lessee, then
Lessor may recover from Lessee: a) the worth at the time of award of any unpaid
Rent which had been earned at the time of such termination; plus b) the worth at
the time of award of unpaid Rent which would have been earned after termination
until the time of award exceeding the amount of such rental loss that the Lessee
proves could have been reasonably avoided; plus c) the worth at the time of
award of the amount by which the unpaid Rent for the balance of the Lease Term
after the time of award exceeds the amount of such

 

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rental loss that the Lessee proves could have been reasonably avoided; plus d)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee’s failure to perform his obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom; and e) at Lessor’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable
California law. As used in (a) and (b) above, the “worth at the time of award”
is computed by allowing interest at the rate of Wells Fargo’s prime rate plus
two percent (2%) per annum. As used in (c) above, the “worth at the time of
award” is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus two percent
(2%).

14.3 Right of Entry and Removal: In the event of any such default beyond the
applicable cure period, by Lessee, Lessor shall also have the right, with or
without terminating this Lease, to re-enter the Premises and remove all persons
and property from the Premises; such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Lessee.

14.4 Abandonment: In the event of the vacation or abandonment, except as
provided in Section 7, of the Premises by Lessee or in the event that Lessor
shall elect to re-enter as provided in paragraph 14.3 above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, and Lessor does not elect to terminate this Lease as
provided in Section 14.2 above, then Lessor may from time to time, without
terminating this Lease, either recover all Rent as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental rates and
upon such other terms and conditions as Lessor, in its sole discretion, may deem
advisable with the right to make alterations and repairs to the Premises. In the
event that Lessor elects to relet the Premises, then Rent received by Lessor
from such reletting shall be applied; first, to the payment of any indebtedness
other than Rent due hereunder from Lessee to Lessor; second, to the payment of
any cost of such reletting; third, to the payment of the cost of any alterations
and repairs to the Premises; fourth, to the payment of Rent due and unpaid
hereunder; and the residue, if any, shall be held by Lessor and applied to the
payment of future Rent as the same may become due and payable hereunder. Should
that portion of such Rent received from such reletting during any month, which
is applied by the payment of Rent hereunder according to the application
procedure outlined above, be less than the Rent payable during that month by
Lessee hereunder, then Lessee shall pay such deficiency to Lessor immediately
upon demand therefore by Lessor. Such deficiency shall be calculated and paid
monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and
expenses incurred by Lessor in such reletting or in making such alterations and
repairs not covered by the rentals received from such reletting.

14.5 No Implied Termination: No re-entry or taking possession of the Premises by
Lessor pursuant to Section 14.3 or Section 14.4 of this Lease shall be construed
as an election to terminate this Lease unless a written notice of such intention
is given to Lessee or unless the termination thereof is decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Lessor because of any default by Lessee, Lessor may at any time after such
reletting elect to terminate this Lease for any such default.

14.6 Mitigation: Notwithstanding anything herein to the contrary, after the
occurrence of a default hereunder, Lessor shall use reasonable efforts to
mitigate Lessor’s damages hereunder.

15. Surrender Of Lease: If Lessee has entered into any subleases of any portion
of the Premises, the voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the option
of Lessor, terminate all or any existing subleases or sub tenancies, or may, at
the option of Lessor, operate as an assignment to him of any or all such
subleases or sub tenancies.

 

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16. Taxes: Lessee shall pay and discharge punctually and when the same shall
become due and payable without penalty, all real estate taxes, personal property
taxes, taxes based on vehicles utilizing parking areas in the Premises, taxes
computed or based on rental income (other than federal, state and municipal net
income taxes), environmental surcharges, privilege taxes, business and
occupation taxes, school fees or surcharges, gross receipts taxes, sales and/or
use taxes, employee taxes, occupational license taxes, water and sewer taxes,
assessments (including, but not limited to, assessments for public improvements
or benefit), assessments for local improvement and maintenance districts, and
all other governmental impositions and charges of every kind and nature
whatsoever, regardless of whether now customary or within the contemplation of
the parties hereto and regardless of whether resulting from increased rate
and/or valuation, or whether extraordinary or ordinary, general or special,
unforeseen or foreseen, or similar or dissimilar to any of the foregoing (all of
the foregoing being hereinafter collectively called “Tax” or “Taxes”) which, at
any time during the Lease Term, shall be applicable or against the Premises, or
shall become due and payable and a lien or charge upon the Premises under or by
virtue of any present or future laws, statutes, ordinances, regulations, or
other requirements of any governmental authority whatsoever. The term
“Environmental Surcharge” shall include any and all expenses, taxes, charges or
penalties imposed by the Federal Department of Energy, Federal Environmental
Protection Agency, the Federal Clean Air Act, or any regulations promulgated
thereunder, or any other local, state or federal governmental agency or entity
now or hereafter vested with the power to impose taxes, assessments or other
types of surcharges as a means of controlling or abating environmental pollution
or the use of energy in regard to the use, operation or occupancy of the
Premises. The term “Tax” shall include, without limitation, all taxes,
assessments, levies, fees, impositions or charges levied, imposed, assessed,
measured, or based in any manner whatsoever (i) in whole or in part on the Rent
payable by Lessee under this Lease, (ii) upon or with respect to the use,
possession, occupancy, leasing, operation or management of the Premises,
(iii) upon this transaction or any document to which Lessee is a party creating
or transferring an interest or an estate in the Premises, (iv) upon Lessee’s
business operations conducted at the Premises, (v) upon, measured by or
reasonably attributable to the cost or value of Lessee’s equipment, furniture,
fixtures and other personal property located on the Premises or the cost or
value of any leasehold improvements made in or to the Premises by or for Lessee,
regardless of whether title to such improvements shall be in Lessor or Lessee,
or (vi) in lieu of or equivalent to any Tax set forth in this Section 16. In the
event any such Taxes are payable by Lessor and it shall not be lawful for Lessee
to reimburse Lessor for such Taxes, then the Rent payable thereunder shall be
increased to net Lessor the same net rent after imposition of any such Tax upon
Lessor as would have been payable to Lessor prior to the imposition of any such
Tax. It is the intention of the parties that Lessor shall be free from all such
Taxes and all other governmental impositions and charges of every kind and
nature whatsoever. However, nothing contained in this Section 16 shall require
Lessee to pay any Federal or State income, franchise, estate, inheritance,
succession, transfer, excise or excess profits tax imposed upon Lessor. If any
general or special assessment is levied and assessed against the Premises,
Lessor agrees to use its best reasonable efforts to cause the assessment to
become a lien on the Premises securing repayment of a bond sold to finance the
improvements to which the assessment relates which is payable in installments of
principal and interest over the maximum term allowed by law. It is understood
and agreed that Lessee’s obligation under this paragraph will be prorated to
reflect the Commencement Date and the end of the Lease Term. It is further
understood that if Taxes cover the Premises or adjacent premises owned by Lessor
and Lessee does not occupy the entire Premises or adjacent premises owned by
Lessor, the Taxes will be allocated to the portion of the Premises and adjacent
premises owned by Lessor occupied by Lessee based on a pro-rata square footage
or other equitable basis, as reasonably determined by Lessor. Taxes billed by
Lessor to Lessee shall be included in the monthly CAC.

Lessee shall have the right to contest or review the amount or validity of any
Tax by appropriate legal proceedings but which is not to be deemed or construed
in any way as relieving, modifying or extending Lessee’s covenant to pay such
Tax at the time and in the manner as provided in this Section 16. However, as a
condition of Lessee’s right to contest, if such contested Tax is not paid before
such contest and if the legal proceedings shall not operate to prevent or stay
the collection of the Tax so contested, Lessee shall, before instituting any
such proceeding, protect the Premises and the interest of Lessor and of the
beneficiary of a deed of trust or the mortgagee of a mortgage affecting the
Premises against any lien upon the Premises by a

 

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surety bond, issued by an insurance company reasonably acceptable to Lessor and
in an amount equal to one and one-half (1 1/2) times the amount contested or, at
Lessor’s option, the amount of the contested Tax and the interest and penalties
in connection therewith. Any contest as to the validity or amount of any Tax,
whether before or after payment, shall be made by Lessee in Lessee’s own name,
or if required by law, in the name of Lessor or both Lessor and Lessee. Lessee
shall defend, indemnify and hold harmless Lessor from and against any and all
costs or expenses, including attorneys’ fees, in connection with any such
proceedings brought by Lessee, whether in its own name or not. Lessee shall be
entitled to retain any refund of any such contested Tax and penalties or
interest thereon which have been paid by Lessee. Nothing contained herein shall
be construed as affecting or limiting Lessor’s right to contest any Tax at
Lessor’s expense.

17. Notices: Unless otherwise provided for in this Lease, any and all written
notices or other communication (the “Communication”) to be given in connection
with this Lease shall be given in writing and shall be given by personal
delivery, facsimile transmission or by mailing by registered or certified mail
with postage thereon or recognized overnight courier, fully prepaid, in a sealed
envelope addressed to the intended recipient as follows:

 

(a) to the Lessor at:    MISSION WEST PROPERTIES L.P.

            10050 Bandley Drive

            Cupertino, California 95014

            Attention: Carl E. Berg

            Fax No: (408) 725-1626

 

(b) to the Lessee:

If prior to Lessee’s occupancy of the Premises:

NEXTEST SYSTEMS CORPORATION

1901 Monterey Road

San Jose, California 95112

Attention: C.F.O.

If after the Commencement Date:    NEXTEST SYSTEMS CORPORATION

                                5345 Hellyer Avenue

                                San Jose, California 95135

                                Attention: C.F.O.

or such other addresses, facsimile number or individual as may be designated by
a Communication given by a party to the other parties as aforesaid. Any
Communication given by personal delivery shall be conclusively deemed to have
been given and received on a date it is so delivered at such address provided
that such date is a business day, otherwise on the first business day following
its receipt, and if given by registered or certified mail, on the day on which
delivery is made or refused or if given by recognized overnight courier, on the
first business day following deposit with such overnight courier and if given by
facsimile transmission, on the day on which it was transmitted provided such day
is a business day, failing which, on the next business day thereafter.

18. Entry By Lessor: Lessee shall permit Lessor and its agents to enter into and
upon said Premises at all reasonable times within 24 hours notice, except in
cases of emergencies, using the minimum amount of interference and inconvenience
to Lessee and Lessee’s business or use and enjoyment, subject to any security
regulations of Lessee, for the purpose of inspecting the

 

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same or for the purpose of maintaining the building in which said Premises are
situated, or for the purpose of making necessary repairs, alterations or
additions to any other portion of said building, including the erection and
maintenance of such scaffolding, canopies, fences and props as may be required,
without any rebate of Rent and without any liability to Lessee for any loss of
occupation or quiet enjoyment of the Premises; and shall permit Lessor and his
agents, at any time within ninety (90) days prior to the end of the Lease Term,
to place upon said Premises any usual or ordinary “For Sale” or “For Lease”
signs and exhibit the Premises to prospective tenants at reasonable hours.
Notwithstanding the foregoing, Lessee shall have the right to have an employee
of Lessee accompany Lessor or its representatives upon their entry into the
Premises, except in the case of an emergency, when no Lessee escort shall be
required.

19. Destruction Of Premises: In the event of a partial destruction of the said
Premises during the Lease Term from any cause which is covered by Lessor’s
property insurance, Lessor shall forthwith repair the same, provided Lessor
notifies Lessee within 10 days after such destruction that the repairs can be
materially restored within two hundred ten (210) days after the occurrence of
such destruction, but such partial destruction shall in no way annul or void
this Lease, except that Lessee shall be entitled to a proportionate reduction of
Rent while such repairs are being made to the extent of payments received by
Lessor under its Loss of Rents Insurance coverage. Notwithstanding the above, if
Lessor notifies Lessee that Lessor cannot materially complete the restoration
within 210 days after the occurrence of such destruction or if Lessor does not
materially complete restoration within 240 days after the occurrence of such
destruction, Lessee may cancel this Lease. With respect to any partial
destruction which Lessor is obligated to repair or may elect to repair under the
terms of this paragraph, the provision of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of the Civil Code of the State of California are
waived by Lessee. In the event that any part of the Premises is destroyed to an
extent greater than thirty-three and one-third percent (33 1/3%) of the
replacement cost thereof, Lessor may, at its sole option, elect to terminate the
Lease, whether the Premises is insured or not. If Lessor decides to restore and
notifies Lessee within ten days after damage that restoration can be completed
within 210 days, and the Premises is not materially restored within 240 days
after the occurrence of such destruction, Lessee may cancel the Lease. A total
destruction of the Premises shall terminate this Lease. Notwithstanding the
above, Lessor is only obligated to repair or rebuild to the extent of available
insurance proceeds including any deductible amount paid by Lessee. Should Lessor
determine that insufficient or no insurance proceeds are available for repair or
reconstruction of Premises, Lessor, at its sole option, may terminate the Lease.
Lessee shall have the option of continuing this Lease by agreeing to pay all
repair costs to the Premises. Notwithstanding the above, if insufficient or no
insurance proceeds are available due to Lessor’s failure to provide the
insurance required under Sections 6 A) and 6 B) of this Lease, then Lessor shall
be obligated to rebuild to the extent of the insurance proceeds that would have
been available had Lessor provided the insurance required under Section 6 A) and
6 B) of this Lease.

20. Assignment And Subletting: Lessee shall not assign this Lease, or any
interest therein, and shall not sublet the said Premises or any part thereof, or
any right or privilege appurtenant thereto, or cause any other person or entity,
to occupy or use the Premises, or any portion thereof, without the advance
written consent of Lessor. Notwithstanding the above, (i) neither the issuance
of securities or ownership shares as part of a public offering of Lessee or in
connection with a private refinancing of Lessee, nor any other issuance of
Lessee’s capital stock for bona fide financing purposes shall be deemed to be an
assignment, subletting or transfer hereunder, even if such issuance results in a
transfer of a controlling percentage of Lessee’s capital stock or ownership
shares, (ii) provided there is no substantial reduction in the net worth of the
resulting transferee as compared to Lessee’s net worth as of the Effective Date,
Lessee may, without the consent of Lessor, assign this Lease or sublet all or
any part of the Premises to a bona fide subsidiary or affiliate of Lessee, an
entity in which or with which Lessee merges or an entity which acquires all or
substantially all of the assets of Lessee (“Excepted Party”), and (iii) Lessee
may sublease all or any part of the Premises for a term including all renewals
and extensions of three or less years, without Lessor’s consent (each an
“Excepted Transfer”). Any assignment or subletting requiring Lessor’s consent
made without Lessor’s consent shall be void, and shall, at the option of the
Lessor, terminate this Lease. This Lease shall not, nor shall any interest
therein, be assignable,

 

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as to the interest of Lessee, by operation of law, without the written consent
of Lessor. If Lessee desires to assign its rights under this Lease or to sublet
all or any part of the Premises for a term including all extension and renewal
periods of greater than three years to a party other than an Excepted Party,
Lessee shall first notify Lessor of the proposed terms and conditions of such
assignment or subletting.

Whether or not Lessor’s consent to a sublease or assignment is required, in the
event of any sublease or assignment, Lessee shall be and shall remain primarily
liable for the performance of all conditions, covenants, and obligations of
Lessee hereunder and, in the event of a default by an assignee or sublessee,
Lessor may proceed directly against the original Lessee hereunder and/or any
other predecessor of such assignee or sublessee without the necessity of
exhausting remedies against said assignee or sublessee.

21. Condemnation: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title vests in the condemnor or purchaser, and the Rent payable
hereunder shall be adjusted so that the Lessee shall be required to pay for the
remainder of the Lease Term only that portion of Rent as the value of the part
remaining. The rental adjustment resulting will be computed at the same Rental
rate for the remaining part not taken; however, Lessor shall have the option to
terminate this Lease as of the date when title to the part so taken vests in the
condemnor or purchaser. If all of the Premises, or such part thereof be taken so
that there does not remain a portion susceptible for occupation hereunder, this
Lease shall thereupon terminate. If a part or all of the Premises be taken, all
compensation awarded upon such taking shall be payable to the Lessor. Lessee may
file a separate claim and be entitled to any award granted to Lessee.

Notwithstanding the above, Lessee at its option within ten (10) days after
notice of taking may terminate the Lease on all or any portion of the Premises
in which 25% or more of the Premises or parking lot is taken.

22. Effects Of Conveyance: The term “Lessor” as used in this Lease, means only
the owner for the time being of the land and building constituting the Premises,
so that, in the event of any sale of said land or building, or in the event of a
Lease of said building, Lessor shall be and hereby is entirely freed and
relieved of all covenants and obligations of Lessor hereunder, and it shall be
deemed and construed, without further agreement between the parties and the
purchaser of any such sale, or the Lessor of the building, that the purchaser or
lessor of the building has assumed and agreed to carry out any and all covenants
and obligations of the Lessor hereunder. If any security is given by Lessee to
secure the faithful performance of all or any of the covenants of this Lease on
the part of Lessee, Lessor may transfer and deliver the security, as such, to
the purchaser at any such sale of the building in which the Premises is located,
and thereupon the Lessor shall be discharged from any further liability.

23. Subordination: This Lease, in the event Lessor notifies Lessee in writing,
shall be subordinate to any ground lease, deed of trust, or other hypothecation
for security now or hereafter placed upon the real property at which the
Premises are a part and to any and all advances made on the security thereof and
to renewals, modifications, replacements and extensions thereof. Lessee agrees
to promptly execute any documents which may be required to effectuate such
subordination. Notwithstanding such subordination, if Lessee is not in default
beyond the expiration of any applicable cure period and so long as Lessee shall
pay the Rent and observe and perform all of the provisions and covenants
required under this Lease, Lessee’s right to quiet possession of the Premises
shall not be disturbed or affected by any subordination to the holder of any
deed of trust or the holder of any such ground lease. A deed of trust will
encumber the Premises on the Commencement Date and Lessee agrees to enter into a
subordination, non-disturbance and attornment agreement with respect thereto
subtstantially in the form attached as Exhibit C hereto.

 

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24. Waiver: The waiver by Lessor or Lessee of any breach of any term, covenant
or condition, herein contained shall not be construed to be a waiver of such
term, covenant or condition or any subsequent breach of the same or any other
term, covenant or condition therein contained. The subsequent acceptance of Rent
hereunder by Lessor shall not be deemed to be a waiver of Lessee’s breach of any
term, covenant, or condition of the Lease.

25. Holding Over: Any holding over after the end of the Lease Term requires
Lessor’s written approval prior to the end of the Lease Term, which,
notwithstanding any other provisions of this Lease, Lessor may withhold. Such
holding over shall be construed to be a tenancy at sufferance from month to
month. Lessee shall pay to Lessor monthly base rent equal to one and one-half
(1.5) times the monthly base rent installment due in the last month of the Lease
Term and all other additional rent and all other terms and conditions of the
Lease shall apply, so far as applicable. Holding over by Lessee without written
approval of Lessor shall subject Lessee to the liabilities and obligations
provided for in this Lease and by law, including, but not limited to those in
Section 2.3 of this Lease. Lessee shall indemnify and hold Lessor harmless
against any loss or liability resulting from any delay caused by Lessee in
surrendering the Premises, including without limitation, any claims made or
penalties incurred by any succeeding lessee or by Lessor. No holding over shall
be deemed or construed to exercise any option to extend or renew this Lease in
lieu of full and timely exercise of any such option as required hereunder.

26. Lessor’s Liability: If Lessee should recover a money judgment against Lessor
arising in connection with this Lease, the judgment shall be satisfied only out
of the Lessor’s interest in the Premises and neither Lessor nor any of its
partners shall be liable personally for any deficiency.

27. Estoppel Certificates: Lessee and Lessor shall at any time during the Lease
Term, upon not less than ten (10) days prior written notice from the other
party, execute and deliver to the other party a statement in writing certifying
that, this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification) and the dates to which the Rent and
other charges have been paid in advance, if any, and acknowledging that there
are not, to the certifying parties knowledge, any uncured defaults on the part
of the other party hereunder or specifying such defaults if they are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises or any assignee or subtenant of Lessee. Failure
of either party to deliver such a statement within such time shall be conclusive
upon the such failing party that (a) this Lease is in full force and effect,
without modification except as may be represented by Lessor; (b) there are no
uncured defaults in the other parties performance.

 

28. Time: Time is of the essence of the Lease.

29. Captions: The headings on titles to the paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof. This instrument contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest.

30. Party Names: Landlord and Tenant may be used in various places in this Lease
as a substitute for Lessor and Lessee respectively.

31. Earthquake Insurance: As a condition of Lessor agreeing to waive the
requirement for earthquake insurance, Lessee agrees that it will pay, as
additional Rent, which shall be included in the monthly CAC, an amount not to
exceed Fifty Thousand Dollars ($50,000) per year for earthquake insurance if
Lessor desires to obtain some form of earthquake insurance in the future, if and
when available, on terms acceptable to Lessor as determined in the sole and
absolute discretion of Lessor.

 

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32. Habitual Default: Notwithstanding anything to the contrary contained in
Section 14 herein, Lessor and Lessee agree that if Lessee shall have defaulted
in the payment of Rent as defined in Section 14.1(a) for two or more times
during any twelve month period during the Lease Term, then such conduct shall,
at the option of the Lessor, represent a separate event of default which cannot
be cured by Lessee. Lessee acknowledges that the purpose of this provision is to
prevent repetitive defaults by the Lessee under the Lease, which constitute a
hardship to the Lessor and deprive the Lessor of the timely performance by the
Lessee hereunder.

33. Hazardous Materials

33.1 Definitions: As used in this Lease, the following terms shall have the
following meaning:

a. The term “Hazardous Materials” shall mean (i) polychlorinated biphenyls;
(ii) radioactive materials and (iii) any chemical, material or substance now or
hereafter defined as or included in the definitions of “hazardous substance”
“hazardous water”, “hazardous material”, “extremely hazardous waste”,
“restricted hazardous waste” under Section 25115, 25117 or 15122.7, or listed
pursuant to Section 25140 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as “hazardous substance”
under Section 25316 of the California Health and Safety Code, Division 20,
Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substances Account Act),
(iii) defined as “hazardous material”, “hazardous substance”, or “hazardous
waste” under Section 25501 of the California Health and Safety Code, Division
20, Chapter 6.95 (Hazardous Materials Release, Response, Plans and Inventory),
(iv) defined as a “hazardous substance” under Section 25181 of the California
Health and Safety Code, Division 20l, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article
9 or defined as “hazardous” or “extremely hazardous” pursuant to Article II of
Title 22 of the California Administrative Code, Division 4, Chapter 20,
(viii) defined as “hazardous substance” pursuant to Section 311 of the Federal
Water Pollution Control Act, 33 U.S.C. 1251 et seq. or listed pursuant to
Section 1004 of the Federal Water Pollution Control Act (33 U.S.C. 1317),
(ix) defined as a “hazardous waste”, pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., (x) defined as
“hazardous substance” pursuant to Section 101 of the Comprehensive Environmental
Responsibility Compensations, and Liability Act, 42 U.S.C. 9601 et seq., or
(xi) regulated under the Toxic Substances Control Act, 156 U.S.C. 2601 et seq.

b. The term “Hazardous Materials Laws” shall mean any local, state and federal
laws, rules, regulations, or ordinances relating to the use, generation,
transportation, analysis, manufacture, installation, release, discharge, storage
or disposal of Hazardous Material.

c. The term “Lessor’s Agents” shall mean Lessor’s agents, representatives,
employees, contractors, subcontractors, directors, officers and partners.

d. The term “Lessee’s Agents” shall mean Lessee’s agents, representatives,
employees, contractors, subcontractors, directors, officers, partners, invitees
or any other person in or about the Premises.

33.2 Lessee’s Right to Investigate: Lessee shall be entitled to cause such
inspection, soils and ground water tests, and other evaluations to be made of
the Premises as Lessee deems necessary regarding (i) the presence and use of
Hazardous Materials in or about the Premises, and (ii) the potential for
exposure to Lessee’s employees and other persons to any Hazardous Materials used
and stored by previous occupants in or about the Premises. Lessee shall provide
Lessor with copies of all inspections, tests and evaluations. Lessee shall
indemnify, defend and hold Lessor harmless from any cost, claim or expense
arising from such entry by Lessee or from the performance of any such
investigation by such Lessee.

33.3 Lessor’s Representations: Lessor hereby represents and warrants that the
Premises are, as of the Effective Date in compliance with all Hazardous Material
Laws.

 

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33.4 Lessee’s Obligation to Indemnify: Lessee, at its sole cost and expense,
shall indemnify, defend, protect and hold Lessor and Lessor’s Agents harmless
from and against any and all cost or expenses, including those described under
subparagraphs i, ii and iii herein below set forth, arising from or caused in
whole or in part, directly or indirectly by:

a. Lessee’s or Lessee’s Agents’ use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Material to, in, on, under, about or from the Project; or

b. Lessee’s or Lessee’s Agents failure to comply with Hazardous Material laws;
or

c. Any release of Hazardous Material to, in, on, under, about, from or onto the
Project caused by or occurring as a result of acts or omissions of Lessee or
Lessee’s Agents, except ground water contamination from other parcels where the
source is from off the Project not arising from or caused by Lessee or Lessee’s
Agents.

The cost and expenses indemnified against include, but are not limited to the
following:

i. Any and all claims, actions, suits, proceedings, losses, damages,
liabilities, deficiencies, forfeitures, penalties, fines, punitive damages, cost
or expenses;

ii. Any claim, action, suit or proceeding for personal injury (including
sickness, disease, or death), tangible or intangible property damage,
compensation for lost wages, business income, profits or other economic loss,
damage to the natural resources of the environment, nuisance, pollution,
contamination, leaks, spills, release or other adverse effects on the
environment;

iii. The cost of any repair, clean-up, treatment or detoxification of the
Project necessary to bring the Project into compliance with all Hazardous
Material Laws, including the preparation and implementation of any closure,
disposal, remedial action, or other actions with regard to the Project, and
expenses (including, without limitation, reasonable attorney’s fees and
consultants fees, investigation and laboratory fees, court cost and litigation
expenses).

33.5 Lessee’s Obligation to Remediate Contamination: Lessee shall, at its sole
cost and expense, promptly take any and all action necessary to remediate
contamination of the Premises by Hazardous Materials during the Lease Term
occurring as a result of acts or omissions of Lessee or Lessee’s Agents.

33.6 Obligation to Notify: Lessor and Lessee shall each give written notice to
the other as soon as reasonably practical of (i) any communication received from
any governmental authority concerning Hazardous Material which related to the
Premises and (ii) any contamination of the Premises by Hazardous Materials which
constitutes a violation of any Hazardous Material Laws.

33.7 Survival: The obligations of Lessee under this Section 33 shall survive the
Lease Term or earlier termination of this Lease.

33.8 Certification and Closure: On or before the end of the Lease Term or
earlier termination of this Lease, Lessee shall deliver to Lessor a
certification executed by Lessee stating that, to the best of Lessee’s
knowledge, there exists no violation of Hazardous Material Laws resulting from
Lessee’s obligation in Paragraph 33. If pursuant to local ordinance, state or
federal law, Lessee is required, at the expiration of the Lease Term, to submit
a closure plan for the Premises to a local, state or federal agency, then Lessee
shall comply at its sole cost and expense with the requirements of the closure
plan and furnish to Lessor a copy of such plan.

33.9 Prior Hazardous Materials: Lessee shall have no obligation to clean up or
to hold Lessor harmless with respect to any Hazardous Material or wastes
discovered on the Premises which were not introduced into, in, on, about, from
or under the Premises during the Lease Term or ground water contamination from
other parcels where the source is from off the Premises not arising from or
caused by Lessee or Lessee’s Agents. Notwithstanding the above, Lessee shall be
obligated for Environmental Surcharges that are on an area wide basis not
related specifically to Premises.

 

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34. Brokers: Lessor and Lessee represent that they have not utilized or
contacted a real estate broker or finder with respect to this Lease other than
CPS (“CPS”) and Lessee agrees to indemnify and hold Lessor harmless against any
claim, cost, liability or cause of action asserted by any broker or finder
claiming through Lessee other than CPS. Lessor shall at its sole cost and
expense pay the brokerage commission per Lessor’s standard commission schedule
to CPS in connection with this transaction. Lessor represents and warrants that
it has not utilized or contacted a real estate broker or finder with respect to
this Lease other than CPS and Lessor agrees to indemnify and hold Lessee
harmless against any claim, cost, liability or cause of action asserted by any
broker or finder claiming through Lessor.

35. Option to Extend:

A. Option: Lessor hereby grants to Lessee three (3) options to extend the Lease
Term, with each extended term to be for a period of five (5) years, on the
following terms and conditions, which shall apply separately to each option to
extend:

(i) Lessee shall give Lessor written notice of its exercise of one of its
options to extend no earlier than twenty-four (24) calendar months, nor later
than six (6) calendar months before the Lease Term would end but for said
exercise. Time is of the essence.

(ii) Lessee may not extend the Lease Term pursuant to any option granted by this
Section 35 if Lessee is in default as of the date of the exercise of one of its
options. If Lessee has committed a default by Lessee as defined in Section 14 or
32 that has not been cured or waived by Lessor in writing by the date that any
extended term is to commence, then Lessor may elect not to allow the Lease Term
to be extended, notwithstanding any notice given by Lessee of an exercise of
this option to extend.

(iii) Lessee must exercise each option consecutively, and if it fails to
exercise any one option, it waives the right to exercise the subsequent option
and the Lease Term shall not be extended further.

(iv) All terms and conditions of this Lease shall apply during each extended
term, except that the Base Rent and rental increases for each extended term
shall be determined as provided in Section 35 (B) below

(v) Lessee must provide Lessor written notice of its exercise of its options as
provided hereunder at least nine (9) months before the Lease Term would end but
for said exercise for purposes of negotiating rental terms. Lessee may withdraw
its notice of exercise of an extension option for any reason prior to six
(6) months before the Lease Term would end but for said exercise. Lessor shall
provide Lessee with Lessor’s proposed Monthly Base Rent for the option period
within twenty (20) days of Lessee’s request. However, once Lessee delivers a
notice of exercise of an option to extend the Lease Term it may not be withdrawn
unless notice in writing is provided to Lessor at least six (6) months before
the Lease Term would end but for said exercise and, subject to the provisions of
this Section 35, such notice shall operate to extend the Lease Term. Upon any
extension of the Lease Term pursuant to this Section 35, the term “Lease Term”
as used in this Lease shall thereafter include the then extended term.

B. Extended Term Rent - Option Period: The monthly Rent for the Premises during
the extended term shall equal 95% of the fair market monthly Rent for the
Premises as of the commencement date of the extended term, but in no case, less
than the Rent during the last month of the prior Lease term. Promptly upon
Lessee’s exercise of the option to extend, Lessee and Lessor

 

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shall meet and attempt to agree on the fair market monthly Rent for the Premises
as of the commencement date of the extended term. In the event the parties fail
to agree upon the amount of the monthly Rent for the extended term prior to
commencement thereof, the monthly Rent for the extended term shall be determined
by appraisal in the manner hereafter set forth; provided, however, that in no
event shall the monthly Rent for the extended term be less than in the immediate
preceding period. Annual base rent increases during the extended term shall be
four percent (4%) per year. In the event it becomes necessary under this
paragraph to determine the fair market monthly Rent of the Premises by
appraisal, Lessor and Lessee each shall appoint a real estate appraiser who
shall be a member of the American Institute of Real Estate Appraiser (“AIREA”)
and such appraisers shall each determine the fair market monthly Rent for the
Premises taking into account the value of the Premises and the amenities
provided by the outside areas, the common areas, and the Building, and
prevailing comparable Rentals in the area. Such appraisers shall, within twenty
(20) business days after their appointment, complete their appraisals and submit
their appraisal reports to Lessor and Lessee. If the fair market monthly Rent of
the Premises established in the two (2) appraisals varies by five percent
(5%) or less of the higher Rent, the average of the two shall be controlling. If
said fair market monthly Rent varies by more than five percent (5%) of the
higher Rental, said appraisers, within ten (10) days after submission of the
last appraisal, shall appoint a third appraiser who shall be a member of the
AIREA and who shall also be experienced in the appraisal of Rent values and
adjustment practices for commercial properties in the vicinity of the Premises.
Such third appraiser shall, within twenty (20) business days after his
appointment, determine by appraisal the fair market monthly Rent of the Premises
taking into account the same factors referred to above, and submit his appraisal
report to Lessor and Lessee. The fair market monthly Rent determined by the
third appraiser for the Premises shall be controlling, unless it is less than
that set forth in the lower appraisal previously obtained, in which case the
value set forth in said lower appraisal shall be controlling, or unless it is
greater than that set forth in the higher appraisal previously obtained in which
case the Rent set for in said higher appraisal shall be controlling. If either
Lessor or Lessee fails to appoint an appraiser, or if an appraiser appointed by
either of them fails, after his appointment to submit his appraisal within the
required period in accordance with the foregoing, the appraisal submitted by the
appraiser properly appointed and timely submitting his appraisal shall be
controlling. If the two appraisers appointed by Lessor and Lessee are unable to
agree upon a third appraiser within the required period in accordance with the
foregoing, application shall be made within twenty (20) days thereafter by
either Lessor or Lessee to AIREA, which shall appoint a member of said institute
willing to serve as appraiser. The cost of all appraisals under this
subparagraph shall be borne equally be Lessor and Lessee. Each appraiser shall
have at least ten (10) years experience appraising research and development
properties in Silicon Valley.

36. Approvals: Whenever in this Lease the Lessor’s or Lessee’s consent is
required, such consent shall not be unreasonably or arbitrarily withheld or
delayed. In the event that the Lessor or Lessee does not respond to a request
for any consents which may be required of it in this Lease within fifteen
business days of the request of such consent in writing by the Lessee or Lessor,
such consent shall be deemed to have been given by the Lessor or Lessee.

37. Authority: Each party executing this Lease represents and warrants that he
or she is duly authorized to execute and deliver the Lease. If executed on
behalf of a corporation, that the Lease is executed in accordance with the
by-laws of said corporation (or a partnership that the Lease is executed in
accordance with the partnership agreement of such partnership), that no other
party’s approval or consent to such execution and delivery is required, and that
the Lease is binding upon said individual, corporation (or partnership) as the
case may be in accordance with its terms.

38. Indemnification: Except to the extent caused by the sole negligence or
willful misconduct of Lessor or Lessor’s Agents, Lessee shall defend, indemnify
and hold Lessor harmless from and against any and all obligations, losses,
costs, expenses, claims, demands, reasonable attorney’s fees, investigation
costs or liabilities on account of, or arising out of the use, condition or
occupancy of the Premises or any act or omission to act of Lessee or Lessee’s
Agents or any occurrence in, upon, about or at the Premises, including, without
limitation, any of the foregoing provisions arising out of the use, generation,
manufacture,

 

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installation, release, discharge, storage, or disposal of Hazardous Materials by
Lessee or Lessee’s Agents. It is understood that Lessee is and shall be in
control and possession of the Premises and that Lessor shall in no event be
responsible or liable for any injury or damage or injury to any person
whatsoever, happening on, in, about, or in connection with the Premises, or for
any injury or damage to the Premises or any part thereof. This Lease is entered
into on the express condition that Lessor shall not be liable for, or suffer
loss by reason of injury to person or property, from whatever cause, which in
any way may be connected with the use, condition or occupancy of the Premises or
personal property located herein, except as otherwise set forth herein. The
provisions of this Lease permitting Lessor to enter and inspect the Premises are
for the purpose of enabling Lessor to become informed as to whether Lessee is
complying with the terms of this Lease and Lessor shall be under no duty to
enter, inspect or to perform any of Lessee’s covenants set forth in this Lease.
Lessee shall further indemnify, defend and hold harmless Lessor from and against
any and all claims arising from any breach or default in the performance of any
obligation to Lessee’s part to be performed under the terms of this Lease.

Lessor shall indemnify, defend and hold Lessee and its partners, shareholders,
officers, directors, agents, employees and contractors harmless from any and all
liability for injury to or death of any person, or loss of or damage to the
property of any person, and all actions, claims, demands, costs (including,
without limitation, reasonable attorneys’ fees), damages or expenses of any kind
arising therefrom which may be brought or made against Lessee or which Lessee
may pay or incur, to the extent such liabilities or other matters arise in, on
or about the Premises by reason of any sole negligence or willful misconduct by
Lessor or Lessor’s agents, employees or contractors.

The provisions of Section 38 shall survive the Lease Term or earlier termination
of this Lease with respect to any damage, injury or death occurring during the
Lease Term.

39. Successors And Assigns: The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.

40. Miscellaneous Provisions: All rights and remedies hereunder are cumulative
and not alternative to the extent permitted by law and are in addition to all
other rights or remedies in law and in equity.

41. Choice of Law: This lease shall be construed and enforced in accordance with
the substantive laws of the State of California. The language of all parts of
this lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Lessor or Lessee.

42. Entire Agreement: Except for the Lessor’s consent to the Sublease and the
related Non Disturbance Agreement between Celestica, Lessor and Lessee, this
Lease is the entire agreement between the parties, and there are no agreements
or representations between the parties except as expressed herein. Except as
otherwise provided for herein, no subsequent change or addition to this Lease
shall be binding unless in writing and signed by the parties hereto.

43. Express Contingency. Notwithstanding anything to the contrary set forth
herein, this Lease is expressly contingent on (i) Lessee and Celestica entering
into a mutually agreeable sublease agreement for a term commencing on or before
the date hereof and expiring at midnight on December 31, 2011, and (ii) Lessee
obtaining a Non-Disturbance Agreement effective with respect to the Premises
during the term of the Sublease, executed by Lessor and Lessee in a form
reasonably acceptable to Lessee (A) confirming that in the event of early
termination of the lease between Celestica and Lessor with respect to the
Premises, so long as Lessee is not in material default under the Sublease beyond
any applicable cure period, Lessee’s rights thereunder shall be in no way
abridged or disturbed by Lessor nor shall Lessee’s obligations thereunder be in
any way expanded, and the

 

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Sublease shall continue in full force and effect as a direct lease between
Lessor and Lessee in accordance with its terms, and (B) agreeing that the
benefit of such Non-Disturbance Agreement shall be transferable to any
transferee that is a Permitted Transfer (as such term is defined in the
Sublease) and to any other assignee or subtenant that is reasonably acceptable
to Lessor at the time of transfer. In the event either (i) or (ii) is not
satisfied on the Effective Date (the “Contingency Satisfaction Date”), Lessee
shall have the right to terminate this Lease by written notice to Lessor of such
termination by December 31, 2006 and (except with respect to obligations that
survive the termination hereof) neither party shall have any further obligations
under this Lease.

 

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STANDARD FORM LEASE

In Witness Whereof, Lessor and Lessee have executed this Lease, the day and year
first above written.

 

Lessor       Lessee Mission West Properties, L.P.       Nextest Systems
Corporation By:   Mission West Properties, Inc.       By:     

/s/ Carl E. Berg

        

/s/ Robin Adler

signature of authorized representative       signature of authorized
representative

Carl E. Berg

     

Robin Adler

printed name       printed name

CEO of the General Partner

     

Chief Executive Officer

Title       title   

12/22/06

     

12/22/06

Date       date   

Exhibit A – Building II

Exhibit A-1 – Dock Space

Exhibit A-2 - Project

Exhibit B- Approved Lessee Improvements

Exhibit C – Form of Subordination, Non-Disturbance and Attornment Agreement

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

STANDARD FORM LEASE

Exhibit A – Building II

[intentionally deleted]

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

STANDARD FORM LEASE

Exhibit A-1 – Dock Space

[intentionally deleted]

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

STANDARD FORM LEASE

Exhibit A-2 – Project

[intentionally deleted]

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

STANDARD FORM LEASE

Exhibit B - Approved Lessee Improvements

[intentionally deleted]

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

STANDARD FORM LEASE

Exhibit C – Form of Subordination, Non-Disturbance and Attornment Agreement

[intentionally deleted]