Document:

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                                                    EXHIBIT 10.5
                             CONFIDENTIAL TREATMENT
                         PDF SOLUTIONS, INC. HAS REQUESTED
                        THAT THE MARKED PORTIONS OF THIS
                        DOCUMENT BE ACCORDED CONFIDENTIAL
                      TREATMENT PURSUANT TO RULE 406 UNDER
                      THE SECURITIES ACT OF 1933, AS AMENDED.

                                                       PROJECT: SONY CORPORATION
                                                                 ***************

                           YIELD IMPROVEMENT AGREEMENT

        This Yield Improvement Agreement is made as of the *** *** ** *******,
****, by and between SONY Corporation, a corporation organized and existing
under and by virtue of the laws of Japan, maintaining its principal office at
7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo, Japan (hereinafter referred to
as "SONY") and PDF Solutions, Inc., a corporation organized and existing under
and by virtue of the laws of the State of California, having its principal place
of business at 333 West San Carlos Street, San Jose, California 95110 U.S.A.
(hereinafter referred to as "PDF").

                               W I T N E S S E T H:

        WHEREAS, SONY is, among other things, engaged in the business of
manufacturing and selling ******************* referred to as the ***** Product
designed by or for SONY (hereinafter referred to as the "PRODUCTS"); and

        WHEREAS, PDF has substantial expertise and skill in yield improvement
for semiconductor manufacturing; and

        WHEREAS, SONY desires that PDF render certain services for SONY for
purposes of improving the yield of the Products manufactured at SONY's
subsidiary located in ************* (hereinafter referred to as the "SONY
SUBSIDIARY"); and

        WHEREAS, PDF is willing to render such services to SONY under the terms
and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, it is mutually covenanted and agreed as follows:

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

1.      SERVICES

1.1       PDF shall, at its cost and expense, render the following services
          (hereinafter referred to as the "SERVICES") for SONY, which are more
          fully described in Exhibit A:

          1.1.1     To provide SONY with certain characterization vehicles to
                    assist in enhancing the yield in the fabrication of the
                    Products manufactured at SONY Subsidiary (the
                    "CHARACTERIZATION VEHICLES").

          1.1.2     To provide certain consulting services in connection with
                    such yield enhancement activities of SONY ("YIELD RAMP
                    SERVICES").

          1.1.3     To provide certain software to be used at the Sony
                    Subsidiary (THE "SOFTWARE DELIVERABLE").

1.2       For purposes of rendering the Services, PDF shall assign appropriate
          number of its employees and have at least ***** of them devote their
          full-time to render the Services. PDF shall ensure that such employees
          are fully qualified personnel with enough experience and expertise to
          render the Services.

2.        SCHEDULES AND DELIVERABLES

2.1       The Services shall be rendered by PDF ******************** and shall
          continue to be rendered until
          ***********************************************************
          Characterization Vehicle Deliverables (as defined below) pursuant to
          Section 2.5 (THE "SERVICE PERIOD"). Upon five (5) working days prior
          written notice by SONY to PDF, SONY may change, if needed, the time
          schedule for the provision of the Services so long as the total period
          of time for the Services to be rendered after the acceptance by SONY
          of the last Characterization Vehicle Deliverables shall not exceed
          ************** *********************************************. If any
          such change significantly affects the costs or efforts required to
          render the Services, the parties shall work together to agree upon an
          equitable adjustment to the Service Fees.

2.2       PDF shall prepare and deliver to SONY the "Characterization Vehicle
          Deliverables", the "Yield Ramp Status Report Deliverables" and the
          "Software Deliverables" described under "Deliverables" in Exhibit A
          (hereinafter collectively referred to as the "DELIVERABLES").
          Characterization Vehicle Deliverables shall be delivered by PDF to
          SONY in accordance with the schedule as described in EXHIBIT A. Upon
          delivery and acceptance of all Characterization Vehicle Deliverables,
          PDF will begin performing Yield Ramp Services for which Yield Ramp
          Status Report Deliverables will be generated and submitted to SONY by
          the end of each month.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

2.3       SONY shall prepare and provide PDF with such design data, process data
          and other data and information as is reasonably deemed necessary by
          SONY or as is reasonably requested by PDF and agreed by SONY for PDF
          to render the Services and deliver the Deliverables (hereinafter
          referred to as the "TECHNICAL DATA"). In addition, SONY shall at its
          cost and expense prepare and make available to the employees of PDF
          stationed at SONY Subsidiary, office space, equipment and services as
          PDF shall reasonably request including secure office space for use as
          a team office, appropriate equipment such as workstations, telephones,
          facsimile machines, a photocopier, printers and a removable data
          storage device, such as tape drives, and services such as
          international access telephone lines, and email access to the
          internet; provided that the costs for office supplies and telephone
          charges used by employees of PDF shall be borne by PDF, however, such
          costs shall constitute additional out-of-pocket expenses to be
          reimbursed by SONY to PDF under, and subject to the limitations set
          forth in, Section 3.3. The bearing of such costs by PDF and the
          reimbursement thereof by SONY shall be accomplished by offsets of one
          against the other to the extent reasonably practicable.

2.4       In addition to the provisions of Section 2.1 above, SONY may, if
          needed, upon written notice to PDF, make changes to Exhibit A relating
          to Deliverables which have not been delivered or actions which have
          not been taken as of the time of such change; provided that if any
          such change significantly affects the scope or timing of the Services
          rendered or any Deliverables to be delivered or changes the costs and
          efforts required to render the Services or deliver the Deliverables,
          the parties shall work together to agree upon an additional amount to
          be paid for such Services, Deliverables, costs or efforts, and upon an
          appropriate time schedule.

2.5       Upon receipt of each Deliverable, SONY shall inspect such Deliverable
          to determine whether such Deliverable conforms to the description
          thereof contained in Exhibit A. Should any Deliverable not reasonably
          conform to such description, SONY shall, within ten (10) days after
          receipt of such Deliverable, so notify PDF in writing specifying the
          variance from the description, and PDF shall promptly correct and
          deliver the Deliverable to SONY again. Such Deliverable, as so
          corrected, shall be redelivered in accordance with this Section 2.5.
          If no notification is made by SONY to PDF within such ten (10) day
          period, such Deliverable shall be deemed accepted by SONY.

2.6       For a period of ten (10) days following the end of the Service Period,
          PDF shall, upon the request of SONY, assist SONY by answering SONY's
          questions through telephone, facsimile or e-mail communications
          ("VERBAL SUPPORT"); provided that any such Verbal Support shall relate
          only to the Services specified to be performed with respect to the
          Products under this Agreement and not to other products, projects or
          work SONY wishes to have PDF perform.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

2.7       The Services shall be deemed completed at the time when all the
          Deliverables are delivered by PDF to, and accepted by, SONY. PDF
          shall, upon the written request of SONY, render for SONY additional
          services of providing additional Yield Ramp Status Report Deliverables
          following the Service Period defined in Section 2.1 above ("FOLLOW-UP
          SERVICES)"; provided that SONY shall pay as consideration the Yield
          Ramp Status Report Deliverable Fee specified in Section 3.1 for each
          such additional Yield Ramp Status Report Deliverable.

3.        CONSIDERATION

3.1       In full and complete consideration for the Services rendered by PDF to
          SONY (including the delivery of the Deliverables), SONY shall pay to
          PDF an aggregate amount equal to
          ***************************************** in total (hereinafter
          referred to as the "SERVICE FEE"). Such Service Fee shall be payable
          by SONY to PDF in ******* installments as follows:

          3.1.1    Upon acceptance of each Characterization Vehicle Deliverable,
                    SONY shall pay the amount of
                    ************************************************
                    *************** as the "Characterization Vehicle
                    Deliverables Fee"; and

          3.1.2     Upon acceptance of each Yield Ramp Status Report
                    Deliverable, SONY shall pay the amount of
                    ************************************************
                    *************** as the "Yield Ramp Status Report
                    Deliverables Fee".

3.2       Upon SONY's acceptance of each of the Deliverables pursuant to Section
          2.5, PDF shall issue to SONY an invoice for the payment in United
          States Dollars of the applicable installment of the Service Fee
          payable by SONY to PDF under Section 3.1 above. SONY shall make
          payment of such installment in United States Dollars by making a
          telegraphic transfer remittance to the bank account of PDF within
          thirty (30) days following the date of receipt of the invoice by SONY
          from PDF.

3.3       In addition to the Service Fee payable under Section 3.1 above, SONY
          shall pay to PDF travel and other reasonable out of pocket expenses
          actually incurred by PDF in rendering the Services, including the
          economy class air fares, domestic travel expenses in the U.S.A. and
          Japan, hotel accommodation expenses and meal expenses for the
          employees and consultants of PDF engaged in the Services; provided,
          however, that in no event shall the expenses to be paid by SONY to PDF
          hereunder exceed *******************
          *************************************************. The costs and
          expenses reimbursable under this Section 3.3 are referred to as
          "EXPENSES."

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

3.4       Within thirty (30) days after close of each calendar month, PDF shall
          issue an invoice for the payment in United States Dollars of the
          Expenses payable by SONY to PDF under Section 3.3 above together with
          a detailed listing of such Expenses. SONY shall make payment of such
          Expenses in United States Dollars by making a telegraphic transfer
          remittance to the bank account of PDF within thirty (30) days
          following the date of receipt of the invoice by SONY from PDF. SONY
          shall have the right at SONY's expense to have such Expenses audited
          by independent accountants of recognized standing.

3.5       All amounts which SONY does not pay on a timely basis as required by
          this Agreement shall be subject to a late charge equal to
          ***************** (or, if less, the maximum allowed by applicable
          law). In the event that any payment due hereunder is overdue, PDF
          reserves the right to suspend performance until such delinquency is
          corrected.

4.      OWNERSHIP AND RIGHTS

4.1       Each party shall solely own any Intellectual Property (as defined
          below) developed solely by the employee(s) or agents of such party
          irrespective of the Services before or after the term of this
          Agreement.

4.2       SONY and PDF agree that the Deliverables shall become the sole and
          exclusive property of SONY.

4.3       PDF and SONY agree that the ownership of the inventions and the
          intellectual property rights thereon, including, without limitation,
          patents and patent applications, copyrights, mask works, trade
          secrets, know how, industrial design rights, rights of authorship, and
          other intellectual property rights or rights protecting intangible
          property or information recognized by the law of any country or
          jurisdiction of the world (hereinafter collectively referred to as the
          "INTELLECTUAL PROPERTY") generated during the course of the Services,
          shall be determined as follows:

          4.3.1. ***

          4.3.2. ***

          4.3.3. ***

          4.3.4. ***

          4.3.5. ***

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

4.4       SONY hereby grants to PDF a ************************************
          ******************************************************* license;
          provided that *** shall be bound by the confidentiality obligations
          contained in this Agreement.

4.5       PDF hereby grants to SONY a ***********************************
          *************************************************************
          ******************************************************* license;
          provided, further, that SONY shall be bound by and shall cause its
          sublicensees to be bound by the confidentiality obligations contained
          in this Agreement.

4.6       Except as otherwise set forth in this Section 4, neither this
          Agreement nor the performance of the Services shall give either PDF or
          SONY any ownership, interest in or rights to the Intellectual Property
          owned by the other party.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

5.        DURATION AND TERMINATION OF AGREEMENT

5.1       This Agreement shall become effective as of the date first above
          written and shall continue in full force and effect until the payment
          of the Service Fees shall have been completed in accordance with the
          terms and conditions of this Agreement.

5.2       Either party shall have the right to terminate this Agreement at any
          time if:

          5.2.1     the other party is in breach of any term, condition or
                    covenant of this Agreement and fails to cure that breach
                    within thirty (30) days after receiving written notice of
                    that breach, which notice must state that failure to cure
                    such breach will result in termination of this Agreement.

          5.2.2     the other party (i) becomes insolvent, (ii) admits in
                    writing its insolvency or inability to pay its debts or
                    perform its obligations as they mature, or (iii) becomes the
                    subject to any voluntary or involuntary proceeding in
                    bankruptcy, liquidation, dissolution, receivership,
                    attachment or composition or general assignment for the
                    benefit of creditors.

          5.2.3     More than ten percent (10%) of the other party's outstanding
                    stock or equity interests is acquired by, or the other party
                    is merged with, any competitor of such terminating party.

          5.3       In addition to the provisions of Section 5.2, SONY may
                    terminate this Agreement at any time prior to the completion
                    of the Services by giving a written notice to PDF. In such
                    case, SONY shall pay to PDF ***********************
                    ***********************************************************
                    **********.

5.4       The provisions of Sections 2.6, 2.7, 3 (to the extent Service Fees,
          Expenses or any portion thereof are payable), 4, 6, 7 and 8 of this
          Agreement shall survive the expiration and termination of this
          Agreement.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

6.      CONFIDENTIALITY

6.1       Each party (the "RECEIVING PARTY") hereto agrees to maintain as
          confidential and to use only for the purposes permitted under this
          Agreement, during the term of this Agreement and for ***************
          thereafter, all confidential and proprietary information and materials
          received from the other party (the "DISCLOSING PARTY") under this
          Agreement ("CONFIDENTIAL INFORMATION"); provided that to be protected
          as Confidential Information, information and materials shall be (a)
          physically marked as confidential or proprietary, or (b) if disclosed
          orally or visually, identified as confidential at the time of
          disclosure and be reduced to writing with confidential or proprietary
          marking, which shall be delivered to the Receiving Party within thirty
          (30) days after the oral or visual disclosure. Notwithstanding the
          immediate foregoing, (i) the Deliverables, (ii) the Technical Data and
          (iii) any and all the information and materials provided to or
          acquired by the employees of PDF at SONY Subsidiary shall be deemed
          Confidential Information of SONY even without marking or designation
          of confidentiality.

6.2       Notwithstanding the provisions of Section 6.1 above, a Receiving Party
          shall have no obligation to maintain the confidentiality of any
          information or material that:

          6.2.1     was in the Receiving Party's lawful possession prior to the
                    disclosure as supported by satisfactory evidence of such
                    possession;

          6.2.2     becomes publicly known through no wrongful act or omission
                    of the Receiving Party;

          6.2.3     is lawfully received by the Receiving Party from a third
                    party without breach of any confidentiality obligation or
                    other restriction on disclosure;

          6.2.4     is independently ascertainable or developed by the Receiving
                    Party or its employees who have not had access to the
                    Confidential Information.

          6.2.5     is required to be disclosed to a court or government agency,
                    provided that prompt prior written notice of such intended
                    disclosure is given to the Disclosing Party sufficient to
                    enable it to acquire a protective order.

6.3       Confidential Information of each party shall be and remain the
          property of such party. Upon request by the Disclosing Party or upon
          expiration or termination of this Agreement, whichever is earlier, the
          Receiving Party shall return all Confidential Information received
          from the Disclosing Party together with all copies thereof or destroy
          them, if so requested by the Disclosing Party.

                                      -8-
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7.        WARRANTIES AND INDEMNIFICATION

7.1       PDF warrants that the Services shall be rendered in a professional
          manner consistent with the quality of PDF's performance of services
          for other similarly situated clients. PDF also warrants that the
          Services shall be rendered in compliance with all relevant Japanese
          and United States (federal and state) laws, ordinances, rules and
          regulations and shall not constitute any breach of contractual
          obligations of PDF with third parties. PDF further warrants that the
          Deliverables are free from infringement of any patent, copyright,
          trade secret right or, to PDF's actual knowledge, other Intellectual
          Property of any third party; provided that such warranty shall not
          extend (a) to any infringement that are caused by or results from (i)
          any modifications recommended to be made to SONY's designs or
          products, or (ii) other suggestions, recommendations or other matters
          made or provided by PDF contained in such Deliverables or the
          application or implementation of any of the foregoing unless such
          recommendations, suggestions, Deliverables, applications, and
          implementations considered alone (and not in conjunction with
          Technical Data, Intellectual Property or other reports or information
          provided by SONY or any third party other than consultants or
          subcontractors of PDF) would constitute such an infringement; or (b)
          to the extent any infringement results from any infringement contained
          in any Technical Data, Intellectual Property or other reports or
          information provided by SONY or any third party other than consultants
          or subcontractors of PDF.

7.2       THE WARRANTY IN THIS SECTION 7 IS EXCLUSIVE AND IN LIEU OF ALL OTHER
          WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
          WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
          NON-INFRINGEMENT, WHICH ARE EXPRESSLY DISCLAIMED. NOTHING UNDER THIS
          AGREEMENT, OR THE STATEMENT OF WORK OR PROJECT SHALL BE DEEMED TO BE A
          WARRANTY AS TO THE OUTCOME OF ANY PROJECT OR THE EFFICACY OF ANY
          RECOMMENDATIONS MADE BY PDF. EXCEPT AS EXPRESSLY PROVIDED IN SECTION
          7.1 ABOVE, NOTHING UNDER THIS AGREEMENT OR THE STATEMENT OF WORK SHALL
          BE DEEMED TO CREATE ANY LIABILITY ON THE PART OF PDF WITH RESPECT TO
          THE RESULTS OF ANY ACTIONS TAKEN BY SONY AS A CONSEQUENCE OF PDF'S
          RECOMMENDATIONS OR THE OUTCOME ON A PRODUCT FROM FOLLOWING ANY
          SUGGESTIONS OR RECOMMENDATIONS CONTAINED IN THE DELIVERABLES.

7.3       EXCEPT AS SPECIFICALLY PROVIDED FOR IN SECTION 7.4, IN NO EVENT SHALL
          EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL, CONSEQUENTIAL,
          INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES, HOWEVER CAUSED,
          WHETHER FOR BREACH OF WARRANTY, CONTRACT, TORT NEGLIGENCE, STRICT
          LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
          POSSIBILITY OF SUCH DAMAGES.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

7.4       PDF hereby agrees to indemnify and hold SONY, its affiliates, and
          their respective officers, directors, employees, and agents ("SONY
          INDEMNITEES") harmless from and against any and all liabilities,
          losses, damages, costs, and expenses ("LOSSES"), and any attorney's
          fees and expenses relating to its defense, resulting directly from any
          claim or action brought against the SONY Indemnitees resulting from
          any breach by PDF of the foregoing warranties (a "CLAIM") and defend
          the SONY Indemnitees against such Claims, provided that the SONY
          Indemnitees shall follow the indemnification procedure as set forth in
          this Agreement. *** The indemnification contained in this Section 7.4
          shall be the sole and exclusive remedy for any breach of warranty
          contained in this Agreement.

7.5       If any Claim is commenced against a party entitled to indemnification
          under this Section 7 , such party shall give written notice to the
          other party within ten (10) days of notice of such Claim. If such
          party receiving notice is obligated under this Section 7 to defend the
          party against such Claim, then the indemnifying party shall take
          control of the defense and investigation of the Claim, using such
          attorneys and other assistance as it selects in its discretion. The
          indemnified party shall cooperate in all reasonable respects in such
          investigation and defense, including trial and any appeals, provided
          that such party may also participate, at its own expense, in such
          defense. No settlement of a Claim that involves a remedy other than
          payment of money by indemnifying party shall be agreed to and entered
          without the consent of the indemnified party, which consent shall not
          be unreasonably withheld.

7.6       No action, regardless of form, arising from this Agreement may be
          brought by either party more than one (1) year after the cause of
          action actually is discovered by that party (but in no event later
          than as otherwise provided by law), except that an action for
          non-payment may be brought within one (1) year after the later of the
          date of last payment or the date such unpaid amount should have been
          paid.

8.      APPLICABLE LAW; JURISDICTION

8.1       This Agreement shall be governed by and construed in accordance with
          the laws of the State of California without reference to choice or
          conflicts of laws. This Agreement is prepared and executed and shall
          be interpreted in the English language only, and no translation of the
          Agreement into another language shall have any effect. The parties
          agree that the United Nations Convention on Contracts for the
          International Sale of Goods (1980) is specifically excluded from and
          shall not apply to this Agreement.

8.2       Any controversies and disputes arising out of or relating to this
          Agreement shall be submitted to: (i) the Tokyo District Court in Japan
          in case the action is instituted by PDF; and (ii) the United States
          District Court for the Northern District of California in case the

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<PAGE>   11

          action is instituted by SONY; as the Court of first instance. The
          parties hereto agree that the judgment, degree, or order rendered by a
          Court of last resort or a Court of lower jurisdiction from which no
          appeal has been taken in Japan or the United States shall be final and
          binding upon both parties.

9.        WORKING INDEPENDENTLY OR WITH OTHERS.

9.1       Subject to SONY's compliance with the confidentiality and other
          provisions stated herein and in any existing agreement between the
          parties, nothing in this Agreement shall be construed to preclude SONY
          from independently performing or acquiring from other parties the same
          or similar services as the Services provided by PDF hereunder.

9.2       SONY acknowledges that PDF has extensive expertise, experience, and
          proprietary products and tools in the area of electronic design and
          yield improvement and that PDF intends to utilize such expertise,
          experience, products and tools in providing consulting services and
          other services to other clients. Subject to PDF's compliance with the
          confidentiality and other provisions stated herein and in any existing
          agreement between the parties, nothing in this Agreement shall
          restrict or limit PDF from performing such design consulting or other
          services to any other entity in any industry, including the
          semiconductor and electronics industries. SONY agrees that, except as
          otherwise agreed in this Agreement, PDF and its employees may provide
          design consulting services similar in nature to the Services for any
          third parties both during and after the term of this Agreement.
          Subject to the limitations placed on PDF by the confidentiality and
          other provisions of this Agreement or by any existing agreement
          between PDF and SONY, PDF may in its sole discretion develop, use,
          market, license, offer for sale, or sell any software, application or
          product that is similar or related to that which was developed by PDF
          for SONY hereunder.

10.       GENERAL

10.1      PDF shall not disclose or publicize the existence and terms of this
          Agreement to any third party without the prior written consent of
          SONY. In particular, no press releases shall be made by PDF without
          prior written consent of SONY.

10.2      The relationship of PDF and SONY established by this Agreement is that
          of independent contractors, and nothing contained in this Agreement
          shall be construed to (i) give either party the power to direct or
          control the day-to-day activities of the other, (ii) constitute the
          parties as agents, partners, joint venturers, co-owners or otherwise
          as participants in a joint or common undertaking, or (iii) allow
          either party to create or assume any obligation on behalf of the other
          or bind the other for any purpose whatsoever nor shall either party
          represent to anyone that it has such power or authority.

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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

10.3      Neither party may assign or transfer any of the rights and
          responsibilities under this Agreement without written consent of the
          other party and any purported attempt to do so shall be deemed void.

10.4      This Agreement expresses the entire understanding and agreement
          between SONY and PDF with regard to the subject matter hereof and,
          except for any confidentiality or nondisclosure agreements between the
          parties, supersedes any and all agreements previously entered into
          between the parties hereto with regard to the subject matter hereof.

10.5      For purposes of this Agreement, "Subsidiary" shall mean any
          corporation or other entity, in which more than fifty percent (50%) of
          the stocks or other equity interest entitled to vote for the election
          of directors of such entity shall be owned or controlled by PDF or
          SONY directly or indirectly; provided that such corporation or entity
          shall be deemed to be a "Subsidiary" only so long as such ownership or
          control exists.

10.6      This Agreement shall not be subject to change or modification except
          by the execution of an instrument in writing subscribed by the parties
          hereto.

10.7      If one or more provisions of this Agreement are held to be
          unenforceable under applicable law, the parties agree to renegotiate
          such provision in good faith. In the event that the parties cannot
          reach a mutually agreeable and enforceable replacement for such
          provision, then (i) such provision shall be excluded from this
          Agreement, (ii) the balance of this Agreement shall be interpreted as
          if such provision were so excluded and (iii) the balance of this
          Agreement shall be enforceable in accordance with its other terms.

10.8      This Agreement may be executed in counterparts, each of which shall be
          deemed an original, but all of which together will constitute one and
          the same instrument.

10.9      Either PDF or SONY shall not be liable for any loss, damage, or
          penalty arising from delay due to causes beyond its reasonable
          control.

10.10     Neither party shall, directly or indirectly export or re-export any
          technical data or information or data received from the other party
          hereunder or the direct products thereof to any destination prohibited
          or restricted by export control regulations of Japan and the United
          States, including U.S. Export Administration Regulations, without
          proper authorization from the appropriate governmental authorities. In
          addition, the parties agree that no technology furnished to the other
          will be used for any purpose to develop and/or manufacture nuclear,
          chemical or biological weapons and/or missiles.

10.11     In rendering the Services hereunder, PDF may use consultants and other
          subcontractors upon obtaining prior consent of SONY, which consent
          shall not be unreasonably

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<PAGE>   13

          withheld. PDF shall cause such consultants and subcontractors to be
          subject to and bound by the confidentiality obligations set forth in
          Section 6 of the Agreement and agree to SONY's and PDF's ownership of
          the Intellectual Property as described in Section 4 of the Agreement.
          Failure by such consultants and subcontractors to observe any
          provisions of this Agreement shall constitute a breach of this
          Agreement by PDF.

10.12     All notices required or permitted to be given under this Agreement
          must be in writing and will be effective when delivered personally or
          sent by registered mail, postage prepaid, and addressed to the parties
          at their respective address set forth below or new address or
          addresses subsequently designated in writing by either party to the
          other:

          SONY                                    PDF
          Legal & Intellectual Property Dept.     Chief Financial Officer
          Core Technology & Network Company
          Sony Corporation                        PDF Solutions, Inc.
          1-11-1, Osaki, Shinagawa-ku, Tokyo      333 West San Carlos Street,
          141-0032, Japan                         Suite 625
                                                San Jose, California 95110 USA

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

SONY CORPORATION                    PDF SOLUTIONS, INC.

By: /s/ Norikazu Ouchi              By /s/ John K. Kibarian
      Norikazu Ouchi                       John K. Kibarian
      General Manager                      President
      Device Development Dept.-1
      LSI Development Div.
        LSI Business & Technology
      Development Group
      Core Technology &
        Network Company

                                      -13-
<PAGE>   14

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

                                                                       EXHIBIT A

                                STATEMENT OF WORK

                                SONY CORPORATION
                                  **************

          This Statement of Work is made between PDF Solutions, Inc. ("PDF") and
SONY Corporation ("SONY") pursuant to and attached as an exhibit to that certain
Yield Improvement Agreement dated as of January 1, 2000 (the "AGREEMENT")
between PDF and SONY. All terms and conditions contained in the Statement of
Work are subject to the terms and conditions set forth in the Agreement.

SERVICES

          PDF will provide SONY with characterization vehicles and other
Deliverables resulting from consulting services relating to assisting SONY in
***************** of the ********************************************** Product
designed by or for SONY ************* (the "PRODUCTS").

COMMENCEMENT

          The engagement will commence with a kick-off meeting on or before
********** (the "KICK-OFF MEETING"). At this meeting PDF and SONY
representatives will meet to commence the project. Prior to the kickoff meeting,
PDF managers and engineers will have met with SONY managers and engineers to
assess availability of data and design a specific work plan for delivery of the
Deliverables based upon available data and resources. This assessment will be
presented at the kickoff meeting along with the first Characterization Vehicle.

DELIVERABLES

        The objective of the Project and the result of the above activities will
be to deliver the following Deliverables (which shall be the "DELIVERABLES" as
defined in the Agreement):

(1)     CHARACTERIZATION VEHICLE DELIVERABLES. The following four items shall
        collectively be referred to as the ************************
        ************** The following ************************ will be delivered
        by **********:

               (a) ********** data and documentation
               (b) ********** data and documentation
               (c) ********** data and documentation
               (d) ********** data and documentation

                                     ExA-1

<PAGE>   15

        NOTE:  Mask data is defined to be an electronic GDS-II file and will be
               delivered either on 8mm tape or through network TCP/IP FTP.

        *********************** DOCUMENTATION:

        As part of the ************************ portion of the project, the
        following documentation will be provided:

        (A)    Summary. *****************************************************.

        (B)    ***********************************************************.

        (C)    *********************************************
               ***************************************************************
               ******************************************* will be provided to
               SONY by **********.

        (D)    **********************************************************
               **************************************************************
               *****************************. One or more status report(s) will
               be generated for *********** ************************ data
               containing the following information and these reports will be
               provided to SONY by **********:

               (i)    ****************************************
                      ********************

               (ii)   **************************************
                      **************************************

               (iii)  *******************************************
                      ******

        (E)    *************************Report.
               *****************************************************************
               *********** **************************will be generated for the
               ************* ********This report will contain the following
               information and will be provided to SONY by **********:

               (i)    **********************************************
                      ***************************************

                                     ExA-2

<PAGE>   16

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

               (ii)   *********************************

               (iii)  ********************************************************
                      *********************

(2)     **********************************************************************

        (A)    ***************************************************************

        (B)    ***************************************************************

        (C)    ***************************************************************

                                     ExA-3
<PAGE>   17

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

                (i)   ***

               (ii)   ********** of yield with ********** data;

               (iii)  ********** assessment; and

               (iv)   ********** results  necessary to **********.

        (D)    Quantification of **********

(3)     SOFTWARE DELIVERABLE. PDF will grant SONY a ********** **********
        software license for use solely in the SONY Subsidiary.  PDF will, upon
        SONY's timely execution of PDF's applicable license agreement, deliver
        and install such software by **********.

TEAM STRUCTURE

        Sony will establish a Steering Committee (the "STEERING COMMITTEE")
which will consist of (a) **********, and (b) **********. ********** will make
all such personnel available for performance under the Agreement and this
Statement of Work. The Steering Committee will be limited to ********** in order
to allow decisions to be reached in a timely fashion. The Steering Committee is
responsible for giving the team its charter, deciding which yield improvement
actions to take and who in the Sony organization will be responsible for
carrying out the improvement. At the quarterly Steering Committee Review
Meetings, PDF will provide a summary of the monthly engineering meetings
********** to assist the Steering Committee in its charter.

        The day-to-day analyses will be conducted by a ********** of engineers
from SONY and PDF. A PDF Engagement Manager will manage the activities of
**********. The PDF Engagement Manager will be responsible for directing all
team members in their analyses as well as aggregating and synthesizing the
results of all the analyses conducted by the entire team. The PDF Engagement
Manager will be available for all communications at reasonable times with the
********** members and the Steering Committee. In addition, the PDF Engagement
Manager will be the principal point of contact for any questions that Sony
personnel not on the ********** or Steering Committee may have during the course
of the engagement.

                                     ExA-4
<PAGE>   18

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION

        In addition to the PDF Engagement Manager, PDF will make a total of **
engineers and managers available to this engagement. PDF may staff additional
engineers during critical points during the term of this Agreement.

TOOLS

     SONY will provide PDF with office space in *********** and other typical
business resources reasonably requested from time to time by PDF. In
particular, SONY will provide PDF with secure office space large enough to
accommodate up to ****** PDF personnel in addition to the SONY engineers
assigned to work on the ********. SONY will provide PDF with office equipment
reasonably requested by PDF from time to time including ******* international
access telephones (including such analog lines as PDF shall request), an
international access Facsimile machine and line, and a photocopier. SONY will
provide PDF with 24-hour access to the team office so work can continue at
night and on weekends.

     SONY will provide PDF with computing resources that PDF reasonably deems
necessary to conduct data analysis and simulations. The details of such request
will be sent in a separate document to the SONY project leader but in general,
SONY will provide ****** engineering workstations connected to **************
the Internet. SONY will also provide such other accessories as PDF shall
reasonably request including a removable data storage device, such as a tape
drive, and a printer.

LOCATION

        The Project will be conducted by SONY's and PDF's personnel at SONY's
Subsidiary , and by PDF's personnel at PDF's facilities. In certain cases, PDF
may require SONY engineers to work at the PDF facility in San Jose, California.
PDF engineers may also work in SONY's Subsidiary when the engagement manager
believes this is necessary to achieve progress. If SONY shall provide PDF
employees with an English version of the employee rules and regulations in force
at the SONY facilities, then PDF employees shall comply with such rules and
regulations in all material respects in an equivalent manner as other SONY
employees generally. PDF shall take all reasonable steps necessary to ensure
that all employees resident at or visiting a SONY facility shall treat as
confidential in accordance with Section 6 all material information of a
proprietary nature observed by or disclosed to such employee, and shall comply
in all material respects with all export control obligations contained in
Section 8.

DURATION

The Project will proceed for a period of *********** following the acceptance of
the last Characterization Vehicle Deliverables unless earlier terminated
pursuant to the Agreement.

                                     ExA-5

<PAGE>   19

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                   Appendix A

**********

                                     APP-1<PAGE>   1
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                                                    EXHIBIT 10.6

                             CONFIDENTIAL TREATMENT
                        PDF SOLUTIONS, INC. HAS REQUESTED
                        THAT THE MARKED PORTIONS OF THIS
                        DOCUMENT BE ACCORDED CONFIDENTIAL
                      TREATMENT PURSUANT TO RULE 406 UNDER
                     THE SECURITIES ACT OF 1933, AS AMENDED.

                                                           PROJECT: TOSHIBA -
                                                           *********************
                                                           *********************

                        TECHNOLOGY COOPERATION AGREEMENT

        This Technology Cooperation Agreement dated as of *****************
(this "AGREEMENT") is entered into by and between Toshiba Corporation, a
corporation organized under the laws of Japan ("TOSHIBA") having its principal
place of business at 1-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan, and
PDF Solutions, Inc., a corporation organized under the laws of California
("PDF") having its principal place of business at 333 West San Carlos Street,
Suite 1200, San Jose, California, U.S.A..

1.      YIELD IMPROVEMENT SERVICES.

        1.1 PROVISION OF SERVICES. During the term of this Agreement, PDF will
provide to Toshiba development work and services with respect to integrated
circuit yield management issues. The services and the Deliverables to be
delivered as a result thereof (the "PROJECT") are described in detail on a
statement of work (the "STATEMENT OF WORK") attached hereto as Exhibit A. The
Statement of Work shall be governed by the terms of this Agreement, and
specifies:

        (a)     Deliverables. The specific deliverables (the "DELIVERABLES") to
                be delivered under the Project and relevant milestones for
                delivering the Deliverables;

        (b)     Team Structure. The team members from PDF and Toshiba who are to
                work on the Project and the expected time contributions for each
                such member;

        (c)     Tools. The required data, tools, hardware, software, materials,
                access to personnel and facilities, and other materials required
                for

                                      -1-
<PAGE>   2

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                effectively completing the Project;

        (d)     Location. The geographic location where each component of the
                Project will be completed;

        (e)     Fees and Expenses. The amount and structure of PDF's Fees (as
                defined below) payable upon delivery of the Deliverables and
                Expenses (as defined below).

        1.2 TOSHIBA INTELLECTUAL PROPERTY. Toshiba will provide PDF on a timely
basis with such Intellectual Property (as defined in Section 3.1) and such other
data and materials as PDF shall reasonably require in order to perform the
Project and/or prepare the Deliverables as defined in the Statement of Work.

        1.3 DELIVERABLES. In performing the Project, PDF shall develop and/or
make for Toshiba the Deliverables in accordance with any schedules set forth in
the Statement of Work. The Deliverables shall meet in all material respects the
description of the Deliverable (the "DELIVERABLE DESCRIPTION") set forth in the
Statement of Work.

        1.4 ACCEPTANCE. Upon delivery of any Deliverable by PDF to Toshiba,
Toshiba shall examine the Deliverable to determine whether it reasonably
conforms to the Deliverable Description. If the Deliverable does not reasonably
conform to such Deliverable Description, Toshiba shall have fifteen (15) days
from the date of delivery thereof to reject such Deliverable and specify in
writing why it does not reasonably conform to such Deliverable Description. Upon
such rejection the parties shall work together to determine what needs to be
done to bring such Deliverable up to such Deliverable Description. If the
Deliverable does not meet the Deliverable Description, PDF shall exercise
reasonable efforts to correct promptly such nonconformity of the Deliverable
with the Deliverable Description and redeliver the Deliverable to Toshiba upon
completion of such correction within one month following the parties' agreement
referenced in the preceding sentence but only if there are no limitations
outside of PDF's control. If there are limitations outside PDF's control, PDF
and Toshiba will negotiate in good faith a time for delivery of the Deliverable.
If a rejection of the Deliverable is not received by PDF within fifteen (15)
days after any delivery or redelivery of a Deliverable under this Section 1.4,
the Deliverable shall be deemed accepted. "ACCEPTANCE" (including with
correlative meaning the term "ACCEPT") shall mean any acceptance under this
Section 1.4. Toshiba agrees to deliver a notice of Acceptance (the "NOTICE OF
ACCEPTANCE") upon its decision to Accept any Deliverable hereunder within such
fifteen (15) days following such delivery or redelivery.

2.      FEES AND EXPENSES.

        2.1 SERVICES FEES AND EXPENSES. Upon delivery of each of the respective
Deliverables provided by PDF hereunder, Toshiba shall pay to PDF the fees
specified to the extent and in the manner set forth in the Statement of Work
("FEES"), and shall reimburse PDF for its out-of-pocket expenses incurred in
carrying out its obligations under this Agreement including, but not limited to,
travel, hotel, meal, document

                                       -2-
<PAGE>   3

production, equipment and other expenses directly related to the services
performed hereunder further subject to the terms and conditions set forth in the
Statement of Work ("EXPENSES"). In no event shall the Expenses for which Toshiba
shall be liable hereunder exceed any limitation on Expenses specified in the
Statement of Work without written agreement from Toshiba. PDF shall use
reasonable and diligent efforts to deliver the Deliverables hereunder within the
estimated expenses and time schedule specified in the Statement of Work.

        2.2 PAYMENTS. All payments by Toshiba hereunder shall be made by wire
transfer to the bank account to be designated by PDF. If required by applicable
law, Toshiba shall withhold and pay any taxes and assessments levied or imposed
by any Japanese tax or other governmental body resulting from the services or
the Deliverables to be provided by PDF to Toshiba and the payment to be made by
Toshiba to PDF hereunder, including without limitation all personal property
taxes on any of the foregoing and any taxes or amounts in lieu of any of the
foregoing paid or payable by PDF, other than taxes based on PDF's net income.
Toshiba shall promptly and timely effect the payment of any such taxes so
withheld to the appropriate tax or other governmental authorities. Upon payment
of such taxes so withheld, Toshiba shall, as promptly as possible, send to PDF
an official tax receipt, tax payment certificate or other evidence issued by the
applicable tax or governmental authorities. The parties acknowledge that PDF
shall be obligated to pay any such tax at the reduced withholding income tax
rate rather than the ordinary rate by filing "Application Form for Income Tax
Convention between the United States and Japan" with the Japanese tax
authorities. If applicable, Toshiba shall send PDF the application form
immediately after the execution of this Agreement for PDF's signature and PDF
shall promptly sign it and return it to Toshiba so that Toshiba may file it with
the applicable Japanese tax authorities on behalf of PDF.

3.      OWNERSHIP.

        3.1 SOLELY DEVELOPED INTELLECTUAL PROPERTY. Each party shall solely own
any Intellectual Property solely developed by such party or the employee(s) of
such party, whether before, during or after the term of this Agreement. For the
purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean the Confidential
Information (as defined in Section 6), patent and patent applications,
copyrights, trade secrets, know how, rights of authorship, and any other
intellectual property rights recognized by the law of any country or
jurisdiction of the world.

        3.2 JOINTLY DEVELOPED INTELLECTUAL PROPERTY. Any Intellectual Property
jointly developed by the employees of both parties in connection with or as a
result of the services provided by PDF hereunder shall be jointly-owned by PDF
and Toshiba; provided, however, that any such Intellectual Property so jointly
developed by PDF and Toshiba which consists of, effects or results in any
improvement, enhancement or derivative work of PDF's software and methodologies
including problem solving processes and practices shall be solely owned by PDF
but subject to the license provided in Section 3.4; provided, further, that any
such Intellectual Property so jointly developed by PDF and Toshiba in the manner
embodied in Toshiba's product designs, products,

                                      -3-
<PAGE>   4

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

fabrication facilities or fabrication processes shall be owned solely by
Toshiba. Each party shall have the right to use, exercise, disclose and license
to third parties such jointly developed Intellectual Property that is not solely
owned by the other party without accounting to or the consent of the other
party.

        3.3 TOSHIBA LICENSE. Toshiba hereby grants to PDF a ****, *************
license to use and practice the Intellectual Property provided by Toshiba
hereunder, in order for PDF to perform the Project and develop or prepare the
Deliverables solely during the term of this Agreement.

        3.4 PDF LICENSE. PDF shall grant to Toshiba and its Subsidiaries
******** ****************************************** license to use, have used
for Toshiba and/or its Subsidiaries ("HAVE-USED RIGHTS"), copy for internal use,
modify and/or enhance the Deliverables as set forth in the Statement of Work and
any PDF-owned methodologies or practices that Toshiba shall observe in the
ordinary course of the provision of services by PDF under this Agreement
(collectively, the "LICENSED PROPERTY") which license, sublicense, have-used
rights or other rights shall only be for any purpose in connection with sales,
development, manufacture, fabrication, and/or use of products of Toshiba and/or
its Subsidiaries, but only to the extent PDF has the right to grant such
license; provided that such have-used rights with respect to any Specified
Deliverable (as defined in Paragraph (a) of the Statement of Work) shall only be
permitted (a) if the have-used rights are solely for the purpose of establishing
Toshiba's Products on the applicable process at the fabrication facility of the
partner of Toshiba which is granted such have-used rights and for no other
purpose or use, and (b) once the Product on the applicable process is
established at such partner's fabrication facility, such partner must return or
destroy all copies of the Deliverables and have an appropriate officer of such
partner certify that all copies of such Specified Deliverable have been returned
or destroyed; provided, further, that such license shall not extend to any
software or tools used by PDF in connection with or during the course of such
services or to any software manuals or documents relating to such software or
tools; provided, further, that Toshiba shall be bound by and shall cause its
Subsidiaries, sublicensees or have-used or other partners to be bound by the
confidentiality obligations contained in Section 6; provided, further, that
Toshiba shall not disclose, license, sublicense or make available on a have-used
basis any such Licensed Property to any third party other than as a part of the
third party's sale, development, manufacturing, fabrication and/or use of
semiconductor products in connection with Toshiba technology or Toshiba
products. Toshiba understands that PDF will not disclose to Toshiba certain
proprietary methods or trade secrets in connection with the services to be
rendered by PDF hereunder. To this end, PDF retains the right to take industry
standard measures to keep such proprietary methods or trade secrets from
Toshiba.

        3.5 NO OTHER OWNERSHIP. Except as otherwise set forth in this Section 3,
neither this Agreement nor performance of the Project shall give either PDF or
Toshiba any ownership, interest in or rights to the Intellectual Property owned
or provided by the other party.

                                      -4-
<PAGE>   5

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        3.6 DEFINITION OF SUBSIDIARY. For the purpose of this Agreement and the
Statement of Work, the term "SUBSIDIARY" of any party shall mean any corporation
or other entity more than fifty percent (50%) of the Voting Stock of which is
beneficially owned or controlled, directly or indirectly, by such party;
provided that such corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists. "VOTING STOCK" of
any entity shall mean any stock or other equity interest entitled to vote for
the election of directors or any equivalent governing body of such entity.
Notwithstanding the above, ******************** ****************************
shall be deemed a Subsidiary of Toshiba under this Agreement for so long as
Toshiba continues to hold **************** of the voting stock of
*******************.

4.      TERM AND TERMINATION.

        4.1 COMMENCEMENT. This Agreement shall commence as of the date first set
forth above and shall continue in force until completion of the Project, unless
sooner terminated as provided in this Section 4.

        4.2 TERMINATION.

            (a) If either party defaults in the performance of any material
obligation hereunder the non-defaulting party may give the defaulting party
written notice of such default within twenty (20) days following the
non-defaulting party's discovery of such default. If the defaulting party fails
to cure such default within forty-five (45) days (or such other time period as
the parties shall mutually agree) after the defaulting party's receipt of such
notice of default, then the non-defaulting party, at its option, may, terminate
this Agreement by giving the defaulting party written notice of termination of
this Agreement within ten days following the end of such 45 day period. If such
notice of default or notice of termination is not given within such period, then
the default shall no longer constitute cause for termination of this Agreement.

            (b) Either party may terminate this Agreement effective upon written
notice to the other party in the event the other party becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding relating to
insolvency, or assignment for the benefit creditors, if that petition or
proceeding is not dismissed within sixty (60) days after filing. Such written
notice of termination must be delivered no later than ten (10) days following
the expiration of such 60-day period. If such notice of termination is not given
within such 10-day period, then the default shall no longer constitute cause for
termination of this Agreement.

            (c) Either party may terminate this Agreement effective upon written
notice to the other party in the event that the other party is merged with or
into, or all or substantially all or the other party's assets are sold to, a
third party corporation or other entity, unless such acquiring corporation or
entity expressly agrees to assume the other party's obligations under this
Agreement. Such written notice of termination must be delivered no later than
ten (10) days following the consummation of such transaction. If

                                      -5-
<PAGE>   6

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

such notice of termination is not given within such 10-day period, then the
default shall no longer constitute cause for termination of this Agreement.

            (d) Toshiba shall be entitled to terminate this Agreement upon
forty-five (45) days prior written notice if (i) Toshiba reasonably rejects the
Deliverables due to their material nonconformity with the Deliverable
Description set forth in the Statement of Work (and clearly and properly
specifies the reason for such nonconformity), the Acceptance procedure set forth
in Section 1.4 shall have been exhausted without an Acceptance, and PDF does not
reasonably cure such material nonconformity within forty-five (45) days
following the final written rejection of such Deliverable, or (ii) Toshiba
reasonably and in good faith judges that the expected progress for the services
to be performed by PDF necessary to deliver the Deliverables hereunder cannot be
achieved within the mutually agreed time frame, and within ten (10) days
following such notice PDF cannot reasonably establish that such progress can be
achieved. This Agreement may then be terminated by a written notice of
termination delivered within ten (10) days following the applicable foregoing
forty-five (45) day period. If such written notice of termination is not given
within such 10-day period, then the default under this Section 4.2(d) shall no
longer constitute cause for termination of this Agreement.

        4.3 TERMINATION OF RIGHTS. Upon expiration or termination of this
Agreement, all rights and licenses granted and all obligations undertaken
hereunder shall forthwith terminate except the following:

            (a) Any and all licenses granted by PDF to Toshiba and its
Subsidiaries under this Agreement as to previously delivered, Accepted and paid
for Deliverables shall survive the expiration or termination of this Agreement
unless this Agreement is terminated by PDF in accordance with the provisions of
Section 4.2(a), (b) or (c) in which case none of such licenses shall survive and
all copies of such Deliverables shall be returned to PDF.

            (b) If Toshiba terminates this Agreement for the reason as stated in
Section 4.2, Toshiba shall pay to PDF, within thirty (30) days after the date of
termination, (i) the actual amount of unreimbursed Expenses incurred by PDF
through the date of termination by Toshiba, (ii) the amount of the Deliverables
Fees with respect to Deliverables delivered or otherwise accrued, and unpaid
through the date of termination, (iii) the Incentive Fee if the Incentive Fee
remains unpaid; provided that payment of such Fees and Expenses shall be subject
to the provisions of Section 2.

            (c) If Toshiba terminates this Agreement for the reason specified in
Section 4.2, Toshiba shall pay to PDF:

                  (i) the amount of any unpaid Product Fees accrued prior to the
date of termination; and

                  (ii) the amount of any future Product Fees in accordance with
Paragraph (e)(iii) of the Statement of Work with respect to any Product that
incorporates

                                      -6-
<PAGE>   7

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

any Deliverable delivered by PDF to Toshiba which Product Fees shall be payable
through the term of payment specified in such Paragraph (e)(iii); provided that
Product Fees to be accrued and paid following a date of termination shall
terminate only if the basis for termination of this Agreement shall be (A) an
involuntary bankruptcy under Section 4.2(b) or (B) the material default under
PDF's confidentiality obligations under Section 6 of this Agreement;

provided that payment of such Product Fees under this Section 4.3(c) shall be
subject to the provisions of Section 2.

                  (d) The provisions of Sections 2 (including by reference
Toshiba's obligations to pay Fees and Expenses set forth in the Statement of
Work but subject to Section 4.3(b) and (c)), 3.1, 3.2, 3.4 (with respect to
Deliverables delivered by PDF to Toshiba and Accepted and paid for by Toshiba),
4, 6, 7, 8.4, 8.7 and 8.8 shall survive any expiration or termination of this
Agreement.

5.      INDEPENDENT CONTRACTORS. The relationship of PDF and Toshiba established
by this Agreement is that of independent contractors, and nothing contained in
this Agreement shall be construed to (i) give either party the power to direct
or control the day-to-day activities of the other, (ii) constitute the parties
as agents, partners, joint venturers, co-owners or otherwise as participants in
a joint or common undertaking, or (iii) allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.

6.      CONFIDENTIALITY. Except as otherwise provided herein, each party agrees,
at all times during the term of this Agreement and for 5 years after receipt of
Confidential Information, to hold in strictest confidence (and to cause its
Subsidiaries to hold in strictest confidence), and not to use, except for the
purposes contemplated herein, or to disclose to any person, firm or corporation
without written authorization of the other party, any Confidential Information
of the disclosing party. As used in this Agreement, "CONFIDENTIAL INFORMATION"
means any proprietary information, technical data, trade secrets or know-how,
including, but not limited to, research, software, developments, inventions,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, yield data or other information disclosed by one
party to the other, which is marked as "Confidential," and/or orally or in other
tangible form identified as confidential at the time of disclosure and confirmed
as Confidential Information in writing within thirty (30) days of its initial
disclosure, provided that any methodologies, practices or procedures used by PDF
and observed by Toshiba shall constitute "Confidential Information" within the
meaning of this Agreement without any such notification. Confidential
Information does not include any of the foregoing items which have become
publicly known and made generally available through no wrongful act of the
receiving party, or which is already known by the receiving party as evidenced
by the receiving party's files immediately prior to such disclosure, or which
the receiving party proves was independently developed, prior to the receiving
party's receipt of such Confidential Information, by employees or other
representatives of such receiving party who have not had access to such
information or the ideas or theories underlying such Confidential Information.
Except as otherwise agreed by both parties, PDF shall return to

                                      -7-
<PAGE>   8

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

Toshiba all Confidential Information of Toshiba owned by Toshiba and not
licensed to PDF or jointly owned by PDF and Toshiba and copies thereof, within
thirty (30) days after completion of the Project or after expiration or
termination of this Agreement. Except as otherwise agreed by both parties,
Toshiba shall return to PDF all Confidential Information of PDF owned by PDF and
not licensed to Toshiba or jointly owned by PDF and Toshiba and copies thereof,
within thirty (30) days after completion of the Project or after expiration or
termination of this Agreement.

7.      WARRANTY. PDF warrants to Toshiba that PDF's Intellectual Property
utilized by PDF in performing the Project does not infringe any patent,
copyright, trade secret, and any other proprietary rights of any third party.
EXCEPT FOR THE FOREGOING, NOTHING UNDER THIS AGREEMENT, OR THE STATEMENT OF WORK
OR PROJECT SHALL BE DEEMED TO BE A WARRANTY OR REPRESENTATION AS TO THE OUTCOME
OF ANY PROJECT OR THE EFFICACY OF ANY RECOMMENDATIONS MADE BY PDF. NOTHING UNDER
THIS AGREEMENT OR THE STATEMENT OF WORK SHALL BE DEEMED TO CREATE ANY LIABILITY
ON THE PART OF PDF WITH RESPECT TO THE OUTCOME OF A PROJECT OR ANY ACTIONS TAKEN
BY TOSHIBA AS A CONSEQUENCE OF PDF'S RECOMMENDATIONS.

8.      MISCELLANEOUS.

        8.1 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Statement
of Work may be amended or waived only with the written consent by the
representatives of the parties.

        8.2 SOLE AGREEMENT. This Agreement and the Statement of Work constitute
the sole agreement of the parties and supersede all oral negotiations and prior
writings with respect to the subject matter hereof.

        8.3 NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by an internationally-recognized delivery service (such as Federal
Express or DHL), or after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address as set forth above or as subsequently
modified by written notice.

        8.4 CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to the principles of conflict of laws.

        8.5 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of this Agreement shall be enforceable in

                                      -8-
<PAGE>   9

accordance with its other terms.

        8.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.

        8.7 ARBITRATION. The parties shall attempt in good faith to resolve any
dispute arising under this Agreement. If the parties are unable to resolve
dispute within a reasonable period then the dispute shall be finally settled by
binding arbitration (a) if brought by Toshiba, in San Jose, California, in
accordance with the Commercial Rules of the American Arbitration Association
and, (b) if brought by PDF, in Tokyo, Japan in accordance with the rules of the
International Chamber of Commerce. In either case such arbitration shall be
conducted by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply California law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any dispute.
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this paragraph,
without breach of this arbitration provision.

        8.8 EXPORT CONTROL. Neither party shall, directly or indirectly export
or re-export any technical data or information or data received from the other
party hereunder or the direct products thereof to any destination prohibited or
restricted by export control regulations of Japan and the United States,
including U.S. Export Administration Regulations, without proper authorization
from the appropriate governmental authorities. In addition, the parties agree
that no technology furnished to the other will be used for any purpose to
develop and/or manufacture nuclear, chemical or biological weapons and/or
missiles.

        8.9 NON-SOLICITATION. Toshiba shall not solicit or influence or attempt
to influence any person employed by PDF to terminate or otherwise cease his or
her employment with PDF or become an employee of Toshiba or any competitor of
PDF. A company's status as a competitor of PDF shall be determined by PDF in its
sole discretion.

                                      -9-
<PAGE>   10

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

PDF SOLUTIONS, INC.                            TOSHIBA CORPORATION

By: /s/ P. Steven Melman                       By: /s/ Koichi Suzuki
   -------------------------------                 ----------------------------
        P. Steven Melman                               Koichi Suzuki, VP

Title: Chief Financial Officer                 Title:  Group Executive
       ---------------------------                     ------------------------
                                                       Semiconductor Group

                                      -10-
<PAGE>   11

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                STATEMENT OF WORK

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

        This Statement of Work is made between PDF Solutions, Inc. ("PDF") and
Toshiba Corporation ("TOSHIBA") pursuant to and attached as an exhibit to that
certain Technology Cooperation Agreement dated as of **************** (the
"AGREEMENT") between PDF and Toshiba. All terms and conditions contained in this
Statement of Work are subject to the terms and conditions set forth in the
Agreement. The date of commencement of services under this Agreement was
**************** (the "ENGAGEMENT COMMENCEMENT DATE").

        (a)     DELIVERABLES

        PDF will provide Toshiba with development work and other consulting
services to assist Toshiba in (a) **************************** of Toshiba's
************* processes referred to as **************** (and derivatives
thereof) for use with the specific ************* ("***********") or any other
device that Toshiba selects to use to verify the **************** and
**************** Processes (a "****************"), (b) effecting the transfer of
the ************** and ************ **************** from Toshiba's *****
facility to its **************** facility, and (c) improving the *************
***** of ****** manufactured utilizing the **************** (the
"****************"), ****** manufactured utilizing the **************** (the
"****************"), and any other devices manufactured utilizing the
**************** or the **************** such as **************** manufactured
utilizing the **************** (the "****************"), ****************
manufactured utilizing the **************** (the "****************"),
**************** manufactured utilizing the **************** (the
"****************"), ****************manufactured utilizing the ****************
(the "****************"). The ****************, the ****************, the
****************, the ****************, the ****************, the
****************, and each other Toshiba product manufactured utilizing the
**************** and the **************** are each individually referred to as a
"PRODUCT" and are collectively referred to as the "PRODUCTS". The parties
acknowledge and agree that a device (such as ****************) manufactured on
**************** is a different product than such device (****************,
respectively) manufactured on the ****************. During the engagement
Toshiba engineers will be invited to be part of the team and work at the
direction of the PDF engineers in conducting the data gathering and analyses
necessary to carry out PDF's holistic yield improvement methodology.

        In order to ensure that the work of the team will result in actions and
subsequent measurable improvements in *******************, the team will report
its recommendations directly to a management steering committee consisting of
the set of Toshiba managers who are necessary to make all decisions regarding
the Product (the "TOSHIBA MANAGEMENT GROUP").

                                     SOW-1
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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        In providing the Services to Toshiba, PDF, working with Toshiba
engineers, will recommend specific actions to be taken to improve *************
***** of each Product. Where determined by PDF to be necessary, PDF will present
a business case stating the expected size of the potential yield improvements,
the likely cost of making the improvements and the relative likelihood of
success.

        The objective of the Project and the result of the activities above will
be to deliver the following Deliverables:

                                  DELIVERABLES
                                  DELIVERABLES
<TABLE>
<CAPTION>
                                                                                                   Anticipated
   No.      Description                                                       Payment             Delivery Date
   ---      -----------                                                       -------             -------------
<S>        <C>                                                              <C>                 <C>
    1.      Detailed Project Plan and Schedule.                              $********           ****************

    2.      *************************************************                $********           ****************
            ********.

    3.      *************************************************                $********           ****************
            *************************************************

    4.      ***************************************.                         $********           ****************

    5.      *************************************************               $********           ****************
            *****************************

    6.      ****************************************.                        $********           ****************

    7.      ******************************************************           $********           ****************
            ********************************.

    8.      ********************************************************         $********           ****************
            ***********************************
</TABLE>

                                     SOW-2
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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

<TABLE>
<S>                                                                              <C>               <C>
            ************************************************************ in
            **********************************************************
            ********************

    9.      ********************************************************             $********           ****************
            ********************************************************
            ****************************************************
            ************************************************
            ********************
</TABLE>

        For the purpose of this Agreement, "SPECIFIED DELIVERABLES" (for
example, as used in Section 3.4 of the Agreement) shall mean Deliverable Numbers
2, 3, 4, 5, 6 and 7.

        The parties acknowledge that the Analysis Software comprising a part of
the Deliverables requires the use of pdFab, pdEx and/or other PDF software
products that PDF separately sells or licenses (the "UNDERLYING SOFTWARE"). This
Analysis Software consists solely of the specifically and custom designed
Analysis Software applicable to Toshiba, and specifically excludes any of the
Underlying Software. Any licensee , sublicensee or other user of the Analysis
Software must have appropriate licenses to use such Underlying Software. No
license, sublicense or other right to use or other right in any Underlying
Software is granted under this Agreement and Statement of Work.

               PDF will present the findings to the Toshiba Management Group
during pre-arranged review meetings. The purpose of these review meetings will
be for the Toshiba Management Group to review recommendations, seek
clarifications where necessary and decide which yield improvement actions to
take.

        Within ******** following the delivery of any Deliverable listed above,
Toshiba will deliver to PDF such test data and other data and materials as shall
be reasonably necessary to enable PDF to prepare and deliver the next
Deliverable (the "TOSHIBA DELIVERABLES").

        (b)     TEAM STRUCTURE

        The team is structured to divide the decision-making, project leadership
and analysis management between three bodies in the form of "TEAM STRUCTURE" in
the form attached to this Statement of Work as Exhibit C.

                                     SOW-3
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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        Toshiba will establish a Steering Committee (the "STEERING COMMITTEE")
which will consist of (a) *************** and any other Toshiba manager who is
necessary in order for yield improvement decisions to be made, and (b)
***************** or another senior executive of PDF. Toshiba and PDF will make
all such personnel available for performance under the Agreement and this
Statement of Work. The Steering Committee will be limited to four
representatives of Toshiba and one representative of PDF in order to allow
decisions to be reached in a timely fashion but will have sufficient authority
to make the relevant decisions. The Steering Committee is responsible for giving
the team its charter, deciding which yield improvement actions to take and who
in the Toshiba organization will be responsible for carrying out the
improvement.

        Project leadership responsibility will be shared by ******** (the
"TOSHIBA PROJECT LEADER"), on behalf of Toshiba, and ************* (the "PDF
PROJECT LEADER"), on behalf of PDF. The Toshiba Project Leader and the PDF
Project Manager will consult with ************ of PDF as they together shall
deem necessary and appropriate. Their primary responsibility will be to ensure
that the team is making good progress toward delivery of the work chartered by
the Steering Committee. In order to maximize the likelihood that the team is
making good progress, the Toshiba Project Leader and the PDF Project Leader will
monitor the team's work on a weekly basis and help reduce any organizational
obstacles which may impede the team's progress.

        The day-to-day analyses will be conducted by a ********************Team
******** of engineers from Toshiba and PDF. A PDF Engagement Manager will manage
the activities of the ****. The PDF Engagement Manager will be responsible for
directing all team members in their analyses as well as aggregating and
synthesizing the results of all the analyses conducted by the entire team. The
PDF Engagement Manager will be available for all communications at reasonable
times with the project leaders. In addition, the PDF Engagement Manager will be
the principal point of contact for any questions that Toshiba personnel not on
the **** may have during the course of the engagement.

        In addition to the PDF Engagement Manager, PDF will make a total of
************** available to this engagement. PDF may staff additional engineers
during critical points during the term of this Agreement.

        Also, ************** Toshiba engineers will be asked to participate
actively with the ****. Toshiba team members should be assigned to one of the
Subgroups and be skilled at one of the principal analytical streams of the PDF
yield improvement methodology. They will be placed on the Team and Subgroups
after approval by PDF for the purpose of gathering data and conducting analyses
to improve yield on the Product. The Toshiba team members will work at the
direction of a PDF engineer responsible for one of the Subgroups and principal
analytical streams of the engagement.

        (c)     TOOLS

        Toshiba will provide PDF with office space and other typical business
resources reasonably requested from time to time by PDF. In particular, Toshiba
will provide PDF with secure office space large enough to accommodate up to **
PDF personnel in addition to Toshiba engineers assigned to work on the ****.
Toshiba will provide PDF with office equipment reasonably requested by PDF from
time to time including **** international access Facsimile machine and line and
a photo copier. Toshiba will provide PDF with 24-hour access to the team office
so work can continue at night and on weekends.

                                     SOW-4
<PAGE>   15

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

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

        Toshiba will provide PDF with computing resources that PDF reasonably
deems necessary to *************************************. The details of such
request will be sent in a separate document to the Toshiba Project Leader but in
general, Toshiba will provide **** engineering workstations connected to both
the Toshiba network and the Internet. Toshiba will also provide such other
accessories as PDF shall reasonably request including a removable data storage
device, such as a tape drive, and a printer.

        (d)     LOCATION

        The Project will be conducted by Toshiba's and PDF's personnel at
Toshiba's ****** ******** in *************** and Toshiba's *******************
in ************, and by PDF's personnel at PDF's facilities. In certain cases,
PDF may require Toshiba engineers to work at the PDF facility in San Jose,
California. PDF engineers may also work in ******** and ******** factory when
the engagement manager believes this is necessary to achieve progress. If
Toshiba shall provide PDF employees with an English version of the employee
rules and regulations in force at the Toshiba facilities, then PDF employees
shall comply with such rules and regulations in all material respects in an
equivalent manner as other Toshiba employees generally. Any failure to comply
with such rules and regulations shall not constitute a default of a material
obligation constituting a basis for termination of this Agreement unless (A)
Toshiba has repeatedly given notices of such failure to PDF and PDF has
repeatedly failed to remedy such noncompliance as specified in such notices, (B)
Toshiba shall notify PDF in writing that failure to cure such repeated non
compliance within ******** shall constitute a basis for termination of the
Agreement and PDF shall fail to remedy such non compliance, and (C) Toshiba
gives final notice of termination within ************** following such ********
period. PDF shall take all reasonable steps necessary to ensure that all
employees resident at or visiting a Toshiba facility shall treat as confidential
in accordance with Section 6 all material information of a proprietary nature
observed by or disclosed to such employee, and shall comply in all material
respects with the all export control obligations contained in Section 8.8.

        (e)     FEES AND EXPENSES.

        Toshiba will pay PDF Fees consisting of three components: (1) the
Deliverables Fees, (2) the Incentive Fee and (3) the Product Fees, each as
defined below:

                  (i) DELIVERABLES FEES. Toshiba will pay PDF a fixed fee upon
delivery of each of the Deliverables equal to the "Payment" with respect to each
such Deliverable specified under (a) above (the "DELIVERABLES FEES"). Toshiba
acknowledges that PDF delivered Deliverable No. 1 to Toshiba on *************
and hereby Accepts Deliverable No. 1. Upon Acceptance by Toshiba of each other
Deliverable, PDF will submit to Toshiba an invoice specifying the

                                     SOW-5
<PAGE>   16

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

Deliverable delivered and the Deliverable Fee due. Toshiba shall pay the
Deliverable Fees within ***** days following the date of the invoice. Payment
shall be made in accordance with the provisions of Section 2.2 of the Agreement.
If Toshiba shall fail to deliver a Toshiba Deliverable with respect to a PDF
Deliverable within the time period specified in the last paragraph of Paragraph
(a) of this Statement of Work and as a result, the delivery of the Deliverable
by PDF is delayed by more than six weeks after the "Anticipated Delivery Date"
referenced in the table in Paragraph (a) of this Statement of Work above, then
the parties hereby agree that such Deliverable shall be deemed to have been
delivered by PDF upon PDF's delivery of such Deliverable to the extent developed
through such date, Toshiba shall be obligated to deliver the respective
Deliverable Fee, and upon payment of such Deliverable Fee and delivery of the
applicable Toshiba Deliverable, PDF shall complete delivery of the Deliverable;
provided that if Toshiba shall wish to modify or alter the Toshiba Deliverable,
then the parties shall work together in good faith to mutually agree upon a
substitute Toshiba Deliverable in which case, if appropriate, the Deliverable
specifications, the Deliverable Fees, time for delivery of Deliverables and due
date for completion of Deliverables necessary to satisfy the requirements to
receive the Incentive Fee, and the Product Fees applicable to such altered
Deliverables shall be appropriately adjusted as well.

                  (ii) INCENTIVE FEE. PDF shall deliver to Toshiba an analysis
report and shall work with Toshiba with the objective of enabling Toshiba to
achieve an average yield of ***** shippable die per wafer (based on a die size
of ***** square millimeters or smaller), over all lots (excluding lots deemed
adversely affected by material operational errors such as equipment
malfunctions, misprocessing (such as operating the recipe not in accordance with
the specifications) and other similar reasons) of the ************** meeting the
Functional Tests and Specifications (as defined below) for which production is
completed during any two-week period of Mass Production commencing on or prior
to ************* (the last date that two weeks of Mass Production can be
completed to achieve the Incentive Fee is referred to as the "INCENTIVE FEE
DATE"). Such average number of shippable die per wafer referenced in the
preceding sentence, as adjusted pursuant to the last sentence of this Paragraph
(e)(ii), shall be referred to as the (the "INCENTIVE TARGET YIELD"). Upon
Toshiba achieving the Incentive Target Yield on or prior to the Incentive Fee
Date as described above, Toshiba shall be obligated to pay PDF an incentive fee
equal to ******** (the "INCENTIVE FEE"); provided, however, that the Incentive
Target Yield shall not be considered achieved and Toshiba shall have no
obligation to pay the Incentive Fee unless Toshiba shall have achieved (in the
manner provided above) the Incentive Target Yield on or prior to the Incentive
Fee Date. In the event the Functional Tests and Specifications for the
*************** change then the Incentive Target Yield will be appropriately
adjusted to account for the change in specifications.

        Upon commencement of Mass Production of the **************** Toshiba
will provide PDF with regular, ongoing data as to the yield on the wafers for
such Product to enable PDF to assess the average yield on the wafers for such
Product for any two-week period commencing on or prior to ***************** and
will provide PDF with such average yield every two-weeks. Upon achievement of
the Incentive Target Yield, Toshiba will notify PDF and PDF will submit to
Toshiba an invoice for the Incentive Fee. Toshiba shall pay the Incentive Fee
within thirty (30) days following the date of the invoice. Payment shall be made
in accordance with the provisions of Section 2.2 of the Agreement.

                                     SOW-6
<PAGE>   17
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        PDF's failure to deliver the materials necessary to enable Toshiba to
achieve the Incentive Target Yield referenced above on or prior to the Incentive
Fee Date shall not constitute a basis for termination of the Agreement under
Section 4 of the Agreement.

                  (iii) PRODUCT FEES. Toshiba will pay PDF a separate Quarterly
fee with respect to each separate Product (as defined in the first paragraph in
Paragraph (a) of this Statement of Work above) manufactured ** **** ******* ***
**** ***** ************ ******** ** ***** **** ******* is manufactured (the
"PRODUCT FEES"). If Toshiba determines to ******** * ******* ** *******
*********** ******** ******** ***** ** ******* ** ****, upon Toshiba's request
PDF shall assist in assessing such facility's yield ramp methodologies and
process transfer data if such facility is to receive ***** of the scheduled
production of such Product. If PDF's services in designing new procedures
(including without limitation development of test structures, TEGs, analysis
models, or other similar services) are necessary to help achieve the targeted
yield ** **** ***** *********** ******** ********* ******** shall not be covered
by this Agreement but shall be provided pursuant to a separate agreement to be
agreed upon between PDF and either Toshiba or the owner of such other facility.
The Product Fees shall be calculated separately *** **** *********** ******** **
***** **** Product is produced, provided that all *********** ********** with
respect to which PDF provides services or advice under an agreement with PDF
(including this Agreement) shall ************ ** ********** *** ******** ****
******** ********** for purposes of such calculation so long as PDF agrees to
include such ******** as a part of such ****************. No Product Fees shall
be payable with respect to any ******** ***** ** ** ************ ***** *****
***** ******** ******** *** **** **** ***** ** *** ***** ****** ** ***** ** ****
Product produced. In making such calculations and paying such amounts, the
foregoing terms (and certain other terms) are defined as follows:

                  "AVERAGE UNIT SALES PRICE" for any Product during any Quarter
                  shall mean the Net Sales of such Product during such Quarter
                  divided by the total number of units of such Product sold
                  during such Quarter which comprise such Net Sales.

                  "BASE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product
                  during any Quarter shall mean a number of die per wafer to be
                  determined by agreement between PDF and Toshiba. With respect
                  to the **************, Base Number of Shippable Die Per Wafer
                  shall initially be **** shippable die per wafer (based on a
                  die size of ***** square millimeters or smaller), subject to
                  adjustment pursuant to a ramp schedule to be mutually agreed
                  upon in writing between Toshiba and PDF before *************.
                  Such ramp schedule shall adjust the Base Number of Shippable
                  Die per Wafer no more frequently than quarterly. For each
                  other Product, within 30 days following the first tape out of
                  such Product, PDF and Toshiba shall meet and agree upon what
                  shall constitute such Base Number of Shippable Die per Wafer
                  for such Product. The adjustments to the Base Number of
                  Shippable Die per Wafer established in the ramp schedule for
                  the ******** Product and with respect to any other Product
                  shall be mutually agreed upon and shall be based upon analysis
                  of the following factors: (a) the defect limited yield used
                  from Toshiba's targets; (b) an estimation of the parametric
                  yield based on static timing analysis and other design
                  factors; (c) an estimation of the typical

                                     SOW-7
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                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                  systematic yield based on Toshiba and industry typical yield
                  improvement rates for systematic yield; and (d) the
                  profitability of the Product. The Base Number of Shippable Die
                  Per Wafer for any Product shall be the same for all
                  fabrication facilities.

                  "FIRST QUALIFYING MONTH" for any Product shall mean the
                  calendar month beginning on the later of (a) the first day of
                  the calendar month immediately following the calendar month in
                  which Mass Production units of such Product are first sold to
                  Customers (unless such first sale occurs on the first day of a
                  calendar month in which case the First Qualifying Month shall
                  commence on the date of such first sale) or (b)
                  **************.

                  "FUNCTIONAL TESTS AND PERFORMANCE SPECIFICATIONS" for any
                  Product shall mean the functional tests and performance
                  specifications at wafer probe test and at die sort test, as
                  the case may be, as are specified for qualification by the
                  client of Toshiba with respect to such Product, or such other
                  less stringent functional tests and performance specifications
                  that such client shall accept, or such other functional tests
                  and performance specifications as are otherwise mutually
                  agreed upon by Toshiba and PDF.

                  "NET SALES" for any Product during any Quarter shall mean the
                  actual gross sales of such Product (a) by Toshiba to any
                  customer, distributor or other third party; and (b) by any
                  such customer, distributor or other third party which is
                  controlling, controlled by or under common control
                  ("AFFILIATED") with Toshiba to any other person; during such
                  Quarter, less returns of such Product during such Quarter. Any
                  sales by an affiliated customer, distributor or other third
                  party shall be reduced by the amount paid for such product to
                  Toshiba by such affiliated customer, distributor or other
                  third party under clause (a) above so as to avoid double
                  counting of sales by such parties. Such amounts shall be
                  determined in accordance with generally accepted accounting
                  principles consistently applied. All persons to whom sales of
                  Products are made under clauses (a) and (b) above or otherwise
                  are collectively referred to as "CUSTOMERS."

                  "MASS PRODUCTION" units shall mean units of a Product that are
                  sold to Customers in mass commercial quantities for use in
                  commercial systems (and not merely for evaluation) or
                  otherwise than for commercial use.

                  "NUMBER OF QUALIFYING UNITS" for any Product during any
                  Quarter shall mean the amount, if any, by which (a) the total
                  number of units of such Product which are produced during such
                  Quarter which meet the Functional Tests and Performance
                  Specifications for such Product upon completion of the die
                  sort test (hereinafter referred to as "PRODUCED"), exceeds (b)
                  the Base Number of Shippable Die Per Wafer for such Product
                  during such Quarter multiplied by the total number of wafers
                  from which die for such Product are produced during such
                  Quarter. (This explicitly excludes zero-yielding wafers since
                  zero-yielding wafers are indicative of operational problems
                  like equipment malfunctions or

                                     SOW-8
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                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                  misprocessing; not process or design related problems which
                  PDF has the ability to affect.)

                  "QUARTER" with respect to any Product shall mean each
                  successive three month period commencing on the later of
                  *************** or the First Qualifying Month for such
                  Product.

        Amount of Product Fee. The Product Fee for each Product shall be
calculated with respect to each Quarter and shall equal the product of:

                        (a)     the product fee multiplier of ******, multiplied
                                by,

                        (b)     the Average Unit Sales Price for such product in
                                such Quarter, multiplied by,

                        (c)     the Number of Qualifying Units in such Quarter.

        The Product Fee for all Products at all fabrication facilities shall
collectively not exceed *********** in the aggregate.

        Calculation of Product Fee. The Product Fee for each Product (as defined
in the first paragraph in Paragraph (a) of this Statement of Work above) will be
calculated with respect to each such Product for each Quarter commencing with
the First Qualifying Month for such Product, and for each additional Quarter
thereafter for an aggregate of *** consecutive Quarters (or *** months) (each,
the "PRODUCT PAYMENT PERIOD"). The First Qualifying Month and the Product
Payment Period shall be calculated separately for each separate Product (as
defined above). In the event of a suspension in the production of such Product
or the reduction of quantities of production of such Product to less than Mass
Production quantities for any reason, the Product Payment Period for which the
Product Fee is being calculated and the calculation of the Base Number of Die
Per Wafer shall be extended for a period of time equal to the period during
which production is suspended or such commercial quantities are not being
produced. Notwithstanding the foregoing, no Product Payment Period shall extend
beyond, and no Product Fee shall be calculated or payable with respect to any
period after, ****************.

        Payment of Product Fee. The Product Fee will be paid for each Product
with respect to each successive Quarter commencing with the Quarter beginning
with the First Qualifying Month and continuing through the end of the Product
Payment Period. Toshiba will make such payment to PDF within forty-five (45)
days following the last day of each such Quarter with respect to which the
Product Fee is determined. Payment will be delivered in accordance with the
provisions of Section 2.3 of the Agreement.

        Verification. Within thirty (30) days following the end of each Quarter,
Toshiba will provide PDF with a report containing the following information with
respect to each Product during such Quarter:

                        (a)     the "Net Sales";

                                     SOW-9
<PAGE>   20

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                        (b)     the total number of units sold which comprise
                                such Net Sales;

                        (c)     the "Average Sales Price;"

                        (d)     the total number of units which are produced
                during such Quarter which meet the applicable Functional Tests
                and Performance Specifications upon completion of the wafer
                probe test;

                        (e)     the "Base Number of Shippable Die Per Wafer;"

                        (f)     the total number of wafers from which Mass
                Production Units are produced during such Quarter; and

                        (g)     the "Number of Qualifying Units."

        Upon the reasonable request of PDF but no more often than once in any
year, PDF may have its independent auditors inspect the accuracy of Toshiba's
reports. If there are inconsistencies found in PDF's favor, Toshiba agrees to
pay the difference within thirty (30) days of the finding. Any information
contained in the report and the results of the inspection shall be considered
Confidential Information under Section 6 of the Agreement.

        (iv)    EXPENSES.

        Toshiba will reimburse PDF for all Expenses incurred by PDF in
performing the services, delivering the Deliverables and fulfilling its
obligations under the Project. The Expenses will be billed to Toshiba at PDF's
cost and will not exceed an average of ******** per calendar quarter without the
written consent of Toshiba. PDF will submit to Toshiba invoices specifying the
Expenses and Toshiba will pay the Deliverable Fees within thirty (30) days
following the date of the invoice. Invoices will be submitted to Toshiba no more
frequently than a monthly basis. Payments of invoices for PDF's expenses will be
made in accordance with the provisions of Section 2.2 of the Agreement.
Notwithstanding the foregoing if PDF is entitled to receive reimbursement of the
same travel, lodging and other similar expenses from both Toshiba and other
customers, then PDF will allocate any expenses that are for the benefit of both
Toshiba and such other customers, among Toshiba and such other customers on a
basis that PDF shall determine is fair, just and equitable to Toshiba and such
other customers taking into account all relevant factors.

        (v)     VERIFICATION.

        Toshiba will provide PDF access to all other relevant information and
documentation (or will provide PDF with copies of all relevant documentation)
necessary to confirm and verify the Deliverables Fees, the Incentive Fee and
Product Fees payable to PDF hereunder.

                                     SOW-10
<PAGE>   21

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                                                              PROJECT: TOSHIBA -
                                                          **********************
                                                          **********************

                                 AMENDMENT NO. 1
                                       TO
                        TECHNOLOGY COOPERATION AGREEMENT

        This Amendment No. 1 to the Technology Cooperation Agreement (the
"AMENDMENT") is made as of the ************************ by and between Toshiba
Corporation, a corporation organized under the laws of Japan ("TOSHIBA") having
its principal place of business at 1-1 Shibaura 1-chome, Minato-ku, Tokyo
105-8001, Japan, and PDF Solutions, Inc., a corporation organized under the laws
of California ("PDF") having its principal place of business at 333 West San
Carlos Street, Suite 1200, San Jose, California, U.S.A.

                                    RECITALS

        WHEREAS, on ****************, Toshiba and PDF entered into a Technology
Cooperation Agreement (the "AGREEMENT") relating to the provision of services by
PDF to Toshiba.

        WHEREAS, the Agreement contained a Statement of Work which detailed the
specific obligations of PDF and Toshiba with respect to the Project; and

        WHEREAS, the schedule for the mass production of the products covered by
the Agreement has been delayed by certain circumstances, and the parties desire
to amend the Statement of Work to change the terms and conditions relating to
the Incentive Fee and the Product Fee sections in the Statement of Work to more
accurately reflect the parties' intentions.

        NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, the adequacy of which is hereby acknowledged, the
parties hereto mutually agree as follows:

        1. Definitions. All capitalized terms unless defined elsewhere in this
Amendment shall have the meanings ascribed to them in the Agreement

        2. Statement of Work. Paragraphs (e)(ii) and e(iii) of the Statement of
Work are hereby amended and restated their entirety as follows:

        "(ii) INCENTIVE FEE. PDF shall deliver to Toshiba analysis reports and
shall work with Toshiba with the objective of enabling Toshiba to achieve the
First, Second and Third Incentive Target Yield (each as defined below)
(collectively, the "INCENTIVE TARGET YIELDS"). Upon Toshiba achieving any of the
First, Second or Third Incentive Target Yields, Toshiba shall pay PDF the First,
Second or Third Incentive Fee (each as defined below), respectively, which Fees
shall total ******** (collectively, the "INCENTIVE FEES"). The Incentive Fees
and Incentive Target Yields shall be determined as follows:

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                      -1-
<PAGE>   22

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        (a)     FIRST INCENTIVE FEE. Toshiba shall pay PDF ******** (the "FIRST
                INCENTIVE FEE") upon achieving a yield of *** shippable die
                (based on a die size of **** square millimeters or smaller) on
                any single wafer of the *********** Product produced and meeting
                the Functional Tests and Specifications (as defined below)
                measured at wafer probe test at any time on or prior to
                ************ (the "FIRST INCENTIVE TARGET YIELD");

        (b)     SECOND INCENTIVE FEE. Toshiba shall pay PDF ******** (the
                "SECOND INCENTIVE FEE") upon achieving an average yield of
                ****** shippable die per wafer (based on a die size of ****
                square millimeters or smaller), on any single lot of wafers of
                the ******** Product meeting the Functional Tests and
                Specifications measured at wafer probe test or prior to
                ************* (the "SECOND INCENTIVE TARGET YIELD"); and

        (c)     THIRD INCENTIVE FEE. Toshiba shall pay PDF ******** (the "THIRD
                INCENTIVE FEE") upon achieving an average yield of ****
                shippable die per wafer (based on a die size of **** square
                millimeters or smaller), over all lots (excluding lots deemed
                adversely affected by material operational errors such as
                equipment malfunctions, misprocessing (such as operating the
                recipe not in accordance with the specifications) and other
                similar reasons) of the ************* Product meeting the
                Functional Tests and Specifications measured at final test for
                which production is completed during any two-week period of Mass
                Production commencing on or prior to ************* (the last
                date that two weeks of Mass Production can be completed to
                achieve the Third Incentive Fee is referred to as the "INCENTIVE
                FEE DATE") (the "THIRD INCENTIVE TARGET YIELD");

        provided, however, that no Incentive Target Yield shall be considered
achieved and Toshiba shall have no obligation to pay the Incentive Fee
corresponding to achievement of such Incentive Target Yield unless Toshiba shall
have achieved (in the manner provided above) such Incentive Target Yield on or
prior to the Incentive Fee Date. In the event the Functional Tests and
Specifications for the ************* Product change then the respective
Incentive Target Yields will be appropriately adjusted to account for the change
in specifications.

        Upon commencement of Mass Production of the ************* Product
Toshiba will provide PDF with regular, ongoing data as to the yield on the
wafers for such Product on a periodic basis to enable PDF to assess each
Incentive Target Yield. Upon achievement of each Incentive Target Yield, Toshiba
will notify PDF and PDF will submit to Toshiba an invoice for the respective
Incentive Fee. Toshiba shall pay each Incentive Fee within thirty (30) days
following the date of the invoice. Payment shall be made in accordance with the
provisions of Section 2.2 of the Agreement.

        PDF's failure to deliver the materials necessary to enable Toshiba to
achieve the Incentive Target Yields referenced above on or prior to the
respective Incentive Fee Dates shall not constitute a basis for termination of
the Agreement under Section 4 of the Agreement.

                                      -2-
<PAGE>   23

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

        (iii) PRODUCT FEES. Toshiba will pay PDF a separate Quarterly fee with
respect to each separate Product (as defined in the first paragraph in Paragraph
(a) of this Statement of Work above) manufactured at each Toshiba and each other
fabricator's facility at which such Product is manufactured (the "PRODUCT
FEES"). If Toshiba determines to *****************************************
****************************************************************************
****************************************************************************
****************************************************************************
************. If PDF's services in designing new procedures (including without
limitation development of test structures, TEGs, analysis models, or other
similar services) are necessary to help achieve the targeted yield *************
******************** then such services shall not be covered by this Agreement
but shall be provided pursuant to a separate agreement to be agreed upon between
PDF and **************************************************. The Product Fees
shall be calculated separately for ************************* at which such
Product is produced, provided that all fabrication facilities with respect to
which PDF provides services or advice under an agreement with PDF (including
this Agreement) shall collectively be considered one facility (the "PRIMARY
FACILITY") for purposes of such calculation so long as PDF agrees to include
such facility as a part of such Primary Facility. No Product Fees shall be
payable with respect to any facility owned by an unaffiliated third party which
facility accounts for less than 25% of the total number of units of such Product
produced. In making such calculations and paying such amounts, the foregoing
terms (and certain other terms) are defined as follows:

                "AVERAGE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product
        during any Quarter shall mean the average number of shippable die per
        wafer (based on a die size of **** square millimeters or smaller), over
        all lots (excluding engineering lots and lots deemed adversely affected
        by material operational errors such as equipment malfunctions,
        misprocessing (such as operating the recipe not in accordance with the
        specifications) and other similar reasons) of such Product during such
        Quarter meeting the Functional Tests and Specifications measured at
        final test for which production is completed during such Quarter.

                "BASE NUMBER OF SHIPPABLE DIE PER WAFER" for any Product during
        any Quarter shall mean a number of die per wafer to be determined by
        agreement between PDF and Toshiba.

        (a)     With respect to the ******** Product, Base Number of Shippable
                Die Per Wafer shall initially be **** shippable die per wafer in
                the Quarter commencing ******** through **************, ***
                shippable die per wafer in the Quarter commencing
                *************** through ****************** and *** shippable die
                per wafer in the Quarter commencing ************* through
                ************** and thereafter (based on a die size of ****
                square millimeters or smaller).

        (b)     With respect to the Base Number of Shippable Die Per Wafer for
                the ******* Product, the Base Number of Shippable Die per Wafer
                shall be

                                      -3-
<PAGE>   24

                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                mutually agreed upon by the parties within *** days of the date
                of execution of the Amendment.

        (c)     For each other Product, within *** days following the first tape
                out of such Product, PDF and Toshiba shall meet and agree upon
                what shall constitute such Base Number of Shippable Die per
                Wafer for such Product. The adjustments to the Base Number of
                Shippable Die per Wafer established in the ramp schedule for the
                ************ Product and with respect to any other Product shall
                be mutually agreed upon and shall be based upon analysis of the
                following factors: **************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************
                ************************************************************

                 "CURRENT WAFER PRICE" shall mean the following:

        (a)     With respect to ************* Products, the "Current Wafer
                Price" in the Quarter commencing ************ though
                ************** shall be ********. Such price shall be reduced by
                ******** percent in the Quarter commencing ************* through
                ***********. On a quarterly basis thereafter determined one week
                prior to the commencement of such Quarter, the price will be
                adjusted to reflect then current market prices for such wafers
                and other relevant market conditions, provided that such
                reductions shall not exceed ************ percent in any
                consecutive 12-month period. If market prices for such wafers
                vary more than plus or minus ************ in any consecutive
                12-month period, the parties agree to re-examine the prices and
                to make alterations accordingly, as mutually agreed upon.

        (b)     With respect to ******** Products, the "Current Wafer Price" in
                the Quarter commencing ******** though ******** shall be
                ********. Such price shall be reduced by ******** percent in the
                Quarter commencing ************ through **************. On a
                quarterly basis thereafter determined one week prior to the
                commencement of such Quarter, the price will be adjusted to
                reflect then current market prices for such wafers and other
                relevant market conditions, provided that such reductions shall
                not exceed ************ percent in any consecutive 12-month
                period. If market prices for such wafers vary more than
                plus or minus ************ in any consecutive 12-month period,
                the parties agree to re-examine the prices and to make
                alterations accordingly, as mutually agreed upon.

                                      -4-
<PAGE>   25
                              CONFIDENTIAL MATERIAL
                        OMITTED AND FILED SEPARATELY WITH
                     THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                        "FIRST QUALIFYING MONTH" for any Product shall mean the
                calendar month beginning on the later of (a) the first day of
                the calendar month immediately following the calendar month in
                which Mass Production units of such Product are first sold to
                Customers (unless such first sale occurs on the first day of a
                calendar month, the First Qualifying Month shall commence on the
                date of such first sale) or (b) ************.

                        "FUNCTIONAL TESTS AND PERFORMANCE SPECIFICATIONS" for
                any Product shall mean the functional tests and performance
                specifications at wafer probe test, at die sort test and at
                final test, as the case may be, as are specified for
                qualification by the client of Toshiba with respect to such
                Product, or such other less stringent functional tests and
                performance specifications that such client shall accept, or
                such other functional tests and performance specifications as
                are otherwise mutually agreed upon by Toshiba and PDF.

                        "MASS PRODUCTION" units shall mean units of a Product
                that are sold to Customers in mass commercial quantities for use
                in commercial systems (and not merely for evaluation) or
                otherwise than for commercial use, and/or when the final mark
                set has been approved for mass production.

                        "QUARTER" with respect to any Product shall mean each
                successive three month period commencing on the later of
                ************* or the First Qualifying Month for such Product.

        Amount of Product Fee. The Product Fee for each Product shall be
calculated with respect to each Quarter and shall equal the product of:

                        (a)     the Current Wafer Price for such Product during
                                such Quarter multiplied by *****;

                        (b)     multiplied by *****;

                        (c)     multiplied by the difference determined by (x)
                                the quotient of the Average Number of Shippable
                                Die per Wafer divided by the Base Number of
                                Shippable Die per Wafer for such Product during
                                such Quarter minus (y) one (1);

                        (d)     multiplied by the number of Mass Production
                                wafers for such Product during such Quarter.

        The Product Fee for all Products at all fabrication facilities shall
collectively not exceed ******** in the aggregate.

        Calculation of Product Fee. The Product Fee for each Product (as defined
in the first paragraph in Paragraph (a) of this Statement of Work above) will be
calculated with respect to each such Product for each Quarter commencing with
the First Qualifying Month for such

                                      -5-
<PAGE>   26
                             CONFIDENTIAL MATERIAL
                       OMITTED AND FILED SEPARATELY WITH
                    THE SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

Product, and for each additional Quarter thereafter for an aggregate of 8
consecutive Quarters (or 24 months) (each, the "PRODUCT PAYMENT PERIOD"). The
First Qualifying Month and the Product Payment Period shall be calculated
separately for each separate Product (as defined above). In the event of a
suspension in the production of such Product or the reduction of quantities of
production of such Product to less than Mass Production quantities for any
reason, the Product Payment Period for which the Product Fee is being calculated
and the calculation of the Base Number of Die Per Wafer shall be extended for a
period of time equal to the period during which production is suspended or such
commercial quantities are not being produced. Notwithstanding the foregoing, no
Product Payment Period shall extend beyond, and no Product Fee shall be
calculated or payable with respect to any period after, ************.

        Payment of Product Fee. The Product Fee will be paid for each Product
with respect to each successive Quarter commencing with the Quarter beginning
with the First Qualifying Month and continuing through the end of the Product
Payment Period. Toshiba will make such payment to PDF within *** days following
the last day of each such Quarter with respect to which the Product Fee is
determined. Payment will be delivered in accordance with the provisions of
Section 2.3 of the Agreement.

        Verification. Within thirty (30) days following the end of each Quarter,
Toshiba will provide PDF with a report containing the following information with
respect to each Product during such Quarter:

                (a) the Average Number of Shippable Die per Wafer (including
        method of calculating such number);

                (b) the total number of units which are produced which meet the
        applicable Functional Tests and Performance Specifications upon
        completion of the wafer probe test; and

                (c) the total number of Mass Production wafers produced.

        Upon the reasonable request of PDF but no more often than once in any
year, PDF may have its independent auditors inspect the accuracy of Toshiba's
reports and the underlying data. If there are inconsistencies found in PDF's
favor, Toshiba agrees to pay the difference within thirty (30) days of the
finding. Any information contained in the report and the results of the
inspection shall be considered Confidential Information under Section 6 of the
Agreement.

        3. Counterparts. This Amendment may be executed in any number of
counterparts, all of which together shall constitute one instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                      -6-
<PAGE>   27

        The parties hereto have executed this Amendment as of the date first set
forth above.

PDF SOLUTIONS, INC.                          TOSHIBHA

By: /s/ John K. Kibarian                     By:    /s/ Shigen Komats
    -----------------------------                   ---------------------------
    Title:  President & CEO                  Title: Vice President
                                                    Micro & Custom LSI Division
                                                    Semiconductor Company

                                      -7-

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