AEHR TEST SYSTEMS

AMENDED 1986 INCENTIVE STOCK PLAN

1. PURPOSES OF THE PLAN. The purposes of this Incentive Stock Plan are to attract and retain the best available personnel, to provide additional incentive to the Employees of Aehr Test Systems (the "Company") and to promote the success of the Company's business.

Options granted hereunder may be either Incentive Stock Options or Nonstatutory Stock Options, at the discretion of the Board and as reflected in the terms of the written option agreement. The Board also has the discretion to grant Stock Purchase Rights.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "BOARD" shall mean the Committee, if one has been appointed, or the Board of Directors of the Company, if no Committee is appointed.

(b) "CAPITAL STOCK" shall mean the Capital Stock of the Company.

(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

(d) "COMPANY" shall mean Aehr Test Systems, a California corporation.

(e) "COMMITTEE" shall mean the Committee appointed by the Board of Directors in accordance with Section 4(a) of the Plan, if one is appointed.

(f) "CONSULTANT" shall mean any person who is engaged by the Company or any subsidiary to render consulting services and is compensated for such consulting services, and any director of the Company whether compensated for such services or not; provided that if and in the event the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term Consultant shall thereafter not include directors who are not compensated for their services or are paid only a director's fee by the Company.

(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the absence of any interruption or termination of service as an Employee or Consultant, as applicable. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute.

(h) "EMPLOYEE" shall mean any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company.

(i) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422A of the Code.

(j) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to qualify as an Incentive Stock Option.

(k) "OPTION" shall mean a stock option granted pursuant to the Plan.

(l) "OPTIONED STOCK" shall mean the Capital Stock subject to an Option.

(m) "OPTIONEE" shall mean an Employee or Consultant who receives an Option .
(n) "PARENT" shall mean a "parent corporation," whether now or hereafter existing, as defined in Section 425(e) of the Code.

(o) "PLAN" shall mean this Amended 1986 Incentive Stock Plan.

(p) "PURCHASER" shall mean an Employee or Consultant who exercises a Stock Purchase Right.

(q) "SHARE" shall mean a share of the Capital Stock, as adjusted in accordance with Section 11 of the Plan.

(r) "STOCK PURCHASE RIGHT" shall mean a right to purchase Capital Stock pursuant to the Plan or the right to receive a bonus of Capital Stock for past services.

(s) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or hereafter existing, as defined in Section 425(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of shares under the Plan is 400,000 shares of Capital Stock. The Shares may be authorized, but unissued, or reacquired Capital Stock.

If an Option or Stock Purchase Right should expire or become unexercisable for any reason without having been exercised in full, then the unpurchased Shares which were subject thereto shall, unless the Plan shall have been terminated, become available for future grant or sale under the Plan. Notwithstanding any other provision of the Plan, shares issued under the Plan and later repurchased by the Company shall not become available for future grant or sale under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE. The Plan shall be administered by the Board of Directors of the Company.

(i) Subject to subparagraph (ii), the Board of Directors may appoint a Committee consisting of not less than two members of the Board of Directors to administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as the Board of Directors may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board of Directors. Members of the Board who are either eligible for Options and/or Stock Purchase Rights or have been granted Options and/or Stock Purchase Rights may vote on any matters affecting the administration of the Plan or the grant of any Options and/or Stock Purchase Rights pursuant to the Plan, except that no such member shall act upon the granting of an Option and/or Stock Purchase Right to himself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting of Options and/or Stock Purchase Rights to him.

(ii) Notwithstanding the foregoing subparagraph (i), if and in any event the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, from the effective date of such registration until six months after the termination of such registration, any grants of Options and/or Stock Purchase Rights to officers or directors shall only be made by the Board of Directors; provided, however, that if a majority of the Board of Directors is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time within the preceding year, any grants of Options and/or Stock Purchase Rights to directors must be made by, or only in accordance with the recommendation of, a Committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board of Directors and having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time within the preceding year. Any Committee administering the Plan with respect to grants to officers who are not also directors shall conform to the requirements of the preceding sentence. Once appointed, the Committee shall continue to serve until otherwise directed by the Board of Directors.

(iii) Subject to the foregoing subparagraphs (i) and (ii), from time to time the Board of Directors may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.

(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the Board shall have the authority, in its discretion: (i) to grant Incentive Stock Options, Nonstatutory Stock Options or Stock Purchase Rights; (ii) to determine, upon review of relevant information and in accordance with Section 7 of the Plan, the fair market value of the Capital Stock; (iii) to determine the exercise price per share of Options or Stock Purchase Rights, to be granted, which exercise price shall be

determined in accordance with Section 7 of the Plan; (iv) to determine the Employees or Consultants to whom, and the time or times at which, Options or Stock Purchase Rights shall be granted and the number of shares to be represented by each Option or Stock Purchase Right; (v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Option and Stock Purchase Right granted (which need not be identical) and, with the consent of the holder thereof, modify or amend each Option or Stock Purchase Right; (viii) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option or Stock Purchase Right previously granted by the Board; and (ix) to make all other determinations deemed necessary or advisable for the administration of the Plan.

(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and interpretations of the Board shall be final and binding on all Optionees, Purchasers and any other holders of any Options or Stock Purchase Rights granted under the Plan.

5. ELIGIBILITY.

(a) Options and Stock Purchase Rights may be granted to Employees and Consultants, provided that Incentive Stock Options may only be granted to Employees. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if he is otherwise eligible, be granted additional Option(s) or Stock Purchase Right(s).

(b) No Incentive Stock Option may be granted to an Employee which, when aggregated with all other incentive stock options granted to such Employee by the Company or any Parent or Subsidiary, would result in Shares having an aggregate fair market value (determined for each Share as of the date of grant of the Option covering such Share) in excess of $100,000 becoming first available for purchase upon exercise of one or more incentive stock options during any calendar year.

(c) Section 5(b) of the Plan shall apply only to an Incentive Stock Option evidenced by an "Incentive Stock Option Agreement" which sets forth the intention of the Company and the Optionee that such Option shall qualify as an incentive stock option. Section 5(b) of the Plan shall not apply to any Option evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the intention of the Company and the Optionee that such Option shall be a Nonstatutory Stock Option.

(d) The Plan shall not confer upon any Optionee or holder of a Stock Purchase Right any right with respect to continuation of employment by or the rendition of consulting services to the Company, nor shall it interfere in any way with his right or the Company's right to terminate his employment or services at any time.

6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by vote of the holders of a majority of the

outstanding shares of the Company entitled to vote on the adoption of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan.

7. EXERCISE PRICE AND CONSIDERATION.

(a) The per Share exercise price for the Shares to be issued pursuant to exercise of an Option or Stock Purchase Right shall be such price as is determined by the Board, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of grant.

(B) granted to any Employee, the per Share exercise price shall be no less than 100% of the fair market value per Share on the date of grant.

(ii) In the case of a nonstatutory stock option

(A) granted to a person who at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of the grant.

(B) granted to any person, the per Share exercise price shall be no less than 85% of the fair market value per Share on the date of grant.

(iii) In the case of a Stock Purchase Right granted to any person, the per Share exercise price shall be no less than 85% of the fair market value per Share on the date of grant.

(iv) In the case of an Option or Stock Purchase Right granted on or after the effective date of registration of any class of equity security of the Company pursuant to Section 12 of the Exchange Act and prior to six months after the termination of such registration, the per Share exercise price shall be no less than 100% of the fair market value per Share on the date of grant.

(b) The fair market value shall be determined by the Board in its discretion; provided, however, that where there is a public market for the Capital Stock, the fair market value per Share shall be the mean of the bid and asked prices of the Capital Stock for the date of grant, as reported in the Wall Street Journal (or, if not so reported, as otherwise reported by the National Association of Securities Dealers Automated Quotation (NASDAQ) System) or, in the event the Capital Stock is listed on a stock exchange, the fair market value per Share shall be the closing price

on such exchange on the date of grant of the Option or Stock Purchase Right, as reported in the Wall Street Journal.

(c) The consideration to be paid for the Shares to be issued upon exercise of an Option or Stock Purchase Right, including the method of payment, shall be determined by the Board and may consist entirely of cash, check, promissory note, other Shares of Capital Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Shares to the extent permitted under Sections 408 and 409 of the California General Corporation Law. In making its determination as to the type of consideration to accept, the Board shall consider if acceptance of such consideration may be reasonably expected to benefit the Company (Section 315(b) of the California General Corporation Law).

8. OPTIONS.

(a) TERM OF OPTION. The term of each Incentive Stock Option shall be ten (10) years from the date of grant thereof or such shorter term as may be provided in the Stock Option Agreement. The term of each Option that is not an Incentive Stock Option shall be ten (10) years and one (1) day from the date of grant thereof or such shorter term as may be provided in the Stock Option Agreement. However, in the case of an Option granted to an Employee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, (i) if the Option is an Incentive Stock Option, the term of the Option shall be five (5) years from the date of grant thereof or such shorter time as may be provided in the Stock Option Agreement, or (ii) if the Option is not an Incentive Stock Option, the term of the Option shall be five (5) years and one (1) day from the date of grant thereof or such other term as may be provided in the Stock Option Agreement.

(b) EXERCISE OF OPTION.

(i) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Board, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Board, consist of any consideration and method of payment allowable under Section 7 of the Plan. The Company shall issue a stock certificate evidencing such shares as soon as practicable. Until the Company receives written notice of such exercise and full payment for the Shares, no right to vote or receive

dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an Employee or Consultant ceases to serve as an Employee or Consultant (as the case may be), he may, but only within thirty (30) days (or such other period of time not exceeding three (3) months as is determined by the Board at the time of grant of the Option) after the date he ceases to be an Employee or Consultant (as the case may be) of the Company, exercise his Option to the extent that he was entitled to exercise it at the date of such termination. To the extent that he was not entitled to exercise the Option at the date of such termination, or if he does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate.

(iii) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 8(b)(ii) above, in the event an Employee or Consultant is unable to continue his employment or consulting relationship (as the case may be) with the Company as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may, but only within six (6) months (or such other period of time not exceeding twelve (12) months as is determined by the Board at the time of grant of the Option) from the date of termination, exercise his Option to the extent he was entitled to exercise it at the date of such termination. To the extent that he was not entitled to exercise the Option at the date of termination, or if he does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate.

(iv) DEATH OF OPTIONEE. In the event of the death of an Optionee:

(i) during the term of the Option who is at the time of his death an Employee or Consultant of the Company and who shall have been in Continuous Status as an Employee or Consultant since the date of grant of the Option, the Option may be exercised, at any time within six (6) months (or such other period of time as is determined by the Board at the time of grant of the Option) following the date of death, by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had the Optionee continued living and remained in Continuous Status as an Employee or Consultant six (6) months (or such other period of time as is determined by the Board at the time of grant of the Option) after the date of death; or

(ii) within thirty (30) days (or such other period of time as is determined by the Board at the time of grant of the Option) after the termination of Continuous Status as an Employee or Consultant, the Option may be exercised, at any time within six (6) months (or such other period of time as is determined by the Board at

the time of grant of the Option) following the date of death, by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination.

9. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE. After the Board of Directors determines that it will offer an Employee or Consultant a Stock Purchase Right, it shall deliver to the offeree a stock purchase agreement or stock bonus agreement, as the case may be, setting forth the terms, conditions and restrictions relating to the offer, including the number of Shares which such person shall be entitled to purchase, and the time within which such person must accept such offer, which shall in no event exceed six (6) months from the date upon which the Board of Directors or its Committee made the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a stock purchase agreement or stock bonus agreement in the form determined by the Board of Directors.

(b) ISSUANCE OF SHARES. Forthwith after payment therefor, the Shares purchased shall be duly issued; provided, however, that the Board may require that the Purchaser make adequate provision for any Federal and State withholding obligations of the Company as a condition to the Purchaser purchasing such Shares.

(c) REPURCHASE OPTION. Unless the Board determines otherwise, the stock purchase agreement or stock bonus agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the Purchaser's employment with the Company for any reason (including death or disability). If the Board so determines, the purchase price for shares repurchased may be paid by cancellation of any indebtedness of the Purchaser to the Company. The repurchase option shall lapse at such rate as the Board may determine.

(d) OTHER PROVISIONS. The stock purchase agreement or stock bonus agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Board of Directors.

10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee or Purchaser, only by the Optionee or Purchaser.

*11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any required action by the shareholders of the Company, the number of shares of Capital Stock covered by each outstanding Option and Stock Purchase Right, and the number of shares of Capital Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights

have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, or repurchase of Shares from a Purchaser upon termination of employment, as well as the price per share of Capital Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Capital Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Capital Stock of the Company or the payment of a stock dividend with respect to the Capital Stock or any other increase or decrease in the number of issued shares of Capital Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Capital Stock subject to an Option or Stock Purchase Right.

In the event of the proposed dissolution or liquidation of the Company, the Board shall notify the Optionee at least thirty (30) days prior to such proposed action. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. In the event of a merger of the Company with or into another corporation, the Option shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation. In the event that such successor corporation does not agree to assume the Option or to substitute an equivalent option the Board shall notify the Optionee that the Option shall be exercisable for a period of thirty
(30) days from the date of such notice, and the Option will terminate upon the expiration of such period.

12. TIME OF GRANT. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Board makes the determination granting such Option or Stock Purchase Right. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

13. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan from time to time in such respects as the Board may deem advisable; provided that, the following revisions or amendments shall require approval of the shareholders of the Company in the manner described in Section 17 of the Plan:

(i) any increase in the number of Shares subject to the Plan, other than in connection with an adjustment under Section 11 of the Plan;

(ii) any change in the designation of the class of persons eligible to be granted Options and Stock Purchase Rights; or

(iii) if the Company has a class of equity securities registered under Section 12 of the Exchange Act at the time of such revision or amendment, any material increase in the benefits accruing to participants under the Plan.

(b) SHAREHOLDER APPROVAL. If any amendment requiring shareholder approval under Section 13(a) of the Plan is made subsequent to the first registration of any class of equity securities by the Company under Section 12 of the Exchange Act, such shareholder approval shall be solicited as described in Section 17 of the Plan.

(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination of the Plan shall not affect Options or Stock Purchase Rights already granted and such Options or Stock Purchase Rights shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee or Purchaser (as the case may be) and the Board, which agreement must be in writing and signed by the Optionee or Purchaser (as the case may be) and the Company.

14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Rights unless the exercise of such Option or Stock Purchase Rights and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option or Stock Purchase Rights, the Company may require the person exercising such Option or Stock Purchase Rights to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

15. RESERVATION OF SHARES. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

16. OPTION, STOCK PURCHASE AND STOCK BONUS AGREEMENTS. Options shall be evidenced by written option agreements in such form as the Board shall approve. Upon the exercise of Stock Purchase Rights, the Purchaser shall sign a stock purchase agreement or stock bonus agreement in such form as the Board shall approve.

17. SHAREHOLDER APPROVAL.

(a) Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. If such shareholder approval is obtained at a duly held shareholders' meeting, it may be obtained by the affirmative vote of the holders of a majority of the outstanding shares of the Company, such holders being present or represented and entitled to vote thereon. If such shareholder approval is obtained by written consent, it must be obtained by the unanimous written consent of all shareholders of the Company, or by written consent of a smaller percentage of shareholders but only if the Board determines, in its discretion after consultation with the Company's legal counsel, that the written consent of such a smaller percentage of shareholders will comply with all applicable laws and will not adversely affect the qualification of the Plan under Section 422A of the Code.

(b) If and in the event that the Company registers any class of any equity securities pursuant to Section 12 of the Exchange Act, any required approval of the shareholders of the Company obtained after such registration shall be solicited substantially in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.

(c) If any required approval by the shareholders of the Plan itself or of any amendment thereto is solicited at any time otherwise than in the manner described in Section 17(b) hereof, then the Company shall, at or prior to the first annual meeting of shareholders held subsequent to the later of (1) the first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an officer or director after such registration, do the following:

(i) furnish in writing to the holders entitled to vote for the Plan substantially the same information which would be required (if proxies to be voted with respect to approval or disapproval of the Plan or amendment were then being solicited) by the rules and regulations in effect under Section 14(a) of the Exchange Act at the time such information is furnished; and

(ii) file with, or mail for filing to, the Securities and Exchange Commission four copies of the written information referred to in subsection (i) hereof not later than the date on which such information is first sent or given to shareholders.

*18. INFORMATION TO OPTIONEES. The Company shall provide to each Optionee and to each individual who acquired Shares pursuant to the Plan, during the period such Optionee or purchaser has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquired Shares pursuant to the Plan, during the period such individual owns such shares, copies of all annual reports and other information which are provided to all shareholders of the Company. The Company shall not be required to provide such information if the issuance of Options or Stock

Purchase Rights under the Plan is limited to key employees whose duties in connection with the Company assure their access to equivalent information.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

STOCK OPTION AGREEMENT

AEHR TEST SYSTEMS, a California corporation (the "Company"), hereby grants to (the "Optionee") an Option to purchase a total of ____________ shares of Common Stock (the "Shares"), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Amended 1986 Incentive Stock Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings herein.

1. NATURE OF THE OPTION. If Optionee is an Employee of the Company, this Option is intended to qualify as an Incentive Stock Option. If Optionee is a Consultant of the Company, this Option is a Nonstatutory Stock Option and is not intended to qualify for any special tax benefits to the Optionee.

2. EXERCISE PRICE. The exercise price is $_______ for each share of Common Stock, which price is not less than the fair market value per share of Common Stock on the date of grant, as determined by the Board; provided, however, in the event Optionee is an Employee and owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its Parent or Subsidiary corporations immediately before this Option is granted, said exercise price is not less than one hundred ten percent (110%) of the fair market value per share of Common Stock on the date of grant as determined by the Board.

3. EXERCISE OF OPTION. This Option shall be exercisable during its term in accordance with the provisions of Section 8 of the Plan as follows:

(i) RIGHT TO EXERCISE

(a) Subject to Subsections 3(i)(b), (c), (d) and (e) below, one forty-eighth (1/48th) of the total number of shares subject to this Option shall become exercisable on _______________ and at the end of each full month thereafter until all of such shares are

exercisable.

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

(c) In the event of Optionee's death, disability or other termination of employment, the exercisability of the Option is governed by Sections 7, 8 and 9 below, subject to the limitations contained in subsections 3(i)(d) and (e).

(d) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 11 below.

(e) If this Option is intended to qualify as an Incentive Stock Option, in no event may this Option become exercisable at a time or times which, when this Option is aggregated with all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, would result in Shares having an aggregate fair market value (determined for each Share as of the date of grant of the option covering such share) in excess of $100,000 becoming first available for purchase upon exercise of one or more incentive stock options during any calendar year.

(ii) METHOD OF EXERCISE. This Option shall be exercisable by written notice which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered in person or by certified mail to the President, Secretary or Chief Financial Officer of the Company. The written notice shall be accompanied by payment of the exercise price. This Option shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by the exercise price.

No shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

4. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON TRANSFER.

(i) By receipt of this Option, by its execution and by its exercise in whole or in part, Optionee represents to the Company the following:

(a) Optionee understands that this Option and any Shares purchased upon its exercise are securities, the issuance of which requires compliance with federal and state securities laws.

(b) Optionee is aware of the Company's business affairs and financial

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

(c) Optionee acknowledges and understands that the securities constitute "restricted securities" under the Securities Act and must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the securities. Optionee understands that the certificate evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, a legend prohibiting their transfer without the consent of the Commissioner of Corporations of the State of California and any other legend required under applicable state securities laws.

(d) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of exercise of the Option by the Optionee, such exercise will be exempt from registration under the Securities Act. In the event the Company later becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter the securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including among other things: (1) the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, and the amount of securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), if applicable. Notwithstanding this paragraph
4(i)(d), the Optionee acknowledges and agrees to the restrictions set forth in paragraph 4(ii).

In the event that the Company does not qualify under Rule 701 at the time of exercise of the Option, then the securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires among other things: (1) the availability of certain public information about the Company; (2) the resale occurring not less than two years after the party has purchased, and made full payment for, within the meaning of Rule 144, the securities to be sold; and (3) in the case of an affiliate, or of a non-affiliate who has held the securities less than three years, the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934) and the amount of securities being sold during any three month period not exceeding the specified limitations stated therein, if applicable.

(ii) Optionee agrees, in connection with the Company's initial underwritten public offering of the Company's securities, (1) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by Optionee (other than those shares included in the registration) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company's securities for one hundred eighty (180) days from the effective date of such registration, and (2) further agrees to execute any agreement reflecting (1) above as may be requested by the underwriters at the time of the public offering.

5. METHOD OF PAYMENT. Payment of the purchase price shall be made by cash or check.

6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, including any rule under Part 207 of Title 12 of the Code of Federal Regulations (Regulation G) as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation.

7. TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the event of termination of Optionee's Continuous Status as an Employee or Consultant, Optionee may, but only within thirty (30) days after the date of such termination (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), exercise this Option to the extent that Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise this Option at the date of such termination, or if Optionee does not exercise this Option within the time specified herein, this Option shall terminate.

8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 7 above, in the event of termination of Optionee's Continuous Status as an Employee or Consultant as a result of Optionee's permanent and total disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from the date of termination of employment or consulting relationship (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), exercise this Option to the extent Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise this Option at the date of termination, or if Optionee does not exercise such Option (which Optionee was entitled to exercise) within the time specified herein, this Option shall terminate.

9. DEATH OF OPTIONEE. In the event of the death of Optionee:

(i) during the term of this Option while an Employee or Consultant of the Company and having been in Continuous Status as an Employee or Consultant since the date of grant of this Option, this Option may be exercised, at any time within six (6) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), by Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had Optionee continued living and remained in Continuous Status as an Employee or Consultant six (6) months after the date of death, subject to the limitations contained in Section 3(i)(e) above; or

(ii) within thirty (30) days after the termination of Optionee's Continuous Status as an Employee or Consultant, this Option may be exercised, at any time within six (6) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), by Optionee's estate or by a person who acquired the right to exercise this Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination.

10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

11. TERM OF OPTION. Notwithstanding Section 9, this Option may not be exercised more than five (5) years from the date of grant of this Option, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

12. EARLY DISPOSITION OF STOCK. If Optionee is an Employee, Optionee understands that, if Optionee disposes of any Shares received under this Option within two (2) years after the date of this Agreement or within one
(1) year after such Shares were transferred to Optionee, Optionee will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount generally measured as the difference between the price paid for the Shares and the lower of the fair market value of the Shares at the date of exercise or the fair market value of the Shares at the date of disposition. The amount of such ordinary income may be measured differently if Optionee is an officer, director or 10% shareholder of the Company, or if the Shares were subject to a substantial risk of forfeiture at the time they were transferred. Any gain recognized on such a premature sale of the Shares in excess of the amount treated as ordinary income will be characterized as capital gain. OPTIONEE HEREBY AGREES TO NOTIFY THE COMPANY IN WRITING WITHIN THIRTY (30) DAYS AFTER THE DATE OF ANY SUCH DISPOSITION. Optionee understands that if Optionee disposes of such Shares at any time after the expiration of such two-year and one-year holding periods, any gain on such sale will be treated as long-term capital gain.

13. TAXATION UPON EXERCISE OF OPTION. If Optionee is a Consultant, Optionee understands that, upon exercise of this Option, Optionee will recognize income for tax purposes in an amount equal to the excess of the then fair market value of the Shares over the exercise price. Upon a resale of such shares by the Optionee, any difference between the sale price and the fair market value of the shares on the date of exercise of the Option will be treated as capital gain or loss.

14. TAX CONSEQUENCES. The Optionee understands that any of the foregoing references to taxation are based on federal income tax laws and regulations now in effect. The Optionee has reviewed with the Optionee's own tax advisors the federal, state, local and foreign tax consequences of the transactions contemplated by this Agreement. The Optionee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Optionee understands that the Optionee (and not the Company) shall be responsible for the Optionee's own tax liability that may arise as a result of the transactions contemplated by this Agreement.

DATE OF GRANT: _______________

AEHR TEST SYSTEMS

By: __________________________________

Title: _____________________________

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

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

Dated: ____________________

Residence Address:

Social Security No. ________________

EXHIBIT 10.5

AEHR TEST SYSTEMS

CAPITAL STOCK PURCHASE AGREEMENT

This Capital Stock Purchase Agreement ("Agreement") is made as of the 11th day of September, 1979, by and between AEHR TEST SYSTEMS, a California corporation (the "Company") and MAYFIELD III, a California Limited Partnership ("Purchaser").

In consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto mutually agree as follows:

1. SALE OF CAPITAL STOCK.

Subject to the terms and conditions hereof, on the Closing Date the Company will issue and sell to Purchaser and Purchaser agrees to purchase from the Company, 20,000 shares of Company's Capital Stock (the "Shares") at a price of $2.50 per share. The term "Shares" refers to the purchased Shares and all securities received in replacement of Shares or as stock dividends, splits, or the like.

2. CLOSING DATES; PRICES; DELIVERY; QUALIFICATION.

(a) The closing of the purchase and sale of the Shares hereunder (the "Closing") shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati, Two Palo Alto Square, Suite 900, Palo Alto, California, at 10:00 a.m. on September 11, 1979.

(b) At the Closing, the Company will deliver to Purchaser a certificate representing the Shares to be purchased by it (which shall be issued in Purchaser's name) against payment of the purchase

price therefor by a check, payable to the order of the Company.

(c) The sale of the securities which are the subject of this Agreement, if not yet qualified with the California Corporations Commissioner, is subject to such qualification, and the issuance of such securities, or the receipt of any part of the consideration prior to such qualification is unlawful. The rights of the parties to this Agreement are expressly conditioned upon such qualification being obtained. The Closing referred to above is subject to the provisions of this Section 2(c).

3. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.

The Company represents and warrants to Purchaser that:

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite power and authority to own and lease property and to conduct its business as presently conducted. The Company is, to the best of its knowledge, not required to be qualified as a foreign corporation in any other jurisdiction. The Company has no subsidiaries. Correct copies of Company's Articles of Incorporation, By-Laws and Minutes of Directors and Stockholders Meetings have been made available to Purchaser.

(b) Company's outstanding securities have been validly issued and fully paid. Except as set forth in Exhibit A, no securities convertible into, or exchangeable for, Shares of any class of capital stock of the Company and no subscription, warrant, option or other right to purchase or acquire any Shares of any class of capital stock of the Company or any securities convertible

into, or exchangeable for, Shares of any class of capital stock of the Company are authorized or outstanding and there is no commitment of the Company to issue any Shares, warrants, options or such rights, except as contemplated herein.

(c) The Company is not a party to any contract, agreement or lease which materially affects the conduct and operation of its business and properties other than as described in this Agreement or on Exhibit B attached hereto.

(d) The issuance, sale and delivery of the Shares to the Purchaser in accordance herewith has been duly authorized by all requisite corporate action; the Shares are not subject to preemptive or any other similar rights of the stockholders of the Company; and the Shares being issued against payment of the purchase price therefor will be validly issued and outstanding, fully paid and nonassessable and in compliance with applicable legal requirements.

(e) To the best of the knowledge of the Company there is no action, proceeding or investigation pending or threatened against or involving the Company or any of its properties or assets which might result in any material and adverse change in the property, assets or financial condition of the Company, and to the best knowledge of the Company, it is not in violation of any law or regulation applicable to it where said violation might result in any material and adverse change in the property, assets or financial condition of the Company.

(f) The Company has no knowledge or information that any of its officers or key employees intends to, or is considering, severing his employment or other relationship with the Company, nor is any such individual incapacitated or unable to carry on fulltime employment with the Company. Each employee engaged in technical work has agreed to transfer to Company inventions made by him relating to Company's business.

(g) No loan or agreement (oral or in writing) exists between the Company and any officer or director or any member of the immediate family of such officer or director except as disclosed in this Agreement or its financial statements.

(h) The Company has furnished to Purchaser a copy of its unaudited financial statements. Such financial statements fairly present the financial position of the Company as of June 30, 1979 and the Company's operations for the period covered. Such financial statements have been prepared in accordance with generally-accepted accounting principles applied on a consistent basis and are in accordance with the books and records of the Company. Since June 30, 1979 there have been no material changes in the assets or liabilities or in the financial condition or business of the Company which alone or in the aggregate have been adverse.

(i) The Company has good and marketable title to all of its properties and assets, including without limitation the properties and assets reflected in the financial statements delivered to Purchaser, and assets used in the course of its business, except for property disposed of in the ordinary course of its business since the effective date of such financial statements.

(j) TO the best knowledge of the Company;

(i) neither the Company nor any of its employees is in breach of any provision of any prior Agreement entered into between either the Company or the employee and any third party, including any employee confidentiality or patent assignment agreements, that in any way adversely affects the Company's ability to conduct its business or affects the employee's performance of his duties as an employee of the Company;

(ii) the Company is not knowingly infringing any patents or other rights relating to the business and propped business of Company;

(iii) none of the employees of the Company are knowingly violating any trade secrets of any prior employer; and

(iv) the Company has all of the rights required to carry on the business it intends to pursue.

(k) No representation or warranty in this Agreement or any writing furnished to the Purchaser in connection with the transaction contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

4. REPRESENTATIONS OF PURCHASER.

In connection with the purchase of the Shares, Purchaser represents to the Company the following:

(a) It is purchasing the Shares for investment for its own account only and not with a view to, or for resale in

connection with, any "distribution" thereof within the meaning of the Securities Act of 1933 ("Securities Act").

(b) It understands that the securities have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of his investment intent as expressed herein. In this connection, it understand that, in the view of the Securities and Exchange Commission ("Commission"), the statutory basis for such exemption may not be present if its representations meant that its present intention was to hold these securities for a minimum capital gains period under the tax statutes, for a deferred sale, for a market rise, for a sale if the market does not rise, on for a year or any other fixed period in the future.

(c) It further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption form such registration is available. It further acknowledges and understands that the Company is under no obligation to register the securities. It understands that the certificate evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

(d) It is aware of the adoption of Rule 144 by the Commission, promulgated under the Securities Act, which permits limited public resale of securities acquired in a non-public offering subject to the satisfaction of certain conditions, including,

among other things, the availability of certain current public information about the Company, the resale occurring not less than two years after it has purchased and paid for the securities to be sold, the sale being through a broker in an unsolicited "broker's transaction" and the amount of securities being sold during any six-month period not exceeding specified limitations (generally, 1% of the total amount outstanding).

(e) It further acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time it wishes to sell the securities; and, if so, it would be precluded from selling the securities under Rule 144 even if the two-year minimum holding period had been satisfied.

(f) It further acknowledges that in the event all of the requirements of Rule 144 are not met, compliance with Regulation A or some other registration exemption will be required; and that although Rule 144 is not exclusive, the staff of the Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and other than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.

5. SURVIVAL OF WARRANTIES.

All agreements, representations and warranties contained herein or made in writing by or on behalf of the Company and/or

by Purchaser in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement, any investigation at any time made by the Corporation or by Purchaser or on Purchaser's behalf, and the purchase of the Shares. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations and warranties as of the date of such certificate or instrument.

6. CONDITIONS OF CLOSING.

The Purchaser's obligation to purchase and pay for the Shares on each Closing Date is subject to the fulfillment prior to or on each Closing Date of the following conditions, any or all of which may be waived in whole or in part by the Purchaser:

(a) The representations and warranties of the Company under this Agreement shall be deemed to have been made on the Closing Date and shall then be true and correct, and Purchaser shall not have discovered any material error, misstatement or omission therein. The Company shall have performed and complied with all obligations and conditions required to have been performed or complied with by it under the Agreement on or prior to the Closing Date.

(b) There shall have been delivered to Purchaser a certificate, dated at the Closing Date, signed by the Company's President, certifying that the conditions specified in paragraph 6(a) have been fulfilled.

7. CONDITIONS OF COMPANY'S OBLIGATION AT CLOSING.

The Company's obligation to deliver the Shares at the Closing is subject to fulfillment prior to or on the Closing Date of the following conditions, any or all of which may be waived, all or in part, by Company.

(a) The representations and warranties of Purchaser shall be true as of the Closing Date.

(b) There shall have been received by the Company, prior to the Closing Date, a Permit from the California Commissioner of Corporations for the sale and issuance of the Shares; the Company agrees to use its best efforts to so qualify the sale and issuance of the Shares prior to the Closing Date.

8. REGISTRATION RIGHTS.

If the Company shall grant to any future purchasers of the Company's capital Stock any rights to demand or request registration of the Company's securities under the Securities Act, the holder of any Shares purchased hereunder shall have the right to registration comparable to the greatest rights under such future grants.

9. LEGENDS.

The certificate or certificates representing the Shares shall bear the following legends:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE CALIFORNIA COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

10. MISCELLANEOUS.

(a) Any Notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed, if to the Company, at its principal place of business, Attention: the President, and if to Purchaser, at his address as shown on the stock records of the Company.

(b) The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company and Purchaser, their successors and assigns, except that the right of Purchaser to purchase Shares may be assigned only with the prior written consent of the Company.

(c) Both parties agree to execute any additional documents necessary to carry out the purposes of this Agreement.

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

COMPANY:                                         PURCHASER:

AEHR TEST SYSTEMS                                MAYFIED III



By  /s/ RHEA J. POSEDEL                          By  /s/ [ILLEGIBLE]
  ----------------------------                      ----------------------------
                   , President                                 , General Partner

Option Holder                                       Number of Shares
-------------                                       ----------------

Donald Brame                                              1,000

Verna Brame                                               1,000

Clarence Brehm                                            2,000

Vivian Owen                                               3,000

Richard A. Paulsen                                        2,000

Rhea J. Posedel                                           5,000

At a meeting of the Board of Directors of Aehr Test Systems held on June 29, 1979, the Board of Directors authorized the grant of an additional 5,000 shares to Rhea J. Posedel, to take place on December 31, 1979, if the

Exhibit 10.6

AEHR TEST SYSTEMS
CAPITAL STOCK
INVESTMENT AGREEMENT

THIS AGREEMENT is made as of April 12, 1984 among AEHR TEST SYSTEMS (the "Company") and the persons listed on the Schedule of Purchasers attached hereto as Exhibit A (the "Purchasers").

1. PURCHASE AND SALE OF CAPITAL STOCK.

Subject to the terms hereof, the Company will issue and sell to the Purchasers, and the Purchasers will buy from the Company, the number of shares of the Company's Capital Stock specified opposite each Purchaser's name on the Schedule of Purchasers at a cash purchase price of $8.50 per share (the "Capital Stock") (hereinafter the shares of Capital Stock purchased and sold hereunder shall be referred to, in all and in part, as the "Shares").

2. CLOSING, DELIVERY.

2.1 CLOSING. The closing of the purchase and sale of the Capital Stock (the "Closing") shall be held at the law offices of Wilson, Sonsini, Goodrich & Rosati, P.C., Two Palo Alto Square, Suite 900, Palo Alto, California, at 10:00 A.M. on April 12, 1984, or at such other time and place upon which the Company and the Purchasers shall agree (the "Closing Date").

2.2 DELIVERY. At the Closing, the Company will deliver to each Purchaser a certificate representing the number of shares of Capital Stock to be purchased by each Purchaser against payment of the purchase price therefor, by check or wire transfer payable to the Company.

3. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.

3.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized and validly existing under the laws of the State of California and is in good standing as a domestic corporation under the laws of said state. The Company has all requisite corporate power and authority to own and lease property and to conduct its business as presently conducted and as proposed to be conducted in the AEHR TEST Financial Forecast, dated April 2, 1984 (the "Financial Forecast"). The Company is not qualified as a foreign corporation in any other jurisdiction and to the Company's best knowledge is not required to be so qualified.

3.2 SUBSIDIARIES. The Company has a 50% equity interest in Aehr Test Systems-Japan. The Company has a wholly-owned domestic

international sales corporation, Aehr Test Systems International. The Company has no other subsidiaries or affiliated companies and does not otherwise directly or indirectly control, or have any investment in, any other business entity.

3.3 CAPITALIZATION. The authorized capital stock of the Company consists of 10,000,000 shares of Capital Stock. 3,140,732 shares of Capital Stock were validly issued and outstanding as of the date hereof. The outstanding shares of Capital Stock are fully paid and nonassessable and were offered and sold in compliance with all applicable federal and state securities laws.

Except as set forth below, no subscriptions, warrants, options or other rights to purchase or acquire any shares of any class of capital stock of the Company or securities convertible into or exchangeable for such capital stock are authorized or outstanding.

No. of Shares                      Exercise Price
-------------                      ---------------
   30,000                               $0.40
   20,000                               $0.50
   50,000                               $1.80
   10,000                               $2.00
   42,500                               $4.00
   59,500                               $6.00

3.4 AUTHORIZATION. The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation, as amended, or the Bylaws of the Company, or any statute, law, rule or regulation or any order, judgment, decree, indenture, mortgage, lease or other agreement or instrument to which the Company, or any of its properties, is subject.

3.5 SHARES. The Shares when issued pursuant to the terms of the Agreement will be validly issued, fully paid and nonassess-

able, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in the Agreement or otherwise required at the time a transfer is proposed.

3.6 LITIGATION. There is no action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company or any of its properties or assets which alone or in the aggregate might result in any material and adverse change in the property, assets or financial condition of the Company, nor, to the knowledge of the Company, is there any basis for any such action, proceeding or investigation. To the best knowledge of the Company, the Company is in compliance in all material respects with all laws and regulations applicable to it, its properties and its business as presently conducted or proposed to be conducted in the Financial Forecast.

3.7 TITLE. The Company has good title to its properties and assets. Such properties and assets are not subject to any liens, mortgages, pledges, encumbrances or charges of any kind except liens under the Company's commercial line of credit with the Bank of America. All leases pursuant to which the Company leases real or personal property are in good standing and are valid and effective in accordance with their respective terms, and, to the Company's knowledge, there exists no default or other occurrence or condition which could result in a material default or termination of any thereof.

3.8 TAX RETURNS. The Company has filed all federal, state and other tax returns which are required to be filed and has paid all taxes which have become due and payable. The Company has not been advised that any of its returns, federal, state, or other, have been or are being audited as of the date hereof. The Company will pay any stamp or issuance taxes required or levied in connection with the issuance of the Shares.

3.9 INFRINGEMENTS. The Company to its knowledge is not infringing, and is not aware of any claimed infringement of, any third party's patent, trademark, trade secret, trade name or copyright and has not since its incorporation, received any notice of any claimed infringement.

3.10 CONTRACTS, NONE BURDENSOME. The Company is not a party to any contract, agreement or instrument or to its knowledge subject to any judgment, order, writ, injunction, rule or regulation which, in opinion of the Company, either is unduly burdensome and substantially and adversely affects its business, operations or conditions (financial or other) or is presently antici-

pated to be unduly burdensome and to substantially and adversely affect its business, operations or condition (financial or other).

3.11 MATERIAL BREACH. The Company is not in violation or breach in any material respect of any of the terms, conditions or provisions of its Articles of Incorporation, as amended, its Bylaws, or any indenture, mortgage, deed of trust or other material agreement, instrument, court order, judgment or decree to which it is a party.

3.12 CONFLICT OF INTEREST. The Company and its officers have no interest (other than as holders of securities of a publicly-traded company), either directly or indirectly, in any entity, including without limitation thereto any corporation, partnership, joint venture, proprietorship, firm, person, licensee, business or association (whether as an employee, officer, director, shareholder, agent, independent contractor, security holder, creditor, consultant or otherwise) that presently (i) provides any services, or designs, produces and/or sells any products or product lines, or engages in any activity which is the same, similar to or competitive with any activity or business in which the Company is now engaged; (ii) is a supplier, customer, creditor or has an existing contractual relationship with any of the Company's managing employees; (iii) has any direct or indirect interest in any asset or property, real or personal, tangible or intangible, of the Company or any property, real or personal, tangible or intangible, that is necessary or desirable for the conduct of the Company's business.

3.13 REPRESENTATIONS. This Agreement, the Financial Forecast, the Financial Statements, and any document, statement, certificate or schedule furnished or to be furnished by the Company pursuant hereto, or in connection with transactions contemplated hereby, do not or will not contain any untrue statement of a material fact or omit to state a fact necessary to make the statements or facts contained therein not misleading. There is, to the best of the Company's knowledge, no fact which materially adversely affects the business, prospects, conditions, affairs or operations of the Company or any of its properties or assets which has not been set forth in this Agreement, including the Exhibits hereto, the Financial Forecast or otherwise disclosed to me. To the best of the Company's knowledge, the Company has provided to me all information which the Company reasonably believes in necessary or appropriate to enable me to make an informed investment decision. The Company warrants the correct computation of the projections contained in the Financial Forecast but does not warrant the accuracy of the assumptions or guarantee that such projections will be achieved.

3.14 INTANGIBLE PROPERTY. The Company, to its knowledge and that of its officers after due inquiry, has all right, title

and interest in and to all intangible property and technology or is able to obtain on reasonable terms, all permits, licenses and other authority necessary to conduct its business as presently conducted and as proposed to be conducted in the Financial Forecast. To the best knowledge of the Company, the Company, its officers and employees have not improperly used and are not making improper use of any confidential information or trade secrets of others, including those of any former employer of an officer or employee. The Company has not sold or granted a license with respect to any technology necessary or useful in connection with its business as described in the Financial Forecast.

3.15 INSURANCE. The Company has fire and casualty insurance policies, with extended coverage, sufficient in amount to allow it to replace any of its properties which might be damaged or destroyed.

3.16 USE OF PROCEEDS. It is the Company's present intention to use the proceeds obtained in this offering for the purchase of capital equipment, for working capital and for debt repayment.

3.17 REGISTRATION RIGHTS. The Company has granted no registration rights to any holders of Capital Stock other than those granted pursuant to paragraph 5 of this Agreement.

3.18 SECURITIES LAWS. The offer, sale and issuance of the Shares as provided in this Agreement are exempt from the registration and prospectus delivery requirements of the Act, and have been registered or qualified (or are exempt from registration or qualification) under the registration or qualification requirements of the California Corporate Securities Law of 1968, as amended.

4. REPRESENTATIONS, WARRANTIES OF PURCHASERS AND RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933.

4.1 REPRESENTATIONS AND WARRANTIES BY PURCHASER. Each Purchaser, for that Purchaser alone, represents and warrants to the Company with respect to the purchase of the Shares as follows:

(a) This Agreement constitutes his valid and legally binding obligation, enforceable in accordance with its terms.

(b) He is experienced in evaluating and investing in new, high technology companies such as the Company.

(c) He is acquiring the Shares for investment for his own account and not with a view to, or for resale in connection with, any distribution thereof. He understands that the Shares to be purchased have not been registered under the Act by reason of a

specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d) He acknowledges that the Shares must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. He is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the securities, the availability of certain current public information about the Company, the resale occurring not less than two years after a party has purchased and paid for the security to be sold, the sale being made through a "broker's transaction" or in transactions made directly with a "market maker" (except as provided by Rule 144(k)), and the number of securities being sold during any three-month period not exceeding specified limitations (except as provided by Rule 144(k)).

(e) He understands that no public market now exists for any of the securities issued by the Company and that it is unlikely that a public market will ever exist for the Shares.

(f) He has had an opportunity to discuss the Company's business, management and financial affairs with its management and an opportunity to review the Company's facilities. He understands that such discussions, as well as to he written information issued by the Company, were intended to describe the aspects of the Company's business and prospects which it believes to be material but were not necessarily a thorough or exhaustive description.

4.2 LEGENDS. Each certificate representing the Shares shall be endorsed with the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

and if imposed by the California Department of Corporations, the following legend:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMIS-

SIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.

The Company need not register a transfer of the Shares unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Shares unless the conditions specified in the foregoing legends are satisfied.

4.3 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4.2 of this Agreement and the stop transfer instructions with respect to the Shares represented by such certificate shall be removed and the Company shall issue a certificate without such legend to the holder of such Shares if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Securities and Exchange Commission (the "Commission") to the effect that a public sale, transfer or assignment of such Shares may be made without registration and without compliance with any restriction such as Rule
144. The California Commissioner of Corporations' legend (if required) will be removed if the Commissioner of Corporations of the State of California has consented to the removal of such legend.

5. REGISTRATION RIGHTS.

5.1 DEFINITIONS. As used in this paragraph 5, the following terms shall have the following respective meanings:

(a) "Commission" shall mean the Securities and Exchange Commission or any other Federal agency at the time administering the Act.

(b) "Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

(c) "Transfer" shall mean any disposition of the Shares which would constitute a sale thereof within the meaning of the Act.

(d) "Restricted Securities" shall mean the Shares or any common stock issued as a dividend or other distribution with respect to, or in exchange for, or in replacement of, such Shares, and the 20,000 shares of Capital Stock purchased by Mayfield III, a

California limited partnership, pursuant to the Capital Stock Purchase Agreement of September 11, 1979, as subsequently converted into 100,000 shares of Capital Stock pursuant to a five-for-one stock split on April 21, 1982, provided the obligation hereunder shall have not terminated with respect thereto under paragraph 5.7 hereof.

5.2 OTHER REGISTRATION RIGHTS. Without the written consent of the holders of fifty percent (50%) of the then outstanding Restricted Securities, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to make a demand registration which could result in such registration statement being declared effective prior to the earlier of of either of the dates set forth in paragraph 5.3(a), or have other material terms more favorable than those contained in paragraph 5.3 or which would limit the effect of the proviso contained in the second sentence of paragraph 5.4.

5.3 REQUESTED REGISTRATION.

(a) If at any time after the earlier of (i) March 1, 1989, or
(ii) one hundred twenty (120) days after the effective date of the first registration statement of a public offering of Capital Stock of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or a Commission Rule 145 transaction), the Company shall be requested by the holders of not less than 50% of the total number of shares of Restricted Securities, the Company shall promptly, and in any case within ten (10) days, give written notice of such proposed registration to all holders of Restricted Securities. Thereupon the Company shall as expeditiously as possible use its best efforts to effect the registration on Form S-1 (or on a form of general use then in effect under the Act) of the shares of Restricted Securities which the Company has been requested to register (i) in such request and (ii) in any response to such notice given to the Company within twenty (20) days after the Company's giving of such notice, in order to permit the sale or other disposition of such shares in accordance with the intended method of sale or other disposition given in the request and in any such response.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(a). The Company shall not be required to effect a registration statement under this paragraph 5.3(a) during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(b) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(b) or 5.4.

The Company may include in the registration under this paragraph 5.3(a) any other shares of Capital Stock (including issued and outstanding shares of Capital Stock as to which the holders thereof have contracted with the Company for "piggyback" registration rights) so long as the inclusion in such registration of such shares will not, in the opinion of the managing underwriter(s), interfere with the successful marketing in accordance with the intended method of sale or other disposition of all the shares of Restricted Securities sought to be registered by the holder or holders of Restricted Securities pursuant to this paragraph 5.3(a). If it is determined as provided above that there will be such interference, the other shares of Capital Stock sought to be included shall be excluded to the extent deemed appropriate by the managing underwriter(s) and, if the number of Restricted Securities to be included would itself be too large, the number of shares of the holder thereof to be included shall be determined pro rata based on the total number of Restricted Securities owned by each holder requesting to participate.

(b) In addition to the registration rights granted in paragraph 5.3(a), if a registration may be effected by the Company on Form S-3 or a similar short-form registration statement, and the Company shall be requested by the holders of not less than thirty percent (30%) of the total number of shares of Restricted Securities, the Company shall, as expeditiously as possible, use its best efforts to effect the registration on Form S-3 or a similar short-form registration statement of the shares of Restricted Securities which the Company has been requested to register in such request.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(b), and the rights granted by this paragraph 5.3(b) may not be exercised during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(a) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(a) or 5.4.

5.4 "PIGGYBACK" REGISTRATIONS. If at any time the Company proposes to register any of its securities under the Act (except with respect to Registration Statements filed on Form S-8 or Form S-14 or such other similar form then in effect under the Act), it will each such time give written notice to all holders of Restricted Securities of its intention so to do and, upon the written request of the holders of any Restricted Securities in order to register such Restricted Securities, (which request shall be given within twenty (20) days after the Company's giving of such notice and which shall state the intended method of disposition of such Restricted Securities by the prospective sellers), the Company will

use its best efforts to cause the Restricted Securities, as to which registration shall have been so requested, to be included in the shares of Capital Stock to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition (in accordance with the written request of the holders, as aforesaid) by the prospective seller or sellers of such Restricted Securities so registered. Notwithstanding any other provision of this paragraph 5.4, if the managing underwriter(s) determines that the marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter(s) may exclude some or all of the Restricted Securities from such registration and underwriting; provided, however, that if any holders of shares of the Company's Capital Stock other than the Restricted Securities (the "Other Shares") request the Company to include the Other Shares in the Registration Statement, such Other Shares shall be excluded from such registration and underwriting before any of the Restricted Securities are excluded. In the event that any registration pursuant to this paragraph 5.4 shall be, in whole or in part, a firm commitment underwritten offering of securities of the Company, any request by such holders pursuant to this paragraph 5.4 to register Restricted Securities must specify that such shares are to be included in the underwriting
(i) on the same terms and conditions as the shares of Capital Stock, if any, otherwise being sold through underwriters under such registration or (ii) on terms and conditions comparable to those normally applicable to offerings of common stock in reasonably similar circumstances in the event that no shares of Capital Stock, other than Restricted Securities, are being sold through underwriters under such registration.

5.5 REGISTRATION PROCEDURES AND EXPENSES. If and whenever the Company is required by the provisions of this paragraph 5 to use its best efforts to effect the registration of any of the Restricted Securities under the Act, each selling shareholder will furnish in writing such information as is reasonably requested by the Company for inclusion in the registration statement relating to such offering and such other information and documentation as the Company shall reasonably request, and the Company will, as expeditiously as possible:

(a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for such period as may be necessary to permit the successful marketing of such securities but not exceeding ninety (90) days for a firm commitment underwritten offering pursuant to paragraph 5.3(a) hereof; six (6) months for an offering pursuant to paragraph 5.3(b) hereof; or, with regard to an offering pursuant to paragraph 5.4 hereof, ninety (90) days or for that period asso-

ciated with the offering which gave rise to rights under paragraph 5.4 hereof, whichever is longer.

(b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Act; and to keep such registration statement effective for that period of time specified in paragraph 5.5(a).

(c) Furnish to each selling shareholder such number of prospectuses and preliminary prospectuses in conformity with the requirements of the Act and such other documents as such seller may reasonably request in order to facilitate the public sale or other disposition of the Restricted Securities owned by such seller;

(d) If the Company is required by the underwriter(s), if any, of the securities registered in a registration under this paragraph 5 to deliver an opinion of counsel to such underwriter(s) in connection with such registration, and if requested by any holder(s) of Restricted Securities participating in such registration, furnish such opinion to such holder(s) on the day of delivery to the underwriter(s), addressed to such underwriter(s) and to such holder(s), containing substantially the following provisions: (i) that the registration statement covering such registration of securities has become effective under the Act; (ii) that, to the best of the knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Act; (iii) that at the time the registration statement became effective, the registration statement and the related prospectus complied as to form in all material respects with the requirements of the Act and the applicable rules and regulations of the Commission thereunder (except that such counsel need express no opinion as to financial statements and related schedules contained therein);
(iv) that while such counsel has not independently verified the accuracy or completeness of the information contained therein, such counsel has no reason to believe that the registration statement at the time it became effective or the prospectus contained any untrue statement of a material fact or omitted to state a materail fact required to be stated therein or necessary to make the statements therein not misleading; (v) that the descriptions in the registration statement and the prospectus, and any amendments or supplements thereto, of all legal and governmental matters and all contracts and other legal documents or instruments described therein are accurate and fairly present the information required to be stated therein concerning such matters, contracts, documents and instruments; and (vi) that such counsel does not know of any legal or governmental proceedings, pending or threatened, required to be described in the registration statement or prospectus, or any amendment or supplement thereto,

which are not described as required, nor of any contracts or documents or instruments of a character required to be described in the registration statement or prospectus, or any amendment or supplement thereto, or to be filed as exhibits to the registration statement which are not described or filed as required. Such opinion shall be in such form as is customary for similar opinions delivered by such counsel so long as such form is acceptable to the underwriter(s).

(e) If the Company is required by the underwriter(s), if any, of the securities registered in a registration under this paragraph 5 to deliver a letter from the independent certified public accountants of the Company to such underwriter(s) in connection with such registration, and if requested by any holder(s) of Restricted Securities participating in such registration, furnish such letter to such holder(s) on the day of delivery to the underwriter(s), addressed to such underwriter(s) and to such holder(s), providing substantially that such accountants are independent certified public accountants within the meaning of the Act and that in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement and the prospectus, any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Act, and such other matters as are customary in connection with public offerings.

(f) Use its best efforts to register or qualify the Restricted Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each such selling stockholder shall reasonably request and do any and all other acts and things which may be necessary or desirable to enable such seller to consummate the public sale or other disposition in such jurisdiction of the Restricted Securities owned by such seller.

All expenses incurred by the Company in complying with paragraphs 5.3, 5.4 and 5.5 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, the fees and disbursements of counsel for the shareholders in the case of a registration pursuant to paragraph 5.3(a) only an the expense of any special audits incident to or required by any registrations (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) are herein called Registration Expenses; and all underwriting discounts and selling commissions applicable to the sales and all other fees and disbursements of counsel for the selling stockholders are herein called Selling Expenses. The Company will pay all Registration Expenses in connection with each registration pursuant to paragraphs 5.3 and 5.4, except as may be required to update any regis-

tration statement kept effective for more than the period of time required by paragraph 5.5(a). All Selling Expenses in connection with each registration pursuant to paragraphs 5.3 and 5.4 shall be borne by the Company and the selling stockholders pro rata in proportion to the securities covered thereby being sold by them, except for the aforementioned fees and disbursements of counsel for the selling shareholders, which expense shall be borne solely by such shareholders.

In the event holders of Restricted Securities propose to sell Restricted Securities in accordance with this paragraph 5 pursuant to an underwritten offering, the Company shall have the right to approve the managing underwriter(s) for such offering; PROVIDED, HOWEVER, that such approval shall not be unreasonably withheld.

5.6 INDEMNIFICATION. In the event of a registration of any of the Restricted Securities under the Act pursuant to this paragraph 5, the Company will hold harmless the seller of such Restricted Securities and each underwriter of such Restricted Securities and each other person, if any, who controls such seller or underwriter within the meaning of Section 15 of the Act, against any losses, claims, damages or liabilities, joint or several, to which such seller or underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which such Restricted Securities were registered under the Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse such seller and each such underwriter and each such controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, said preliminary prospectus or said prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such seller or underwriter specifically for use in the preparation thereof; and PROVIDED, FURTHER, that if any losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in

any preliminary prospectus which did not appear in the final prospectus, the Company shall not have any liability with respect thereto to (i) the seller or any person who controls such seller within the meaning of Section 15 of the Act, if the seller delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person, or (ii) any underwriter or any person who controls such underwriter within the meaning of Section 15 of the Act, if such underwriter delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person.

In the event of any registration of any of the Restricted Securities under the Act pursuant to this paragraph 5, each seller of such Restricted Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Act, each officer of the Company who signs the registration statement, each director of the Company and each underwriter and each person who controls any underwriter within the meaning of Section 15 of the Act, against any and all such losses, claims, damages or liabilities referred to in the first paragraph of this paragraph 5.6, if the statement, alleged statement, omission or alleged omission in respect of which such loss, claim, damage or liability is asserted was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such seller specifically for use in connection with the preparation of such registration statement, preliminary prospectus, prospectus, amendment or supplement; PROVIDED, HOWEVER, that if any losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in any preliminary prospectus which did not appear in the final prospectus, such seller shall not have any such liability with respect thereto to (i) the Company, any person who controls the Company within the meaning of Section 15 of the Act, any officer of the Company who signed the registration statement or any director of the Company, if the Company delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person or (ii) any underwriter or any person controlling such underwriter within the meaning of
Section 15 of the Act, if such underwriter delivered a copy of the preliminary prospectus to

the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person.

5.7 TERMINATION OF CONDITIONS AND OBLIGATIONS. The obligations and conditions precedent imposed by this paragraph 5 shall cease and terminate as to any of such Restricted Securities when (a) such securities shall have been effectively registered under the Act and sold or otherwise disposed of in accordance with the intended method of disposition by the seller or sellers thereof set forth in the registration statement covering such securities and (b) at such time as an opinion of counsel with respect to free transferability shall have been rendered pursuant to paragraph 5.8. Whenever the conditions imposed by this paragraph 5 shall terminate as herein provided, the holder of any of the Restricted Securities bearing the first legend set forth in paragraph 4.2 as to which such conditions shall have terminated shall be entitled to receive from the Company, without expense, a new stock certificate not bearing such legend.

5.8 NOTICE OF PROPOSED TRANSFERS. The holder of any of the Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this paragraph 5.8. Prior to any proposed transfer of any of the Restricted Securities (other than under circumstances described in paragraph 5.3 or 5.4 hereof or a transfer to any partner, retired partner or the estate thereof in the case of any partnership Purchaser), the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail, and shall be accompanied by an unqualified written opinion of counsel for the shareholder (which counsel shall be reasonably satisfactory to the Company) to the effect that (i) such proposed transfer does not create a situation which would require the registration of any of the Restricted Securities under the Act; and (ii) the proposed transfer may be effected without registration under the Act of the Restricted Securities to be transferred (as, for example, that such transfer may be made pursuant to and in compliance with the conditions of Rule 144 or Rule 237 under the Act (or any other similar rule in effect at the time)). The Company's acceptance of such an opinion as satisfactory shall not be unreasonably withheld. Such proposed transfer may be effected only if the Company shall have received such notice and opinion of counsel, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company. The certificate issued upon the transfer of any such Restricted Securities as above provided (and the certificate evidencing any untransferred balance of such Restricted Securities) shall bear the first restric-

tive legend set forth in paragraph 4.2 above, except that the certificate shall not bear such restrictive legend and, as provided in paragraph 5.7 hereof, the holder thereof shall be entitled to receive from the Company, without expense, a new certificate not bearing such legend, if the opinion of counsel referred to above is to the further effect that such legend or legends are not required in order to establish compliance with any provisions of the Act.

6. MISCELLANEOUS

6.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California.

6.2 SURVIVAL. The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Shares.

6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

6.4 ENTIRE AGREEMENT. This the Purchasers Agreement embodies the entire understanding and agreement between and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.

6.5 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (a) if to the Purchasers, at the address set forth on the Schedule of Purchasers attached hereto as Exhibit A, or at such other address as the Purchasers have furnished the Company in writing, or (b) if to the Company, at the address of its principal office in the State of California, or at such other address as the Company shall have furnished to the Purchasers in writing.

6.6 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT MAY NOT HAVE BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA. IN THE ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION REQUIREMENT, THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL. THE RIGHTS OF ALL PARTIES TO THIS AGREE-

MENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION BEING APPLICABLE.

6.7 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

6.8. WAIVERS AND AMENDMENTS. With the written consent of the record holders of more than 50% of the Shares then outstanding, the obligations of the Company and the rights of the holders of the Shares under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that no such waiver or supplemental agreement shall reduce the aforesaid percentage of Shares, the holders of which are required to consent to any waiver or supplemental agreement, without the consent of the record or beneficial holders of all of the Shares. Upon the effectuation of each such waiver, consent, agreement of amendment or modification the Company shall promptly give written notice thereof to the record holders of the Shares who have not previously consented thereto in writing. Neither this Agreement nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing.

6.9 SEPARABILITY OF AGREEMENTS; SEVERABILITY OF THIS AGREEMENT. The Company's Agreement with each of the Purchasers is a separate agreement and the sale of the Shares to each of the Purchasers is a separate sale. Unless otherwise expressly provided herein, the rights of each Purchaser hereunder are several rights, not rights jointly held with any of the other Purchasers. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, whether arising by reason of the law of the respective Purchaser's domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to the other Purchasers. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

6.10 INFORMATION CONFIDENTIAL. Each Purchaser acknowledges that the information received by it pursuant hereto is confidential and for its use only.

6.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

The foregoing is hereby executed as of the date first above written.

PURCHASERS                                  AEHR TEST SYSTEMS

RUTVEN ASSOCIATES I, L.P.
                                            By:  /s/ Rhea Posedel, President
                                               -------------------------------
                                                 Rhea Posedel, President

By:
   --------------------------------------
Title:
      -----------------------------------

RUTVEN ASSOCIATES II, L.P.

By:
   --------------------------------------
Title:
      -----------------------------------

MAYFIELD III

By:
   --------------------------------------
Title:
      -----------------------------------

6.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

The foregoing is hereby executed as of the date first above written.

PURCHASERS                                  AEHR TEST SYSTEMS

RUTVEN ASSOCIATES I, L.P.
                                            By:
                                               -------------------------------
                                                 Rhea Posedel, President

By:
   --------------------------------------
Title:
      -----------------------------------

RUTVEN ASSOCIATES II, L.P.

By:
   --------------------------------------
Title:
      -----------------------------------

MAYFIELD III

By: /s/ Illegible
   --------------------------------------
Title:  General Partner
      -----------------------------------

6.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

The foregoing is hereby executed as of the date first above written.

PURCHASERS                                  AEHR TEST SYSTEMS

RUTVEN ASSOCIATES I, L.P.                   By:
                                               -------------------------------
By:  L.F. Rothschild, Unterberg, Towbin,         Rhea Posedel, President
     General Partner

By /s/ Illegible
  ---------------------------------------
      Authorized Signatory


Rutven Associates II, L.P.

By:  L.F. Rothschild, Unterberg, Towbin,
     General Partner

By /s/ Illegible
  ---------------------------------------
      Authorized Signatory

MAYFIELD III

                                            Number
         Name                             of Shares        Purchase Price
         ----                             ---------        --------------

Rutven Associates I, L.P.                   8,824            $  75,004

Rutven Associates II, L.P.                  5,882            $  49,997

Mayfield III                               58,824            $ 500,004
                                                             ---------

                                               Total         $ 625,005

EXHIBIT A

Exhibit 10.7
AMENDMENT TO REGISTRATION RIGHTS

BY HOLDERS OF

RESTRICTED SECURITIES

Aehr Test Systems (the "Company") intends to enter into a stock purchase agreement (the "Agreement") with Summit Ventures, L.P., and certain other entities (the "Purchasers"). Certain shareholders of the Company also intend to enter into a stock purchase agreement with the Purchasers. Each of the undersigned hereby consents to the amendment of the registration rights set forth in paragraph 5 of the Capital Stock Investment Agreement dated April 12, 1984, to read as set forth in Exhibit I hereto and to the grant of the registration rights to the Purchasers as set forth in the Agreement.

    Holder of                     Holder of
Restricted Securities         Restricted Securities                Date
---------------------         ---------------------        ------------------

Mayfield III                        158,824                September 17, 1985


By: /s/ Illegible
   --------------------
Title: General Partner
      -----------------


Rutven Associates I, L.P.             8,824                September 17, 1985

By:  L.F. Rothschild,
     Unterberg, Towbin,
     General Partner


By:
   --------------------
   Authorized Signatory


Rutven Associates II, L.P.            5,882                September 17, 1985

By:  L.F. Rothschild,
     Unterberg, Towbin,
     General Partner


By:
   --------------------
   Authorized Signatory

EXHIBIT I

5. REGISTRATION RIGHTS.

5.1 DEFINITIONS. As used in this paragraph 5, the following terms shall have the following respective meanings:

(a) "Commission" shall mean the Securities and Exchange Commission or any other Federal agency at the time administering the Act.

(b) "Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

(c) "Transfer" shall mean any disposition of the Shares which would constitute a sale thereof within the meaning of the Act.

(d) "Restricted Securities" shall mean (i) the shares as that term is defined under the Agreement, and (ii) the 20,000 shares of Capital Stock purchased by Mayfield III, a California Limited Partnership, pursuant to the Capital Stock Purchase Agreement dated September 11, 1979, as subsequently converted into 100,000 shares of Capital Stock pursuant to a 5 for 1 stock split on April 21, 1982, and (iii) any Common Stock issued as a dividend or other distribution with respect to, or in exchange for, or in replacement of any of the shares of Capital Stock listed in (i) and (ii) above; provided the obligation hereunder shall not have terminated with respect thereto under paragraph 5.7 hereof.

5.2 OTHER REGISTRATION RIGHTS. Without the written consent of the holders of fifty percent (50%) of the then outstanding Restricted Securities, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to make a demand registration which could result in such registration statement being declared effective prior to the earlier of either of the dates set forth in paragraph 5.3(a), or have other material terms more favorable than those contained in paragraph 5.3 or which would limit the effect of the proviso contained in the second sentence of paragraph 5.4.

5.3 REQUESTED REGISTRATION.

(a) If at any time after the earlier of (i) March 1, 1989, or
(ii) one hundred twenty (120) days after the effective

date of the first registration statement of a public offering of Capital Stock of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or a Commission Rule 145 transaction), the Company shall be requested by the holders of not less than 50% of the total number of shares of Restricted Securities, the Company shall promptly, and in any case within ten (10) days, give written notice of such proposed registration to all holders of Restricted Securities. Thereupon the Company shall as expeditiously as possible use its best efforts to effect the registration on Form S-1 (or on a form of general use then in effect under the Act) of the shares of Restricted Securities which the Company has been requested to register (i) in such request and (ii) in any response to such notice given to the Company within twenty (20) days after the Company's giving of such notice, in order to permit the sale or other disposition of such shares in accordance with the intended method of sale or other disposition given in the request and in any such response.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(a). The Company shall not be required to effect a registration statement under this paragraph 5.3(a) during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(b) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(b) or 5.4.

The Company may include in the registration under this paragraph 5.3(a) any other shares of Capital Stock (including issued and outstanding shares of Capital Stock as to which the holders thereof have contracted with the Company for "piggyback" registration rights) so long as the inclusion in such registration of such shares will not, in the opinion of the managing underwriter(s), interfere with the successful marketing in accordance with the intended method of sale or other disposition of all the shares of Restricted Securities sought to be registered by the holder or holders of Restricted Securities pursuant to this paragraph 5.3(a). If it is determined as provided above that there will be such interference, the other shares of Capital Stock sought to be included shall be excluded to the extent deemed appropriate by the managing underwriter(s) and, if the number of Restricted Securities to be included would itself be too large, the number of shares of the holder thereof to be included shall be determined pro rata based on the total number of Restricted Securities owned by each holder requesting to participate.

(b) In addition to the registration rights granted in paragraph 5.3(a), if a registration may be effected by the Com-

pany on Form S-3 or a similar short-form registration statement, and the Company shall be requested by the holders of not less than thirty percent (30%) of the total number of shares of Restricted Securities, the Company shall, as expeditiously as possible, use its best efforts to effect the registration on Form S-3 or a similar short-form registration statement of the shares of Restricted Securities which the Company has been requested to register in such request.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(b), and the rights granted by this paragraph 5.3(b) may not be exercised during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(a) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(a) or 5.4.

5.4 "PIGGYBACK" REGISTRATIONS. If at any time the Company proposes to register any of its securities under the Act (except with respect to Registration Statements filed on Form S-8 or Form S-14 or such other similar form then in effect under the Act), it will each such time give written notice to all holders of Restricted Securities of its intention so to do and, upon the written request of the holders of any Restricted Securities in order to register such Restricted Securities, (which request shall be given within twenty (20) days after the Company's giving of such notice and which shall state the intended method of disposition of such Restricted Securities by the prospective sellers), the Company will use its best efforts to cause the Restricted Securities, as to which registration shall have been so requested, to be included in the shares of Capital Stock to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition (in accordance with the written request of the holders, as aforesaid) by the prospective seller or sellers of such Restricted Securities so registered. Notwithstanding any other provision of this paragraph 5.4, if the managing underwriter(s) determines that the marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter(s) may exclude some or all of the Restricted Securities from such registration and underwriting; provided, however, that if any holders of shares of the Company's Capital Stock other that the Registered Securities which shares possess registration rights (the "Other Shares") request the Company to include the other shares in the registration statement, such Other Shares be excluded from such registration and underwriting along with the Restricted Shares on a pro-rata basis (according to the number of shares having registration rights the holders of which have requested such inclusion). in the event that any registration pursuant to this paragraph 5.4 shall be, in whole or in part, a firm commitment

underwritten offering of securities of the Company, any request by such holders pursuant to this paragraph 5.4 to register Restricted Securities must specify that such shares are to be included in the underwriting (i) on the same terms and conditions as the shares of Capital Stock, if any, otherwise being sold through underwriters under such registration or (ii) on terms and conditions comparable to those normally applicable to offerings of common stock in reasonably similar circumstances in the event that no shares of Capital Stock, other than Restricted Securities, are being sold through underwriters under such registration.

5.5 REGISTRATION PROCEDURES AND EXPENSES. If and whenever the Company is required by the provisions of this paragraph 5 to use its best efforts to effect the registration of any of the Restricted Securities under the Act, each selling shareholder will furnish in writing such information as is reasonably requested by the Company for inclusion in the registration statement relating to such offering and such other information and documentation as the Company shall reasonably request, and the Company will, as expeditiously as possible:

(a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for such period as may be necessary to permit the successful marketing of such securities but not exceeding ninety (90) days for a firm commitment underwritten offering pursuant to paragraph 5.3(a) hereof; six (6) months for an offering pursuant to paragraph 5.3(b) hereof; or, with regard to an offering pursuant to paragraph 5.4 hereof, ninety (90) days or for that period associated with the offering which gave rise to rights under paragraph 5.4 hereof, whichever is longer.

(b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Act; and to keep such registration statement effective for that period of time specified in paragraph 5.5(a).

(c) Furnish to each selling shareholder such number of prospectuses and preliminary prospectuses in conformity with the requirements of the Act and such other documents as such seller may reasonably request in order to facilitate the public sale or other disposition of the Restricted Securities owned by such seller;

(d) If the Company is required by the underwriter(s), if any, of the securities registered in a registration under this paragraph 5 to deliver an opinion of counsel to such underwriter(s) in connection with such registration, and if requested by any

holder(s) of Restricted Securities participating in such registration, furnish such opinion to such holder(s) on the day of delivery to the underwriter(s), addressed to such underwriter(s) and to such holder(s), containing substantially the following provisions: (i) that the registration statement covering such registration of securities has become effective under the Act; (ii) that, to the best of the knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Act; (iii) that at the time the registration statement became effective, the registration statement and the related prospectus complied as to form in all material respects with the requirements of the Act and the applicable rules and regulations of the Commission thereunder (except that such counsel need express no opinion as to financial statements and related schedules contained therein); (iv) that while such counsel has not independently verified the accuracy or completeness of the information contained therein, such counsel has no reason to believe that the registration statement at the time it became effective or the prospectus contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (v) that the descriptions in the registration statement and the prospectus, and any amendments or supplements thereto, of all legal and governmental matters and all contracts and other legal documents or instruments described therein are accurate and fairly present the information required to be stated therein concerning such matters, contracts, documents and instruments; and (vi) that such counsel does not know of any legal or governmental proceedings, pending or threatened, required to be described in the registration statement or prospectus, or any amendment or supplement thereto, which are not described as required, nor of any contracts or documents or instruments of a character required to be described in the registration statement or prospectus, or any amendment or supplement thereto, or to be filed as exhibits to the registration statement which are not described or filed as required. Such opinion shall be in such form as is customary for similar opinions delivered by such counsel so long as such form is acceptable to the underwriter(s).

(e) If the Company is required by the underwriter(s), if any, of the securities registered in a registration under this paragraph 5 to deliver a letter from the independent certified public accountants of the Company to such underwriter(s) in connection with such registration, and if requested by any holder(s) of Restricted Securities participating in such registration, furnish such letter to such holder(s) on the day of delivery to the underwriter(s), addressed to such underwriter(s) and to such holder(s), providing substantially that such accountants are independent certified public accountants within the meaning of the Act and that

in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement and the prospectus, any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Act, and such other matters as are customary in connection with public offerings.

(f) Use its best efforts to register or qualify the Restricted Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each such selling stockholder shall reasonably request and do any and all other acts and things which may be necessary or desirable to enable such seller to consummate the public sale or other disposition in such jurisdiction of the Restricted Securities owned by such seller.

All expenses incurred by the Company in complying with paragraphs 5.3, 5.4, and 5.5 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, the fees and disbursements of counsel for the shareholders in the case of a registration pursuant to paragraph 5.3(a) only and the expense of any special audits incident to or required by any registrations (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) are herein called Registration Expenses; and all underwriting discounts and selling commissions applicable to the sales and all other fees and disbursements of counsel for the selling stockholders are herein called Selling Expenses. The Company will pay all Registration Expenses in connection with each registration pursuant to paragraphs 5.3 and 5.4, except as may be required to update any registration statement kept effective for more than the period of time required by paragraph 5.5(a). All Selling Expenses in connection with each registration pursuant to paragraphs 5.3 and 5.4 shall be borne by the Company and the selling stockholders pro rata in proportion to the securities covered thereby being sold by them, except for the aforementioned fees and disbursements of counsel for the selling shareholders, which expense shall be borne solely by such shareholders.

In the event holders of Restricted Securities propose to sell Restricted Securities in accordance with this paragraph 5 pursuant to an underwritten offering, the Company shall have the right to approve the managing underwriter(s) for such offering; PROVIDED, HOWEVER, that such approval shall not be unreasonably withheld.

5.6 INDEMNIFICATION. In the event of a registration of any of the Restricted Securities under the Act pursuant to this

paragraph 5, the Company will hold harmless the seller of such Restricted Securities and each underwriter of such Restricted Securities and each other person, if any, who controls such seller or underwriter within the meaning of
Section 15 of the Act, against any losses, claims, damages or liabilities, joint or several, to which such seller or underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which such Restricted Securities were registered under the Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse such seller and each such underwriter and each such controlling persons for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, said preliminary prospectus or said prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such seller or underwriter specifically for use in the preparation thereof; and PROVIDED, FURTHER, that if any losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in any preliminary prospectus which did not appear in the final prospectus, the Company shall not have any liability with respect thereto to (i) the seller or any person who controls such seller within the meaning of Section 15 of the Act, if the seller delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages, or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person, or (ii) any underwriter or any person who controls such underwriter within the meaning of Section 15 of the Act, if such underwriter delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person.

In the event of any registration of any of the Restricted Securities under the Act pursuant to this paragraph 5, each seller of such Restricted Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Act, each officer of the Company who signs the registration statement, each director of the Company and each underwriter and each person who controls any underwriter within the meaning of Section 15 of the Act, against any and all such losses, claims, damages or liabilities referred to in the first paragraph of this paragraph 5.6, if the statement, alleged statement, omission or alleged omission in respect of which such loss, claim, damage or liability is asserted was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such seller specifically for use in connection with the preparation of such registration statement, preliminary prospectus, prospectus, amendment or supplement; PROVIDED, HOWEVER, that if any losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in any preliminary prospectus which did not appear in the final prospectus which did not appear in the final prospectus, such seller shall not have any such liability with respect thereto to (i) the Company, any person who controls the Company within the meaning of Section 15 of the Act, any officer of the Company who signed the registration statement or any director of the Company, if the Company delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person or (ii) any underwriter or any person controlling such underwriter within the meaning of Section 15 of the Act, if such underwriter delivered a copy of the preliminary prospectus to the person alleging such losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person.

5.7 TERMINATION OF CONDITIONS AND OBLIGATIONS. The obligations and conditions precedent imposed by this paragraph 5 shall cease and terminate as to any of such Restricted Securities when (a) such securities shall have been effectively registered under the Act and sold or otherwise disposed of in accordance with the intended method of disposition by the seller or sellers thereof set forth in the registration statement covering such securities and (b) at such time as an opinion of counsel with respect to free transferability shall have been rendered pursuant to paragraph 5.8. Whenever the conditions imposed by this paragraph 5 shall terminate as herein provided, the holder of any of the Restricted Securities

bearing the first legend set forth in paragraph 4.2 as to which such conditions shall have terminated shall be entitled to receive from the Company, without expense, a new stock certificate not bearing such legend.

5.8 NOTICE OF PROPOSED TRANSFERS. The holder of any of the Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this paragraph 5.8. Prior to any proposed transfer of any of the Restricted Securities (other than under circumstances described in paragraph 5.3 or 5.4 hereof or a transfer to any partner, retired partner or the estate thereof in the case of any partnership Purchaser), the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail, and shall be accompanied by an unqualified written opinion of counsel for the shareholder (which counsel shall be reasonably satisfactory to the Company) to the effect that (i) such proposed transfer does not create a situation which would require the registration of any of the Restricted Securities under the Act; and (ii) the proposed transfer may be effected without registration under the Act of the Restricted Securities to be transferred (as, for example, that such transfer may be made pursuant to and in compliance with the conditions of Rule 144 or Rule 237 under the Act (or any other similar rule in effect at the time)). The Company's acceptance of such an opinion as satisfactory shall not be unreasonably withheld. Such proposed transfer may be effected only if the Company shall have received such notice and opinion of counsel, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of notice delivered by the holder to the Company. The certificate issued upon the transfer of any such Restricted Securities as above provided (and the certificate evidencing any untransferred balance of such Restricted Securities) shall bear the first restrictive legend set forth in paragraph 4.2 above, except that the certificate shall not bear such restrictive legend and, as provided in paragraph 5.7 hereof, the holder thereof shall be entitled to receive from the Company, without expense, a new certificate not bearing such legend, if the opinion of counsel referred to above is to the further effect that such legend or legends are not required in order to establish compliance with any provisions of the Act.

AEHR TEST SYSTEMS

AMENDMENT TO REGISTRATION RIGHTS

Aehr Test Systems (the "Company") intends to enter into a common stock purchase agreement (the "Jafco Agreement") with Jafco America Ventures, Inc., and certain other entities (the "Purchasers") providing for the issuance and sale by the Company of shares of Common Stock of the Company to the Purchasers. The representative of the Purchasers has made it a condition to the execution of the Agreement by the Purchasers that this Amendment to Registration Rights ("Amendment") be duly executed.

Pursuant to Section 6.8 of the Capital Stock Investment Agreement dated April 12, 1984 (the "1984 Agreement"), the Company and the undersigned holder of a majority of the Restricted Securities (as defined in the 1984 Agreement) agrees to the amendment of paragraph 5.3 of the 1984 Agreement, to read in full as set forth in Exhibit I hereto.

This Amendment shall be conditioned and effective upon the closing of the Jafco Agreement.

AEHR TEST SYSTEMS                                      MAYFIELD III

By /s/ Rhea J. Rosedel                                 By /s/ illegible
  ----------------------                                 -----------------------
   Executive Officer                                     General Partner

                                  EXHIBIT I

5.3 REQUESTED REGISTRATION.

(a) If at any time the Company shall be requested by the holders of not less than 50% of the total number of shares of Restricted Securities, the Company shall promptly, and in any case within ten (10) days, give written notice of such proposed registration to all holders of Restricted Securities. Thereupon the Company shall as expeditiously as possible use its best efforts to effect the registration on Form S-1 (or on a form of general use then in effect under the Act) of the shares of Restricted Securities which the Company has been requested to register (i) in such request and (ii) in any response to such notice given to the Company within twenty (20) days after the Company's giving of such notice, in order to permit the sale or other disposition of such shares in accordance with the intended method of sale or other disposition given in the request and in any such response.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(a). The Company shall not be required to effect a registration statement under this paragraph 5.3(a) during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3
(b) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(b) or 5.4.

The Company may include in the registration under this paragraph 5.3(a) any other shares of Capital Stock (including issued and outstanding shares of Capital Stock as to which the holders thereof have contracted with the Company for "piggyback" registration rights). However, if the offering of the Restricted Securities is proposed to be underwritten on a firm commitment basis (i) the Company (if it is including shares in the registration for its own account) and the holders of any other shares proposed to be included in the registration ("Other Shares") must agree to include such shares in the underwriting on the same terms and conditions as the holders of Restricted Securities, and (ii) if the managing underwriter(s) determines that marketing considerations require a limitation of the total number of shares to be included in the registration, the managing underwriter(s) will determine the number of shares to be included in the registration for the account of the Company (if any) and the total number of shares to be included in the registration for the account of all others (including the holders of Restricted Securities), which total number shall then be allocated pro rata among such shareholders according to the number of shares owned by each of them. All other shares shall be excluded from the registration.

2.

(b) In addition to the registration rights granted in paragraphs 5.3(a), if a registration may be effected by the Company on Form S-3 or a similar short-form registration statement, and the Company shall be requested by the holders of not less than thirty percent (30%) of the total number of shares of Restricted Securities, the Company shall, as expeditiously as possible, use its best efforts to effect the registration on Form S-3 or a similar short-form registration statement of the shares of Restricted Securities which the Company has been requested to register in such request. The notice, underwriting and cut-back provisions set forth in paragraph 5.3(a) shall also apply to any registration pursuant to this paragraph 5.3(b).

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(b), and the rights granted by this paragraph 5.3(b) may not be exercised during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(a) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(a) or 5.4.

3.

AEHR TEST SYSTEMS

Stock Purchase Agreement

Dated as of September 18, 1985

AEHR TEST SYSTEMS
STOCK PURCHASE AGREEMENT

Dated as of September 18, 1985

INDEX

                                                                            Page
                                                                            ----
ARTICLE I

    PURCHASE, SALE AND TERMS OF SHARES

    1.01      The Shares . . . . . . . . . . . . . . . . . . . . . . . .     1
    1.02      Purchase and Sale of Shares  . . . . . . . . . . . . . . .     1
              (a)  The Closing . . . . . . . . . . . . . . . . . . . . .     1
              (b)  Use of Proceeds . . . . . . . . . . . . . . . . . . .     1

ARTICLE II

    CONDITIONS TO CLOSING

    2.01      Conditions to Purchaser's Obligations  . . . . . . . . . .     2
    2.02      Conditions to Company's Obligations  . . . . . . . . . . .     3

ARTICLE III

    REPRESENTATIONS AND WARRANTIES

    3.01      Organization and Standing of the Company . . . . . . . . .     3
    3.02      Corporate Action . . . . . . . . . . . . . . . . . . . . .     3
    3.03      Governmental Approvals . . . . . . . . . . . . . . . . . .     4
    3.04      Litigation . . . . . . . . . . . . . . . . . . . . . . . .     4
    3.05      Compliance with Other Instruments  . . . . . . . . . . . .     4
    3.06      Title to Assets, Patents . . . . . . . . . . . . . . . . .     5
    3.07      Financial Information  . . . . . . . . . . . . . . . . . .     5
    3.08      Taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .     6
    3.09      ERISA  . . . . . . . . . . . . . . . . . . . . . . . . . .     6
    3.10      Transactions with Affiliates . . . . . . . . . . . . . . .     6
    3.11      Other Matters  . . . . . . . . . . . . . . . . . . . . . .     6
    3.12      Securities Act of 1933 . . . . . . . . . . . . . . . . . .     7
    3.13      Disclosure . . . . . . . . . . . . . . . . . . . . . . . .     7
    3.14      No Brokers or Finders  . . . . . . . . . . . . . . . . . .     7
    3.15      Certain Agreements of Key Employees  . . . . . . . . . . .     7
    3.16      Capitalization; Status of Capital
              Stock  . . . . . . . . . . . . . . . . . . . . . . . . . .     8
    3.17      Books and Records  . . . . . . . . . . . . . . . . . . . .     8
    3.18      Subsidiaries . . . . . . . . . . . . . . . . . . . . . . .     8

                                                                            Page
                                                                            ----
ARTICLE IV

    COVENANTS OF THE COMPANY

    4.01      Affirmative Covenants of the Company
              Other Than Reporting Requirements  . . . . . . . . . . . .     9
              (a)  Payment of Taxes and Trade Debt . . . . . . . . . . .     9
              (b)  Preservation of Corporate Existence . . . . . . . . .     9
              (c)  Compliance with Laws  . . . . . . . . . . . . . . . .    10
              (d)  Keeping of Records and Books of
                   Account . . . . . . . . . . . . . . . . . . . . . . .    10
              (e)  Maintenance of Properties, etc. . . . . . . . . . . .    10
              (f)  New Developments  . . . . . . . . . . . . . . . . . .    10
              (g)  Employee Invention and
                   Non-Disclosure Agreement  . . . . . . . . . . . . . .    10
              (h)  Budgets and Board Approval  . . . . . . . . . . . . .    10
              (i)  Financings  . . . . . . . . . . . . . . . . . . . . .    11
              (j)  Observer Rights . . . . . . . . . . . . . . . . . . .    11
    4.02      Negative Covenants of the Company  . . . . . . . . . . . .    11
              (a)  Dealings with Affiliates and Others . . . . . . . . .    11
    4.03      Reporting Requirements . . . . . . . . . . . . . . . . . .    11
    4.04      Confidentiality  . . . . . . . . . . . . . . . . . . . . .    12

ARTICLE V

    REGISTRATION RIGHTS

    5.01      "Piggy Back" Registration  . . . . . . . . . . . . . . . .    12
    5.02      Effectiveness  . . . . . . . . . . . . . . . . . . . . . .    13
    5.03      Indemnification of Holders of
              Registrable Shares . . . . . . . . . . . . . . . . . . . .    13
    5.04      Indemnification of Company . . . . . . . . . . . . . . . .    14
    5.05      Exchange Act Registration  . . . . . . . . . . . . . . . .    16
    5.06      Damages  . . . . . . . . . . . . . . . . . . . . . . . . .    16
    5.07      Further Obligations of the Company . . . . . . . . . . . .    16
    5.08      Expenses . . . . . . . . . . . . . . . . . . . . . . . . .    17
    5.09      Transfer of Registration Rights  . . . . . . . . . . . . .    17
    5.10      No Superior Rights . . . . . . . . . . . . . . . . . . . .    18

ARTICLE VI

    REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND
    RESTRICTIONS ON TRANSFERS

    6.01      Representations and Warranters by Each Purchaser . . . . .    18
    6.02      Legends  . . . . . . . . . . . . . . . . . . . . . . . . .    19
    6.03      Removal of Legends and Transfer Restrictions . . . . . . .    19
    6.04      Additional Purchases of Common Stock . . . . . . . . . . .    20


                                         -ii-

                                                                            Page
                                                                            ----
ARTICLE VII

    DEFINITIONS AND ACCOUNTING TERMS

    7.01      Certain Defined Terms  . . . . . . . . . . . . . . . . . .    20
    7.02      Accounting Terms . . . . . . . . . . . . . . . . . . . . .    22

ARTICLE VIII

    MISCELLANEOUS

    8.01      No Waiver; Cumulative Remedies . . . . . . . . . . . . . .    22
    8.02      Amendments, Waivers and Consent  . . . . . . . . . . . . .    22
    8.03      Addresses for Notices, etc.  . . . . . . . . . . . . . . .    23
    8.04      Costs, Expenses and Taxes  . . . . . . . . . . . . . . . .    23
    8.05      Binding Effect; Assignment . . . . . . . . . . . . . . . .    23
    8.06      Survival of Representations and
              Warranties . . . . . . . . . . . . . . . . . . . . . . . .    24
    8.07      Prior Agreements . . . . . . . . . . . . . . . . . . . . .    24
    8.08      Severability . . . . . . . . . . . . . . . . . . . . . . .    24
    8.09      Governing Law  . . . . . . . . . . . . . . . . . . . . . .    24
    8.10      Headings   . . . . . . . . . . . . . . . . . . . . . . . .    24
    8.11      Counterparts . . . . . . . . . . . . . . . . . . . . . . .    24
    8.12      Further Assurances   . . . . . . . . . . . . . . . . . . .    24

EXHIBITS

    1.01      List of Purchasers
    2.02      Matters to be Covered by Opinion Letter
    3.03      Schedule of Exceptions and Other Matters
    3.07      Financial Statements
    3.15      Employee Invention and Nondisclosure Agreement
    3.16      Schedule of Stock, Options and Other Rights
              and Restrictions





WJS/38v

AEHR TEST SYSTEMS
135 Constitution Drive
Menlo Park, CA 94025

As of September 18, 1985

To: The Persons listed on EXHIBIT 1.01 hereto

Re: CAPITAL STOCK, WITHOUT PAR VALUE, OF AEHR TEST SYSTEMS

Dear Sirs:

Aehr Test Systems, a California corporation (the "Company"), hereby agrees with you as follows:

ARTICLE I

PURCHASE, SALE AND TERMS OF SHARES

1.01 THE SHARES. The Company has authorized the issuance and sale of 50,000 shares (the "Shares") of the previously authorized but unissued shares of its Capital Stock, without par value (the "Common Stock"), to the Persons (collectively, the "Purchasers" and, individually, a "Purchaser") and in the respective amounts set forth in EXHIBIT 1.01 hereto.

1.02 PURCHASE AND SALE OF SHARES.

(a) THE CLOSING. Subject to and in reliance upon the representations, warranties, terms and conditions of this Agreement, the Company agrees to issue and sell to the Purchasers, and the Purchasers, severally but not jointly, agree to purchase, the Shares for the aggregate purchase prices and in the amounts set forth opposite their respective names in EXHIBIT 1.01 hereto. Such purchase and sale shall take place at a closing (the "Closing") to be held at the office of Wilson, Sonsini, Goodrich & Rosati, Two Palo Alto Square, Palo Alto, CA 94306 on September 18, 1985 at 10:00 A.M., or on such other date and at such time as may be mutually agreed upon. At the Closing the Company will issue and deliver certificates evidencing the Shares to be sold to the Purchasers, in the amounts set forth opposite their respective names in EXHIBIT 1.01 hereto and in such denominations as each such Purchaser shall specify, against delivery of cashier's or certified checks payable to, or wire transfer of funds to the account of, the Company in payment of the full purchase price for the Shares.

(b) USE OF PROCEEDS. The Company agrees to use the proceeds from the sale of the Shares solely for working capital and other general corporate purposes.

ARTICLE II

CONDITIONS TO CLOSING

2.01 CONDITIONS TO PURCHASERS' OBLIGATIONS. The obligation of each Purchaser to purchase and pay for the Shares at the Closing is subject to the following conditions:

(a) Each of the representations and warranties of the Company set forth in Article III hereof shall be true on the date of the Closing.

(b) The Purchasers shall have received prior to or at the Closing all of the following, each in form and substance satisfactory to the Purchasers and their special counsel, and all of the following events shall have occurred prior to or simultaneous with the Closing hereunder:

(i) A copy of all charter documents of the Company certified by the Secretary of State of California, a certified copy of the resolutions of the Board of Directors and, if required, the stockholders of the Company evidencing approval of this Agreement, the authorization for issuance of the Shares and other matters contemplated hereby, a certified copy of the By-laws of the Company, and certified copies of all documents evidencing other necessary corporate or other action and governmental approvals, if any, with respect to this Agreement and the Shares.

(ii) An opinion of Messrs. Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, in substantially the form attached hereto as EXHIBIT 2.02.

(iii) A certificate of the Secretary or an Assistant Secretary of the Company stating the names of the officers of the Company authorized to sign this Agreement, the certificates for the Shares, the other documents or certificates to be delivered pursuant to this Agreement by the Company or any of its officers, together with the true signatures of such officers.

(iv) A certificate from a duly authorized officer of the Company stating that the representations and warranties of the Company contained in Article III hereof are true and correct and that all conditions required to be performed by the Company prior to or at the Closing have been performed.

(c) Prior to the Closing, the Company shall have obtained all consents or waivers, if any, necessary to execute and deliver this Agreement, issue the Shares and carry out the transactions contemplated hereby and thereby, and all such consents and waivers shall be in full force and effect. All corporate and other action and governmental filings necessary to effectuate the terms of this Agreement, the Shares and other agreements and instruments executed and delivered by the Company in connection herewith

shall have been made or taken, except for any post-sale filing that may be required under federal and state securities laws. In addition to the documents set forth above, the Company shall have provided the Purchasers with any other information or copies of documents that they may reasonably request.

2.02 CONDITIONS TO COMPANY'S OBLIGATIONS. The obligation of the Company to sell the Shares at the Closing is subject to the following conditions:

(a) Each of the representations and warranties of each of the Purchasers set forth in Article VI hereof shall be true on the date of the Closing.

(b) The Company shall have obtained all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement.

(c) At the time of the Closing, the purchase of the Shares by the Purchasers hereunder shall be legally permitted by all laws and regulations to which the Purchasers and the Company are subject.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Except as set forth in EXHIBIT 3.03, the Company represents and warrants as follows:

3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction in which it is organized and has all requisite corporate power and authority for the ownership and operation of its properties and for the carrying on of its business as now conducted and as now proposed to be conducted. The Company is duly licensed or qualified and in good standing as a foreign corporation authorized to do business in all jurisdictions in which the character of the property owned or leased, or the nature of the activities conducted, by it makes such licensing or qualification necessary, or the failure to be so qualified will not have a material adverse effect on the condition, assets, liabilities, earnings or business of the Company.

3.02. CORPORATE ACTION. The Company has all necessary corporate power and has taken all corporate action required to make all the provisions of this Agreement, the Shares and any other agreements and instruments executed in connection herewith and therewith the valid and enforceable obligations they purport to be. The issuance of the Shares is not subject to preemptive or other preferential rights, or similar statutory or contractual

rights, either arising pursuant to any agreement or instrument to which the Company is a party or which are otherwise binding upon the Company.

3.03. GOVERNMENTAL APPROVALS. Except for filings required by federal or state securities laws, no authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the offer, issuance, sale, execution or delivery by the Company, of the Shares or the performance by the Company of its obligations under the Agreement.

3.04. LITIGATION. There is no litigation or governmental proceeding or investigation pending or threatened against the Company or the Subsidiaries affecting any of their properties or assets, or, to the knowledge of the Company, against any officer, or Key Employee of the Company, that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company or the Subsidiaries or any of their material properties or assets, or that might call into question the validity of this Agreement, any of the Shares, or any action taken or to be taken pursuant hereto or thereto, nor, to the knowledge of the Company, has there occurred any event or does there exist any condition on the basis of which any litigation, proceeding or investigation might properly be instituted that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs of the Company, the Subsidiaries or any of their material properties and assets. Neither the Company, any Subsidiary nor, to the knowledge of the Company, any officer of the Company or the Subsidiaries, is in default with respect to any order, writ, injunction, decree, ruling or decision of any court, commission, board or other government agency that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company or any of their material properties or assets. The foregoing sentences include, without limiting their generality, actions pending or, to the knowledge of the Company, threatened (or any basis therefor known to the Company) involving the prior employment of employees of the Company or any of its Subsidiaries in any of the Company's or any Subsidiary's business of any information or techniques allegedly proprietary to any of their former employers.

3.05. COMPLIANCE WITH OTHER INSTRUMENTS. The Company and the Subsidiaries are in compliance in all respects with the terms and provisions of this Agreement and of their charters and by-laws and in all material respects with the terms and provisions of each mortgage, indenture, lease, agreement and other instrument relating to obligations of the Company and the Subsidiaries in excess of $50,000, individually or in the aggregate, and, of all judgments, decrees, governmental orders, statutes, rules or regulations by which it is bound or to which its properties or assets

are subject the noncompliance with which would have a material adverse effect on the business, operations, or affairs or conditions of the Company. There is no term or provision in any of the foregoing documents and instruments that materially adversely affects the business, assets or financial condition of the Company or the Subsidiaries. Neither the execution and delivery of this Agreement or the Shares, nor the consummation of any transaction contemplated hereby or thereby, has constituted or resulted in or will constitute or result in a default or violation of any term or provision in any of the foregoing documents or instruments.

3.06. TITLE TO ASSETS, PATENTS.

(a) The Company and the Subsidiaries have good and marketable title in fee to their fixed assets that are real property, and good and merchantable title to all of their other significant assets, now carried on its books including those reflected in the most recent balance sheet of the Company contained in EXHIBIT 3.07 attached hereto, or acquired since the date of such balance sheet (except personal property disposed of since said date in the ordinary course of business), free of any mortgages, pledges, charges, liens, security interests or other encumbrances. The Company enjoys peaceful and undisturbed possession under all significant leases under which it is operating, and all said leases are valid and subsisting and in full force and effect.

(b) The Company and the Subsidiaries own or have a valid right to use all significant patents, patent rights, licenses, permits, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights being used to conduct their business as now operated and as now proposed to be operated; and, to the best knowledge of the Company, the conduct of their businesses as now operated and as now proposed to be operated does not and will not conflict in any respects material to the Company and its Subsidiaries considered as a whole with valid patents, patent rights, licenses, permits, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights of others. The Company and the Subsidiaries have no obligation to compensate any Person for the use of any such patents or such rights nor has the Company or any Subsidiary granted to any Person any license or other rights to use in any manner any of such patents or such rights of the Company and the Subsidiaries.

3.07. FINANCIAL INFORMATION. Attached hereto as EXHIBIT 3.07 are true and complete copies of the Consolidated audited financial statements of the Company and its Subsidiaries for the twelve months ended May 31, 1985 and the Company's unaudited unconsolidated financial statements for the two months ended July 31, 1985 certified by the chief financial officer of the Company. Such financial statements when read together, present fairly the financial position of the Company and its Subsidiaries at the dates

thereof and their results of operations for the periods covered thereby and have been prepared in accordance with generally accepted accounting principles consistently applied. The Company and the Subsidiaries have no liability, contingent or otherwise, required to be disclosed in a financial statement prepared in accordance with generally accepted accounting principles which are not disclosed in the aforesaid financial statements or in the notes thereto, that could, together with all such other liabilities, materially affect the financial condition of the Company, nor does the Company have any reasonable grounds to know of any such liability. Except as set forth in the aforesaid audited financial statements or as otherwise set forth in this Agreement since July 31, 1985 (i) there has been no adverse event or occurrence affecting the business, assets or condition, financial or otherwise, or operations of the Company and its Subsidiaries; (ii) neither the business, condition, or operations of the Company, the Subsidiaries nor any of their properties or assets has been adversely affected as the result of any legislative or regulatory change, any revocation or change in any franchise, license or right to do business, or any other event or occurrence, whether or not insured against; and (iii) the Company has not entered into any transaction with respect to, or made any distribution on, its capital stock.

3.08. TAXES. The Company and its Subsidiaries have accurately prepared and timely filed all federal, state and other tax returns required by law to be filed by them, and all taxes shown to be due and all additional assessments have been paid or provision made therefor. To the Company's knowledge, none of the federal income tax returns of the Company and the Subsidiaries have been audited by the Internal Revenue Service. The Company knows of no significant additional assessments or adjustments pending or threatened against the Company or any Subsidiary for any period, nor of any basis for any such assessment or adjustment.

3.09. ERISA. Neither the Company nor any Subsidiary makes contributions to any pension, defined benefit plans or defined contribution plans for its employees that are subject to the federal Employee Retirement Income Security Act of 1974, as amended ("ERISA").

3.10. TRANSACTIONS WITH AFFILIATES. Except as set forth in the audited financial statements of the Company set forth in EXHIBIT 3.07, there are no loans, leases, royalty agreements or other continuing transactions between the Company and any of the Company's customers or suppliers, and any officer or director of the Company.

3.11. OTHER MATTERS. Neither the Company nor any Subsidiary has (i) become directly or contingently liable (including, without limitation, by way of assumption or guaranty) on any Indebtedness of any other Person or (ii) made or agreed to make any loan, advance or other investment to or in any other Person. The Company and each Subsidiary is in compliance in all material respects with all laws, rules and regulations applicable to them.

3.12. SECURITIES ACT OF 1933. The Company has complied and will comply with all applicable federal or state securities laws in connection with the issuance and sale of the Shares. Neither the Company nor anyone acting on its behalf has offered or will offer to sell the Shares or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any Person, so as to bring the issuance and sale of the Shares under the registration provisions of the Securities Act. Except as set forth in Article V hereof, no Person has demand or other rights to cause the Company to file any registration statement under the Securities Act relating to any securities of the Company or any right to participate in any such registration statement.

3.13 DISCLOSURE. Neither this Agreement, the financial statements incorporated herein as EXHIBIT 3.07, nor any other agreement, document, certificate or written or oral statement furnished to the Purchasers or their special counsel by or on behalf of the Company in connection with the transactions contemplated hereby when taken as a whole contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact within the special knowledge of the Company or any of its executive officers that has not been disclosed herein by them to the Purchasers and that materially adversely affects, or in the future in their opinion may, insofar as they can now foresee, materially adversely affect the business, properties, assets or condition, financial or otherwise, of the Company. Without limiting the foregoing, the Company has disclosed to the Purchasers any knowledge that it has that there exists, or there is pending or planned, any patent, invention, device, application or principle or any statute, rule, law, regulation, standard or code that would materially adversely affect the condition, financial or otherwise, or the operations of the Company.

3.14. NO BROKERS OR FINDERS. No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon the Company for any commission, fee or other compensation as a finder or broker because of any act or omission by the Company or any agent of the Company; and the Company agrees to indemnify and hold the Purchasers harmless against any such commissions, fees or other compensation.

3.15. CERTAIN AGREEMENTS OF KEY EMPLOYEES.

(a) To the best knowledge of the Company, no Key Employee is a party to or bound by any agreement, contract or commitment, or subject to any restrictions, particularly but without limitation in connection with any previous employment of any such person, which materially and adversely affects, or in the future may (so far as the Company can reasonably foresee) materially and adversely affect, the business or operations of the Company or the right of any such person to participate in the affairs of the Company;

(b) Each Key Employee who has or had access to proprietary information of the Company has executed an employee invention and non-disclosure agreement to the effect and in substantially the form set forth in EXHIBIT 3.15. To the best of the Company's knowledge, no Key Employee or former Key Employee of the Company is, or to the Company's knowledge and belief is expected to be, in violation of the terms or the aforesaid agreements or of any other obligation relating to the use of confidential or proprietary information of the Company.

3.16 CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the date hereof, the Company has a total authorized capitalization consisting of 75,000,000 shares of Common Stock, without par value, of which 3,432,022 shares are issued and outstanding. A complete list of the shares of capital stock currently issued and outstanding and the names in which such shares are registered is set forth in EXHIBIT 3.16 hereto. All of the outstanding shares of capital stock of the Company have been duly authorized, are validly issued and are fully paid and nonassessable. All shares of capital stock issuable upon exercise of outstanding options and warrants have been duly authorized and, when issued in accordance with the terms of such options and warrants, will be validly issued, and fully paid and nonassessable. The Shares when issued and delivered in accordance with the terms hereof, will be duly authorized, validly issued and fully paid and nonassessable. Except as set forth in EXHIBIT 3.16 hereto, there are no options, warrants or rights to purchase shares of capital stock or other securities authorized, issued or outstanding, nor is the Company obligated in any other manner to issue shares of its capital stock or other securities. There are no restrictions on the transfer of shares of capital stock of the Company other than those imposed by relevant state and federal securities laws. No holder of any security of the Company is entitled to preemptive or similar statutory or contractual rights, either arising pursuant to any agreement or instrument to which the Company is a party or that are otherwise binding upon the Company. The offer and sale of all shares of capital stock or other securities of the Company issued before the Closing complied with or were exempt from registration or qualification under all federal and state securities laws.

3.17. BOOKS AND RECORDS. The books of account, ledgers, order books, records and documents of the Company and the Subsidiaries accurately and completely reflect all material information relating to the businesses of the Company and the Subsidiaries, the nature, acquisition, maintenance, location and collection of the assets of the Company and the Subsidiaries, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company and the Subsidiaries.

3.18. SUBSIDIARIES. Each of the Company's Subsidiaries is listed in EXHIBIT 3.03 below and the Company has no other Subsidiaries. All issued and outstanding shares of capital stock of

each present Subsidiary are owned by the Company and are the validly issued, fully paid and nonassessable shares of each Subsidiary, respectively, and are owned by the Company fee and clear of all encumbrances. Except as set forth in the audited financial statements of the Company set forth in EXHIBIT 3.07, there are no outstanding rights, options, warrants, conversion rights or agreements for the purchase or acquisition of any shares of any of the Subsidiaries' capital stock.

ARTICLE IV

COVENANTS OF THE COMPANY

4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OF OTHER THAN REPORTING REQUIREMENTS. Without limiting any other covenants and provisions hereof, the Company covenants and agrees that, until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 100,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), it will perform and observe the following covenants and provisions and will cause each Subsidiary to perform and observe such of the following covenants and provisions as are applicable to such Subsidiary:

(a) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge, and cause each Subsidiary to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or business, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims, which, if unpaid, might become a lien or charge upon any properties of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by appropriate proceedings if the Company or Subsidiary concerned shall have set aside on its books adequate reserves with respect thereto as shall be determined by its Board of Directors. Pay and cause each Subsidiary to pay, when due, or in conformity with customary trade terms, all lease obligations, all trade debt, and all other Indebtedness incident to the operations of the Company or its Subsidiaries, except such as are being contested in good faith and by appropriate proceedings if the Company or Subsidiary concerned shall have set aside on its books adequate reserves with respect thereto as shall be determined by its Board of Directors.

(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified, and cause each Subsidiary to qualify and remain qualified, as a

foreign corporation in each jurisdiction in which the failure to qualify will have a material adverse effect upon the condition, assets, liabilities, earnings or business of the Company. Preserve and maintain, and cause each Subsidiary to preserve and maintain, all material licenses and other rights to use patents, processes, licenses, trademarks, trade names, inventions, intellectual property rights or copyrights owned or possessed by it and necessary to the conduct of its business.

(c) COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations and orders of any governmental authority, noncompliance with which could materially adversely affect its business or condition, financial or otherwise, except non-compliance being contested in good faith through appropriate proceedings so long as the Company shall have set up sufficient reserves, if any, required under generally accepted accounting principles with respect to such items.

(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and cause each Subsidiary to keep, adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial transactions of the Company and each Subsidiary, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection within its business shall be made.

(e) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause each Subsidiary to maintain and preserve, all of its properties, necessary or useful in the proper conduct of its business, in good repair, working order and condition, ordinary wear and tear excepted.

(f) NEW DEVELOPMENTS. Use its best efforts to cause all Key Employees of the Company and each Subsidiary to execute appropriate patent assignment agreements to the Company and, where possible and appropriate, to file and prosecute United States and foreign patent applications relating to and protecting such developments on behalf of the Company or such subsidiary.

(g) EMPLOYEE INVENTION AND NON-DISCLOSURE AGREEMENT. Use its best efforts to cause each Key Employee now or hereafter employed by the Company or any Subsidiary promptly to execute an agreement substantially in the form of EXHIBIT 3.15 hereto or in a form approved by the Board of Directors.

(h) BUDGETS AND BOARD APPROVAL. Within ninety (90) days of the commencement of each fiscal year, prepare and submit to, and obtain the approval of a majority of, the Board of Directors of a budget for the upcoming fiscal year, including projections of capital and operating expenses, cash flow, and profits and losses, all itemized in reasonable detail.

(i) FINANCINGS. Promptly, fully and in detail, inform the Board of Directors in advance of any commitments or contracts relating to financing of any nature for the Company or pledge of corporate assets.

(j) OBSERVER RIGHTS. Invite a representative of the Purchasers, which representative shall be designated by the Purchasers, to attend all meetings of its Board of Directors in a non-voting, observer capacity, and, in connection therewith, give such representative copies of all notices, minutes, consents and other materials, financial and otherwise, that it provides to its board of directors.

4.02. NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other covenants and provisions hereof, the Company covenants and agrees that, until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 100,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), it will comply with and observe the following covenants and provisions, and will cause each Subsidiary to comply with and observe such of the following covenants and provisions as are applicable to such Subsidiary, and WILL NOT, without the approval of holders of the Shares in accordance with Section 8.02:

(a) DEALINGS WITH AFFILIATES AND OTHERS. Enter into any transaction, including, without limitation, any loans or extensions of credit or royalty agreements, with any officer or director of the Company or any Subsidiary or holder of any class of capital stock of the Company, or any member of their respective immediate families or any corporation or other entity directly or indirectly controlled by one or more of such officers, directors or stockholders or members of their immediate families unless such transaction is approved in advance by a majority of disinterested members of the Board of Directors.

4.03 REPORTING REQUIREMENTS. Until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 100,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), the Company will furnish the following to each Purchaser.

(a) as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter of the Company, Consolidated balance sheets of the Company and its Subsidiaries as of the end of such quarter and Consolidated statements of income and retained earnings of the Company and its Subsidiaries for the period ending with such quarter, setting forth in each

case in comparative form the corresponding figures for the corresponding period of the prior fiscal year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer of the Company as having been prepared in accordance with generally accepted accounting principals consistently applied, except for the absence of footnotes; provided, however, that the obligation to deliver Consolidated financial statements shall commence with the quarter ending February 28, 1986 and until that date the Company shall use its best efforts to deliver Consolidated financial statements.

(b) as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Company, a copy of the annual audit report for such year for the Company and its Subsidiaries, including therein Consolidated (and, to the extent otherwise prepared by the Company, consolidating) balance sheets of the Company and its Subsidiaries as of the end of such fiscal year and Consolidated (and, to the extent otherwise prepared by the Company, consolidating) statements of income and retained earnings and of changes in financial position of the Company and its Subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, all duly certified by an independent public accountant of national standing;

(c) promptly after sending, making available, or filing the same, all reports and financial statements that the Company or any Subsidiary sends or makes available to the stockholders of the Company or the Securities and Exchange Commission; and

(d) all other information respecting the business, properties or the condition or operations, financial or otherwise, of the Company or any of its Subsidiaries that any Purchaser may from time to time reasonably request.

4.40. CONFIDENTIALITY. Any confidential information obtained by any holder of the Shares pursuant to this Agreement shall be treated as confidential and shall not be disclosed to a third party without the consent of the Board of Directors, except that such information shall not be deemed confidential for the purpose of enforcement of this Agreement or valuation of the Shares and except that any such holder may otherwise disclose such information to its partners if such partners agree to be bound by the restrictions contained in this
Section 4.04.

ARTICLE V

REGISTRATION RIGHTS

5.01 "PIGGY BACK" REGISTRATION. If at any time the Company shall determine to register under the Securities Act (including pursuant to a demand of any stockholder of the Company

exercising registration rights) any of its Common Stock (except shares to be issued solely in connection with any acquisition of any entity or business, shares issuable solely upon exercise of stock options, or shares issuable solely pursuant to employee benefit plans), it shall send to each holder of Registrable Shares, written notice of such determination and, if within thirty (30) days after receipt of such notice, such holder shall so request in writing, the Company shall use its best efforts to include in such registration statement all or any part of the Registrable Shares that such holder requests to be registered, except that if, in connection with any offering involving an underwriting of Common Stock to be issued by the Company, the managing underwriter shall impose a limitation on the number of shares of such Common Stock included in any such registration statement because, in its judgment, such limitation is necessary to effect an orderly public distribution, and such limitation is imposed among all holders of Common Stock exercising their contractual incidental ("piggy back") right to include such Common Stock in the registration statement as provided below on a PRO RATA basis (according to the number of shares of Common Stock held by such holders that are entitled to such "piggy back" registration rights). In the event of any such limitation, the Company may include in such registration statement only (i) shares of Common Stock to be sold for the Company's account; (ii) Registrable Shares; and (iii) shares of Common Stock the holders of which are entitled to registration pursuant to an agreement with the Company approved by the Board of Directors; provided, that, in the case of clauses (ii) and (iii) of the preceding sentence, such inclusion shall be on the PRO RATA basis hereinabove described. Notwithstanding the foregoing, no such reduction shall be made with respect to securities being offered by the Company for its own account. If any holder of Registrable Shares disapproves of the terms of such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

5.02 EFFECTIVENESS. The Company will use its best efforts to maintain the effectiveness for up to ninety (90) days of any registration statement pursuant to which any of the Registrable Shares are being offered, and from time to time will amend or supplement such registration statement and the prospectus contained therein as and to the extent necessary to comply with the Securities Act and any applicable state securities statute or regulation.

5.03 INDEMNIFICATION OF HOLDERS OF REGISTRABLE SHARES. In the event that the Company registers any of the Registrable Shares under the Securities Act, the Company will indemnify and hold harmless each holder and each underwriter of the Registrable Shares so registered (including any broker or dealer through whom such shares may be sold) and each person, if any, who controls such holder or any such underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to

which they or any of them become subject under the Securities Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse each such holder, each such underwriter and each such controlling person, if any, for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplemented by the Company) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with such registration, unless such untrue statement or omission was made in such registration statement, preliminary or amended, preliminary prospectus or prospectus in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder of Registrable Shares, any such underwriter or any such controlling person expressly for use therein. Promptly after receipt by any holder of Registrable Shares, any underwriter or any controlling person of notice of the commencement of any action in respect of which indemnity may be sought against the Company, such holder of Registrable Shares, or such underwriter or such controlling person, as the case may be, will notify the Company in writing of the commencement thereof, and, subject to the provisions hereinafter stated, the Company shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such holder of Registrable Shares, such underwriter or such controlling person, as the case may be), and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Company. Such holder of Registrable Shares, any such underwriter or any such controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall not be at the expense of the Company unless the employment of such counsel has been specifically authorized by the Company. The Company shall not be liable to indemnify any person for any settlement of any such action effected without the Company's consent. The Company shall not, except with the approval of each party being indemnified under this Section 5.03, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to the parties being so indemnified of a release from all liability in respect to such claim or litigation.

5.04. INDEMNIFICATION OF COMPANY. In the event that the Company registers any of the Registrable Shares under the Securities Act, each holder of the Registrable Shares so registered will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each underwriter of the Registrable Shares so registered (including any broker or dealer through whom such of the shares may be sold) and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses, or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or under any other statue or at common law or otherwise, and, except as hereinafter provided, will reimburse the Company and each such director, officer, underwriter or controlling person for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder of Registrable Shares expressly for use therein; PROVIDED, HOWEVER, that such holder's obligations hereunder shall be limited to an amount equal to the proceeds to such holder of the Registrable Shares sold in such registration. Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against such holder of Registrable Shares, the Company will notify such holder of Registrable Shares in writing of the commencement thereof, and such holder of Registrable Shares shall, subject to the provisions hereinafter stated, assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to the Company) and the payment of expenses insofar as such action shall relate to the alleged liability in respect of which indemnity may be sought against such holder of Registrable Shares. The Company and each such director, officer, underwriter or controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall not be at the expense of such holder of Registrable Shares unless employment of such counsel has been specifically authorized by such holder of Registrable Shares. Notwithstanding the two preceding sentences, if the action is one in which the Company may be obligated to indemnify any holder of Registrable Shares pursuant to Section 5.03, the Company shall have the right to assume the defense of such action, subject to the right of such holders to participate

therein as permitted by Section 5.03. Such holder of Registrable Shares shall not be liable to indemnify any person for any settlement of any such action effected without such holder's consent. Such holder shall not, except with the approval of the Company, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to the party being so indemnified of a release from all liability in respect to such claim or litigation.

5.05. EXCHANGE ACT REGISTRATION. The Company will use its best efforts to file on a timely basis with the Securities and Exchange Commission all information that the Commission may require under either of Section 13 or
Section 15(d) of the Exchange Act and shall use its best efforts to take all action that may be required as a condition to the availability of Rule 144 under the Securities Act (or any successor exemptive rule hereinafter in effect) with respect to the Company's Common Stock. The Company shall furnish to any holder of Registrable Shares forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company as filed with the Securities and Exchange Commission, and (iii) any other reports and documents that a holder may reasonably request in availing itself of any rule or regulation of the Securities and Exchange Commission allowing a holder to sell any such Registrable Securities without registration.

5.06. DAMAGES. The Company recognizes and agrees that the holder of Registrable Shares will not have an adequate remedy if the Company fails to comply with this Article V and that damages will not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by the holder of Registrable Shares or any other person entitled to the benefits of this Article V requiring specific performance of any and all provisions hereof or enjoining the Company from continuing to commit any such breach of this Article V.

5.07 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding Sections of this Article V, the Company is required hereunder to register Registrable Shares, it agrees that it shall also do the following:

(a) Furnish to each selling holder of Registrable Shares such copies of each preliminary and final prospectus and any other documents that such holder may reasonably request to facilitate the public offering of its Registrable Shares;

(b) Use its best efforts to register or qualify the Registrable Shares to be registered pursuant to this Article V under the applicable securities or "blue sky" laws of such jurisdictions as any selling holder may reasonably request; PROVIDED, HOWEVER, that the Company shall not be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to the service of process

in suits other than those arising out of the offer or sale of the securities covered by the registration statement in any jurisdiction where it is not then so subject;

(c) Furnish to each selling holder a signed counterpart of

(i) an opinion of counsel for the Company, dated the effective date of the registration statement, and

(ii) "comfort" letters signed by the Company's independent public accountants who have examined and reported on the Company's financial statements included in the registration statement, to the extent permitted by the standards of the American Institute of Certified Public Accountants,

covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and (in the case of the accountants' "comfort" letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' "comfort" letters delivered to the underwriters in underwritten public offerings of securities, to the extent that the Company is required to deliver or cause the delivery of such opinion or "comfort" letters to the underwriters in an underwritten public offering of securities;

(d) Permit each selling holder of Registrable Shares or his counsel or other representatives to inspect and copy such corporate documents and records as may reasonably be requested by them; and

(e) Furnish to each selling holder, upon request, a copy of all documents filed and all correspondence from or to the Securities and Exchange Commission in connection with any such offering.

5.08. EXPENSES. In the case of a registration under Sections 5.01, the Company shall bear all costs and expenses of each such registration, including, but not limited to, printing, legal and accounting expenses, Securities and Exchange Commission filing fees and "blue sky" fees and expenses; PROVIDED, HOWEVER, that the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of counsel (other than counsel for the Company) for the selling holders of Registrable Shares in connection with the registration of their Registrable Shares, or (ii) any portion of the underwriters' commissions or discounts attributable to the Registrable Shares being offered and sold by the holders of Registrable Shares.

5.09. TRANSFER OF REGISTRATION RIGHTS. The registration rights of the holders of Registrable Shares under this Article V may be transferred without the consent of the Company to any

transferee of Registrable Shares that (i) is a partner of a Purchaser, (ii) acquires all of the Registrable Shares held by a Purchaser or (iii) holds 25,000 Registrable Shares (such number to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement).

5.10. NO SUPERIOR RIGHTS. The Company will not grant registration rights to any Person that are superior to the rights granted hereunder without the prior consent of Purchasers holding at least fifty-one percent (51%) of the Registrable Shares unless the holders of Registrable Shares are also granted such superior rights.

ARTICLE VI

Representations and Warranties of Purchasers
and Restrictions on Transfer

6.01 REPRESENTATIONS AND WARRANTIES BY EACH PURCHASER. Each Purchaser, for that Purchaser alone, represents and warrants to the Company with respect to this purchase as follows:

(a) This Agreement constitutes the Purchaser's valid and legally binding obligation, enforceable in accordance with its terms.

(b) It is experienced in evaluating and investing in high technology companies such as the Company.

(c) It is acquiring the Shares for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Shares to be purchased have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d) It acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act, or unless an exemption from such registration is available. It is aware of the provisions of Rule 144 promulgated under the Securities Act that permit limited resale of Shares purchased in a private placement subject to the satisfaction of certain conditions.

(e) It understands that no public market now exists for any of the securities issued by the Company, and that it is unlikely that a public market will ever exist for the Shares.

(f) It has had an opportunity to discuss the Company's business, management, and financial affairs with the Company's management and to review the Company's facilities. It understands that such discussions, as well as the written information

issued by the Company, were intended to describe the aspects of the Company's business and prospects that the Company believes to be material, but that these descriptions were not necessarily thorough or exhaustive.

6.02 LEGENDS. Each certificate representing the Shares shall be endorsed with the following legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

and if imposed by the California Department of Corporations, the following legend:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

The Company need not register a transfer of Shares, unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Shares unless the conditions specified in the foregoing legends are satisfied.

6.03 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend relating to the Securities Act endorsed on a stock certificate pursuant to
Section 6.02 of this Agreement and the stop transfer instructions with respect to the Shares represented by such certificate shall be removed and the Company shall issue a certificate without such legend to the holder of such Shares if such Shares are registered under the Securities Act and a prospectus meeting the requirements of Section 10 of the Securities Act is available or if such holder provides to the Company an opinion of counsel for such holder of the Shares reasonably satisfactory to the Company, or a no-action letter or interpretive opinion of the staff of the Securities and Exchange Commission (the "Commission") to the effect that a public sale, transfer or assignment of such Shares may be made without registration and without compliance with any restriction such as Rule 144. The California Commissioner of Corporations legend (if required) will be removed if the Commissioner of Corporations of the State of California has consented to the removal of such legend.

6.04 ADDITIONAL PURCHASES OF COMMON STOCK. The Purchasers covenant and agree that they shall not acquire more than an aggregate of three hundred thousand shares of Common Stock (including the Shares) or other equity securities of the Company (such number to be appropriately adjusted for stock splits, stock dividends and the like) from the Company or from other stockholders of the Company without the prior approval of the Board of Directors. This section 6.04 shall terminate automatically upon the closing of the Company's initial registered public offering under the Securities Act.

ARTICLE VII

DEFINITIONS AND ACCOUNTING TERMS.

7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Agreement" means this Common Stock Purchase Agreement as from time to time amended and in effect between the parties.

"Board of Directors" shall mean the then present members of the Board of Directors of the Company.

"Company" means and shall include Aehr Test Systems and its successors and assigns.

"Consolidated" when used with reference to any term defined herein mean that term as applied to the accounts of the Company and its Subsidiaries consolidated in accordance with generally accepted accounting principles after eliminating intercompany items and minority interests.

"ERISA" shall have the meaning assigned to that term in Section 3.09.

"Exchange Act" means the Securities Exchange Act of 1934, or any similar federal statute, and the rules and regulations of the Securities and Exchange Commission (or of any other Federal Agency then administering the Exchange Act) thereunder, all as the same shall be in effect at the time.

"Indebtedness" means all obligations, contingent and otherwise, which should, in accordance with generally accepted accounting principles consistently applied, be classified upon the obligor's balance sheet as liabilities, excluding any liabilities in respect of deferred federal or state income taxes, but in any event including, without limitation, liabilities secured by any mortgage on property owned or acquired subject to such mortgage, whether or not the liability secured thereby shall have been assumed, and

also including, without limitation, (i) all guaranties, endorsements and other contingent obligations, in respect of Indebtedness of others, whether or not the same are or should be so reflected in said balance sheet, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and (ii) the present value of any lease payments due under leases required to be capitalized in accordance with applicable Statements of Financial Accounting Standards, determined by discounting all such payments at the interest rate determined in accordance with applicable Statements of Financial Accounting Standards.

"Key Employee" means and includes, currently, Rhea Posedel, Richard Sette, Thomas Lee, Malcolm Farnsworth, Jr., Charles Shalvoy, and in the future the foregoing individuals as well as the Chairman of the Board of Directors, the President, any Vice-President and the Treasurer of the Company or any Subsidiary, or any person who is not an officer of the Company or any Subsidiary and is in charge of one or more of the following functions: sales, marketing, production, or engineering and technical development or any other position or employee so designated by the Board of Directors of the Company.

"Ownership Percentage" means and includes, with respect to each holder of Registrable Shares for purposes of Section 5.01, the number of Registrable Shares held by such holder divided by the aggregate of the then-outstanding shares of Common Stock of the Company.

"Person" means an individual, corporation, partnership, joint venture, trust, or unincorporated organization, or a government or any agency or political subdivision thereof.

"Purchaser" means and shall include the persons listed on EXHIBIT 1.01.

"Qualified Public Offering" means and includes the closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, converting the offer and sale of Common Stock for the account of the Company from which the aggregate gross proceeds to the Company exceed $7,500,000 and in which the price per share is at least $10.00 per share (such amount to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock).

"Registrable Shares" means and includes (i) the Shares, (ii) any other shares of Common Stock acquired by the Purchasers within 60 days of the Closing and (iii) any shares of Common Stock issued on or with respect to the foregoing by way of stock split, stock dividend, recapitalization or the like.

"Securities Act" means the Securities Act of 1933, or any similar Federal statute, and the rules and regulations of the Securities and Exchange Commission
(or of any other Federal agency then administering The Securities Act)
thereunder, all as the same shall be in effect at the time.

"Shares" shall have the meaning assigned to that term in Section 1.01.

"Subsidiary" or "Subsidiaries" means any corporation, 50% or more of the outstanding voting stock of which shall at the time be owned by the Company or by one or more Subsidiaries, or any other entity or enterprise, 50% or more of the equity of which shall at the time be owned by the Company or by one or more Subsidiaries.

7.02. ACCOUNTING TERMS. All accosting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in preparation of the financial statements set forth in EXHIBIT 3.07, and all other financial data submitted pursuant to this Agreement and all financial tests to be calculated in accordance with this Agreement shall be prepared and calculated in accordance with such principles.

ARTICLE VIII

MISCELLANEOUS

8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of any Purchaser, or any other holder of the Shares in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this Agreement or the Shares to the contrary nothwithstanding, changes in or additions to this Agreement or the Shares may be made, and compliance with any covenant or provision herein or therein set forth may be omitted or waived, if the Company, (i) shall obtain consent thereto in writing from Persons holding an aggregate of at least sixty percent (60%) of the Shares, and (ii) shall, in each such case, deliver copies of such consent in writing to any holders who did not execute the same. Any waiver or consent may be given subject to satisfaction of conditions stated therein and any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

8.03. ADDRESS FOR NOTICES, ETC. All notices, requests, demands and other communications provided for hereunder shall be in writing (including telegraphic communication) and mailed or telegraphed or delivered to the applicable party at the addresses indicated below:

If to the Company:

Aehr Test Systems
135 Constitution Drive
Menlo Park, CA 94025

with a copy to:

Mario M. Rosati
Wilson, Sonsini, Goodrich & Rosati Two Palo Alto Square, Suite 900 Palo Alto, CA 94306

If to the Purchaser: at the addresses set forth under their respective names on EXHIBIT 1.01 hereto.

If to any other holder of the Shares: at such holder's address for notice as set forth in the register maintained by the Company, or, as to each of the foregoing, at such other address as shall be designated by such Person in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall, when mailed or telegraphed, respectively, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid.

8.04. COSTS, EXPENSES AND TAXES. The Company agrees to pay the reasonable fees and out-of-pocket expenses of Messrs. Testa, Hurwitz & Thibeault, special counsel for the Purchasers with respect thereto (which costs and expenses shall not exceed $10,000). In addition, the Company shall pay any and all stamp and other taxes payable or determined to be payable in connection with the execution and delivery of this Agreement, the Shares, and other instruments and documents to be delivered hereunder or thereunder and agrees to save the Purchaser harmless from the against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and filing fees.

8.05. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Company and the Purchasers and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Purchasers obtained in accordance with Section 8.02 hereof.

8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made in this Agreement, the Shares, or any other instrument or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof.

8.07. PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties and supersedes any prior understandings or agreements concerning the subject matter hereof.

8.08. SEVERABILITY. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

8.09. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

8.10. HEADINGS. Article, Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

8.11. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

8.12. FURTHER ASSURANCES. From and after the date of this Agreement, upon the request of the Purchasers, the Company and each Subsidiary shall execute and deliver such instruments, documents and other writings as may be necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the Shares.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

AEHR TEST SYSTEMS

By: /s/ Rhea J. Posedel
   -------------------------------
   President

SUMMIT VENTURES, L.P.

By: Summit Partners, L.P.
General Partner

By: Stamps, Woodsum & Co.
General Partner

By: /s/ illegible
   ---------------------------
   General Partner

SV EUROFUND C.V.

By: SV International, L.P.
General Partner

By: Stamps, Woodsum
International & Co.
General Partner

By: /s/ illegible
   ----------------------
   General Partner

SUMMIT INVESTORS. L.P.

By: /s/ illegible
   --------------------------------
    General Partner

Name and Address                  Number of                Aggregate Purchase
of Purchaser                      Shares                    Price of Shares
----------------                  ---------                -----------------

Summit Ventures, L.P.               30,002                      $300,020
One Boston Place
Boston, MA  02108

SV Eurofund C.V.                    19,773                       197,730
c/o SV Interna-
  tional, L.P.
One Boston Place
Boston, MA  02108

Summit Investors, L.P.                 225                         2,250
c/o Summitt Partners, L.P.
One Boston Place
Boston, MA  02108                   ------                       -------

            TOTAL                   50,000                      $500,000
                                    ------                      --------
                                    ------                      --------

September 19, 1985

To Each Purchaser listed on
the List of Purchasers

Gentlemen:

This opinion is rendered to you in compliance with Section 2.01 (b) (ii) of the Stock Purchase Agreement dated as of September 18, 1985 (the "Agreement") among Aehr Test Systems (the "Company") and you. The terms as defined in the Agreement shall, unless otherwise defined herein or unless the context otherwise requires, have the same defined meanings herein.

We are general legal counsel to the Company. As its counsel, we have made such legal and factual examinations and inquiries as we have deemed advisable or necessary for the purpose of rendering this opinion and have examined, among other things, originals, certified copies, or copies otherwise identified to our satisfaction as being true copies of the originals of the following:

(a) The Articles of Incorporation and By-Laws, as amended to date, of the Company;

(b) Advice from the California Secretary of State and California Franchise Tax Board as to the good standing of the Company;

(c) The resolutions of the board of directors of the Company with respect to the Agreement and the transactions covered thereby; and

(d) The Agreement and the Exhibits thereto.

We have also relied upon and obtained from public officials, officers and representatives of the Company, such other certificates and written assurances as we consider necessary for the purposes of rendering this opinion. As used in this opinion, the expressions "to our knowledge" and "known to us" with reference to matters of fact means that, after an examination of documents made available to us by the Company, we find no reason to believe that the opinions expressed herein are factually incorrect, but beyond that we have made no independent factual investigation for the purpose of rendering this opinion.

The opinions hereinafter expressed are subject to the following qualifications:

(a) No opinion is given with respect to the effect of applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally;

(b) No opinion is given with respect to the effect of rules of law governing specific performance, injunctive relief or other equitable remedies;

(c) No opinion is given with respect to the enforceability of the indemnification provisions of Sections 5.03 or 5.04 of the Agreement;

(d) No opinion is given with respect to compliance with the antifraud provisions under federal and state laws; and

(e) We are members of the bar of the state of California and we do not hold ourselves out as experts of the laws of other states.

On the basis of the foregoing and in reliance thereon, we are of the opinion that:

1. The Company is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction in which it was organized and has all requisite corporate power and authority for the ownership and operation of its properties and for the carrying on of its business as now conducted and as now proposed to be conducted. Except as disclosed in Exhibit 3.03 of the Agreement, the Company is duly licensed or qualified and in good standing as a foreign corporation authorized to do business in all jurisdictions in which the character of the property owned or leased, or the nature of the activities conducted, by it makes such licensing or qualification necessary, or the failure to be so qualified will not have a materially adverse effect on the condition, assets, liabilities, earnings or business of the Company.

2. The Company has all necessary corporate power and has taken all corporate action required to make all the provisions of the Agreement and any other agreements and instruments executed in connection with the Agreement the valid and binding obligations of the Company enforceable in accordance with their respective terms. The Company has duly executed and delivered the Agreement, the Shares, and each other agreement and instrument executed in connection with the agreement and each is a legal, valid and binding obligation of the Company enforceable in accordance with its terms. The issuance of the Shares does not require any further corporate action, and will not be subject to preemptive or other preferential rights or similar statutory or contractual rights arising pursuant to any agreement or instrument, known to us, to which the Company is a party or which are otherwise binding upon the Company.

3. Except for filings under federal and state securities law which may be made under applicable provisions after the Closing, no further authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations in effect, is or will be necessary for, or in connection with, the offer, issuance, sale, execution or delivery by the Company of the Shares, or for the performance by it of the Company's obligations under the Agreement or the Shares.

4. There is, to our knowledge, no litigation or governmental proceeding or investigation pending or threatened against the Company or any of its Subsidiaries affecting any of their material properties or assets, or, to our knowledge, against any officer or Key Employee of the Company, that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company, any of its Subsidiaries, or any of their material properties or assets, or that might call into question the validity of the Agreement, any of the Shares, or any action taken or to be taken pursuant thereto, nor, to our knowledge, has there occurred any event or does there exist any condition on the basis of which any litigation, proceeding or investigation might properly be instituted that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company, any of its Subsidiaries, or any of their material properties or assets. To our knowledge, no officer of Key Employee of the Company, or any of its Subsidiaries, is in default with respect to any order, writ, injunction decree, ruling or decision of any court, commission, board of other government agency that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company, any of its Subsidiaries, or any of their material properties or assets. The fore-

going sentences include, without limiting their generality, actions pending or threatened, which are known to us, (or any basis therefor known to us) involving the prior employment of any of the Company's or any Subsidiary's officers or employees or their use in connection with the Company or any Subsidiary's business of any information or techniques allegedly proprietary to any of their former employers.

5. The Company is in compliance in all respects with the terms and provisions of its Articles of Incorporation and By-laws and in all material respects with the terms and provisions of the mortgages, indentures, leases, agreements and other instruments known to us relating to obligations of the Company in excess of $50,000, individually or in the aggregate, and of all judgments, decrees, governmental orders, statutes, rules or regulations by which it is bound or to which it or any of its properties or assets are subject of which we have knowledge, the noncompliance with which would have a materially adverse effect on the business, operations, affairs or conditions of the Company, or any of its material properties or assets. Neither the execution and delivery of the Agreement or Shares, nor the consummation or any transaction contemplated thereby, has constituted or resulted in or will constitute or result in a default or violation of any term or provision in any of the documents, instruments, judgements, decrees, orders, statutes, rules and regulations, known to us.

6. Subject to the accuracy of the Purchaser's representations in Section 6.01 of the Agreement and in written responses to the Company's inquiries, the offer, sale, and issuance of the Shares in conformity with the terms of the Agreement constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended and the registration or qualification requirements of the applicable state securities laws.

7. The Company has a total authorized capitalization consisting of 75,000,000 shares of Common Stock, of which 3,432,022 shares are issued and outstanding. All the outstanding shares of capital stock of the Company have been duly authorized, are validly issued and are fully paid and nonassessable. The Shares, when issued and delivered in accordance with the terms thereof, will be duly authorized, validly issued and fully paid and nonassessable. Except as set forth in Exhibit 3.16 to the Agreement, there are no options, warrants or rights to purchase shares of capital stock or other securities of the Company which are authorized, issued or outstanding, nor is the Company obligated in any other manner to issue shares of its capital stock other than those imposed by relevant state and federal securities laws and those contemplated by the Agreement. No holder of any security of the Company is entitled to preemptive or similar statutory or contractual rights, either arising pursuant to any agreement or instrument, known to

us, to which the Company is a party or which is otherwise binding upon the Company. The offer and sale of the shares of Capital Stock under the Capital Stock Investment Agreement dated April 12, 1984 was exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended.

This opinion may not be furnished to, quoted to or relied upon by any other person, firm or corporation without our prior written consent.

Very truly yours,

WILSON, SONSINI, GOODRIBH & ROSATI

J. Casey McGlynn

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                           1995           1984
                                           ----           ----

Leasehold improvements                  $  513,649     $  397,792
Furniture and fixtures                     374,134        211,251
Machinery and equipment                    645,110        261,024
Test equipment                           1,007,672        497,293
Transportation equipment                    -               7,333
                                        ----------     ----------

                                         2,540,565      1,374,693

Less accumulated
    depreciation and
    amortization                           657,677        336,910
                                        ----------     ----------
                                        $1,882,888     $1,037,783
                                        ----------     ----------
                                        ----------     ----------

4. INVESTMENT IN FOREIGN JOINT VENTURE:

In October 1981, the Company and an individual formed a corporate joint venture in Tokyo, Japan to manufacture, import, export and sell test systems, parts and accessories. The Company contributed cash of $241,895 for a 50% interest in the profits or losses of the joint venture. The Company also holds an option to purchase all or part of the remaining 50% interest in such amounts and at such times it chooses through March 1, 1997 at an exercise price based on future earnings of the joint venture as defined in the agreement.

Continued

Balance Sheets:                             1985             1984
--------------                              ----             ----

Cash and cash equivalents                $  837,209       $  915,352
Accounts receivable                       2,817,991          918,366
Inventories                               4,425,863        1,737,424
Other assets                                692,994          397,893

                                         ----------       ----------
                                         $8,774,057       $3,969,035
                                         ----------       ----------
                                         ----------       ----------

Notes payable                            $2,469,234       $1,720,060
Account payable to Aehr Test Systems        707,888          383,621
Accounts payable and accrued liabilities  4,294,708        1,228,850
                                         ----------       ----------
                                          7,471,830        3,332,531
Stockholder's equity                      1,302,227          636,504
                                         ----------       ----------
                                         $8,774,057       $3,969,035
                                         ----------       ----------
                                         ----------       ----------

Statements of Income:
--------------------

Sales                                    $9,040,033       $4,474,578
Cost of sales                             5,808,328        3,012,783
                                         ----------       ----------
        Gross profit                      3,231,705        1,461,795
Selling, general and administrative
   expense                                1,112,528          869,619
Research and development expense            360,583            -
                                         ----------       ----------
Income before income taxes and
   extraordinary item                     1,758,594          592,176
Provision for income taxes                1,033,674          365,110
                                         ----------       ----------

Income before extraordinary item            724,920          227,066

Extraordinary item - tax benefit
   resulting from utilization of
   loss carryforward                         -                67,072
                                         ----------       ----------

           Net income                    $  724,920       $  294,138

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

During fiscal 1985 and 1984, respectively, the Company sold $2,666,943 and $1,386,217 of its product to the joint venture.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

5. NOTES PAYABLE:

At May 31, 1985, the Company had available an unsecured revolving line of credit with a bank which provides for borrowings of up to $4,500,000. Under this agreement which is available until September 30, 1985, interest is charged at the bank's prime rate (10.0% at May 31, 1985). The agreement requires the Company to maintain specified financial ratios and an average compensating balance of $200,000. The compensating balance does not constitute a legal restriction on the Company's cash, and to the extent it is not maintained, the bank charges a fee based on an interest formula contained within the agreement. At May 31, 1985 $1,200,000 was outstanding under the line of credit.

                                                1985        1984
                                                ----        ----

Unsecured revolving term loan
bearing interest at the bank's
prime rate plus 0.25% (10.25%
at May 31, 1985).  Borrowing, up
to a maximum amount of $3,500,000,
are available until September 30,
1986.  Principal outstanding at
September 30, 1986 will be payable
in sixty equal monthly installments
commencing October 1, 1986.                  $1,400,000      -

Term note bearing interest at the
bank's prime rate plus 1/2%.                     -          $475,000

Term note bearing interest at the
bank's prime rate plus 3/4%.                     -           308,335

Obligations under capital leases                 16,664       32,057
                                             ----------     --------
                                              1,416,664      815,392
Less amount due within one year                  10,153      188,136
                                             ----------     --------
                                             $1,406,511     $627,256
                                             ----------     --------
                                             ----------     --------

Continued

1986                                    $   12,872
1987                                        77,250
1988                                       280,000
1989                                       280,000
1990                                       280,000
Thereafter                                 490,000
                                        ----------
                                         1,420,122

Less interest relating to
    capital leases                           3,458
                                        ----------
                                        $1,416,664
                                        ----------
                                        ----------

7. LEASE COMMITMENTS:

The Company leases most of its present manufacturing and office space under an operating lease which expires in 1991. Under the terms of the lease, the rentals will be adjusted upward every two years based on the Consumer Price Index but with increases not to exceed 14% for any adjustment. The lease contains a renewal option whereby the Company may extend the lease term for an additional five years with the same terms. In addition, the Company is required to pay for insurance, taxes and maintenance of the property.

The Company has entered into an operating lease agreement for additional office space. The lease commences upon the later of completion of the facility or January 15, 1986 and expires in 1991. The Company will be responsible for taxes, insurance, maintenance and utilities related to the property. The lease contains a renewal option whereby the Company may extend the lease term for an additional four years, with rentals to be determined by mutual agreement at the time of renewal.

    1986           $  511,191
    1987              953,309
    1988              967,009
    1989              986,365
    1990            1,007,718
Thereafter          1,277,675
                   ----------
                   $5,703,267
                   ----------
                   ----------

Net rent expense for the years ended May 31, 1985 and 1984 was approximately $432,000 and $334,000, respectively.

8. COMMON STOCK:

Approximately 625,000 shares of common stock outstanding at May 31, 1985 have certain registration rights which are exercisable after the earlier of March 1, 1989 or 120 days after the effective date of the first registration of a public offering of the Company's capital stock.

9. STOCK OPTIONS:

The Company has two incentive stock option plans under which 775,000 shares of capital stock were reserved for issuance to employees and paid consultants. Both plans provide that options be granted at an exercise price equal to the fair market value at the date of grant, as determined by the Board of Directors. The options expire five years from the grant date and most options become exercisable in increments over a four-year period from the date of grant. At May 31, 1985, options to purchase 95,675 shares were exercisable.

Continued

                                                       Optioned Shares
                        Reserved But     --------------------------------------------
                         Unoptioned      Number of           Price
                           Shares          Shares          Per Share            Total
                         ----------      ---------         ---------            -----
Balances,
  June 1, 1983             140,000        269,000       $ .40 to $ 4.00      $505,500
Options granted            (67,100)        67,100       $6.00 to $ 8.50       419,100
Options exercised             -           (80,250)      $ .40 to $ 4.00       (83,250)
Options terminated          42,250        (42,250)      $3.60 to $ 6.00      (169,500)
                           -------        -------       ---------------    ----------

Balances,
  May 31, 1984             115,150        213,600       $ .40 to $ 8.50       671,850
Options granted            (73,630)        73,630       $8.50 to $10.00       631,105
Options exercised             -           (58,250)      $ .50 to $ 4.00       (31,750)
Options terminated          34,650        (34,650)      $ .40 to $ 8.50       (87,900)
                           -------        -------       ---------------    ----------

Balances,
  May 31, 1985              76,170        194,330       $ .40 to $10.00    $1,183,305
                           -------        -------       ---------------    ----------
                           -------        -------       ---------------    ----------

Notes receivable for capital stock comprises $350,000 of noninterest- bearing notes received by the Company from employees exercising stock options in 1981 and a $92,400 note bearing interest at 9% issued in 1984 in connection with the sale of stock to an employee. The notes are collateralized by the shares issued to the employees, except one note for $150,000 which is collateralized by a deed of trust in real property. The notes are due in the years 1986 and 1989, except one note for $200,000 which is due upon the creation of a public market for the Company's stock or May 1986, whichever occurs later.

10. EMPLOYEE BONUS PLAN:

The Company has a noncontributory, trusteed employee bonus plan for full-time employees. The intent of the Company is to contribute shares of the Company's stock to the plan, although the plan also allows cash contributions. The contribution is determined annually by the Company and cannot exceed 15% of the annual aggregate salaries of those employees eligible for participation in the plan. Individuals' account balances vest at a rate of 25% per year commencing upon completion of three years of service. Nonvested balances which are forfeited are allocated to the remaining employees in the plan.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

10. EMPLOYEE BONUS PLAN, continued

The authorized contribution to the plan for the year ended May 31, 1985 was approximately $241,900, which was charged to expense in fiscal 1985 and will be paid to the plan in fiscal 1986 by the issuance of 24,190 shares of the Company's capital stock. The number of shares of stock to be issued to the plan was based on a valuation by the Board of Directors of $10.00 per share as of May 31, 1985.

The authorized contribution to the plan for the year ended May 31, 1984 was approximately $164,000, which was charged to expense in fiscal 1984 and was paid to the plan in fiscal 1985 by the issuance of 19,192 shares of the Company's capital stock. The number of shares of stock issued to the plan was based on a valuation by the Board of Directors of $8.50 per share as of May 31, 1984.

The contribution of 25,180 shares made to the plan in fiscal 1984 was authorized and charged to expense in fiscal 1983.

                                                 1985           1984
                                                 ----           ----

State income taxes:
  Currently payable                          $  285,000       $ 36,000
  Deferred                                       37,000        174,000

Federal income taxes:
  Currently payable (refundable)                524,000       (278,000)
  Deferred                                      218,000        797,000
                                             ----------       --------
                                             $1,064,000       $729,000
                                             ----------       --------
                                             ----------       --------

Continued

                                              1985           1984
                                              ----           ----

Maximum statutory income tax rate             46.0%          46.0%
Effect of graduated rates                      (.5)           (.9)
Investment tax credit                         (1.7)          (1.9)
Research and development tax credit          (11.1)         (10.3)
State taxes, net of federal tax
    effect                                     4.9            4.8
Undistributed earnings of foreign
    joint venture not having a
    federal tax effect                        (4.5)          (2.9)
DISC earnings not subjected to
    federal taxes                             (2.4)          (3.0)
FSC earnings exempt from
    federal taxes                             (2.0)            -
Other                                          (.1)           (.5)
                                              -----          -----
Provision for income taxes                    28.6%          31.3%
                                              -----          -----
                                              -----          -----

[AEHR TEST SYSTEMS LETTERHEAD]

September 12, 1985

Summit Ventures
One Boston Place
Boston, MA 02108

Gentlemen:

To my knowledge, the attached unaudited and unconsolidated Income Statement for the two months ended July 31, 1985 and Balance Sheet as of July 31, 1985 are true and correct.

/s/ Malcolm M. Farnsworth
-----------------------------
Malcolm M. Farnsworth
Treasurer and Chief Financial
Officer

Net Sales                                       $5,096

Cost of Goods Sold                               2,703
                                                ------
Gross Margin                                     2,393

Operating Expenses:
   Sales and Marketing                             636
   R & D                                           616
   General & Admin                                 216
                                                ------
    Total Operating Exp                          1,468
                                                ------
Operating Profit                                   925
                                                ------
Other Income & Expense:
   Interest                                         15
   Other Expense                                    75
                                                ------
    Total Other                                     90
                                                ------
Net Income Before Taxes                            835
Tax Provision                                      311

Net Income                                        $524
                                                ------
                                                ------


/s/ Malcolm M. Farnsworth
-----------------------------
Malcolm M. Farnsworth
Treasurer and Chief Financial
Officer

AEHR TEST SYSTEMS
BALANCE SHEET
JULY 31, 1985
($ in thousands)

Current Assets:
   Cash                                                                  ($23)
   Accounts Receivable, Net                                             5,621
   Inventories                                                          7,723
   Prepaid Expenses                                                        47
                                                                     --------
      Total Current Assets                                             13,368

Property, Plant & Equipment, Net                                        1,836

Other Assets                                                              749
                                                                     --------
Total Assets                                                          $15,953
                                                                     --------
                                                                     --------

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts Payable                                                    $2,112
   Accrued Liabilities                                                  1,791
   Accrued Income Taxes                                                 1,940
                                                                     --------
      Total Current Liabilities                                         5,843

Other Long-term Liabilities                                               255
                                                                     --------
      Total Liabilities                                                 6,098

Stockholders' Equity:
   Capital Stock                                                        2,130
   Notes Secured by Capital Stock                                        (442)
   Retained Earnings                                                    7,643
   Net Income YTD                                                         524
                                                                     --------
      Total Stockholders' Equity                                        9,855
                                                                     --------
Total Liabilities and Stockholders' Equity                            $15,953
                                                                     --------
                                                                     --------

/s/ Malcolm M. Farnsworth
-----------------------------
Malcolm M. Farnsworth
Treasurer and Chief Financial
Officer

PATENT AND CONFIDENTIALITY AGREEMENT

In consideration and as a condition of my employment or continued employment by AEHR TEST SYSTEMS (the "Company") and the compensation paid therefor:

1. ASSIGNMENT OF INVENTIONS. I hereby assign and transfer to the Company my entire right, title and interest in and to all inventions, improvements, discoveries, ideas, designs, documents, and other data (whether or not patentable) made, conceived, or first reduced to practice by me, whether solely or jointly with others, during the period of my employment with the Company (the "Inventions"), which relate in any manner to the actual or anticipated business or research and development of the Company or its subsidiaries, or result from or are suggested by any task assigned to me or by any of the work I have performed or may perform for the Company. Provided, however, that this Agreement does not require assignment of an Invention which qualifies fully for protection under Section 2870 of the California Labor Code (hereinafter "Section 2870"). In the event any Invention relating in any manner to the actual or anticipated business or research and development of the Company or its subsidiaries is disclosed by me under paragraph 2 within six (6) months after ceasing to serve as a consultant of the Company, it is to be presumed that such Invention was conceived or resulted form developments made during the period of my relationship with the Company and I agree that any such Invention will belong to the Company, subject to the provisions of section 2870.

2. DISCLOSURE OF INVENTIONS; PATENTS. I agree promptly to disclose all Inventions to whomever may be designated by the Company, regardless of whether I believe the Invention is protected by Section 2870, in order to permit the Company to claim rights to which it may be entitled under this Agreement. Such disclosure shall be received in confidence by the Company. With respect to all inventions which are to be assigned pursuant to paragraph 1, I will assist the Company in any reasonable manner to obtain for its own benefit patents thereon in any and all countries, and I will execute when requested, patent applications and assignments thereof to the Company or persons designated by it, and any other lawful documents deemed necessary by the Company to carry out the purposes of this agreement, and I will further assist the Company in every way to enforce any patents obtained, including, without limitation, testifying in any suit or proceeding involving any of said patents or executing any documents deemed necessary by the Company, all without further consideration than provided for herein, but at the expense of the Company. I agree to preserve such Inventions as confidential information of the Company. I further agree that the obligations and undertakings stated in this paragraph 2 shall con-

3.15

tinue beyond the termination of my consulting relationship with the Company, but if I am called upon to render such assistance after the termination of my consulting relationship, then I shall be entitled to a fair and reasonable per diem fee in addition to reimbursement of any expenses incurred at the request of the Company. I agree to keep and maintain adequate and current written records of all such Inventions made by me (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the property of the Company at all times.

3. CONFIDENTIALITY. I agree that without the Company's prior express consent, I will not during my employment by the Company engage directly or indirectly in any employment, consulting or activity other than for the Company in any business in which the Company is now or may hereafter become engaged. I agree that I will not during the period I am serving as an employee for the Company or thereafter at any time disclose directly or indirectly to any person or entity or use for my own benefit any trade secrets or confidential information relating to products, processes, know-how, machines, designs, drawings, software, formulas, test data, marketing data, business plans and strategies, employees, negotiations and contracts with other companies, disclosures and applications for patents and the status of their prosecution, or any other subject matter pertaining to any of the business of the Company or any of its clients, customers, consultants, licensees or affiliates, known to, learned or acquired by me during the period or my employment by the Company, except to such an extent as may be necessary in the ordinary course of performing my particular duties as an employee of the Company. I acknowledge that all the foregoing information is proprietary to the Company and is a special, valuable and unique asset of the business of the Company, and that my giving service as an employee creates a relationship of confidence and trust between myself and the Company with respect to the proprietary information.

4. PRIOR INVENTIONS. All inventions which I have made prior to my employment by the Company shall be excluded from the scope of this Agreement. As a matter of record, I have set forth at the end of this Agreement a complete list of all inventions, discoveries or improvements relating to the Company's business which I have conceived prior to my serving as a consultant for the Company. I represent and covenant that the list is complete and that, if no items are on the list, I have no such prior inventions.

5. RETURN OF CONFIDENTIAL MATERIAL. I agree to deliver promptly to the Company on termination of my employment by the Company, whether or not for cause and whatever the reason, or at any time it may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints, and any other documents of a con-

fidential nature belonging to the Company, including all copies of such materials, which I may then possess or have under my control. I further agree that upon termination of my status as a consultant that I shall not take with me any document or data of any description containing or pertaining to the proprietary information of the Company as set forth in paragraph 3.

6. CUSTOMER LISTS AND EMPLOYEES. I agree that I shall not for a period of six (6) months immediately following the termination of my relationship with the Company for any reason, whether with or without cause, either directly or indirectly: (1) call on, solicit, or take away any of the customers of the Company on whom I called or with whom I became acquainted during the period of my employment with the Company, either for myself or for any other person or entity, or (2) solicit or take away, or attempt to solicit or take away any employees of the Company, either for myself or for any other person or entity.

7. TRADE SECRETS OF OTHERS. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information or trade secrets acquired by me in confidence or in trust prior to my entering into a consulting relationship with the Company, and I will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any previous employer or others. I agree not to enter into any agreement either written or oral in conflict herewith.

8. OTHER OBLIGATIONS. I acknowledge that the Company from time to time may have agreements with other persons or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. I agree to be bound by all such obligations and restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

9. INJUNCTIVE RELIEF. I agree that it would be difficult to measure the damage to the Company from any breach by me of the covenants set forth in paragraphs 1, 2, 3, 5, or 6 herein, that injury to the Company from any such breach would be impossible to calculate, and that money damages would therefore be an inadequate remedy for any such breach. Accordingly, I agree that if I breach paragraphs 1, 2, 3, 5, and 6 or any of them, the Company shall be entitled, in addition to all other remedies it may have, to injunctions or other appropriate orders to restrain any such breach without showing or proving any actual damage to the Company.

10. GENERAL. I acknowledge receipt of this Agreement and agree that, with respect to the subject matter hereof, this Agreement is my entire agreement with the Company, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof. This Agreement shall inure to the benefit of the successors and assigns of the Company, and shall be binding upon my heirs, assigns, administrators and representatives. To the extent that any of the agreements set forth herein, or any word, phrase, clause or sentence thereof shall be found to be illegal or unenforceable for any reason, such agreement, word, phrase, clause or sentence shall be modified or deleted in such a manner so as to make the Agreement, as modified, legal and enforceable under applicable laws. This Agreement shall be governed by the laws of the State of California, which state shall have jurisdiction of the subject matter hereof. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing signed by the Consultant and the Company.

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

                                        Employee:

                                        -----------------------------------
                                        Print Name


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

                                        AEHR TEST SYSTEMS

                                        By:
                                             ------------------------------
                                        Title:
                                              -----------------------------

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Aehr Test Systems                      128    09/07/82     28,120
Employee Stock Bonus Plan              189    10/08/83     18,418
135 Constitution Dr.                   205    08/30/84     19,192
Menlo Park, CA 94025                   248    02/28/85     31,517
                                       257    04/10/85      2,559
                                       273    08/15/85     23,800
                                       277    08/15/85      2,686     126,292

Allen Amsbaugh and                      28    08/10/79      1,000
Judith Amsbaugh, JTWROS                 80    04/21/82      4,000       5,000
900 Menlo Oaks Drive
Menlo Park, CA 94025

Masamichi Ariga                        268    08/12/85      9,800       9,800
c/o ATS Japan
19-25, 1-Chome
Shimura, Itabashi-Ku
Tokyo, 174 Japan

Atherton Ventures                      156    05/27/83      8,250       8,250
c/o Mario M. Rosati
Two Palo Alto Square, Suite 900
Palo Alto, CA 94306

Ross Atwood                            216    11/12/84      1,000       1,000
738 Long Ridge
Oakland, CA 94610

Patricia J. Battaglia and              222    12/03/84      1,100       1,100
Biogio G. Battaglia,
Joint Tenants
706 Hillcrest Way
Redwood City, CA 94062

Robert R. Berry                         29    08/10/79      1,500
628 Forest Ave., Apt. A                 81    04/21/82      6,000       7,500
Palo Alto, CA 94301


                                         3.16

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Mark A. Bertelsen                      138    03/07/83      3,130       3,130
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Charles W. Bishop                       30    08/10/79      1,000
3091 Chardonnay                        217    11/12/84      3,000       4,000
Pleasanton, CA 94566

Bernard Bouyea and Margaret            225    12/03/84        555         555
Bouyea, Joint Tenants
166 Shell Street
Pacifica, CA 94044

Roger D. Bouyea and                    147    05/04/83    125,000
Lorraine M. Bouyea, his wife,          227    12/03/84      1,313     126,313
 as their Community Property
1000 North Point Street
Apt. 1001
San Francisco, CA 94109

John Bouyea, Jr.                       172    08/04/83      1,660       1,660
2615 Lincoln Way
San Francisco, CA 94122

Roger Bouyea, Jr.                      171    08/04/83      1,660       1,660
1000 Northpoint, Apt. 1001
San Francisco, CA 94109

Ronald E. Boyd                         231    12/05/84      9,500       9,500
24390 Summerhill Road
Los Altos Hills, CA 94022

Verna L. Brame                         201    04/18/84      5,000       5,000
322 Cuardo Avenue
Millbrae, CA 94030

Verna L. Brame Trustee                 169    07/26/83    204,900     204,900
Verna L. Brame Trust
U/D/T dated May 20, 1983
322 Cuardo Ave.
Millbrae, CA 94030

Clarence M. Brehm                      149    05/04/83     10,000      10,000
1047 Mango Ave.
Sunnyvale, CA 94087

                                       Cert.                           Total
                Name                    No.     Date        Shares     Shares
-----------------------------------   ------  ----------   ---------  ---------

Faye Crawford Bremond,                 159    05/30/83      3,750       3,750
 Trustee of the Faye Crawford
 Bremond Separate Property Trust
 U/D/T January 6, 1983
101 Catalpa Drive
Atherton, CA 94025

Harry B. Bremond                       145    03/08/83      3,750       3,750
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

J. Edwin Brooks                        187    10/07/83      2,114       2,114
50 Pasatiempo Drive
Santa Cruz, CA 95060

Barbara J. Brown                       151    05/27/83        400         400
1621 Albatross Drive
Sunnyvale, CA 94086

T. Steven Brown and                     20    07/20/79      5,000
Elizabeth Brown JTWROS                  86    04/21/82     20,000      25,000
16601 Sagewood Lane
Poway, CA 92064

Carl N. Buck                           232    12/28/84      1,000       1,000
Aehr Test Systems
135 Constitution Drive
Menlo Park, CA 94025

Robert R. Buck                         233    12/28/84        500         500
167 Pleasant Avenue
Fanwood, NJ 07023

Louis J. Cartalano                      32    08/10/79      1,000
750 Sunshine Dr.                        87    04/21/82     64,000
Los Altos, CA 94022                    157    05/27/83      5,000
                                       158    05/30/83      6,000
                                       202    04/18/84      6,500
                                       239    12/28/84     30,000     112,500

John Case                              236    12/28/84      2,000       2,000
The Case Companies
969 Buenos Avenue
San Diego, CA 92110

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

CHARALYN, Inc. Defined Benefit         255    03/06/85      3,000       3,000
and Money Purchase Pension Plan
(Fred Pilster, Trustee)
12002 Old Snakey Road
Los Altos Hills, CA 94022

Gene S. Crockett                        78    04/15/82      3,000
1200 Mosswood                           88    04/21/82     12,000      15,000
Irving, Texas 75061

John Cruse and Carol                   226    12/03/84        277         277
Cruse, Joint Tenants
1380 Flores Drive
Pacifica, CA 94044

Jean Pierre Dammann and                 89    04/21/82      8,000       8,000
Winifred S. Dammann, JTWROS
19 Whitlaw Close
Chappaqua, New York 10514

Carol A. Decker                        152    05/27/83        250
6227 Balsamo Dr.                       243    01/07/85      5,000       5,250
San Jose, CA 95129

Dr. R. Cameron Emmott                  168    07/26/83        100         100
315 Barroilhet Avenue
San Mateo, CA 94402

James Fadiman                          129    09/20/82      3,375
1070 Colby Ave.                        130    09/21/82      6,000       9,375
Menlo Park, CA 94025


James Fadiman, Trustee                  26    07/20/79      5,000
UAD 6/1/68 f/b/o CHRISTINE E.           91    04/21/82     20,000      25,000
CROSBY TRUST #2
P.O. Box 1032
Menlo Park, CA 94025

James Fadiman, Trustee                  27    07/20/79      5,000
UAD 3/1/79 f/b/o TAMARA E.              92    04/21/82     20,000      25,000
CROSBY TRUST #2
P.O. Box 1032
Menlo Park, CA 94025

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Andree P. Feldmann                      35    08/10/79      2,500
Kreidelstrasse 4                        90    04/21/82     10,000      12,500
D6200 Wiesbaden
Erbenheim, West Germany

Ferlic Investments, Ltd.               182    10/12/83      1,000       1,000
c/o Randolph M. Ferlic
509 Doctor Building
Omaha, NE 68131

William R. Franke and                   93    04/21/82     30,000
Barbara J. Franke, JTWROS              253    02/20/85      4,500      34,500
P.O. Box 722
Kenwood, CA 95452

Trina Anne Franke                      252    02/20/85      1,000       1,000
P.O. Box 722
Kenwood, CA 95452

Frank J. George and                     24    07/20/79     10,000
Evelyn E. George                        36    08/10/79      1,000
3716 Kenwood Ave.                       94    04/21/82     44,000      55,000
San Mateo, CA 94403

William P. Gilbreath and                37    08/10/79      1,500
Vibeke Gilbreath, JTWROS                95    04/21/82      6,000       7,500
1624 Petal Way
San Jose, CA 95129

Susan Golden                           212    10/10/84        186         186
410 Belmont Way
San Jose, CA 95125

John Goodrich                          241    12/28/84      4,687       4,687
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Margaret K. Goodrich                   240    12/28/84      4,688       4,688
21132 Patriot Way
Cupertino, CA 95014

J. Barry Gray                          133    02/17/83      2,000       2,000
15725 Peach Hill Road
Los Gatos, CA 95034

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Peter Tyler Hall                        60    05/15/80      4,000
c/o Dean Witter Reynolds                96    04/21/82     76,000
720 Santa Cruz Avenue                  134    02/17/83      3,000      83,000
Menlo Park, CA 94025

Takahiro Hatakenaka                    267    08/12/85      7,800
c/o ATS Japan
19-25,1-Chome
Shimura, Itabashi-Ku
Tokyo, 174 Japan

Martin J. Held, Trustee of             237    12/28/84        500         500
M.J. Held Associates Money
Purchase Pension & Defined
Benefit Pension Trust
DTD 1-28-82
240 Tamal Vista Blvd., #130
Corte Madera, CA 94925

Alan Helgesson                         166    07/05/83     30,000      30,000
12997 Cortez Court
Los Altos Hills, CA 94022

Alan L. Helgesson and                   39    08/10/79      2,500
Llyssa H. Helgesson                     98    07/21/82     10,000      12,500
Trustees U/D/T dated
4/19/78
12997 Cortez Court
Los Altos Hills, CA 94022

Janet Palm Higginbotham                 40    08/10/79        500
223 More Avenue                         99    04/21/82      2,000       2,500
Los Gatos, CA 95030

Tom A. Kelley, Trustee                 238    12/28/84      2,000       2,000
of the Thomas A. Kelley
Pension & Profit Sharing Trust
Building 2, Suite 120
3000 San Hill Road
Menlo Park, CA 94025

Allan King                             234    12/28/84      1,000       1,000
1542 Winding Way
Belmont, CA 94022

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Joel Klein                             193    02/08/84      1,000       1,000
354 Seale Ave.
Palo Alto, CA 94301

Ralph W. Kummer                         57    03/26/80      1,200
Post Office Box 420                    100    04/21/82      4,800       6,000
Colfax, CA 95713

Charles F. LaBrecque                    77    04/18/82      1,000
302 Old Westford Road                  101    04/21/82      4,000
Chelmsford, MA 01824                   126    06/16/82      2,500
                                       135    03/04/83      1,000       8,500

Thomas Lee                              19    07/20/79      5,000
240 Floresta Way                        70    05/11/81     20,000
Portola Valley, CA 94025               102    04/21/82    100,000     125,000

Barbara Long, Trustee                  160    05/30/83      5,000       5,000
of the Kevin Allen
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  161    05/30/83      5,000       5,000
of the Candice Ann
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  162    05/30/83      5,000       5,000
of the Kyler David
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  163    05/30/83      5,000       5,000
of the Eric Nels
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

                                      Cert.                           Total
         Name                          No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Barbara Long, Trustee                  164    05/30/83      5,000       5,000
of the Brock Frank
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Harvey Long and Barbara                228    12/03/84      1,200       1,200
Long, Joint Tenants
3828 Hamilton Way
Redwood City, CA 94062

Los Gatos Ventures                     246    01/15/85      5,000       5,000
2 Palo Alto Square
Palo Alto, CA 94306

Frank and Josephine Luporini           196    03/27/84      3,750       3,750
1324 Hover
Menlo Park, CA 94025

Dana Marie Mahoney                     251    02/20/85      1,000       1,000
663 Simpson Street
Santa Rosa, CA 95401

Paul Margolin                           41    08/10/79      5,000
P.O. Box 2302                          106    04/21/82     20,000      25,000
16 Tall Oaks Drive
Wayne, New Jersey 07470

Renzo Maraviglia and                   223    12/03/84        775         775
Joan M. Maraviglia,
Joint Tenants
301 Heather Way
South San Francisco, CA 94080

James S. Mathews                        76    04/15/82      1,000
26 Spruce Lane                         103    04/21/82      4,000
Holden, MA 01520                       127    06/16/82      2,500       7,500

Mayfield III                            50    09/11/79     20,000
2200 Sand Hill Road                     61    07/21/80     18,000
Menlo Park, CA 94025                    73    08/11/81      5,000
                                       104    04/21/82    172,000
                                       132    11/23/83     10,000
                                       197    04/12/84     58,824     283,824

                                      Cert.                             Total
                 Name                  No.      Date        Shares      Shares
-----------------------------------   ------  ----------   ---------   ---------

Martina McGlynn as                      63    07/24/80            25
Custodian for Kathleen                 105    04/21/82           100         125
Ann McGlynn (UGMA)
440 Coleridge
Palo Alto, CA 94301

Alexandria Jean McGurn                 125    05/27/82        12,000
975 Marlin Drive                       192    11/04/83         3,000      15,000
Vista, CA 92082

James F. McGurn                        124    05/27/82        12,000
9292 Chesepeake Drive                  191    11/04/83         3,000      15,000
San Diego, CA 92123

Linda C. Miller                        249    02/15/85         1,000       1,000
2225 Vineyard Court
Los Altos, CA 94022

John Spencer Morse and                 175    08/30/83        50,000
Annette Ruth Morse,                    178    08/30/83         2,000
Trustees of the                        179    08/30/83        40,000
John Spencer Morse and                 260    04/16/85         3,000      95,000
Annette Ruth Rose
Trusts, U/D/T dated
December 23, 1982
19479 Miller Court
Saratoga, CA 95070

Roger Mosher                           140    03/07/83        11,875      11,875
525 University Avenue
Suite 1410
Palo Alto, CA 94301

Walter Neumann                         153    05/27/83           300
1339 Lerida Way                        242    01/04/85        10,000      10,300
Pacifica, CA 94044

Walter F. Neumann                       53    11/02/79           500
and Susan Garder Neumann               109    04/21/82         2,000       2,500
JT TEN WROS
1339 Lerida Way
Pacifica, CA 94044

                                      Cert.                             Total
                 Name                  No.      Date        Shares      Shares
-----------------------------------   ------  ----------   ---------   ---------

F.D. Orahood                            14    07/20/79        25,000
655 West Evelyn Ave.                    48    08/20/79         2,500
Mountain View, CA 94041                110    04/21/82       110,000     137,500

Leonard E. Orsak and                    52    11/02/79         1,000
Marjorie L. Orsak                      111    04/21/82         4,000       5,000
JT TEN WROS
241 Biarritz Circle
Los Altos, CA 94022

Vivian M. Owen                           4    07/20/79         5,000
1736 Terrace                           112    04/21/82        20,000
Belmont, CA 94002                      181    09/21/83        15,000      40,000

Victor P. Pagani                        15    07/20/79        25,000
and Diane R. Pagani                     43    08/10/79         2,500
205 Garden Lane                        113    04/21/82       110,000     137,500
Colma, CA 94015

Joseph F. Pickering, Trustee            67    05/07/81         2,375
of the Joseph F. Pickering and         114    04/21/82         9,500      11,875
Helen D. Pickering Trusts U/D/T
dated 1/12/77
c/o Rollins, Burdick, Hunter
P.O. Box 51110
Palo Alto, CA 94303

Portola Valley Ventures                254    03/05/85         3,810       3,810
Two Palo Alto Square, Ste. 900
Palo Alto, CA 94306

Rhea J. Posedel                          1    07/20/79       125,000
1736 Terrace                            25    07/20/79         2,500
Belmont, CA 94002                       58    04/17/80         2,500
                                        62    07/21/80        32,000
                                        65    06/24/80         5,000
                                       115    04/21/82       668,000
                                       200    04/18/84        25,000
                                       266    07/22/85        50,000     910,000

Carol A. Preble                        154    05/27/83           300         300
19973 Peartree Ct.
Cupertino, CA 95014


                                         -10-

                                      Cert.                             Total
                  Name                 No.      Date        Shares      Shares
-----------------------------------   ------  ----------   ---------   ---------

Rosanna McClure Roedder                190    10/21/83        15,000      15,000
Schonauerstrasse No. 19
5206 Wolperath
West Germany

M.M. Rosati & D. M. Laurice            264    05/15/85         5,000       5,000
Trustees FBO Mario M. Rosati
WILSON, SONSINI, GOODRICH &
ROSATI
Two Palo Alto Square, Ste. 900
Palo Alto, CA 94306

Rutven Associates I, L.P.              198    04/16/84         8,824       8,824
c/o L.F. Rothschild,
Unterberg & Towbin
55 Water Street
New York, NY 10041

Rutven Associates II, L.P.             199    04/16/84         5,882       5,882
c/o L. F. Rothschild,
Unterberg & Towbin
55 Water Street
New York, NY 10041

Marvin R. Samuel and                    44    08/10/79         5,000
Margery F. Samuel, JTWROS              117    04/21/82        20,000      25,000
471 Panchita Way
Los Altos, CA 94022

Ramona Lee Santos                      250    02/20/85         1,000       1,000
32 Escanyo Drive
So. San Francisco, CA 94080

Carol C. Scott                         155    05/27/83           500         500
4812 Corrales Dr.
San Jose, CA 95136

Richard F. Sette                       195    03/19/84        15,400
13070 Regan Lane                       271    08/12/85         1,000      16,400
Saratoga, CA 95070

Charles E. Shalvoy                     118    04/21/82        60,000      70,400
111 Selby Lane                         261    05/13/85        10,400
Atherton, CA 94025


                                         -11-

                                      Cert.                             Total
                Name                   No.      Date        Shares      Shares
-----------------------------------   ------  ----------   ---------   ---------

Charles E. Shalvoy, Sr.                244    01/11/85           500         500
  or Helen M. Shalvoy,
  JT WROS
17910 Villamoura Drive
Poway, CA 92064

James A. Shalvoy, Trustee              218    11/13/84         2,300       4,600
of the Brenton O. Shalvoy,             263    05/13/85         2,300
Trust I UTA dated July 25,
1984
113-35th Place
Manhattan Beach, CA 90266

Sabro Shikano                          269    08/12/85         4,900       4,900
c/o ATS Japan
19-25, 1-Chume
Shimura, Itabashi-Ku
Tokyo, 174 Japan

Wayne L. Sloyer                        204    07/02/84           500
1149 S. Mary Avenue                    265       06/28           500       1,000
Sunnyvale, CA 94087

Larry W. Sonsini                       141    03/07/83        11,560      11,560
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Martin C. Sturzenbecker                220    11/30/84           250         250
4125 Tulare Court
Concord, CA 94521

Mel Thomsen                            174    08/08/83         1,250       1,250
555 Latimer Circle
Campbell, CA 95008

David Torresdal                         18    07/20/79        10,000
and Betty Torresdal                    120    04/21/82       263,000
427 Hillcrest Way                      165    05/30/83        25,000
Redwood City, CA 94062                 210    10/05/84         5,000
                                       229    12/03/84           800     303,800

Margo Tullus                           170    08/04/83         1,660       1,660
2515 Lunada Lane
Walnut Creek, CA 94595


                                         -12-

                                      Cert.                           Total
              Name                     No.      Date        Shares    Shares
-----------------------------------   ------  ----------   --------- ---------

Margo D. Tullus and                    224    12/03/84      1,000       1,000
David Shelton Tullus,
Community Property
2515 Lunada Lane
Walnut Creek, CA 94595

John A. Wilson                         142    03/07/83     10,625      10,625
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Miriam E. Wolff                        207    09/05/84     10,000      10,000
Trust FBO Miriam E. Wolff
25623 Elena Rd.
Los Altos Hills, CA 94022

Donald E. Yost                          47    08/10/79      2,500
1860 Middleton Ave.                    123    04/21/82     10,000      12,500
Los Altos, CA 94022
                                                                    ----------

TOTAL OUTSTANDING -                                                 3,432,022

*Held in Safe

                                                                                                   Total
                                       Exer-                        Shares                      Outstanding
      Name of              Date         cise        Shares          Exer-          Shares          and
      Optionee           of Grant      Price        Granted         cised         Returned      Unexercised
---------------------    --------      --------    ----------      --------       --------      -----------
Robert N. Allebrand     05/22/84       $8.50            400                                          400

Christian J. C.         03/15/84       $6.00          4,000                                        4,000
 Bastoul

Charles A. Briggs       03/15/82       $2.00          5,000                         5,000              0

Ricky I. Bonbright      05/22/84       $8.50            400                                          400

Ronald E. Boyd          09/15/82       $4.00         25,000
                        05/13/83       $4.00         25,000         12,500         37,500              0

Donald Brame            04/19/79       $ .40          5,000          5,000                             0

Verna Brame             04/19/79       $ .40          5,000          5,000                             0

Clarence Brehm          04/19/79       $ .40         10,000         10,000                             0

Carl N. Buck            08/20/84       $8.50            200                                          200

Louis J. Cartalano      10/22/79       $ .50         50,000         50,000                             0

Michael J. Coggiano     06/15/84       $8.50          2,000                                        2,000

Jonathan D. Craig       03/15/84       $6.00          2,000                                        2,000

James A. Crawford       05/22/84       $8.50          2,500                                        2,500

Carol A. Decker         01/14/80       $ .50          5,000          5,000                             0

Malcolm M. Farnsworth   03/15/84       $6.00          7,000                                        7,000

Patrick K. Flaherty     03/15/84       $6.00          1,000                         1,000              0

Peter Hall              10/22/79       $ .50         20,000         20,000                             0

                                                                                                   Total
                                         Exer-                      Shares                      Outstanding
      Name of              Date          cise        Shares         Exer-          Shares          and
      Optionee          of Grant         Price       Granted        cised         Returned      Unexercised
---------------------   ---------      --------    ----------      --------       --------      -----------
Arthur Harui            05/27/80       $ .50         20,000                        20,000              0

Alan Helgesson          05/11/81       $2.00         60,000         30,000         30,000              0

Bruce W. Howard         06/15/84       $8.50          1,000                         1,000              0

Aleck S. Kogan          03/15/84       $6.00            700                                          700

Fred Lauriello          05/13/83       $4.00         20,000                                       20,000

Tom Lee                 12/05/80       $2.00        100,000        100,000                             0

Pamela Mayerfeld        06/15/84       $8.50          3,000                                        3,000

Rosie McClure Roedder   10/22/79       $ .50         15,000         15,000                             0

Robert Morgan           06/15/84       $8.50            400                                          400

John Morse              10/22/79       $ .50         50,000         50,000
                        12/05/80       $2.00         10,000         10,000                             0

Thomas A. Nelson        03/15/84       $6.00            500                                          500

Walter F. Neumann       01/14/80       $ .50         10,000         10,000                             0

Vivian Owen             04/19/79       $. 40         15,000         15,000                             0


Richard A. Paulsen      04/19/79       $ .40         10,000                        10,000              0

Peter Penwarden         05/22/84       $8.50            400                           400              0

Rhea J. Posedel         04/19/79       $ .40         25,000
                        01/03/80       $ .50         25,000
                        07/24/80       $1.80         25,000
                        07/24/80       $2.00         25,000        100,000                             0

Carol Preble            03/15/84       $6.00            200                                          200

Francisco A. Roa        03/15/84       $6.00          1,000                                        1,000

Loren S. Rhodes         05/22/84       $8.50            400                                          400

Mario Rosati            10/22/79       $ .50          5,000          5,000                             0

                                                                                                   Total
                                         Exer-                      Shares                      Outstanding
     Name of              Date           cise        Shares         Exer-          Shares          and
    Optionee            of Grant         Price       Granted        cised         Returned      Unexercised
---------------------    --------      --------    ----------      --------       --------      -----------
Richard F. Sette        03/15/84       $6.00         16,600                                       16,600

Charles E. Shalvoy      05/11/81       $2.00         75,000         75,000                             0

Michael S. Silverman    08/20/84       $8.50            500                                          500

Mel Thomsen             03/15/82       $2.00          5,000          1,250          3,750              0

Michael Kent Throck-    06/15/84       $8.50          2,500                                        2,500
  morton

David Torresdal         10/22/79       $ .50          5,000          5,000                             0
                                                 ----------     ----------     ----------     ----------

                        Totals :                    696,700        523,750        108,650         64,300


Shares Available in Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .625,000

Total Outstanding and Unexercised. . . . . . . . . . . . . . . .    64,300
Total Exercised. . . . . . . . . . . . . . . . . . . . . . . . .   523,750        588,050
                                                                   -------      ---------

Total Available for Future Grants. . . . . . . . . . . . . . . .                   36,950

                                                                                                   Total
                                         Exer-                      Shares                      Outstanding
      Name of              Date          cise        Shares         Exer-          Shares          and
    Optionee            of Grant         Price       Granted        cised         Returned      Unexercised
---------------------    --------      --------    ----------      --------       --------      -----------
Ross Atwood             02/28/85      $ 8.50          4,000                                        4,000

Edward J. Barlow        09/14/84      $ 8.50         11,750
                        02/08/85      $ 8.50          3,250                                       15,000

Keith Blackey           05/23/83      $ 4.00          5,000                                        5,000

Jeff Brehm              05/23/83      $ 4.00          1,000                                        1,000

Carl Buck               07/13/83      $ 6.00          5,000                                        5,000

Anpao Chou              02/28/85      $ 8.50            500                                          500

Garry Clark             02/28/85      $ 8.50          2,000                                        2,000

Gerard Connolly         09/14/84      $ 8.50            500                                          500

Malcolm Farnsworth      07/13/83      $ 6.00         10,000
                        02/28/85      $ 8.50          3,000                                       13,000

Steve Feller            11/14/84      $ 8.50            280                                          280

Robert Gorman           02/28/85      $ 8.50            500                                          500

Richard Graves          09/16/83      $ 6.00          1,000                         1,000              0

Scott Harlow            04/01/85      $ 8.50          1,000                                        1,000

Ray Ingraham            09/14/84      $ 8.50          2,000                                        2,000

Richard Jensen          04/01/85      $ 8.50          3,000                                        3,000

                                                                                                   Total
                                         Exer-                      Shares                      Outstanding
    Name of               Date           cise        Shares         Exer-          Shares          and
    Optionee            of Grant         Price       Granted        cised         Returned      Unexercised
---------------------    --------      --------    ----------      --------       --------      -----------
Goutama Kantamaneni     02/28/85      $ 8.50          2,000                                        2,000

Bryan Kember            05/23/83      $ 4.00          1,000                                        1,000

Allan King              02/28/85      $ 8.50          3,000                                        3,000

Aleck Kogan             02/28/85      $ 8.50            500                                          500

Thomas Lee              02/28/85      $ 8.50         10,000                                       10,000

Timothy Lee             02/28/85      $ 8.50          1,000                                        1,000

John Ludlow             09/14/84      $ 8.50          3,500                                        3,500

Joan McCall             02/28/85      $ 8.50          3,000                                        3,000

Robert Morgan           07/12/85      $10.00            500                                          500

Fred Muraira            02/28/85      $ 8.50          2,000                                        2,000

John Rand Perretta      09/14/84      $ 8.50          2,000                                        2,000

Linda Raggi             07/12/85      $10.00          4,000                                        4,000

Jerry Schlegel          07/12/85      $10.00            500                                          500

Richard Sette           07/12/85      $10.00          3,000                                        3,000

George Skevos           09/14/84      $ 8.50            750                                          750

Wayne Sloyer            05/23/83      $ 4.00          2,000          1,000          1,000              0

Roger Smith             07/13/83      $ 6.00         11,000                                       11,000

Martin Sturzenbecker    05/23/83      $ 4.00          1,000            250            750              0

James Tomic             04/01/85      $ 8.50            500                                          500

                                                                      Total
                               Exer-              Shares            Outstanding
       Name of      Date       cise      Shares   Exer-   Shares        and
     Optionee      of Grant    Price     Granted   cisedReturned    Unexercised
----------------  ---------    -----   -------   -----  --------  -----------

Albert Wang      09/16/83    $ 6.00         500              500          0

Jim Wrenn        02/28/85    $ 8.50       3,000                       3,000
                                        -------  ------  -------  ---------

                 Totals:                108,530   1,250    3,250    104,030

Shares Available in Plan. . . . . . . . . . . . . . . . .    150,000

Total Outstanding and Unexercised. . . . . . . .   104,030
Total Exercised. . . . . . . . . . . . . . . . .     1,250
                                                ---------

                                                             105,280
                                                             -------

Total Available for Future Grants. . . . . . . .              44,720
                                                             -------

SCHEDULE OF EXCEPTIONS

This Schedule of Exceptions, dated as of September 18, 1985, is made and given pursuant to Article III of the Aehr Test Systems Stock Purchase Agreement dated September 18, 1985 (the "Agreement"). The section numbers in this Schedule of Exceptions correspond to the section numbers in the Agreement; however, any information disclosed herein under any section number shall be deemed to be disclosed and incorporated into any other section number under the Agreement where such disclosure would be appropriate. Any terms defined in the Agreement shall have the same meaning when used in this Schedule of Exceptions as when used in the Agreement unless the context otherwise requires.

3.01 ORGANIZATION AND STANDING OF COMPANY.

The Company has sales offices in Texas and Massachusetts and an employee in Pennsylvania. The Company is not qualified to do business in any of these states.

3.05 COMPLIANCE WITH OTHER INSTRUMENTS.

The Company believed that to the extent it is not in compliance in all material respects with the terms and provisions of an agreement or other instrument relating to obligations of the Company that such noncompliance is currently adequately reserved for on its financial statements.

3.06 TITLE TO ASSETS, PATENTS.

(b) Under Japanese law the Company may be required to purchase patents from its employees in order to acquire proprietary rights to such patents.

3.07 FINANCIAL STATEMENTS.

The May 31, 1985 financial statements include the accounts of the Company and its wholly-owned subsidiaries, a domestic international sales corporation and a foreign sales corporation. Aehr Test Japan, the foreign joint venture, was accounted for by the equity method.

The Company's backlog on May 31,1985, and July 31, 1985, was approximately $16,500,000 and $12,400,000, respectively. The Company believes that this trend may continue until a rebound occurs in the semiconductor market.

         Aehr Test Systems Employee
           Stock Bonus Plan                           23,800(1)
         Richard F. Sette                              1,000(2)
         The employees of Aehr Test Japan             22,500(2)

-----------------------
(1) Contribution to Plan.
(2) $10.00 per share cash issuance price.

3.08 TAXES.

The Company has obtained an extension from the Internal Revenue Service for the filing of its income tax return for the year ending May 31, 1985.

3.09 ERISA.

The Company has an employee stock ownership plan, a copy of which has been provided to the special counsel for the Purchasers. See Note 10 of Notes to Consolidated Financial Statements of Aehr Test Systems and Subsidiaries for the year ended May 31, 1985.

The Company's practice has been to repurchase, at the then current fair market value, shares distributed by the Employee Stock Bonus Plan to terminated employees if the employees so desire. The current fair market value of the Company's Capital Stock is $10.00 per share. The Company intends to repurchase approximately 5,000 shares from recently terminated employees in the near future.

Tom Lee             $200,000
Charles Shalvoy     $150,000
Richard Sette       $ 92,400

3.11 OTHER MATTERS.

Under certain theories of successor liability, the Company may be liable for certain Indebtedness of its Subsidiaries.

3.12 SECURITIES OF ACT OF 1933.

173,530 shares of the Common Stock of the Company have certain registration rights as set forth in the Stock Investment Agreement dated April 12, 1984, and the Capital Stock Purchase Agreement dated September 11, 1979.

3.15 CERTAIN AGREEMENTS OF KEY EMPLOYEES.

(b) Tom Lee has agreed to sign a modified confidentiality agreement, but has not yet done so. No former Key Employee has signed a proprietary information agreement, however to the Company's knowledge, no former employee is wrongfully using any proprietary information of the Company.

3.18 SUBSIDIARIES.

The Company has three Subsidiaries, Aehr Test Japan, a partially-owned subsidiary incorporated under the laws of Japan, Aehr Test Foreign Sales Corporation, a foreign sales corporation, organized under the laws of the Virgin Islands and Aehr Test International, a domestic international sales corporation. The Company has an option to acquire all of the outstanding shares of Aehr Test Japan. A copy of such documentation has been provided to special counsel for the purchasers.

IN WITNESS WHEREOF, the Company has executed this Schedule of Exceptions as of the date first above written.

AEHR TEST SYSTEMS

[COOPERS & LYBRAND LETTERHEAD]

To the Board of Directors
and Stockholders
Aehr Test Systems
Menlo Park, California

We have examined the consolidated balance sheets of Aehr Test Systems and Subsidiaries as of May 31, 1985 and 1984 and the related consolidated statements of income, stockholders' equity and changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards, and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the aforementioned financial statements present fairly the consolidated financial position of Aehr Test Systems and Subsidiaries as of May 31, 1985 and 1984 and the consolidated results of their operations and changes in their financial position for the years then ended in conformity with generally accepted accounting principles applied on a consistent basis.

COOPERS & LYBRAND

San Jose, California
July 15, 1985

3.07

                       ASSETS                       1985             1984
                                                    ----             ----
Current assets:
  Cash                                          $    498,190     $    182,973
  Accounts receivable, less allowance
     for doubtful accounts of $670,954
     in 1985 and $147,000 in 1984                  5,375,067        5,700,056
  Account receivable from foreign joint
     venture                                         707,888          383,621
  Inventories                                      8,390,500        5,467,671
  Refundable income taxes                            -                232,251
  Prepaid expenses and other current
     assets                                           23,755           20,420
                                                 -----------      -----------
        Total current assets                      14,995,400       11,986,992

Property and equipment                             1,882,888        1,037,783

Investment in foreign joint venture                  682,267          319,807

Other assets                                          36,683           29,598
                                                 -----------      -----------

                                                 $17,597,238      $13,374,180
                                                 -----------      -----------
                                                 -----------      -----------


     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable                                    1,200,000        1,900,000
  Current portion of long-term debt                   10,153          188,136
  Accounts payable                                 2,144,504        2,196,089
  Accured expenses                                 1,895,300        1,068,547
  Income taxes payable                               434,000          -
  Deferred income taxes                            1,109,238          975,000
                                                 -----------      -----------
        Total current liabilities                  6,793,195        6,327,772

Long-term debt, less current portion               1,406,511          627,256

Deferred income taxes                                241,000          120,779
                                                 -----------      -----------
        Total liabilities                          8,440,706        7,075,807
                                                 -----------      -----------

Commitments (Note 7).

Stockholders' equity:
  Capital stock, no par value:
     Authorized, 75,000,000 shares;
     Issued and outstanding, 3,334,591
        shares in 1985 and 3,263,262
        shares in 1984                             2,037,780        1,894,858
     Notes receivable for capital stock            (442,400)        (502,400)
     Retained earnings                             7,561,152        4,905,915
                                                 -----------      -----------
        Total stockholders' equity                 9,156,532        6,298,373
                                                 -----------      -----------

                                                 $17,597,238      $13,374,180
                                                 -----------      -----------
                                                 -----------      -----------

The accompanying notes are an integral part of these consolidated financial statements.

                                                     1985             1984
                                                     ----             ----

Net sales                                        $30,133,510      $18,257,267

Cost of sales                                     17,398,070       10,067,576
                                                 -----------      -----------
       Gross profit                               12,735,440        8,189,691
                                                 -----------      -----------

Selling, general and administrative
   expense                                         5,352,319        3,572,883

Research and development expense                   3,625,620        2,261,618

Equity in net income of foreign
   joint venture                                   (362,460)        (147,070)

Interest expense, net                                400,724          172,138
                                                 -----------      -----------
                                                   9,016,203        5,859,569
                                                 -----------      -----------
       Income before provision for
          income taxes                             3,719,237        2,330,122

Provision for income taxes                         1,064,000          729,000
                                                 -----------      -----------

       Net income                                $ 2,655,237      $ 1,601,122
                                                 -----------      -----------
                                                 -----------      -----------

The accompanying notes are an integral part of these consolidated financial statements.

                                                                                       Notes
                                                           Capital Stock             Receivable
                                                      ---------------------         for Capital         Retained
                                                      Shares         Amount           Stock             Earnings       Total
                                                      ------         ------         -----------         --------       -----

Balances, June 1, 1983                               3,103,550     $1,033,272        $(470,000)        $3,304,793    $3,868,065

Issuance of capital stock:
  Private placement, net of offering costs of $2,260    73,530        622,745                                           622,745
  Stock options exercised                               80,250         83,250                                            83,250
  Pursuant to employee bonus plan                       25,180        151,080                                           151,080
  To employee                                           15,400         92,400          (92,400)                           -

Repurchases of capital stock:
  From employee                                        (30,000)       (60,000)          60,000                            -
  From employee bonus plan                              (4,648)       (27,889)                                          (27,889)

Net income                                                                                              1,601,122     1,601,122
                                                     ---------     ----------        ----------       -----------    ----------
Balances, May 31, 1984                               3,263,262      1,894,858         (502,400)         4,905,915     6,298,373

Issuance of capital stock:
  Stock options exercised                               58,250         31,750                                            31,750
  Pursuant to employee bonus plan                       19,192        163,132                                           163,132

Repurchase of capital stock:
  From employee bonus plan                              (6,113)       (51,960)                                          (51,960)

Repayment of notes receivable                                                           60,000                           60,000

Net income                                                                                              2,655,237     2,655,237
                                                      ---------     ----------        ----------       -----------    ----------

Balances, May 31, 1985                                3,334,591     $2,037,780       $(442,400)        $7,561,152    $9,156,532
                                                      ---------     ----------       ----------        -----------    ----------
                                                       ---------    ----------       ----------        -----------    ----------

The accompanying notes are an Integral part of these consolidated financial statements.

Resources provided:                              1985           1984
                                                 ----           ----
  From operations:
    Net income                                $2,655,237     $1,601,122
    Items included in net income not
        affecting working capital:
      Depreciation and amortization              320,767        164,908
      Equity in net income of foreign
         joint venture                          (362,460)      (147,070)

     Noncurrent deferred income taxes            120,221         24,779
                                              ----------     ----------
        Working capital provided by
             operations                        2,733,765      1,643,739

  Proceeds from issuance of capital
     stock and exercise of stock
     options, net                                202,922        829,186
  Proceeds from long-term debt                 2,258,333        475,000
                                              ----------     ----------
       Total resources provided                5,195,020      2,947,925
                                              ----------     ----------

Resources applied:
  Expenditures for property and equipment      1,165,872        557,055
  Payments and current maturities of
     long-term debt                            1,479,078        197,041
  Other                                            7,085          7,086
                                              ----------     ----------
       Total resources applied                 2,652,035        761,182
                                              ----------     ----------
          Increase in working capital         $2,542,985     $2,186,743
                                              ----------     ----------
                                              ----------     ----------

  Increase (decrease) on working capital by
     components:
    Increase (decrease) in current assets:
     Cash                                        315,217       (272,294)
     Accounts receivable                            (722)     2,894,558
     Inventories                               2,922,829      3,178,036
     Prepaid expenses and other current
         assets                                    3,335          7,077
                                              ----------     ----------
                                               3,240,659      5,807,377
                                              ----------     ----------

    Decrease (increase) in current
        liabilities:
     Notes payable                               700,000     (1,900,000)
     Current portion of long-term debt           177,983        (73,525)
     Accounts payable                             51,585     (1,126,077)
     Accrued expenses                           (826,753)      (212,283)
     Income taxes payable and refundable        (666,251)       638,251
     Deferred income taxes                      (134,238)      (947,000)
                                              ----------     ----------
                                                (697,674)    (3,620,634)
                                              ----------     ----------
          Increase in working capital         $2,542,985     $2,186,743
                                              ----------     ----------
                                              ----------     ----------

The accompanying notes are an integral part of these consolidated financial statements.

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CONSOLIDATION:

The financial statements include the accounts of the Company and its wholly-owned subsidiaries, a domestic international sales corporation (DISC) and a foreign sales corporation (FSC). The foreign joint venture is accounted for by the equity method. All intercompany accounts and transactions have been eliminated.

FOREIGN CURRENCY TRANSLATION:

The Company's equity in income and losses from its investment in the foreign joint venture is translated into United States dollar equivalents using the weighted average exchange rates in effect during the year.

INVENTORIES:

Inventories are stated at the lower of cost (first-in, first-out method) or market.

Leasehold improvements                       Life of lease
Furniture and fixtures                        5 to 7 years
Equipment                                     3 to 7 years

INCOME TAXES:

Deferred income taxes are recorded to reflect the tax effects of timing differences in reporting certain items for financial statement and income tax purposes. The differences relate primarily to installment sales, depreciation and a portion of DISC income.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

INCOME TAXES, continued:

Investment tax credits are accounted for by the flowthrough method which reduces the provision for federal income taxes during the year in which the credits are utilized.

The Company intends to reinvest its share of the undistributed earnings of its foreign joint venture. Therefore, it makes no provision for additional U.S. taxes which might result from distribution of such earnings unless they are actually repatriated. Through May 31, 1985, the Company's share of the joint venture's income on which no provision for any additional U.S. income taxes had been made amounted to $440,372.

                               1985           1984
                               ----           ----
Raw materials and sub-
    assemblies              $5,077,488     $3,476,689
Work in process              2,568,533      1,884,968
Finished product               744,479        106,014
                            ----------     ----------
                            $8,390,500     $5,467,671
                            ----------     ----------
                            ----------     ----------

Continued

AEHR TEST SYSTEMS

Common Stock Purchase Agreement

February 26, 1990

INDEX

                                                                           Page
                                                                           ----

ARTICLE I - PURCHASE, SALE AND TERMS OF SHARES . . . . . . . . . . . . . .    1

     1.1  Authorization of Shares. . . . . . . . . . . . . . . . . . . . .    1
     1.2  Purchase and Sale of Shares  . . . . . . . . . . . . . . . . . .    1

ARTICLE II - CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . .    2

     2.1  Conditions to Purchasers' Obligations. . . . . . . . . . . . . .    2
     2.2  Conditions to Company's Obligations. . . . . . . . . . . . . . .    3

ARTICLE III - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . .    3

     3.1  Organization and Standing of the Company . . . . . . . . . . . .    3
     3.2  Corporate Action . . . . . . . . . . . . . . . . . . . . . . . .    4
     3.3  Governmental Approvals . . . . . . . . . . . . . . . . . . . . .    4
     3.4  Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
     3.5  Compliance with Other Instruments. . . . . . . . . . . . . . . .    5
     3.6  Title to Assets, Patents . . . . . . . . . . . . . . . . . . . .    5
     3.7  Financial Information. . . . . . . . . . . . . . . . . . . . . .    6
     3.8  Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.9  ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     3.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . .    7
     3.11 Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . .    7
     3.12 Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . .    7
     3.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     3.14 No Brokers or Finders. . . . . . . . . . . . . . . . . . . . . .    8
     3.15 Certain Agreements of Employees. . . . . . . . . . . . . . . . .    8
     3.16 Capitalization; Status of Capital Stock. . . . . . . . . . . . .    8
     3.17 Books and Records. . . . . . . . . . . . . . . . . . . . . . . .    9
     3.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .    9
     3.19 Environmental Protection . . . . . . . . . . . . . . . . . . . .    9

ARTICLE IV - COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . .   10

     4.1  Affirmative Covenants of the Company Other Than
            Reporting Requirements . . . . . . . . . . . . . . . . . . . .   10
     4.2  Negative Covenants of the Company. . . . . . . . . . . . . . . .   12
     4.3  Reporting Requirements . . . . . . . . . . . . . . . . . . . . .   13
     4.4  Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . .   14

ARTICLE V - REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . .   14

     5.1  "Piggy-Back" Registration. . . . . . . . . . . . . . . . . . . .   14
     5.2  Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . .   15
     5.3  Indemnification of Holders of Registrable Shares . . . . . . . .   15
     5.4  Indemnification of Company . . . . . . . . . . . . . . . . . . .   16
     5.5  Exchange Act Registration. . . . . . . . . . . . . . . . . . . .   18
     5.6  Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
     5.7  Further Obligations of the Company . . . . . . . . . . . . . . .   18
     5.8  Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
     5.9  Transfer of Registration Rights. . . . . . . . . . . . . . . . .   19
     5.10 No Superior Rights . . . . . . . . . . . . . . . . . . . . . . .   20

ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF PURCHASERS
             AND RESTRICTIONS ON TRANSFER. . . . . . . . . . . . . . . . .   20

     6.1  Representations and Warranties by Each Purchaser . . . . . . . .   20
     6.2  Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
     6.3  Removal of Legends and Transfer Restrictions . . . . . . . . . .   21
     6.4  Additional Purchases of Common Stock . . . . . . . . . . . . . .   22

ARTICLE VII - DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . .   22

     7.1  Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . .   22
     7.2  Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . .   24

ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .   24

     8.1  No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . .   24
     8.2  Amendments, Waivers and Consents . . . . . . . . . . . . . . . .   24
     8.3  Addresses for Notices, etc.. . . . . . . . . . . . . . . . . . .   25
     8.4  Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . .   25
     8.5  Binding Effect; Assignment . . . . . . . . . . . . . . . . . . .   25
     8.6  Survival of Representations and Warranties . . . . . . . . . . .   26
     8.7  Prior Agreements . . . . . . . . . . . . . . . . . . . . . . . .   26
     8.8  Severability . . . . . . . . . . . . . . . . . . . . . . . . . .   26
     8.9  Governing Law  . . . . . . . . . . . . . . . . . . . . . . . . .   26
     8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
     8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .   26
     8.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . .   26


                                      -ii-

EXHIBITS

1.1         List of Purchasers
2.1(b)      Opinion Letter
2.1(c)      Amendment to Registration Rights
3.0         Schedule of Exceptions and Other Matters
3.7         Financial Statements
3.15        Employee Invention and Nondisclosure Agreement
3.16        Schedule of Stock, Options and Other Rights
              and Restrictions
4.1(k)      Aehr Test Systems Japan Term Sheet
4.1(l)      Conditional Waiver

COMMON STOCK PURCHASE AGREEMENT

This Common Stock Purchase Agreement ("Agreement') is made as of February 26, 1990 among Aehr Test Systems, a California corporation (the "Company"), and the persons identified on EXHIBIT 1.1 hereto (the "Purchasers").

In consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

PURCHASE, SALE AND TERMS OF SHARES

1.1 AUTHORIZATION OF SHARES. The Company has authorized the issuance and sale of 385,715 shares (the "Shares") of the previously authorized but unissued shares of its Capital Stock, without par value (the "Common Stock"), to the Purchasers and in the respective amounts set forth in EXHIBIT 1.1 hereto.

1.2 PURCHASE AND SALE OF SHARES.

(a) THE CLOSING. Subject to and in reliance upon the representations, warranties, terms and conditions of this Agreement, the Company agrees to issue and sell to the Purchasers, and the Purchasers, severally but not jointly, agree to purchase, the Shares for the aggregate purchase prices and in the amounts set forth opposite their respective names in EXHIBIT 1.1 hereto. Such purchase and sale shall take place at a closing (the "Closing") to be held at the offices of Wilson, Sonsini, Goodrich & Rosati, Two Palo Alto Square, Palo Alto, CA 94306 on February 26, 1990 at 10:00 a.m., or on such date and time as may be mutually agreed upon. At the Closing the Company will issue and deliver certificates evidencing the Shares to be sold to the Purchasers, in the amounts set forth opposite their respective names in EXHIBIT 1.1 hereto and in such denominations as each such Purchaser shall specify, against delivery of cashier's or certified checks payable to, or wire transfer of funds to the account of, the Company in payment of the full purchase price for the Shares.

(b) SUBSEQUENT SALES OF SHARES. At any time on or before the 60th day following the Closing, the Company may sell up to the balance of the shares of Common Stock authorized for issuance and sale and not sold at the Closing, to such persons as may be approved by the Board of Directors of the Company. All such sales shall be made on the terms and conditions set forth in this Agreement. Any shares of Common Stock sold pursuant to this Section 1.2(b) shall be deemed to be "Shares" for all purposes under this Agreement, and any purchasers thereof shall be deemed to be

"Purchasers" for all purposes under this Agreement. Should any such sales be made, the Company shall prepare and distribute to the Purchasers a list of subsequent purchasers in the form of EXHIBIT 1.1 hereto reflecting such sales.

ARTICLE II

CONDITIONS TO CLOSING

2.1 CONDITIONS TO PURCHASERS' OBLIGATIONS. The obligation of each purchaser to purchase and pay for the Shares at the Closing is subject to the following conditions:

(a) Each of the representations and warranties of the Company set forth in Article III hereof shall be true on the date of the Closing.

(b) The Purchasers shall have received prior to or at the Closing all of the following, each in form and substance satisfactory to the Purchasers and their special counsel, and all of the following events shall have occurred prior to or simultaneous with the Closing hereunder:

(i) A copy of all charter documents of the Company certified by the Secretary of State of California, a certified copy of the resolutions of the Board of Directors and, if required, the stockholders of the Company evidencing approval of this Agreement, the authorization for issuance of the Shares and other matters contemplated hereby, a certified copy of the By-laws of the Company, and certified copies of all documents evidencing other necessary corporate or other action and governmental approvals, if any, with respect to this Agreement and the Shares.

(ii) An opinion of Messrs. Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, in substantially the form attached hereto as EXHIBIT 2.1(b).

(iii) A certificate of the Secretary or an Assistant Secretary of the Company stating the names of the officers of the Company authorized to sign this Agreement, the certificates for the Shares, and the other documents or certificates to be delivered pursuant to this Agreement by the Company or any of its officers, together with the true signatures of such officers.

(iv) A certificate from a duly authorized officer of the Company stating that the representations and warranties of the Company contained in Article III hereof are true and correct and that all conditions required to be performed by the Company prior to or at the Closing have been performed.

(v) An amendment to the Company's existing registration rights in the form attached hereto as Exhibit 2.1(c).

(c) Prior to the Closing, the Company shall have obtained all consents or waivers, if any, necessary to execute and deliver this Agreement, issue the Shares and carry out the transactions contemplated hereby and thereby, and all such consents and waivers shall be in full force and effect. All corporate and other action and governmental filings necessary to effectuate the terms of this Agreement, the Shares and other agreements and instruments executed and delivered by the Company in connection herewith shall have been made or taken, except for any post-sale filing that may be required under federal and state securities laws. In addition to the documents set forth above, the Company shall have provided the Purchasers with any other information or copies of documents that they may reasonably request.

2.2 CONDITIONS TO COMPANY'S OBLIGATIONS. The obligation of the Company to sell the Shares at the Closing is subject to the following conditions:

(a) Each of the representations and warranties of each of the Purchasers set forth in Article VI hereof shall be true on the date of the Closing.

(b) The Company shall have obtained all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement.

(c) At the time of the Closing, the purchase of the Shares by the Purchasers hereunder shall be legally permitted by all laws and regulations to which the Purchasers and the Company are subject.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Except as set forth in EXHIBIT 3.0, the Company represents and warrants as follows:

3.1 ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction in which it is organized and has all requisite corporate power and authority for the ownership and operation of its properties and for the carrying on of its business as now conducted and as now proposed to be conducted. The Company is duly licensed or qualified and in good standing as a foreign

corporation authorized to do business in all jurisdictions in which the character of the property owned or leased, or the nature of the activities conducted, by it makes such licensing or qualification necessary, or the failure to be so qualified will not have a material adverse effect on the condition, assets, liabilities, earnings or business of the Company.

3.2 CORPORATE ACTION. The Company has all necessary corporate power and has taken all corporate action required to make all the provisions of this Agreement, the Shares and any other agreements and instruments executed in connection herewith and therewith the valid and enforceable obligations they purport to be. The issuance of the Shares is not subject to preemptive or other preferential rights, or similar statutory or contractual rights, either arising pursuant to any agreement or instrument to which the Company is a party or which are otherwise binding upon the Company.

3.3 GOVERNMENTAL APPROVALS. Except for filings required by federal or state securities laws, no authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the offer, issuance, sale, execution or delivery by the Company, of the Shares or the performance by the Company of its obligations under the Agreement.

3.4 LITIGATION. There is no litigation or governmental proceeding or investigation pending or threatened against the Company or the Subsidiaries affecting any of their properties or assets, or, to the knowledge of the Company, against any officer, or Key Employee of the Company, that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company or the Subsidiaries or any of their material properties or assets, or that might call into question the validity of this Agreement, any of the Shares, or any action taken or to be taken pursuant hereto or thereto, nor, to the knowledge of the Company, has there occurred any event or does there exist any condition on the basis of which any litigation, proceeding or investigation might properly be instituted that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs of the Company, the Subsidiaries or any of their material properties and assets. Neither the Company, any Subsidiary nor, to the knowledge of the Company, any officer of the Company or the Subsidiaries, is in default with respect to any order, writ, injunction, decree, ruling or decision of any court, commission, board or other government agency that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or conditions of the Company or any of their material properties or assets. The foregoing sentences

include, without limiting their generality, actions pending or, to the knowledge of the Company, threatened (or any basis therefor known to the Company) involving the prior employment of employees of the Company or, any of its Subsidiaries in any of the Company's or any Subsidiary's business of any information or techniques allegedly proprietary to any of their former employers.

3.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company and the Subsidiaries are in compliance in all respects with the terms and provisions of this Agreement and of their charters and by-laws and in all material respects with the terms and provisions of each mortgage, indenture, lease, agreement and other instrument relating to obligations of the Company and the Subsidiaries in excess of $50,000, individually or in the aggregate, and, of all judgments, decrees, governmental orders, statutes, rules or regulations by which it is bound or to which its properties or assets are subject the noncompliance with which would have a material adverse effect on the business, operations, or affairs or conditions of the Company. There is no term or provision in any of the foregoing documents and instruments that materially adversely affects the business, assets or financial condition of the Company or the Subsidiaries. Neither the execution and delivery of this Agreement or the Shares, nor the consummation of any transaction contemplated hereby or thereby, has constituted or resulted in or will constitute or result in a default or violation of any term or provision in any of the foregoing documents or instruments.

3.6 TITLE TO ASSETS, PATENTS.

(a) The Company and the Subsidiaries have good and marketable title in fee to their fixed assets that are real property, and good and merchantable title to all of their other significant assets, now carried on its books including those reflected in the most recent balance sheet of the Company contained in EXHIBIT 3.7 attached hereto, or acquired since the date of such balance sheet (except personal property disposed of since said date in the ordinary course of business), free of any mortgages, pledges, charges, liens, security interests or other encumbrances. The Company enjoys peaceful and undisturbed possession under all significant leases under which it is operating, and all said leases are valid and subsisting and in full force and effect.

(b) The Company and the Subsidiaries own or have a valid right to use all significant patents, patent rights, licenses, permits, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights being used to conduct their business as now operated and as now proposed to be operated; and, to the best knowledge of the Company, the conduct of their businesses as now operated and as now proposed to be operated does not and will not

conflict in any respects material to the Company and its Subsidiaries considered as a whole with valid patents, patent rights, licenses, permits, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights of others. The Company and the Subsidiaries have no obligation to compensate any Person for the use of any such patents or such rights nor has the Company or any Subsidiary granted to any Person any license or other rights to use in any manner any of such patents or such rights of the Company and the Subsidiaries.

3.7 FINANCIAL INFORMATION. Attached hereto as EXHIBIT 3.7 are true and complete copies of the Consolidated audited financial statements of the Company and its Subsidiaries for the twelve months ended May 31, 1989 and the Company's unaudited unconsolidated financial statements for the seven months ended December 31, 1989 certified by the chief financial officer of the Company. Such financial statements when read together, present fairly the financial position of the Company and its Subsidiaries at the dates thereof and their results of operations for the periods covered thereby and have been prepared in accordance with generally accepted accounting principles consistently applied. The Company and the Subsidiaries have no liability, contingent or otherwise, required to be disclosed in a financial statement prepared in accordance with generally accepted accounting principles which are not disclosed in the aforesaid financial statements or in the notes thereto, that could, together with all such other liabilities, materially affect the financial condition of the Company, nor does the Company have any reasonable grounds to know of any such liability. Except as set forth in the aforesaid audited financial statements or as otherwise set forth in this Agreement since December 31, 1989 (i) there has been no adverse event or occurrence affecting the business, assets or condition, financial or otherwise, or operations of the Company and its Subsidiaries; (ii) neither the business, condition, or operations of the Company, the Subsidiaries nor any of their properties or assets has been adversely affected as the result of any legislative or regulatory change, any revocation or change in any franchise, license or right to do business, or any other event or occurrence, whether or not insured against; and (iii) the Company has not entered into any transaction with respect to, or made any distribution on, its capital stock.

3.8 TAXES. The Company and its Subsidiaries have accurately prepared and timely filed all federal, state and other tax returns required by law to be filed by them, and all taxes shown to be due and all additional assessments have been paid or provision made therefor. To the Company's knowledge, none of the federal income tax returns of the Company and the Subsidiaries have been audited by the Internal Revenue Service. The Company knows of no

significant additional assessments or adjustments pending or threatened against the Company or any Subsidiary for any period, nor of any basis for any such assessment or adjustment.

3.9 ERISA. Neither the Company nor any Subsidiary makes contributions to any pension, defined benefit plans or defined contribution plans for its employees that are subject to the federal Employee Retirement Income Security Act of 1974, as amended ("ERISA").

3.10 TRANSACTIONS WITH AFFILIATES. Except as set forth in the audited financial statements of the Company set forth in EXHIBIT 3.7, there are no loans, leases, royalty agreements or other continuing transactions between the Company and any of the Company's customers or suppliers, and any officer or director of the Company.

3.11 OTHER MATTERS. Neither the Company nor any Subsidiary has (i) become directly or contingently liable (including, without limitation, by way of assumption or guaranty) on any Indebtedness of any other Person or (ii) made or agreed to make any loan, advance or other investment to or in any other Person. The Company and each Subsidiary is in compliance in all material respects with all laws, rules and regulations applicable to them.

3.12 SECURITIES ACT OF 1933. The Company has complied and will comply with all applicable federal or state securities laws in connection with the issuance and sale of the Shares. Neither the Company nor anyone acting on its behalf has offered or will offer to sell the Shares or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any Person, so as to bring the issuance and sale of the Shares under the registration provisions of the Securities Act. Except as set forth in Article V hereof, no Person has demand or other rights to cause the Company to file any registration statement under the Securities Act relating to any securities of the Company or any right to participate in any such registration statement.

3.13 DISCLOSURE. Neither this Agreement, the financial statements incorporated herein as EXHIBIT 3.7, nor any other agreement, document, certificate or written or oral statement furnished to the Purchasers or their special counsel by or on behalf of the Company in connection with the transactions contemplated hereby when taken as a whole contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact within the special knowledge of the Company or any of its executive officers that has not been disclosed herein by them to the Purchasers and that materially adversely affects, or in the

future in their opinion may, insofar as they can now foresee, materially adversely affect the business, properties, assets or condition, financial or otherwise, of the Company. Without limiting the foregoing, the Company has disclosed to the Purchasers any knowledge that it has that there exists, or there is pending or planned, any patent, invention, device, application or principle or any statute, rule, law, regulation, standard or code that would materially adversely affect the condition, financial or otherwise, or the operations of the Company.

3.14 NO BROKERS OR FINDERS. No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon the Company for any commission, fee or other compensation as a finder or broker because of any act or omission by the Company or any agent of the Company; and the Company agrees to indemnify and hold the Purchasers harmless against any such commissions, fees or other compensation.

3.15 CERTAIN AGREEMENTS OF EMPLOYEES.

(a) To the best knowledge of the Company, no Key Employee is a party to or bound by any agreement, contract or commitment, or subject to any restrictions, particularly but without limitation in connection with any previous employment of any such person, which materially and adversely affects, or in the future may (so far as the Company can reasonably foresee) materially and adversely affect, the business or operations of the Company or the right of any such person to participate in the affairs of the Company;

(b) Each Key Employee who has or had access to proprietary information of the Company has executed an employee invention and non-disclosure agreement to the effect and in substantially the form set forth in EXHIBIT 3.15. To the best of the Company's knowledge, no Key Employee or former Key Employee of the Company is, or to the Company's knowledge and belief is expected to be, in violation of the terms of the aforesaid agreements or of any other obligation relating to the use of confidential or proprietary information of the Company.

3.16 CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the date hereof, the Company has a total authorized capitalization consisting of 75,000,000 shares of Common Stock of which 3,526,986 shares are issued and outstanding and 10,000,000 shares of Preferred Stock, none of which is issued or outstanding. In addition, the Company has options exercisable for 299,300 shares of Common Stock issued and outstanding and warrants exercisable for 9,333 shares of Common Stock issued and outstanding. A complete list of the shares of capital stock currently issued and outstanding and the names in which such shares are registered is set forth in EXHIBIT 3.16

hereto. All of the outstanding shares of capital stock of the Company have been duly authorized, are validly issued and are fully paid and nonassessable. All shares of capital stock issuable upon exercise of outstanding options and warrants have been duly authorized and, when issued in accordance with the terms of such options and warrants, will be validly issued, and fully paid and nonassessable. The Shares when issued and delivered in accordance with the terms hereof, will be duly authorized, validly issued and fully paid and nonassessable. Except as set forth in EXHIBIT 3.16 hereto, there are no options, warrants or rights to purchase shares of capital stock or other securities authorized, issued or outstanding, nor is the Company obligated in any other manner to issue shares of its capital stock or other securities. There are no restrictions on the transfer of shares of capital stock of the Company other than those imposed by relevant state and federal securities laws. No holder of any security of the Company is entitled to preemptive or similar statutory or contractual rights, either arising pursuant to any agreement or instrument to which the Company is a party or that are otherwise binding upon the Company. The offer and sale of all shares of capital stock or other securities of the Company issued before the Closing complied with or were exempt from registration or qualification under all federal and state securities laws.

3.17 BOOKS AND RECORDS. The books of account, ledgers, order books, records and documents of the Company and the Subsidiaries accurately and completely reflect all material information relating to the businesses of the Company and the Subsidiaries, the nature, acquisition, maintenance, location and collection of the assets of the Company and the Subsidiaries, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company and the Subsidiaries.

3.18 SUBSIDIARIES. Each of the Company's Subsidiaries is listed in EXHIBIT 3.0 below and the Company has no other Subsidiaries. All issued and outstanding shares of capital stock of each present Subsidiary are owned by the Company and are the validly issued, fully paid and nonassessable shares of each Subsidiary, respectively, and are owned by the Company free and clear of all encumbrances. Except as set forth in the audited financial statements of the Company set forth in EXHIBIT 3.7, there are no outstanding rights, options, warrants, conversion rights or agreements for the purchase or acquisition of any shares of any of the Subsidiaries' capital stock.

3.19 ENVIRONMENTAL PROTECTION. After reasonable inquiry, to its knowledge the Company has obtained all material permits, licenses and other authorizations which are required under federal, state and local laws relating to public health and safety, worker health and safety and pollution or protection of the environment,

including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or hazardous or toxic substances (including petroleum) into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous or toxic substances (including petroleum). After reasonable inquiry, to its knowledge the Company is in compliance with all material terms and conditions of such required permits, licenses and authorizations, and is also in compliance with all other material limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any federal, state or local law or any regulation, code, plan, order, decree or judgment relating to public health and safety, worker health and safety and pollution or protection of the environment the non-compliance with which would have a material adverse affect upon the Company. The Company has not received notice of any claim or action, or threatened claim or action, or any common law or legal liability under any law or regulation related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant or hazardous or toxic substance (including petroleum) which, if adversely decided against or imposed upon the Company, would have a material adverse affect upon the Company.

ARTICLE IV

COVENANTS OF THE COMPANY

4.1 AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING REQUIREMENTS. Without limiting any other covenants and provisions hereof, the Company covenants and agrees that, until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 50,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), it will perform and observe the following covenants and provisions and will cause each Subsidiary to perform and observe such of the following covenants and provisions as are applicable to such Subsidiary:

(a) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge, and cause each Subsidiary to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or business, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all

lawful claims, which, if unpaid, might become a lien or charge upon any properties of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by appropriate proceedings if the Company or Subsidiary concerned shall have set aside on its books adequate reserves with respect thereto as shall be determined by its Board of Directors. Pay and cause each Subsidiary to pay, when due, or in conformity with customary trade terms, all lease obligations, all trade debt, and all other Indebtedness incident to the operations of the Company or its Subsidiaries, except such as are being contested in good faith and by appropriate proceedings if the Company or Subsidiary concerned shall have set abide on its books adequate reserves with respect thereto as shall be determined by its Board of Directors.

(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified, and cause each Subsidiary to qualify and remain qualified, as a foreign corporation in each jurisdiction in which the failure to qualify will have a material adverse effect upon the condition, assets, liabilities, earnings or business of the Company. Preserve and maintain, and cause each Subsidiary to preserve and maintain, all material licenses and other rights to use patents, processes, licenses, trademarks, trade names, inventions, intellectual property rights or copyrights owned or possessed by it and necessary to the conduct of its business.

(c) COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations and orders of any governmental authority, noncompliance with which could materially adversely affect its business or condition, financial or otherwise, except non-compliance being contested in good faith through appropriate proceedings so long as the Company shall have set up sufficient reserves, if any, required under generally accepted accounting principles with respect to such items.

(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and cause each Subsidiary to keep, adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial transactions of the Company and each Subsidiary, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection within its business shall be made.

(e) MAINTENANCE OF PROPERTIES. Maintain and preserve, and cause each Subsidiary to maintain and preserve, all of its properties, necessary or useful in the proper conduct of its business, in good repair, working order and condition, ordinary wear and tear excepted.

(f) NEW DEVELOPMENTS. Use its best efforts to cause all Key Employees of the Company and each Subsidiary to execute appropriate patent assignment agreements to the Company and, where possible and appropriate, to file and prosecute United States and foreign patent applications relating to and protecting such developments on behalf of the Company or such subsidiary.

(g) EMPLOYEE INVENTION AND NON-DISCLOSURE AGREEMENT. Use its best efforts to cause each Key Employee now or hereafter employed by the Company or any Subsidiary promptly to execute an agreement substantially in the form of EXHIBIT 3.15 hereto or in a form approved by the Board of Directors.

(h) BUDGETS AND BOARD APPROVAL. Within ninety (90) days of the commencement of each fiscal year, prepare and submit to, and obtain the approval of a majority of, the Board of Directors of a budget for the upcoming fiscal year, including projections of capital and operating expenses, cash flow, and profits and losses, all itemized in reasonable detail.

(i) FINANCINGS. Promptly, fully and in detail, inform the Board of Directors in advance of any commitments or contracts relating to financing of any nature for the Company or pledge of corporate assets.

(j) OBSERVER RIGHTS. Invite a representative of the Purchasers, which representative shall be designated by the Purchasers, to attend all meetings of its Board of Directors in a non-voting, observer capacity, and, in connection therewith, give such representative copies of all notices, minutes, consents and other materials, financial and otherwise, that it provides to its board of directors.

(k) JAPANESE OFFERING. The Company shall cause Aehr Test Japan, a subsidiary of the Company, to offer and sell equity securities to the Purchasers upon the terms set forth in the Term Sheet attached hereto as Exhibit 4.1(k).

(l) DEBT REPAYMENT. As required pursuant to Exhibit 4.1(l), the Company shall repay any overadvance outstanding with Union Bank upon receipt of funds from the Purchasers at the Closing.

4.2 NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other covenants and provisions hereof, the Company covenants and agrees that, until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 50,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), it will comply with and observe the following covenants and provisions, and will cause each Subsidiary to comply with and observe such of the following covenants and provisions as are applicable to such Subsidiary, and WILL NOT, without the approval of holders of the Shares in accordance with Section 8.2:

(a) DEALINGS WITH AFFILIATES AND OTHERS. Enter into any transaction, including, without limitation, any loans or extensions of credit or royalty agreements, with any officer or director of the Company or any Subsidiary or holder of any class of capital stock of the Company, or any member of their respective immediate families or any corporation or other entity directly or indirectly controlled by one or more of such officers, directors or stockholders or members of their immediate families unless such transaction is approved in advance by a majority of disinterested members of the Board of Directors.

4.3 REPORTING REQUIREMENTS. Until the completion of a Qualified Public Offering, and so long as the Purchasers and/or their partners, own (of record or beneficially) 50,000 shares of Common Stock (such number of shares to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement), the Company will furnish the following to each Purchaser:

(a) as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter of the Company, Consolidated balance sheets of the Company and its Subsidiaries as of the end of such quarter and Consolidated statements of income and retained earnings of the Company and its Subsidiaries for the period ending with such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the prior fiscal year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer of the Company as having been prepared in accordance with generally accepted accounting principles consistently applied, except for the absence of footnotes.

(b) as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Company, a copy of the annual audit report for such year for the Company and its

Subsidiaries, including therein Consolidated (and, to the extent otherwise prepared by the Company, consolidating) balance sheets of the Company and its Subsidiaries as of the end of such fiscal year and Consolidated (and, to the extent otherwise prepared by the Company, consolidating) statements of income and retained earnings and of changes in financial position of the Company and its Subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, all duly certified by an independent public accountant of national standing;

(c) promptly after sending, making available, or filing the same, all reports and financial statements that the Company or any Subsidiary sends or makes available to the stockholders of the Company or the Securities and Exchange Commission; and

(d) all other information respecting the business, properties or the condition or operations, financial or otherwise, of the Company or any of its Subsidiaries that any Purchaser may from time to time reasonably request.

4.4 CONFIDENTIALITY. Any confidential information obtained by any holder of the Shares pursuant to this Agreement shall be treated as confidential and shall not be disclosed to a third party without the consent of the Board of Directors, except that such information shall not be deemed confidential for the purpose of enforcement of this Agreement or valuation of the Shares and except that any such holder may otherwise disclose such information to its partners if such partners agree to be bound by the restrictions contained in this
Section 4.4.

ARTICLE V

REGISTRATION RIGHTS

5.1 "PIGGY-BACK" REGISTRATION. If at any time the Company shall determine to register under the Securities Act (including pursuant to a demand of any stockholder of the Company exercising registration rights) any of its Common Stock (except shares to be issued solely in connection with any acquisition of any entity or business, shares issuable solely upon exercise of stock options, or shares issuable solely pursuant to employee benefit plans), it shall send to each holder of Registrable Shares, written notice of such determination and, if within thirty (30) days after receipt of such notice, such holder shall so request in writing, the Company shall use its best efforts to include in such registration statement all or any part of the Registrable Shares that such holder requests to be registered, except that if, in connection with any offering involving an underwriting of Common Stock to be issued by

the Company, the managing underwriter shall impose a limitation on the number of shares of such Common Stock included in any such registration statement because, in its judgment, such limitation is necessary to effect an orderly public distribution, and such limitation is imposed among all holders of Common Stock exercising their contractual incidental ("piggy back") right to include such Common Stock in the registration statement as provided below on a PRO RATA basis (according to the number of shares of Common Stock held by such holders that are entitled to such "piggy-back" registration rights). In the event of any such limitation, the Company may include in such registration statement only (i) shares of Common Stock to be sold for the Company's account; (ii) Registrable Shares; and (iii) shares of Common Stock the holders of which are entitled to registration pursuant to an agreement with the Company approved by the Board of Directors; provided, that, in the case of clauses (ii) and (iii) of the preceding sentence, such inclusion shall be on the PRO RATA basis hereinabove described. Notwithstanding the foregoing, no such reduction shall be made with respect to securities being offered by the Company for its own account. If any holder of Registrable Shares disapproves of the terms of such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

5.2 EFFECTIVENESS. The Company will use its best efforts to maintain the effectiveness for up to ninety (90) days of any registration statement pursuant to which any of the Registrable Shares are being offered, and from time to time will amend or supplement such registration statement and the prospectus contained therein as and to the extent necessary to comply with the Securities Act and any applicable state securities statute or regulation.

5.3 INDEMNIFICATION OF HOLDERS OF REGISTRABLE SHARES. In the event that the Company registers any of the Registrable Shares under the Securities Act, the Company will indemnify and hold harmless each holder and each underwriter of the Registrable Shares so registered (including any broker or dealer through whom such shares may be sold) and each person, if any, who controls such holder or any such underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them become subject under the Securities Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse each such holder, each such underwriter and each such controlling person, for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended

preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplemented by the Company) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with such registration, unless such untrue statement or omission was made in such registration statement, preliminary or amended, preliminary prospectus or prospectus in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder of Registrable Shares, any such underwriter or any such controlling person expressly for use therein. Promptly after receipt by any holder of Registrable Shares, any underwriter or any controlling person of notice of the commencement of any action in respect of which indemnity may be sought against the Company, such holder of Registrable Shares, or such underwriter or such controlling person, as the case may be, will notify the Company in writing of the commencement thereof, and, subject to the provisions hereinafter stated, the Company shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to such holder of Registrable Shares, such underwriter or such controlling person, as the case may be) and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Company. Such holder of Registrable Shares, any such underwriter or any such controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall not be at the expense of the Company unless the employment of such counsel has been specifically authorized by the Company. The Company shall not be liable to indemnify any person for any settlement of any such action effected without the Company's consent. The Company shall not, except with the approval of each party being indemnified under this Section 5.3, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to the parties being so indemnified of a release from all liability in respect to such claim or litigation.

5.4 INDEMNIFICATION OF COMPANY. In the event that the Company registers any of the Registrable Shares under the Securities Act, each holder of the Registrable Shares so registered will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each underwriter of the Registrable Shares so registered (including any broker or dealer through whom such of the shares may be sold) and each person, if any, who controls the Company within the

meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse the Company and each such director, officer, underwriter or controlling person for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder of Registrable Shares expressly for use therein; PROVIDED, HOWEVER, that such holder's obligations hereunder shall be limited to an amount equal to the proceeds to such holder of the Registrable Shares sold in such registration. Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against such holder of Registrable Shares, the Company will notify such holder of Registrable Shares in writing of the commencement thereof, and such holder of Registrable Shares shall, subject to the provisions hereinafter stated, assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to the Company) and the payment of expenses insofar as such action shall relate to the alleged liability in respect of which indemnity may be sought against such holder of Registrable Shares. The Company and each such director, officer, underwriter or controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall not be at the expense of such holder of Registrable Shares unless employment of such counsel has been specifically authorized by such holder of Registrable Shares.
Notwithstanding the two preceding sentences, if the action is one in which the Company may be obligated to indemnify any holder of Registrable Shares pursuant to Section 5.3, the Company shall have the right to assume the defense of such action, subject to the right of such holders to participate therein as permitted by Section 5.3. Such holder of Registrable Shares shall not be liable to indemnify any person for any settlement of any such action effected without such holder's consent. Such holder shall not, except with the approval of the Company, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof

the giving by the claimant or plaintiff to the party being so indemnified of a release from all liability in respect to such claim or litigation.

5.5 EXCHANGE ACT REGISTRATION. The Company will use its best efforts to file on a timely basis with the Securities and Exchange Commission all information that the Commission may require under either of Section 13 or
Section 15(d) of the Exchange Act and shall use its best efforts to take all action that may be required as a condition to the availability of Rule 144 under the Securities Act (or any successor exemptive rule hereinafter in effect) with respect to the Company's Common Stock. The Company shall furnish to any holder of Registrable Shares forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company as filed with the Securities and Exchange Commission, and (iii) any other reports and documents that a holder may reasonably request in availing itself of any rule or regulation of the Securities and Exchange Commission allowing a holder to sell any such Registrable Securities without registration.

5.6 DAMAGES. The Company recognizes and agrees that the holder of Registrable Shares will not have an adequate remedy if the Company fails to comply with this Article V and that damage will not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by the holder of Registrable Shares or any other person entitled to the benefits of this Article V requiring specific performance of any and all provisions hereof or enjoining the Company from continuing to commit any such breach of this Article V.

5.7 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding Sections of this Article V, the Company is required hereunder to register Registrable Shares, it agrees that it shall also do the following:

(a) Furnish to each selling holder of Registrable Shares such copies of each preliminary and final prospectus and any other documents that such holder may reasonably request to facilitate the public offering of its Registrable Shares;

(b) Use its best efforts to register or qualify the Registrable Shares to be registered pursuant to this Article V under the applicable securities or "blue sky" laws of such jurisdictions as any selling holder may reasonably request; PROVIDED, HOWEVER, that the Company shall not be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to the service of process

in suits other than those arising out of the offer or sale of the securities covered by the registration statement in any jurisdiction where it is not then so subject;

(c) Furnish to each selling holder a signed counterpart of

(i) an opinion of counsel for the Company, dated the effective date of the registration statement, and

(ii) "comfort" letters signed by the Company's independent public accountants who have examined and reported on the Company's financial statements included in the registration statement, to the extent permitted by the standards of the American Institute of Certified Public Accountants,

covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and (in the case of the accountants' "comfort" letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' "comfort" letters delivered to the underwriters in underwritten public offerings of securities, to the extent that the Company is required to deliver or cause the delivery of such opinion or "comfort" letters to the underwriters in an underwritten public offering of securities;

(d) Permit each selling holder of Registrable Shares or his counsel or other representatives to inspect and copy such corporate documents and records as may reasonably be requested by them; and

(e) Furnish to each selling holder, upon request, a copy of all documents filed and all correspondence from or to the Securities and Exchange Commission in connection with any such offering.

5.8 EXPENSES. In the case of a registration under Section 5.1, the Company shall bear all costs and expenses of each such registration, including, but not limited to, printing, legal and accounting expenses, Securities and Exchange Commission filing fees and "blue sky" fees and expenses; PROVIDED, HOWEVER, that the Company shall have no obligation to pay or otherwise bear
(i) any portion of the fees or disbursements of counsel (other than counsel for the Company) for the selling holders of Registrable Shares in connection with the registration of their Registrable Shares, or (ii) any portion of the underwriters' commissions or discounts attributable to the Registrable Shares being offered and sold by the holders of Registrable Shares.

5.9 TRANSFER OF REGISTRATION RIGHTS. The registration rights of the holders of Registrable Shares under this Article V may be transferred without the consent of the Company to any transferee of Registrable Shares that (i) is a partner of a Purchaser, (ii) acquires all of the Registrable Shares held by a Purchaser or (iii) holds 29,000 Registrable Shares (such number to be equitably adjusted whenever there shall occur a stock split, combination, reclassification or other similar event affecting the Common Stock after the date of this Agreement).

5.10 NO SUPERIOR RIGHTS. The Company will not grant registration rights to any Person that are superior to the rights granted hereunder without the prior consent of Purchasers holding at least fifty-one percent (51%) of the Registrable Shares unless the holders of Registrable Shares are also granted such superior rights.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASERS
AND RESTRICTIONS ON TRANSFER

6.1 REPRESENTATIONS AND WARRANTIES BY EACH PURCHASER. Each Purchaser, for that Purchaser alone, represents and warrants to the Company with respect to this purchase as follows:

(a) This Agreement constitutes the Purchaser's valid and legally binding obligation, enforceable in accordance with its terms.

(b) It is experienced in evaluating and investing in high technology companies such as the Company.

(c) It is acquiring the Shares for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Shares to be purchased have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d) It acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act, or unless an exemption from such registration is available. It is aware of the provisions of Rule 144 promulgated under the Securities Act that permit limited resale of Shares purchased in a private placement subject to the satisfaction of certain conditions.

(e) It understands that no public market now exists for any of the securities issued by the Company, and that it is unlikely that a public market will ever exist for the Shares.

(f) It has had an opportunity to discuss the Company's business, management, and financial affairs with the Company's management and to review the Company's facilities. It understands that such discussions, as well as the written information issued by the Company, were intended to describe the aspects of the Company's business and prospects that the Company believes to be material, but that these descriptions were not necessarily thorough or exhaustive.

6.2 LEGENDS. Each certificate representing the Shares shall be endorsed with the following legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

and if imposed by the California Department of Corporations, the following legend:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

The Company need not register a transfer of Shares, unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Shares unless the conditions specified in the foregoing legends are satisfied.

6.3 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend relating to the Securities Act endorsed on a stock certificate pursuant to Section 6.2 of this Agreement and the stop transfer instructions with respect to the Shares represented by such certificate shall be removed and the Company shall issue a certificate without such legend to the holder of such Shares if such Shares are registered under the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available or if such holder provides to the Company an opinion of counsel for such holder of the Shares reasonably satisfactory to the Company, or a

no-action letter or interpretive opinion of the staff of the Securities and Exchange Commission (the "Commission") to the effect that a public sale, transfer or assignment of such Shares may be made without registration and without compliance with any restriction such as Rule 144. The California Commissioner of Corporations legend (if required) will be removed if the Commissioner of Corporations of the State of California has consented to the removal of such legend.

6.4 ADDITIONAL PURCHASES OF COMMON STOCK. The Purchasers covenant and agree that they shall not acquire any additional shares of Common Stock or other equity securities of the Company (other than shares acquired by way of stock splits, stock dividends and the like) from the Company or from other stockholders of the Company without the prior approval of the Board of Directors. This Section 6.4 shall terminate automatically upon the closing of a Qualified Public Offering.

ARTICLE VII

DEFINITIONS AND ACCOUNTING TERMS

7.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Agreement" means this Common Stock Purchase Agreement as from time to time amended and in effect between the parties.

"Board of Directors" shall mean the then present members of the Board of Directors of the Company.

"Company" means and shall include Aehr Test Systems and its successors and assigns.

"Consolidated" when used with reference to any term defined herein means that term as applied to the accounts of the Company and its Subsidiaries consolidated in accordance with generally accepted accounting principles after eliminating intercompany items and minority interests.

"ERISA" shall have the meaning assigned to that term in Section 3.9.

"Exchange Act" means the Securities Exchange Act of 1934, or any similar federal statute, and the rules and regulations of the Securities and Exchange Commission (or of any other Federal

Agency then administering the Exchange Act) thereunder, all as the same shall be in effect at the time.

"Indebtedness" means all obligations, contingent and otherwise, which should, in accordance with generally accepted accounting principles consistently applied, be classified upon the obligor's balance sheet as liabilities, excluding any liabilities in respect of deferred federal or state income taxes, but in any event including, without limitation, liabilities secured by any mortgage on property owned or acquired subject to such mortgage, whether or not the liability secured thereby shall have been assumed, and also including, without limitation, (i) all guaranties, endorsements and other contingent obligations, in respect of Indebtedness of others, whether or not the same are or should be so reflected in said balance sheet, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and (ii) the present value of any lease payments due under leases required to be capitalized in accordance with applicable Statements of Financial Accounting Standards, determined by discounting all such payments at the interest rate determined in accordance with applicable Statements of Financial Accounting Standards.

"Key Employee" means and includes the Chairman of the Board of Directors, the President, any Vice-President and the Treasurer of the Company or any Subsidiary, or any person who is not an officer of the Company or any Subsidiary and is in charge of one or more of the following functions: sales, marketing, production, or engineering and technical development or any other position or employee so designated by the Board of Directors of the Company.

"Ownership percentage" means and includes, with respect to each holder of Registrable Shares for purposes of Section 5.1, the number of Registrable Shares held by such holder divided by the aggregate of the then- outstanding shares of Common Stock of the Company.

"Purchaser" means and shall include the persons listed on
EXHIBIT 1.1.

"Person" means an individual, corporation, partnership, joint venture, trust, or unincorporated organization, or a government or any agency or political subdivision thereof.

"Qualified Public Offering" means and includes the closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Company.

"Registrable Shares" means and includes (i) the Shares, (ii) any other shares of Common Stock acquired by the Purchasers within sixty (60) days of the Closing and (iii) any shares of Common Stock issued on or with respect to the foregoing by way of stock split, stock dividend, recapitalization or the like.

"Securities Act" means the Securities Act of 1933, or any similar Federal statute, and the rules and regulations of the Securities and Exchange Commission (or of any other Federal agency then administering The Securities Act) thereunder, all as the same shall be in effect at the time.

"Shares" shall have the meaning assigned to that term in Section 1.1.

"Subsidiary" or "Subsidiaries" means any corporation, 50% or more of the outstanding voting stock of which shall at the time be owned by the Company or by one or more Subsidiaries, or any other entity or enterprise, 50% or more of the equity of which shall at the time be owned by the Company or by one or more Subsidiaries.

7.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in preparation of the financial statements set forth in EXHIBIT 3.7; and all other financial data submitted pursuant to this Agreement and all financial tests to be calculated in accordance with this Agreement shall be prepared and calculated in accordance with such principles.

ARTICLE VIII

MISCELLANEOUS

8.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of any Purchaser, or any other holder of the Shares in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

8.2 AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this Agreement or the Shares to the contrary notwithstanding, changes in or additions to this Agreement or the Shares may be made, and compliance with any covenant or provision herein or therein set

forth may be omitted or waived, if the Company, (i) shall obtain consent thereto in writing from Persons holding an aggregate of at least sixty percent of the Shares, and (ii) shall, in each such case, deliver copies of such consent in writing to any holders who did not execute the same. Any waiver or consent may be given subject to satisfaction of conditions stated therein and any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

8.3 ADDRESSES FOR NOTICES, ETC. All notices, requests, demands and other communications provided for hereunder shall be in writing (including telegraphic communication) and mailed or telegraphed or delivered to the applicable party at the addresses indicated below or at such other address as shall be designated by such Person in a written notice to the other party complying as to delivery with the terms of this Section.

If to the Company:

Aehr Test Systems
155 Constitution Drive
Menlo Park, CA 94025
Attn: President

with a copy to:

Mario M. Rosati
Wilson, Sonsini, Goodrich & Rosati Two Palo Alto Square, Suite 900 Palo Alto, CA 94306

If to the Purchaser: at the addresses set forth under their respective names on EXHIBIT 1.1 hereto.

If to any other holder of the Shares: at such holder's address for notice as set forth in the register maintained by the Company.

All such notices, requests, demands and other communications shall, when mailed or telegraphed, respectively, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid.

8.4 COSTS, EXPENSES AND TAXES. The Company shall pay any and all stamp and other taxes payable or determined to be payable in connection with the execution and delivery of this Agreement, the Shares, and other instruments and documents to be delivered hereunder or thereunder and agrees to hold the Purchaser harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and filing fees.

8.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Company and the Purchasers and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Purchasers obtained in accordance with Section 8.2 hereof.

8.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made in this Agreement, the Shares, or any other instrument or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof.

8.7 PRIOR AGREEMENTS. With the exception of any applicable confidentiality agreement, this Agreement constitutes the entire agreement between the parties and supersedes any prior understandings or agreements concerning the subject matter hereof.

8.8 SEVERABILITY. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

8.9 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

8.10 HEADINGS. Article, Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

8.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

8.12 FURTHER ASSURANCES. From and after the date of this Agreement, upon the request of the Purchasers, the Company and each Subsidiary shall execute and deliver such instruments, documents and other writings as may be necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the Shares.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

AEHR TEST SYSTEMS

By: /s/ Rhea J. Posedel
    -----------------------------------
    President

JAPAN ASSOCIATED FINANCE CO., LTD.

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Toshiba Building
    10th Floor
    1-1-1 Shibaura, Minato-ku
    Tokyo, Japan 105

JAFCO G-2(A) INVESTMENT
ENTERPRISE PARTNERSHIP

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Japan Associated Finance Co., Ltd.
    Executive Partner

JAFCO G-2(B) INVESTMENT
ENTERPRISE PARTNERSHIP

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Japan Associated Finance Co., Ltd.
    Executive Partner

JAFCO No. 5 INVESTMENT
ENTERPRISE PARTNERSHIP

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Japan Associated Finance Co., Ltd.
    Executive Partner

JAFCO No. 6 INVESTMENT
ENTERPRISE PARTNERSHIP

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Japan Associated Finance Co., Ltd.
    Executive Partner

JAFCO G-3 INVESTMENT
ENTERPRISE PARTNERSHIP

By: /s/ Kunio Takai
    -----------------------------------
    Kunio Takai, President
    Japan Associated Finance Co., Ltd.
    Executive Partner

NIKKO VENTURE CAPITAL CO., LTD.

By: /s/ [illegible]
    -----------------------------------

Title: Attorney-in-Fact
       --------------------------------

THE CENTRAL CAPITAL LIMITED

By: /s/ [illegible]
    -----------------------------------
Title: Attorney-in-Fact
       --------------------------------

                                                NUMBER              AGGREGATE
NAME AND ADDRESS                               OF SHARES          PURCHASE PRICE
----------------                               ---------          --------------

Japan Associated Finance Co., Ltd.               57,715           $  404,005.00
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

JAFCO G-2(A) Investment                          29,000           $  203,000.00
  Enterprise Partnership
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

JAFCO G-2(B) Investment                          29,000           $  203,000.00
  Enterprise Partnership
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

JAFCO No. 5 Investment                           43,000           $  301,000.00
  Enterprise Partnership
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

JAFCO No. 6 Investment                           43,000           $  301,000.00
  Enterprise Partnership
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

JAFCO G-3 Investment                             84,000           $  588,000.00
  Enterprise Partnership
Toshiba Building, 10th Floor
1-1-1 Shibaura, Minato-ku
Tokyo, Japan 105

Nikko Venture Capital Co., Ltd.                  50,000           $  350,000.00
2-7-3 Marunouchi
Chiyoda-Ku, Tokyo
Japan

The Central Capital Ltd.                         50,000           $  350,000.00
1-7-17 Nihonbashi
Chuo-Ku, Tokyo
Japan
                                                -------           -------------

          TOTAL:                                385,715           $2,700,005.00

EXHIBIT 2.1(b)

[Legal Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C.]

February __, 1990

To the Purchasers Listed in
Exhibit 1.1 to the Aehr Test Systems
Common Stock Purchase Agreement
Dated as of February __, 1990

Ladies and Gentlemen:

Reference is made to the Common Stock Purchase Agreement, complete with all listed exhibits thereto, dated as of February __, 1990 (the "Agreement"), by and among Aehr Test Systems, a California corporation (the "Company"), and the persons and entities listed in Exhibit 1.1 to the Agreement (the "Purchasers"), which provides for the issuance by the Company to the Purchasers of shares of Common Stock of the Company, without par value (the "Shares"). This opinion is rendered to you pursuant to Section 2.1(b)(ii) of the Agreement, and all terms used herein have the meanings defined for them in the Agreement unless otherwise defined herein.

We have acted as counsel for the Company in connection with the negotiation of the Agreement and the issuance of the Shares. As such counsel, we have made such legal and factual examinations and inquiries as we have deemed advisable or necessary for the purpose of rendering this opinion. In addition, we have examined originals or copies of documents, corporate records and other writings which we consider relevant for the purposes of this opinion. In such examination we have assumed the genuineness of all signatures on original documents, the conformity to original documents of all copies submitted to us and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof.

As used in this opinion, the expression "to our knowledge" with reference to matters of fact means that, after an examination of documents in our files and documents made available to us by the Company and after inquiries of officers of the Company, we find no reason to believe that the opinions expressed herein are factually incorrect; but beyond that we have made no independent factual investigation for the purpose of rendering this opinion.

For purposes of this opinion, we are assuming that you have all requisite power and authority, and have taken any and all necessary corporate or partnership action, to execute and deliver the Agreement, and we are assuming that the representations and warranties made by the Purchasers and the Company under the Agreement are true and correct.

The opinions hereinafter expressed are subject to the following qualifications:

(a) We express no opinion as to the effect of applicable bankruptcy and other similar laws affecting the rights of creditors generally;

(b) We express no opinion as to the effect of rules of law governing specific performance, injunctive relief or other equitable remedies;

(c) We express no opinion as to compliance with applicable anti-fraud provisions of federal or state securities laws;

(d) We express no opinion as to the enforceability of the indemnification provisions set forth in Section 5.3 of the Agreement to the extent the provisions thereof may be subject to limitations of public policy; and

(e) We are members of the Bar of the State of California and, except as set forth in paragraph 7 below with respect to the securities laws of other states, we are not expressing any opinion as to any matter relating to the laws of any jurisdiction other than the laws of the United States of America and the laws of the State of California. To the extent this opinion addresses applicable securities laws of states other than the State of California, we have not retained nor relied on the opinion of counsel admitted to the bar of such states, but rather have relied on compilations of the securities laws of such states contained in looseleaf reporting services presently available to us.

Based upon and subject to the foregoing, we are of the opinion that:

1. The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of California and is in good standing under such laws. The Company has requisite corporate power to own and operate its properties and assets, and to carry on its business as presently conducted. The Company is qualified to do business as a foreign corporation in each jurisdiction where such qualification is presently required and the failure to so qualify would have a material adverse effect on the Company.

2. The Company has all requisite legal and corporate power to execute and deliver the Agreement, to sell and issue the Shares thereunder and to carry out and perform its obligations under the terms of the Agreement.

3. The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. Immediately prior to the Closing, 3,526,986 shares of Common Stock and no shares of Preferred Stock were outstanding. All such issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and are free of any preemptive or similar rights contained in the Articles of Incorporation or Bylaws of the Company. As of the date hereof the Company has outstanding options exercisable for 299,300 shares of Common Stock and warrants exercisable for 9,333 shares of Common Stock. The Shares issued under the Agreement are validly issued, fully paid and nonassessable and free of any liens, encumbrances and preemptive or similar rights except as specifically provided in the Agreement; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth in the Agreement. To our knowledge, except for rights described in the Agreement and the Exhibits thereto, there are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of capital stock or other securities of the Company, or any other agreements to issue any such securities or rights.

4. All corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance of the Agreement by the Company, the authorization, sale, issuance and delivery of the Shares and the performance of the Company's obligations under the Agreement has been taken. The Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms.

5. The Company is not in violation of any term of its Articles of Incorporation or Bylaws, or, to our knowledge and except as set forth in the Agreement, in any material respect of any term or provision of any material contract, agreement, instrument, judgment or decree binding upon the Company. The execution, delivery and performance of and compliance with the terms of the Agreement, and the issuance of the Shares, do not violate any provision of the Articles of Incorporation or Bylaws, or, to our knowledge, any provision of any applicable federal, state or local law, rule or regulation. To our knowledge, the execution, delivery and performance of and compliance with the Agreement, and the issuance of the Shares have not resulted and will not result in any violation of,

or conflict with, or constitute a default under, any material contract, agreement, instrument, judgment or decree binding upon the Company.

6. Except as identified in the Agreement, to our knowledge, there are no actions, suits, proceedings or investigations pending against the Company or its properties before any court or governmental agency (nor, to our knowledge, is there any written threat thereof), which, either in any case or in the aggregate, might result in any material adverse change in the business or financial condition of the Company or any of its properties, or in any material impairment of the right or ability of the Company to carry on its business as now conducted or in any material liability on the part of the Company, or which questions the validity of the Agreement or any action taken or to be taken by the Company in connection therewith.

7. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of the Agreement, or the offer, sale or issuance of the Shares or the consummation of any other transaction contemplated thereby, except qualification (or taking such action as may be necessary to secure an exemption from qualification, if available) of the offer and sale of the Shares under the California Corporate Securities Laws and other applicable securities laws (but excluding jurisdictions outside of the United States), filings for which have been accomplished and are effective, except filings which may be made after the date hereof and which the Company has agreed to make in a timely manner.

8. Subject to the accuracy of the Purchasers' representations in
Section 6.1 of the Agreement and their responses (if any) to the Company's inquiries, the offer, sale and issuance of the Shares to be issued in conformity with the terms of the Agreement constitute transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended.

This opinion is furnished to the Purchasers solely for their benefit in connection with the purchase of the Shares, and may not be relied upon by any other person without prior written consent.

Very truly yours,

WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation

EXHIBIT 2.1(c)

AEHR TEST SYSTEMS

AMENDMENT TO REGISTRATION RIGHTS

Aehr Test Systems (the "Company") intends to enter into a common stock purchase agreement (the "Jafco Agreement") with Jafco America Ventures, Inc., and certain other entities (the "Purchasers") providing for the issuance and sale by the Company of shares of Common Stock of the Company to the Purchasers. The representative of the Purchasers has made it a condition to the execution of the Agreement by the Purchasers that this Amendment to Registration Rights ("Amendment") be duly executed.

Pursuant to Section 6.8 of the Capital Stock Investment Agreement dated April 12, 1984 (the "1984 Agreement"), the Company and the undersigned holder of a majority of the Restricted Securities (as defined in the 1984 Agreement) agrees to the amendment of paragraph 5.3 of the 1984 Agreement, to read in full as set forth in Exhibit I hereto.

This Amendment shall be conditioned and effective upon the closing of the Jafco Agreement.

AEHR TEST SYSTEMS                       MAYFIELD III


By                                      By
  ----------------------------           ------------------------------
     Executive Officer                            General Partner

                                    EXHIBIT I

5.3 REQUESTED REGISTRATION.

(a) If at any time the Company shall be requested by the holders of not less than 50% of the total number of shares of Restricted Securities, the Company shall promptly, and in any case within ten (10) days, give written notice of such proposed registration to all holders of Restricted Securities. Thereupon the Company shall as expeditiously as possible use its best efforts to effect the registration on Form S-1 (or on a form of general use then in effect under the Act) of the shares of Restricted Securities which the Company has been requested to register (i) in such request and (ii) in any response to such notice given to the Company within twenty (20) days after the Company's giving of such notice, in order to permit the sale or other disposition of such shares in accordance with the intended method of sale or other disposition given in the request and in any such response.

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(a). The Company shall not be required to effect a registration statement under this paragraph 5.3(a) during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(b) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(b) or 5.4.

The Company may include in the registration under this paragraph 5.3(a) any other shares of Capital Stock (including issued and outstanding shares of Capital Stock as to which the holders thereof have contracted with the Company for "piggyback" registration rights). However, if the offering of the Restricted Securities is proposed to be underwritten on a firm commitment basis (i) the Company (if it is including shares in the registration for its own account) and the holders of any other shares proposed to be included in the registration ("Other Shares") must agree to include such shares in the underwriting on the same terms and conditions as the holders of Restricted Securities, and (ii) if the managing underwriter(s) determines that marketing considerations require a limitation of the total number of shares to be included in the registration, the managing underwriter(s) will determine the number of shares to be included in the registration for the account of the Company (if any) and the total number of shares to be included in the registration for the account of all others (including the holders of Restricted Securities), which total number shall then be allocated pro rata among such shareholders according to the number of shares owned by each of them. All other shares shall be excluded from the registration.

(b) In addition to the registration rights granted in paragraph 5.3(a), if a registration may be effected by the Company on Form S-3 or a similar short-form registration statement, and the Company shall be requested by the holders of not less than thirty percent (30%) of the total number of shares of Restricted Securities, the Company shall, as expeditiously as possible, use its best efforts to effect the registration on Form S-3 or a similar short-form registration statement of the shares of Restricted Securities which the Company has been requested to register in such request. The notice, underwriting and cut-back provisions set forth in paragraph 5.3(a) shall also apply to any registration pursuant to this paragraph 5.3(b).

The Company shall be obligated to have only one (1) registration statement declared effective pursuant to this paragraph 5.3(b), and the rights granted by this paragraph 5.3(b) may not be exercised during the first one hundred twenty (120) days after the effective date of any registration statement filed by the Company under paragraph 5.3(a) or 5.4 hereof if the Company has complied with the provisions of paragraph 5.3(a) or 5.4.

2.

EXHIBIT 3.0

SCHEDULE OF EXCEPTIONS

This Schedule of Exceptions, dated as of February 8, 1990, is made and given pursuant to Article 3 of the Aehr Test Systems Common Stock Purchase Agreement dated February 8, 1990 (the "Agreement"). The section numbers in this Schedule of Exceptions correspond to the section numbers in the Agreement; however, any information disclosed herein under any section number shall be deemed to be disclosed and incorporated into any other section number under the Agreement where such disclosure would be appropriate. Any terms defined in the Agreement shall have the same meaning when used in this Schedule of Exceptions as when used in the Agreement unless the context otherwise requires.

3.5 COMPLIANCE WITH OTHER INSTRUMENTS.

Both the agreement with Dana Commercial Credit and Equitable Lomas Leasing referenced below contain provisions of default including a cross default clause. If the Company's default on its line of credit with Union Bank caused Union Bank to accelerate such line of credit (see "Line of Credit" below), the Company would be in default of both agreements.

3.6 TITLE TO ASSETS, PATENTS.

All of the Company's property and equipment in the U.S. is pledged as collateral under term debt agreements with Equitable Lomas Leasing, Dana Commercial Credit and various leasing companies under capital lease obligations. The Company's outstanding principle balance due Equitable Lomas Leasing at December 31, 1989 was $1,432,213 and is evidenced by a promissory note bearing interest at 12.8% per year. This loan is payable in equal monthly installments of $48,146 through December 1992. The outstanding principle balance due Dana Commercial Credit at December 31, 1989 was $750,882 and is evidenced by a promissory note bearing interest at 12.55% per year. The loan is payable in equal monthly installments of $17,119 through December 1994.

Capital lease obligations as of December 31, 1989 of $513,000 consist of various leases payable in installments through fiscal 1994 at a weighted average interest rate of 11.3% per year.

3.12 SECURITIES ACT OF 1933. The holders of Restricted Securities, as defined in the Capital Stock Investment Agreement dated April 12, 1984, as amended, have the registration rights set forth in paragraph 5 thereof. The holders of Registrable Shares, as defined in the Stock Purchase Agreement dated September 18, 1985, have the registration rights set forth in Article V thereof.

3.13 DISCLOSURE

PROJECTIONS

No representation or warranty is made concerning the financial projections provided to Purchasers, except that they were prepared in good faith based on assumptions which the Company believes to be reasonable. Projections of future financial results for a company in the semiconductor industry are inherently subject to substantial risks of inaccuracy. No assurance can be given that the assumptions on which projections are based will prove to be correct. Variations from the projections could be substantial and adverse.

The Company's projections depend on a number of factors including present backlog, expected future orders and shipment of new burn-in test equipment being developed and built by the Company under contract with IBM (the "Wide I/0"). (See "Contract with IBM" below.) The Company has experienced declining order rates and declining backlog over the last four quarters as shown below:

                                          In Millions
                                          -----------
Quarter Ended                       Orders             Backlog
------------------------------------------------------------------

November 30, 1988                   $10.1              $20.0
February 28, 1989                   $12.8              $20.8
May 31, 1989                        $12.3              $20.9
August 31, 1989                     $ 6.5              $15.9
November 30, 1989                   $ 6.3              $13.9

The Company includes in backlog orders to which a purchase order number has been assigned by the customer and which are expected to be shipped within one year. Orders are subject to cancellation by the customer with limited charges. Included in the backlog are orders from IBM for Wide I/O systems totaling approximately $4 Million.

The Company's projections contain revenues for which purchase orders have not yet been received by the Company. Also included in the Company's projection for the six month period ending May 31, 1990 are the revenues expected from the shipment of two Wide I/O systems to IBM totaling $2,400,000. The Company has experienced delays in completing this project. Further delays in completing the Wide I/O project and delays in receiving purchase orders for other shipments in the projection would result in significantly lower revenues and could lead to a material loss in each of the quarters ending February 28, 1990 and May 31, 1990, and possibly result in a loss for the fiscal year ending May 31, 1990.

CONTRACT WITH IBM

Included in work-in-process at May 31, 1989 and November 30, 1989 are deferred costs of $1,673,000 and $2,360,389 respectively, related to the Wide I/O project with IBM. Deferred costs primarily include manufacturing direct material, direct labor

and overhead and tooling, and exclude research and development that is expensed as incurred. This production contract is accounted for under the units of delivery method. Development problems have been experienced, which have delayed shipment of the equipment. The latest scheduled delivery date was August 15, 1989. Additional development problems could be encountered in the future, which could further delay shipment and possibly lead to order cancellations. Initial product acceptance procedures were expected to commence in December 1989 but have been delayed until February 1990. The contract is subject to cancellation by the customer for noncompliance and the Company may incur a material loss if the contract is canceled. Related progress payments received under the contract of $197,000 included in customer deposits as of May 31, 1989, and $874,000 received during June 1989, might be refundable in the event of the customer's cancellation of the contract.

QUARTERLY LOSSES

The Company incurred an after tax loss of $245,000 in its quarter ended November 30, 1989 and is projecting a loss in its quarter ending February 28, 1990. For the seven month period ended December 31, 1989 the Company incurred an after tax loss of $449,000. The Company could incur losses in the future.

LINE OF CREDIT

On September 20, 1989, the Company renewed its line of credit agreement with Union Bank. This agreement, renewable again on September 15, 1990, provides for maximum borrowings of up to the lesser of $5,000,000 or 80% of eligible accounts receivable (borrowing base formula), including a maximum of $500,000 in standby letters of credit. Borrowings under the agreement bear interest at 0.75% in excess of the bank's reference rate and are collateralized by accounts receivable, inventories, certain property and equipment and other assets of the Company. Under this agreement, the Company is required to maintain certain financial ratios, profitability on a quarterly basis and an average compensating balance of $200,000.

The Company is currently in default of the profitability covenant because it incurred an after tax loss of $241,000 in its U.S. operations for the quarter ended November 30, 1989. The Company is forecasting an after tax loss of over $400,000 in its U.S. operations for the quarter ending February 28, 1990 and will remain in default of the profitability covenant. In addition, the Company is currently in default of its borrowing base limitation. As of December 31, 1989, the Company's borrowings under its line of credit were $2,425,000 which was in excess of the amount available under the borrowing base formula by approximately $500,000. The Company's target cash balance in the United States is approximately $1,000,000. In order to maintain this target balance, the Company is forecasting that its borrowings will remain in excess of the amount permitted by the formula through May 31, 1990 and that the excess amount will exceed $1,300,000 during that period. The Company has negotiated with the Bank a conditional waiver of the profitability covenant, the current default and the borrowing base

limit, a copy of which is attached as Exhibit 4.1(l) to the Agreement.

The proceeds from the sale of stock offered hereby will be used to repay the Company's bank line of credit to cure the default of the borrowing base. The Company believes it will be able to maintain its line of credit under its current terms. However, loss of the line of credit with Union Bank may require the Company to raise additional equity capital if a bank line of credit could not be obtained from alternative sources. There is no assurance that the Company could raise such equity capital on favorable terms.

SOLE SOURCE COMPONENTS

The Company is dependent on several vendors as sole suppliers. One of these suppliers, Texas Instruments, has informed the Company that it will no longer manufacture two integrated circuits which are used in large quantities in all of the Company's older model dynamic and test burn-in systems. In 1989, the Company entered into an agreement with Arrow Kierrulff (acting as Texas Instruments distributor) to purchase a two to three year supply of these circuits amounting to a total purchase order commitment of $717,000. The Company has taken partial delivery on the contract and as of December 31, 1989 had an excess supply of parts over current demand of $343,000 in inventory. The Company is currently negotiating deferral of shipments of the balance of the contract of $404,000 in excess parts scheduled for delivery monthly through June of 1990.

These integrated circuits are no longer used in the industry and the Company is the only major customer for these parts. No reserve for loss or obsolescence has been recorded in the Company's financial statements for this contract or for the excess inventory because the Company believes it will use all of the parts in its burn-in systems sold in future years, and in support of its installed base of over 1,000 systems.

3.18 SUBSIDIARIES. The Company holds 78.6% of the outstanding stock and has rights to purchase all of the minority interest of Aehr Test Systems, Japan, a Japanese corporation.

EXHIBIT 3.7

CERTIFICATE OF CHIEF FINANCIAL OFFICER

OF

AEHR TEST SYSTEMS

The undersigned Acting Chief Financial Officer hereby certifies to the items below. Capitalized terms shall have the meanings assigned to them in the Common Stock Purchase Agreement dated February 26, 1990, between Aehr Test Systems and certain Purchasers (the "Agreement").

1. She is the Acting Chief Financial Officer of Aehr Test Systems, a California corporation.

2. Attached hereto are true and complete copies of the Consolidated audited financial statements of the Company and its Subsidiaries for the twelve months ended May 31, 1989 and the Company's unaudited unconsolidated financial statements for the seven months ended December 31, 1989.

IN WITNESS WHEREOF, the undersigned has executed this certificate this 26th day of February, 1990.

                                                NUMBER              AGGREGATE
NAME AND ADDRESS                               OF SHARES          PURCHASE PRICE
----------------                               ---------          --------------

Jafco American Ventures, Inc.                    12,000             Y42,000,000
555 California Street
24th Floor, Suite 2450
San Francisco, CA  94104

Nikko Venture Capital Co., Ltd.                   2,000             Y 7,000,000
2-7-3 Marunouchi
Chiyoda-Ku, Tokyo
Japan

The Central Capital Ltd.                          2,000             Y 7,000,000
1-7-17 Nihonbashi
Chuo-Ku, Tokyo
Japan
                                               --------             -----------

          TOTAL:                                 16,000             Y56,000,000

ASSETS

CURRENT ASSETS:
  CASH                                                     $4,267
  ACCOUNTS RECEIVABLE                                       9,075
  INVENTORY                                                13,444
  OTHER CURRENT ASSETS                                      1,342
                                                         --------
     TOTAL CURRENT ASSETS                                  28,128

FIXED ASSETS                                                3,674
OTHER ASSETS                                                1,270
                                                         --------
 TOTAL ASSETS                                             $33,072
                                                         --------
                                                         --------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  NOTES PAYABLE                                            $7,813
  ACCOUNTS PAYABLE                                          5,957
  ACCRUED EXPENSES                                          1,617
  CUSTOMER DEPOSITS                                         1,129
  ACCRUED INCOME TAXES                                        150
                                                         --------
     TOTAL CURRENT LIABILITIES                             16,666

LONG TERM LIABILITIES                                       2,922
MINORITY INTEREST                                             821
                                                         --------
       TOTAL LIABILITIES                                   20,409
                                                         --------
STOCKHOLDERS' EQUITY:
  CAPITAL STOCK                                             3,530
  RETAINED EARNINGS (PRIOR)                                 8,625
  RETAINED EARNINGS (CURRENT)                                (449)
  TRANSLATION ADJUSTMENT                                      957
                                                         --------
       TOTAL STOCKHOLDERS' EQUITY                          12,663
                                                         --------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                                    $33,072
                                                         --------
                                                         --------

                                AEHR TEST SYSTEMS
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      SEVEN MONTHS ENDED DECEMBER 31, 1989

                                   (UNAUDITED)

($ in '000s)

                                            ACTUAL      %
                                          --------     ----
REVENUE                                    $21,082      100%

COST OF GOODS SOLD                          11,843       56%
                                          --------     ----
GROSS PROFIT                                 9,239       44%

OPERATING EXPENSES:
    RESEARCH & DEVELOPMENT                   3,586       17%
    SELLING, GENERAL & ADMIN                 5,602       27%
                                          --------     ----
TOTAL OPERATING EXPENSES                     9,188       44%
                                          --------     ----
OPERATING PROFIT (LOSS)                         51        0%

INTEREST, NET                                  392        2%
OTHER (INCOME) EXPENSE                          69        0%
                                          --------     ----
TOTAL OTHER (INCOME) EXPENSE                   461        2%
                                          --------     ----
PROFIT BEFORE TAXES AND
    MINORITY INTEREST                         (410)      -2%

TAX PROVISION                                    6        0%
                                          --------     ----
PROFIT BEFORE MINORITY INTEREST               (416)      -2%

MINORITY INTEREST                               33        0%
                                          --------     ----
NET INCOME (LOSS)                            ($449)      -2%
                                          --------     ----
                                          --------     ----

AEHR TEST SYSTEMS AND SUBSIDIARIES

REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

as of May 31, 1988 and 1989
and for each of the three years
in the period ended May 31, 1989

[Letterhead of Coopers & Lybrand, Certified Public Accountants]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders
Aehr Test Systems:

We have audited the accompanying consolidated balance sheets of Aehr Test Systems and Subsidiaries as of May 31, 1988 and 1989 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended May 31, 1989. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aehr Test Systems and Subsidiaries as of May 31, 1988 and 1939, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 1989, in conformity with generally accepted accounting principles.

                                        /s/ COOPERS & LYBRAND


San Jose, California
July 7, 1989, except for Notes 2 and 15,
   for which the dates are September 30, 1989
   and September 20, 1989, respectively

                             ASSETS                                             1988           1989
                                                                                ----           ----
                                                                                   (in thousands,
                                                                                 except share data)
Current assets:
   Cash and cash equivalents                                                  $ 2,877        $ 2,826
   Short-term cash deposits                                                     1,237            211
   Accounts receivable (less allowance for doubtful
       accounts of $127 and $136 at 1988 and 1989,
       respectively)                                                            8,972         13,367
   Inventories                                                                  8,786         11,560
   Refundable income taxes                                                        582            133
   Deferred income taxes                                                                         671
   Other                                                                          184            250
                                                                              -------        -------
          Total current assets                                                 22,638         29,018

Property and equipment, net                                                     3,917          3,985
Other assets, net                                                                 792          1,326
                                                                              -------        -------

             Total assets                                                     $27,347        $34,329
                                                                              -------        -------
                                                                              -------        -------
              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable -- banks                                                       7,357          7,275
   Current portion of long-term debt and capital lease
       obligations                                                                               555
   Accounts payable                                                             4,321          6,615
   Accrued expenses                                                             1,472          2,050
   Customer deposits                                                            1,478            389
   Income taxes payable                                                                        1,216
                                                                              -------        -------
          Total current liabilities                                            14,628         18,100

Long-term debt and capital lease obligations, net of
       current portion                                                                         1,679

Deferred income taxes                                                             576            825
Minority interest in subsidiary                                                   983            797
                                                                              -------        -------
          Total liabilities                                                    16,187         21,401
                                                                              -------        -------
Contingencies and commitments (Notes 2, 7 and 9).

Stockholders' equity:
   Preferred stock, $.01 par value:
       Authorized:  10,000,000 shares:
       Issued and outstanding:  none
   Common stock, $.01 par value:
       Authorized:  75,000,000 shares;
       Issued and outstanding:  3,513,077 shares and
          3,526,986 shares at 1988 and 1989,
          respectively                                                             35             35
   Additional paid-in capital                                                   3,411          3,595
   Notes receivable for capital stock                                            (150)
   Retained earnings                                                            6,768          8,525
   Translation adjustment                                                       1,096            773
                                                                              -------        -------
          Total stockholders' equity                                           11,160         12,928
                                                                              -------        -------

             Total liabilities and stockholders' equity                       $27,347        $34,329
                                                                              -------        -------
                                                                              -------        -------

The accompanying notes are an integral part of these consolidated financial statements.

                                                                1987         1988         1989
                                                                ----         ----         ----
                                                             (in thousands, except per share data)
Net sales                                                      $24,547      $26,323      $41,828
                                                               -------      -------      -------
Costs and expenses:
     Cost of goods sold                                         15,938       15,185       21,774
     Research and development                                    5,141        5,303        7,533
     Selling, general and administrative                         6,774        6,780        8,259
                                                               -------      -------      -------
                                                                27,853       27,268       37,566
                                                               -------      -------      -------
Income (loss) from operations                                   (3,306)        (945)       4,262
Interest expense                                                  (351)        (485)        (730)
Interest income                                                    210          272           84
                                                               -------      -------      -------
          Income (loss) before income taxes,
               minority interest in subsidiary
               and extraordinary credit                         (3,447)      (1,158)       3,616

Provision (benefit) for income taxes                            (1,388)        (445)       1,812
                                                               -------      -------      -------
          Income (loss) before minority
               interest in subsidiary and
               extraordinary credit                             (2,059)        (713)       1,804

Minority interest in net income (loss)
     of subsidiary                                                (277)         113          238
                                                               -------      -------      -------
          Income (loss) before extraordinary
               credit                                           (1,782)        (826)       1,566

Extraordinary credit -- tax benefit
     from utilization of operating
     loss carryforwards                                                         208          291
                                                               -------      -------      -------

            Net income (loss)                                  $(1,782)     $  (618)     $ 1,857
                                                               -------      -------      -------
                                                               -------      -------      -------
Net income (loss) per common and common
     equivalent share:
  Before extraordinary credit                                    $(.51)       $(.23)        $.45
  Extraordinary credit                                                          .06           .8
                                                               -------      -------      -------

                                                                 $(.51)       $(.17)        $.53
                                                               -------      -------      -------
                                                               -------      -------      -------
Weighted average number of common and common
     equivalent shares used in per share
     calculations                                                3,508        3,531        3,528
                                                               -------      -------      -------
                                                               -------      -------      -------

The accompanying notes are an integral part of these consolidated financial statements.

                                                                                        Notes
                                                      Common Stock      Additional   Receivable
                                                      ------------        Paid-in    for Capital   Retained   Translation
                                                    Shares     Amount     Capital       Stock      Earnings   Adjustment     Total
                                                    ------     ------   ----------   -----------   --------   -----------    -----
                                                                           (in thousands, except share data)
Balances, June 1, 1986                             3,489,680    $ 35      $ 3,194      $ (242)     $ 9,168       $ 444     $ 12,599
  Issuance of common stock:
    Fiscal 1986 contribution to employee stock
        bonus plan                                    18,965                  190                                               190
    To employees                                         500                    5                                                 5
  Repurchase of common stock from employees             (550)                  (8)                                               (8)
  Issuance of warrants                                                          9                                                 9
  Net loss                                                                                          (1,782)                  (1,782)
  Translation adjustment                                                                                           323          323
                                                   ---------    ----      -------      ------      -------       -----     --------

Balances, May 31, 1987                             3,508,595      35        3,390        (242)       7,386         767       11,336
  Issuance of common stock to employees               30,003                  170                                               170
  Repurchase of common stock:
    From employee stock bonus plan                   (13,321)                 (76)                                              (76)
    From employees                                   (12,200)                 (73)         73                                    --
  Repayment of notes receivable                                                            19                                    19
  Net loss                                                                                            (618)                    (618)
  Translation adjustment                                                                                           329          329
                                                   ---------    ----      -------      ------      -------       -----     --------

Balances, May 31, 1988                             3,513,077      35        3,411        (150)       6,768       1,096       11,160
  Issuance of common stock to employees               49,909                  300                                               300
  Repurchases of common stock from employee
        stock bonus plan                             (11,000)                 (66)                                              (66)
  Surrender of common stock and cancellation of
        related note receivable                      (25,000)                 (50)        150         (100)                      --
  Net income                                                                                         1,857                    1,857
  Translation adjustment                                                                                          (323)        (323)
                                                   ---------    ----      -------      ------      -------       -----     --------

Balances, May 31, 1989                             3,526,986     $35     $  3,595       $  --       $8,525        $773      $12,928
                                                   ---------    ----      -------      ------      -------       -----     --------
                                                   ---------    ----      -------      ------      -------       -----     --------

The accompanying notes are an integral part of these consolidated financial statements.

                                                                1987         1988         1989
                                                                ----         ----         ----
                                                                        (in thousands)
Cash flows from operating activities:
  Net income (loss)                                            $(1,782)      $ (618)      $1,857
  Adjustments to reconcile net income (loss)
      to net cash provided by (used in) operating
      activities:
    Minor interest in subsidiary                                  (277)         113          238
    Depreciation and amortization                                  956        1,276        1,324
    Decrease (increase) in accounts receivable                   1,800       (2,314)      (5,407)
    Decrease (increase) in inventories                           2,585       (2,600)      (3,111)
    Decrease (increase) in recoverable income
        taxes and other current assets                          (1,023)         599          312
    Increase in accounts payable                                   272        1,102        2,824
    Increase in accrued expenses, income taxes
        payable and customer deposits                              208        1,240          764
    Decrease in deferred income taxes                             (291)        (240)        (397)
                                                               -------       ------       ------
        Net cash provided by (used in)
            operating activities                                 2,448       (1,442)      (1,596)
                                                               -------       ------       ------
Cash flows from investing activities:
  Decrease (increase) in short-term cash
      deposits                                                  (1,921)         863          960
  Additions to property and equipment                           (1,490)      (1,266)        (729)
  Decrease (increase) in other assets                                2         (103)        (609)
                                                               -------       ------       ------
        Net cash used in investing activities                   (3,409)        (506)        (378)
                                                               -------       ------       ------
Cash flows from financing activities:
  Increase (decrease) in notes payable - banks                   1,708         (622)         495
  Borrowings under long-term debt                                                          1,800
  Long-term debt and capital lease principal
      payments                                                                              (249)
  Proceeds from issuance of capital stock,
      exercise of stock options and issuance
      of warrants                                                  204          170          300
  Repurchase of common stock                                        (8)         (76)         (66)
  Repayment of notes receivable from
      shareholders                                                               19
                                                               -------       ------       ------
        Net cash provided by (used in)
            financing activities                                 1,904         (509)       2,280
                                                               -------       ------       ------

Effect of exchange rates on cash                                   373          655          357
                                                               -------       ------       ------
        Net increase (decrease) in cash and
            cash equivalents                                     1,316       (1,802)         (51)

Cash and cash equivalents, beginning of year                     3,363        4,679        2,877
                                                               -------       ------       ------

Cash and cash equivalents, end of year                         $ 4,679       $2,877       $2,826
                                                               -------       ------       ------
                                                               -------       ------       ------
Supplemental cash flow information:
  Cash paid during the year for:
    Interest                                                      $257         $505         $732
    Income taxes                                                                  4          660

The accompanying notes are an integral part of these consolidated financial statements.

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CONSOLIDATION:

The financial statements include the accounts of the Company, its wholly owned foreign sales corporation (FSC) and both its wholly owned and majority owned foreign subsidiaries. All intercompany accounts and transactions have been eliminated.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS:

Assets and liabilities of the Company's foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at the balance sheet date. Additionally, their revenues and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. dollars are accumulated and reflected as a separate component of stockholders' equity.

Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the statements of operations as incurred and are not significant.

CASH EQUIVALENTS AND SHORT-TERM CASH DEPOSITS:

All highly liquid debt instruments purchased with a maturity of three months or less are considered to be cash equivalents.

Short-term cash deposits represent interest bearing tine deposits with a maturity greater than three months.

INVENTORIES:

Inventories are stated at the lower of cost (first-in, first-out method) or market.

Continued

Leasehold improvements        Life of lease
Furniture and fixtures        3 to 15 years
Machinery and equipment       2 to 11 years

REVENUE RECOGNITION:

Revenue related to systems is recognized upon shipment. A provision for the estimated future cost of warranty is recorded upon shipment.

PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE:

Costs incurred in the research and development of new products or systems are charged to operations as incurred.

Costs incurred in the development of software programs for the Company's products are charged to operations as incurred until technological feasibility of the software has been established. After technological feasibility is established, any additional costs are capitalized. Capitalized costs of approximately $168,000 and $265,000 are included in inventory at May 31, 1988 and 1989. No software development Costs were capitalized prior to 1988.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

INCOME TAXES:

Deferred income taxes are recorded to reflect the tax effects of timing differences in reporting certain items for financial statement and income tax purposes. The differences relate primarily to installment sales, inventory and warranty reserves, reserve for doubtful accounts and depreciation.

The Company intends to reinvest its share of the undistributed earnings of its majority owned foreign subsidiaries. Therefore, it makes no provision for additional U.S. taxes, which might result from distribution of such earnings unless they are actually repatriated. At May 31, 1989, the cumulative amount of earnings from subsidiaries on which the Company has not provided U.S. income taxes was approximately $2,400,000.

Statement of Financial Accounting Standards No. 96, "Accounting for Income Taxes" (FAS No. 96), was issued in December 1987. The Company is required to adopt the statement for its fiscal year ending May 31, 1991, although early adoption is allowed. The change in accounting required by the statement is not expected to have a material effect on the Company's financial position or results of operations.

NET INCOME (LOSS) PER SHARE:

Net income per share has been computed using the treasury stock method after considering the dilutive effect of stock options and warrants. Net loss per share has been computed using the weighted average shares of Common Stock outstanding as the affect of stock options and warrants is antidilutive.

Continued

Inventories at May 31 comprise:

                                                  1988     1989
                                                 ------   -------
                                                  (in thousands)

  Raw materials and subassemblies                $3,590    $3,028
  Work in process                                 3,581     7,559
  Finished product                                1,615       973
                                                 ------   -------
                                                 $8,786   $11,560
                                                 ------   -------
                                                 ------   -------

Included in work-in-process at May 31, 1989 and September 30, 1989 are deferred Costs of $1,673,000 and $2,361,000, respectively, related to new burn-in test equipment being developed and built by the Company under contract. Deferred costs primarily include manufacturing direct material, direct labor and overhead and tooling, and exclude research and development that is expensed as incurred. This production contract is accounted for under the units of delivery method. The latest scheduled delivery date was August 15, 1989. Development problems have been experienced, which have delayed shipment of the equipment. Additional development problems could be encountered in the future, which could further delay shipment and possibly lead to order cancellations. Initial product acceptance procedures are expected to commence in December 1989. Management believes it will meet its obligations under the contract. Currently, the contract may be canceled by the customer in the event of noncompliance with the required delivery schedule and the Company may incur a significant loss if the contract. is canceled. Related progress payments received under the contract of $197,000 included in customer deposits as of May 31, 1989, and $874,000 received during June 1989, might be refundable in the event of the customer's cancellation of the contract.

Continued

                                              1988      1989
                                             ------    ------
                                              (in thousands)

Leasehold Improvements                       $  896    $  982
Furniture and fixtures                        2,117     2,395
Machinery and equipment                       2,718     3,096
Test equipment                                1,861     2,285
                                             ------    ------
                                              7,592     8,758
Less accumulated deprecation and
    amortization                              3,675     4,773
                                             ------    ------
                                             $3,917    $3,985
                                             ------    ------
                                             ------    ------

                                   Interest         Cost
                                   --------        ------
                                               (in thousands)

Formation                             50.0%        $  242
Fiscal 1987                           13.9            695
Fiscal 1988                            4.9            147
Fiscal 1989                            9.8            295
                                      ----         ------
  Balances, May 31, 1989              78.6%        $1,379
                                      ----         ------
                                      ----         ------

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

4. OPTION TO PURCHASE MINORITY INTEREST IN SUBSIDIARY, continued:

Prior to the Company's initial exercise of its option in fiscal 1987, the Company accounted for its investment using the equity method. Subsequently, the joint venture has been consolidated with the Company and each purchase under the option has been accounted for as a step purchase. The cost in excess of the fair value of the net assets acquired of $692,000 is being amortized on a straight-line basis over 20 years and is included in other assets, net of accumulated amortization of $117,000 at May 31, 1989.

5. JOINT VENTURE:

In June 1989, the Company's majority owned Japanese subsidiary formed a joint venture with a U.S. company for the purpose of marketing certain products and technology in Japan and to develop and manufacture products particular to the Japanese market. The joint venture corporation is equally owned by the two corporate partners with each contributing 50,000,000 yen of capital (approximately $350,000), which was contributed on May 29, 1989 and is included in other assets as of May 31, 1989.

6. NOTES PAYABLE:

At May 31, 1988 and 1989 short-term bank borrowings totaled $7,357,000 and $7,275,000, respectively. These outstanding borrowings at May 31, 1989 were comprised of short-term bank loans to the Company's majority owned subsidiary totaling $4,270,000 at a weighted average interest rate of 5.2%, secured by inventories, and $3,005,000 under the Company's revolving line of credit (see below) at prime plus 2% (13.5% at May 31, 1989).

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

6. NOTES PAYABLE, Continued:

As of May 31, 1989 and through September 19, 1989, the Company's revolving line of credit provided for maximum borrowings of up to the lesser of $3,500,000 or 60% of eligible accounts receivable. Borrowings under this agreement, renewed on September 20, 1989 (see Note 15), bore interest at 2.0% in excess of the bank's reference rate (a total of 13.5% as of May 31, 1989) and were collateralized by accounts receivable, inventories, certain property and equipment and other assets of the Company. Under this agreement, the Company was required to maintain certain financial ratios, profitability on a quarterly basis and an average compensating balance of $200,000. The compensating balance did not constitute a legal restriction on the Company's cash and to the extent it was not maintained, the bank would charge a fee based on an interest formula contained within the agreement.

7. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS:

Long-term debt as of May 31, 1989 of $1,651,000 consists of an equipment loan, evidenced by a promissory note, payable to a financing company bearing interest at 12.8% per annum. The loan is payable in equal monthly principal and interest installments of $48,146 through December 1992 and is collateralized by the Company's property and equipment. Under the loan agreement, the Company must pay a prepayment penalty of approximately 4% to 5% of the outstanding principal balance in the event of full prepayment between January 1990 and December 1992.

Capital lease obligations as of May 31, 1989 of $583,000 consist of various leases payable in installments through fiscal 1994 at a weighted average interest rate of 11.3% per annum.

Principal payments under long-term debt and capital lease obligations for each of the next five years as of May 31, 1989 are as follows:

1990                 $555
1991                  632
1992                  646
1993                  387
1994                   14

Continued

                                      1988       1989
                                     ------     ------
                                                (in thousands)

Commissions                          $  274     $  203
Warranty                                147         93
Payroll                                 554        899
Vacation                                284        286
Other                                   213        569
                                     ------     ------
                                     $1,472     $2,050
                                     ------     ------
                                     ------     ------

9. COMMITMENTS:

The Company leases most of its present manufacturing and office space under operating leases which expire between fiscal 1990 and 1992. Under the terms of certain leases, the rentals will be adjusted upward every two years based on the Consumer Price Index but with increases not to exceed 14% for any adjustment. The leases contain renewal options whereby the Company may extend the lease term for up to an additional five years. In addition, the Company is required to pay for insurance, taxes and maintenance of the property. The Company is subleasing a portion of this space under noncancelable subleases expiring in 1991.

Minimum annual rentals payable under operating leases in each of the next five fiscal years (in thousands) are as follows:

                1990                             $1,307
                1991                              1,226
                1992                                338
                1993                                 15
                1994                                  9
                                                 ------
                                                  2,895
Less rentals receivable under subleases             118
                                                 ------
                                                 $2,777
                                                 ------
                                                 ------

Rent expense for the years ended May 31, 1987, 1988 and 1989 was approximately $1,229,000, $1,303,000 and $1,405,000, respectively.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

9. COMMITMENTS, Continued:

The Company's Japanese subsidiary discounts notes receivable at banks in the ordinary course of business. The proceeds of such discounting for the years ended May 31, 1987, 1988 and 1989 were approximately $4,533,000, $4,524,000 and $3,507,000, respectively. As of May 31, 1989 there were no trade notes receivable discounted at banks.

10. SHAREHOLDERS' EQUITY:

In September 1988, the Company amended its Articles of Incorporation to authorize the issuance of 10,000,000 shares of preferred stock, and 75,000,000 shares of common stock, and to assign a par value of $.01 to each share. The Board of Directors is authorized to determine the rights of the preferred stockholders.

The financial statements have been restated to reflect this change.

11. COMMON STOCK:

Approximately 925,000 shares of common stock outstanding at May 31, 1989 have certain registration rights which are exercisable.

During fiscal 1987, the Company issued warrants to purchase 16,000 shares of common stock at $6.00 per share to members of the Company's Board of Directors. These transferable warrants, valued at $.60 each, are exercisable at any time and expire five years from date of issuance. As of May 31, 1989, the Company has reserved 16,000 shares of its common stock for issuance upon exercise of these warrants.

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

12. STOCK OPTIONS:

The Company has reserved 1,025,000 shares of common stock for issuance to employees and paid consultants under its three stock option plans. All three plans provide that qualified options be granted at an exercise price equal to the fair market value at the date of grant, as determined by the Board of Directors (85% of fair market value in the case of nonstatutory options and purchase rights and 110% of fair market value in certain circumstances). Qualified options expire five years from date of grant, nonqualified options ten years from date of grant, and stock purchase rights six months from date of grant. Most options become exercisable in increments over a four-year period from the date of grant. Options to purchase approximately 121,000 shares were exercisable at May 31, 1989.

Activity under the three plans was as follows:

                       Unoptioned     Number of          Price
                         Shares        Shares          Per Share         Total
                      ------------    ---------        ---------         -----
                                 (in thousands, except per share data)
Balances
 June 1, 1986               77           166        $4.00 to $10.00      $1,151
Increase in
 options available
 under plans               250
Options granted           (115)          115        $6.00 to $10.00         736
Options terminated         110          (110)       $6.00 to $10.00        (891)
                          ----          ----                             ------
Balances,
 May 31, 1987              322           171        $4.00 to $10.00         996
Options granted           (113)          113              $6.00             682
Options exercised                         (5)             $4.00             (20)
Options terminated          19           (19)       $6.00 to $10.00        (124)
                          ----          ----                             ------
Balances,
 May 31, 1988              228           260        $4.00 to $10.00       1,534
Options granted            (84)           84              $6.00             504
Options exercised                         (1)             $6.00              (5)
Options terminated         100          (100)       $4.00 to $10.00        (552)
                          ----          ----                             ------
Balances,
 May 31, 1989              244           243        $4.00 to $6.00       $1,471
                          ----          ----                             ------
                          ----          ----                             ------

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

13. EMPLOYEE STOCK BONUS PLAN:

The Company has a noncontributory, trusteed employee stock bonus plan for full-time employees. The intent of the Company is to contribute shares of the Company's stock to the plan, although the plan also allows cash contributions. The contribution is determined annually by the Company and cannot exceed 15% of the annual aggregate salaries of those employees eligible for participation in the plan. Individuals' account balances vest at a rate of 25% per year commencing upon completion of three years of service. Nonvested balances which are forfeited are allocated to the remaining employees in the plan.

No contribution to the plan was authorized for the years ended May 31, 1987, 1988 and 1989.

                                                         May 31,
                                               ---------------------------
                                                1987       1988      1989
                                               -------     -----    ------
                                                      (in thousands)
Federal income taxes:
  Current                                      $(1,047)    $(400)    $ 547
  Deferred                                         (18)     (269)     (125)
State income taxes:
  Current                                                              151
  Deferred                                                             (63)
Foreign income taxes:
  Current                                                    224     1,303
  Deferred                                        (323)                 (1)
                                               -------     -----    ------
                                               $(1,388)    $(445)   $1,812
                                               -------     -----    ------
                                               -------     -----    ------

The Company's effective tax (benefit) rate differs from the U.S. federal statutory tax (benefit) rate as follows:

                                                         May 31,
                                               ---------------------------
                                                1987       1988      1989
                                               -------     -----    ------
                                                      (in thousands)

Maximum statutory income tax (benefit)
    rate                                       (46.0)%    (46.0)%   34.0%
Foreign income (loss) taxed
    (benefited) at a higher (lower) rate        (5.5)      (4.4)    15.3
State taxes, net of federal tax effect                               5.2
FSC earnings exempt from
    federal taxes                                                   (6.6)
Other                                            0.2        3.2      2.2
                                               -----      -----     ----
Effective tax (benefit) rate                   (40.3)%    (38.4)%   50.1%
                                               -----      -----     ----
                                               -----      -----     ----

Continued

AEHR TEST SYSTEMS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

15. SUBSEQUENT EVENT:

On September 20, 1989, the Company renewed its line of credit agreement (see Note 6). The renewed agreement, renewable again on September 15, 1990, provides for maximum borrowings of up to the lesser of $5,000,000 or 80% of eligible accounts receivable, including a maximum of $500,000 in standby letters of credit. Borrowings under the renewed agreement bear interest at 0.75% in excess of the bank's reference rate. Other provisions of the renewed agreement are similar to those of the previous agreement.

Continued

EXHIBIT 3.15

EMPLOYMENT AGREEMENT
REGARDING PROPRIETARY DEVELOPMENTS
AND CONFIDENTIAL INFORMATION

1. I am a paid employee of Aehr Test Systems (the "Company").

2. This Agreement concerns inventions, improvements, data, processes, computer software programs and discoveries (hereinafter called "Proprietary Developments") that are conceived or made by me alone or with others while I am employed by the Company; and that relate to the research and development or the business of the Company, or result form tasks assigned to me by the Company. Such Proprietary Developments are the sole property of the Company, and I agree:

a. To disclose them promptly to the Company;
b. To assign them to the Company; and
c. To execute all documents and do all things necessary to assist the Company in obtaining patent, copyright and/or trade secret protection in all countries, the Company to pay the expenses.

3. This Agreement also concerns trade secrets, confidential business and technical information, and know-how not generally known to the public, that are acquired or produced by me in connection with my employment by the Company. As to these, I agree:

a. To use them only in the performance of the Company's duties; and
b. To hold them in confidence and trust, and to use all reasonable precautions to assure that they are not disclosed to unauthorized persons or used in an authorized manner, both during and after my employment with the Company.

4. Upon termination of employment, I will not take with me any documents or materials of any nature relating to the subject matter described in paragraphs 2 and 3 above.

5. This Agreement does not relate to any information which qualifies fully for protection under Section 2870 of the California Labor Code. A copy of
Section 2870 of the California Labor Code is attached hereto as Exhibit A.

6. The above provisions shall be separately construed. If any of them is held to be unenforceable, the remaining provisions shall not be affected.

WITNESS:

EXHIBIT A

CALIFORNIA LABOR CODE SECTION 2870

EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS

"Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of his or her rights in an invention to his or her employer shall not apply to an invention for which no equipment, supplies, facility, or trade secret information of the employer was used and which was developed entirely on the employee's own time, and (a) which does not relate (1) to the business of the employer or (2) to the employer's actual or demonstrably anticipated research or development, or (b) which does not result from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable."

                               February 2, 1990

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Aehr Test Systems
Employee Stock Bonus Plan                273    08/15/95     23,800
155 Constitution Dr.                     327    03/03/86     27,751
Menlo Park, CA 94025                     355    09/22/86     11,124
                                         357    06/26/86     18,965
                                         358    10/10/86      3,055
                                         394    11/09/87      4,677
                                         445    02/01/89     20,428
                                         465    11/13/89      2,333     112,133

Allen Amsbaugh and                        80    04/21/82      4,000       4,000
Judith Amsbaugh, JTWROS
900 Menlo Oaks Drive
Menlo Park, CA 94025

A.T. Venture Investments                 343    05/12/86      3,000       3,000
c/o Robert Salipante
900 Euclid Avenue, T-18
Cleveland, OH 44101

Hasamichi Ariga                          330    03/07/86      4,455
c/o ATS Japan                            383    09/01/87      4,455
19-25, 1-Chome                           431    08/23/88      4,455
Shimura, Itabashi-ku                     454    04/05/89      4,455      17,820
Tokyo, 174 Japan

Ross Atwood                              216    11/12/84      1,000       1,000
305 St. James Drive
Piedmont, CA 94611

Janet Palm Higginbotham Bailey            40   08/10/79         500         500
223 More Avenue
Los Gatos, CA 95030

Edward Barlow                            391   11/09/87         134         134
1533 Orillia Court
Sunnyvale, CA 94087

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Patricia J. Battaglia and                222    12/03/84      1,100       1,100
Biogio G. Battaglia,
Joint Tenants
706 Hillcrest Way
Redwood City, CA 94062

Robert and Dorothy Bechler               306    11/21/85        200         200
3455 Santa Rosa Blvd., #30
Santa Rosa, CA 95407

Robert R. Berry                           29    08/10/79      1,500
201 Cuesta Dr., Apt. 11                  335    03/03/86      1,000
Los Altos, CA 94022                      336    03/03/86      1,000
                                         337    03/03/86      1,000
                                         338    03/03/86      1,000       5,550

Mark A. Bertelsen                        138    03/07/83      3,130       3,130
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Keith Blackey                            389    11/09/87        624         624
1032 Shoreline Drive
San Mateo, CA 94025

Charles W. Bishop                         30    08/10/79      1,000
3091 Chardonnay                          217    11/12/84      3,000       4,000
Pleasanton, CA 94566

John and Joyce Boscacci                  305    11/21/85      1,000
1355 Monterey Boulevard                  364    12/09/86      1,000       2,000
San Francisco, CA 94127

Bernard Bouyea and Margo                 225    12/03/84        555         555
  Bouyea, Joint Tenants
166 Shell Street
Pacifica, CA 94044

Roger D. Bouyea and
Lorraine M. Bouyea, his wife,            315    11/21/85    100,000
  as their Community Property            317    11/21/85      5,000
1000 North Point Street, #1001           318    11/21/85      5,000
San Francisco, CA 94109                  322    11/21/85      1,704
                                         365    12/09/86         13
                                         470    11/24/89      2,980     114,697

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

John Bouyea, Jr.                         172    08/04/83      1,660
2615 Lincoln Way                         440    12/06/88        835
San Francisco, CA 94122                  469    11/24/89        505       3,000

Roger Bouyea, Jr.                        171    08/04/83      1,660
2141 Hillview Drive                      439    12/06/88        835
Walnut Creek, CA 94596                   468    11/24/89        505       3,000

Ronald E. Boyd                           231    12/05/84      9,500       9,500
24390 Summerhill Road
Los Altos Hills, CA 94022

Richard Bracken                          393    11/09/87         61          61
138 Wilmar Way
Los Gatos, CA 95030

Verna L. Brame                           201    04/18/84      5,000       5,000
322 Cuardo Avenue
Millbrae, CA 94030

Verna L. Brame Trustee                   282    09/27/85    154,900     154,900
Verna L. Brame Trust
U/D/T dated May 20, 1983
322 Cuardo Ave.
Millbrae, CA 94030

Clarence M. Brehm                        285    09/27/85      5,000       5,000
1047 Mango Ave.
Sunnyvale, CA 94087

Faye Crawford Bremond,                   159    05/30/83      3,750       3,750
  Trustee of the Faye Crawford
  Bremond Separate Property Trust
  U/D/T January 6, 1983
101 Catalpa Drive
Atherton, CA 94025

Harry B. Bremond                         145    03/08/83      3,750       3,750
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

J. Edwin Brooks                          187    10/07/83      2,114       2,114
50 Pasatiempo Drive
Santa Cruz, CA 95060

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Barbara J. Brown                         151    05/27/83        400         400
1855 Graham Lane
Santa Clara, CA 95050

T. Steven Brown and                       20    07/20/79      5,000
Elizabeth Brown JTWROS                    86    04/21/82     20,000      25,000
11822 Paseo Lucido, #2020
San Diego, CA 92128

Carl M. Buck                             232    12/28/84      1,000       1,000
Aehr Test Systems
155 Constitution Drive
Menlo Park, CA 94025

Robert R. Buck                           233    12/28/84        500         500
167 Pleasant Avenue
Fenwood, NJ 07023

Louis J. Cartalano                        32    08/10/79      1,000
750 Sunshine Dr.                          87    04/21/82     64,000
Los Altos, CA 94022                      158    05/30/83      6,000
                                         202    04/18/84      6,500
                                         239    12/28/84     30,000
                                         367    12/18/86      3,000     110,500

John Case                                236    12/28/84      2,000       2,000
The Case Companies
969 Buenos Avenue
San Diego, CA 92110

(Dr.) Stanton M. Charney and             420    09/19/88      5,000
Freya Charney, Trustees of the           422    09/19/88      4,125
Stanton M. Charney Family                424    09/19/88      1,104
Trust U/T/A dated 10/2/75                426    09/19/88      4,561      14,790
4 Surrey Lane
Atherton, CA 94025

Charles T. C. Compton                    344    07/17/86        175         175
27855 Via Ventana
Los Altos Hills, CA 94022

Continental Trust Company                385    11/09/87      3,000       3,000
Trustee FBO Fred M. Pilster, IRAR
P.O. Box 809009
Dallas, TX 75380

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Hewitt D. Crane                        428      09/19/88     1,905        1,905
25 Cordova Court
Portola Valley, CA 94025

Gene S. Crockett                        78      04/15/82     3,000
1200 Mosswood                           88      04/21/82    12,000       15,000
Irving, Texas 75061

John Cruse and Carol                   226      12/03/84       277          277
Cruse, Joint Tenants
1380 Flores Drive
Pacifica, CA 94044

Carol A. Decker                        152      05/27/83       250
P.O. Box 692                           243      01/07/85     5,000        5,250
Pollock Pines, CA 95726

Alice Jane Edge                        366      12/18/86     2,000        2,000
149 Eunice
Mountain View, CA 94040

William W.R. Elder, Trustee of         430      09/19/88     2,500        2,500
the William W.R. Elder Separate
Property Trust, U/D/T dated
April 18, 1983
19485 Montevina Road
Los Gatos, CA 95030

Dr. R. Cameron Emmott                  168      07/26/83       100          100
315 Berroilnet Avenue
San Mateo, CA 94402

James Fadimen                          129      09/20/82     3,375
1070 Colby Ave.                        130      09/21/82     6,000        9,375
Menlo Park, CA 94025

James Fadiman, Trustee                  26      07/20/79     5,000
UAD 6/1/68 f/b/o CHRISTINE E.          283      09/27/85     7,500       12,500
CROSBY TRUST #2
P.O. Box 1032
Menlo Park, CA 94025

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

James Fadiman, Trustee                  27      07/20/79     5,000
UAD 3/1/79 f/b/o TAMARA E.             284      09/27/85     7,500       12,500
CROSBY TRUST #2
P.O. Box 1032
Menlo Park, CA 94025

Andree P. Feldmann                     340      03/03/86     1,500
242 Watson Avenue                      449      04/30/89     6,000        7,500
Monterey, CA 93940

Ferlic Investments, Ltd.               182      10/12/83     1,000        1,000
c/o Randolph M. Ferlic
309 Doctor Building
Omaha, NE 68131

Patrick K. Flaherty                    326      03/03/86       369          369
390 Echo Drive
Los Altos, CA 94022

Wiliam R. Franke and                    93      04/21/82    30,000
Barbara J. Franke, JTWROS              253      02/20/85     4,500       34,500
P.O. Box 722
Kenwood, CA 95452

Trina Anne Franke                      252      02/20/85     1,000        1,000
P.O. Box 722
Kenwood, CA 95452

David Garaviglia                       463      11/13/89       202          202
----------------------------------
----------------------------------

Frank J. George and                     24      07/20/79    10,000
Evelyn E. George                        36      08/10/79     1,000
3716 Kenwood Ave.                       94      04/21/82    44,000       55,000
San Mateo, CA 94403

William P. Gilbreath and                37      08/10/79     1,500
Vibeke Gilbreath, JTWROS                95      04/21/82     6,000        7,500
1624 Petal Way
San Jose, CA 95129

Susan Golden                           300      10/08/85        93           93
1722 Valpico Drive
San Jose, CA 95124

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------
John Goodrich                          241      12/28/84     4,687        4,687
2 Palo Alto Square, Suite 900
Palo Alto, CA 94306

Margaret K. Goodrich                   240      12/28/84     4,688        4,688
21132 Patriot Way
Cupertino, CA 95014

James Grant                            442      11/17/88        35           35
534 Madison Ave.
Redwood City, CA 94061

Peter Tyler Hall                        96      04/21/82    76,000
c/o Dean Witter Reynolds               134      02/17/83     3,000
720 Santa Cruz Avenue                  286      09/27/85     1,000
Menlo Park, CA 94025                   402      01/28/88       400
                                       409      08/12/88       800       81,200

Takahiro Hatakenaka                    267      08/12/85     7,800
c/o ATS Japan                          328      03/07/86    12,028
19-25, 1-Chome                         384      09/01/87    12,028
Shimura, Itabashi - Ku                 432      08/23/88    12,028
Tokyo, 174 Japan                       455      04/05/89    12,028       55,912

Martin J. Held, Trustee of             453      06/14/89       500          500
M.J. Held & Associates,
Incorporated Profit Sharing Trust
IQ #68-007184
160 Shoreline Highway, Suite 958
Mill Valley, CA 94941

Alan Helgesson                         166      07/05/83    30,000
505 Cypress Point Dr., #169            404      03/16/88    12,500       42,500
Mt. View, CA 94043

Jack Edward Hubbell                    410      08/12/88       800          800
14388 Liddicoate Drive
Los Altos Hills, CA 94022

Richard Jensen                         397      12/01/87       500          500
367 Mandell Way
Los Altos, CA 94022

Jack and Carleta Jones                 394      11/16/87       150          150
616 Morningside
Los Altos, CA 94022

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Allan King                             234      12/28/84     1,000       1,000
1542 Winding Way
Belmont, CA 94022

Bruce C. Keller                        301      10/08/85        93          93
6339 Broadway, #306
Oakland, CA 94618

Ralph W. Kummer                         57      03/26/80     1,200
Post Office Box 420                    100      04/21/82     4,800       6,000
Colfax, CA 95713

Teruo Kunugi                           299      10/08/85     9,800
c/o ATS Japan                          329      03/07/86     5,346
19-25, 1-Chome                         382      09/01/87     5,346
Shimura, Habashi-Ku                    433      08/23/88     5,346
Tokyo, 174 Japan                       456      04/05/89     5,346       31,184

Charles F. LaBrecque                    77      04/18/82     1,000
302 Old Westford Road                  101      04/21/82     4,000
Chelmsford, MA 01824                   126      06/16/82     2,500
                                       135      03/04/83     1,000        8,500

Thomas Lee                             332      04/10/86    77,780       77,780
128 Escobar Road
Portolo Valley, CA 94025

Barbara Long, Trustee                  160      05/30/83     5,000
of the Kevin Allen                     411      08/23/88     1,800        6,800
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  161      05/30/83     5,000
of the Candice Ann                     412      08/23/88     1,800        6,800
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  162      05/30/83     5,000
of the Kyler David                     413      08/23/88     1,800        6,800
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Barbara Long, Trustee                  163      05/30/83     5,000
of the Eric Nels                       414      08/23/88     1,800        6,800
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Barbara Long, Trustee                  164      05/30/83     5,000
of the Brock Frank                     415      08/23/88     1,800        6,800
Torresdal Trust I
U/T/A dated 5/30/83
3828 Hamilton Way
Redwood City, CA 94062

Harvey Long and Barbara                228      12/03/84     1,200        1,200
Long, Joint Tenants
3828 Hamilton Way
Redwood City, CA 94062

Frank and Josephine Luporini           196      03/27/84     3,750        3,750
1324 Hover
Menlo Park, CA 94025

Dana Marie Mahoney                     251      02/20/85     1,000        1,000
P.O. Box 722
Kenwood, CA 95452

Paul Margolin                           41      08/10/79     5,000
P.O. Box 2302                          106      04/21/82    20,000       25,000
16 Tall Oaks Drive
Wayne, New Jersey 07470

Renzo Maraviglia and                   223      12/03/84       775          775
Joan M. Maraviglia, Joint Tenants
301 Heather Way
South San Francisco, CA 94080

Victoria Martinez                      464      11/13/89        24           24
2875 White Acres Drive
San Jose, CA 95148

James S. Mathews                        76      04/15/82     1,000
26 Spruce Lane                         103      04/21/82     4,000
Holden, WA 01520                       127      06/16/82     2,500        7,500

                                       Cert                            Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Mayfield III                            50      09/11/79    20,000
2200 Sand Hill Road, Suite 200          61      07/21/80    18,000
Menlo Park, CA 94025                    73      08/11/81     5,000
                                       104      04/21/82   172,000
                                       132      11/23/82    10,000
                                       197      04/12/84    58,824      283,824

Martina McGlynn as                      63      07/24/80        25
Custodian for Kathleen                 105      04/21/82       100          125
Ann McGlynn (UGMA)
440 Coleridge
Palo Alto, CA 94301

Alexandria Jean McGurn                 125      05/27/82    12,000
6210 Agee Street, #237                 369      12/31/86     2,000       14,000
San Diego, CA 92122

James F. McGurn                        124      05/27/82    12,000
c/o MACS Corp.                         191      11/04/83     3,000
9292 Chesepeake Dr.                    368      12/31/86     1,000       16,000
San Diego, CA 92123

Linda C. Miller                        249      02/15/85     1,000        1,000
2225 Vineyard Court
Los Altos, CA 94022

Shigeru Miyazaki                       446      03/01/89       437          437
2-22-11 Kamisho Kujiicho
Berima-ku, Tokyo

Pamela Moon                            437      12/06/88     2,495
197 Ramona Avenue                      466      11/24/89       505        3,000
Pacifica, CA 94044

Vanda Morello                          392      11/09/87        79           79
555 Jeter Street
Redwood City, CA 94062

John Spencer Morse and Annette         175      08/30/83    50,000
Ruth Morse, Trustees of the            260      04/16/85     3,000
John Spencer Morse and                 362      11/14/86     1,643       54,643
Annette Ruth Morse Trusts,
U/D/T dated December 23, 1982
15463 El Camino Grande
Saratoga, CA 95070

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Richard W. and Nell Neil               321      11/21/85       300          300
600 Meadowood Lane
St. Helena, CA 94594

Walter Neumann                         153      05/27/83       300
1339 Lorida Way                        242      01/04/85    10,000       10,300
Pacifica, CA 94044

Walter F. Neumann and Susan             53      01/02/79       500          500
Gardner Neumann, JT TEN WROS
1339 Lorida Way
Pacifica, CA 94044

Timothy F. O'Brien and Pearl           363      12/09/86       300          300
O'Brien, as Community Property
1709 Pine Knoll Drive
Belmont, CA 94022

F.D. Orahood                            14      07/20/79    25,000
16882 Bolsa Chica Road                  48      08/20/79     2,500
Huntington Beach, CA 92649             110      04/21/82   110,000      137,500

Leonard E. Orsak and                    52      11/02/79     1,000
Marjorie L. Orsak                      111      04/21/82     4,000        5,000
JT TEN WROS
241 Biarritz Circle
Los Altos, CA 94022

Douglas A. Owen, Trustee for           459      08/04/89     2,000        2,000
Douglas Owen Search Consultants
Profit Sharing Plan
3000 Sand Hill Road, 2-120
Menlo Park, CA 94025

Vivian H. Owen                           4      07/20/79     5,000
1736 Terrace                           112      04/21/82    20,000
Belmont, CA 94002                      181      09/21/83    15,000       40,000

Diane R. Pagani                        460      08/11/89   100,000      100,000
22140 Cedar Springs Road
Twain Harte, CA 95383

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Joseph F. Pickering, Trustee            67      05/07/81     2,375
of the Joseph F. Pickering and         114      04/21/82     9,500       11,875
Helen D. Pickering Trusts U/D/T
dated 1/12/77
c/o Rollins, Burdick, Hunter
P.O. Box 51110
Palo Alto, CA 94303

Frank and Donna Pitto, Sr.             307      11/21/85       500          500
445 Keith Court
Walnut Creek, CA 94596

Frank Pitto, Sr., Custodian            309      11/21/85        50           50
for John Frank Pitto under
the California Uniform
Transfers to Minors Act
445 Keith Court
Walnut Creek, CA 94596

Frank Pitto, Sr., Custodian            308      11/21/85        50           50
for John Frank Pitto under
the California Uniform
Transfers to Minors Act
445 Keith Court
Walnut Creek, CA 94596

Anne Popylisen                         441      10/27/88        50           50
424 Paula Court, #15
Santa Clara, CA 95050

Rhea J. Posedel                          1      07/20/79   125,000
1736 Terrace                            25      07/20/79     2,500
Belmont, CA 94002                       58      04/17/80     2,500
                                        62      07/21/80    32,000
                                        65      06/24/80     5,000
                                       115      04/21/82   668,000
                                       200      04/18/84    25,000
                                       342      05/12/86    27,000      887,000

Carol A. Preble                        154      05/27/83       300          300
19973 Peartree Ct.
Cupertine, CA 95014

Craig Ringener                         408      08/02/88       416          416
408 Canyon Ridge Dr.
Richardson, TX 75080

                                       Cert.                           Total
            Name                        No.       Date      Shares     Shares
----------------------------------   --------   --------   --------   ---------

Rosanna McClure Roedder                190      10/21/83    15,000       15,000
Schonauerstrasse No. 19
5206 Wolperath
West Germany

M.M. Rosati & D. M. Laurice            264      05/15/85     5,000
Trustees FBO Mario M. Rosati           333      03/03/86     2,000
Wilson, Sonsini, Goodrich &            341      03/03/86     1,000
Rosati                                 374      05/14/87     2,343
Two Palo Alto Square, Ste. 900         378      07/28/87     7,657
Palo Alto, CA 94306                    450      04/30/89     2,000       20,000

Mario M. Rosati & Sally J.             407      05/29/88     4,722
Rosati, Trustees of the                417      09/19/88       333
Mario M. & Sally J. Rosati             419      09/19/88     3,000
Trust, UDT 9/30/76, as amended         421      09/19/88     4,125
Wilson, Sonsini, Goodrich &            423      09/19/88     1,104
Rosati                                 425      09/19/88     4,561
Two Palo Alto Square, Suite 900        427      09/19/88     1,903
Palo Alto, CA 94306                    429      09/19/88     2,500
                                       451      04/30/89     2,000
                                       452      01/13/89       667       26,917

Rutven Associates I, L.P.              198      04/16/84     8,824        8,824
c/o Cornerstone Management
2420 Sand Hill Road, #202
Menlo Park, CA 94025
Attn: Barbara Anderson

Rutven Associates II, L.P.             199      04/16/84     5,882        5,882
c/o Cornerstone Management
2420 Sand Hill Road, #202
Menlo Park, CA 94025
Attn: Barbara Anderson

Marvin R. Samuel and                   117      04/21/82    20,000       20,000
Margery F. Samuel, JTWROS
471 Panchita Way
Los Altos, CA 94022

Ramona Lee Santos                      250      02/20/85     1,000        1,000
32 Escanyo Drive
So. San Francisco, CA 94080

Carol C. Scott                         155      05/27/83       500          500
21200 Todd Valley Road, #160
Foresthill, CA 95631

                                Cert                            Total
      Name                       No.        Date      Shares    Shares
-------------------------     --------     --------  ---------  -------

Richard F. Sette                  271      08/12/85    1,000
45425 Potawatami Drive            356      09/30/86      500
Fremont, CA  94539                390      11/09/87      296
                                  406      04/12/88    3,200     4,996

Charles E. Shalvoy                401      01/05/88    4,000
111 Selby Lane                    458      05/31/89   35,000    39,000
Atherton, CA  94025

Charles E. Shalvoy, Sr.           244      01/11/85      500       500
or Helen M. Shalvoy, JT WROS
17910 Villamoure Drive
Poway, CA 92064

James A. Shalvoy, Trustee of      347      07/11/86    2,000
the Alexandra Miller Shalvoy      399      12/31/87    3,000
1986 Trust, U/T/A dated           400      01/05/88    3,000     8,000
7/11/86
115 19th Place
Manhattan Beach, CA  90266

James A. Shalvoy, Trustee          218      11/13/84    2,300
of the Brenton O. Shalvoy,         263      05/13/85    2,300
Trust I UTA dated July 25, 1984    346      07/11/86    2,000
115 19th Place                     398      12/31/87    1,400    8,000
Manhattan Beach, CA  90266

Saburo Shikano                     269      08/12/85    4,900
c/o ATS Japan                      331      03/07/86    2,674
19-25, 1-Chome                     381      09/01/87    2,674
Shimura, Itabashi-Ku               434      08/23/88    2,674
Tokyo, 174 Japan                   457      04/05/89    2,674   15,596

Frances Ellen Sloyer, Trustee      462      09/12/89    1,000    1,000
U/D/T dated 10-26-82
2920 Lakemont Drive
Fallbrook, CA  92028

Peter Spire                        435      09/29/88    1,000    1,000
3356 La Mesa #2
San Carlos, CA  94070

Martin C. Sturzenbecker            220      11/30/84      250      250
1 Michael Court
Carmel, NY  10512

                                Cert                            Total
      Name                       No.        Date      Shares    Shares
-------------------------     --------     --------  ---------  -------

Summit Investors, L.P.             280    09/19/85       223
c/o Summit Partners, L.P.          296    09/27/85     1,013       1,238
One Boston Place
Boston, MA  02108

Summit Ventures, L.P.              278    09/19/85     30,002
One Boston Place                   294    09/27/85    150,455    180,457
Boston, MA  02108

SV Eurofund C.V.                   279    09/19/85     19,773
c/o SV International, L.P.         295    09/27/85     99,157    118,930
One Boston Place
Boston, MA  02108

Mel Thomsen                        174    08/08/83      1,250      1,250
555 Latimer Circle
Campbell,  CA  95008

David Torresdal                    120    04/21/82    263,000
and Betty Torresdal                210    10/05/84      5,000
427 Hillcrest Way                  229    12/03/84        800
Redwood City, CA  94062            287    09/27/85      5,000    273,800


Thanh Tran Dinh                    443    11/17/88         54         54
544 W. 4th Street
San Jose, CA  95112

Margo Tullus                       170    08/04/83      1,660
636 La Casa Via                    438    12/06/88        835
Walnut Creek, CA  94598            467    11/24/89        505      3,000

David and Margo Tullus, Sr.        310    11/21/85        366        366
636 La Casa Via
Walnut Creek, CA  94598

David and Margo Tullus, Sr.        313    11/21/85         55         55
Custodians for Andrew
Richard Tullus under the
Uniform Transfers to Minors Act
636 La Casa Via
Walnut Creek,  CA  94598

                                Cert                            Total
      Name                       No.        Date      Shares    Shares
-------------------------     --------     --------  ---------  -------

David and Margo Tullus, Sr.        312    11/21/85        110       110
Custodians for Bonwyn Pamela
Tullus under the California
Uniform Transfers to Minors Act
636 La Casa Via
Walnut Creek, CA  94598

David and Margo Tullus, Sr.       314     11/21/85        165       165
Custodians for David Shelton
Tullus
636 La Casa Via
Walnut Creek,  CA  94598

Margo D. Tullus and                224    12/03/84      1,000     1,000
David Shelton Tullus,
Community Property
636 La Casa Via
Walnut Creek,  CA  94598

Donna G. Widner                    304    11/21/85        500       500
13 Adelphi Court
Sacramento,  CA  95825

John A. Wilson and Nancy S.        405    03/28/88     10,625    10,625
Wilson, Trustees of the
Nancy S. and John A. Wilson
Family Trust U/D/T dated
October 27, 1987
2 Palo Alto Square, Suite 900
Palo Alto, CA  94306

Miriam E. Wolff Trust              290    09/27/85      9,000     9,000
Trust FBO Miriam E. Wolff
25623 Elena Rd.
Los Altos Hills, CA  94022

WS Investment Company 87A          371    05/14/87      3,040     3,040
Two Palo Alto Square, Suite 900
Palo Alto, CA  94306

Donald E. Yost and Patricia        370    04/20/87      2,500     2,500
Yost, Trustees of the Yost
Family Trust u/d/t dated 08/31/87
1860 Middleton Ave.
Los Altos, CA  94022

TOTAL OUTSTANDING                                             3,526,986
                                                              ---------
                                                              ---------

                                                Exercise
                                      No. of      Price     Expiration
            Name                      Shares    Per Share     Date
----------------------------------   --------   ---------   ----------

Robert R. Anderson                      3,333    $   6.00    12/31/92
KLA Instruments Corp.
2051 Mission College Blvd.
P.O. Box 58016
Santa Clara, CA 95052

Peter Tyler Hall                        3,000    $   6.00    05/06/92
c/o Dean Witter Reynolds
720 Santa Cruz Ave.
Menlo Park, CA 94025

David Torresdal                         3,000    $   6.00    05/06/92
c/o Davtron
427 Hillcrest Way
Redwood City, CA 94062

                                                                      Page 21

Outstanding Options, Warrants and Other Rights to Purchase Shares of Common Stock

                                           Exercise
                                             Price            Number
        Description                        Per Share         of Shares
----------------------------------         ---------         ---------

Warrants                                    $6.00                9,333

Amended 1978 Stock Option Plan              $6.02(1)            61,250

Amended 1983 Incentive Stock Plan           $6.00(1)            83,100

Amended 1986 Incentive Stock Plan           $6.00              154,950

(1) Weighted Average

EXHIBIT 4.1(k)

AEHR TEST SYSTEMS-JAPAN

FEBRUARY 9, 1990

MEMORANDUM OF TERMS FOR PRIVATE PLACEMENT OF COMMON STOCK

Aehr Test Systems-Japan, a corporation organized under the laws of Japan ("ATS-Japan") presently has 400,000 authorized shares of Common Stock, par value Y500 per share. Before the closing of the Common Stock sale described below, ATS-Japan will have 220,000 shares of Common Stock outstanding. No other shares of stock, or options or warrants to purchase stock from ATS-Japan, will be outstanding at the time of the closing.

ATS-Japan proposes a private placement of shares of Common Stock on the following terms:

Aggregate Purchase Price:          Y56,000,000

Number of Shares:                  16,000 (see attached list
                                           of purchasers)

Price Per Share:                   Y3,500

Information Rights:                Until ATS-Japan completes a public offering
                                   of shares in Japan ("Public Offering") and so
                                   long as a purchaser holds all shares of
                                   Common Stock initially purchased, ATS-Japan
                                   will provide to the purchaser (i) an
                                   unaudited semi-annual balance sheet and
                                   income statement, (ii) an audited annual
                                   balance sheet and income statement and
                                   (iii) all other information concerning ATS-
                                   Japan's finances or operations reasonably
                                   requested by the purchaser.  Any information
                                   provided to a purchaser shall be subject to
                                   standard confidentiality provisions.

Transferability:                   Until a Public Offering, each share shall be
                                   subject to ATS-Japan's right of first refusal
                                   on any transfer, except a transfer pursuant
                                   to a merger or sale of assets of the
                                   purchaser, or a transfer among affiliated
                                   entities.

Standoff:                          Each purchaser shall not purchase any more
                                   shares of ATS-Japan, either from ATS-Japan or
                                   its shareholders, without the prior consent
                                   of ATS-Japan's board of directors.

Forced Sale:                       In the event of a Public Offering, if the
                                   Company is required by law to sell such
                                   number of shares as would result in Aehr Test
                                   Systems, a California corporation, holding
                                   less than 70% of the stock of ATS-Japan after
                                   the completion of the Public Offering, then
                                   ATS-Japan may require the purchasers, on a
                                   pro rata basis, to sell their shares in the
                                   Public Offering.

Purchase Agreement:                The investment shall be made pursuant to a
                                   Stock Purchase Agreement reasonably
                                   acceptable to ATS-Japan and the purchasers.
                                   The agreement shall contain appropriate
                                   representations and warranties of ATS-Japan
                                   and the purchasers and conditions of closing.

Closing:                           May 1, 1990

EXHIBIT 4.1(l)

[letterhead of Union Bank]

January 29, 1990

Mr. Malcolm M. Farnsworth
Chief Financial Officer
Aehr Test Systems
135 Constitution Drive
Menlo Park, CA 94025

Dear Mr. Farnsworth:

Aehr Test Systems is currently in default of certain terms and conditions of the Letter Agreement ("Agreement") dated September 20, 1989 between Union Bank
("Bank") and Aehr Test Systems ("Borrower") regarding a Line of Credit ("Line")
in the amount of $5 Million.

You have requested waivers with regard to the following conditions of the Agreement:

"Advances shall be limited to $5,000,000, or 80% of eligible accounts receivable, whichever is less. Eligible accounts receivable is defined as total accounts receivable less those accounts which are over 90 days past due from invoice date, and those accounts due from Aehr Test-Japan."

Advances exceed eligible accounts receivable by $499,000 as of December 31, 1989.

"7. To be profitable on a pretax basis for the quarters ending August 1989, November 1989, February 1990, May 1990 and August 1990."

The actual profitability on a pretax basis for the quarter ending August 1989, November 1989, February 1990, May 1990 and August 1990."

The actual profitability on a pretax basis for the quarter ending November 1989 was a loss of $403,000.

Additionally, you have informed us that you will not be in compliance

with the borrowing base formula for the periods ending January 31, 1990 and February 28, 1990. You have also stated that you will not be in compliance with the requirement for quarterly profitability for the quarter ending February 28, 1990. You have indicated you are anticipating a loss before tax of $648,000 for the quarter ending February 1990.

The Bank agrees to forbear from taking action on the defaults occurring on or before December 31, 1989, as you have indicated that the Company will be receiving cash in the amount of $2 Million in the form of equity from JAFCO ("JAFCO") America Ventures, Inc. You have advised us that this cash will be used to pay off over advance on the Company's Line. Over advance is defined as funds borrowed by the Company in excess of the agreed upon advance rate of 80% of eligible accounts receivable, as determined by the Company's submissions of monthly borrower base certificates. Bank agrees to allow over advances in the following amounts as noted below.

For the period:  1/3/90 through 1/31/90:  $500,000
For the period:  2/1/90 through 2/28/90:  $1,500,000
For the period:  after 2/28/90:  0

Over advances shall bear interest at the rate of 3.0% above the Bank's Reference Rate and shall be charged on February 28, 1990 to Borrower's account for the period February 6, 1990 through February 28, 1990.

The Bank agrees to waive the anticipated default for quarterly profitability expected to occur upon receipt of the Borrower's February 28, 1990 financial statements, providing the following:

1. Borrower has received $2 Million in cash from JAFCO in the form of equity.

2. Borrower pays off any over advance outstanding upon receipt of $2 Million in cash from JAFCO which is anticipated prior to February 28, 1990.

3. Borrower is in compliance with all other covenants per the Letter Agreement dated September 20, 1989 between Borrower and Bank.

4. Borrower's pretax loss for the quarter ending February 1990 is not to exceed $950,000.

5. Bank to receive by February 19, 1990 commitment letter from JAFCO indicating $2 Million purchase of stock.

This letter will not be a waiver of an existing or future default unless specified herein.

Sincerely,

UNION BANK

/s/ James L. Weber

James L. Weber
Vice President & SAE

Acknowledged and Accepted by:

AEHR TEST SYSTEMS

By: /s/ M.M. Farnsworth
    -------------------------------

Title:   Chief Financial Officer
       ----------------------------

Date:    2-8-90
       ---------

Exhibit 10.11

1. PARTIES. THIS LEASE, is entered into on this 14th day of May, 1991, between The John A. & Susan R. Sobrato 1979 Revocable Trust and Aehr Test Systems, Inc., a California Corporation, hereinafter called, respectively, "Landlord" and "Tenant".

2. PREMISES. Landlord hereby leases to Tenant, and Tenant leases from Landlord, those certain Premises with the appurtenances, situated in the City of Mountain View, County of Santa Clara, State of California, and more particularly described as follows, to-wit:

That certain real property commonly known and designated as 1667 Plymouth Street (APN 116-13-17, 116-13-21 AND 116-09-22) containing a building (the "Building") consisting of 61,364 square feet as outlined in red on EXHIBIT "A" attached hereto and incorporated herein by reference.

3. USE. Tenant shall use the Premises only for legally permitted uses.

4. TERM AND RENTAL. The term (the "Lease Term") shall be for ninety-six (96) months, commencing on the "Commencement Date" as defined in subparagraph 7.T of this Lease and ending ninety-six months thereafter (the "Expiration Date"), unless sooner terminated pursuant to the terms hereof. Tenant shall pay as monthly rent for the Premises the following amounts:

            PERIOD                                          MONTHLY RENT
--------------------------------------------------     ------------------------
Commencement Date - lst Anniversary                    $0 per month
of Commencement Date (12 months)

1st Anniversary of Commencement  Date through 5th      $79,773.20  per month
Anniversary of Commencement Date (48 Months)

5th Anniversary of Commencement Date through           $85,909.60 per month
Expiration Date (36 months)

Monthly rent shall be due on or before the first day of each calendar month during the Lease Term. Said rental shall be paid in lawful money of the United States of America, without offset or deduction except as set forth in this Lease, and shall be paid to Landlord at such place or places as may be designated from time to time in writing by Landlord. Rent for any period less than a calendar month shall be prorated based on a thirty (30) day month.

5. A. SECURITY DEPOSIT. Within three (3) business days after both parties' execution of this Lease, Tenant shall deposit with Landlord the sum of Sixty Seven Thousand Four Hundred Eighty-Five Dollars ($67,485) as a security deposit. If Tenant defaults with respect to any provisions of this Lease, including, but not limited to, the provisions relating to payment of rent or other charges, Landlord may, to the extent reasonably necessary to remedy Tenant's default, use all or any part of said deposit for the payment of rent or other charges in default or the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default

or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. If any portion of said deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount hereinabove stated. Said deposit shall be returned to Tenant within thirty (30) days after the expiration or earlier termination of the Lease Term, less any amount deducted in accordance with this paragraph, together with Landlord's written notice itemizing the amounts and purposes for such retention. In the event of termination of Landlord's interest in this Lease, Landlord shall transfer said deposit to Landlord's successor in interest.

B. LETTER OF CREDIT: Notwithstanding the provisions of paragraph 5.A, Landlord agrees that in lieu of a cash security deposit, Tenant may deposit a letter of credit in a form reasonably acceptable to Landlord. Landlord shall be entitled to draw against the letter of credit at any time that Tenant has committed a default under this Lease as defined in paragraph 22, provided that Landlord certifies to the issuer of the letter of credit under penalty of perjury that Tenant is in default under the Lease. Tenant shall keep the letter of credit in effect during the entire Lease Term, as the same may be extended, plus a period of four (4) weeks thereafter. At least sixty (60) days prior to expiration of any letter of credit, the term thereof shall be renewed or extended. Subject to Tenant's cure rights under Paragraph 22, Tenant's failure to so renew or extend the letter of credit shall be a material default of this Lease by Tenant. If Landlord draws against the letter of credit, Tenant shall replenish the existing letter of credit or cause a new letter of credit to be issued such that the aggregate amount of letters of credit available to Landlord at all times during the Lease Term is the amount of the security deposit originally required.

6. LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, administrative, processing, accounting charges, and late charges, which may be imposed on Landlord by the terms of any contract, revolving credit, mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within five (5) days after receipt by Tenant of written notice specifying that Landlord has failed to receive the amount in question, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount, which shall be due and payable with the payment then delinquent. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of rent, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding any provision of this Lease to the contrary.

7. CONSTRUCTION AND POSSESSION.

A. DEFINITIONS: As used in this paragraph 7, the following terms shall have the following meanings:

1. ARCHITECT: The term "Architect" shall mean Dennis Kobza & Associates.

2. BUILDING SHELL: The term "Building Shell" shall mean
(i) the one story Building containing 61,364 square feet of floor space as shown on those certain plans and specifications prepared by the Architect (the "Building Shell Plans"); (ii) all parking areas, driveways, sidewalks, site utility installations, exterior lighting, irrigation systems, landscaping, and other outside area improvements specified on the Building Shell Plans; (iii) all other on-site and off-site improvements required by any governmental agency as a condition of its issuance of any approval for construction of the Building Shell; and (iv) those modifications set forth in Exhibit "B" hereto and incorporated herein by reference.

3. FINAL TENANT IMPROVEMENT PLANS: The term "Final Tenant Improvement Plans" shall mean those plans, specifications, and working drawings for the Tenant Improvements prepared and approved by the parties in accordance with this paragraph 7.

4. PRELIMINARY TENANT IMPROVEMENT PLANS: The term "Preliminary Tenant Improvement Plans" shall mean those plans and specifications for the Tenant Improvements prepared and approved by the parties in accordance with this paragraph 7.

5. TENANT IMPROVEMENTS: The term "Tenants Improvements" shall mean all partitions, windows, walls, wall coverings, HVAC equipment, lighting, ceilings, utility fixtures and other improvements and fixtures, installed in the Building Shell to the extent that such improvements and fixtures are specified on the Final Tenant Improvement Plans and to the extent such improvements are not shown on the Building Shell Plans. Without limiting the generality of the foregoing, the Tenant Improvements shall also include the following: (i) water drains for water cooled systems to be used by Tenant, (ii) the cement pad for Tenant's generator, (iii) cement trash compactor pad, and (iv) exterior security fencing.

6. TENANT IMPROVEMENT ALLOWANCE/MOVING ALLOWANCE: The term
"Tenant Improvement Allowance" shall mean One Million Five Hundred Thirty Four Thousand Dollars ($1,534,000), which Landlord must contribute for construction of Tenant Improvements. The term "Moving Allowance" shall mean Sixty-One Thousand Three Hundred Sixty-Four Dollars ($61,364). Tenant may use the Moving Allowance for all of Tenant's moving and relocation expenses including without limitation the following: (i) the purchase of new furniture, (ii) transportation costs, (iii) the costs of installing telephone systems and computer cabling. The Tenant Improvement Allowance shall be reduced by the amount of the Moving Allowance used by Tenant.

7. TENANT IMPROVEMENT COSTS: The term "Tenant Improvement Costs" shall mean the lesser of (a) the Tenant Improvement Cost Estimate, or
(b) the sum of the following: (i) payments to third party contractors, subcontractors and materialman for the construction of the Tenant Improvements;
(ii) reasonable fees paid to architects, engineers and other construction professionals (other than employees of Landlord or of entities in any way affiliated with Landlord) for services required in connection with the design and construction of the Tenant Improvements; (iii) fees paid to architects, space planners, designers, inspectors and other construction professionals in connection with the design of the Tenant Improvements; (iv) utility connection charges incurred by Tenant; (v) permit and license fees paid for use and occupancy permits required for Tenant to occupy the Premises; (vi) the amounts paid to governmental authorities or agencies for inspections and issuance of building permits and approvals for the Improvements (but not that portion of such amounts applicable to, or based on the value of, the Building Shell);
(vii) a development fee (in lieu of any general conditions, overhead, profit or other fee) equal to eight percent (8%) of Tenant Improvement Costs. In no event shall Tenant Improvement Costs include (herein "Excluded Costs"): (i) charges and expenses for changes to either the Building Shell Plans or the Final Tenant Improvement Plans which have not been approved by Tenant in writing; (ii) wages, labor and overhead for overtime and premium time unless approved by Tenant in writing in Tenant's discretion; (iii) additional costs and expenses incurred by Landlord on account of any contractor's or subcontractor's default or construction defects; (iv) interest and fees for construction financing;
(v) off-site management or other general overhead costs incurred by Landlord;
(vi) bond premiums; (vii) costs for which Landlord has a right of reimbursement from others (including, without limitation, insurers and warrantors); (viii) the cost of bringing the Building Shell and surrounding lot into compliance with applicable building codes, environmental laws, or other statutes, laws, rules and regulations; (ix) costs of management, design and all other services provided by employees or affiliates of Landlord and the cost of any administration, profit and overhead for Landlord or any of its employees or affiliates in excess of the developer's fee mentioned above; (x) costs incurred as a result of delays caused by the acts or omissions of Landlord or its employees, agents, contractors or subcontractors; (xi) any expense or cost which is not required to be incurred in order to complete construction of the Tenant Improvements; (xii) any costs associated with the design or construction of the Building Shell; (xiii) any cost associated with a casualty or Act of God; and
(xiv) any costs associated with the removal of Hazardous Materials (as defined in paragraph 18) or asbestos from the Building or Premises. All of the foregoing "Excluded Costs" shall be the sole obligation of Landlord.

8. TENANT IMPROVEMENT COST ESTIMATE: The term "Tenant Improvement Cost Estimate" shall mean the total estimated cost of constructing the Tenant Improvements prepared and approved by Landlord and Tenant in accordance with this paragraph 7, as modified by change orders approved by Tenant in accordance with this paragraph 7. The Tenant Improvement Cost Estimate may contain a contingency reserve of one and one-half percent (1 1/2%) of the Tenant Improvement Costs. If such contingency reserve is not used by Landlord due to unforeseen conditions related to the construction of the Tenant Improvements, such contingency reserve shall not be a part of the Tenant Improvement Costs.

9. SUBSTANTIAL COMPLETION: The term "Substantial Completion" shall mean that (i) all necessary governmental approvals for occupancy of the Building have been obtained (including, if applicable, a certificate of occupancy); (ii) the Premises fully meet the Final Tenant Improvement Plans and the Building Shell Plans approved by Tenant; (iii) the Premises are in a "broom clean" finished condition; (iv) all utilities be supplied to the Premises are hooked up and available for use by Tenant; (v) Tenant has had fourteen (14) days to install its trade fixtures in the Building pursuant to subparagraph 7.N below;
(vi) Landlord has completed the Building Shell, including any modifications thereto described in EXHIBIT "B"; (vii) the Architect has certified that the Premises have been completed in accordance with the Final Tenant Improvement Plans; (viii) all incomplete or defective construction which interferes with Tenant's use of the Premises has been remedied and repaired, subject only to the completion of minor "punch list" items not interfering with Tenant's use of the Premises; and (ix) Landlord has offered to deliver possession of the Premises to Tenant.

B. PRELIMINARY PLANS FOR INTERIOR IMPROVEMENTS: Landlord and Tenant have agreed upon preliminary space plans for the Tenant Improvements which are attached hereto as EXHIBIT "C" (the "Preliminary Tenant Improvement Plans"). Landlord has provided Tenant with a preliminary cost estimate based upon the Preliminary Tenant Improvement Plans.

C. FINAL TENANT IMPROVEMENT PLANS AND COST ESTIMATE: Tenant shall cooperate with the Architect to that the Architect may prepare and deliver to Landlord proposed final plans, specifications and working drawings for the Tenant Improvements by May 20, 1991. Landlord shall submit any reasonable objections to the proposed final plans, specifications and working drawings to Tenant in writing within fourteen (14) days after Landlord's receipt of same and shall submit a proposed tenant improvement cost estimate for the Tenant Improvements shown on the proposed final plans, specifications and working drawings, as amended by the changes reasonably made by Landlord. If Tenant disapproves the cost estimate or the proposed final plans with Landlord's modifications in any respect, then within seven (7) days following receipt of the proposed final plans and cost estimate, Tenant may deliver to Landlord its written proposal for the changes necessary, in Tenant's opinion, to satisfy Tenant's objections or to reduce costs. If Tenant proposes changes to the proposed final plans for the Tenant Improvements, Landlord shall not unreasonably withhold its approval of such change and the parties shall confer and negotiate in good faith to reach agreement on specific required modifications to the proposed final plans and costs estimate as a consequence of such change. If Tenant believes that the cost estimate is incorrect, it may require that all or any portion of the work be submitted for competitive bids. The final plans, modified for changes proposed by Tenant and approved by Landlord pursuant to this paragraph, shall be the approved Final Tenant Improvement Plans and the cost estimate approved by Tenant shall be the Tenant Improvement Cost Estimate for the purposes of this Addendum.

D. TERMINATION: Tenant shall have the right in Tenant's discretion to terminate this Lease by delivery of written notice within five (5) days of Tenant's receipt of the final plans to Landlord if both (i) the final cost estimate for the final plans exceeds twenty-five dollars and fifty cents ($25.50) per square foot, and (ii) the final plans are consistent in scope with the Preliminary Tenant Improvement Plans.

E. APPLICATION FOR APPROVALS: As soon as the Final Tenant Improvement Plans are approved by Landlord and Tenant, Landlord shall submit the approved Final Tenant Improvement Plans to all appropriate governmental agencies for their approval and issuance of all required permits. Landlord shall use its best efforts to obtain all governmental approvals and permits necessary for construction of the Premises in accordance with the Final Tenant Improvement Plans on or before July 15, 1991. Landlord and Tenant shall initial the Final Tenant Improvement Plans immediately after all governmental approvals and permits have been obtained and shall append the approved Final Tenant Improvement Plans and Tenant Improvement Cost Estimate to this Lease.

F. CHANGES TO PLANS: After the Final Tenant Improvement Plans have been approved by Landlord and Tenant as provided above, neither party shall have the right to require extra work or make any modifications with respect to the construction of the Tenant Improvements, without the prior written consent of the other party as to (i) the change, (ii) any estimated delay in the scheduled completion date of the Premises caused by the change, and (iii) any modification to the Tenant Improvement Cost Estimate as a consequence of the change. Landlord shall not unreasonably withhold or delay its consent to changes or extra work proposed by Tenant with respect to the Tenant Improvements and, if the change will not materially modify the exterior appearance of the Building Shell, then Landlord also shall not unreasonably withhold its consent to change in the Building Shell. Tenant may withhold its consent, in its discretion, to any change in the Final Tenant Improvement Plans or the Tenant Improvement Cost Estimate.

G. GENERAL CONTRACTOR: Landlord shall serve as the general contractor for construction of the Tenant Improvements. Landlord shall cause each subcontract to be competitively bid by three contractors for construction of the Tenant Improvements. The contractors to whom such work shall be competitively bid shall be selected by Landlord and approved by Tenant, which approval shall not be unreasonably withheld. All bids shall be opened simultaneously. All work shall be awarded based upon the lowest bid submitted unless agreed in writing by Tenant. Notwithstanding Tenant's right to approve the subcontractors, each subcontractor is a contractor only of Landlord and Tenant shall have no liability to the subcontractor under any subcontract or otherwise with respect to the Building.

H. LANDLORD'S OBLIGATION TO CONSTRUCT: As soon as the Final Tenant Improvement Plans have been approved, all necessary governmental approvals and permits have been obtained, and the bids have been accepted, Landlord shall cause construction of the Tenant Improvements to be commenced and diligently prosecuted to completion, so that the Premises will be Substantially Complete as soon as possible.

I. SCHEDULE OF CRITICAL DATES: Set forth in this paragraph is a schedule of certain critical dates relating to Landlord's and Tenant's respective obligations regarding the construction of the Building Shell and the Interior Improvements (the "Schedule of Performance"). Landlord and Tenant shall each be obligated to use reasonable efforts to perform their respective obligations within the time periods set forth in this Schedule of Performance and elsewhere in this Construction Addendum. The Schedule of Performance is as follows:

                                                             (Days After
                    ACTION                                  Another Event
--------------------------------------------------     -------------------------

1. Tenant Submits Proposed Final Interior Plans On or before May 20, 1991

2. Landlord Submits Reasonable Objections to 14 days after Item 1 Proposed Final Tenant Improvement Plans and Submits Proposed Tenant Improvement Cost Estimate Based On Bids

3. Tenant Modifies Plans To Reduce Tenant 7 days after Item 2 Improvement Cost Estimate, or to Resolve Tenant's Objections if required or Tenant so elects

4. Landlord Rebids Tenant Improvement Cost, if 7 days after Item 3 appropriate, and Submits Revised Tenant Improvement Cost Estimate To Tenant

5. Parties Finally Approve Final Tenant June 15, 1991 Improvement Plans

6. Issuance Of All Construction Permits For July 15, 1991 Landlord's

7. Last Date For Issuance Of All Construction October 1, 1991 Permits (or Tenant may terminate this Lease in accordance with this paragraph 7)

8. Scheduled Substantial Completion Date September 30, 1991

9. Last Date For Delivery of Premises March 15, 1992 Substantially Complete (or Tenant may terminate as set forth in this paragraph 7)

J. DELIVERY OF POSSESSION: When the Premises are Substantially Complete, Landlord shall deliver possession of the Premises to Tenant. However, Tenant shall have no obligation to accept possession of the Premises or commence payment of rent until the Commencement Date as defined in subparagraph 7.T.

K. FAILURE TO DELIVER: Landlord hereby acknowledges that its failure to deliver to Tenant Premises that are Substantially Complete on or before September 30, 1991 will cause Tenant to incur costs not contemplated by the Lease, the exact amount of which will be extremely difficult to ascertain. Consequently, if the Commencement Date has not occurred on or before September 30, 1991, then in addition to Tenant's other rights and remedies, the date Tenant is otherwise obligated to commence paying monthly and additional rent shall be delayed two days for each day that the Commencement Date is delayed beyond September 30, 1991.

L. TENANT'S CONTRIBUTION TO INTERIOR IMPROVEMENT COSTS: Tenant's obligation to pay the cost of constructing the Premises shall be limited to the positive difference, if any, between (i) the lesser of the Tenant Improvement Costs or the Tenant Improvement Cost Estimate approved by Tenant in writing; and
(ii) the Tenant Improvement Allowance. The parties acknowledge that Tenant shall have no obligation to pay any cost of constructing any portion of the Tenant Improvements in excess of such amount. If the Tenant Improvement Cost Estimate is more than the Tenant Improvement Allowance, Tenant shall pay to Landlord the difference (described in the first sentence of this subparagraph) on the later to occur of the following (i) fifteen (15) days after the Commencement Date; or (ii) within fifteen (15) days after receipt of a statement and reasonable documentation of such costs from Landlord. If Tenant pays any such excess Tenant Improvement Costs, as soon as possible after commencement of the Lease, Landlord and Tenant shall designate as Tenant's property, Tenant Improvements having a cost approximately equal to the excess paid by Tenant. Property designated as Tenant's property under the terms of this paragraph may be removed from the Premises at any time by Tenant and Tenant shall be entitled to all investment tax credit, depreciation, and other tax attributes relating to such property. In determining which Tenant Improvements will be designated as Tenant's property, the parties shall confer in good faith and shall give preference to those Tenant Improvements which are most readily removable from the Building and which shall have the greatest utility for Tenant outside of the Building but which are not required for the basic operation of the tenant. At the expiration or sooner termination of the Lease Term, all Tenant Improvements not designated as Tenant's property under this paragraph shall be surrendered to Landlord in accordance with the terms of the Lease. If the Tenant Improvement Cost Estimate exceeds the Tenant Improvement Allowance, Tenant shall deposit a letter of credit in a form reasonably acceptable to Landlord to secure the amount by which Tenant is required to contribute to the cost of the Tenant Improvements pursuant to this subparagraph. Landlord shall be entitled to draw against the letter of credit in an amount equal to the amount by which Tenant fails to make its required contribution to the cost of the Tenant Improvements, provided that Landlord certifies to the issuer of the letter of credit under penalty of perjury that (i) the Commencement Date under the Lease has occurred,
(ii) The draw against the letter of credit represents an amount which Tenant has failed to make its required contribute to Landlord for the construction of the Tenant Improvements under the Lease within the time period permitted by the Lease.

M. RIGHTS IF ALLOWANCE UNUSED: If the amount of the Tenant Improvement Costs (and any amount designated by Tenant for future alterations to the Premises) is less than the Tenant Improvement Allowance, then beginning on the first anniversary of the Commencement Date, the monthly rental under the Lease shall be reduced at the rate of Fifteen Dollars ($15.00) per month for each One Thousand Dollars ($1,000) of the Tenant Improvement Allowance not used.

N. TENANT'S RIGHT TO ENTER: Tenant and its authorized representatives shall have the right to enter the Building at all reasonable times for the purpose of inspecting the progress of the construction of the Tenant Improvements. Landlord shall give Tenant at least fifteen (15) days prior written notice of its estimated date for Substantial Completion of the Premises, so that Tenant may cause its fixtures and equipment to be ordered. When the construction of the Tenant Improvements has proceeded to the point where Tenant's work of installing its fixtures and equipment in the

Building can be commenced in accordance with good construction practice, Landlord also shall notify Tenant to that effect and shall permit Tenant and its authorized representatives and contractors to have access to the Building for a period of not less than fifteen (15) days for the purpose of installing Tenant's trade fixtures and equipment.

O. CONSTRUCTION WARRANTY FOR THE BUILDING: Notwithstanding anything to the contrary in the Lease, effective upon delivery of the Premises to Tenant, Landlord does hereby warrant (i) that the Building Shell, Tenant Improvements and Premises fully comply with all applicable covenants, conditions or restrictions and the rules, regulations, codes, statutes, ordinances, and laws of all governmental and quasi-governmental authorities having jurisdiction over the Premises; (ii) that the Tenant Improvements are constructed in accordance with the Final Tenant Improvement Plans and in a good and workmanlike manner; and (iii) that all material and equipment installed at the Premises conform to the Final Tenant Improvement Plans and are new and otherwise of good quality. Notwithstanding anything to the contrary contained in the Lease, Tenant's acceptance of the Premises shall not be deemed a waiver of the foregoing warranty or any other warranty of Landlord under the Lease, and Landlord shall promptly repair all violations of the warranty set forth in this paragraph at its sole cost and expense.

P. RISK OF LOSS: Risk of loss of the Premises prior to the Commencement Date of the Lease shall be borne by Landlord. At all times prior to the Commencement Date, Landlord at its sole cost and expense shall maintain so-called contingent liability and broad form "builder's risk" insurance with coverage in an amount equal to the replacement cost of the Building Shell plus the Tenant Improvement Cost Estimate. The insurance policy (i) shall be in a form reasonably satisfactory to Tenant, (ii) shall be carried with a company reasonably acceptable to Tenant, (iii) shall provide that such policy shall not be subject to cancellation or change except after at least ten (10) days prior written notice to Tenant, and (iv) shall contain a "cross liability" provision insuring Landlord and Tenant against any loss caused by the negligence of the other party. If the Building is damaged or destroyed prior to the Commencement Date, Tenant shall have the right to terminate the Lease, if the Premises, in the reasonable opinion of the Architect, cannot be Substantially Complete prior to March 15, 1992. If the Lease is so terminated, Tenant shall be entitled to that amount of the builder's risk insurance proceeds equal to the amount, if any, paid by Tenant for construction of the Tenant Improvements prior to the termination date. If the Premises are damaged or destroyed and the Lease is not terminated pursuant to the terms of the Lease, Landlord shall promptly and diligently complete construction of the Building in accordance with this Lease and all insurance proceeds with respect to the loss shall be paid to an independent depository, reasonably acceptable to Landlord and Tenant, for disbursement to the contractors completing the Building as the work progresses in accordance with customary institutional lending practices.

Q. RIGHTS UPON TERMINATION: If the Lease is terminated pursuant to any provision of this paragraph 7, then in addition to all other amounts due Tenant hereunder, all security deposits, letters of credit, prepaid rent, shall be returned to Tenant promptly upon demand.

R. ACCOUNTING: Landlord shall submit to Tenant on a monthly basis an accounting of all Tenant Improvement Costs, certified as true and correct by Landlord. Tenant shall have the right to audit the books, records and supporting documents of Landlord during normal business hours, after giving Landlord at least twenty-four (24) hours prior notice to the extent reasonably necessary to determine the accuracy of any accounting. Within thirty (30) days after Substantial Completion, Landlord shall render to Tenant a final and detailed accounting of all Tenant Improvement Costs paid by Landlord and Tenant, certified as true and correct by Landlord. Tenant shall have the same audit rights as set forth above with respect to the monthly accounting. If such audit discloses that an overpayment was made by Tenant, there shall be an adjustment between Landlord and Tenant as soon as reasonably practicable such that each shall only be required to contribute to the payment of costs to the extent provided for in this paragraph 7.

S. TENANT DELAYS: For purposes of this Lease, the foregoing shall be deemed "Tenant Delays": (i) Tenant's failure to submit plans and information or review and approve information including the Tenant Improvement Cost Estimate by the dates set forth in this paragraph 7; or (ii) as a result of written change orders made by Tenant pursuant to the terms of this paragraph 7 after final approval of the Final Tenant Improvement Plans, to the extent specified in any written change order approved by Tenant in writing. In the event of such Tenant Delays, then the dates on which Tenant is entitled to free rent and to terminate this Lease on account of Landlord's failure to Substantially Complete the Premises shall be postponed one day for each day of the actual delay in Substantial Completion caused by such Tenant Delay. Furthermore, the date Tenant is otherwise obligated to begin paying rent shall occur one day earlier than the Commencement Date for each day that the Commencement Date is actually delayed as a result of a Tenant Delay; provided, however, that for purposes of this paragraph, the Commencement Date shall in no event be deemed to occur any date earlier than September 30, 1991 regardless of any Tenant Delay.

T. COMMENCEMENT DATE: If Landlord, for any reason whatsoever, cannot Substantially Complete the Premises on the estimated completion date of September 30, 1991, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom if due to circumstances beyond Landlord's control; but in such event the commencement and termination dates of the Lease and all other dates affected thereby shall be revised to conform to the date of Landlord's delivery of possession. The term of the Lease shall not commence (the "Commencement Date") until the later of September 30, 1991 or the date on which the Premises are Substantially Complete as defined herein.

8. ACCEPTANCE OF PREMISES AND COVENANTS TO SURRENDER.

A. PUNCH LIST: As soon as Landlord reasonably believes that the Premises are Substantially Complete, as defined in paragraph 7.A.8 hereof, Landlord and Tenant shall together walk through and inspect the work and prepare a written "punch list" of incomplete or defective construction. Landlord shall use its best efforts to complete and/or repair any items on the "punch list" within thirty (30) days after the parties have prepared the "punch list" or as soon thereafter as practicable in the exercise of due diligence.

B. CORRECTION OF DEFECTS: Notwithstanding anything contrary in the Lease, Tenant's acceptance of the Premises or submission of a "punch list" shall not be deemed a waiver of Tenant's right to have defects in the Tenant Improvements and the Premises repaired at Landlord's sole expense. Tenant shall give notice to Landlord whenever any such defect becomes reasonably apparent, and Landlord shall repair such defect as soon as practicable. Landlord also hereby assigns to Tenant all warranties with respect to the Premises which would reduce Tenant's maintenance obligations hereunder and shall cooperate with Tenant to enforce all such warranties. Without limiting any other obligation of Landlord hereunder, Landlord shall correct any defect or problem in the roof membrane (except for routine maintenance items as set forth in subparagraph 11.A) for a period of one (1) year after the Commencement Date. Further, without limiting any obligation of Landlord under this Lease, Landlord warrants that it will obtain an express one (1) year warranty from its contractors and suppliers on all other items and will not waive the protection of any statute or case law providing for a longer period to assert a claim for defects in the Premises or any item therein.

C. SURRENDER: Tenant agrees on the last day of the Lease Term, or promptly following any sooner termination, to surrender the Premises to Landlord in the condition received by Tenant, reasonable wear and tear, acts of God, casualties, condemnation, Hazardous Materials as defined in paragraph 18 hereof (other than those stored, used, or disposed of by Tenant in or about the Premises in violation of "Law" as defined in subparagraph 11.B.1), and Alterations as defined in subparagraph 10.A made by Tenant which Landlord has indicated that Tenant shall not be required to remove, excepted. Tenant shall ascertain from Landlord within thirty (30) days before the end of the Lease Term whether Landlord will require Tenant to remove any Alterations made by Tenant at the Premises; provided that Landlord shall not require Tenant to remove any Alteration which Landlord has previously indicated may remain at the Premises. If Landlord shall so require, then Tenant shall remove such Alterations as Landlord may designate and shall repair any damage to the Premises occasioned by the removal before the expiration of the Lease Term or promptly following any sooner termination at Tenant's sole cost and expense. On or before the end of the Lease Term or promptly following any sooner termination, Tenant shall remove all of its personal property and trade fixtures from the Premises, and all property not so removed shall be deemed to be abandoned by Tenant.

9. USES PROHIBITED. Tenant shall not commit, or suffer to be committed, any waste or nuisance upon the Premises, or allow any sale by auction upon the Premises, or allow the Premises to be used for any unlawful purpose, or place any loads upon the floor, walls, or ceiling which endanger the structure, or use any machinery or apparatus which will vibrate or shake the Premises or the Building so as to damage the Premises other than ordinary wear and tear or otherwise in violation of applicable Law, or place any harmful liquids, waste materials, or Hazardous Materials in the drainage system of, or upon or in the soils surrounding, the Building in violation of applicable Law. No materials, supplies, equipment, finished products or semi-finished products, raw materials or articles of any nature or any waste materials, refuse, scrap or debris shall be stored upon or permitted to remain on any portion of the Premises outside of the Building except for trash

compactors, chemical storage cabinets, a screened, equipment enclosure and accumulated pallets consolidated for disposal.

10. ALTERATIONS AND ADDITIONS.

A. CONSTRUCTION OF ALTERATIONS: Tenant may construct non-structural alterations, additions and improvements ("Alterations") in the Premises without Landlord's prior approval, if the cost of the item in question does not exceed Twenty-Five Thousand Dollars ($25,000). If Tenant desires to make Alterations costing more than Twenty-Five Thousand Dollars ($25,000) or structural Alterations, Landlord's consent shall not be unreasonably withheld, and, if Landlord does not notify Tenant in writing of its reasonable disapproval of such Alteration within fourteen (14) days following Tenant's written request for approval and delivery to Landlord of the proposed plans, then Landlord shall be deemed to have approved the proposed Alteration. Upon the request of Tenant, Landlord shall within the above-stated fourteen (14) day period advise Tenant in writing as to whether Landlord shall require removal of any Alteration in question upon the expiration or earlier termination of the Lease Term. After having obtained Landlord's consent, Tenant agrees that it will not proceed to make such Alterations until three (3) days from the receipt (or deemed receipt) of Landlord's consent, in order that Landlord may post appropriate notices to avoid any liability to contractors or material suppliers for payment for Tenant's improvements. Tenant will at all times permit such notices to be posted and to remain posted until the completion of work.

B. OWNERSHIP OF ALTERATIONS: All Alterations, trade fixtures and personal property installed in the Premises at Tenant's expense ("Tenant's Property") shall at all times remain Tenant's property and Tenant shall be entitled to all depreciation, amortization and other tax benefits with respect thereto. Except for Alterations which cannot be removed without structural injury to the Premises, Tenant may remove Tenant's Property from the Premises at any time, provided Tenant repairs any damage caused by such removal. Landlord shall have no lien or other interest whatsoever in any item of Tenant's Property located in the Premises or elsewhere, and Landlord hereby waives all such liens and interests. Within ten (10) days following Tenant's request, Landlord shall execute documents in reasonable form to evidence Landlord's waiver of any right, title, lien or interest in Tenant's Property located in the Premises.

11. MAINTENANCE OF PREMISES.

A. TENANT MAINTENANCE: Subject to Landlord's obligations as set forth in this Lease and to the amortization of capital items as set forth in subparagraph 11.B, Tenant shall, at its sole cost, keep and maintain, repair and replace, the Premises and appurtenances and every part hereof, including but not limited to, the interior non-load bearing walls, the roof membrane, the sidewalks, the parking areas, the plumbing, electrical and HVAC systems, and the Tenant Improvements in good and sanitary order, condition, and repair. Notwithstanding the foregoing, Landlord shall repair and maintain in good condition, at Landlord's sole cost, the structural portions of the Premises at all times during the Lease Term, including the foundation, exterior walls, load- bearing walls, and the roof structure. Tenant shall provide Landlord with a copy of a service contract between Tenant

and a licensed air-conditioning and heating contractor which contract shall provide for maintenance of all air conditioning and heating equipment at the Premises at such intervals as may be reasonably required by the manufacturer of such equipment. Subject to the obligations of Landlord hereunder and the amortization of capital items as set forth in subparagraph 11.B, Tenant shall pay the cost of all air-conditioning and heating equipment repairs or replacements which are either excluded from such service contract or any existing equipment warranties. Tenant shall be responsible for the preventive maintenance of the roof membrane, which responsibility shall be deemed properly discharged if (i) Tenant contracts with a licensed roof contractor who is reasonably satisfactory to both Tenant and Landlord, at Tenant's sole cost, to inspect the roof membrane at least every six months with the first inspection due six (6) months after the Commencement Date and (ii) Tenant performs, at Tenant's sole cost, all routine preventive maintenance recommendations made by such contractor within a reasonable time after such recommendations are made. Such preventive maintenance might include acts such as clearing storm gutters and drains, removing debris from the roof membrane, trimming trees overhanging the roof membrane, applying coating materials to seal roof penetrations, repairing blisters, and other routine measures. Upon Landlord's advance written request, Tenant shall provide to Landlord a copy of such preventive maintenance contract and paid invoices for the recommended work for which Tenant is responsible. Subject to Landlord's obligations hereunder and to the amortization of capital items set forth below, Tenant agrees to water, maintain and replace, when necessary, any shrubbery and landscaping.

B. EXCLUDED COSTS: Notwithstanding anything to the contrary in this Lease, in no event shall Tenant have any obligation to perform or to pay directly, or to reimburse Landlord for, all or any portion of the following repairs, maintenance, improvements, replacements, premiums, claims, losses, fees, charges, costs and expenses (collectively "Costs") nor shall any portion of the Tenant Improvement Costs (as defined in paragraph 7) consist of the following items, all of which shall be the responsibility of Landlord:

1. LOSSES CAUSED BY OTHERS: Costs occasioned by the act, omission or violation of covenants, statutes, laws, orders, rules, underwriter's requirements, regulations, private restrictions, building codes or ordinances (collectively, "Laws"), a misrepresentation, or breach of this Lease, by Landlord or its agents, employees, contractors, subcontractors, tenants, or invitees.

2. CASUALTIES AND CONDEMNATIONS: Costs occasioned by fire, acts of God, or other casualties or by the exercise of the power of eminent domain, provided that Tenant will pay insurance deductibles but only to the extent approved by Tenant in writing in accordance with subparagraph 12.D of this Lease.

3. REIMBURSABLE EXPENSES: Costs for which Landlord has a right of reimbursement from others or for which Landlord actually receives reimbursement.

4. CONSTRUCTION DEFECTS AND COMPLIANCE WITH LAW: Costs
(i) relating to a failure of the Premises to conform to all CC&Rs, underwriter's requirements or Laws as of the

Commencement Date; or (ii) relating to construction defects; or (iii) required to conform the Premises to the Final Tenant Improvement Plans.

5. HAZARDOUS MATERIALS: Except to the extent caused by the disposal, release, emission or storage of the Hazardous Material in question by Tenant, its agents, employees, invitees or contractors in violation of Law, Costs incurred to investigate the presence of any Hazardous Materials, Costs to respond to any claim of Hazardous Material contamination or damage, Costs to remove any Hazardous Material from the Premises, judgments or other Costs incurred in connection with any Hazardous Materials exposure or releases, or any other Cost associated with a Hazardous Material.

6. CAPITAL IMPROVEMENTS: If Tenant's maintenance or repair obligations as set forth in this Lease would require Tenant to perform or pay for any item which would be properly be capitalized under generally accepted accounting principles and which costs in excess of Ten Thousand Dollars ($10,000), then Landlord shall perform such repair or make such replacement promptly after notification by Tenant and the cost of such item or improvement shall be allocated as follows. Landlord and Tenant shall establish the useful life of the item in question based upon generally accepted accounting principles. Tenant shall pay a proportion of the cost equal to the actual cost of such improvement or item paid by Landlord to the third party contractor performing the maintenance or furnishing the replacement times a fraction, the numerator of which is the number of months remaining in the initial Lease Term, and the denominator of which is the useful life of the improvement in months. Tenant shall make such payment to Landlord within five (5) days after written demand by Landlord. Nothing contained in this paragraph 11.B.6 shall require Landlord to remodel, refurbish or reconfigure the Premises except as may be incidental to Landlord's performance of the maintenance and repair obligations Landlord is required to perform hereunder.

7. PARKING LOT: Costs relating to the repaving or resurfacing of the parking area if such repaving or resurfacing is required more frequently than once every five (5) years.

12. INSURANCE.

A. TENANT'S USE: Tenant shall not use, or permit the Premises, or any part thereof, to be used for any unlawful purpose and no use shall be made or permitted to be made of the Premises, nor acts done, which will cause an increase in premiums for the insurance to be maintained by Landlord (unless Tenant agrees to pay for the cost of such increase) or a cancellation of any insurance policy covering the Building. Tenant shall, at its sole cost and expense, comply with any and all reasonable requirements pertaining to said Premises of any insurance organization or company necessary for the maintenance of reasonable fire and public liability insurance covering the Building, excluding structural improvements or alterations not related to Tenant's specific and particular use.

B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in force fire and extended coverage insurance in so-called "all risk" form covering the Premises and all of the Tenant Improvements paid for by Landlord in the amount of their full replacement value. Tenant agrees to pay to the Landlord as additional rent, on demand, the cost of such insurance as evidenced by insurance billings to Landlord. Payment shall be due to Landlord on the later of:
(i) fifteen (15) days after written invoice to Tenant; or (ii) twenty (20) days prior to the due date of such premiums. Tenant's obligation under this paragraph will be prorated to reflect the commencement and termination dates of this Lease. With respect to earthquake insurance, Landlord agrees to purchase earthquake coverage and Tenant agrees to reimburse Landlord for the additional cost of such insurance provided: (i) Tenant requests such coverage and in such case the premium for such earthquake coverage shall be shared equally between Landlord and Tenant and Tenant's share of such cost shall be payable in the manner set forth above for casualty insurance; or (ii) such insurance is required by Landlord's lender and is customarily required by institutional lenders on comparable buildings in Santa Clara County, and in such case the premium for such earthquake coverage shall be shared equally between Landlord and Tenant and Tenant's share of such cost shall be payable in the manner set forth above for casualty insurance. If the Project is located in a flood zone, Landlord shall also maintain flood insurance insuring the Building and Tenant Improvements paid for by Landlord for their full replacement value, and Tenant shall pay for flood insurance premiums in the manner set forth herein.

C. TENANT'S INSURANCE: Tenant agrees to insure its personal property and Alterations. Tenant shall name Landlord as an additional insured under such commercial general liability policy, and shall deliver a copy of such policy to Landlord within thirty (30) days after the Commencement Date and upon any renewal of such policy. Tenant's commercial general liability policy shall provide for thirty (30) days' prior written notice to Landlord of any cancellation or termination.

D. INSURANCE DEDUCTIBLES: Tenant shall have the right to specify the deductible of any insurance policy to be carried by Landlord under this Lease and shall reimburse Landlord, in the manner set forth in subparagraph 12.B, for the premiums payable with respect to insurance policies for which Tenant is responsible under subparagraph 12.B containing the deductible so specified by Tenant or on insurance policies for which Tenant fails to specify a deductible amount within thirty (30) days following Landlord's written demand for such deductible specification. In the event of damage to the Premises covered by Landlord's "all risk" casualty policy (and not caused by the negligence or willful misconduct of Landlord or Landlord's employees, agents, contractors, subcontractors, or invitees), Tenant shall pay the amount of any deductible under such policy if this Lease is not terminated in connection with such casualty as provided in paragraph 27 hereof, provided Tenant has approved in writing in advance the amount of such deductible. Tenant shall in no event be required to pay for any flood or earthquake insurance deductibles.

E. WAIVER: Notwithstanding anything to the contrary in this Lease, Landlord and Tenant hereby waive any rights each may have against the other on account of any loss or damage that is caused or results from a risk which is actually insured

against, which is required to be insured against under this Lease, or which would normally be covered by a standard form of full replacement value "all risk extended coverage" policy of casualty insurance, regardless of whether such loss or damage is due to the negligence of Landlord or Tenant or of their respective agents, employees, subtenants, contractors, assignees, invitees or any other cause. Each party shall use its best efforts to obtain from their respective insurance companies a waiver of any right of subrogation which said insurance company may have against the Landlord or the Tenant, as the case may be. If such insurance policy cannot be obtained with such waiver of subrogation, or if such waiver of subrogation is only available at additional cost and the party for whose benefit the waiver is not obtained does not pay such additional cost, then the party obtaining such insurance shall immediately notify the other party of that fact.

13. TAXES. Tenant shall be liable for all taxes levied against Tenant's personal property and trade or business fixtures, and agrees to pay, as additional rental, all real estate taxes and special assessment installments levied with respect to the Premises. It is understood and agreed that Tenant's obligation under this paragraph will be prorated to reflect the commencement and termination dates of this Lease. Tenant shall pay such taxes on the later of:
(i) fifteen (15) days after written notice from Landlord (which notice shall contain a copy of the tax bill in question); or (ii) ten (10) days before the tax delinquency date. In any time during the term of this Lease a tax, excise on rents, business license tax, or any other tax, however described, is levied or assessed against Landlord, as a substitute or addition in whole or in part for real estate taxes assessed or imposed on land or Buildings, Tenant shall pay and discharge its share of such tax or excise on rents or other tax before it becomes delinquent. In the event that a tax is placed, levied, or assessed against Landlord and the taxing authority takes the position that the Tenant cannot pay and discharge its prorata share of such tax on behalf of the Landlord, then at the sole election of the Landlord, the Landlord may increase the rental charged hereunder by the exact amount of such tax. Notwithstanding the above, if property taxes increase during the lease term as a result of a reassessment due to voluntary change of ownership, Tenant shall be responsible for payment of the resulting property tax increase as follows: during the first twelve months following change of ownership, Tenant shall be responsible for payment of one third (1/3) of the tax increase; during the second twelve months, Tenant shall be responsible for payment of two thirds (2/3) of the tax increase. If the reassessment occurs as of a date other than the commencement of the tax year, Tenant's liability for payment of the property tax increase described herein shall be pro rated on the basis of a 365 day year for the purpose of calculating the amounts payable by Tenant during the two years following the reassessment. After the end of the second twelve month period, Tenant shall be fully responsible for payment of the property tax increase. Notwithstanding anything to the contrary herein, Tenant shall not be required to pay any portion of any tax or assessment: (i) levied on Landlord's rental income, unless such tax or assessment is imposed in lieu of real property taxes; (ii) in excess of the amount which would be payable if such tax or assessment were paid in installments over the longest possible term; (iii) imposed on land and improvements other than the Premises; or (iv) attributable to Landlord's net income, inheritance, gift, transfer, franchise or estate taxes. Tenant may in good faith contest any real property taxes provided that Tenant indemnifies Landlord from any loss or liability in connection therewith.

14. UTILITIES. Tenant shall pay directly to the providing utility all water, gas, heat, light, power, telephone and other utilities supplied to the Premises. Landlord shall not be liable for a loss of or injury to property, however occurring, through or in connection with or incidental to furnishing or failure to furnish any of utilities to the Premises and Tenant shall not be entitled to abatement or reduction of any portion of the rent so long as any failure to provide and furnish the utilities to the Premises due to any cause beyond the Landlord's reasonable control. Notwithstanding the foregoing, if utilities are not available to the Premises for a period of fifteen (15) days or more and such failure does not result from Tenant's failure to make the payments required herein, Tenant shall be entitled to an abatement of rent to the extent of the interference with Tenant's use of the Premises occasioned thereby. If such interference is not corrected within one hundred eighty (180) days following the interference or interruption, then Tenant shall be entitled to terminate this Lease.

15. ABANDONMENT. Tenant shall not abandon the Premises at any time during the Lease Term; and if Tenant shall abandon or surrender the Premises, or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall be deemed to be abandoned, at the option of Landlord.

16. FREE FROM LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by Tenant; provided, however, that if Tenant, in good faith, elects to contest such lien, Tenant shall furnish a bond or other security reasonably acceptable to Landlord and Tenant shall not then be deemed in default under this Lease.

17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at its sole cost and expense, comply with the requirements of all municipal, state and federal authorities now in force, or which may hereafter be in force, pertaining to Tenant's specific and particular use of the Premises, and shall faithfully observe in the use of the Premises all municipal ordinances and state and federal statutes now in force or which may hereafter be in force. The judgement of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such ordinance or statute in Tenant's use of the Premises, shall be conclusive of that fact as between Landlord and Tenant. At the Commencement Date, the Premises shall conform to all requirements of covenants, conditions, restrictions and encumbrances ("CC&Rs"), all underwriters' requirements, and all Laws applicable thereto. Tenant shall not be required to construct or pay the cost of complying with any CC&Rs, underwriters' requirements or Laws requiring construction of improvements in the Premises which are properly capitalized under generally accepted accounting principles, unless such compliance is necessitated solely because of Tenant's particular and specific use of the Premises or Alterations to the Premises other than the Tenant Improvements. Any structural requirements or Costs necessitated by CC&R's, underwriters' requirements or Laws which are imposed on buildings or real estate generally (as opposed to the Premises because of Tenant's specific and particular use or Alteration to the Premises other than the Tenant Improvements) shall be performed or paid by Landlord without reimbursement by Tenant.

18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE.

A. TENANT'S RESPONSIBILITY: Tenant shall not bring, allow, or use upon the Premises, or generate or create at or emit or dispose from the Premises any chemicals, toxic or hazardous gaseous, liquid or solid materials or waste, including without limitation, material or substance having characteristics of ignitability, corrosivity, reactivity, or extraction procedure toxicity or substances or materials which are listed on any of the Environmental Protection Agency's lists of hazardous wastes or which are identified in Sections 66680 through 66685 of Title 22 of the California Administrative Code as the same may be amended from time to time (which are referred to in this Lease as "Hazardous Materials") in violation of Law. Tenant shall comply, at its sole cost, with all laws pertaining to, and shall indemnify and hold Landlord harmless from any claims, liabilities, costs or expenses incurred or suffered by Landlord arising from such bringing, allowing, using, generating, creating, emitting or disposing of any such Hazardous Materials by Tenant. Tenant's indemnification and hold harmless obligations as hereinbefore specified include, without limitation,
(i) claims, liability, costs or expenses resulting from or based upon administrative, judicial (civil or criminal) or other action, legal or equitable, brought by any private or public person under common law or under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any other federal, state, county or municipal law, ordinance or regulation,
(ii) claims, liabilities, costs or expenses pertaining to the cleanup or containment of wastes, the identification of the pollutants in the waste, the identification of scope of any environmental contamination, the removal of pollutants from soils, riverbeds or aquifers, the provision of an alternative public drinking water source, or the long term monitoring of ground water and surface waters, all to the extent required by applicable law, and (iii) all costs of defending such claims. Tenant further agrees to properly close the facility with regard to Hazardous Materials and obtain a Closure Certificate from the local administering agency for any Hazardous Material used, generated, emitted or disposed of by Tenant in or about the Premises if so required by Law upon the expiration or earlier termination of the Lease.

B. NO RESPONSIBILITY: Notwithstanding the foregoing or anything in this Lease, Tenant shall have no responsibility to Landlord, Landlord's employees, contractors, officers, agents or partners or to any third party for any Hazardous Material which was not released, stored, disposed of, emitted, or discharged by Tenant, its agents, invitees, employees and contractors in or about the Premises and which is or comes to be, present on or about the Premises, or the soil or groundwater thereof, at any time. Landlord, at its sole expense, shall promptly comply with all Laws, orders, injunctions, judgments, mandates and directives of any applicable governmental authority concerning the investigation, removal, monitoring or remediation of any Hazardous Materials present on the Premises or the groundwater thereof, except to the extent that the Hazardous Material in question was released, stored, disposed of, emitted or discharged by Tenant or its employees, invitees, agents, or contractors in or about the Premises. Landlord hereby waives all claims, liabilities, costs, expenses or obligations, known or unknown, against Tenant with respect to Hazardous Materials present on the Premises as of the Commencement Date or which come to be present on the Premises after the Commencement Date, except to the extent that the Hazardous Materials in question were released, emitted, or discharged onto the Premises or Project by Tenant or its employees, agents, contractors, subcontractors or invitees. In this regard, Landlord acknowledges

that it is aware of and hereby waives the provisions of California Civil Code
Section 1542 (or any similar or successor Law) which provides as follows:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor, at the time of executing the release, which if known by him must have materially affected the settlement with the debtor."

C. LANDLORD'S REPRESENTATION AND INDEMNITY: Landlord hereby represents and warrants to Tenant, that except as outlined in the Levine Fricke report dated April 20, 1987, that to the best of Landlord's knowledge: (i) the Premises and all operations conducted thereon prior to the Commencement Date are in compliance with all Laws regarding Hazardous Materials ("Hazardous Material Laws"), (ii) any handling, transportation, storage, treatment, disposal, release or use of Hazardous Materials that has occurred on or about the Premises prior to the Commencement Date has been in compliance with all Hazardous Materials Laws, and (iii) no litigation has been brought or threatened, nor any settlements reached with any governmental or private party, concerning the actual or alleged presence of Hazardous Materials on or about the Premises, nor has Landlord received any notice of any violation, or any alleged violation of any Hazardous Materials Laws, pending claims or pending investigations with respect to the presence of Hazardous Materials on or about the Premises. Except to the extent that the Hazardous Material in question was released, emitted, used, stored, manufactured, transported or discharged by Tenant, or its agents, employees and contractors, Landlord shall indemnify, protect, defend and hold harmless Tenant and its employees, officers, directors, successors and assigns arising from or in connection with any claim, remediation obligation, investigation obligation, liability, cause of action, penalty, attorneys' fee, cost, expense or damage owing or alleged to be owing by Tenant to any third party which relates to the removal investigation, monitoring or remediation of any Hazardous Material present on or about the Premises or the soil, groundwater or surface water thereof, in any of the foregoing cases without regard to whether the Hazardous Materials were present on the Premises as of the Commencement Date or whether the presence of the Hazardous Materials was caused by Landlord. The foregoing indemnity shall not extend to any claim to the extent such claim is based upon an interference with Tenant's business activities resulting from the presence of such Hazardous Materials.

D. NOTIFICATION: Landlord and Tenant shall notify the other of the existence of any reports, recommendations or studies prepared in connection with any investigation for the presence of Hazardous Materials on or about the Premises and shall give written notice to the other as soon as reasonably practicable of (i) any communication received from any governmental authority concerning any Hazardous Materials which relates to the Premises; and (ii) any contamination of the Premises by Hazardous Materials which constitutes a violation of any Hazardous Materials Laws.

E. ENVIRONMENTAL STUDIES: Tenant shall have the right, at Tenant's expense, to conduct a baseline environmental study at the Project, including the right to bore holes and take soils samples, if Tenant so elects, provided Tenant obtains Landlord's advance written consent, which consent shall not be unreasonably withheld.

19. INDEMNITY. As a material part of the consideration to be rendered to Landlord, Tenant hereby waives all claims against Landlord for damages to goods, wares and merchandise, and all other personal property in, upon or about said Premises and for injuries to persons in or about said Premises, from any cause arising at any time, and Tenant will hold Landlord exempt and harmless from any damage or injury to any person, or to the goods, wares and merchandise and all other personal property of any person, arising from the use of the Premises by Tenant, or from the failure of Tenant to keep the Premises in good condition and repair, as herein provided. Further, in the event Landlord is made party to any litigation due to the acts or omission of Tenant, Tenant will indemnify and hold Landlord harmless from any such claim or liability including Landlord's costs and expenses and reasonable attorney's fees incurred in defending such claims except to the extent of the negligence or willful misconduct of Landlord or its agents, employees, tenants, or contractors, subcontractors, or a breach of this Lease by Landlord. Notwithstanding anything to the contrary in this Lease, Tenant shall neither release Landlord from, nor indemnify or defend Landlord with respect to: (i) the negligence or willful misconduct of Landlord, or its agents, tenants, employees, contractors, subcontractors or invitees; (ii) a breach of Landlord's obligations or representations under this Lease, or
(iii) any Hazardous Material which was not released, emitted, or discharged by Tenant, its agents, employees and contractors and which is or comes to be, present on or about the Premises, or the soil or groundwater thereof, at any time. Landlord shall indemnify, defend and hold harmless Tenant from all damages, costs, liabilities, judgments, actions, attorneys' fees, consultants' fees, investigative cost, remediation expense, and all other costs and expenses arising from (i) the negligence or willful misconduct of Landlord or its employees, agents, contractors or invitees; or (ii) the breach of Landlord's obligations or representations under this Lease.

20. ADVERTISEMENTS AND SIGNS. Tenant will not place or permit to be placed, in, upon or about the said Premises any signs not approved by the city or other governing authority. Any sign so placed on the Premises shall be so placed upon the understanding and agreement that Tenant will remove the same before the expiration or promptly following any earlier termination of the Lease Term, and repair any damage or injury to the Premises caused thereby, and if not so removed by Tenant then Landlord may have same so removed at Tenant's expense. Landlord shall cooperate with and assist Tenant in acquiring permits for the signage desired by Tenant; provided, however, that Landlord shall not be required to incur additional out-of-pocket costs in connection therewith.

21. ATTORNEYS' FEES. In case suit should be brought for the possession of the Premises, for the recovery of any sum due hereunder, or because of the breach of any other covenant herein, the losing party shall pay to the prevailing party a reasonable attorneys fee as part of its costs which shall be deemed to have accrued on the commencement of such action and shall be enforceable whether or not such action is prosecuted to judgement.

22. TENANT'S DEFAULT. The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant: (a) Any failure by Tenant to pay the rental or to make any other payment required to be made by Tenant hereunder, where such failure continues for five (5) days after receipt by Tenant of written notice of Landlord's failure to receive the payment in question; (b) The abandonment of the Premises by Tenant; (c) A failure by Tenant to observe and

perform any other provision of this Lease to be observed or performed by Tenant, where such failure continues for thirty (30) days after written notice thereof by Landlord to Tenant; provided, however, that if the nature of such default is such that the same cannot reasonably be cured within such thirty (30) day period Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion;
(d) The making by Tenant of any general assignment for the benefit of creditors; the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days after the filing); the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within sixty (60) days; or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within sixty (60) days. The notice requirements set forth herein are in lieu of and not in addition to the notices required by California Code of Civil Procedure Section 1161, provided that such notices are given in the manner required by such statute.

A. REMEDIES. In the event of any such default by Tenant, then in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such intention to terminate. In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant: (a) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus (b) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus (c) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (d) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. The term "rent", as used herein, shall be deemed to be and to mean the minimum monthly installments of rent and all other sums required to be paid by Tenant pursuant to the terms of this Lease, all other such sums being deemed to be additional rent due hereunder. As used in (a) and (b) above, the "worth at the time of award" is computed by allowing interest at the rate of the discount rate of the Federal Reserve Bank of San Francisco plus five (5%) percent per annum. As used in (c) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

B. RIGHT TO RE-ENTER. In the event of any such default by Tenant, that results in the termination of the Lease, Landlord shall also have the right to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.

C. ABANDONMENT. In the event of the abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter as provided in paragraph 22.B above or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease as provided in paragraph 22.A above, then the provisions of California Civil Code Section 1951.4, as amended from time to time, shall apply and Landlord may from time to time, recover all rental as it becomes due.

D. NO TERMINATION. No re-entry or taking possession of the Premises by Landlord pursuant to 22.B or 22.C of this Article 22 shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction.

23. SURRENDER OF LEASE. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not automatically effect a merger of the Lease with Landlord's ownership of the Premises. Instead, at the option of Landlord, Tenant's surrender may terminate all or any existing sublease or subtenancies, or may operate as an assignment to Landlord of any or all such subleases or subtenancies, thereby creating a direct relationship between Landlord and any subtenants.

24. LANDLORD'S DEFAULT. In the event of Landlord's failure to perform any of its covenants or agreements under this Lease, Tenant shall give Landlord written notice of such failure and shall give thirty (30) days or such longer time as may be reasonably required by Landlord to cure said failure in the exercise of reasonable diligence provided Landlord commences the cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion prior to terminating this Lease on account of such default. If Landlord so fails to perform its obligations under this Lease, then, in addition to its other rights and remedies, Tenant shall have the right to cure Landlord's default and to recover from Landlord the cost of the cure together with interest thereon at the prime rate charged by Union Bank, main San Francisco branch, plus two percent (2%) per annum from the date of the expenditure until the date of the repayment.

25. NOTICES. All notices required or permitted to be given under this Lease shall be personally delivered or delivered by reputable commercial overnight courier to the parties at the following addresses, or such other addresses as the parties shall designate by three (3) days' prior written notice to the other party:

If to Tenant before the Commencement Date:

Aehr Test Systems, Inc. 150 Constitution Drive Menlo Park, California 94025 Attn: President

If to Tenant after the Commencement Date:

Aehr Test Systems, Inc.
1667 Plymouth Street
Mountain View, California 94043
Attn: President

If to Landlord:

The John A. & Susan Sobrato 1979 Revocable Trust
c/o Sobrato Development Company
10600 N. De Anza Boulevard, Suite 200
Cupertino, California 95014
Attn: John Sobrato, Jr.

Notices given by personal delivery shall be deemed effective upon signed acknowledgment of receipt or, if delivered by courier, one (1) day after deposit with the courier.

26. ENTRY BY LANDLORD. Upon forty-eight (48) hours advance written notice to Tenant (except in the event of an emergency where no such prior notice shall be required) and provided that Landlord does not unreasonably interfere with Tenant's use of the Premises, Tenant shall permit Landlord and his agents to enter upon the Premises at all reasonable times subject to any safety and/or security regulations of Tenant for the purpose of inspecting the same, maintaining the Premises, or making repairs or alterations as may be required to fulfill Landlord's obligations hereunder without any rebate of rent or without any liability to Tenant for any loss of occupation or quiet enjoyment of the Premises thereby occasioned; and Tenant shall permit Landlord and his agents, at any time within ninety (90) days prior to the expiration of this Lease, to place upon said Premises any "For Sale" or "For Lease" signs and exhibit the Premises to prospective tenants at reasonable hours upon reasonable prior notice.

27. DESTRUCTION OF PREMISES.

A. OBLIGATION TO RESTORE: In the event of damage or destruction to the Building or Premises or any portion thereof by any casualty during the Lease Term, Landlord shall forthwith repair the same to the condition the Building or Premises were in immediately before the destruction, provided such casualty is of a type required to be insured against by Landlord under the terms of this

Lease or actually insured against by Landlord (herein collectively referred to as an "Insured Casualty"). In the event of damage or destruction of the Premises by a casualty of a type which is not required to be insured against by Landlord under this Lease, and which is not actually insured against by Landlord (herein referred to as an "Uninsured Casualty"), Landlord shall restore the Premises to the same condition as they were in immediately before such destruction and this Lease shall not terminate; provided, that if in the case of such Uninsured Casualty the cost of restoration exceeds five percent (5%) of the then replacement cost of the Building, Landlord may elect to terminate this Lease by giving written notice to Tenant within fifteen (15) days after determining the replacement cost and furnishing reasonable evidence thereof to Tenant. If Landlord so elects to terminate this Lease, Tenant, within fifteen
(15) days after receiving Landlord's notice to terminate, can elect to pay to Landlord at the time Tenant notifies Landlord of its election, the difference between five percent (5%) of the replacement cost of the Building and the actual cost of restoration, in which case Landlord shall restore the Premises and this Lease shall not terminate. If Landlord so elects to terminate this Lease and Tenant does not elect to contribute the cost of restoration as provided herein, this Lease shall terminate. In all events Landlord shall not be required to restore Tenant's Alterations or replace Tenant's fixtures or personal property or Tenant Improvements which have become Tenant's property. Tenant shall be entitled to a proportionate reduction of rent during the period of damage and restoration, such proportionate reduction to be based upon the extent to which the damage and making of repairs shall interfere with Tenant's use of the Premises.

B. TENANT'S RIGHT TO TERMINATE: In the event of damage or destruction to the Premises, Landlord shall furnish to Tenant a good faith written estimate from Landlord's architect or construction consultant of the time period needed to restore the Premises, within thirty (30) days after the date of the damage or destruction in question. If such estimate indicates that the repair or restoration of the Premises cannot be made within one hundred eighty (180) days after the date of the damage or destruction, Tenant may, at its option, terminate this Lease by giving written notice to Landlord of such election within thirty (30) days after receipt of Landlord's estimate. Tenant shall also have the right to terminate this Lease if the actual restoration of the Premises or Other Space, as the case may be, is not effectuated within one hundred eighty (180) days after the date of the casualty. Further, Tenant shall have the right to terminate this Lease if the Building is damaged by any peril within twelve (12) months of the last day of the Lease Term to such an extent that more than thirty percent (30%) of the floor area of the Building is rendered unusable by Tenant for a period of more than sixty (60) days. The provision of Section 1932, Subdivision 2, and of Section 1933, Subdivision 4, of the Civil Code of the State of California are waived by Tenant to the extent inconsistent with the provisions of this Lease.

28. ASSIGNMENT OR SUBLEASE.

A. PERMITTED TRANSFERS: Tenant may, without Landlord's prior written consent and without any participation by Landlord in assignment or subletting proceeds, sublet the Premises or assign the Lease to the following (herein called "Permitted Transferees"): (i) a subsidiary, affiliate, division or corporation controlled by or under common control with Tenant; (ii) a successor corporation related to Tenant by merger, consolidation, or non- bankruptcy reorganization; or (iii) a purchaser of substantially all of Tenant's assets located in the Premises. For the purpose of this Lease, sale of Tenant's capital stock shall not be deemed an assignment, subletting, or any other transfer of the Lease or the Premises.

B. CONSENT BY LANDLORD: In the event Tenant desires to assign this Lease or any interest therein including, without limitation, a pledge, mortgage or other hypothecation, or sublet the Premises or any part thereof except as set forth above with respect to "Permitted Transferees," Tenant shall deliver to Landlord copies of the proposed agreement, the financial statements of the assignee or subtenant, and any additional information as reasonably required by Landlord. Landlord shall then have a period of ten (10) days following receipt of such notice within which to notify Tenant in writing that Landlord elects
(i) to permit Tenant to assign or sublet such space to the named assignee/ subtenant, or (ii) to refuse consent, provided Landlord shall not unreasonably refuse such consent. If Landlord should fail to notify Tenant in writing of such election within said 10-day period, Landlord shall be deemed to have elected to permit the assignment or sublease in question. No assignment or subletting by Tenant shall relieve Tenant of any obligation under this Lease. Landlord's consent to the proposed assignment or sublease shall not be unreasonably withheld or delayed, provided and upon condition that:

C. The proposed uses will not violate Laws;

D. The proposed assignee or subtenant has sufficient financial worth to undertake the responsibility involved, and Landlord has been furnished with reasonable proof thereof; and

E. The proposed assignment shall be in a form reasonably satisfactory to Landlord.

F. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent actually received by Tenant under any sublease or assignment in excess of the rent payable hereunder, after deducting the unamortized cost of the Tenant Improvements paid by Tenant and Alterations installed at Tenant's expense, and subletting and assignment costs incurred by Tenant in connection with the assignment or sublease (including, without limitation, attorneys' fees, brokerage commissions, and remodeling costs), any vacancy costs incurred by Tenant, and Tenant's costs in performing under such assignment or sublease, shall be paid by Tenant fifty percent (50%) to Landlord. Tenant's obligation to pay such consideration shall constitute an obligation for additional rent hereunder.

G. NO RELEASE: Any assignment except to a Permitted Transferee shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord an agreement, in form and substance reasonably satisfactory to Landlord, whereby the assignee shall assume all of the obligations of this Lease on the part of Tenant to be performed or observed and shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any sublease or assignment and the acceptance of rent or additional rent by Landlord from any subtenant or assignee, Tenant shall and will remain fully liable for the payment of the rent and additional rent due, and to become due hereunder, for the performance of all of the covenants, agreements, terms, provisions and conditions contained in this Lease on the part of Tenant to be performed and for all acts and omissions of any licensee, subtenant, assignee or any other person claiming under or through any subtenant that shall be in violation of any of the obligations of this Lease, and any such violation shall be deemed to be a violation by Tenant. Tenant shall further indemnify, defend and hold Landlord harmless from and against any and all losses, liabilities, damages, costs and expenses (including reasonable attorney fees) resulting from any claims that may be made against Landlord by any real estate brokers or other persons claiming a commission or similar compensation in connection with the proposed assignment or sublease.

H. EFFECT OF DEFAULT: In the event of Tenant's default, Tenant hereby assigns all rents due from any assignment or subletting to Landlord as security for performance of its obligations under this Lease and Landlord may collect such rents as Tenant's attorney-in-fact, except that Tenant may collect such rents unless a default occurs as described in paragraph 22 above. The termination of this Lease due to Tenant's default shall not automatically terminate any assignment or sublease then in existence. At the election of Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall undertake the obligations of the Tenant under the sublease or assignment; provided the Landlord shall not be liable for prepaid rent, security deposits or other defaults of the Tenant to the subtenant or assignee.

29. CONDEMNATION. If any part of the Premises shall be taken for any public or quasi-public use, under any statute or by right of eminent domain or private purchase in lieu thereof, and a part thereof remains which is susceptible of occupation hereunder, this Lease shall as to the part so taken, terminate as of the date title shall vest in the condemnor or purchaser, and the rent payable hereunder shall be adjusted so that Tenant shall be required to pay for the remainder of the Lease Term only such portion of the rent as the value of the part remaining after such taking bears to the value of the entire Premises prior to such taking; but in such event Tenant shall have the option to terminate this Lease as of the date when title to the part taken vests in the condemnor or purchaser if the taking or condemnation of the Premises is such that the remaining space unaffected by the taking or condemnation is not reasonably suitable for Tenant's use or the conduct of Tenant's business. If a part or all of the Premises be taken, all compensation awarded upon such taking shall go to Landlord and the Tenant shall have no claim thereto; provided, however, that nothing contained herein shall be deemed to waive or release Tenant's interest in any separate award for (i) loss of or damage to Tenant's trade fixtures, Alterations, or personal property; (ii) interruption of Tenant's business; (iii) Tenant's loss of goodwill; (iv) Tenant's moving cost;
(v) Tenant's interest in any Tenant

Improvements; (vi) or any separate award made to Tenant for whatever purpose. In the event that this Lease is not terminated by reason of the condemnation, Landlord at its expense shall repair any damage to the Premises caused by such condemnation. Tenant hereby waives the provisions of California Code of Civil Procedures Section 1265.130.

30. EFFECTS OF CONVEYANCE. The term "Landlord" as used in this Lease, means only the owner for the time being of the Premises, so that, in the event of any sale of the Premises Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of the Landlord hereunder accruing after the date of the conveyance. Notwithstanding the foregoing, Landlord shall not be relieved of its obligations under this Lease, unless and until Landlord transfers the cash security deposit or original letter of credit to its successor and the successor assumes in writing the obligations of Landlord accruing on and after the effective date of the transfer.

31. SUBORDINATION.

A. SUBORDINATION TO FUTURE OBLIGATIONS: In the event Landlord notifies Tenant in writing, this Lease shall be subordinate to any ground lease, deed of trust, or other hypothecation for security now or hereafter placed upon the Premises and to any and all advances made on the security thereof and to renewals, modifications, replacements and extensions thereof. Tenant agrees to promptly execute any reasonable documents which may be required to effectuate such subordination. Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default. Notwithstanding anything to the contrary in the Lease, subordination of Tenant's leasehold interest to a mortgage, deed of trust, ground lease or instrument of security, and Tenant's attornment to any party is conditioned upon (i) Tenant's concurrent receipt from the lender or ground lessor in question of an express written agreement in form reasonably satisfactory to Tenant providing for recognition of all of the terms and conditions of this Lease and providing for continuation of this Lease upon foreclosure of the deed of trust, mortgage or security interest or termination of the ground lease; and (ii) the written agreement by such successor to perform all of the obligations to be performed by Landlord under the Lease on and after the date of the foreclosure or termination of the ground lease.

B. EXISTING OBLIGATIONS: Landlord represents and warrants that the Premises are not encumbered by a mortgage, loan, deed of trust or ground lease as of the date of both parties' execution of this Lease, except for a deed of trust in favor of Principal Mutual Life Insurance Company ("Lender"). Landlord shall use its best efforts to furnish to Tenant, within fourteen (14) days of the date of both parties' execution of this Lease, with a written agreement in form satisfactory to Tenant providing for: (i) recognition by Lender of all of the terms and conditions of this Lease and any Other Lease; and
(ii) continuation of this Lease upon foreclosure of Lender's security interest in the Premises.

32. WAIVER. The waiver by Landlord or Tenant of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The

subsequent acceptance of rent hereunder by Landlord (or the payment thereof by Tenant) shall not be deemed to be a waiver of any preceding breach by Landlord or Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rental accepted by Landlord, regardless of the party's knowledge of such preceding breach at the time of acceptance of such preceding breach at the time of acceptance of such rent.

33. HOLDING OVER. Any holding over after the termination or expiration of the Lease Term shall be construed to be a tenancy from day-to-day and Tenant shall pay rent to Landlord at a rate equal to one thirtieth (1/30th) of the greater of (i) one hundred fifty percent (150%) of the monthly rental installment due in the month preceding the termination or expiration of the Lease Term or (ii) the Fair Market Rental (as defined in paragraph 37). Any holding over shall otherwise be on the terms and conditions herein specified, except those provisions relating to the term and any options to extend or renew, which terms are expressly waived during any hold over. Furthermore, no holding over shall be deemed or construed to exercise any option to extend or renew this Lease in lieu of full and timely exercise of any such option as required hereunder.

34. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto.

35. ESTOPPEL CERTIFICATES. Each party shall at any time during the Lease Term, upon not less than ten (10) business days prior written notice from the other party, execute and deliver a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification) and the date to which any rent and other charges have been paid in advance, and acknowledging that there are not, to the party's knowledge, any uncured defaults on the part of the other party hereunder or specifying such defaults if they are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises or a purchaser of Tenant's assets or leasehold interest. Landlord's or Tenant's failure to deliver such statement within such time shall be conclusive upon the party not providing the statement that: (a) this Lease is in full force and effect, without modification except as may be represented by the requesting party; (b) there are not uncured defaults in the requesting party's performance. Upon the advance written request of Landlord, Tenant shall furnish Landlord with Tenant's most recent available financial statement, subject to the following: (i) Landlord shall only require such statement in connection with Landlord's proposed sale or refinance of the Premises; and (ii) Landlord and any person or entity to whom such financial statements are provided shall agree in writing to hold such statements in the strictest confidence.

36. OPTION TO EXTEND THE TERM. Landlord hereby grants to Tenant, upon and subject to the terms and conditions set forth in this paragraph, the option (the "Option") to extend the term of this Lease for an additional term (the "Option Term"), which Option Term shall be a period of sixty (60) months. The Option Term shall be exercised, if at all, by written notice to Landlord on or before the date that is six (6) months prior to the expiration date of the initial Lease Term. If Tenant exercises the Option, each of the terms, covenants and conditions of this Lease except this paragraph

shall apply during the Option Term be, except that the rent payable by Tenant during the Option Period shall be ninety-five percent (95%) of the fair market monthly rent for the Premises (the "Fair Market Rent") as of the commencement of the Option Period. The parties acknowledge that they have agreed to so set the rent at ninety-five percent (95%) of the then Fair Market Rent in recognition of and in consideration for the fact that Landlord shall not incur brokerage commissions, vacancy costs, and costs for the installation of new tenant improvements (including recarpeting and repainting), along with other savings, if Tenant elects to extend the term of this Lease, and that such discount of the full Fair Market Rent is a reasonable estimate of the savings to be so realized by Landlord.

37. APPRAISAL. If the parties are unable to agree upon the Fair Market Rent for the Premises for the Option Term at least ninety (90) days prior to the commencement of such Option Term, then the Fair Market Rent shall be determined by appraisal conducted pursuant to this paragraph 38. If it becomes necessary to determine by appraisal the Fair Market Rent for the Premises for the purpose of establishing the monthly rent pursuant to paragraph 37 or for purposes of any other provision of this Lease, then such Fair Market Rent shall be determined by three (3) real estate appraisers, all of whom shall be members of the American Institute of Real Estate Appraisers with not less than five (5) years experience appraising commercial and industrial real property located in Santa Clara County, California, in accordance with the following procedures:

A. The party demanding an appraisal (the "Notifying Party") shall notify the other party (the "Non-Notifying Party") thereof by delivering a written demand for appraisal, which demand, to be effective, must give the name, address and qualifications of an appraiser selected by the Notifying Party. Within ten (10) days of receipt of said demand, the Non-Notifying Party shall select its appraiser and notify the Notifying Party, in writing, of the name, address and qualifications of an appraiser selected by it. Failure by the Non- Notifying Party to select a qualified appraiser within said ten (10) day period shall be deemed a waiver of its right to select a second appraiser on its own behalf and the Notifying Party shall select a second appraiser on behalf of the Non-Notifying Party within five (5) days after the expiration of said ten (10) day period. Within ten (10) days from the date the second appraiser shall have been appointed, the two (2) appraisers so selected shall appoint a third appraiser. In the event the two appraisers fail to select a third qualified appraiser, the third appraiser shall be appointed by the then Presiding Judge of the Superior Court of the State of California for the County of Santa Clara or the head of the most local chapter of the American Institute of Real Estate Appraisers.

B. The three (3) appraisers so selected shall meet in Santa Clara County, California, not later than twenty (20) days following the selection of the third appraiser. At said meeting the appraisers so selected shall attempt to determine the Fair Market Rent for the Premises for the Option Term in question.

C. If the appraisers so selected are unable to complete their determinations in one meeting, they may continue to consult at such times as they deem necessary for a fifteen (15) day period from the date of the first meeting, in an attempt to have at least two (2) of them agree. If at

the initial meeting or at any time during said fifteen (15) day period two (2) or more of the appraisers so selected agree on the Fair Market Rent for the Premises, such agreement shall be determinative and binding on the parties hereto, and the agreeing appraisers shall forthwith notify both Landlord and Tenant of the amount set by such agreement.

D. In the event two (2) or more appraisers do not so agree within said fifteen (15) day period, then each appraiser shall, within five (5) days after the expiration of said fifteen (15) day period, submit his or her independent appraisal in simple letter form to Landlord and Tenant stating his or her determination of the fair market rent for the Premises for the Option Term. The parties shall then determine the Fair Market Rent for the Premises by determining the average of the Fair Market Rent set by each of the appraisers; provided, however, that (i) if the lowest appraisal is less than eighty-five percent (85%) of the middle appraisal, then such lowest appraisal shall be disregarded; and/or (ii) if the highest appraisal is greater than one hundred fifteen percent (115%) of the middle appraisal, then such highest appraisal shall be disregarded. If any appraisal is so disregarded, then the average shall be determined by computing the average set by the other appraisals that have not been disregarded.

E. Each party shall bear the fees and expenses of the appraiser selected by or for it, and the fees and expenses of the third appraiser (or the joint appraiser if one joint appraiser is used) shall be borne fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.

F. Any determination of Fair Market Rent of the Premises made pursuant to any provision of this Lease, whether by agreement of the parties or by appraisal pursuant to this paragraph, shall be based upon the following:
(i) that the Premises would be leased for sixty (60) months on the same terms as contained in this Lease, particularly with regard to Tenant's obligation to pay additional rent and its obligation to repair and maintain; (ii) the condition, size, age and location of the Premises; and (iii) the Fair Market Rent for the Premises shall not include any part of the rental value added to the Premises as a consequence of construction of Alterations or improvements made by Tenant or at Tenant's expense.

G. Tenant shall have the right to rescind its exercise of the Option if it does not approve in writing the fair market rent determined by appraisal, but in such case, Tenant shall pay the costs of the appraisals. In the event Tenant rescinds its exercise of the Option, the Lease shall be automatically extended for a period of one hundred twenty (120) days from the date of Tenant's written rescission at the rent then payable under this Lease until the expiration of the Lease Term, and thereafter at the rate established by appraisal until the end of the one hundred twenty (120) day period.

38. QUIET ENJOYMENT. Tenant shall quietly have and hold the Premises for the term and any extensions thereof without interference by Landlord or any party claiming by or through Landlord.

39. BROKERS. Tenant represents it has not utilized or contacted a real estate broker or finder with respect to this Lease other than Gordon Smith of Coldwell Banker ("Broker"), Tenant and Landlord each agree to indemnify and hold the other harmless against any claim, cost, liability or cause of action asserted by any other broker or finder claiming through the acts or conduct of the indemnifying party. Landlord shall pay any commission or fee owing to Broker without contribution by Tenant.

40. AUTHORITY OF PARTIES.

A. CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation, in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms.

B. LANDLORD'S AUTHORITY: The individual(s) executing this Lease on Landlord's behalf represent and warrant that they have the requisite authority to sign this Lease and that this Lease is binding on Landlord. Landlord represents that it owns the Premises and is duly empowered to sign this Lease, and that the consent of no other party is required to make this Lease binding on Landlord.

41. MISCELLANEOUS PROVISIONS.

A. RIGHTS AND REMEDIES: All rights and remedies hereunder are cumulative and not alternative to the extent permitted by law and are in addition to all other rights and remedies in law and in equity.

B. SEVERABILITY: If any term or provision of this Lease is held unenforceable or invalid by a court of competent jurisdiction, the remainder of the Lease shall not be invalidated thereby but shall be enforceable in accordance with its terms, omitting the invalid or unenforceable term.

C. CHOICE OF LAW: This Lease shall be governed by and construed in accordance with California law.

D. INTEREST: All sums due hereunder, including rent and additional rent, if not paid within five (5) days after Tenant's receipt of written notice from Landlord indicating that Landlord has failed to receive the payment in question, shall bear interest at the prime rate charged by Union Bank, main San Francisco branch, plus two percent (2%) per annum from time to time or, if lower, at the maximum rate permitted under California law accruing from the date due until the date paid.

E. TIME: Time is of the essence hereunder.

F. HEADINGS: The headings or titles to the paragraphs of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part thereof.

G. ENTIRE AGREEMENT: This instrument contains all of the agreements made between the parties hereto and may not be modified orally or in any other manner than by an agreement in writing signed by all of the parties hereto or their respective successors in interest.

H. PERFORMANCE BY LANDLORD: If Tenant defaults in its performance of any obligation required under this Lease after expiration of the applicable cure period, Landlord may, in its sole discretion, without further notice perform such obligation, in which event Tenant shall pay Landlord as additional rent all reasonable sums paid by Landlord in connection with such substitute performance within ten (10) days following Landlord's written notice for such payment.

I. REPRESENTATIONS: Tenant acknowledges that except as set forth herein neither Landlord or its affiliates or agents have made any agreements, representations, warranties or promises with respect to the Premises or the Building.

J. RENT: All monetary sums due from Tenant to Landlord under this Lease shall be deemed to be rent.

K. INTERFERENCE: If the Premises should become unsuitable for Tenant's use as a consequence of the presence of any Hazardous Material which does not result from Tenant's use, storage or disposal of such material in violation of applicable Law ("Interfering Event"), which, in the case of the foregoing Interfering Events persists for thirty (30) continuous business days, then Tenant shall be entitled to an abatement of rent to the extent of the interference with Tenant's use of the Premises occasioned thereby from the date of the Interfering Event, and, if such interference cannot be corrected or the damage resulting therefrom repaired so that the Premises or any Other Space leased by Tenant from Landlord will be reasonably suitable for Tenant's intended use within one hundred eighty (180) days following the occurrence of the Interfering Event, then Tenant shall be entitled to terminate this Lease by delivery of written notice to Landlord at any time after occurrence of the Interfering Event.

L. APPROVALS: Whenever the Lease requires an approval, consent, designation, determination or judgment by either Landlord or Tenant, such approval, consent, designation, determination or judgment (including, without limiting the generality of the foregoing, those required in connection with assignment and subletting) shall not be unreasonably withheld or delayed and in exercising any right or remedy hereunder, each party shall at all times act reasonably and in good faith.

M. REASONABLE EXPENDITURES: Any expenditure by a party permitted or required under the Lease, for which such party is entitled to demand and does demand reimbursement from the other party, shall be limited to the fair market value of the goods and services involved, shall be

reasonably incurred, and shall be substantiated by documentary evidence available for inspection and review by the other party or its representative during normal business hours.

N. EXHIBITS: All exhibits are incorporated herein by reference.

O. LIGHT AND VIEW: Landlord shall not construct any structure or improvement or do any other act that will impede Tenant's light, air or view.

P. MEMORANDUM OF LEASE: At Tenant's option, a memorandum of this Lease shall be recorded in a form acceptable to Tenant in the Official Records of Santa Clara County, California. Landlord agrees to duly execute and acknowledge such Memorandum.

IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day and year first above written.

LANDLORD: The JOHN A. & SUSAN R. TENANT: AEHR TEST SYSTEMS, INC.
SOBRATO 1979 REVOCABLE TRUST a California Corporation

BY:   /s/ John A. Sobrato               BY:   /s/ Rhea J. Posedel
      ---------------------------             --------------------------------

ITS:   Trustee                          ITS:   President
      ---------------------------             --------------------------------

EXHIBIT "A"
Site Plan

EXHIBIT "B"
Site Modifications

The parties agree that the following modifications shall be made to the Premises, at the sole cost and expense of Landlord (and not as a part of the Tenant Improvement Allowance):

1. Landlord shall extend the telephone conduit termination to the interior of the Building.

2. Landlord shall install fire sprinklers in the Building as required by law.

3. Landlord shall provide a water line to the Building.