THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Nextest Systems Corporation (NEXT)

3/21/2006 S-1/A Information

Preferred Stock Issuances

In November and December 2001, we sold a total of 8,000,000 shares of Series B Preferred at a purchase price of $2.50 per share to 19 investors. Affiliates of Needham Capital Partners and J&W Seligman & Co., purchased 2,400,000 and 2,000,000 shares, respectively, as a result of which each of them became one of our 5% stockholders. Two shares of Series B Preferred is convertible into one share of common stock as a result of a 1 for 2 reverse split of our common stock effective March 20, 2006. In connection with the sale of shares of Series B Preferred, we granted demand registration rights and other registration rights to the purchasers of our Series B Preferred. See “Description of Capital Stock—Registration Rights.”

Loans to Officers and Directors

In connection with the purchase of shares of common stock by a certain executive officer and certain directors, we extended them loans. Each of these loans were evidenced by a full-recourse promissory note and was secured by a pledge of the shares purchased. The following table describes the interest rate charged for these loans, the largest amount of indebtedness of the executive officer and each of the directors during the fiscal year ended June 30, 2005 and the amount of indebtedness of the executive officer and each of the directors at December 31, 2005. (See page 69 of S-1/A for table).

On September 21, 2005, these notes were extinguished and a total bonus payment of $117,000, that was approved by the disinterested members of the Board of Directors, was paid to this officer and these directors to reimburse them for the tax consequences related to the repurchase of their restricted common stock to extinguish their non-recourse promissory notes. The following table provides details of the number of shares repurchased from, and the amount of bonus payments paid, to this officer and these directors. (See page 69 of S-1/A for table).

Transactions and Relationships with Underwriters

The affiliated funds of Needham & Company, LLC, one of the underwriters in this offering, invested an aggregate of $6,000,000 in our Series B Preferred financing in November of 2001. For further information, see “Principal and Selling Stockholders”.

Affiliates of Cowen & Co., LLC, one of the underwriters in this offering, invested an aggregate of $2,570,000 in our Series B Preferred financing in November of 2001.

An affiliate of Merrill Lynch, one of the underwriters in this offering, invested an aggregate of $2,000,000 in our Series B Preferred financing in November of 2001.