Exhibit 10.1

 

AMENDMENT TO LOAN DOCUMENTS

 

THIS AMENDMENT TO LOAN DOCUMENTS (this “Amendment”) is entered into as of
September 30, 2010, by and between SILICON VALLEY BANK (“Bank” or “Silicon”) and
NETLIST, INC., a Delaware corporation (“Borrower”).  Borrower’s chief executive
office is located at 51 Discovery, Suite 150, Irvine, CA 92618.

 

RECITALS

 

A.            Bank and Borrower are parties to that certain Loan and Security
Agreement with an Effective Date of October 31, 2009 (as amended, modified,
supplemented or restated, the “Loan Agreement”) in effect between Bank and
Borrower.

 

B.            Bank has extended credit to Borrower for the purposes permitted in
the Loan Agreement.

 

C.            Borrower has requested that Bank amend the Loan Agreement to
modify the Profitability Financial Covenant as more fully set forth herein.

 

D.            Bank has agreed to so amend the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance
upon the representations and warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.             Definitions.  Capitalized terms used but not defined in this
Amendment shall have the meanings given to them in the Loan Agreement.

 

2.             Amendments to Loan Documents.

 

2.1          Modified LC Sublimit.  The LC Sublimit, as defined in
Section 2.1.2(a) of the Loan Agreement is hereby amended from “$2,500,000” to
“$10,000,000.”

 

2.2          Modified FX Sublimit.  The FX Sublimit, as defined in Section 2.1.3
of the Loan Agreement is hereby amended from “$2,500,000” to “$10,000,000.”

 

2.3          Modified Cash Management Services Sublimit.  The CMS Sublimit, as
defined in Section 2.1.4 of the Loan Agreement is hereby amended from
“$2,500,000” to “$10,000,000.”

 

2.4          Modified Overall Sublimit.  The Overall Sublimit, as set forth in
Section 2.1.5 of the Loan Agreement is hereby amended from “$2,500,000” to
“$10,000,000.”

 

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2.5          Addition of Term Loan.  The following language is hereby added to
the Loan Agreement as Section 2.1.6 and shall read as follows:

 

2.1.6       Term Loan.

 

(a)           Availability.  Bank shall make one (1) term loan available to
Borrower in an amount up to the Term Loan Amount on or before September 30,
2010, subject to the satisfaction of the terms and conditions of this Agreement.

 

(b)           Repayment.  Borrower shall repay the Term Loan in (i) thirty-six
(36) equal installments of principal, plus (ii) monthly payments of accrued
interest (the “Term Loan Payment”).  Beginning on the first day of the month
following the month in which the Funding Date occurs, each Term Loan Payment
shall be payable on the first day of each month.  Borrower’s final Term Loan
Payment, due on the Term Loan Maturity Date, shall include all outstanding
principal and accrued and unpaid interest under the Term Loan.

 

2.6          Modified Interest Rate.  Section 2.3(a) of the Loan Agreement is
hereby amended in its entirety to read as follows:

 

(a)           Interest Rate.

 

(i)            Advances.  Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a per annum rate
equal to the following: (i) at all times that a Streamline Period is in effect,
one and one-quarter of one percentage points (1.25%) above the Prime Rate; and
(ii) at all times that a Streamline Period is not in effect, two and one-quarter
of one percentage points (2.25%) above the Prime Rate; which interest shall be
payable monthly in accordance with Section 2.3(f) below.

 

(ii)           Term Loan.  Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a per annum rate equal
to one and three-quarters of one percentage point (1.75%) above the Prime Rate,
which interest shall be payable monthly in accordance with Section 2.3(f) below.

 

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2.7          Modified Minimum Monthly Interest.  Section 2.3(e) of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

(e)           Minimum Monthly Interest.  [Omitted]

 

2.8          Modified Fees.  Subclauses (c) and (d) of Section 2.4 of the Loan
Agreement are hereby amended in their entirety to read as follows:

 

(c)           Termination Fee.  Subject to the terms of Section 12.1, a
termination fee; and

 

(d)           Unused Revolving Line Facility Fee.  A fee (the “Unused Revolving
Line Facility Fee”), payable quarterly, in arrears, on a calendar year basis, in
an amount equal to 0.50% per annum of the average unused portion of the
Revolving Line.  The unused portion of the Revolving Line, for purposes of this
calculation, shall equal the difference between (x) the Maximum Revolver Amount
(as it may be modified from time to time) and (y) the average for the period of
the daily closing balance of the Revolving Line outstanding plus the sum of the
aggregate amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve).  Borrower
shall not be entitled to any credit, rebate or repayment of any Unused Revolving
Line Facility Fee previously earned by Bank pursuant to this
Section notwithstanding any termination of the Agreement, or suspension or
termination of Bank’s obligation to make loans and advances hereunder, including
during any Streamline Period; and

 

2.9          New Anniversary Fee.  The following language is hereby added to the
Loan Agreement as Section 2.4(g) and shall read as follows

 

(g)           Anniversary Fee.  A fully earned, non-refundable fee equal to
0.50% of the Maximum Revolver Amount, on the first anniversary of the
September 2010 Amendment Effective Date; and if this Agreement is terminated
prior to the first anniversary of the September 2010 Amendment Effective Date,
either by Borrower or Bank, Borrower shall pay such Anniversary Fee to Bank in
addition to any Termination Fee.

 

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2.10        Modified Financial Covenants.  Section 6.9(b) of the Loan Agreement
is hereby amended in its entirety to read as follows:

 

(b)           Tangible Net Worth.  A Tangible Net Worth of at least $17,500,000
(“Minimum Tangible Net Worth”) plus (i) 50% of all consideration received after
the date hereof for equity securities and subordinated debt of the Borrower,
plus (ii) 50% of the Borrower’s net income in each fiscal quarter ending after
the date hereof.  Increases in the Minimum Tangible Net Worth based on
consideration received for equity securities and subordinated debt of the
Borrower shall be effective as of the end of the month in which such
consideration is received, and shall continue effective thereafter. Increases in
the Minimum Tangible Net Worth based on net income shall be effective on the
last day of the fiscal quarter in which said net income is realized, and shall
continue effective thereafter. In no event shall the Minimum Tangible Net Worth
be decreased.

 

2.11        Modified Termination Fee. Section 12.1 of the Loan Agreement is
hereby amended in its entirety to read as follows:

 

12.1        Termination Prior to Revolving Line Maturity Date. On the Revolving
Line Maturity Date or on any earlier effective date of termination, Borrower
shall pay and perform in full all Obligations, whether evidenced by installment
notes or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable.  This Agreement may be terminated prior to the
Revolving Line Maturity Date by Borrower, effective three (3) Business Days
after written notice of termination is given to Bank.  Notwithstanding any such
termination, Bank’s lien and security interest in the Collateral and all of
Bank’s rights and remedies under this Agreement shall continue until Borrower
fully satisfies its Obligations. If such termination is at Borrower’s election,
or at Bank’s election due to the occurrence and continuance of an Event of
Default, Borrower shall pay to Bank, in addition to the payment of any other
expenses or fees then-owing, a termination fee in an amount equal to 2.0% of the
Maximum Revolver Amount if termination occurs on or before the first anniversary
of the September 2010 Amendment Effective Date, and 1.0% of the Maximum Revolver
Amount if termination occurs after the first anniversary of the September 2010
Amendment Effective Date; provided that no termination fee shall be charged if
the credit facility hereunder is replaced with a new facility from another
division of Silicon Valley Bank

 

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2.12        Modified Definitions.  In Section 13.1 of the Loan Agreement, the
following definitions are, as applicable, either hereby (i) amended in their
entirety to read as follows or (ii) added to read as follows:

 

“Credit Extension” is any Advance, Term Loan, Letter of Credit, FX Forward
Contract, amount utilized for Cash Management Services, or any other extension
of credit by Bank for Borrower’s benefit.

 

“Liquidity Condition” is the condition that the sum of (1) the aggregate amount
of Borrower’s unencumbered (except for Bank’s security interest), unrestricted
cash on deposit at Bank, plus (2) the Availability Amount, is at least
$10,000,000.

 

“Maximum Revolver Amount” is $10,000,000; provided, however, at Borrower’s
option and upon at least five (5) days prior written notice to Bank by Borrower,
the Maximum Revolver Amount shall be increased to $15,000,000 provided that at
the time of such increase, no Default or Event of Default has occurred and is
continuing (including, without limitation, with respect to Borrower’s reporting
requirements set forth in Section 6.2 hereof and Borrower’s financial covenants
set forth in Section 6.9 hereof).

 

“Revolving Line Maturity Date” September       , 2012 [the date that is two
years from the date of this Amendment].

 

“September 2010 Amendment Effective Date” is as defined in that certain
Amendment to Loan Documents between Borrower and Bank and dated approximately
September         , 2010.

 

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower
and its Subsidiaries minus (a) any amounts attributable to (i) goodwill,
(ii) intangible items including unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, (iii) notes, accounts receivable and other
obligations owing to Borrower from its officers or other Affiliates, and
(iv) reserves not already deducted from assets, minus (b) Total Liabilities,
plus (c) Subordinated Debt.

 

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“Term Loan” is a loan made by Bank pursuant to the terms of Section 2.1.6
hereof.

 

“Term Loan Amount” is an amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000).

 

“Term Loan Maturity Date” is the earlier of the following dates:
(i) September 1, 2013, (ii) the Revolving Line Maturity Date or (iii) the date
this Agreement terminates by its terms or is terminated by either party in
accordance with its terms.

 

“Term Loan Payment” is defined in Section 2.1.6(b).

 

“Unused Revolving Line Facility Fee” is defined in Section 2.4(d).

 

2.13        Additional Commitment Fee.  In the event the Maximum Revolver Amount
is increased from $10,000,000 to $15,000,000, at the time of such increase,
Borrower shall pay to Bank an additional fully earned, non-refundable commitment
fee of $25,000.

 

2.14        Modified Exhibit B.  Exhibit B to the Loan Agreement is hereby
amended in its entirety to read as set forth in Exhibit B attached hereto.

 

2.15        Netlist Technology Texas LP.  Reference is hereby made to the
following documents:  (i) that certain Unconditional Continuing Guaranty
executed by Netlist Technology Texas LP (“Netlist Texas”) in favor of Bank and
dated October 31, 2009 (the “Netlist Texas Guaranty”), (ii) that certain
Security Agreement executed by and between Netlist Texas and Bank and
October 31, 2009 (the “Netlist Texas Security Agreement”) and (iii) that certain
Intercompany Subordination Agreement executed by Borrower and Netlist Texas in
favor of Bank and dated October 31, 2009 (the “Netlist Texas Subordination
Agreement”).  The Netlist Texas Guaranty, Netlist Texas Security Agreement and
Netlist Texas Subordination Agreement are, collectively, referred to herein as
the “Netlist Texas Documents.”  Borrower has advised Bank that Netlist Texas
shall be dissolved on or about October 1, 2010.  Based upon such representation
by Borrower, Bank hereby agrees that upon Bank receiving written evidences,
satisfactory to Bank in its good faith business judgment, of the dissolution of
Netlist Texas, the Netlist Texas Documents will terminate and Netlist Texas will
be released and discharged from it liabilities and obligations thereunder
subject to any terms or provisions that by their terms survive the release,
revocation or termination of the Netlist Texas Documents.  Notwithstanding the
foregoing, the termination of the Netlist Texas Guaranty does not affect the
provisions of Section 5 of the Netlist Texas Guaranty or the of Section 12 of
the Netlist Guaranty to the extent that it pertains to reasonable costs and
expenses of enforcing the Netlist Texas Guaranty.

 

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3.             Limitation of Amendments.

 

3.1          The amendments set forth in Section 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Bank may now have or may have in the future under or in
connection with any Loan Document.

 

3.2          This Amendment shall be construed in connection with and as part of
the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents (as amended by this
Amendment, as applicable) are hereby ratified and confirmed and shall remain in
full force and effect.

 

4.             Representations and Warranties.  To induce Bank to enter into
this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1          Immediately after giving effect to this Amendment, (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date, or except as otherwise
previously disclosed in writing by Borrower to Bank), and (b) no Event of
Default has occurred and is continuing;

 

4.2          Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Documents, as amended by
this Amendment;

 

4.3          The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been otherwise
amended, supplemented or restated and are and continue to be in full force and
effect;

 

4.4          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Documents, as amended
by this Amendment, have been duly authorized;

 

4.5          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Documents, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;

 

4.6          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Documents, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Borrower, except as already has been obtained or
made; and

 

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4.7           This Amendment has been duly executed and delivered by Borrower
and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.

 

5.             Release by Borrower and Guarantor.  Each of Borrower and
Guarantor (individually and collectively, “Obligor”) hereby agree as follows:

 

5.1          FOR GOOD AND VALUABLE CONSIDERATION, Obligor hereby forever
relieves, releases, and discharges Bank and its present or former employees,
officers, directors, agents, representatives, attorneys, and each of them, from
any and all claims, debts, liabilities, demands, obligations, promises, acts,
agreements, costs and expenses, actions and causes of action, of every type,
kind, nature, description or character whatsoever, whether known or unknown,
suspected or unsuspected, absolute or contingent, arising out of or in any
manner whatsoever connected with or related to facts, circumstances, issues,
controversies or claims existing or arising from the beginning of time through
and including the date of execution of this Amendment (collectively “Released
Claims”).  Without limiting the foregoing, the Released Claims shall include any
and all liabilities or claims arising out of or in any manner whatsoever
connected with or related to the Loan Documents, the Recitals hereto, any
instruments, agreements or documents executed in connection with any of the
foregoing or the origination, negotiation, administration, servicing and/or
enforcement of any of the foregoing.

 

5.2          In furtherance of this release, Obligor expressly acknowledges and
waives any and all rights under Section 1542 of the California Civil Code, which
provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.” (Emphasis added.)

 

5.3          By entering into this release, Obligor recognizes that no facts or
representations are ever absolutely certain and it may hereafter discover facts
in addition to or different from those which it presently knows or believes to
be true, but that it is the intention of Obligor hereby to fully, finally and
forever settle and release all matters, disputes and differences, known or
unknown, suspected or unsuspected; accordingly, if

 

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Obligor should subsequently discover that any fact that it relied upon in
entering into this release was untrue, or that any understanding of the facts
was incorrect, Obligor shall not be entitled to set aside this release by reason
thereof, regardless of any claim of mistake of fact or law or any other
circumstances whatsoever.  Obligor acknowledges that it is not relying upon and
has not relied upon any representation or statement made by Bank with respect to
the facts underlying this release or with regard to any of such party’s rights
or asserted rights.

 

5.4          This release may be pleaded as a full and complete defense and/or
as a cross-complaint or counterclaim against any action, suit, or other
proceeding that may be instituted, prosecuted or attempted in breach of this
release.  Obligor acknowledges that the release contained herein constitutes a
material inducement to Bank to enter into this Amendment, and that Bank would
not have done so but for Bank’s expectation that such release is valid and
enforceable in all events.

 

5.5          Obligor hereby represents and warrants to Bank, and Bank is relying
thereon, as follows:

 

(a)           Except as expressly stated in this Amendment, neither Bank nor any
agent, employee or representative of Bank has made any statement or
representation to Obligor regarding any fact relied upon by Obligor in entering
into this Amendment.

 

(b)           Obligor has made such investigation of the facts pertaining to
this Amendment and all of the matters appertaining thereto, as it deems
necessary.

 

(c)           The terms of this Amendment are contractual and not a mere
recital.

 

(d)           This Amendment has been carefully read by Obligor, the contents
hereof are known and understood by Obligor, and this Amendment is signed freely,
and without duress, by Obligor.

 

(e)           Obligor represents and warrants that it is the sole and lawful
owner of all right, title and interest in and to every claim and every other
matter which it releases herein, and that it has not heretofore assigned or
transferred, or purported to assign or transfer, to any person, firm or entity
any claims or other matters herein released.  Obligor shall indemnify Bank,
defend and hold it harmless from and against all claims based upon or arising in
connection with prior assignments or purported assignments or transfers of any
claims or matters released herein.

 

6.             Bank Expenses.  Borrower shall pay to Bank, when due, all Bank
Expenses (including reasonable attorneys’ fees and expenses), when due, incurred
in connection with or pursuant to this Amendment.

 

7.             Counterparts.  This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

 

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8.             Effectiveness.  This Amendment shall be deemed effective upon
(a) the due execution and delivery to Bank of this Amendment by each party
hereto, (b) Borrower’s payment of an amendment fee in an amount equal to $57,500
($50,000 with respect to the Revolving Line and $7,500 with respect to the Term
Loan) and (c) Bank’s receipt of the Consent attached hereto, duly executed and
delivered by Guarantor (unless Bank, in its sole discretion at any time waives
in writing the receipt of any such Consent).  The above-mentioned fees shall be
fully earned and payable concurrently with the execution and delivery of this
Amendment and shall be non-refundable and in addition to all interest and other
fees payable to Bank under the Loan Documents.  Bank is authorized to charge
such fees to Borrower’s loan account.  The date that this Amendment is deemed
effective is referred to herein as the “September 2010 Amendment Effective
Date.”

 

[Remainder of page intentionally left blank; signature page immediately
follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

BANK

BORROWER

 

 

Silicon Valley Bank

NETLIST, INC.

 

 

 

 

By:

/s/ Brian Lowry

 

By:

/s/ Gail Sasaki

Name:

Brian Lowry

 

Name:

Gail Sasaki

Title:

Relationship Manager

 

Title:

Vice President and Chief Financial Officer

 

CONSENT

 

The undersigned hereby expressly agrees to Section 5 of the foregoing Amendment
and acknowledges that its consent to the rest of the foregoing Amendment is not
required, but the undersigned nevertheless does hereby agree and consent to the
entire foregoing Amendment and to the documents and agreements referred to
therein and to all future modifications and amendments thereto, and any
termination thereof, and to any and all other present and future documents and
agreements between or among the foregoing parties.  Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty, the Guarantor Security
Agreement, or any other Loan Documents, executed by the undersigned, all of
which are hereby ratified and affirmed.

 

 

GUARANTOR:

 

 

 

NETLIST TECHNOLOGY TEXAS LP, a Texas limited partnership

 

 

 

By:

NETLIST, INC., its general partner

 

 

 

 

 

 

 

 

By:

/s/ Gail Sasaki

 

 

Name:

Gail Sasaki

 

 

Title:

Vice President and Chief Financial Officer

 

 

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EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:

SILICON VALLEY BANK

 

Date:

FROM:

NETLIST, INC.

 

 

 

The undersigned authorized officer of NETLIST, INC. (“Borrower”) certifies that
under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending                                with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.  Attached are the
required documents supporting the certification.  The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period
to the next except as explained in an accompanying letter or footnotes.  The
undersigned acknowledges that no borrowings may be requested at any time or date
of determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.  Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Monthly financial statements with Compliance Certificate

 

Monthly within 30 days

 

Yes No

Annual financial statement (CPA Audited)

 

Concurrently with Form 10-K

 

Yes No

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes No

A/R & A/P Agings; Deferred Revenue Report

 

Monthly within 20 days

 

Yes No

Transaction Reports

 

(i) if Streamline Period is in effect, monthly (within twenty (20) days after
the end of each month) and at the time of each request for an Advance; and
(ii) if Streamline Period is not in effect, weekly and at the time of each
request for an Advance

 

Yes No

 

The following intellectual property was registered after the Effective Date (if
no registrations, state “None”)

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

Maintain on a Monthly Basis:

 

 

 

 

 

 

Minimum Adjusted Quick Ratio

 

1.25 : 1.00

 

      : 1.00

 

Yes No

Minimum Tangible Net Worth

 

$17,500,000 plus (i) 50% of new equity and sub debt plus (ii) 50% of quarterly
net income

 

$            

 

Yes No

 

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The following financial covenant analysis and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)

 

 

 

 

NETLIST, INC.

 

BANK USE ONLY

 

 

 

 

 

Received by:

 

By:

 

 

 

AUTHORIZED SIGNER

Name:

 

 

Date:

 

Title:

 

 

 

 

 

Verified:

 

 

 

 

AUTHORIZED SIGNER

 

 

Date:

 

 

 

 

 

 

 

Compliance Status:              Yes    No

 

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Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

 

Dated:

 

I.

Adjusted Quick Ratio (Section 6.9(a))

 

 

 

 

Required:               1.25 : 1.00

 

Actual:

 

A.

Borrower’s cash and Cash Equivalents that are unencumbered (except for Bank’s security interest) and unrestricted

 

$

 

 

B.

Aggregate net amount of Borrower’s Eligible Accounts

 

$

 

 

 

 

 

 

 

C.

Sum of line A plus line B

 

$

 

 

 

 

 

 

 

D.

Current Liabilities

 

$

 

 

 

 

 

 

 

E.

Adjusted Quick Ratio (line C divided by line D)

 

    : 1.00

 

 

Is line F equal to or greater than 1.25 : 1.00 ?

 

 

o No, not in compliance

o Yes, in compliance

 

 

 

 

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II.

Minimum Tangible Net Worth (Section 6.9(b))

 

 

 

 

Required Amount:

 

$17,500,000 plus (i) 50% of consideration for equity securities and subordinated
debt plus (ii) 50% of Borrower’s quarterly net income

 

Actual:

 

A.

Aggregate value of total assets of Borrower and its Subsidiaries

 

$

 

 

 

 

 

 

 

B.

Aggregate value of goodwill of Borrower and its Subsidiaries

 

$

 

 

 

 

 

 

 

C.

Aggregate value of intangible assets of Borrower and its Subsidiaries

 

$

 

 

 

 

 

 

 

D.

Aggregate value of investments of Borrower and its Subsidiaries consisting of
minority investments in companies which investments are not publicly-traded

 

$

 

 

 

 

 

 

 

E.

Aggregate value of any reserves not already deducted from assets

 

$

 

 

 

 

 

 

 

F.

Aggregate value of liabilities of Borrower and its Subsidiaries (including all
Indebtedness) and current portion of Subordinated Debt permitted by Bank to be
paid by Borrower (but no other Subordinated Debt)

 

$

 

 

 

 

 

 

 

G.

Aggregate value of Indebtedness of Borrower subordinated to Borrower’s
Indebtedness to Bank

 

$

 

 

 

 

 

 

 

H.

Tangible Net Worth (line A minus line B minus line C minus line D minus line E
minus line F plus line G)

 

$

 

 

 

Is line H equal to or greater than Required Amount?

 

 

o No, not in compliance

o Yes, in compliance

 

 

 

 

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