Exhibit 10.1

 

AMENDMENT TO LOAN DOCUMENTS

 

THIS AMENDMENT TO LOAN DOCUMENTS (this “Amendment”) is entered into as of
May 14, 2012, 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.            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.  The Loan Agreement is amended as
follows, effective on the date hereof (except where a different effective date
is specified below):

 

2.1          Modified Letters of Credit Sublimit.  Section 2.1.2 of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

2.1.2       Letters of Credit Sublimit.  [Omitted].

 

2.2          Modified Foreign Exchange Sublimit.  Section 2.1.3 of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

2.1.3       Foreign Exchange Sublimit.  [Omitted].

 

2.3          Modified Cash Management Services Sublimit.  Section 2.1.4 of the
Loan Agreement is hereby amended in its entirety to read as follows:

 

2.1.4       Cash Management Services Sublimit.  [Omitted].

 

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2.4          Modified Overall Aggregate Sublimit.  Section 2.1.5 of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

2.1.5       Overall Aggregate Sublimit.  [Omitted].

 

2.5          Modification of Term Loan and Term Loan II.  Section 2.1.6 and
Section 2.1.7 of the Loan Agreement are hereby deleted and replace with the
following which shall read as follows:

 

2.1.6       Term Loan.

 

(a)           Availability.  On the May 2012 Amendment Effective Date, Bank
shall make one (1) term loan available to Borrower in an amount up to the Term
Loan Amount, subject to the satisfaction of the terms and conditions of this
Agreement.

 

(b)           Interest Only.  Interest only on the Term Loan shall be paid until
November 30, 2012.

 

(c)           Repayment.  Beginning on December 1, 2012, 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 December 1, 2012, 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          Addition of Letters of Credit Bank Services.  The following is
hereby added as Section 2.1.7 of the Loan Agreement and shall read as follows:

 

2.1.7       Letters of Credit.

 

(a)           The Dollar Equivalent of the aggregate face amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) may not exceed $3,000,000 (the “Letter of Credit
Limit”).  Through the Revolving Line Maturity Date, Bank will grant Letters of
Credit up to the Letter of Credit Limit upon the request of Borrower, as
communicated by Borrower through Borrower’s submission of the Bank’s standard
Application and Letter of Credit Agreement (the “Letter of Credit Application”).

 

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(b)           All Letters of Credit shall be in form and substance acceptable to
Bank in its sole discretion and shall be subject to the terms and conditions of
the Letter of Credit Application.  Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.  Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Bank and
opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower’s instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto.

 

(c)           The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.

 

(d)           Borrower may request that Bank issue a Letter of Credit payable in
a Foreign Currency.  If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrower of the Dollar
Equivalent of the amount thereof (plus fees and charges in connection therewith
such as wire, cable, SWIFT or similar charges).

 

(e)           To guard against fluctuations in currency exchange rates, upon the
issuance of any Letter of Credit payable in a Foreign Currency, Bank shall
create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of Credit. 
The amount of the Letter of Credit Reserve may be adjusted by Bank from time to
time to account for fluctuations in the exchange rate.  The availability of
funds under the Revolving Line shall be reduced by the amount of such Letter of
Credit Reserve for as long as such Letter of Credit remains outstanding.

 

(f)            If, on the Revolving Line Maturity Date (or the effective date of
any termination of this Agreement), there are any outstanding Letters of Credit,
then on such date Borrower shall provide to Bank cash collateral in an

 

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amount equal to 105% (110% if the Letter of Credit is denominated in a currency
other than U.S. Dollars) of the Dollar Equivalent of the face amount of all such
Letters of Credit plus all interest, fees, and costs due or to become due in
connection therewith (as estimated by Bank in its good faith business judgment),
to secure all of the Obligations relating to such Letters of Credit.

 

2.7          Modified Overadvances.  Section 2.2 of the Loan Agreement is hereby
amended in its entirety to read as follows:

 

2.2          Overadvances.  If, at any time, the outstanding principal amount of
any Advances exceeds the lesser of either the Maximum Revolver Amount or the
Borrowing Base (such excess being an “Overadvance”), Borrower shall immediately
pay to Bank in cash such Overadvance.  Without limiting Borrower’s obligation to
repay Bank any amount of the Overadvance, Borrower agrees to pay Bank interest
on the outstanding amount of any Overadvance, on demand, at the Default Rate.

 

2.8          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 two and one-half percentage points (2.50%) above the Prime Rate, which
interest shall be payable monthly in accordance with Section 2.3(f) below.

 

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2.9          Modified Unused Revolving Line Fee.  Section 2.4(d) of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

(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.  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

 

2.10        Modified Anniversary Fee.  Section 2.4(g) of the Loan Agreement is
hereby amended in its entirety to read as follows

 

(g)           Anniversary Fee.  A fully earned, non-refundable fee equal to
0.50% of the Maximum Revolver Amount, on September 30, 2012 and on September 30
of each year thereafter (exclusive of the Revolving Line Maturity Date); and if
this Agreement is terminated prior to September 30 of any given year, either by
Borrower or Bank, Borrower shall pay the Anniversary Fee that would be due on
September 30 of such given year to Bank in addition to any Termination Fee.

 

2.11        Modified Grant of Security Interest.  Section 4.1 of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

4.1          Grant of Security Interest.  Borrower hereby grants Bank, to secure
the payment and performance in full of all of the Obligations, a continuing
security interest in, and pledges to Bank, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof.

 

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank.  Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by

 

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the first priority perfected security interest in the Collateral granted herein
(subject only to Permitted Liens that may have superior priority to Bank’s Lien
in this Agreement).

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are satisfied
in full, and at such time, Bank shall, at Borrower’s sole cost and expense,
terminate its security interest in the Collateral and all rights therein shall
revert to Borrower.  In the event (x) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and
(y) this Agreement is terminated, Bank shall terminate the security interest
granted herein upon Borrower providing cash collateral acceptable to Bank in its
good faith business judgment for Bank Services, if any.

 

2.12        Modified Language in Priority of Security Interest.  The following
language in Section 4.2 of the Loan Agreement is hereby deleted (due to the
modification in Section 4.1 of the Loan Agreement above):

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, release its Lien in the Collateral and all
rights therein shall revert to Borrowers.

 

2.13        Modified Financial Covenants.  Section 6.9(b) of the Loan Agreement
is hereby amended in its entirety to read as follows, effective as of the
May 2012 Amendment Effective Date:

 

(b)           Tangible Net Worth.  A Tangible Net Worth of at least $15,000,000
(“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

 

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which said net income is realized, and shall continue effective thereafter. In
no event shall the Minimum Tangible Net Worth be decreased.

 

2.14        Modified Remedy Regarding Letters of Credit.  Section 9.1(c) of the
Loan Agreement is hereby amended in its entirety to read as follows:

 

(c)           for any Letters of Credit, demand that Borrower (i) deposit cash
with Bank in an amount equal to 105% (110% if the Letter of Creditor is
denominated in a currency other than U.S. Dollars) of the Dollar Equivalent of
the aggregate face amount of all Letters of Credit remaining undrawn (plus all
interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment)), to secure all of the
Obligations relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter
of credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;

 

2.15        Modified Remedy Regarding FX Contracts.  Section 9.1(d) of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

(d)           terminate any FX Contracts;

 

2.16        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

 

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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 date that is one
year prior to the Revolving Line Maturity Date, and 1.0% of the Maximum Revolver
Amount if termination occurs after the date that is one year prior to the
Revolving Line Maturity 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.

 

2.17        Modified Survival Provision.  Section 12.9 of the Loan Agreement is
hereby amended in its entirety to read as follows:

 

12.9        Survival.  All covenants, representations and warranties made in
this Agreement continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been paid in full and satisfied.  Without
limiting the foregoing, except as otherwise provided in Section 4.1, the grant
of security interest by Borrower in Section 4.1 shall survive until the
termination of all Bank Services Agreements.  The obligation of Borrower in
Section 12.3 to indemnify the Indemnified Persons shall survive until all
statutes of limitation with respect to the Claims, losses and expenses for which
indemnity is given shall have run.

 

2.18        Added Definitions Pertaining to the May 2012 Amendment.  The
following definitions are hereby added to Section 13.1 of the Loan Agreement, in
alphabetical order, and shall read as follows:

 

“May 2012 Amendment” is that certain Amendment to Loan Documents between
Borrower and Bank and dated approximately May 14, 2012.

 

“May 2012 Amendment Effective Date” is as defined in the May 2012 Amendment.

 

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2.19        Modified Definition of Eligible Accounts Regarding Foreign Billed
Accounts.  Subclause (d) of the definition of “Eligible Accounts” (identifying
what does not constitute an Eligible Account) set forth in Section 13.1 of the
Loan Agreement is hereby amended in its entirety to read as follows:

 

(d)           Accounts payable outside of the United States;  Accounts billed
outside of the United States unless (i) such billed Accounts are collected by
Borrower at its United States headquarters and (ii) such collections are
remitted to the lockbox provided for in Section 6.3(c) of this Agreement or
Borrower’s cash collateral account maintained with Bank;

 

2.20        Modified Definition of Eligible Accounts Regarding Concentration
Limit.  Subclause (h) of the definition of “Eligible Accounts” (identifying what
does not constitute an Eligible Account) set forth in Section 13.1 of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

(h)           Accounts of Borrower owing from an Account Debtor, including
Affiliates, whose total obligations to Borrower exceed forty percent (40%) (such
percentage, the “Concentration Limit”) of all Eligible Accounts, to the extent
of amounts that exceed that percentage, unless Bank approves in writing;
provided, however, that such Concentration Limit will not apply to Accounts that
are covered in full by credit insurance satisfactory to Bank;

 

2.21        Modified Definition of Revolving Line Maturity Date.  The definition
of Revolving Line Maturity Date set forth in Section 13.1 of the Loan Agreement
is hereby amended in its entirety to read as follows:

 

“Revolving Line Maturity Date” September 30, 2014.

 

2.22        Modified Definitions Pertaining to the Term Loan.  The following
definitions, set forth in Section 13.1 of the Loan Agreement, are hereby amended
in their entirety to read as follows:

 

“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 Three Million Five Hundred Thousand
Dollars ($3,500,000).

 

“Term Loan Maturity Date” is the earlier of the following dates: (i) October 14,
2015 [the date that is forty-two months from the date of the May 2012
Amendment], (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(c).

 

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2.23        Deleted Definitions Pertaining to Term Loan II.  The following
defined terms, set forth in Section 13.1 of the Loan Agreement, are hereby
deleted:

 

“Term Loan II”

 

“Term Loan II Amount”

 

“Term Loan II Maturity Date”

 

“Term Loan II Payment”

 

2.24        Modified or Added Definitions Pertaining to Deletion of Letters of
Credit Sublimit, Foreign Exchange Sublimit and Cash Management Services
Sublimit.  The following definitions are hereby modified in, or added to,
Section 13.1 of the Loan Agreement, in alphabetical order, and shall read as
follows:

 

“Availability Amount” is (a) the lesser of (i) the Maximum Revolver Amount or
(ii) the amount available under the Borrowing Base minus (b) the outstanding
principal balance of any Advances.

 

“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

 

“Credit Extension” is any Advance, Term Loan or any other extension of credit by
Bank for Borrower’s benefit.

 

“FX Contract” is any foreign exchange contract by and between Borrower and Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.

 

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity, or
similar agreement.

 

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
the IP Security Agreements, any Bank Services Agreement, any subordination
agreement,

 

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any note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement by Borrower and/or any Guarantor with or for
the benefit of Bank, all as amended, restated, or otherwise modified.

 

“Obligations” are Borrower’s obligation to pay when due any debts, principal,
interest, Bank Expenses, and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, any interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Bank, and the
performance of Borrower’s duties under the Loan Documents.

 

2.25        Deleted Definitions Pertaining to Deletion of Letters of Credit
Sublimit, Foreign Exchange Sublimit and Cash Management Services Sublimit.  The
following defined terms, set forth in Section 13.1 of the Loan Agreement, are
hereby deleted:

 

“Cash Management Services”

 

“FX Business Day”

 

“FX Forward Contract”

 

“FX Reduction Amount”

 

“FX Reserve”

 

“Settlement Date”

 

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.

 

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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

 

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.

 

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5.             Release by Borrower.  Borrower hereby agree as follows:

 

5.1          FOR GOOD AND VALUABLE CONSIDERATION, Borrower 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, Borrower 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, Borrower 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 Borrower hereby to fully, finally and
forever settle and release all matters, disputes and differences, known or
unknown, suspected or unsuspected; accordingly, if Borrower 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, Borrower 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. Borrower
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. Borrower 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.

 

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5.5          Borrower 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 Borrower regarding any fact relied upon by Borrower in
entering into this Amendment.

 

(b)           Borrower 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 Borrower, the contents
hereof are known and understood by Borrower, and this Amendment is signed
freely, and without duress, by Borrower.

 

(e)           Borrower 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. Borrower 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.

 

8.             Effectiveness.  This Amendment shall be deemed effective upon
(a) the due execution and delivery to Bank of this Amendment by each party
hereto and (b) Borrower’s payment of an amendment fee (with respect to the Term
Loan) in an amount equal to $7,500.  The above-mentioned fee 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.

 

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

 

14

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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

 

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