EXHIBIT 10.1

EIGHTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

This Amendment, dated as of June 29, 2007, is made by and between NETLIST, INC.,
a Delaware corporation, and NETLIST TECHNOLOGY TEXAS, L.P., a Texas limited
partnership (each a “Borrower” and collectively, the “Borrowers”), on the one
hand, and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through
its WELLS FARGO BUSINESS CREDIT operating division, on the other hand.

RECITALS

The Borrowers and Wells Fargo Business Credit, Inc., a Minnesota corporation
(“WFBCI”), are parties to an Amended and Restated Credit and Security Agreement,
dated as of December 27, 2003, as amended by a First Amendment to Amended and
Restated Credit and Security Agreement, dated as of June 30, 2004, a Second
Amendment to Credit and Security Agreement and Waiver of Defaults, dated as of
December 20, 2005, a Third Amendment to Credit and Security Agreement, dated as
of February 14, 2006, a Fourth Amendment to Credit and Security Agreement and
Waiver of Defaults, dated as of April 18, 2006, a Fifth Amendment to Credit and
Security Agreement, dated as of July 28, 2006, a Sixth Amendment to Credit and
Security Agreement and Waiver of Defaults, dated as of December 29, 2006, and a
Seventh Amendment to Credit and Security Agreement, dated as of March 21, 2007
(as so amended, the “Credit Agreement”). Capitalized terms used in these
recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.

WFBCI has merged with and into Lender and Lender is the surviving corporation.

The Borrowers have requested that the Lender make certain additional amendments
to the Credit Agreement, which the Lender is willing to make pursuant to the
terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

1.             Defined Terms.

(a)           Capitalized terms used in this Amendment which are defined in the
Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.

(b)           The following definition set forth in Section 1.1 of the Credit
Agreement is hereby amended in its entirety as follows:

“Foreign Accounts Eligibility Period” means until July 31, 2008.

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2.             Bank and Brokerage Statements.  A new clause (r) is hereby added
to Section 6.1 immediately following clause (q) thereof as follows:

(r)            Monthly Bank and Brokerage Statements.  As soon as available and
in any event within 20 days after the end of each month, the Borrowers will
deliver to the Lender copies of their most recent bank and brokerage account
statements together such additional information with respect thereto as the
Lender may in its discretion require.

3.             Financial Covenants.  Section 6.2 of the Credit Agreement is
hereby amended in its entirety as follows:

Section 6.2             Financial Covenants.

(a)           Minimum Book Net Worth.  The Borrowers will maintain at all times
Netlist’s Book Net Worth, determined as at the end of each month, at an amount
not less than $42,600,000.

(b)           Minimum Net Income (Maximum Net Loss).  The Borrowers will
achieve, for each period described below, Net Income (or Net Loss) of not less
than (or more than, as applicable) the amount set forth for each such period
(numbers appearing between “< >” are negative):

Period

 

Minimum Net Income / Maximum Net Loss

 

7/1/07 – 9/30/07

 

<$1,500,000>

 

7/1/07 – 12/31/07

 

<$2,000,000>

 

(c)           Capital Expenditures.  The Borrowers will not incur or contract to
incur Capital Expenditures of more than $6,000,000 in the aggregate during the
fiscal year ending December 31, 2007.

(d)           Stop Loss.  The Borrowers will not, during any single month or in
any two consecutive months during the periods indicated below, suffer a Net Loss
in excess of the amounts indicated in the table below opposite the applicable
period:

Period

 

Maximum One Month Net
Loss

 

Maximum Two Consecutive
Months Net Loss

 

7/1/07 – 10/31/07

 

<$600,000>

 

<$900,000>

 

11/1/07 and thereafter

 

<$400,000>

 

<$700,000>

 

(e)           Intentionally Deleted.

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(f)            Minimum Liquidity.  The Borrowers will maintain at all times,
determined as of the end of each month, the sum of their cash and cash
equivalents at an amount not less than $20,000,000.

4.             Replacement Exhibit C.  Exhibit C attached to the Credit
Agreement is hereby replaced with Exhibit C attached to this Amendment.

5.             No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.

6.             Amendment Fee. The Borrowers shall pay the Lender a fully earned,
non-refundable fee in the amount of $50,000 (“Amendment Fee”) in consideration
of the Lender’s execution and delivery of this Amendment.  The Amendment Fee
shall be due and payable as follows: (i) $25,000 upon execution of this
Amendment; and (ii) $25,000 upon the earlier to occur of (x) January 31, 2008 or
(y) the Termination Date; provided that the second installment of the Amendment
Fee shall be waived if no Event of Default has occurred and is continuing as of
December 31, 2007.

7.             Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:

(a)           The first installment of the Amendment Fee; and

(b)           Such other matters as the Lender may require.

8.             Representations and Warranties. Each Borrower hereby represents
and warrants to the Lender as follows:

(a)           Such Borrower has all requisite power and authority to execute
this Amendment, to perform all of its obligations hereunder, and this Amendment
has been duly executed and delivered by such Borrower and constitute the legal,
valid and binding obligation of such Borrower, enforceable in accordance with
their terms.

(b)           The execution, delivery and performance by each Borrower of this
Amendment has been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
such Borrower, or the articles of incorporation or by-laws of such Borrower, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which such
Borrower is a party or by which it or its properties may be bound or affected.

(c)           All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though made
on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date.

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9.             References. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

10.           No Waiver.  The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.

11.           Release.

(a)           Each Borrower hereby absolutely and unconditionally releases and
forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which such Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.  Each Borrower
certifies that it has read the following provisions of California Civil Code
Section 1542:

A general release does not extend to claims which the creditor does not know or
suspect 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.

(b)           Each Borrower understands and acknowledges that the significance
and consequence of this waiver of California Civil Code Section 1542 is that
even if it should eventually suffer additional damages arising out of the facts
referred to above, they will not be able to make any claim for those damages.
Furthermore, each Borrower acknowledges that it intends these consequences even
as to claims for damages that may exist as of the date of this release but which
it does not know exist, and which, if known, would materially affect its
decision to execute this Agreement, regardless of whether its lack of knowledge
is the result of ignorance, oversight, error, negligence, or any other cause.

12.           Costs and Expenses. The Borrowers hereby reaffirm their agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrowers
specifically agree to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The
Borrowers hereby agree that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrowers, make a
loan to the Borrowers under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses, and the Amendment Fee.

13.           Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.

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

WELLS FARGO BANK, NATIONAL
ASSOCIATION
Through its Wells Fargo Business Credit

 

NETLIST, INC.

operating division

 

By:

/s/ Chun K. Hong

 

 

Name: Chun K. Hong

 

 

Its: President

By

/s/ Josephine Camalian

 

 

Name: Josephine Camalian

 

 

Its   Vice President

 

NETLIST TECHNOLOGY TEXAS L.P.

 

 

By: Netlist Holdings GP, Inc., its general partner

 

 

 

 

 

By:

/s/ Chun K. Hong

 

 

Name: Chun K. Hong

 

 

Its:  President

 

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