Exhibit 10.4

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER,
SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

NETLIST, INC.

 

STOCK PURCHASE WARRANT

 

Date of Issuance: July 18, 2013

 

Certificate No. W-1

 

FOR VALUE RECEIVED, Netlist, Inc., a Delaware corporation (the “Company”),
hereby grants to Drawbridge Special Opportunities Fund LP, a Delaware limited
partnership or its registered assigns (the “Registered Holder”) the right (this
“Warrant”) to purchase from the Company 1,648,351 shares of Warrant Stock at a
price per share of $1.00 (as adjusted from time to time hereunder, the “Exercise
Price”). Certain capitalized terms used herein are defined in Section 5. The
amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant.

 

This Warrant is subject to the following provisions:

 

Section 1.                                           Exercise of Warrant.

 

1A.                                  Exercise Period. Subject to Section 9, the
Registered Holder may exercise, in whole or in part (but not as to a fractional
share of Warrant Stock), the purchase rights represented by this Warrant at any
time and from time to time after the Date of Issuance to and including the
seventh (7th) anniversary thereof (the “Exercise Period”).

 

1B.                                  Exercise Procedure.

 

(i)                                          This Warrant shall be deemed to
have been exercised (in whole or in part) when the Company has received all of
the following items (as the case may be from time to time, the “Exercise Time”):

 

(a)                                 a completed Exercise Agreement, as described
in Section 1 C, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the “Purchaser”);

 

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(b)                                      this Warrant (delivery of which shall
be subject to the Company’s obligations with respect to delivery of a new
Warrant as provided in Section 1B(iii));

 

(c)                                       if this Warrant is not registered in
the name of the Purchaser, an Assignment or Assignments in the form of Exhibit A
attached hereto (each, an “Assignment”) evidencing the assignment of this
Warrant to the Purchaser, in which case the Registered Holder shall have
complied with the provisions set forth in Section 7; and

 

(d)                                      wire transfer of immediately available
funds or a check payable to the Company in an amount equal to the product of the
Exercise Price multiplied by the number of shares of Warrant Stock being
purchased upon such exercise (the “Aggregate Exercise Price”).

 

(ii)                                       As an alternative to the exercise of
this Warrant as provided in Section 1B(i), the holder of this Warrant may
exchange all or part of the purchase rights represented by this Warrant by
surrendering this Warrant to the Company, together with a written notice to the
Company that the holder is exchanging the Warrant (or a portion thereof) for an
aggregate number of shares of Warrant Stock specified in the notice, from which
the Company shall withhold and not issue to the holder a number of shares of
Warrant Stock with an aggregate Market Price equal to the Aggregate Exercise
Price of the number of shares of Warrant Stock specified in such notice (and
such withheld shares shall no longer be issuable under this Warrant).

 

(iii)                                    The Company shall cause the Transfer
Agent to deliver to the Purchaser, within five (5) Business Days after the date
of each Exercise Time, certificates for shares of Warrant Stock purchased upon
exercise of this Warrant; provided, that no failure or delay in such delivery
shall affect the issuance of any Warrant Stock as provided in Section 1B(iv).
Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this Warrant
which have not expired or been exercised and shall, within such five
(5) Business Day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.

 

(iv)                                   The Warrant Stock issuable upon the
exercise of this Warrant shall be deemed to have been issued to the Purchaser at
the Exercise Time, and the Purchaser shall be deemed for all purposes to have
become the record holder of such Warrant Stock at the Exercise Time.

 

(v)                                      The issuance of certificates for shares
of Warrant Stock upon exercise of this Warrant shall be made without charge to
the Registered Holder or the Purchaser for any issuance tax in respect thereof
or other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Warrant Stock. Each share of Warrant Stock
issuable upon exercise of this Warrant shall, upon payment of the Exercise Price
therefor, be fully paid and nonassessable and free from all liens and charges
with respect to the issuance thereof.

 

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(vi)                                   The Company shall not close its books
against the transfer of this Warrant or of any share of Warrant Stock issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant. The Company shall from time to time take
all such action as may be necessary to assure that the par value per share of
the unissued Warrant Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.

 

(vii)                                The Company shall assist and cooperate with
any Registered Holder or Purchaser required to make any filings with, or obtain
any approvals of, any Governmental Authority prior to or in connection with any
exercise of this Warrant (including making any filings required to be made by
the Company).

 

(viii)                             Notwithstanding any other provision hereof,
if an exercise of any portion of this Warrant is to be made in connection with a
registered public offering or the sale of the Company, the exercise of any
portion of this Warrant may, at the election of the holder hereof, be
conditioned upon the consummation of the public offering or the sale of the
Company in which case such exercise shall not be deemed to be effective until
the consummation of such transaction.

 

(ix)                                   The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Warrant Stock
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Warrant Stock issuable upon the exercise of all outstanding
Warrants. The Company shall take all such actions as may be necessary to assure
that all such shares of Warrant Stock may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
the Financial Industry Regulatory Authority (FINRA), the National Association of
Securities Dealers Automated Quotation (“NASDAQ”) or any domestic securities
exchange upon which shares of Warrant Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon each
such issuance). The Company shall not take any action which would cause the
number of authorized but unissued shares of Warrant Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon
exercise of the Warrants.

 

(x)                                      The Company shall not take any action
which would materially conflict with or frustrate the purpose of this Warrant or
any adjustment or exercise thereof, including that the Company shall not adopt
any rights plan or similar agreement unless the potential adverse effects of any
such plan or agreement expressly exclude the Registered Holder, any Purchaser,
their respective Affiliates and their respective ownership (beneficial or of
record) of any securities acquirable pursuant to this Warrant.

 

1C.                                  Exercise Agreement. Upon any exercise of
this Warrant, the Exercise Agreement shall be substantially in the form of
Exhibit B attached hereto, except that if any shares of Warrant Stock are not to
be issued in the name of the Person in whose name this Warrant is registered,
the Exercise Agreement shall also state the name of the Person to whom the
certificates for such shares of Warrant Stock are to be issued, and if the
number of shares of Warrant Stock to be issued does not include all the shares
of Warrant Stock purchasable hereunder, it shall also state the name of the
Person(s) to whom a new Warrant(s) for the unexercised portion of the rights
hereunder is to be delivered. Such Exercise Agreement shall be dated the actual
date of execution thereof.

 

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1D.                                  Fractional Shares. If a fractional share of
Warrant Stock would, but for the provisions of Section 1 A, be issuable upon
exercise of the rights represented by this Warrant, the Company shall, within
five (5) Business Days after the date of the Exercise Time, deliver to the
Purchaser a check payable to the Purchaser in lieu of such fractional share in
an amount equal to the difference between the Market Price of such fractional
share as of the date of the Exercise Time and the Exercise Price of such
fractional share.

 

Section 2.                                           Adjustment of Exercise
Price and Number of Shares. The Exercise Price shall be subject to adjustment
from time to time as provided in this Section 2, and the number of shares of
Warrant Stock obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time as provided in this Section 2.

 

2A.                                  Subdivision or Combination of Common Stock.
If the Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of shares of Warrant Stock obtainable upon exercise of this Warrant shall
be proportionately increased. If the Company at any time combines (by reverse
stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of shares of Warrant Stock obtainable upon exercise of this Warrant shall
be proportionately decreased.

 

2B.                                  Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company’s assets or other transaction, which in each case is effected in such a
way that the holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets (including cash) with
respect to or in exchange for Common Stock is referred to herein as “Organic
Change.” Prior to the consummation of any Organic Change, the Company shall make
appropriate provision (in form and substance satisfactory to the Registered
Holders of Warrants representing a majority of the shares of Warrant Stock
obtainable upon exercise of such Warrants (the “Majority Holders”) to insure
that each of the Registered Holders of the Warrants shall thereafter have the
right to acquire and receive, in lieu of or addition to (as the case may be) the
shares of Warrant Stock immediately theretofore acquirable and receivable upon
the exercise of such holder’s Warrant, such shares of stock, securities or
assets (including cash) as would have been issued or payable in such Organic
Change (if the holder had exercised this Warrant immediately prior to such
Organic Change) with respect to or in exchange for the number of shares of
Warrant Stock immediately theretofore acquirable and receivable upon exercise of
such holder’s Warrant had such Organic Change not taken place, including that if
the holders of Common Stock are given any choice as to the securities or assets
(including cash) to be received in such Organic Change, then the Registered
Holders shall be given the same choice in respect thereof. Notwithstanding
anything to the contrary, in the event of an Organic Change involving a Person
whose common stock is not

 

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traded on a national securities exchange (a “Non-Listed Company”) in which all
outstanding shares of Common Stock as of immediately prior to the Organic Change
are converted into or exchanged or tendered for stock, securities or assets
(other than cash) or the right to receive stock, securities or assets (other
than cash) of such Non-Listed Company, the Company (or as applicable, the
successor entity) and the purchaser entity shall, at the Registered Holder’s
election, exercisable at any time prior to, concurrently with, or within 30 days
after, the consummation of such Organic Change, purchase this Warrant (or any
stock, securities or assets into which this Warrant or the Warrant Stock
underlying this Warrant may have been converted or exchanged or for which any of
them may have been tendered in such Organic Change) from the Registered Holder
by paying to the Holder cash, in immediately available funds payable upon the
consummation of such Organic Change (or within 10 days following notice of such
election by the Registered Holder in the case of an election delivered after
such consummation), in an amount equal to the value thereof reflected by the
terms of such Organic Change. In the case of any Organic Change, the Company
shall make appropriate provision (in form and substance satisfactory to the
Majority Holders) with respect to such holders’ rights and interests to insure
that the provisions of this Section 2 and Sections 2D and 4 shall thereafter be
applicable to the Warrants (including, in the case of any such Organic Change in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such Organic Change and a corresponding immediate
adjustment in the number of shares of Warrant Stock acquirable and receivable
upon exercise of the Warrants, if the value so reflected is less than the
Exercise Price in effect immediately prior to such Organic Change). The Company
shall not effect any Organic Change unless prior to the consummation thereof,
the successor entity (if other than the Company) and the purchasing entity
assume by written instrument (in form and substance satisfactory to the Majority
Holders), the obligation to deliver to each such holder such shares of stock,
securities or assets (including cash) as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.

 

2C.                                      Notices.

 

(i)                                          Promptly upon any adjustment of the
Exercise Price, the Company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying the calculation of
such adjustment.

 

(ii)                                       The Company shall give written notice
to the Registered Holder at least twenty (20) days prior to the date on which
the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation.

 

(iii)                                    The Company shall also give written
notice to the Registered Holders at least twenty (20) days prior to the date on
which any Organic Change, dissolution or liquidation shall take place.

 

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2D.                             Pro Rata Distributions. During such time as this
Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including any
distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the
Registered Holder would have participated therein if the Registered Holder had
held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on exercise hereof) immediately
before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the participation in such Distribution.

 

Section 3.                                           Liquidating Dividends. If
the Company declares or pays a dividend upon the Common Stock payable otherwise
than in cash out of earnings or earned surplus (determined in accordance with
generally accepted accounting principles, consistently applied) except for a
stock dividend payable in shares of Common Stock (a “Liquidating Dividend”),
then the Company shall pay to the Registered Holder of this Warrant at the time
of payment thereof the Liquidating Dividend which would have been paid to such
Registered Holder on the Warrant Stock had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined.

 

Section 4.                                           Purchase Rights. If at any
time the Company grants, issues or sells any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of Common Stock (the “Purchase Rights”), then the
Registered holder of this Warrant shall be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Warrant Stock acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

 

Section 5.                                           Definitions. The following
terms have meanings set forth below:

 

“Affiliate” means, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.

 

“Business Day” means any day that is not a Saturday, Sunday or a day on which
banks located in the State of New York are authorized or obligated to close.

 

“Common Stock” means, collectively, the Company’s Common Stock and any capital
stock of any class of the Company hereafter authorized which is not limited to a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Company.

 

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“Convertible Securities” means any stock or securities (directly or indirectly)
convertible into or exchangeable for Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

 

“Loan Agreement” means that certain Loan and Security Agreement, dated as of
date hereof, by and between DBD Credit Funding LLC, a Delaware limited liability
company and the Company (as amended, restated supplemented, or otherwise
modified from time to time).

 

“Market Price” means as to any security the volume weighted average (rounded to
the nearest cent) of the closing prices of such security’s sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on any day, the volume weighted
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any day such security is not so listed, the volume
weighted average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by Pink OTC Markets, Inc., or any
similar successor organization, in each such case averaged over a period of ten
(10) days consisting of the day as of which “Market Price” is being determined
and the nine (9) consecutive Business Days prior to such day; provided that if
such security is listed on any domestic securities exchange or quoted in a
domestic over-the-counter market the term “Business Days” as used in this
sentence means Business Days on which such exchange is open for trading. If at
any time such security is not listed on any domestic securities exchange or
quoted in the domestic over-the-counter market, the “Market Price” shall be the
fair value thereof determined jointly by the Company and the Majority Holders
(without applying any marketability, minority or other discounts); provided that
if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined (without applying any marketability,
minority or other discounts) by an appraiser jointly selected by the Company and
the Majority Holders. The determination of such appraiser shall be final and
binding on the Company and the Registered Holders of the Warrants, and the fees
and expenses of such appraiser shall be paid by the Company.

 

“Options” means any rights or options to subscribe for or purchase Common Stock
or Convertible Securities.

 

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

 

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“Subsidiary” means, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.

 

“Transfer Agent” means Computershare Trust Company, N.A., the current transfer
agent of the Company, with a mailing address of 330 N. Brand Blvd., Ste. 701,
Glendale, CA 91203-2149 and a facsimile number of, and any successor transfer
agent of the Company.

 

“Warrant Stock” means the Company’s Common Stock, par value $0.001 per share;
provided that if there is a change such that the securities issuable upon
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the type or class of securities so issuable, then the term
“Warrant Stock” shall mean one share of the security issuable upon exercise of
the Warrants if such security is issuable in shares, or shall mean the smallest
unit in which such security is issuable if such security is not issuable in
shares.

 

Section 6. No Voting Rights; Limitations of Liability. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Warrant Stock, and no enumeration herein of the
rights or privileges of the Registered Holder shall give rise to any liability
of such holder for the Exercise Price of Warrant Stock acquirable by exercise
hereof or as a stockholder of the Company.

 

Section 7.                                           Warrant Transferable.
Subject to compliance with applicable securities laws and the transfer
conditions referred to in the legend endorsed hereon, this Warrant and all
rights hereunder are transferable, in whole or in part, without charge to the
Registered Holder, upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit A attached hereto) at the principal office of
the Company.

 

Section 8.                                           Warrant Exchangeable for
Different Denominations. This Warrant is exchangeable, upon the surrender hereof
by the Registered Holder at the principal office of the Company, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such
rights as is designated by the Registered Holder at the time of such surrender.
The date the Company initially issues this Warrant shall be deemed to be the
“Date of Issuance” hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the “Warrants.”

 

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Section 9.                                           Warrant Vesting.

 

9A.                                  Solely with respect to the issuance of
329,670 shares of Warrant Stock issuable pursuant to this Warrant (as adjusted
from time to time hereunder, the “First Tranche Deferred Warrant Stock”), this
Warrant shall not be exercisable unless and until the IP Monetization Milestones
(as such term is defined in the Loan Agreement) have been achieved, it being
understood that this Section 9A shall cease to be effective, and this Warrant
shall become exercisable with respect to all shares of Warrant Stock issuable
hereunder, other than the Second Tranche Deferred Warrant Stock (as defined
below), immediately and automatically upon achievement of the IP Monetization
Milestones. Following such time as the IP Monetization Milestones have been
achieved, the Company shall, upon request by the Registered Holder, issue to the
Registered Holder, in replacement of this Warrant, a new warrant certificate in
form and substance identical to this Warrant, but with this Section 99A having
been removed.

 

9B.                                  Solely with respect to the issuance of
329,670 shares of Warrant Stock issuable pursuant to this Warrant (as adjusted
from time to time hereunder, the “Second Tranche Deferred Warrant Stock”), this
Warrant shall not be exercisable unless and until the Company borrows any
amounts under the IP Monetization Milestone Term Loan (as such term is defined
in the Loan Agreement), it being understood that this Section 9 shall cease to
be effective, and this Warrant shall become exercisable with respect to all
shares of Warrant Stock issuable hereunder, (including the First Tranche
Deferred Warrant Stock and the Second Tranche Deferred Warrant Stock),
immediately and automatically upon a borrowing by the Company of any amount
under the IP Monetization Milestone Term Loan. From and after such time as the
Company borrows any amounts under the IP Monetization Milestone Term Loan, the
Company shall, upon request by the Registered Holder, issue to the Registered
Holder, in replacement of this Warrant, a new warrant certificate in form and
substance identical to this Warrant, but with this Section 9 having been
removed.

 

Section 10.                                    Replacement. Upon receipt of
evidence reasonably satisfactory to the Company (an affidavit of the Registered
Holder shall be satisfactory) of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing this Warrant, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.

 

Section 11.                                    Notices. Except as otherwise
expressly provided herein, all notices, demands or other communications referred
to in this Warrant shall be in writing and shall be deemed to have been given
(i) when delivered personally to the recipient, (ii) when sent to the recipient
by confirmed electronic mail or facsimile if delivered prior to 5:00 p.m. local
time of the recipient on a Business Day or otherwise on the next Business Day,
(iii) one business day after it is sent to the recipient by reputable overnight
courier service (charges prepaid) or (iv) three Business Days after it is mailed
to the recipient by first class mail, return receipt requested, and shall be
addressed (a) to the Company, at its principal executive offices and (b) to the
Registered Holder of this Warrant, to Drawbridge Special Opportunities Fund LP,
1345

 

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Avenue of the Americas, 46th Floor, New York, New York 10105, Attention: James
K. Noble, III - General Counsel, Telephone: (212) 798-6100, Telecopier: (646)
224-8716, Email: dbsoloanops@fortress.com, with a copy (which shall not
constitute notice) to Kirkland & Ellis LLP, 333 South Hope Street, Los Angeles,
California 90071, Attention: Hamed Meshki, Telephone: (213) 680-8360,
Telecopier: (213) 808-8145, Email: hamed.meshki@kirkland.com.

 

Section 12.                                    Investment Representations. By
accepting this Warrant from the Company, Drawbridge Special Opportunities Fund
LP represents and warrants to the Company that it (a) is an “accredited
investor” as such term is defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the “Act”), (b) it is acquiring this Warrant
with the present intention of holding this Warrant for purposes of investment
and not with a view to the public resale or distribution within the meaning of
the Act, and (c) understands that this Warrant and the securities issuable upon
exercise hereof have not been registered under the Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of Drawbridge Special Opportunities Fund LP’s investment
intent as expressed herein.

 

Section 13.                                    Amendment and Waiver. Except as
otherwise provided herein, the provisions of the Warrants may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Majority Holders.

 

Section 14.                                    Descriptive Headings; Governing
Law. The descriptive headings of the several Sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The corporation laws of the State of New York shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal law of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York.

 

* * * *

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the Date of Issuance
hereof.

 

 

NETLIST, INC.

 

 

 

 

 

By:

/s/ Gail Sasaki

 

 

Name:

Gail Sasaki

 

 

Title:

CFO

 

[Signature Page - Netlist Warrant]

 

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EXHIBIT A

 

ASSIGNMENT

 

FOR VALUE
RECEIVED,                                                                             hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant (Certificate No. W-       ) with respect to the number of
shares of the Warrant Stock covered thereby set forth below, unto:

 

Names of Assignee

 

Address

 

No. of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Assignor]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT B

 

EXERCISE AGREEMENT

 

To:

 

Dated:

 

The undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W-        ), hereby agrees to subscribe for the purchase of
               shares of the Warrant Stock covered by such Warrant and makes
payment herewith in full therefor at the price per share provided by such
Warrant.

 

Check one box:

 

o            I am attaching a cashier’s, personal or certified check, or have
arranged for a wire transfer of immediately available funds to the Company, in
an amount equal to the Aggregate Exercise Price.

 

o            In lieu of paying cash, I have elected to receive such lesser
number of shares of Common Stock as determined pursuant to Section 1B(ii) of the
attached Warrant.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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