EXHIBIT 4.3


 


NETLIST,
INC.


 


STOCK OPTION AGREEMENT

(Employment
Inducement Grant)


 


This NON-STATUTORY STOCK
OPTION AGREEMENT, dated as of May 2, 2008 (this “Agreement”), is
between NETLIST, INC., a Delaware corporation (the “Company”), and James
P. Perrott (the “Optionee”).


 


R E C I T A L S


 


A.            Optionee has not previously been an
officer, director or employee of the Company, and this Option (as defined
below) is granted to Optionee to attract and retain Optionee to serve the
Company in the capacity of Senior Vice President of Sales and Marketing.


 


B.            This Agreement, and the grant of an
Option to the Optionee pursuant to the terms and conditions hereof, have been
approved by the Board of Directors of the Company (the “Board”).


 


C.            This Option is designated as a
non-qualified stock option, and does not
qualify as an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”).


 


A G R E E M E N T


 


In
consideration of the foregoing recitals and of the mutual covenants contained
herein, the parties, intending to be legally bound, agree as follows:


 


1.             Grant  of  Option.  The Company hereby grants to the Optionee, as
an inducement to accept employment with the Company pursuant to the terms and
conditions of that certain employment agreement, dated April 7, 2008,
between the Company and Optionee, an option (the “Option”) to purchase
from the Company all or any number of an aggregate of 250,000 shares (the “Option
Shares”), of the Company’s common stock, $.001 par value per share, at a
price of $1.29 per share, on the terms and subject to the conditions of this
Agreement.  This grant is not made pursuant to the Company’s 2006
Equity Incentive Plan (the “Plan”). 
However, except as otherwise expressly provided herein, this grant is
subject to the rules, terms and conditions of the Plan as if it were a grant
made pursuant to and under the Plan, and all such rules, terms and conditions
are hereby incorporated herein by reference as if set forth herein in their
entirety.  Capitalized terms used but not
defined in this Agreement shall have the meanings given to them in the
Plan.  The Option is granted as of May 2,
2008 (the “Grant  Date”).


 


2.             Character  of  Option.  The Option is not intended to be treated as an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).


 


3.             Duration  of  Option.  Unless subject to earlier expiration or
termination pursuant to the terms of the Plan, the Option shall expire on the
ten year anniversary of the Grant Date.


 

















 


4.             Exercisability  of  Option.  The Option may be exercised, at any time and
from time to time until its expiration or termination, for any or all of those
Option Shares in respect of which the Option shall have become exercisable, in
accordance with the provisions set forth below in this Section 4, on or at
any time prior to the date of any such exercise.  Subject to the provisions of the Plan
(including, without limitation, the provisions of Section 7.1(e) of
the Plan), the Option shall become exercisable (i) in the amount of 62,500
shares of Common Stock on April 7, 2009, and (ii) in thirty-six (36)
equal monthly installments thereafter until vested in full (or otherwise
terminated), such that, on April 7, 2012, the Option shall be vested as to
all of the Shares and fully exercisable. 
These installments shall be cumulative, such that Optionee may exercise
the Option as to any or all of the Shares covered by any installment at any
time or times after such installment vests and prior to termination of the
Option.  The foregoing notwithstanding,
the Option shall cease vesting upon the termination of Optionee’s status as an
employee of the Company for any reason. 
Notwithstanding anything expressed or implied to the contrary in the
foregoing provisions of this Section 4, the exercisability of the Option
may, as provided in Section 7.1(d) of the Plan, at any time be
Accelerated in the discretion of the Committee.


 


5.             Transfer  of  Option.  Other than as expressly permitted by the
provisions of Section 6.4 of the Plan, the Option may not be transferred
except by will or the laws of descent and distribution and, during the lifetime
of the Optionee, may be exercised only by the Optionee.


 


6.             Incorporation  of  Plan  Terms.  The Option is granted subject to all of the
applicable terms and provisions of the Plan, which terms and provisions are
incorporated herein by reference pursuant to Section 1 of this Agreement,
including, but not limited to, the limitations on the Company’s obligation to
deliver Option Shares upon exercise set forth in Section 9.2 (Violation of
Law), Section 9.3 (Corporate Restrictions on Rights in Stock), Section 9.4
(Investment Representations) and Section 9.7 (Tax Withholding).


 


7.             Miscellaneous. 
This Agreement shall be construed and enforced in accordance with the
internal, substantive laws of the State of Delaware and shall be binding upon
and inure to the benefit of any successor or assign of the Company and any
executor, administrator, trustee, guardian, or other legal representative of
the Optionee.


 


IN WITNESS WHEREOF, the
parties have executed this Stock Option Agreement as a sealed instrument as of
the date first above written.


 


 


	
  NETLIST,
  INC.

  	
  OPTIONEE

  
	
  By:

  	
  /s/
  Gail Itow

  	
   

  	
  /s/
  James P. Perrott

  
	
   

  	
  Name:
  Gail Itow

  	
   

  	
  JAMES
  P. PERROTT

  
	
   

  	
  Title:
  Chief Financial Officer