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.”


 


1

















 


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.


 


2

















 


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.


 


3

















 


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


 


4

















 


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.


 


5

















 


“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.


 


6

















 


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


 


7

















 


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 


 


8

















 


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.


 


9

















 


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.]


 


10

















 


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

  	
   

  



 
















 


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

  



 

















 


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

  



 

















 


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

  	
   

  	
   

  	
   

  



 


[continued
on next page]


 

















 


	
  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