**Exhibit10.1**

** **

**AMENDMENT TO LOAN DOCUMENTS**

 

THIS**AMENDMENT TO LOAN DOCUMENTS** (this****“Amendment”)is entered into as of September 30, 2010, by and between SILICON VALLEYBANK (“Bank” or “Silicon”) and NETLIST, INC., a Delaware corporation (“Borrower”).  Borrower’s chief executive office is locatedat 51 Discovery, Suite 150, Irvine, CA 92618.

 

**RECITALS**

 

**A.**            Bank andBorrower are parties to that certain Loan and Security Agreement with anEffective Date of October 31, 2009 (as amended, modified, supplemented orrestated, the “Loan Agreement”) in effect between Bank and Borrower.

 

**B.**            Bank hasextended credit to Borrower for the purposes permitted in the Loan Agreement.

 

**C.**            Borrower hasrequested that Bank amend the Loan Agreement to modify the Profitability FinancialCovenant as more fully set forth herein.

 

**D.**            Bank has agreedto so amend the Loan Agreement, but only to the extent, in accordance with theterms, subject to the conditions and in reliance upon the representations andwarranties set forth below.

 

**AGREEMENT**

 

**NOW, THEREFORE,** in consideration of the foregoing recitalsand other good and valuable consideration, the receipt and adequacy of which ishereby acknowledged, and intending to be legally bound, the parties heretoagree as follows:

 

**1.****            ****Definitions.**  Capitalized terms used but not defined in thisAmendment shall have the meanings given to them in the Loan Agreement.

 

**2.****            ****Amendmentsto Loan Documents.**

 

**2.1****         ****ModifiedLC Sublimit. **The LCSublimit, as defined in Section 2.1.2(a) of the Loan Agreement is herebyamended from “$2,500,000” to “$10,000,000.”

 

**2.2****         ****ModifiedFX Sublimit. **The FXSublimit, as defined in Section 2.1.3 of the Loan Agreement is herebyamended from “$2,500,000” to “$10,000,000.”

 

**2.3****         ****ModifiedCash 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****         ****ModifiedOverall Sublimit. **The OverallSublimit, as set forth in Section 2.1.5 of the Loan Agreement is herebyamended from “$2,500,000” to “$10,000,000.”

 

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**2.5****         ****Additionof Term Loan. **The followinglanguage is hereby added to the Loan Agreement as Section 2.1.6 and shallread as follows:

 

**2.1.6****      ****Term Loan.**

 

(a)           Availability.  Bank shall make one (1) term loanavailable 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 thisAgreement.

 

(b)           Repayment.  Borrower shall repay the Term Loan in (i) thirty-six(36) equal installments of principal, plus (ii) monthly payments ofaccrued interest (the “Term Loan Payment”). Beginning on the first day of the month following the month in which theFunding Date occurs, each Term Loan Payment shall be payable on the first dayof each month.  Borrower’s final TermLoan Payment, due on the Term Loan Maturity Date, shall include all outstandingprincipal and accrued and unpaid interest under the Term Loan.

 

**2.6****         ****ModifiedInterest Rate. **Section 2.3(a) ofthe Loan Agreement is hereby amended in its entirety to read as follows:

 

(a)           Interest Rate.

 

(i)            Advances.  Subject to Section 2.3(b), the principalamount outstanding under the Revolving Line shall accrue interest at a perannum rate equal to the following: (i) at all times that a StreamlinePeriod is in effect, one and one-quarter of one percentage points (1.25%) abovethe Prime Rate; and (ii) at all times that a Streamline Period is not ineffect, 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 principalamount outstanding under the Term Loan shall accrue interest at a per annumrate equal to one and three-quarters of one percentage point (1.75%) above thePrime Rate, which interest shall be payable monthly in accordance with Section 2.3(f) below.

 

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**2.7****         ****ModifiedMinimum Monthly Interest. **Section 2.3(e) ofthe Loan Agreement is hereby amended in its entirety to read as follows:

 

(e)           Minimum Monthly Interest.  [Omitted]

 

**2.8****         ****ModifiedFees. **Subclauses (c) and (d) ofSection 2.4 of the Loan Agreement are hereby amended in their entirety toread as follows:

 

(c)           Termination Fee.  Subject to the terms of Section 12.1, atermination fee; and

 

(d)           Unused Revolving LineFacility Fee.  A fee (the “**Unused Revolving Line Facility Fee**”), payable quarterly, inarrears, on a calendar year basis, in an amount equal to 0.50% per annum of theaverage unused portion of the Revolving Line. The unused portion of the Revolving Line, for purposes of thiscalculation, shall equal the difference between (x) the Maximum RevolverAmount (as it may be modified from time to time) and (y) the average forthe period of the daily closing balance of the Revolving Line outstanding plusthe sum of the aggregate amount of outstanding Letters of Credit (includingdrawn 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 earnedby Bank pursuant to this Section notwithstanding any termination of theAgreement, or suspension or termination of Bank’s obligation to make loans andadvances hereunder, including during any Streamline Period; and

 

**2.9****         ****NewAnniversary Fee. **The followinglanguage is hereby added to the Loan Agreement as Section 2.4(g) andshall read as follows

 

(g)           Anniversary Fee.  A fully earned, non-refundable fee equal to0.50% of the Maximum Revolver Amount, on the first anniversary of the September 2010Amendment Effective Date; and if this Agreement is terminated prior to thefirst anniversary of the September 2010 Amendment Effective Date, eitherby Borrower or Bank, Borrower shall pay such Anniversary Fee to Bank inaddition to any Termination Fee.

 

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**2.10****       ****ModifiedFinancial Covenants. **Section 6.9(b) ofthe 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 andsubordinated debt of the Borrower, plus (ii) 50% of the Borrower’s netincome in each fiscal quarter ending after the date hereof.  Increases in the Minimum Tangible Net Worthbased on consideration received for equity securities and subordinated debt ofthe Borrower shall be effective as of the end of the month in which suchconsideration is received, and shall continue effective thereafter. Increasesin the Minimum Tangible Net Worth based on net income shall be effective on thelast day of the fiscal quarter in which said net income is realized, and shallcontinue effective thereafter. In no event shall the Minimum Tangible Net Worthbe decreased.

 

**2.11****       ****ModifiedTermination Fee.**Section 12.1 of the Loan Agreement is herebyamended in its entirety to read as follows:

 

**12.1****       ****TerminationPrior to Revolving Line Maturity Date**. On the Revolving LineMaturity Date or on any earlier effective date of termination, Borrower shallpay and perform in full all Obligations, whether evidenced by installment notesor otherwise, and whether or not all or any part of such Obligations areotherwise then due and payable.  ThisAgreement may be terminated prior to the Revolving Line Maturity Date byBorrower, effective three (3) Business Days after written notice oftermination is given to Bank. Notwithstanding any such termination, Bank’s lien and security interestin the Collateral and all of Bank’s rights and remedies under this Agreementshall continue until Borrower fully satisfies its Obligations. If suchtermination is at Borrower’s election, or at Bank’s election due to theoccurrence 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, atermination fee in an amount equal to 2.0% of the Maximum Revolver Amount iftermination occurs on or before the first anniversary of the September 2010Amendment Effective Date, and 1.0% of the Maximum Revolver Amount iftermination occurs after the first anniversary of the September 2010Amendment Effective Date; provided that no termination fee shall be charged ifthe credit facility hereunder is replaced with a new facility from anotherdivision of Silicon Valley Bank

 

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**2.12****       ****ModifiedDefinitions.**  In Section 13.1of the Loan Agreement, the following definitions are, as applicable, eitherhereby (i) amended in their entirety to read as follows or (ii) addedto read as follows:

 

“**Credit Extension**” is any Advance, Term Loan, Letter ofCredit, FX Forward Contract, amount utilized for Cash Management Services, orany other extension of credit by Bank for Borrower’s benefit.

 

**“Liquidity Condition”** is the condition that thesum of (1) the aggregate amount of Borrower’s unencumbered (except forBank’s security interest), unrestricted cash on deposit at Bank, plus (2) theAvailability 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 priorwritten notice to Bank by Borrower, the Maximum Revolver Amount shall be increasedto $15,000,000 provided that at the time of such increase, no Default or Eventof Default has occurred and is continuing (including, without limitation, withrespect to Borrower’s reporting requirements set forth in Section 6.2hereof and Borrower’s financial covenants set forth in Section 6.9hereof).

 

“**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 definedin that certain Amendment to Loan Documents between Borrower and Bank and datedapproximately September         ,2010.

 

“**Tangible Net Worth**” is, on any date, the consolidated totalassets of Borrower and its Subsidiaries minus (a) any amountsattributable to (i) goodwill, (ii) intangible items includingunamortized debt discount and expense, patents, trade and service marks andnames, copyrights and research and development expenses except prepaidexpenses, (iii) notes, accounts receivable and other obligations owing toBorrower from its officers or other Affiliates, and (iv) reserves notalready deducted from assets, minus (b) Total Liabilities, plus(c) Subordinated Debt.

 

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**“Term Loan”** is a loan made by Bank pursuant to the terms of Section 2.1.6hereof.

 

**“Term Loan Amount”** is an amount equal to OneMillion Five Hundred Thousand Dollars ($1,500,000).

 

“**Term Loan Maturity Date**” is the earlier of the followingdates: (i) September 1, 2013, (ii) the Revolving Line MaturityDate or (iii) the date this Agreement terminates by its terms or isterminated 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****       ****AdditionalCommitment Fee. **In the eventthe Maximum Revolver Amount is increased from $10,000,000 to $15,000,000, atthe time of such increase, Borrower shall pay to Bank an additional fullyearned, non-refundable commitment fee of $25,000.

 

**2.14****       ****ModifiedExhibit B.**  Exhibit Bto the Loan Agreement is hereby amended in its entirety to read as set forth inExhibit B attached hereto.

 

**2.15****       ****NetlistTechnology Texas LP.**  Reference ishereby made to the following documents:  (i) thatcertain Unconditional Continuing Guaranty executed by Netlist Technology TexasLP (“Netlist Texas”) in favor of Bank and dated October 31, 2009 (the “NetlistTexas Guaranty”), (ii) that certain Security Agreement executed by andbetween Netlist Texas and Bank and October 31, 2009 (the “Netlist TexasSecurity Agreement”) and (iii) that certain Intercompany SubordinationAgreement 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 TexasSecurity Agreement and Netlist Texas Subordination Agreement are, collectively,referred to herein as the “Netlist Texas Documents.”  Borrower has advised Bank that Netlist Texasshall be dissolved on or about October 1, 2010.  Based upon such representation by Borrower,Bank hereby agrees that upon Bank receiving written evidences, satisfactory toBank in its good faith business judgment, of the dissolution of Netlist Texas,the Netlist Texas Documents will terminate and Netlist Texas will be released anddischarged from it liabilities and obligations thereunder subject to any termsor provisions that by their terms survive the release, revocation ortermination of the Netlist Texas Documents. Notwithstanding the foregoing, the termination of the Netlist TexasGuaranty does not affect the provisions of Section 5 of the Netlist TexasGuaranty or the of Section 12 of the Netlist Guaranty to the extent thatit pertains to reasonable costs and expenses of enforcing the Netlist TexasGuaranty.

 

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**3.****            ****Limitationof Amendments.**

 

**3.1****         **The amendmentsset forth in **Section 2**, above, areeffective for the purposes set forth herein and shall be limited precisely aswritten 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 mayhave in the future under or in connection with any Loan Document.

 

**3.2****         **This Amendmentshall be construed in connection with and as part of the Loan Documents and allterms, conditions, representations, warranties, covenants and agreements setforth in the Loan Documents (as amended by this Amendment, as applicable) arehereby ratified and confirmed and shall remain in full force and effect.

 

**4.****            ****Representationsand Warranties.**  To induceBank to enter into this Amendment, Borrower hereby represents and warrants toBank as follows:

 

**4.1****         **Immediatelyafter giving effect to this Amendment, (a) the representations andwarranties contained in the Loan Documents are true, accurate and complete inall material respects as of the date hereof (except to the extent suchrepresentations and warranties relate to an earlier date, in which case theyare true and correct as of such date, or except as otherwise previouslydisclosed in writing by Borrower to Bank), and (b) no Event of Default hasoccurred and is continuing;

 

**4.2****         **Borrower hasthe power and authority to execute and deliver this Amendment and to performits obligations under the Loan Documents, as amended by this Amendment;

 

**4.3****         **Theorganizational documents of Borrower delivered to Bank on the Effective Dateremain 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 executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Documents, as amended by this Amendment, havebeen duly authorized;

 

**4.5****         **The executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Documents, as amended by this Amendment, do notand will not contravene (a) any law or regulation binding on or affectingBorrower, (b) any contractual restriction with a Person binding onBorrower, (c) any order, judgment or decree of any court or othergovernmental or public body or authority, or subdivision thereof, binding onBorrower, or (d) the organizational documents of Borrower;

 

**4.6****         **The executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Documents, as amended by this Amendment, do notrequire any order, consent, approval, license, authorization or validation of,or filing, recording or registration with, or exemption by any governmental orpublic body or authority, or subdivision thereof, binding on either Borrower,except as already has been obtained or made; and

 

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4.7           This Amendment has been dulyexecuted and delivered by Borrower and is the binding obligation of Borrower,enforceable against Borrower in accordance with its terms, except as suchenforceability may be limited by bankruptcy, insolvency, reorganization,liquidation, moratorium or other similar laws of general application andequitable principles relating to or affecting creditors’ rights.

 

**5.****            ****Releaseby Borrower and Guarantor**.  Eachof Borrower and Guarantor (individually and collectively, “Obligor”) herebyagree as follows:

 

**5.1****         ****FORGOOD AND VALUABLE CONSIDERATION**, Obligor hereby foreverrelieves, releases, and discharges Bank and its present or former employees,officers, directors, agents, representatives, attorneys, and each of them, fromany 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 anymanner whatsoever connected with or related to facts, circumstances, issues,controversies or claims existing or arising from the beginning of time throughand including the date of execution of this Amendment (collectively “**Released Claims**”). Without limiting the foregoing, the Released Claims shall include anyand all liabilities or claims arising out of or in any manner whatsoeverconnected with or related to the Loan Documents, the Recitals hereto, anyinstruments, agreements or documents executed in connection with any of theforegoing or the origination, negotiation, administration, servicing and/orenforcement of any of the foregoing.

 

**5.2**          In furtheranceof this release, Obligor expressly acknowledges and waives any and all rightsunder Section 1542 of the California Civil Code, which provides asfollows:

 

**“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOESNOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THERELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HERSETTLEMENT WITH THE DEBTOR.”** (Emphasis added.)

 

**5.3****         **By enteringinto this release, Obligor recognizes that no facts or representations are everabsolutely certain and it may hereafter discover facts in addition to ordifferent from those which it presently knows or believes to be true, but thatit is the intention of Obligor hereby to fully, finally and forever settle andrelease all matters, disputes and differences, known or unknown, suspected orunsuspected; accordingly, if 

 

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Obligorshould subsequently discover that any fact that it relied upon in entering intothis 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 circumstanceswhatsoever.  Obligor acknowledges that itis not relying upon and has not relied upon any representation or statementmade by Bank with respect to the facts underlying this release or with regardto any of such party’s rights or asserted rights.

 

**5.4****         **This releasemay be pleaded as a full and complete defense and/or as a cross-complaint orcounterclaim against any action, suit, or other proceeding that may beinstituted, prosecuted or attempted in breach of this release.  Obligor acknowledges that the releasecontained herein constitutes a material inducement to Bank to enter into thisAmendment, and that Bank would not have done so but for Bank’s expectation thatsuch release is valid and enforceable in all events.

 

**5.5****         **Obligor herebyrepresents and warrants to Bank, and Bank is relying thereon, as follows:

 

**(a)****          **Except asexpressly stated in this Amendment, neither Bank nor any agent, employee orrepresentative of Bank has made any statement or representation to Obligorregarding any fact relied upon by Obligor in entering into this Amendment.

 

**(b)****          **Obligor hasmade such investigation of the facts pertaining to this Amendment and all ofthe matters appertaining thereto, as it deems necessary.

 

**(c)****          **The terms ofthis Amendment are contractual and not a mere recital.

 

**(d)****          **This Amendmenthas been carefully read by Obligor, the contents hereof are known and understoodby Obligor, and this Amendment is signed freely, and without duress, byObligor.

 

**(e)****          **Obligorrepresents 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 itreleases herein, and that it has not heretofore assigned or transferred, orpurported to assign or transfer, to any person, firm or entity any claims orother matters herein released.  Obligorshall indemnify Bank, defend and hold it harmless from and against all claimsbased upon or arising in connection with prior assignments or purportedassignments or transfers of any claims or matters released herein.

 

**6.****            ****BankExpenses. **Borrower shallpay to Bank, when due, all Bank Expenses (including reasonable attorneys’ feesand expenses), when due, incurred in connection with or pursuant to thisAmendment.

 

**7.****            ****Counterparts.**  This Amendment may be executed in any numberof counterparts and all of such counterparts taken together shall be deemed toconstitute one and the same instrument.

 

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**8.****            ****Effectiveness**.  This Amendment shall be deemed effective upon(a) the due execution and delivery to Bank of this Amendment by each partyhereto, (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 tothe Term Loan) and (c) Bank’s receipt of the Consent attached hereto, dulyexecuted and delivered by Guarantor (unless Bank, in its sole discretion at anytime waives in writing the receipt of any such Consent).  The above-mentioned fees shall be fullyearned and payable concurrently with the execution and delivery of thisAmendment and shall be non-refundable and in addition to all interest and otherfees 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 deemedeffective is referred to herein as the “September 2010 Amendment EffectiveDate.”

 

[Remainder of page intentionally left blank; signature page immediatelyfollows.]

 

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**INWITNESS WHEREOF,** the parties hereto have caused this Amendment to beduly 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**

 

Theundersigned hereby expressly agrees to Section 5 of the foregoingAmendment and acknowledges that its consent to the rest of the foregoingAmendment is not required, but the undersigned nevertheless does hereby agreeand consent to the entire foregoing Amendment and to the documents andagreements referred to therein and to all future modifications and amendmentsthereto, and any termination thereof, and to any and all other present andfuture documents and agreements between or among the foregoing parties.  Nothing herein shall in any way limit any ofthe terms or provisions of the Guaranty, the Guarantor Security Agreement, orany other Loan Documents, executed by the undersigned, all of which are herebyratified 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 |   |

 

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**EXHIBIT B**

 

**COMPLIANCE CERTIFICATE**

 
| TO:   | SILICON  VALLEY BANK |   | Date:  |
|-------|----------------------|--------|--------|
| FROM: | NETLIST, INC.   |   |   |

 

Theundersigned authorized officer of NETLIST, INC. (“Borrower”) certifiesthat under the terms and conditions of the Loan and Security Agreement betweenBorrower and Bank (the “Agreement”), (1) Borrower is in completecompliance for the period ending                              with all required covenants except as noted below, (2) there are no Eventsof Default, (3) all representations and warranties in the Agreement aretrue and correct in all material respects on this date except as noted below;provided, however, that such materiality qualifier shall not be applicable toany representations and warranties that already are qualified or modified bymateriality in the text thereof; and provided, further that thoserepresentations and warranties expressly referring to a specific date shall betrue, 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 andreports, and Borrower has timely paid all foreign, federal, state and localtaxes, assessments, deposits and contributions owed by Borrower except asotherwise 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 anyof its Subsidiaries relating to unpaid employee payroll or benefits of whichBorrower has not previously provided written notification to Bank.  Attached are the required documentssupporting the certification.  Theundersigned certifies that these are prepared in accordance with GAAPconsistently applied from one period to the next except as explained in anaccompanying letter or footnotes.  Theundersigned acknowledges that no borrowings may be requested at any time ordate of determination that Borrower is not in compliance with any of the termsof the Agreement, and that compliance is determined not just at the date thiscertificate is delivered.  Capitalizedterms used but not otherwise defined herein shall have the meanings given themin the Agreement.

 

**Pleaseindicate 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       |

** **

Thefollowing intellectual property was registered after the Effective Date (if noregistrations, 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       |

 

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Thefollowing financial covenant analysis and information set forth in Schedule 1attached hereto are true and accurate as of the date of this Certificate.

 

Thefollowing are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptionsto note.”)

 

 

 

** **
| NETLIST, INC. |   | **BANK  USE ONLY**                                                                                                                   |
|--------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|               |   | ** **                                                                                                                           |
|               |   | Received  by:                                                                                                                        |   |
| By:                |   |                                                                                                                                 |   | AUTHORIZED SIGNER |
| Name:              |   |                                                                                                                                 | Date: |   |
| Title:             |   |                                                                                                                                 |   |
|               |   | Verified:                                                                                                                            |   |
|               |   |                                                                                                                                 | AUTHORIZED SIGNER |
|               |   | Date:                                                                                                                                |   |
|               |   |                                                                                                                                 |   |
|               |   | Compliance  Status:              Yes    No |

 

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**Schedule 1 to Compliance Certificate**

 

**Financial Covenants of Borrower**

 

Inthe event of a conflict between this Schedule and the Loan Agreement, the termsof 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 |   |

 

Isline F equal to or greater than 1.25 : 1.00 ?

 
|   | o No, not  in compliance | o Yes, in  compliance |   |   |   |
|--------|-------------------------------|----------------------------|--------|--------|--------|

 

**[continuedon next page]**

 

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| **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)                                                                                                         |   | $      |   |   |

 

Isline H equal to or greater than Required Amount?

 
|   | o No, not  in compliance | o Yes, in  compliance |   |   |   |
|--------|-------------------------------|----------------------------|--------|--------|--------|

 

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