**Exhibit 10.10**

 

**CERTAININFORMATION (INDICATED BY “[***]”) IN THIS EXHIBIT HAS BEEN OMITTED AND FILEDSEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTEDWITH RESPECT TO THE OMITTED PORTIONS.**

 

MKT-DSA-VTB-001

 

**Diablo Technologies, Inc.****DevelopmentAnd Supply Agreement**

 

This Development andSupply Agreement (“Agreement”) is made this 10th day of September 2008(“Effective Date”) between Diablo Technologies, Inc,, a Canadiancorporation having a principal place of business at 290 St. Joseph, Suite 200,Gatineau, Quebec J8Y 3Y3 (“Diablo”) and Netlist, Inc., a Delawarecorporation having a principal place of business at 51 Discovery, Irvine, CA92618 (“Netlist”).

 

**RECITALS**

** **

Whereas, Netlist desiresto have certain products designed and manufactured by Diablo for sale toNetlist; and Diablo has the capability of designing and manufacturing suchproducts and desires to do so for sale to Netlist.

 

Now, therefore, inconsideration of the promises and the mutual agreements hereinafter set forth,and intending to be legally bound, the parties hereto agree as follows:

 

**AGREEMENT**

 

**1.****                                     ****Definitions**. The following terms shall have the meanings set forth below.

 

“ConfidentialInformation” of a party shall mean any information disclosed by that partyto the other pursuant to this Agreement which is in written, graphic, machinereadable or other tangible form and is marked “Confidential,” “Proprietary” orin some other manner to indicate its confidential nature.  Confidential Information may also includeoral information disclosed by one party to the other pursuant to thisAgreement, provided that such information is designated as confidential at thetime of disclosure and is reduced to writing by the disclosing party within areasonable time (not to exceed thirty (30) days) after its oral disclosure, andsuch writing is marked in a manner to indicate its confidential nature anddelivered to the receiving party.

 

“Cost” shall meanDiablo’s full standard cost basis including without limitation any applicablelicense royalties.

 

“Intellectual PropertyRights” shall mean all intellectual property rights including, but notlimited to, patents, copyrights, authors’ rights, trademarks, tradenames,know-how and trade secrets, irrespective of whether such rights arise underU.S. or international intellectual property, unfair competition or trade secretlaws.

 

“Inventory” shallmean raw materials and supplies necessary for the manufacture of Productspursuant to this Agreement.

 

“Market Share” shallmean the number of Netlist Chipsets shipped, invoiced or sold by Netlist to anythird party.

 

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“Netlist Technology”shall mean Netlist’s patented and trade secret-protected RankMultiplication/Load Rank Multiplication technology (“DxD/LRD”), includingwithout limitation its “know-how” and database design technology, developedprior to the Effective Date and provided to Diablo.

 

“Netlist Chipset”shall mean a DDR3 proprietary chip set solution consisting of a DDR3 standardregister (with DxD/LRD physically enabled) and set of isolation devicesutilizing the Netlist Technology for use in Netlist RDIMM products implementedin OEM server systems developed under this Agreement in accordance with theSpecification.

 

“Diablo StandardRegister” or “Register” shall mean a DDR3 industry standard registerderivative of Netlist Chipset with either or both of DxD/LRD functionalityphysically disabled.

 

“Products” shallinclude both Netlist Chipset and Diablo Standard Register.

 

“Specifications”shall mean the logic diagram, schematics, test requirements and definition,plots, and electric related requirements and “know-how” and revised or modifiedto produce the initial prototypes, and, to the extent necessary, modificationsthereto, to produce the Product set forth in Exhibit A.

 

**2.****                                     ****Development and Design.**

 

(a)                                  **Development and Design**. Netlist agrees to pay a NRE (Non-Recurring Engineering) Payment (setforth in Exhibit D) to Diablo for the design and development of theNetlist Chipset and the delivery of the initial prototypes, all meeting theSpecifications, as defined in the Statement of Work set forth in Exhibit A(“SOW”) and on the dates specified in the NRE Payment Schedule.  Diablo shall use its commercially reasonableefforts to design and develop the Product as defined in the SOW and to meet theDevelopment Schedule (set forth in Exhibit B).  Netlist agrees to promptly respond toinquiries, make personnel available to discuss any changes or concerns ofDiablo and to generally cooperate in assisting Diablo in the design anddevelopment of the Product.

 

(b)                                 **Changes**. Netlist may, at any time during the term of this Agreement, requestchanges to the Specification and any other functional or performancespecifications agreed to between Diablo and Netlist.  Such request shall be submitted by Netlist toDiablo in writing.  Diablo will thenestimate, using industry established reasonable and customary rates, the amountof work necessary, the additional development time and cost that would beincurred, and shall request Netlist’s approval of such additional cost anddevelopment time.  Upon written receiptof such approval, implementation of such changes will proceed.  The Specification, Development Schedule, NREPayment Schedule and Production Price will be updated in writing and signed byboth parties to reflect any such changes.

 

(c)                                  **Engineering Resources**. Each party will designate a project manager in the SOW who shall act asthat party’s liaison and administrator of the project provided pursuant to theSOW.  Diablo hereby agrees to submit tothe Netlist project manager the names and other pertinent information requestedby Netlist prior to utilization of any personnel of Diablo.  Netlist reserves the right to interview Diablo’spersonnel prior to such utilization. Netlist reserves the right to request the reasonable replacement of anyof Diablo’s personnel assigned to this project, 

 

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and Diablo shall as soon as possible consider such request and mayremove same and secure replacement(s) reasonably acceptable to Netlist.

 

(d)                                 **Joint Tasks**.

 

**[***]**

 

(e)                                  **License**.

 

**[***]**

 

**3.****                                     ****Manufacture and Supply ofProducts.**

 

(a)                                  **Agreement to Manufacture**. Diablo agrees to make commercially reasonable efforts, pursuant topurchase orders or changes to purchase orders issued by Netlist and accepted 

 

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in writing by Diablo (“Purchase Orders”), to procure Inventory,components and other supplies and to manufacture, test, assemble, and deliverthe Netlist Chipset pursuant to the Specifications for each device of theNetlist Chipset and to deliver such Netlist Chipset to a location designated byNetlist.  Except as set forth herein,this Agreement shall not constitute a requirements contract and Netlist shallnot be obligated to order Products from Diablo.

 

**[***]**

 

(c)                                  **Purchase Orders**. All orders for Netlist Chipset shall be submitted to Diablo in writingby mail, email or facsimile to the address set forth on the signature page tothis Agreement, and shall conform to the binding Forecasts in accordance with Section 3(b).  Netlist shall submit such Purchase Orders toDiablo at least ninety (90) days prior to the date of requested delivery (“DeliveryDate”).

 

(d)                                 **Terms and Conditions**. Any additional or different terms or conditions in any communication byNetlist (whether in a purchase order or otherwise) are hereby rejected andshall be null and void, irrespective of the means of Netlist’s acceptance.  Diablo’s failure to object to any additionalor different provisions proposed by Netlist shall not constitute a waiver ofthese terms and conditions, nor constitute acceptance of any such Netlist’sterms and conditions.  All orders orcontracts must be approved and accepted by Diablo at its principal place ofbusiness.  The terms and conditions ofthis Agreement shall be applicable whether or not they are attached to orenclosed with the Products sold hereunder.

 

(e)                                  **Market Share Commitment**.  **[***]**

 

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(i)                                     A **[***]**for theNetlist Chipsets will be allocated to Diablo if Diablo delivers workingengineering samples of the Product no later than **[***]**and production worthy devices no later than **[***]**.  This minimum Market Share commitment willapply to the first year of production and will be maintained at least, but notnecessarily limited to, **[***]**MarketShare thereafter for the life of the Products provided that Diablo maintains acommercially reasonable continuity of supply sufficient to meet Netlist’sForecasts.

 

(ii)                                  A **[***]**for theNetlist Chipsets will be allocated to Diablo if Diablo delivers workingengineering samples of the Product no later than **[***]**and production worthy devices no later than **[***]**.  This minimum Market Share commitment willapply to the first year of production and will he maintained thereafter for thelife of the Products provided that Diablo maintains a commercially reasonablecontinuity of supply sufficient to meet Netlist’s Forecasts.

 

(iii)                               The **[***]** listed in(ii) above shall be reduced by **[***]**for every2 months of delay in delivering production worthy devices of the NetlistChipset to Netlist.  Should Diablo beunable to deliver production worthy devices of the Netlist Chipset by **[***]** Netlist will have no further obligations to Diablo,whether to purchase Netlist Chipset or to make any payments beyond the secondpayment under Exhibit D.

 

(iv)                              The parties hereby agree that the aboveMarket Share commitments are contingent upon Netlist receiving qualificationstatus on a major leading platform at one (1) OEM (IBM, RP, or Dell) forRDIMM(s) using the Netlist Chipset and Diablo’s ability to maintain orreduce sell prices as outlined below in Exhibit C.  If Netlist is not able to secure a majorleading platform at one OEM and if Diablo delivers production devices of theNetlist Chipset by **[***]** Netlistwill commit to purchase **[***]**of theProducts from Diablo over a period of one year.

 

(v)                                 Audit.  Netlist willmaintain complete and accurate records for not less than three (3) yearsafter this Agreement expires or is terminated. Diablo may audit Netlist’s records in accordance with this Section;provided that a nationally recognized accounting firm retained by Diablo (“Auditor”)will have access to such records solely for the purposes of confirming thatNetlist has fulfilled its obligations under Sections (i) - (iv) above.

 

**4.****                                     ****Product Shipment andInspection.**

 

(a)                                  **Shipments**. Shipment will be F.O.B. Diablo’s factory, at which time risk of loss andtitle will pass to Netlist.  All freight,insurance and other shipping expenses, as well as any special packing expensesnot included in the original price quotation for the Products will be paid byNetlist.  The carrier shall be deemedNetlist’s agent, and any claims for damages in shipment must be filed with thecarrier.  Diablo is authorized todesignate a carrier pursuant to Diablo’s standard shipping practices unlessotherwise specified in writing by Netlist.

 

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(b)                                 **Product Inspection andAcceptance**.  The Products delivered by Diablo will beinspected and tested as required by Netlist within thirty (30) days of receipt(the “Acceptance Period”).  IfProducts are found to be defective in material or workmanship and/or fail tomeet the Specifications, Netlist may reject such Products during the AcceptancePeriod.  Products not rejected during theAcceptance Period will be deemed accepted. Netlist may return rejected Products pursuant to Section 10(c).

 

**5.****                                     ****Payment Terms, AdditionalCosts and Price Changes.**

 

(a)                                  **Payment Terms**. Payment for any products, services or other costs to be paid by Netlisthereunder are due forty-five (45) days from the date of invoice for Productsdelivered to Netlist and shall be made in lawful U.S. currency.  Any amounts not paid when due will accrueinterest at the rate of 1 1/2% per month, or the maximum amount allowed by law,if lower.  In the event that any paymentis more than forty-five (45) days late, Diablo shall have the right to suspendperformance until all payments are made current.

 

(b)                                 **Additional Costs**.

 

(i)                                     **Duties and Taxes**.  All prices quoted are exclusive of federal, state and local excise,sales, use and similar duties and taxes, and Netlist shall be responsible forall such items.

 

(ii)                                  **Expediting Charges**. Netlist shall be responsible for any expediting charges reasonablynecessary because of a change in Netlist’s requirements.  Diablo shall obtain approval from Netlist forexpediting charges prior to incurring any such charge.

 

(c)                                  **Price**. The initial maximum average selling price for Products is set forth on Exhibit Chereto; which shall be subject to final order acknowledgment from Diablo at thetime a Purchase Order is placed. Netlist and Diablo will agree to quarterlypricing sixty (60) days prior to the beginning of each quarter.  The price guidelines set forth in Exhibit Cwill be the basis for establishing quarterly pricing such that the originalmetrics used to define this price structure remains reasonably intact.  The average selling price is contingent uponDiablo receiving the minimum Market Share defined in Section 3e above, andmaintaining market competitive selling prices to Netlist.

 

**6.****                                     ****Marketing and OtherObligations**

 

**[***]**

 

(b)                                 **Joint Promotion andMarketing**.

 

(i)                                     Netlist and Diablo will engage in a jointmarketing effort providing introductions of each other to their respectivecustomers.  Netlist shall use bestcommercial efforts, in order to meet Netlist market share obligations to Diablo,by promoting, where possible, the use of Netlist products utilizing Diablobased products.  Both parties shallprovide appropriate recognition of the other party’s contributions.

 

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(ii)                                  Joint Press Release.  **[***]**

 

(iii)                               **[***]**

 

**7.****                                     ****Intellectual PropertyRights.**

 

(a)                                  **[***]**

 

(b)                                 **[***]**

 

**8.****                                     ****Confidential Information.**

 

(a)                                  **Nondisclosure and Nonuse**. Each party shall treat as confidential all Confidential Information ofthe other party, shall not use such Confidential Information except as setforth in this Agreement, and shall use reasonable efforts not to disclose suchConfidential Information to any third party. Without limiting the foregoing, each of the parties shall use at leastthe same degree of care which it uses to prevent the disclosure of its ownconfidential information of like importance to prevent the disclosure ofConfidential Information disclosed to it by the other party under thisAgreement.  Each party shall discloseConfidential Information of the other party only to its directors, officers,employees, and consultants who are required to have such information in orderfor such party to carry out the transactions contemplated by this Agreement andwho have signed nondisclosure agreements protecting the ConfidentialInformation on substantially the same terms as this Agreement.  Each party shall promptly notify the otherparty of any actual or suspected misuse or unauthorized disclosure of the otherparty’s Confidential Information.  Forpurposes of clarification, the Netlist Technology is the ConfidentialInformation of Netlist and may not be used for any purpose other than as setforth in this Agreement, including without limitation use of such NetlistTechnology to develop a chip competitive to the Netlist Chipset.

 

(b)                                 **Exceptions**. Notwithstanding the above, neither party shall have liability to theother with regard to any Confidential Information of the other which thereceiving party can prove (i) was in the public domain at the time it wasdisclosed or has entered the public domain 

 

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through no fault of the receiving party; (ii) was known to thereceiving party, without restriction, at the time of disclosure, asdemonstrated by files in existence at the time of disclosure; (iii) isdisclosed with the prior written approval of the disclosing party; (iv) wasindependently developed by the receiving party without any use of theConfidential Information, as demonstrated by files created at the time of suchindependent development; (v) is disclosed pursuant to the order orrequirement of a court, administrative agency, or other governmental body;provided, however, that the receiving party shall provide prompt notice of suchcourt order or requirement to the disclosing party to enable the disclosingparty to seek a protective order or otherwise prevent or restrict suchdisclosure.

 

(c)                                  **Return of ConfidentialInformation**.  Upon expiration or termination of thisAgreement and at the request of either party, the other party shall promptlyreturn all Confidential Information of the other party.

 

(d)                                 **Remedies**. Any breach of the restrictions contained in this Section is abreach of this Agreement which may cause irreparable harm to the nonbreachingparty.  Any such breach shall entitle thenonbreaching party to injunctive relief in addition to all legal remedies.

 

**Confidentialityof Agreement**.  Each party shall be entitled to disclose theexistence of this Agreement, but agrees that the terms and conditions of thisAgreement shall be treated as Confidential Information and shall not bedisclosed to any third party; provided, however, that each party may disclosethe terms and conditions of this Agreement: (i) as required by any courtor other governmental body; (ii) as otherwise required by law; (iii) tolegal counsel of the parties; (iv) in confidence, to accountants, banks,and financing sources and their advisors; (v) in connection with theenforcement of this Agreement or rights under this Agreement or (vi) inconfidence, in connection with an actual or proposed merger, acquisition, orsimilar transaction.

 

**9.****                                     ****Indemnification.**

 

(a)                                  **Indemnification by Diablo**. Diablo agrees, at its own expense, to defend or at its option to settleany claim or action brought against Netlist on the issue of infringement of anypatent, copyright, trademark, trade secret, mask work right or otherintellectual property right of any third party by the Products as used ordistributed within the scope of this Agreement, and to indemnify Netlistagainst any and all damages and costs, including legal fees, that a courtawards against Netlist under any such claim or action; provided thatNetlist provides Diablo with (i) prompt written notice of such claim oraction, (ii) sole control and authority over the defense or settlement ofsuch claim or action and (iii) proper and full information and reasonableassistance to defend and/or settle any such claim or action.

 

(i)                                     **Injunctions**. In the event that any Product is, or in the Diablo’s sole opinion islikely to be, enjoined due to the type of infringement described in Section (a) above,Diablo, at its option and expense, may either (i) modify the NetlistChipset so that they become non-infringing, (ii) replace the NetlistChipset with functionally equivalent non-infringing Products reasonablyacceptable to Netlist or, if the foregoing alternatives are not reasonablyavailable to Diablo, (iii) accept return of the Products and refund toNetlist the purchase price of the Products and portion of the NRE payment whichshall be reduced over a four (4) year period under a straight linedepreciation.

 

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(ii)                                  **Exceptions**. Diablo will have no liability to the extent that any such claim is basedon the Netlist Technology or would have been avoided but for (i) use orcombination of the Netlist Chipset with any other products not provided byDiablo or (ii) modification of the Netlist Chipset after delivery byDiablo, unless such use, combination and/or modification is authorized inadvance in writing by Diablo.

 

(b)                                 **Indemnification by Netlist**. Netlist agrees, at its own expense, to defend or at its option to settleany claim or action brought against Diablo on the issue of infringement of anypatent, copyright, trademark, trade secret, mask work right or otherintellectual property right of any third party by the Netlist Technology asused or distributed within the scope of this Agreement, and to indemnify Diabloagainst any and all damages and costs, including legal fees, that a courtawards against Netlist under any such claim or action; provided thatDiablo provides Netlist with (i) prompt written notice of such claim oraction, (ii) sole control and authority over the defense or settlement ofsuch claim or action and (iii) proper and full information and reasonableassistance to defend and/or settle any such claim or action.

 

(c)                                  **Limitation**. THE FOREGOING PROVISIONS OF THIS SECTION STATE THE ENTIRE LIABILITYAND OBLIGATION OF EACH PARTY AND THE EXCLUSIVE REMEDY OF NETLIST, WITH RESPECTTO ANY ALLEGED OR ACTUAL INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADE SECRETS,TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS OR NETLISTTECHNOLOGY.

 

(d)                                 **Mutual Indemnity**. The parties will indemnify each other against actions, liabilities,loss, damages and expenses resulting from injury or death of any person or lossof or damage to any tangible real or tangible personal property to the extentthat such injury, death, loss or damage is proximately caused by theindemnifying party’s negligent act or omission or intentional misconduct orthat of its agents, employees or subcontractors in connection with theperformance of its obligations under this Agreement, provided that theindemnifying party has been notified in writing as soon as practicable of anysuch claim.  The indemnifying party willhave the sole right to control the defense of all such claims and in no eventwill the indemnified party settle any claim without the indemnifying party’sprior written approval.

 

(e)                                  **No Other Liability**. IN NO EVENT SHALL DIABLO, ITS SUPPLIERS OR NETLIST BE LIABLE TO THEOTHER OR ANY THIRD PARTY FOR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS ORSERVICES, LOST PROFITS, DATA OR BUSINESS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL,EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTIONWITH THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER INCONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE).  EXCEPT FOR LIABILITY INDER SECTIONS 8 and9(a), NEITHER PARTIES TOTAL AND CUMULATIVE LIABILITY ARISING OUT OF OR INCONNECTION WITH ANY PRODUCTS PURCHASED BY NETLIST HEREUNDER SHALL IN NO EVENTEXCEED THE PURCHASE PRICE PAID BY NETLIST FOR SUCH PRODUCTS.  THE LIMITATIONS SET FORTH IN THIS SECTION SHALLAPPLY EVEN IF DIABLO OR ITS SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OFSUCH 

 

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DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANYLIMITED REMEDY.

 

**10.****                              ****Warranty and Disclaimer.**

 

(a)                                  **Warranty**. Diablo warrants that, for a period of twelve (12) months from the dateof shipment of the Products from Diablo (the “Warranty Period”), theProducts will conform to the Specification in effect as of the date of manufacture.  Diablo SPECIFICALLY DISCLAIMS ANY INCIDENTALOR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) WHICH MAY RESULT FROMTHE USE OF PRODUCTS PURCHASED HEREUNDER. This limited warranty extends only to Netlist as original purchaserunless otherwise agreed upon in writing by Diablo.

 

(b)                                 **Exclusions**. The foregoing warranty shall not apply if the defective Products (i) hasbeen subjected to abuse, misuse, neglect, negligence, accident, impropertesting, improper installation, improper storage, improper handling or usecontrary to any instructions issued by Diablo, (ii) has been repaired oraltered by persons other than Diablo, (iii) has not been installed,operated, repaired and maintained in accordance with the documentation or (iv) isattributable to the Netlist Technology. In addition, the foregoing warranty shall not apply to Product (i) markedor identified as “sample,” (ii) loaned or provided to Netlist at no cost,or (iii) which are sold “as is.”

 

(c)                                  **Remedies**. If during the Warranty Period or Acceptance Period: (i) Diablo isnotified promptly in writing upon discovery of any defect in the Products,including a detailed description of such alleged defect, (ii) suchProducts are returned, transportation charges prepaid, to Diablo’s designatedmanufacturing facility in accordance with Diablo’s then-current returnprocedures, as set forth by Diablo from time to time, and (iii) Diablo’sinspections and tests determine that the Products are indeed defective and theProducts have not been subjected to any of the conditions set forth in thisSection, then, as Netlist’s sole remedy and Diablo’s sole obligation under theforegoing warranty, Diablo will replace without charge the defective Productsat the earliest commercially reasonable time. Any Products that have been replaced under this warranty shall have thesame warranty coverage as outlined in 10 (a) above.

 

(d)                                 **Disclaimer**. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS SECTION, DIABLO MAKES NOOTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO ANY PRODUCTSPROVIDED IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANYIMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,NONINFRINGEMENT, OR ARISING FROM COURSE OF PERFORMANCE, DEALING, USAGE ORTRADE.

 

**11.****                              ****Term and Termination.**

 

(a)                                  **Term**. This Agreement shall become effective on the Effective Date of thisAgreement and shall continue for a period of three years (“Initial Term”).  This Agreement shall be extendedautomatically at the end of the initial term or subsequent terms for anadditional one (1) year terms, unless terminated in accordance with thisAgreement.

 

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(b)                                 **Termination for Cause**. Either party may terminate this Agreement at any time (i) if theother party breaches any term hereof and fails to cure such breach within sixty(60) days after notice of such breach or (ii) if the other party shall beor becomes insolvent, or if either party makes an assignment for the benefit ofcreditors, or if there are instituted by or against either party proceedings inbankruptcy or under any insolvency or similar law or for reorganization,receivership or dissolution which proceeding is not dismissed within ninety(90) days.

 

(c)                                  **Termination for TechnicalReasons**.  In the event that after exercisingcommercially reasonable efforts, Diablo is unable to deliver production worthyNetlist Chipsets due to technical changes created or requested by Netlist,after the establishment of this agreement, either Netlist or Diablo shall havethe right to terminate this agreement.

 

(d)                                 **Obligations UponTermination**.  The termination or expiration of thisAgreement shall in no way relieve either party from its obligations to pay theother any sums accrued hereunder prior to such termination or expiration.

 

(e)                                  **Survival of CertainProvisions**.  Notwithstanding anything to the contrary inthis Agreement, the following sections shall survive termination of thisAgreement: 1, 2e, 5, 7, 8, 9, 10, 11(d), 12 and 13.

 

**12.****                              ****Standby ManufacturingRights**.  At Netlist’s expense, Diablo agrees todeposit into a third party escrow account, pursuant to the terms of an EscrowAgreement (which shall be mutually agreed by the parties), all engineeringdrawings, manufacture documents and instructions and other written materials(including lists of suppliers and their addresses), including database tapesnecessary to enable Netlist to manufacture, assemble, test and/or maintain theProducts (“Escrow Materials”); which Escrow Materials shall be theConfidential Information of Diablo.  SuchEscrow Agreement shall be executed within thirty (30) days after the EffectiveDate and shall authorize the release of the Escrow Materials to Netlist solelyfor use in accordance with the terms and conditions of this Agreement in theevent of a Release Condition as described and to be negotiated in the EscrowAgreement.

 

**13.****                              ****Miscellaneous.**

 

(a)                                  **Amendments and Waivers**. Any term of this Agreement may be amended or waived only with the priorwritten consent of the parties or their respective successors and assigns, in adocument signed in ink by authorized representatives of the parties.  Any amendment or waiver made in accordance withthis Section shall be binding upon the parties and their respectivesuccessors and assigns.

 

 

(b)                                 **Successors and Assigns**. The rights and obligations of each party under this Agreement shall notbe assignable without the prior written consent of the other party and anyattempt to assign them without that consent will be void.  Notwithstanding the foregoing, either partymay assign, upon written notice to the other, both the rights and obligationsof this Agreement to the surviving corporation in any merger or consolidationto which it is a party or to any person who acquires all or substantially allof its capital stock or assets.  Anypurported 

 

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transfer, assignment or delegation in, violation of the foregoing willbe null and void and of no force or effect.

 

(c)                                  **Governing Law; AttorneyFees and Costs**.  This Agreement and all acts and transactionspursuant hereto and the rights and obligations of the parties hereto shall begoverned, construed and interpreted in accordance with the laws of the State ofCalifornia, without giving effect to principles of conflicts of law.

 

(d)                                 **Titles and Subtitles**. The titles and subtitles used in this Agreement are used for convenienceonly and are not to be considered in construing or interpreting this Agreement.

 

(e)                                  **Notices**. Any notice required or permitted by this Agreement shall be in writingand shall be deemed sufficient upon receipt, when delivered personally or bycourier, overnight delivery service or confirmed facsimile, or forty-eight (48)hours after being deposited in the regular mail as certified or registered mail(airmail if sent internationally) with postage prepaid, if such notice isaddressed to the party to be notified at such party’s address or facsimilenumber as set forth below, or as subsequently modified by written notice.

 

(f)                                    **Severability**. If one or more provisions of this Agreement are held to be unenforceableunder applicable law, the parties agree to renegotiate such provision in goodfaith, in order to maintain the economic position enjoyed by each party asclose as possible to that under the provision rendered unenforceable.  In the event that the parties cannot reach amutually agreeable and enforceable replacement for such provision, then (i) suchprovision shall be excluded from this Agreement, (ii) the balance of theAgreement shall be interpreted as if such provision were so excluded and (iii) thebalance of the Agreement shall be enforceable in accordance with its terms.

 

(g)                                 **Entire Agreement**. This Agreement, including the Exhibits attached hereto, constitutes theentire agreement between such parties pertaining to the subject matter hereof,and merges all prior negotiations and drafts of the parties with regard to thetransactions contemplated herein.  Anyand all other written or oral agreements existing between the parties heretoregarding such transactions are expressly canceled.

 

(h)                                 **Independent Contractors**. The relationship of Diablo and Netlist established by this Agreement isthat of independent contractors, and nothing contained in this Agreement willbe construed (i) to give either party the power to direct and control theday-to-day activities of the other, (ii) to constitute the parties aspartners, joint venturers, co-owners or otherwise as participants in a joint orcommon undertaking, or (iii) to allow either party to create or assume anyobligation on behalf of the other for any purpose whatsoever.

 

(i)                                     **Force Majeure**. If the performance of this Agreement or any obligations hereunder isprevented, restricted or interfered with by reason of fire or other casualty oraccident, strikes or labor disputes, war or other violence, any law, order,proclamation, regulation, ordinance, demand or requirement of any government agency,or any other act or condition beyond the reasonable control of the partieshereto, the party so affected upon giving prompt notice to the other partiesshall be excused from such performance during such prevention, restriction orinterference.

 

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(j)                                     **Export Control**. Netlist acknowledges and agrees that the Products purchased under thisAgreement may be subject to restrictions and controls imposed by the UnitedStates Export Administration Act and the regulations thereunder.  Netlist warrants that it will not export orre-export any products purchased, or SoftWare licensed, under this Agreementinto any country in violation of such controls or any other laws, rules orregulations of any country, state or jurisdiction.

 

(k)                                  **Counterparts**. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original and all of which together shall constituteone instrument.

 

[Remainder of Page IntentionallyBlank ]

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement effective as of the Effective Date.

 
| **Netlist, Inc.**             |
|------------------------------------|
|                               |   |
|                               |   |
| By:                                | */s/ James P. Perrott* |   |
| Name:                              | James P. Perrott |   |
| Title:                             | SVP Sales &  Marketing |   |
|                               |   |
| **Diablo Technologies, Inc.** |
| ** **                         |
|                               |   |
| By:                                | */s/ Ricardo Badalone* |   |
| Name:                              | Ricardo Badalone |   |
| Title:                             | C.E.O. |   |

 

**[SIGNATUREPAGE TODEVELOPMENT AND SUPPLY AGREEMENT]**

 

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Exhibit A

 

**Statementof Work See**

 

SOW Document Number MKT-SOW-VTB-001

 

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Exhibit B

 

**DevelopmentSchedule**

 

See SOW Document NumberMKT-SOW-VTB-001

 

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Exhibit C

 

**ProductionPrice Schedule**

 
| **Netlist  Chipset** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011**  | ** ** | **2012** | ** ** |
|----------------------|------------|----------|------------|----------|------------|-----------|------------|----------|------------|
| **[***]**            |       | US$      | **[***]**  |     | US$        | **[***]** |       | US$      | **[***]**  |   | US$ | **[***]** |   |
| **[***]**            |       | US$      | **[***]**  |     | US$        | **[***]** |       | US$      | **[***]**  |   | US$ | **[***]** |   |

 

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Exhibit D

 

**NREPayment Schedule**

 
| **Milestone**                           | ** ** | **Payment ($)** | ** ** |
|-----------------------------------------|------------|-----------------|------------|
|                                    |       |            |       |
| Specification  sign-off of the Product  |       | $               | **[***]**  |   |
|                                    |       |            |       |
| Tape-out  of Product                    |       | $               | **[***]**  |   |
|                                    |       |            |       |
| Engineering  sample shipment of Product |       | $               | **[***]**  |   |
|                                    |       |            |       |
| Production  status of Product           |       | $               | **[***]**  |   |
|                                    |       |            |       |
| Total  NRE Payment:                     |       | $               | **[***]**  |   |

 

18

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