EXHIBIT 10.2


SEVENTH
AMENDMENT TO

AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT


This Amendment, dated as of March 21, 2007, is made by
and between NETLIST, INC., a Delaware corporation, and NETLIST TECHNOLOGY
TEXAS, L.P., a Texas limited partnership (each a “Borrower” and collectively,
the “Borrowers”), on the one hand, and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its
WELLS FARGO BUSINESS CREDIT operating division, on the other hand.


RECITALS


The Borrowers and Wells Fargo Business Credit, Inc., a
Minnesota corporation (“WFBCI”), are parties to an Amended and Restated Credit
and Security Agreement, dated as of December 27, 2003, as amended by a First
Amendment to Amended and Restated Credit and Security Agreement, dated as of
June 30, 2004, a Second Amendment to Credit and Security Agreement and Waiver
of Defaults, dated as of December 20, 2005, a Third Amendment to Credit and
Security Agreement, dated as of February 14, 2006, a Fourth Amendment to Credit
and Security Agreement and Waiver of Defaults, dated as of April 18, 2006, a
Fifth Amendment to Credit and Security Agreement, dated as of July 28, 2006,
and a Sixth Amendment to Credit and Security Agreement and Waiver of Defaults,
dated as of December 29, 2006 (as so amended, the
“Credit Agreement”). Capitalized terms used in these recitals have the meanings
given to them in the Credit Agreement unless otherwise specified.


WFBCI has merged with and into Lender and Lender is
the surviving corporation.


The Borrowers have requested
that the Lender make certain additional amendments to the Credit Agreement,
which the Lender is willing to make pursuant to the terms and conditions set
forth herein.


NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements herein contained, it is agreed as
follows:


1.             Defined Terms.


(a)           Capitalized terms used in this
Amendment which are defined in the Credit Agreement shall have the same
meanings as defined therein, unless otherwise defined herein.


(b)           The following definitions set forth
in Section 1.1 of the Credit Agreement are hereby amended in their entirety as
follows:


“Advance” means a Revolving Advance, the Term Advance, an Equipment
Advance, and an Equipment Advance A.


“Borrowing Base” means at any time the lesser of:


(a)           The Maximum Line then in effect; or



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(b)           Subject to change from time to time in the Lender’s sole
discretion, the sum of:


(i)            The product of the Accounts Advance
Rate times Eligible Accounts (provided that Advances against Accounts
described in clause (xiv) of the definition of Eligible Accounts set forth in Section
1.1 shall not exceed 75% of the Maximum
Line then in effect), plus


(ii)           During
the Foreign Accounts Eligibility Period, the lesser of (A) the product of the
Accounts Advance Rate times Eligible Foreign Accounts or (B) $2,000,000, plus


(iii)          The lowest of (A) the product of
the Inventory Advance Rate times Eligible Inventory or (B) eighty percent
(80%) of the Net Orderly Liquidation Value of Eligible Inventory, or (C) the Inventory Sublimit; less


(iv)          The Borrowing Base Reserve, less


(v)           Indebtedness that the Borrowers owe
to the Lender that has not yet been advanced on the Revolving Note, and the dollar amount that
the Lender in its reasonable discretion then determines to be a reasonable
determination of the Borrowers’ credit exposure with respect to any swap,
derivative, foreign exchange,
hedge, deposit, treasury management or other similar transaction or arrangement
offered to Borrowers by Lender that is not described in Article II of this
Agreement and any indebtedness owed by Borrowers to Wells Fargo Merchant
Services, LLC.


“Equipment Advance” is defined in Section 2.11(a).


“Letter of Credit Sublimit” means $5,000,000.


“Maturity Date” means July 31, 2009.


“Maximum Line” means $25,000,000 unless this amount is increased
pursuant to Section 2.21, in which event it means such increased amount.


“Net Income” means fiscal year-to-date after-tax net income (excluding
extraordinary income), prepared on a consolidating and consolidated basis to
include any domestic Subsidiaries, from continuing operations as determined in
accordance with GAAP.


“Revolving Note” means the Borrowers’ Replacement Revolving Note,
payable to the order of the Lender in substantially the form of Exhibit A
attached to the Seventh Amendment, as same may be renewed and amended from time
to time, and all replacements thereto.



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(c)           The following new definitions are
hereby added to Section 1.1 of the Credit Agreement in appropriate alphabetical
order:


“Equipment Advance(s) A” is defined in Section 2.11A(a).


“Equipment Advance A Commitment” means $2,927,550.


“Equipment Advance A Conversion Date” means the last day of each June
and December, commencing June 30, 2007.


“Equipment Advance A Interest Only Period” means, (i) with respect to
the first Equipment Advance A Conversion Date, the period commencing on the
effective date of the Seventh Amendment and ending on such Equipment Advance A
Conversion Date, and (ii) with respect to all other Equipment Advance A
Conversion Dates, the period commencing on the first day following the prior
Equipment Advance A Conversion Date, and ending on such Equipment Advance A
Conversion Date.


“Equipment Term Loan A” is defined in Section 2.11A(b).


“Equipment Note A” means the Borrowers’ promissory note, payable to the
order of the Lender in substantially the form of Exhibit B attached to the
Seventh Amendment, as same may be renewed and amended from time to time, and
all replacements thereto.


“Inventory Sublimit” means $7,000,000; provided that if the
Borrowers’ maintain their cash on hand in any month at all times in an amount
equal to or greater than $3,000,000 (as verified by the Lender from time to
time in its sole discretion), then the Inventory Sublimit shall be
automatically increased to $10,000,000, effective upon such verification; provided
further that if the Borrowers’ thereafter fail to maintain their cash on
hand in any month at all times in an amount equal to or greater than $3,000,000
(as verified by the Lender from time to time in its sole discretion), then the
Inventory Sublimit shall automatically revert to $7,000,000, effective upon
such verification; provided  further that no increase in the
Inventory Sublimit shall be made if a Default or an Event of Default has
occurred and is then continuing.


“Maximum Line Increase Request” means a written request by the
Borrowers to increase the Maximum Line Amount in the form of Exhibit D attached
to the Seventh Amendment.


“Seventh Amendment” means that certain Seventh Amendment to Credit and
Security Agreement, dated as of March 21, 2007, between the Borrowers and the
Lender, amending the Agreement.



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2.             Amendment to Section 2.4.  Clause (b) of Section 2.4 of the Credit
Agreement is hereby amended in its entirety as follows:


(b)           The Letter of Credit
Sublimit less the L/C Amount, or


3.             Amendment to Section 2.11(c).  Section 2.11(c) is hereby amended in it
entirety as follows:


(c)           [Intentionally
Deleted].


4.             Equipment Advances A.  A new Section 2.11(A) is hereby added to the
Credit Agreement immediately following Section 2.11 thereof as follows:


Section 2.11A       Equipment
Advances A.


(a)           Subject to the terms and conditions
hereof, from the first Business Day following the effective date of the Seventh
Amendment up to but not including the last Equipment Advance A Conversion Date
prior to the Maturity Date, the Lender agrees to make one or more advances
(each, an “Equipment Advance A” and collectively the “Equipment Advances A”) to
or for the benefit of the Borrowers, in minimum amounts of $100,000 up to an
aggregate amount not to exceed the Equipment Advance A Commitment. The
Borrowers’ obligation to pay the Equipment Advances A shall be evidenced by the
Equipment Note A and shall be secured by the Collateral as provided in
Article III.  Equipment Advances A
may not be re-borrowed after repayment is made by the Borrowers.  Each Equipment Advance A shall be advanced
directly to the applicable vendor or the Borrowers, as the Borrowers may
request.  The foregoing to the contrary
notwithstanding, (i) each Equipment Advance A shall be in an amount, as
determined by the Lender, not to exceed 80% of the Borrowers’ invoice cost (net
of shipping, taxes, freight, installation, and other so-called “soft costs”) of
new or used Equipment that is to be purchased by the Borrowers with the
proceeds of such Advance, or new or used Equipment that has been purchased by
the Borrowers within 30 days prior to the date of such Advance, (ii) the
Equipment that is to be acquired or that has been purchased by the Borrowers
must be acceptable to the Lender in all respects, not be a fixture, and not be
intended to be affixed to real property or to become installed in or affixed to
other goods, and must be located at one of the Borrowers’ facilities located in
the United States, (iii) the Lender shall have no obligation to make any
Equipment Advance A hereunder to the extent that the making thereof would cause
the then outstanding amount of all Equipment Advances A to exceed the Equipment
Advance A Commitment, (iv) prior to each such Equipment Advance A, the Lender
shall have received an invoice for the Equipment to be purchased in form and
substance satisfactory to the Lender, together with evidence satisfactory to
the Lender that the delivery of such Equipment has been made and unconditionally
accepted by the Borrowers, (v) the Lender may review the value of any
Equipment purchased with any Equipment Advance A, with the results of such
review to be satisfactory to the Lender in its sole discretion, (vi) the
aggregate



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amount of all Equipment Advances A outstanding at any
time (including giving effect to any requested Equipment Advance A) shall not
exceed the lesser of cost or fair market value, of all of the Equipment
acquired or financed with the proceeds of such Equipment Advances A, and (vii)
on the last Equipment Advance A Conversion Date prior to the Maturity Date, the
Equipment Advance A Commitment and the Lender’s obligation to make Equipment
Advances A shall terminate.


(b)           With respect to each Equipment
Advance A Interest Only Period, no principal payments shall be due on any
outstanding Equipment Advances A that were advanced during such Equipment
Advance A Interest Only Period; provided that the Borrowers shall make
interest payments thereon during such period in accordance with Section 2.12.  On each Equipment Advance A Conversion Date,
all Equipment Advances A that were advanced during the applicable Equipment
Advance A Interest Only Period shall be converted into a single term loan (each,
an “Equipment Term Loan A”).  The Borrowers
shall repay each Equipment Term Loan A in equal monthly installments of
principal, each in the amount equal to 1/42 of the original amount of such
Equipment Term Loan A, and such installments shall be due and payable on the
first day of each month, commencing on the first day of the first month
following the applicable Equipment Advance A Conversion Date, and continuing on
the first  day of each succeeding month.


(c)           If the Borrowers breach a Financial Covenant, and the Lender obtains an appraisal of the Equipment as permitted
under Section 6.10(e) herein, and the appraisal shows the sum of the
outstanding principal balances of the Equipment Note and the Equipment Note A
to exceed eighty percent (80%) of the Net Orderly Liquidation Value of the Equipment financed with the Equipment
Advances and the Equipment Advances A, then the Borrowers, upon demand by the
Lender, shall immediately prepay the Equipment Note and the Equipment Note A
ratably in the amount of such excess.  All
prepayments of principal with respect to the Equipment Note and the Equipment
Note A shall be applied ratably to the most remote principal installment or
installments then unpaid.


(d)           Notwithstanding the foregoing, on the
Termination Date, the entire unpaid principal balance of the Equipment Note A,
and all unpaid interest accrued thereon, shall in any event be due and payable.


5.             Amendment to Section 2.12(b).  Section 2.12(b) of the Credit Agreement shall
be deleted in its entirety and restated as follows:



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(b)           Margins.  The Margins through and including any
reduction occurring as specified below shall be zero percent (0%) for all Floating Rate Advances, and two and one
half of one percent (2.5%) for all LIBOR Advances.  The Margins shall be reduced in accordance
with the table below provided that the Borrowers meet the two conditions set
forth in the following table:


	
   

  	
   

  	
  Margins

  	
   

  
	
  Conditions

  	
   

  	
  Floating RateAdvances

  	
   

  	
  LIBOR Advances

  	
   

  
	
  If (i) the Borrowers achieve Net Income of at least
  $7,500,000 for their fiscal year ending December 31, 2007, as verified by the
  Borrowers’ annual audited financial statements delivered pursuant to Section
  6.1(a), and (ii) the total outstanding Advances exceed $25,000,000 at all
  times during the trailing six month period preceding the date of the
  requested reduction in the Margin

  	
   

  	
  -0.25

  	
  %

  	
  2.25

  	
  %

  



Any reductions in the
Margins will be made upon the Lender’s verification that the Borrowers have met both of the conditions set forth above, effective the first
day of the month following such verification.  Notwithstanding the foregoing, no reduction in any Margin will be made if a
Default Period exists at the time that such reduction would otherwise be made.


If the Margins are reduced as a result of the Borrower’s achieving Net
Income of at least $7,500,000 for their fiscal year ending December 31, 2007,
and if amended or restated financial statements disclose Net Income for such
fiscal year less than that amount, the Lender may increase the Margins to their
prior level from the date of receipt of such amended or restated financial
statements, to the beginning of the appropriate month to which the restated statements relate
or to the beginning of the month in which any Event of Default has occurred, as
the Lender in its sole discretion deems appropriate.


6.             Amendment to Section 2.13(g).  Clause (i) of Section 2.13(g) of the Credit
Agreement shall be deleted in its entirety and restated as follows:


(i)            The Borrowers will not be required
to pay the termination fee otherwise due under subsection (e) if such
termination or prepayment is made because of refinancing by any Regional
Commercial Banking Office of the Lender.



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7.             Increase in Maximum Line.  A new Section 2.21 is hereby added to the
Credit Agreement immediately following Section 2.20 thereof as follows:


2.21         Increase in
Maximum Line.  The Borrowers shall
have the option to increase the Maximum Line in increments of $2,500,000 up to
a maximum Maximum Line of $40,000,000, subject to the terms and conditions of
this Section 2.21.  Provided that no
Default or Event of Default has occurred and is continuing, the Maximum Line
shall be automatically increased upon receipt by the Lender of each of the
following, each in substance and form acceptable to the Lender in its sole
discretion:


(a)           a Maximum Line
Increase Request consistent with this Section 2.21, duly executed by the
Borrowers;


(b)           payment of a fee in
an amount equal to $6,250 for each $2,500,000 incremental increase of the
Maximum Line Amount; and


(c)           Such other matters
as the Lender may require.


On the date of fulfillment of the terms and conditions of this Section
2.21 to the satisfaction of the Lender, in its sole discretion, (i) the new
Maximum Line shall be effective, and (ii) the Dollars indicated in the
definition of “Maximum Line Amount” set forth in Section 1.1 shall be
automatically amended to indicate the new Maximum Line.


8.             Projections.  Section 6.1(d) of the Credit Agreement is
hereby amended in its entirety as follows:


(d)           Projections.  At least 60 days prior to each fiscal year
end of the Borrowers, the Borrowers will deliver to the Lender the projected
consolidated balance sheets and income statements for each month of next fiscal
year, each in reasonable detail, representing the Borrowers’ good faith
projections and certified by each Borrower’s chief financial Officer as being
the most accurate projections available and identical to the projections used
by the Borrowers for internal planning purposes, together with a statement of
underlying assumptions and such supporting schedules and information as the
Lender may in its discretion require.


9.             Financial Covenants.  Section 6.2 of the Credit Agreement is hereby
amended in its entirety as follows:


Section 6.2             Financial
Covenants.


(a)           Minimum
Book Net Worth.  The
Borrowers will maintain at all times Netlist’s Book Net Worth, determined as at
the end of each month, at an amount not less than $46,700,000.


(b)           Intentionally
Deleted.



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(c)           Capital
Expenditures.  The
Borrowers will not incur or contract to incur Capital Expenditures of more than
$6,000,000 in the aggregate during the fiscal year ending December 31, 2007.


(d)           Intentionally
Deleted.


(e)           Minimum Debt
Service Coverage Ratio. 
The Borrowers will maintain, as of each
fiscal quarter end, a Debt Service Coverage Ratio of not less than 1.20 to 1.0.


10.           Amendment to Section 6.4.  Section 6.4 of the Credit Agreement is hereby
amended in its entirety as follows:


Section 6.4             Indebtedness.  The Borrowers will not incur, create, assume
or permit to exist any indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money or letters of credit issued on the Borrowers’ behalf, or any
other indebtedness or liability evidenced by notes, bonds, debentures or
similar obligations, except:


(a)           Any
existing or future
Indebtedness or any other obligations of the Borrowers to the Lender;


(b)           Any
indebtedness of the
Borrowers in existence on the date hereof and listed in Schedule 6.4 hereto;


(c)           Any
indebtedness relating to Permitted Liens; and


(d)           Indebtedness
consisting of
intercompany transactions in the ordinary course of business between the
Borrowers.


11.           Amendment to Section
6.10(d).  Section 6.10(d)
of the Credit Agreement is hereby amended in its entirety as follows:


(d)           The Lender may also, from time to time
(but no more frequently than three times per calendar year unless an Event of
Default has occurred and is continuing), obtain at the Borrowers’ expense an
appraisal of the Inventory by an appraiser acceptable to the Lender in its sole
discretion.


12.           Replacement Exhibit C.  Exhibit C attached to the Credit Agreement is
hereby replaced with Exhibit C attached to this Amendment.


13.           No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions
of the Credit Agreement shall remain in full force and effect and shall apply
to any advance or letter of credit thereunder.


14.           Amendment Fee.
The Borrowers shall pay the
Lender as of the date hereof a fully earned, non-refundable fee in the amount
of $10,000 (“Amendment Fee”) in consideration of the Lender’s execution and
delivery of this Amendment.



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15.           Conditions Precedent.
This Amendment shall be effective when the Lender shall have received an
executed original hereof, together with each of the following, each in
substance and form acceptable to the Lender in its sole discretion:


(a)           The Replacement Revolving Note in the
form of Exhibit A attached hereto.


(b)           The Equipment Note A in the form of
Exhibit B attached hereto.


(c)           Payment of the Amendment Fee.


(d)           A Certificate of the Secretary of each Borrower certifying as to
(i) the resolutions of the board of directors of such Borrower approving
the execution and delivery of this Amendment and the Replacement Revolving
Note, (ii) the fact that the articles of incorporation and bylaws of the
Borrower, which were certified and delivered to the Lender pursuant to the
Certificate of Secretary of such Borrower’s secretary dated July 2, 2003
continue in full force and effect and have not been amended or otherwise
modified except as set forth in the Certificate to be delivered, and
(iii) certifying that the officers and agents of such Borrower who have
been certified to the Lender, pursuant to the Certificate of Secretary of such
Borrower’s secretary dated July 2, 2003, as being authorized to sign and to act
on behalf of such Borrower continue to be so authorized or setting forth the
sample signatures of each of the officers and agents of such Borrower
authorized to execute and deliver this Amendment and all other documents,
agreements and certificates on behalf of such Borrower.


(e)           Such other matters as the Lender may
require.


16.           Representations and
Warranties. Each Borrower hereby represents and warrants to the
Lender as follows:


(a)           Such Borrower has all requisite power
and authority to execute this Amendment, the Replacement Revolving Note and the
Equipment Note A, to perform all of its obligations hereunder, and this
Amendment, the Replacement Revolving Note and the Equipment Note A have been
duly executed and delivered by such Borrower and constitute the legal, valid
and binding obligation of such Borrower, enforceable in accordance with their
terms.


(b)           The execution, delivery and
performance by each Borrower of this Amendment,  the
Replacement Revolving Note and the Equipment Note A have been duly authorized
by all necessary corporate action and do not (i) require any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
(ii) violate any provision of any law, rule or regulation or of any order,
writ, injunction or decree presently in effect, having applicability to such
Borrower, or the articles of incorporation or by-laws of such Borrower, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
such Borrower is a party or by which it or its properties may be bound or
affected.


(c)           All of the representations and
warranties contained in Article V of the Credit Agreement are correct on and as
of the date hereof as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date.



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17.           References.
All references in the Credit Agreement to “this Agreement” shall be deemed to
refer to the Credit Agreement as amended hereby; and any and all references in
the Security Documents to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended hereby.


18.           No Waiver.  The execution of this Amendment and acceptance of any documents
related hereto shall not be deemed to be a waiver of any Default or Event of
Default under the Credit Agreement (except for the Existing Defaults) or
breach, default or event of default under any Security Document or other
document held by the Lender, whether or not known to the Lender and whether or
not existing on the date of this Amendment.


19.           Release.


(a)           Each Borrower  hereby
absolutely and unconditionally releases and forever discharges the Lender, and
any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof,
together with all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or causes
of action of any kind, nature or description, whether arising in law or equity
or upon contract or tort or under any state or federal law or otherwise, which
such Borrower has had, now has or has made claim to have against any such person
for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown.  Each Borrower
certifies that it has read the following provisions of California Civil Code
Section 1542:


A general release does
not extend to claims which the creditor does not know or suspect 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.


(b)           Each Borrower understands and
acknowledges that the significance and consequence of this waiver of California
Civil Code Section 1542 is that even if it should eventually suffer additional
damages arising out of the facts referred to above, they will not be able to
make any claim for those damages. Furthermore, each Borrower acknowledges that
it intends these consequences even as to claims for damages that may exist as
of the date of this release but which it does not know exist, and which, if
known, would materially affect its decision to execute this Agreement,
regardless of whether its lack of knowledge is the result of ignorance,
oversight, error, negligence, or any other cause.


20.           Costs and Expenses.
The Borrowers hereby reaffirm their agreement under the Credit Agreement to pay
or reimburse the Lender on demand for all costs and expenses incurred by the
Lender in connection with the Loan Documents, including without limitation all
reasonable fees and disbursements of legal counsel. Without limiting the
generality of the foregoing, the Borrowers specifically agree to pay all fees
and disbursements of counsel to the Lender for the services performed by such
counsel in connection with the preparation of this Amendment and the documents
and instruments incidental hereto. The Borrowers hereby agree that the Lender
may, at any time or from time to time in its sole discretion and without
further



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authorization by the Borrowers, make a loan to the
Borrowers under the Credit Agreement, or apply the proceeds of any loan, for
the purpose of paying any such fees, disbursements, costs and expenses, and the
Amendment Fee.


21.           Miscellaneous.
This Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.


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IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed as of the date
first written above.


 


	
  WELLS FARGO BANK, NATIONAL ASSOCIATION 

  	
   

  	
  NETLIST, INC.

  
	
  Through its Wells Fargo Business Credit operating division
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Chun K. Hong

  
	
   

  	
   

  	
  Its: 

  	
  President

  
	
  By

  	
   

  	
   

  	
   

  
	
  Name: Josephine Camalian

  	
   

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NETLIST TECHNOLOGY TEXAS L.P.

  
	
   

  	
   

  	
  By: Netlist Holdings GP, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chun K. Hong

  
	
   

  	
   

  	
   

  	
  Its: President

  
							



 
















Exhibit A

to

Seventh Amendment to Amended and Restated Credit and Security Agreement


REPLACEMENT
REVOLVING NOTE


	
  $40,000,000

  	
  March 21, 2007

  



 


For value received, the
undersigned, NETLIST, INC., a Delaware corporation (“Netlist”) and NETLIST
TECHNOLOGY TEXAS, L.P., a Texas limited partnership (“NTTLP” and Netlist
referred to herein collectively as the “Borrowers” and individually as the “Borrower”),
hereby jointly and severally promise to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (the “Lender”), acting through its Wells Fargo Business
Credit operating division, on the Termination Date set forth in the Amended and
Restated Credit and Security Agreement dated as of December 27, 2003 that was
entered into by the Lender and the Borrowers (as amended to date and as may be
further amended from time to time, the “Credit Agreement”), at Lender’s main
office located at in Minneapolis, Minnesota, or at any other place designated
at any time by the holder hereof, in lawful money of the United States of
America and in immediately available funds, the principal sum of Forty Million
Dollars ($40,000,000) or the aggregate unpaid principal amount of the Revolving
Advances made by the Lender to the Borrowers under the Credit Agreement together
with interest on the principal amount hereunder remaining unpaid from time to
time, computed on the basis of the actual number of days elapsed and a 360-day
year, from the date hereof until this Revolving Note is fully paid at the rate
from time to time in effect under the Credit Agreement.


This Replacement
Revolving Note is the Revolving Note referred to in the Credit Agreement, and
is subject to the terms of, the Credit Agreement, which provides, among other
things, for acceleration hereof.  Principal
and interest due hereunder shall be payable as provided in the Credit
Agreement, and this Revolving Note may be prepaid only in accordance with the
terms of the Credit Agreement.  This
Revolving Note is secured, among other things, pursuant to the Credit Agreement
and the Security Documents as therein defined, and may now or hereafter be
secured by one or more other security agreements, mortgages, deeds of trust,
assignments or other instruments or agreements.


The Borrowers hereby
agree to pay all costs of collection, including attorneys’ fees and legal
expenses in the event this Revolving Note is not paid when due, whether or not
legal proceedings are commenced.


Presentment or other
demand for payment, notice of dishonor and protest are expressly waived.


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This Note
replaces, and continues the obligations incurred under and evidenced by, any
and all prior Revolving Notes made by the Borrowers to the order of the Lender
(the “Prior Revolving Notes”).  Nothing herein
contained shall be construed as a substitution or novation of the obligations
of the Borrowers outstanding under the Prior Notes, which obligations shall be
incorporated into this Note, except to the extent such obligations are modified
hereby or by the Credit Agreement.


	
  

  	
   

  	
   

  	
  NETLIST, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chun K. Hong

  
	
   

  	
   

  	
   

  	
  Its: President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NETLIST TECHNOLOGY TEXAS L.P.

  
	
   

  	
   

  	
   

  	
  By: 

  	
  Netlist Holdings GP, Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Chun K. Hong  

  
	
   

  	
   

  	
   

  	
   

  	
  Its: President

  
							



 



 2















Exhibit B

to

Seventh Amendment to Amended and Restated Credit and Security Agreement


EQUIPMENT
NOTE A


$2,927,550                                                                                                                                                 March
21, 2007


For value received, the
undersigned, NETLIST, INC., a Delaware corporation (“Netlist”) and NETLIST
TECHNOLOGY TEXAS, L.P., a Texas limited partnership (“NTTLP” and Netlist
referred to herein collectively as the “Borrowers” and individually as the “Borrower”),
hereby jointly and severally promise to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (the “Lender”), acting through its Wells Fargo Business
Credit operating division, on the Termination Date set forth in the Amended and
Restated Credit and Security Agreement dated as of December 27, 2003 that was
entered into by the Lender and the Borrowers (as amended to date and as may be
further amended from time to time, the “Credit Agreement”), at Lender’s main
office located at in Minneapolis, Minnesota, or at any other place designated
at any time by the holder hereof, in lawful money of the United States of
America and in immediately available funds, the principal sum of Two Million
Nine Hundred Twenty-Seven Thousand Five Hundred Fifty Dollars ($2,927,550) or
the aggregate unpaid principal amount of all Equipment Advances A made by the
Lender to the Borrowers under the Credit Agreement together with interest on
the principal amount hereunder remaining unpaid from time to time, computed on
the basis of the actual number of days elapsed and a 360-day year, from the
date hereof until this Equipment Note A is fully paid at the rate from time to
time in effect under the Credit Agreement.


This Equipment Note A is
the Equipment Note A referred to in the Credit Agreement, and is subject to the
terms of, the Credit Agreement, which provides, among other things, for
acceleration hereof.  Principal and
interest due hereunder shall be payable as provided in the Credit Agreement,
and this Equipment Note A may be prepaid only in accordance with the terms of
the Credit Agreement.  This Equipment
Note A is secured, among other things, pursuant to the Credit Agreement and the
Security Documents as therein defined, and may now or hereafter be secured by
one or more other security agreements, mortgages, deeds of trust, assignments
or other instruments or agreements.


The Borrowers hereby
agree to pay all costs of collection, including attorneys’ fees and legal
expenses in the event this Equipment Note A is not paid when due, whether or
not legal proceedings are commenced.


[remainder
of this page intentionally left blank]



 1
 









Presentment or
other demand for payment, notice of dishonor and protest are expressly waived.


	
  

  	
  NETLIST, INC.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Chun K. Hong

  	 

	
   

  	
  Its: President

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  NETLIST TECHNOLOGY TEXAS L.P.

  	 

	
   

  	
  By: Netlist Holdings GP, Inc., its general partner

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By: 

  	
   

  	
   

  	 

	
   

  	
   

  	
  Name: Chun K. Hong  

  	
   

  	 

	
   

  	
   

  	
  Its: President

  	
   

  	 

										



 



 2















Exhibit C

to

Seventh Amendment to Amended and Restated Credit and Security Agreement


Compliance Certificate


	
  To:

  	
  Josephine Camalian 

  Wells Fargo Business Credit

  
	
   

  	
   

  
	
  Date:

  	
                                       ,
  200   

  
	
   

  	
   

  
	
  Subject:

  	
  Netlist, Inc. and Netlist Technology Texas LP

  



 


Financial Statements


In accordance with our
Amended and Restated Credit and Security Agreement dated as of December 27,
2003 (as amended to date, the “Credit Agreement”), attached are the
consolidated financial statements of Netlist, Inc. (“Netlist”) and Netlist
Technology Texas LP (collectively with Netlist, the “Borrowers” and,
individually, the “Borrower”) as of and for                              ,
20     (the “Reporting Date”) and the year-to-date period then
ended (the “Current Financials”). All terms used in this certificate have the
meanings given in the Credit Agreement.


The undersigned certifies
that the Current Financials have been prepared in accordance with GAAP, subject
to year-end audit adjustments, and fairly present Netlist’s financial condition
as of the date thereof.


Events of Default.  (Check one):


o                                    The
undersigned does not have knowledge of the occurrence of a Default or Event of
Default under the Credit Agreement except as previously reported in writing to
the Lender.


o                                    The
undersigned has knowledge of the occurrence of a Default or Event of Default
under the Credit Agreement not previously reported in writing to the Lender and
attached hereto is a statement of the facts with respect to thereto.  Each of the Borrowers acknowledges that
pursuant to Section 2.12(d) of the Credit Agreement, the Lender may impose the
Default Rate at any time during the resulting Default Period.


Financial Covenants.  Each of the undersigned further hereby
certify as follows:


1.             Minimum Book Net Worth
Plus Subordinated Indebtedness. 
Pursuant to Section 6.2(a) of the Credit Agreement, as of the
Reporting Date, the Book Net Worth was $                             
which o satisfies o
does not satisfy the requirement that such amount be not less than $46,700,000
at all times, as set forth in Section 6.2(a).



 1
 









2.             Intentionally
Deleted.


3.             Capital Expenditures.
 Pursuant to Section 6.2(c) of the
Credit Agreement, for the period from                    
and ending on the Reporting Date, the Borrowers have expended or contracted to
expend for Capital Expenditures, $                                   
in the aggregate, which o
satisfies o does not satisfy the requirement that such
expenditures not exceed $                         ,
as set forth in Section 6.2(c).


4.             Intentionally
Deleted.


5.             Minimum Debt
Service Coverage Ratio. 
Pursuant to Section 6.2(e) of the Credit Agreement, as of the Reporting
Date, the Borrowers’ Debt Service Coverage Ratio was [                  
  ] to 1.00, which o satisfies
o does not satisfy the requirement that
such ratio be no less than 1.20 to 1.00 on the Reporting Date.


6.             Salaries.  As of the Reporting Date, salaries for all
Directors, Officers, consultants, and any member of their families, is set
forth on Schedule 1 attached hereto.


Attached hereto are all
relevant facts in reasonable detail to evidence, and the computations of the
financial covenants referred to above.  These
computations were made in accordance with GAAP.


	
  

  	
  NETLIST, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Its Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NETLIST TECHNOLOGY TEXAS LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Netlist Holdings GP, Inc.,

  
	
   

  	
   

  	
   

  	
      its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
      Its Chief Financial Officer

  
						



 



 2















Exhibit D

to

Seventh Amendment to Amended and Restated Credit and Security Agreement


MAXIMUM LINE INCREASE REQUEST


Wells
Fargo Bank, National Association


Wells
Fargo Business Credit


245
South Los Robles


Suite
700


Pasadena,
CA  91101


Telecopier:  (626) 844-9063


Attention:
Josephine Camalian


e-mail: Josephine.camalian@wellsfargo.com


This Maximum Line
Increase Request is given pursuant to Section 2.21 of that certain Amended
and Restated Credit and Security Agreement, dated as of December 27, 2003 (as
amended or restated from time to time, the “Agreement”), between NETLIST
TECHNOLOGY TEXAS, L.P., a Texas limited partnership (each a “Borrower” and
collectively, the “Borrowers”), on the one hand, and WELLS FARGO BANK, NATIONAL
ASSOCIATION (the “Lender”),
acting through its WELLS FARGO BUSINESS CREDIT operating division, on the other
hand. All initially capitalized terms used but not defined in this Maximum Line
Increase Request shall have the meanings assigned to such terms in the
Agreement.


The undersigned hereby request that the Maximum Line
be increased by $                    
(increments of $2,500,000 only) to $                     
($40,000,000 maximum).


The undersigned acknowledge and agree that the Lender
is under no obligation in increase the Maximum Line except upon fulfillment of
the terms and conditions set forth in Section 2.21 of the Agreement.


The undersigned certify that, as of the date hereof:


(a)           On the date hereof, no Default or
Event of Default has occurred and is continuing.


(b)           All of the representations and
warranties contained in Article V of the Agreement are correct on and as of the
date hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.



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  NETLIST, INC.

  	 

	
  Dated:                          , 200

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Chun K. Hong

  	 

	
   

  	
  Its: President

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  NETLIST TECHNOLOGY TEXAS L.P.

  	 

	
   

  	
  By: Netlist Holdings GP, Inc., its general partner

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
  Name: Chun K. Hong  

  	
   

  	 

	
   

  	
   

  	
  Its: President

  	
   

  	 

									



 



 2