Item 1.01
Entry into a Material Definitive Agreement.
On September 28, 2021, Netlist, Inc. (the “Company”,
“we”, “us” and “our”) entered into a purchase agreement (the “Purchase Agreement”) with
Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has agreed to purchase from us, at our direction
from time to time, in our sole discretion, from and after the date of this report and over a period of up to 36 months thereafter, shares
of our common stock having a total maximum aggregate purchase price to Lincoln Park of $75,000,000 (the “Purchase Shares”),
upon the terms and subject to the conditions and limitations contained in the Purchase Agreement. Concurrently with the execution of the
Purchase Agreement on September 28, 2021, we also entered into a registration rights agreement (the “Registration Rights Agreement”)
with Lincoln Park, relating to the registration under the Securities Act of 1933, as amended (the “Securities Act”), of the
offer and sale of the securities that have been and may be issued and sold by us to Lincoln Park, from time to time in our sole discretion,
from and after the date of this report, under the Purchase Agreement and to take such other specified actions to maintain such registration
under the Securities Act.
The
offer and sale of the securities that may be issued and sold by us to Lincoln Park under the Purchase Agreement, and the resale of such
securities by Lincoln Park, are being made pursuant to a prospectus supplement, dated September 28, 2021, and an accompanying base prospectus
forming a part of the Company’s automatic shelf registration statement on Form S-3 (File No. 333-259838) that became effective automatically
upon filing with the Securities and Exchange Commission (the “SEC”) on September 28, 2021, prior to our execution of the Purchase
Agreement and Registration Rights Agreement.
We
may, from time to time and at our sole discretion, direct Lincoln Park to purchase shares of our common stock upon the satisfaction of
certain conditions set forth in the Purchase Agreement at a purchase price per share based on the market price of our common stock at
the time of sale as computed under the Purchase Agreement. There is no upper limit on the price per share that Lincoln Park could
be obligated to pay for common stock under the Purchase Agreement. We will control the timing and amount of any sales of our common stock
to Lincoln Park, and Lincoln Park has no right to require us to sell any shares to it under the Purchase Agreement. Actual sales of shares
of common stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by the Company from
time to time, including (among others) market conditions, the trading price of our common stock and determinations by the Company as to
available and appropriate sources of funding for the Company and its operations. Lincoln Park may not assign or transfer its rights and
obligations under the Purchase Agreement.
The Purchase Agreement prohibits us from directing
Lincoln Park to purchase any shares of our common stock if those shares of our common stock, when aggregated with all other shares of
our common stock then beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park having beneficial ownership
of more than 9.99% of the outstanding shares of our common stock, as calculated pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, and Rule 13d-3 thereunder.
The
Purchase Agreement contains customary representations, warranties and agreements of the Company and Lincoln Park, limitations and
conditions regarding sales of Purchase Shares, indemnification rights and other obligations of the parties. The Company has the right
to terminate the Purchase Agreement at any time, at no cost or penalty. Pursuant to the terms of the Purchase Agreement, on the date of
this report, we are issuing 218,750 shares of our common stock (the “Initial Commitment Shares”) to Lincoln Park as an initial
fee for its commitment to purchase shares of our common stock under the Purchase Agreement, and we have agreed to issue to Lincoln Park
as an additional fee up to 143,750 shares of our common stock (the “Additional Commitment Shares”) on a pro rata basis upon
each purchase by Lincoln Park of Purchase Shares from us under the Purchase Agreement, up to an aggregate number of Purchase Shares having
a total maximum aggregate purchase price to Lincoln Park equal to its $75,000,000 total aggregate purchase commitment under the Purchase
Agreement, if and when we determine, in our sole discretion, to sell such Purchase Shares to Lincoln Park under the Purchase Agreement.The
Company will not receive any cash proceeds from the issuance of the Initial Commitment Shares to Lincoln Park on the date of this report,
or from the issuance to Lincoln Park of the Additional Commitment Shares that may be issued on a pro rata basis upon purchases by Lincoln
Park of Purchase Shares that we may elect to issue and sell to Lincoln Park under the Purchase Agreement.
This
Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any shares of common stock,
nor shall there be any sale of shares of common stock in any state or jurisdiction in which such an offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
The
Purchase Agreement and Registration Rights Agreement are filed as Exhibits 1.1 and 1.2, respectively, to this Current Report on
Form 8-K and incorporated herein by reference. The foregoing descriptions of the Purchase Agreement and the Registration Rights Agreement
and the transactions contemplated thereby are qualified in their entirety by reference to such Exhibits.