Exhibit 10.1

 

 

 

 

 

NORTHERN POWER SYSTEMS CORP.

 

 

 

 

 

SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT

 

 

 

 

 

AUGUST 2, 2018

 

 

 

 

 

 

 

NORTHERN POWER SYSTEMS CORP.

 

SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT

 

This Subordinated Convertible Note Purchase Agreement (this “Agreement”) is made
as of August 2, 2018 by and between Northern Power Systems Corp., a British
Columbia corporation (the “Company”) and each of the purchasers listed on
Exhibit A attached to this Agreement (each a “Purchaser” and together the
“Purchasers”).

 

RECITALS

 

The Company desires to issue and sell, and each Purchaser desires to purchase, a
convertible promissory note in substantially the form attached to this Agreement
as Exhibit B (the “Note”) which shall be convertible on the terms stated therein
into shares of equity securities issued in the Company’s next equity financing
on the terms and conditions contained in the Notes. The Notes and the equity
securities issuable upon conversion thereof (and the securities issuable upon
conversion of such equity securities) are collectively referred to herein as the
“Securities.”

 

AGREEMENT

 

In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:

 

1.       Purchase and Sale of Notes.

 

(a)       Sale and Issuance of Notes. Subject to the terms and conditions of
this Agreement, each Purchaser agrees to purchase at the Closing (as defined
below) and the Company agrees to sell and issue to each Purchaser a Note in the
principal amount set forth opposite such Purchaser’s name on Exhibit A. The
purchase price of each Note shall be equal to 100% of the principal amount of
such Note. The Company’s agreements with each of the Purchasers are separate
agreements, and the sales of the Notes to each of the Purchasers are separate
sales.

 

(b)       Closing; Delivery.

 

(i)       The initial purchase and sale of the Notes shall take on the date
hereof or at such other time and place as the Company and the Purchasers
mutually agree upon, orally or in writing (which time and place are designated
as the “Initial Closing”). In the event there is more than one closing, the term
“Closing” shall apply to each such closing, unless otherwise specified herein.
In the event there is more than one closing, Exhibit A and Exhibit B shall be
amended and updated as needed and the term “Closing” shall apply to each such
closing, unless otherwise specified herein.

 

 

 

(ii)       At each Closing, the Company shall deliver to each Purchaser the Note
to be purchased by such Purchaser against (1) payment of the purchase price
therefor by check payable to the Company or by wire transfer to a bank account
designated by the Company, (2) delivery of counterpart signature pages to this
Agreement and (3) delivery of a validly completed and executed IRS Form W-9
establishing such Purchaser’s exemption from withholding tax, which forms are
attached to this Agreement as Exhibit C.

 

(iii)       The Company may sell additional Notes to such persons or entities as
determined by the Company, or to any Purchaser who desires to acquire additional
Notes. All such sales shall be made on the terms and conditions set forth in
this Agreement. For purposes of this Agreement, and all other agreements
contemplated hereby, any additional purchaser so acquiring Notes shall be deemed
to be a “Purchaser” for purposes of this Agreement, and any notes and so
acquired such additional purchaser shall be deemed to be “Notes” and
“Securities” as applicable.

 

2.       Stock Purchase Agreement. Each Purchaser understands and agrees that
the conversion of the Notes into equity securities of the Company will require
such Purchaser’s execution of certain agreements relating to the purchase and
sale of such securities as well as any rights relating to such equity
securities.

 

3.       Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser that the following representations are
true and complete as of the date of the Initial Closing, unless otherwise
indicated:

 

(a)       Organization, Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of British
Columbia, and has all requisite corporate power and authority to carry on its
business as presently conducted and as currently proposed to be conducted.

 

(b)       Authorization. The Agreement and the Notes, and the stock issuable
upon conversion of the Notes, have been duly authorized by the Board of
Directors and stockholders of the Company. The Company has obtained the
necessary corporate approval for the authorization of any shares of Equity
Securities (as defined in the Notes), and the Company has sufficient number of
shares of Equity Securities authorized under the Company’s Certificate of
Incorporation to provide for the issuance of such shares upon conversion of the
Notes. The Agreement and the Notes, when executed and delivered by the Company,
shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.

 

4.       Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants to the Company that:

 

(a)       Authorization. The Purchaser has full power and authority to enter
into this Agreement. This Agreement, when executed and delivered by the
Purchaser, will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally, and as limited by laws relating to
the availability of a specific performance, injunctive relief, or other
equitable remedies.

 

 

 

(b)       Purchase Entirely for Own Account. This Agreement is made with the
Purchaser in reliance upon the Purchaser’s representation to the Company, which
by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms,
that the Securities to be acquired by the Purchaser will be acquired for
investment for the Purchaser’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. If the Purchaser is a corporation, partnership or other entity, the
Purchaser has not been formed for the specific purpose of acquiring any of the
Securities.

 

(c)       Knowledge. The Purchaser is aware of the Company’s business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities.

 

(d)       Restricted Securities. The Purchaser understands that the Securities
have not been, and will not be, registered under the Securities Act of 1933, as
amended (the “Securities Act”), by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser’s representations as expressed herein. The Purchaser understands that
the Securities are “restricted securities” under applicable U.S. federal and
state securities laws and that, pursuant to these laws, the Purchaser must hold
the Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the
Securities for resale. The Purchaser further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of sale,
the holding period for the Securities, and on requirements relating to the
Company which are outside of the Purchaser’s control, and which the Company is
under no obligation and may not be able to satisfy.

 

 

 

(e)       Acknowledgment of Subordination Agreement. Each Purchaser, by its
acceptance of a Note (whether upon original issue or upon transfer or
assignment) acknowledges and agrees, notwithstanding anything to the contrary
contained herein or in any other document or communication regarding the Notes,
that the payment of any and all of the obligations thereunder and hereunder
shall be subordinate and subject in right and time of payment, to the extent and
in the manner set forth in the Subordination Agreement between the Company and
Comerica Bank, dated on or about the date of this Agreement (the “Comerica
Subordination Agreement”), to the prior payment in full in cash of all Senior
Indebtedness, as defined in the Comerica Subordination Agreement.

 

(f)       Legends. The Purchaser understands that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:

 

(i)       “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.”

 

(ii)       “UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MAY NOT TRADE THE SECURITY, OR TRADE THE UNDERLYING COMMON SHARES
BEFORE FOUR MONTHS AND ONE DAY FOLLOWING THE ISSUANCE OF THE SECURITY.”

 

(iii)       “THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE
TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED
THROUGH THE FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY”
IN SETTLEMENT OF TRANSACTIONS ON THE TSX.”

 

(iv)       “THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS UNSECURED AND IS
SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF THE SENIOR INDEBTEDNESS, AS DEFINED
IN THE SUBORDINATION AGREEMENT, DATED AUGUST 1, 2018, BY THE MAKER IN FAVOR OF
BANK, AS MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME (THE
“SUBORDINATION AGREEMENT”), AND REFERENCE IS MADE TO THE SUBORDINATION AGREEMENT
FOR A FULL STATEMENT OF THE TERMS AND CONDITIONS OF SUCH SUBORDINATION. PAYMENTS
MAY BE MADE UNDER THIS NOTE ONLY TO THE EXTENT EXPRESSLY PERMITTED UNDER SUCH
SUBORDINATION AGREEMENT. THIS LEGEND SHALL BE PLACED ON ANY NOTE OR OTHER
INSTRUMENT GIVEN AT ANY TIME IN SUBSTITUTION FOR OR REPLACEMENT HEREOF.”

 

 

 

(v)       Any legend required by the securities laws of any state of the United
States or province of Canada to the extent such laws are applicable to the
shares represented by the certificate so legended.

 

(g)       Accredited Investor. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(h)       Collateral Security. The Purchaser acknowledges and agrees that the
Notes are not secured by any collateral provided by Company, Subsidiary, or any
other person.

 

(i)       Foreign Investors. If a Purchaser is not a United States person (as
defined by Section 7701(a)(30) of the Internal Revenue Code of 1986), such
Purchaser hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Such Purchaser’s
subscription and payment for, and his or her continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of
Purchaser’s jurisdiction. Such Purchaser also hereby represents that such
Purchaser is not a “10-percent shareholder” as defined in Section 871(h) of the
Internal Revenue Code of 1986. The funds used for the Notes do not violate the
anti-money laundering provisions of the Money Laundering Control Act of 1986 or
the Bank Secrecy Act of 1970, as amended by the USA Patriot Act of 2001.

 

5.       Conditions of the Purchasers’ Obligations at Closing. The obligations
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

 

(a)       Representations and Warranties. The representations and warranties of
the Company contained in Section 3 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Initial Closing.

 

(b)       Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.

 

6.       Conditions of the Company’s Obligations at Closing. The obligations of
the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

 

(a)       Representations and Warranties. The representations and warranties of
each Purchaser contained in Section 4 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.

 

 

 

(b)       Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.

 

(c)       Delivery of Form Form W-9. Each Purchaser shall have completed and
delivered to the Company a validly executed IRS Form W-9 establishing such
Purchaser’s exemption from withholding tax.

 

7.       Miscellaneous.

 

(a)       Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties, including transferees of any Securities. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 

(b)       Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.

 

(c)       Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

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

 

(e)       Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be either hand delivered in
person, sent by facsimile, electronic mail (with confirmation of receipt), sent
by certified or registered first-class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
facsimile or electronic mail, three (3) business days after mailing if sent by
mail, and one (1) business day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section 7(e):

 

If to Company:

 

Northern Power Systems, Inc.

29 Pitman Road

Barre, VT 05641

Attention: William St. Lawrence
Email: wstlawrence@northernpower.com

 

 

 

If to a Purchaser, to the address set forth on Exhibit A hereto.

 

(f)       Finder’s Fee. Each party represents that it neither is nor will be
obligated for any finder’s fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder’s fee arising out of the transaction (and the costs and expenses of
defending against such liability or asserted liability) for which each Purchaser
or any of its officers, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finder’s fee arising out
of the transaction (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.

 

(g)       Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the Company and the holders of at least
a majority in interest of the Notes. Any amendment or waiver effected in
accordance with this Section 7(g) shall be binding upon each Purchaser and each
transferee of the Securities, each future holder of all such Securities, and the
Company.

 

(h)       Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as though
such provision were so excluded and shall be enforceable in accordance with its
terms.

 

(i)       Entire Agreement. This Agreement, and the documents referred to herein
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof, and any and all other written or oral agreements existing
between the parties hereto are expressly canceled.

 

(j)       Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company. Each Purchaser agrees that no Purchaser nor the respective controlling
persons, officers, directors, partners, agents, or employees of any Purchaser
shall be liable for any action heretofore or hereafter taken or omitted to be
taken by any of them in connection with the Securities.

 

(k)       Stockholders, Officers and Directors Not Liable. In no event shall any
stockholder, officer or director of the Company be liable for any amounts due or
payable pursuant to the Note.

 

(l)       Loss of Note. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of the Note or any Note
exchanged for it, and indemnity satisfactory to the Company (in case of loss,
theft or destruction) or surrender and cancellation of such Note (in case of
mutilation), the Company will make and deliver to Purchaser in lieu of such Note
a new Note of like tenor.

 

 

 

[Signature Pages Follow]

 

 

 

 

 

 

 

The parties have executed this Subordinated Convertible Note Purchase Agreement
as of the date first written above.

 

 

COMPANY:

 

Northern Power Systems Corp.

 

 

By: ________________________________

Name: Ciel R. Caldwell

Title: President & COO

 

 

 

 

 

SIGNATURE PAGE TO SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT

 

The parties have executed this Subordinated Convertible Note Purchase Agreement
as of the date first written above.

 

 

PURCHASERS:

 

____________________________________

(Purchaser)

 

By:_________________________________

 

Name:_______________________________

(print)

Title:________________________________

 

 

 

 

 

SIGNATURE PAGE TO SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT

 

EXHIBIT A

 

SCHEDULE OF PURCHASERS*

 

 

 

* To be amended and updated in connection with subsequent Closings, if any.

 

 

 

EXHIBIT B

 

FORM OF SUBORDINATED CONVERTIBLE PROMISSORY NOTE

 

 

 

 

 

 

EXHIBIT C*

 

PURCHASER WITHHOLDING EXEMPTIONS

 

 

 

 

* To be amended and updated in connection with subsequent Closings, if any.