Exhibit 10.23.1

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
TRANSPHORM, INC.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$15,000,000
October 4, 2017

FOR VALUE RECEIVED, Transphorm, Inc., a Delaware corporation (the “Company”)
promises to pay to Yaskawa Electric Corporation, or its registered assigns
(“Investor”), in lawful money of the United States of America the principal sum
of Fifteen Million Dollars ($15,000,000, or such lesser amount as shall equal
the outstanding principal amount hereof, together with interest from the date of
this Subordinated Convertible Promissory Note (this “Note”) on the unpaid
principal balance at a rate equal to one percent (1%) per annum, computed on the
basis of the actual number of days elapsed and a year of 365 days. All unpaid
principal, together with any then unpaid and accrued interest and other amounts
payable hereunder, shall be due and payable on the earlier of (i) September
30th, 2022 (the “Maturity Date”), or (ii) when, upon the occurrence and during
the continuance of an Event of Default, such amounts are declared due and
payable by Investor or made automatically due and payable, in each case, in
accordance with the terms hereof.
The following is a statement of the rights of Investor and the conditions to
which this Note is subject, and to which Investor, by the acceptance of this
Note, agrees:
1.    Payments.
(a)    Interest. Accrued interest on this Note shall be payable at maturity.
(b)    Voluntary Prepayment.
(i)    Prior to a Qualified Financing, this Note may not be prepaid without the
written consent of Investor.
(ii)    On or after a Qualified Financing, upon five (5) business days prior
written notice (the “Prepayment Notice”) to Investor, the Company may prepay
this Note in whole or in part, provided that any such prepayment will be applied
first to interest accrued on this Note and second, if the amount of prepayment
exceeds the amount of all such accrued interest, to the payment of principal of
this Note. For the avoidance of doubt, upon receipt of the Prepayment Notice,
Investor may elect to convert all or a portion of this Note into the Conversion
Stock pursuant to Section 4, provided that such conversion shall be effective on
or prior to the date specified for prepayment set forth in the Prepayment
Notice.

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(c)    Mandatory Prepayment.
(i)    In the event of a Change of Control, the outstanding principal amount of
this Note, plus all accrued and unpaid interest, in each case that has not
otherwise been converted into the Conversion Stock pursuant to Section 4, shall
be due and payable immediately prior to the closing of such Change of Control.
(ii)    In the event of an Initial Public Offering, the outstanding principal
amount of this Note, plus all accrued and unpaid interest, in each case that has
not otherwise been converted into the Conversion Stock pursuant to Section 4,
shall be due and payable within thirty (30) days of the closing of such Initial
Public Offering.
2.    Events of Default. The occurrence of any of the following shall constitute
an “Event of Default” under this Note:
(a)    Failure to Pay. The Company shall fail to pay (i) when due any principal
payment on the due date hereunder or (ii) any interest payment or other payment
required under the terms of this Note on the date due and such payment shall not
have been made within five (5) business days of the Company’s receipt of written
notice to the Company of such failure to pay; or
(b)    Breaches of Covenants. The Company shall fail to observe or perform any
other covenant, obligation, condition or agreement contained in this Note (other
than those specified in Section 2(a)) and such failure shall continue for ten
(10) business days after the Company’s receipt of written notice to the Company
of such failure; or
(c)    Representations and Warranties. Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by or
on behalf of the Company to Investor in writing in connection with this Note, or
as an inducement to Investor to enter into this Note, shall be false, incorrect,
incomplete or misleading in any material respect when made or furnished; or
(d)    Other Payment Obligations. Defaults shall exist under any agreements of
the Company with any third party or parties which consists of the failure to pay
any indebtedness for borrowed money at maturity or which results in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of such indebtedness for borrowed money of the Company, in each case,
in an aggregate amount in excess of Two Hundred Fifty Thousand Dollars
($250,000); or
(e)    Voluntary Bankruptcy or Insolvency Proceedings. The Company shall
(i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property,
(ii) admit in writing its inability to pay its debts generally as they mature,
(iii) make a general assignment for the benefit of its or any of its creditors,
(iv) be dissolved or liquidated, (v) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or
other proceeding commenced against it, or (vi) take any action for the purpose
of effecting any of the foregoing; or
(f)    Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the Company, or
of all or a substantial part of the property thereof, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief with
respect to the Company or any of its subsidiaries, if any, or the debts thereof
under any bankruptcy, insolvency or other similar

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law now or hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged within
forty-five (45) days of commencement; or
(g)    Judgments. A final judgment or order for the payment of money in excess
of Two Hundred Fifty Thousand Dollars ($250,000) (exclusive of amounts covered
by insurance) shall be rendered against the Company and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of the Company or any of its subsidiaries, if any and such
judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within thirty (30) days after issue or levy.
3.    Rights of Investor upon Default. Upon the occurrence of any Event of
Default (other than an Event of Default described in Sections 2(e) or 2(f)) and
at any time thereafter during the continuance of such Event of Default, Investor
may, by written notice to the Company, declare all outstanding Obligations
payable by the Company hereunder to be immediately due and payable without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding. Upon the occurrence of any Event of Default described in
Sections 2(e) and 2(f), immediately and without notice, all outstanding
Obligations payable by the Company hereunder shall automatically become
immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein to the contrary notwithstanding. In addition to the foregoing remedies,
upon the occurrence and during the continuance of any Event of Default, Investor
may exercise any other right, power or remedy permitted to it by law, either by
suit in equity or by action at law, or both.
4.    Conversion.
(a)    Voluntary Conversion. On or after each Qualified Financing, Investor has
the right, at Investor’s option, at any time prior to payment in full of the
principal amount of this Note to convert all or a portion of the outstanding
principal amount of this Note and all accrued and unpaid interest on this Note
into that number of fully paid and non-assessable shares of Conversion Stock
equal to (x) the amount of outstanding principal and accrued and unpaid interest
being converted, divided by (y) the applicable Conversion Price.
(i)    “Qualified Financing” shall mean a transaction or series of transactions
pursuant to which the Company issues and sells shares of its preferred stock for
aggregate gross proceeds of at least $10 million (excluding all proceeds from
the incurrence of indebtedness that is converted into such preferred stock, or
otherwise cancelled in consideration for the issuance of such preferred stock)
with the principal purpose of raising capital.
(ii)    “Conversion Stock” shall mean the class and series of preferred stock
sold by the Company in a Qualified Financing that occurs after the date of
issuance of this Note and on or prior to the Maturity Date; provided, however,
that with each subsequent Qualified Financing of the Company that occurs on or
prior to the Maturity Date, “Conversion Stock” shall only mean the class and
series of preferred stock sold by the Company in such subsequent Qualified
Financing and not the class and series of preferred stock sold in any earlier
Qualified Financing. For example, if the Company closes its first Qualified
Financing after the issuance of this Note on September 30, 2017 (the “First
Qualified Financing”), a second Qualified Financing on August 1, 2018 (the
“Second Qualified Financing”) and a third Qualified Financing on January 1, 2020
(the “Third Qualified Financing”), “Conversion Stock” shall mean, (A) from
September 30, 2017 through July 31, 2018, the class and series of preferred
stock sold by the Company in the First Qualified Financing, (B) from

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August 1, 2018 through December 31, 2019, the class and series of preferred
stock sold by the Company in the Second Qualified Financing, and (C) from
January 1, 2020 through the earlier of the Maturity Date or the date immediately
preceding the date on which the Company closes a fourth Qualified Financing, the
class and series of preferred stock sold by the Company in the Third Qualified
Financing.
(iii)    “Conversion Price” shall mean (A) immediately following the first
Qualified Financing that occurs after the date of issuance of this Note and
prior to a second Qualified Financing, if any, a price per share equal to the
price per share paid by the other purchasers of the preferred stock sold in such
first Qualified Financing and (B) immediately following each subsequent
Qualified Financing, if any, a price per share equal to the lesser of:
(1)    eighty percent (80%) of the price per share (subject to appropriate
adjustment from time to time for any stock dividend, stock split, combination of
shares, reorganization, recapitalization, reclassification or other similar
event) paid by the other purchasers of the preferred stock sold in the most
recent Qualified Financing (excluding, for the avoidance of doubt, the first
Qualified Financing that occurs after the date of issuance of this Note),
provided that in no event shall the price per share calculated pursuant to this
clause (1) be lower than the amount obtained by dividing (x) $160 million
($160,000,000) by (y) the Fully Diluted Capitalization of the Company; and
(2)    an amount obtained by dividing (x) $250 million ($250,000,000) by (y) the
Fully Diluted Capitalization of the Company.
(iv)    “Fully Diluted Capitalization” shall mean, as of immediately prior to
the applicable Qualified Financing, the sum of (i) the outstanding shares of
common stock of the Company; (ii) the shares of common stock of the Company
directly or indirectly issuable upon conversion or exchange of all outstanding
securities directly or indirectly convertible into or exchangeable for common
stock of the Company and the exercise of all outstanding options and warrants;
and (iii) the shares of common stock of the Company reserved, but neither issued
nor the subject of outstanding awards, under any equity incentive or similar
plan of the Company; provided that Fully Diluted Capitalization shall not
include (i) this Note and the securities directly or indirectly issuable upon
conversion or exchange of this Note, (ii) other outstanding convertible
promissory notes and any related warrants and the securities directly or
indirectly issuable upon conversion or exchange of such other outstanding
convertible promissory notes and the exercise of any such related warrants, or
(iii) in any voluntary conversion relating to a financing, any securities issued
in the financing, any shares of common stock of the Company directly or
indirectly issuable upon conversion, exchange or exercise of such securities and
any increase in the number of shares reserved for issuance under the Company’s
equity incentive or similar plans or arrangements in connection with the
financing.
(b)    Conversion Procedure. Before Investor shall be entitled to convert this
Note into the Conversion Stock, it shall surrender this Note (or a notice to the
effect that the original Note has been lost, stolen or destroyed and an
agreement acceptable to the Company whereby the holder agrees to indemnify the
Company from any loss incurred by it in connection with this Note) and give
written notice to the Company at its principal corporate office of the election
to convert the same pursuant to Section 4(a), and shall state therein the amount
of the unpaid principal amount of this Note to be converted, together with all
accrued and unpaid interest. Upon such conversion of this Note, Investor hereby
agrees to execute and deliver to the Company all transaction documents entered
into by other purchasers of the Conversion Stock (as may be amended), including
a purchase agreement, an investor rights agreement and other ancillary
agreements, with customary representations and warranties and transfer
restrictions (including, without limitation, a one hundred eighty (180)-day
lock-up agreement in connection with an Initial Public Offering). The Company
shall, as soon as practicable thereafter,

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issue and deliver to such Investor a certificate or certificates (or a notice of
issuance of uncertificated shares, if applicable) for the number of shares to
which Investor shall be entitled upon such conversion, including a check payable
to Investor for any cash amounts payable as described in Section 4(c). Any
conversion of this Note pursuant to Section 4(a) shall be deemed to have been
made upon the satisfaction of all of the conditions set forth in this
Section 4(b) and on and after such date Investor shall be treated for all
purposes as the record holder of the Conversion Stock.
(c)    Fractional Shares; Interest; Effect of Conversion. No fractional shares
shall be issued upon conversion of this Note. In lieu of the Company issuing any
fractional shares to the Investor upon the conversion of this Note, the Company
shall pay to Investor by check an amount equal to the product obtained by
multiplying (x) the applicable Conversion Price by (y) the fraction of a share
not issued pursuant to the previous sentence. In addition, to the extent not
converted into the Conversion Stock, the Company shall pay to Investor any
interest accrued on the amount converted and on the amount to be paid by the
Company pursuant to the previous sentence. Upon conversion of this Note in full
and the payment of the amounts specified in this paragraph, the Company shall be
forever released from all its obligations and liabilities under this Note and
this Note shall be deemed of no further force or effect, whether or not the
original of this Note has been delivered to the Company for cancellation.
(d)    Conversion of Preferred Stock into Common Stock. Should all of any series
of preferred stock issuable upon conversion of this Note be, at any time prior
to full payment of this Note, redeemed or converted into shares of the Company’s
common stock (the “Common Stock”) in accordance with the Company’s certificate
of incorporation, then, to the extent this Note is convertible into such
preferred stock, this Note shall immediately become convertible into that number
of shares of Common Stock equal to the number of shares of the Common Stock that
would have been received if this Note had been converted in full and the
preferred stock received thereupon had been simultaneously converted into Common
Stock immediately prior to such event.
(e)    Notices of Record Date. In the event of:
(i)    Any taking by the Company of a record of the holders of any class of
securities of the Company for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right; or
(ii)    Any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to any other Person or any
consolidation or merger involving the Company; or
(iii)    Any voluntary or involuntary dissolution, liquidation or winding-up of
the Company,
the Company will mail to Investor at least ten (10) days prior to the earliest
date specified therein, a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right
and the amount and character of such dividend, distribution or right; or (B) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is
expected to become effective and the record date for determining stockholders
entitled to vote thereon.

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5.    Subordination. The Obligations evidenced by this Note are hereby expressly
subordinated in right of payment to the prior payment in full of all of the
Company’s Senior Indebtedness and any Liens on property of the Company in favor
of Investor are hereby expressly subordinated in priority to any Liens on the
Company’s property in favor of any holder of Senior Indebtedness. By acceptance
of this Note, Investor agrees to execute and deliver customary forms of
subordination agreement requested from time to time by holders of Senior
Indebtedness, and as a condition to Investor’s rights hereunder, the Company may
require that Investor execute such forms of subordination agreement.
Notwithstanding the foregoing, Investor shall be entitled to receive (i) the
Conversion Stock of the Company from the conversion of all or any part of the
Obligations and payments of cash in lieu of issuing fractional shares in
connection with any such conversions, (ii) any note, instrument or other
evidence of indebtedness which may be issued by the Company in exchange for or
in substitution of this Note, provided that such note, instrument or other
evidence of indebtedness is subordinated to the Senior Indebtedness on the same
terms and conditions as set forth in this Section 5 and (iii) other payments
consented to in writing by holders of Senior Indebtedness.
6.    Representations and Warranties of the Company. Except as set forth on the
Disclosure Schedule, attached as Schedule I, delivered to the Investor on the
date hereof (the “Disclosure Schedule”), the Company represents and warrants to
the Investor that:
(a)    Due Incorporation, Qualification, etc. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) has the power and authority to own, lease and operate
its properties and carry on its business as now conducted; and (iii) is duly
qualified, licensed to do business and in good standing as a foreign corporation
in each jurisdiction where the failure to be so qualified or licensed could
reasonably be expected to have a material adverse effect on the Company.
(b)    Authority. The execution, delivery and performance by the Company of this
Note and the consummation of the transactions contemplated hereby (i) are within
the power of the Company and (ii) have been duly authorized by all necessary
actions on the part of the Company.
(c)    Enforceability. This Note has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and general principles
of equity.
(d)    Non-Contravention. The execution and delivery by the Company of this Note
and the performance and consummation of the transactions contemplated hereby do
not and will not (i) violate the Company’s Certificate of Incorporation or
Bylaws (as amended, the “Charter Documents”) or any material judgment, order,
writ, decree, statute, rule or regulation applicable to the Company;
(ii) violate any provision of, or result in the breach or the acceleration of,
or entitle any other Person to accelerate (whether after the giving of notice or
lapse of time or both), any material mortgage, indenture, agreement, instrument
or contract to which the Company is a party or by which it is bound; or
(iii) result in the creation or imposition of any Lien upon any property, asset
or revenue of the Company or the suspension, revocation, impairment, forfeiture,
or nonrenewal of any material permit, license, authorization or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
(e)    Subsidiaries. Each of the Company’s subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is in good standing under such laws and has the power and
authority to own, lease and operate its properties and carry on its business as
now conducted.

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(f)    Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of this Note and the
performance and consummation of the transactions contemplated hereby, other than
such as have been obtained and remain in full force and effect and other than
such qualifications or filings under applicable securities laws as may be
required in connection with the transactions contemplated by this Note.
(g)    No Violation or Default. None of the Company or the Company’s
subsidiaries is in violation of or in default with respect to (i) its Charter
Documents or other organizational documents, as applicable, or any material
judgment, order, writ, decree, statute, rule or regulation applicable to such
Person; or (ii) any material mortgage, indenture, agreement, instrument or
contract to which such Person is a party or by which it is bound (nor is there
any waiver in effect which, if not in effect, would result in such a violation
or default).
(h)    Litigation. No actions (including, without limitation, derivative
actions), suits, proceedings or investigations are pending or, to the knowledge
of the Company, threatened in writing against the Company or the Company’s
subsidiaries at law or in equity in any court or before any other governmental
authority that if adversely determined (i) would (alone or in the aggregate)
result in a material liability or (ii) seeks to enjoin, either directly or
indirectly, the execution, delivery or performance by the Company of this Note
or the transactions contemplated hereby.
(i)    Title. The Company has good and marketable title to its properties and
assets, and has a valid leasehold interest in all its leasehold interests, in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (i) liens for current taxes not yet due and payable, (ii) liens
imposed by law and incurred in the ordinary course of business for obligations
not past due, (iii) liens in respect of pledges or deposits under workers’
compensation laws or similar legislation, and (iv) liens, encumbrances and
defects in title which do not in any case materially detract from the value of
the property subject thereto or do not have a material adverse effect on the
Company. With respect to the property and assets it leases, the Company is in
compliance with such leases in all material respects and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances,
subject to clauses (i)-(iv) above. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by the Company are
in good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used.
(j)    Intellectual Property. The Company owns or possesses sufficient legal
rights to all patents, trademarks, service marks, trade names, copyrights,
domain names, trade secrets, mask works, licenses (software or otherwise),
information and similar proprietary rights and processes, in each instance as
used by it in connection with the Company’s business, which represent all
intellectual property rights necessary to the conduct of the Company’s business
as now conducted and as presently proposed to be conducted, without any conflict
with, or infringement of, the rights of others.
(k)    Financial Statements. The Company has delivered to Investor its unaudited
financial statements (balance sheet, profit and loss, and statement of cash
flows) as at and for the quarters ended March 31, 2016, June 30, 2016, September
30, 2016, December 31, 2016, March 31, 2017 and June 30, 2017 (the “Financial
Statements”). The Financial Statements fairly present the financial condition
and operating results of the Company as of the dates, and for the periods,
indicated therein. Except as set forth in the Financial Statements, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
after June 30, 2017 in the ordinary course of business, and (ii) obligations
under contracts and commitments incurred in the ordinary course of business
which would not be required under U.S. generally accepted accounting principles
(“GAAP”) to be reflected in the Financial Statements prepared in accordance with
GAAP, which, in both cases,

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individually or in the aggregate, would not have a material adverse effect on
the Company. The Company does not represent or warrant that it will achieve any
financial projections provided to Investor and represents only that such
projections were prepared in good faith.
(l)    Capitalization.
(i)    The authorized capital stock of the Company consists of (i) 300,000,000
shares of Common Stock, 50,811,818 of which are issued and outstanding, (ii)
51,700,000 shares of Series 1 Preferred Stock, $0.001 par value per share (the
“Series 1 Preferred Stock”), 51,680,254 of which are issued and outstanding, and
(iii) 38,800,000 shares of Series 2 Preferred Stock, $0.001 par value per share
(the “Series 2 Preferred Stock”), 38,760,190 of which are issued and
outstanding. The equity securities (“Equity Securities”) of the Company have the
respective rights, preferences and privileges set forth in the Company’s Charter
Documents in effect on the date hereof. As of the date hereof, the issued and
outstanding Series 1 Preferred Stock converts into an aggregate of 150,002,715
shares of Common Stock, and the issued and outstanding Series 2 Preferred Stock
converts into an aggregate of 38,760,190 shares of Common Stock. All of the
outstanding Equity Securities of the Company have been duly authorized and are
validly issued, fully paid and nonassessable.
(ii)    The Company has reserved 3,013,645 shares of Common Stock authorized for
issuance to employees, consultants and directors pursuant to its 2007 Stock
Plan, under which (i) options to purchase 3,013,645 shares are issued and
outstanding as of the date of this Note and (ii) no shares of Common Stock
remain available for issuance to employees, consultants and directors of the
Company. The Company has reserved 45,455,952 shares of Common Stock authorized
for issuance to employees, consultants and directors pursuant to its 2015 Stock
Plan, under which (i) options to purchase 27,390,350 shares are issued and
outstanding as of the date of this Note, (ii) 18,047,394 shares of Common Stock
remain available for issuance to employees, consultants and directors of the
Company, and (iii) 18,208 shares of Common Stock have been issued upon the
exercise of options.
(iii)    Except as expressly referenced herein or as set forth in Item 6(l) of
the Disclosure Schedule, there are as of the date of this Note no options,
warrants or rights to purchase Equity Securities of the Company authorized,
issued or outstanding, and the Company is not obligated in any other manner to
issue shares of its Equity Securities.
(iv)    Except as set forth in Item 6(l) of the Disclosure Schedule, there are
no restrictions on the transfer of Equity Securities of the Company, other than
those imposed by the Company’s Charter Documents as of the date hereof, or
relevant state and federal securities laws, and no holder of any Equity Security
of the Company or other Person is entitled to preemptive or similar statutory or
contractual rights, either arising pursuant to any agreement or instrument to
which the Company is a party or that are otherwise binding upon the Company.
7.    Representations and Warranties of Investor. Investor represents and
warrants to the Company upon the acquisition of this Note as follows:
(a)    Binding Obligation. Investor has full legal capacity, power and authority
to execute and deliver this Note and to perform its obligations hereunder. This
Note constitutes a valid and binding obligation of Investor, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

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(b)    Securities Law Compliance. Investor has been advised that the Note and
the underlying securities have not been registered under the Securities Act, or
any state securities laws and, therefore, cannot be resold unless they are
registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration requirements is available. Investor
is aware that the Company is under no obligation to effect any such registration
with respect to this Note or the underlying securities or to file for or comply
with any exemption from registration. Investor has not been formed solely for
the purpose of making this investment and is purchasing this Note for its own
account for investment, not as a nominee or agent, and not with a view to, or
for resale in connection with, the distribution thereof, and Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Investor has such knowledge and experience in financial
and business matters that Investor is capable of evaluating the merits and risks
of such investment, is able to incur a complete loss of such investment without
impairing Investor’s financial condition and is able to bear the economic risk
of such investment for an indefinite period of time. Investor is an accredited
investor as such term is defined in Rule 501 of Regulation D under the
Securities Act and shall submit to the Company such further assurances of such
status as may be reasonably requested by the Company. The residency of Investor
(or, in the case of a partnership or corporation, such entity’s principal place
of business) is correctly set forth beneath Investor’s name on the signature
pages hereto.
(c)    Access to Information. Investor acknowledges that the Company has given
Investor access to the corporate records and accounts of the Company and to all
information in its possession relating to the Company, has made its officers and
representatives available for interview by Investor, and has furnished Investor
with all documents and other information required for such Investor to make an
informed decision with respect to the purchase of this Note.
(d)    Tax Advisors. Investor has reviewed with its own tax advisors the U.S.
federal, state and local and non-U.S. tax consequences of this investment and
the transactions contemplated by this Note. With respect to such matters,
Investor relies solely on any such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. Investor
understands that it (and not the Company) shall be responsible for its own tax
liability that may arise as a result of this investment and the transactions
contemplated by this Note.
(e)    No “Bad Actor” Disqualification Events. Neither (i) Investor, (ii) any of
its directors, executive officers, other officers that may serve as a director
or officer of any company in which it invests, general partners or managing
members, nor (iii) any beneficial owner of any of the Company’s voting equity
securities (in accordance with Rule 506(d) of the Securities Act) held by
Investor is subject to any of the “bad actor” disqualifications described in
Rule 506(d)(1)(i) through (viii) under the Securities Act (“Disqualification
Events”), except for Disqualification Events covered by Rule 506(d)(2) or (d)(3)
under the Securities Act and disclosed reasonably in advance of the closing in
writing in reasonable detail to the Company.
8.    Definitions. As used in this Note, the following capitalized terms have
the following meanings:
“Change of Control” shall mean (i) any “person” or “group” (within the meaning
of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of more than fifty
percent (50%) of the outstanding voting securities of the Company having the
right to vote for the election of members of the Board of Directors, other than
pursuant to a bona fide equity financing for capital raising purposes, (ii) any
reorganization, merger or consolidation of the Company, other than a transaction
or series of related transactions in which the holders of the voting securities
of the Company outstanding immediately prior to such transaction or series of
related transactions retain, immediately after such transaction or series of
related

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transactions, at least a majority of the total voting power represented by the
outstanding voting securities of the Company or such other surviving or
resulting entity or (iii) a sale, lease or other disposition of all or
substantially all of the assets of the Company.
“Event of Default” has the meaning given in Section 2 hereof.
“Initial Public Offering” shall mean the closing of the Company’s first firm
commitment underwritten initial public offering of the Common Stock pursuant to
a registration statement filed under the Securities Act.
“Investor” shall mean the Person specified in the introductory paragraph of this
Note or any Person who shall at the time be the registered holder of this Note.
“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance.
“Obligations” shall mean and include all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by the Company to Investor of every kind
and description, now existing or hereafter arising under or pursuant to the
terms of this Note, including, all interest, fees, charges, expenses, attorneys’
fees and costs and accountants’ fees and costs chargeable to and payable by the
Company hereunder and thereunder, in each case, whether direct or indirect,
absolute or contingent, due or to become due, and whether or not arising after
the commencement of a proceeding under Title 11 of the United States Code (11 U.
S. C. Section 101 et seq.), as amended from time to time (including
post-petition interest) and whether or not allowed or allowable as a claim in
any such proceeding.
“Person” shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability
company, an unincorporated association, a joint venture or other entity or a
governmental authority.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Senior Indebtedness” shall mean, unless expressly subordinated to or made on a
parity with the amounts due under this Note, the principal of (and premium, if
any), unpaid interest on and amounts reimbursable, fees, expenses, costs of
enforcement and other amounts due in connection with, (i) indebtedness for
borrowed money of the Company, to banks, commercial finance lenders or other
lending institutions regularly engaged in the business of lending money
(excluding (A) any indebtedness convertible into equity securities of the
Company and (B) indebtedness in connection with capital leases or operating
leases used solely for the purchase, finance or acquisition of equipment and
where such indebtedness is secured solely by such equipment), (ii) indebtedness
for borrowed money of the Company to ON Semiconductor, and (iii) any extension,
refinance, renewal, replacement, defeasance or refunding of any indebtedness
described in clauses (ii) and (iii).
9.    Miscellaneous.
(a)    Financial Information Rights. The Company will furnish Investor the
following reports:
(i)    As soon as practicable after the end of the first, second, third and
fourth quarterly accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days after the end of each quarter, the
unaudited consolidated balance sheet, statements of income and cash flows of the
Company

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and its subsidiaries, if any, for such period, prepared in accordance with GAAP
consistently applied, subject to changes resulting from normal year-end audit
adjustments; and
(ii)    As soon as practicable after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company and its subsidiaries, if any, as at
the end of such fiscal year, and consolidated statements of income and cash
flows of the Company and its subsidiaries, if any, for such year, prepared in
accordance with GAAP consistently applied.
(b)    Preferential Treatment and Product Roadmap. For as long as Yaskawa
Electric Corporation (“Yaskawa”) is the holder of this Note:
(i)    The Company agrees to offer Yaskawa key terms related to supply of
product, such as pricing and turn-around times, that are either equal to or more
favorable than the Company offers to other customers with respect to the sale of
similar volumes of the same product(s) that it manufacture(s) for Yaskawa; and
(ii)    The Company agrees to consider Yaskawa’s input in shaping the Company’s
product roadmap with the goal of prioritizing the development of products for
Yaskawa, provided that such development is within the Company’s resource
capabilities and the Company’s commercial and business sales plan with respect
to Yaskawa supports such development.
(c)    Successors and Assigns; Registration, Transfer and Replacement of this
Note or Securities Issuable on Conversion Hereof; No Transfers to Bad Actors;
Notice of Bad Actor Status.
(i)    Subject to the restrictions on transfer described in this Section 9(c),
the rights and obligations of the Company and Investor shall be binding upon and
benefit the successors, assigns, heirs, administrators and transferees of the
parties.
(ii)    With respect to any offer, sale or other disposition of this Note or
securities into which such Note may be converted, Investor will give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of Investor’s counsel, or other evidence if
reasonably satisfactory to the Company, to the effect that such offer, sale or
other distribution may be effected without registration or qualification (under
any federal or state law then in effect). Upon receiving such written notice and
reasonably satisfactory opinion, if so requested, or other evidence, the
Company, as promptly as practicable, shall notify Investor that Investor may
sell or otherwise dispose of this Note or such securities, all in accordance
with the terms of the notice delivered to the Company. If a determination has
been made pursuant to this Section 9(c) that the opinion of counsel for
Investor, or other evidence, is not reasonably satisfactory to the Company, the
Company shall so notify Investor promptly after such determination has been
made. Each Note thus transferred and each certificate, instrument or book entry
representing the securities thus transferred shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
the Securities Act, unless in the opinion of counsel for the Company such legend
is not required in order to ensure compliance with the Securities Act. The
Company may issue stop transfer instructions to its transfer agent in connection
with such restrictions.
(iii)    This Note shall be a registered note. The Company will keep, at its
principal executive office, books for the registration and registration of
transfer of this Note. Subject to Section 9(c)(ii) and any other restrictions on
or conditions to transfer set forth in this Note, transfers of this Note shall
be registered

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upon registration books maintained for such purpose by or on behalf of the
Company. Prior to presentation of this Note for registration of transfer, the
Company shall treat the Person in whose name this Note is registered as the
owner and holder of this Note for the purpose of receiving all payments of
principal and interest hereon and for all purposes whatsoever, whether or not
this Note shall be overdue, and the Company shall not be affected by notice to
the contrary. Subject to any restrictions on or conditions to transfer set forth
in this Note, the holder of this Note, at its option, may in person or by duly
authorized attorney surrender the same for exchange at the Company’s chief
executive office, and promptly thereafter and at the Company’s expense, except
as provided below, receive in exchange therefor one or more new Note(s), each in
the principal requested by such holder, dated the date to which interest shall
have been paid on the Note so surrendered or, if no interest shall have yet been
so paid, dated the date of the Note so surrendered and registered in the name of
such Person or Persons as shall have been designated in writing by such holder
or its attorney for the same principal amount as the then unpaid principal
amount of the Note so surrendered. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Note and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it; or (b) in the case of
mutilation, upon surrender thereof, the Company, at its expense, will execute
and deliver in lieu thereof a new Note executed in the same manner as the Note
being replaced, in the same principal amount as the unpaid principal amount of
such Note and dated the date to which interest shall have been paid on such Note
or, if no interest shall have yet been so paid, dated the date of such Note.
(iv)    Neither this Note nor any of the rights, interests or obligations
hereunder may be assigned, by operation of law or otherwise, in whole or in
part, by the Company without the prior written consent of Investor.
(v)    Investor agrees not to sell, assign, transfer, pledge or otherwise
dispose of any securities of the Company, or any beneficial interest therein, to
any person (other than the Company) unless and until the proposed transferee
confirms to the reasonable satisfaction of the Company that neither the proposed
transferee nor any of its directors, executive officers, other officers that may
serve as a director or officer of any company in which it invests, general
partners or managing members nor any person that would be deemed a beneficial
owner of those securities (in accordance with Rule 506(d) of the Securities Act)
is subject to any of the “bad actor” disqualifications described in
Rule 506(d)(1)(i) through (viii) under the Securities Act, except as set forth
in Rule 506(d)(2) or (d)(3) under the Securities Act and disclosed, reasonably
in advance of the transfer, in writing in reasonable detail to the Company.
Investor will promptly notify the Company in writing if Investor or, to
Investor’s knowledge, any person specified in Rule 506(d)(1) under the
Securities Act becomes subject to any of the “bad actor” disqualifications
described in Rule 506(d)(1)(i) through (viii) under the Securities Act.
(d)    Waiver and Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and Investor.
(e)    Notices. All notices, requests, demands, consents, instructions or other
communications required or permitted hereunder shall be in writing and faxed,
mailed or delivered to each party at the respective addresses of the parties as
set forth on the signature pages hereto, or at such other address or facsimile
number as the Company shall have furnished to Investor in writing. All such
notices and communications will be deemed effectively given the earlier of
(i) when received, (ii) when delivered personally, (iii) one (1) business day
after being delivered by facsimile (with receipt of appropriate confirmation),
(iv) one (1) business day after being deposited with an overnight courier
service of recognized standing or (v) four (4) days after being deposited in the
U.S. mail, first class with postage prepaid. In the event of any conflict
between the Company’s books and records and this Note or any notice delivered
hereunder, the Company’s books and records will control absent

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fraud or error. Subject to the limitations set forth in Delaware General
Corporation Law §232(e), Investor consents to the delivery of any notice to
stockholders given by the Company under the Delaware General Corporation Law or
the Company’s certificate of incorporation or bylaws by (i) facsimile
telecommunication to any facsimile number for Investor in the Company’s records,
(ii) electronic mail to any electronic mail address for Investor in the
Company’s records, (iii) posting on an electronic network together with separate
notice to Investor of such specific posting or (iv) any other form of electronic
transmission (as defined in the Delaware General Corporation Law) directed to
Investor. This consent may be revoked by Investor by written notice to the
Company and may be deemed revoked in the circumstances specified in Delaware
General Corporation Law §232.
(f)    Payment. Unless converted into the Conversion Stock pursuant to the terms
hereof, payment shall be made in lawful tender of the United States.
(g)    Usury. In the event any interest is paid on this Note which is deemed to
be in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of this Note.
(h)    Waivers. The Company hereby waives notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor and all other
notices or demands relative to this instrument.
(i)    Governing Law. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed in accordance with the laws of
the State of California, without regard to the conflicts of law provisions of
the State of California, or of any other state.
(j)    Jurisdiction and Venue. Each of Investor and the Company irrevocably
consents to the exclusive jurisdiction of, and venue in, the state courts in
Santa Clara County in the State of California (or in the event of exclusive
federal jurisdiction, the courts of the Northern District of California), in
connection with any matter based upon or arising out of this Note or the matters
contemplated herein, and agrees that process may be served upon them in any
manner authorized by the laws of the State of California for such persons.
(k)    Waiver of Jury Trial; Judicial Reference. By acceptance of this Note,
Investor hereby agrees and the Company hereby agrees to waive their respective
rights to a jury trial of any claim or cause of action based upon or arising out
of this Note. If the jury waiver set forth in this paragraph is not enforceable,
then any claim or cause of action arising out of or relating to this Note shall
be settled by judicial reference pursuant to California Code of Civil Procedure
Section 638 et seq. before a referee sitting without a jury, such referee to be
mutually acceptable to the parties or, if no agreement is reached, by a referee
appointed by the Presiding Judge of the California Superior Court for Santa
Clara County. This paragraph shall not restrict a party from exercising remedies
under the Uniform Commercial Code or from exercising pre-judgment remedies under
applicable law.
(l)    Counterparts. This Note may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Note.
(Signature Page Follows)

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The Company has caused this Note to be issued as of the date first written
above.
TRANSPHORM, INC.
a Delaware corporation
 
 
 
 
By:
/s/ Primit Parikh
Name:
Primit Parikh
Title:
Co-founder and COO
 
 
Address:
115 Castilian Drive
 
Goleta, CA 93117
 
USA.
 
 
Fax:
+1-805-456-1307
Email:
pparikh@transphormusa.com

YASKAWA ELECTRIC CORPORATION
 
 
 
 
By:
/s/ Hiroshi Ogasawara

Name:
Hiroshi Ogasawara

Title:
Representative Director, President
 
 
Address:
2-1 Kurosakishiroishi,

 
Yahatanishi-ku, Kitakyushu,
 
806-0004 Japan,
 
 
Fax:
+81-93-645-8800
Email:
[***]

[Signature Page to Subordinated Convertible Promissory Note]