EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of
________, 2004, by and between Digital Power Corporation, a California
corporation (the "Company") and _____________________________ (the "Purchaser").
WHEREAS, the Company desires to sell shares of its common stock, no par
value, to the Purchaser who is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D, promulgated by the United States Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the
"Securities Act") upon the terms and conditions contained herein; and
WHEREAS, the Purchaser desires to purchase shares of common stock of the
Company upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, for and in consideration of the premises and the mutual
representations, warranties, covenants, and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. PURCHASES
1.1 Purchase of Common Stock. Upon the terms and subject to the conditions
set forth in this Agreement, the Purchaser hereby agrees to purchase from the
Company and the Company hereby agrees to issue and sell to the Purchaser on the
Closing Date, as defined below, _______ shares of common stock of the Company
(the "Common Stock"). The per share price shall be the average closing price of
the Company's shares of common stock during the twenty (20) trading days
immediately preceding _______, 2004, or $____ per share for a total purchase
price of $__________ (the "Consideration"). All references to dollars in this
Agreement shall mean United States dollars.
1.2 Additional Common Stock. Upon the terms and subject to the conditions
set forth in this Agreement, the Company and the Purchaser hereby agree that the
Purchaser shall be entitled, at its sole discretion, to purchase from the
Company (and the Company shall be obliged to issue and sell, if so elected by
the Purchaser) at any time before or on December 31, 2004, the number of shares
of common stock of the Company (the "Additional Common Stock") equal to the
quotient of (i) Two Hundred Fifty Thousand dollars ($250,000); divided by (ii)
the average closing price of the Company's shares during the twenty (20) trading
days immediately preceding the date of delivery of a written notice (a
"Notice"). The purchase price of the Additional Common Stock shall be the
average trading price of the Company's shares during twenty (20) day trading
period immediately preceding the date of delivery of a Notice (the "Additional
Consideration"). The Notice shall specify the number of shares of Additional
Common Stock to be purchased and the aggregate amount to be paid in
consideration thereof.
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The Common Stock and the Additional Common Stock are, collectively,
referred to herein as the "Securities".
1.3 Wire Transfer Instructions. The Consideration and the Additional
Consideration will be delivered to the Company by the Purchaser via wire
transfer upon written instruction to be delivered to the Purchaser by the
Company.
1.4 Closing Date. The closing of all transaction contemplated hereby,
including the issuance of the shares of Common Stock, shall be on ________, 2004
(the "Closing Date") at the offices of the Company.
1.5 Delivery of Shares of Common Stock on the Closing Date. On the Closing
Date, the Company shall deliver, (i) against payment therefore, certificate
representing the shares of Common Stock; and (ii) all other documents required
to be delivered on the Closing Date pursuant to this Agreement. The shares of
Common Stock and the Additional Common Stock, if and when issuable, will be duly
authorized and issued to the Purchaser. The certificate evidencing the shares of
Common Stock and the Additional Common Stock (if and to the extent issuable) as
delivered to the Purchaser will be in due and proper legal form.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchaser as of the date
hereof and on the Closing Date as follows:
2.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, with all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as it is now being conducted,
and is qualified or licensed to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where its failure
so to qualify to be licensed would not have a material adverse effect on the
Company.
2.2 Capitalization and Voting Rights. On the Closing Date, the
authorized capital stock of the Company will consist of 10,000,000 shares of
Common Stock, no par value, of which 5,710,703 shares shall be issued and
outstanding, excluding the Common Stock to be issued under this Agreement, and
2,000,000 shares of Preferred Stock, no par value, of which no shares are issued
and outstanding. All of such issued and outstanding shares of common stock
(including the shares of Common Stock to be issued hereunder and the Additional
Common Stock, if and when issued) are and will be validly issued, fully paid and
the holders thereof are not entitled to any preemptive or other similar rights
other than as set forth in Schedule 2.2. The rights, privileges, preferences and
restrictions of the Common Stock and Preferred Stock are as stated in the
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Company's Articles of Incorporation, which have not been changed since September
6, 2001. Schedule 2.2 contains a capitalization table which includes all
securities issued by the Company (on a fully diluted basis) as of the Closing
Date, immediately prior to the issuance of the shares of Common Stock hereunder.
All of such issued and outstanding securities have been validly issued and the
holders thereof will not be entitled to any preemptive or other similar rights,
except as set forth in Schedule 2.2. Except as set forth in Schedule 2.2, there
are no outstanding rights, plans, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of capital stock.
2.3 Authorization: Validity. The Company has full corporate power and
authority to enter into the Agreement and to carry out its obligations
thereunder. When issued in accordance with this Agreement and the shares of
Common Stock and the shares of Additional Common Stock, respectively, will be
validly issued, fully paid and nonassessable. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby,
including without limitation, the issuance of the Common Stock and the
Additional Common Stock hereunder, have been duly authorized by the Board of
Directors of the Company, which authorization remains in full force and effect
and has not been modified or amended by any subsequent action of such Board of
Directors, and no other corporate actions or proceedings on the part of the
Company is necessary to authorize the Agreement or the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligations of the
Company enforceable in accordance with their terms.
2.4 No Violation. The execution, delivery and performance by the Company of
the Agreement and the consummation by it of the transactions contemplated
thereby, including, without limitation, the issuance, sale and delivery of the
shares of Common Stock and the Additional Common Stock, do not require the
consent, waiver, approval, license or authorization of or filing of any notice
or report with any person, entity or public authority and will not violate,
result in a breach of or the acceleration of any obligation under, or constitute
a default under, any provision of the Company's Articles of Incorporation or
Bylaws or any indenture, mortgage, lien, lease, agreement, contract, instrument,
order, judgment, decree, law, ordinance or regulation to which any property of
the Company is subject or by which the Company is bound or result in the
creation or imposition of any lien, claim, charge, restriction, equity or
encumbrance of any kind whatsoever upon, or give to any other person any
interest or right in or with respect to, any of the properties, assets,
business, agreements or contracts of the Company.
2.5 Compliance With Law. To the best of its knowledge, the Company and its
subsidiary are in compliance with the governmental laws, environmental laws,
safety laws, codes, orders, rules, regulations and requirements applicable to
its business and conditions of employment, except where noncompliance could not
reasonably be expected to have a material adverse effect on the business,
assets, properties or financial condition of the Company and its subsidiary. The
Company and its subsidiary have obtained all permits, licenses, variances,
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exemptions, orders, contracts and approvals from Federal, state, local and
foreign governmental and regulatory bodies which are material, singularly or in
the aggregate, to the operation of its business (collectively, the "Permits" and
each individually, a "Permit"). The Company and its subsidiary are in compliance
with the material terms of each Permit and with all requirements, standards and
procedures of the federal, state, local and foreign governmental or regulatory
bodies which issued the Permits or any of them and there does not exist under
any of the Permits any default or event of default or event which with notice or
lapse of time or both would constitute an event of default by the Company or its
subsidiary.
2.6 Tax Matters. The Company and its subsidiary have fully and timely,
properly and accurately filed all material tax returns and reports required to
be filed by them, including all federal, foreign, state and local returns and
reports for all years and periods for which any such returns or reports were
due. All income, sales, use, occupation, property, or other taxes or assessments
due from the Company and its subsidiary have been paid, and there are no pending
assessments, asserted deficiencies or claims for additional taxes that have not
been paid. There are no tax liens on any property or assets by any applicable
government agency except those not yet due. No state of facts exists or has
existed which would constitute grounds for the assessment of any penalty or any
further tax liability beyond that shown on the respective tax reports or
returns. There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, state or local income tax return
or report for any period. All taxes which the Company or its subsidiary have
been required to collect or withhold have been duly withheld or collected and,
to the extent required, have been paid to the proper taxing authority.
Currently, the Company is under audit by the Internal Revenue Service for the
year 2002.
2.7 SEC Filings. The Company previously has delivered to the Purchaser a
copy of the Company's Annual Report on Form 10-KSB for the year ended December
31, 2003, and the quarterly reports on Form 10-Q for the quarters ended March
31, 2004, Proxy Statement for the annual shareholders meeting held on August 4,
2003 and the current report on Form 8-K filed on May 20, 2004 (collectively, the
"Reports"). Since 1996, the Company has made all filings required to be made by
it under the Securities Act, the Securities Exchange Act of 1934 (the "1934
Act") and the securities laws of any state, and any rules and regulations
promulgated thereunder. The consolidated financial statements of the Company
included in the Reports have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated in the
notes thereto) and fairly present the financial position of Company as at the
dates thereof and the results of its operations and changes in cash flows for
the periods then ended. The information contained in the Reports is or was
accurate and complete as of the date given. No stop order asserting that any of
the transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued by the SEC. The Reports, at
the time they were or are hereafter filed or last amended, as the case may be,
with the SEC, complied and will comply in all material respects with the
requirements of the 1934 Act. Neither the Agreement nor the Reports, taken as a
whole, contain any untrue statement of material fact or omit to state a material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. To the best of the
Company's knowledge, it is not currently under investigation by the SEC, AMEX or
other governmental authority.
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2.8 As of the Closing Date, Real Property. As of the Closing Date, the
Company and its subsidiary own all real property described in the Reports. All
real property leases of the Company and its subsidiary as described in the
Reports are in full force and effect and the Company or subsidiary is not in
breach thereof.
2.9 As of the Closing Date, Intellectual Property. As described in the
Reports, the Company owns or possesses all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names ("Intellectual Property")
currently employed or utilized by it in connection with the business now
operated and proposed to be operated. The Company has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property. The description of the Intellectual Property in the
Reports does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2.10 AMEX Compliance. The Company does and will take all necessary actions
to ensure its continued inclusion in, and the continued eligibility of the
Common Stock for listing on, the AMEX under all currently effective and
currently proposed inclusion requirements.
2.11 Private Offering. Subject to the accuracy of the representations of
the Purchaser in Section 3 hereof, the offer, sale and issuance of the shares of
Common Stock and the Additional Common Stock constitute a transaction exempt
from the registration requirements of Section 5 of the Securities Act and
neither the Company nor anyone acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.12 Undisclosed Litigation. Except the Tek-Tron dispute, the Company
and/or the subsidiary thereof are not currently involved in, and to the best
knowledge of the Company, there is no threat of, any material civil, criminal,
administrative action, suit, claim, hearing, investigation or proceeding.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser understands that the issuance and sale of the Securities have
not been registered under the Securities Act on the grounds that the issuance
and sale of such Securities to the Purchaser is exempt pursuant to Section 4(2)
of the Securities Act and/or Regulation D promulgated under the Securities Act
or Regulation S promulgated under the Securities Act, and that the reliance of
the Company on such exemptions is predicated in part on the Purchaser's
representations, warranties, covenants and acknowledgments set forth in this
Section 3.
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3.1 Authorization. The Purchaser represents and warrants to the Company
that he is a resident of the state set forth in Section 10.4.
3.2 Purchase Without View to Distribute. The Purchaser represents and
warrants to the Company that the shares of Common Stock, being purchased by him
are being acquired for his own account, not as a nominee or agent, and not with
a view to resale or distribution within the meaning of the Securities Act and
the rules and regulations thereunder.
3.3 Restrictions on Transfer.
(a) The Purchaser (i) acknowledges that the Securities are not
registered under the Securities Act and that the Securities must be held
indefinitely by him unless they are subsequently registered under the Securities
Act or an exemption from registration is available, (ii) is aware that any
routine sales of the Securities under Rule 144 promulgated by the SEC under the
Securities Act may be made only in limited amounts and in accordance with the
terms and conditions of that Rule and that in such cases where the Rule is not
applicable, compliance with some other registration exemption will be required,
(iii) is aware that Rule 144 is not presently available for use by the Purchaser
for resale of any such Securities and that there can be no assurance that Rule
144 will be available at any time in the future, (iv) is aware that, except as
provided in Section 6 hereof, the Company is not obligated to register under the
Securities Act any sale, transfer or other disposition of the Securities , (v)
is aware that the Company shall not be required to register the transfer of the
Securities on the books of the Company unless the Company shall have been
provided with an opinion of counsel satisfactory to him prior to such transfer
to the effect that registration under the Securities Act or any applicable state
securities law has been effected or is not required in connection with the
transaction resulting in such transfer, and (vi) is aware that the Securities,
and each certificate representing the shares of Common Stock, the Additional
Common Stock and any shares of common stock or other securities issued in
respect of such shares of Common Stock or shares of Additional Common Stock upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted by paragraph (b) of this
Section 3.3) be stamped or otherwise imprinted with the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
AND MAY NOT BE SOLD, OFFERED TO SALE, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT RELATING TO THE SECURITIES WHICH IS EFFECTIVE
UNDER THE SECURITIES ACT, (ii) RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OR (iii) AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE."
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(b) The restrictions on the transferability of the shares of Common
Stock and the Additional Common Stock shall cease and terminate when such shares
of Common Stock and the Additional Common Stock, respectively, shall have been
registered under the Securities Act and are proposed to be sold or otherwise
disposed of in accordance with an intended method of disposition set forth in
the registration statement covering such Common Stock and Additional Common
Stock required by Section 6.1 or 6.2 or any other applicable registration
statement, or when such shares of Common Stock or Additional Common Stock are
transferable in accordance with the provisions of Rule 144(k) promulgated under
the Securities Act. Whenever the restrictions on transfer shall terminate as
hereinabove provided with respect to any of the shares of Common Stock or
Additional Common Stock, the holder of any such shares of Common Stock or
Additional Common Stock bearing the legend set forth in paragraph (a) of this
Section 3.3 as to which such conditions shall have terminated shall be entitled
to receive from the Company, without expense (except for the payment of any
applicable transfer tax) and as expeditiously as possible, new stock
certificates not bearing such legend.
3.4 Access to Information. The Purchaser acknowledges that he has been
provided with a copy of the Reports and has carefully reviewed the same. The
Purchaser further acknowledges that the Company has made available to him the
opportunity to ask questions of and receive answers from the Company's officers
and directors concerning the terms and conditions of the offering and the
business and financial condition of the Company, and to acquire, and the
Purchaser has received to its satisfaction, such information about the business
and financial condition of the Company and the terms and conditions of the
offering as he has requested.
3.5 Additional Representations of the Purchaser. The Purchaser represents
that (i) he is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act, or is a non-U.S. person as such term is
defined in Regulation S, (ii) its financial situation is such that he can afford
to bear the economic risk of holding the securities for an indefinite period of
time and suffer complete loss of its investment in the securities, (iii) he has
the funds necessary to purchase the Common Stock immediately available to him
and (iv) his knowledge and experience in financial and business matters are such
that he is capable of evaluating the merits and risks of its purchase of the
Common Stock as contemplated by this Agreement.
SECTION 4. COVENANTS OF THE COMPANY.
4.1 Consummation of Agreement. The Company shall perform and fulfill all
conditions and obligations on its part to be performed and fulfilled under the
Agreement, to the end that the transactions contemplated by the Agreement shall
be carried out. The Company has obtained all necessary authorizations or
approvals of its Board of Directors for the execution and performance of the
Agreement, which include as integral parts thereof the issuance to the Purchaser
of the Securities upon the terms and conditions set forth in the Agreement.
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4.2 Securities Compliance. The Company agrees to file a Form D with the SEC
within fifteen days of the date of the Closing and to file, on a timely basis,
any amendments or supplements to such Form D as may be required under Regulation
D promulgated under the Securities Act. The Company also agrees to comply with
the filing requirements of AMEX applicable to the sale of the shares of Common
Stock hereunder. All expenses, costs and fees incurred in connection with this
Section 4.2 shall be borne by the Purchaser.
4.3 Good Faith Effort to Effect Transfers. Upon registration of the shares
of Common Stock, or the termination under the provisions of Rule 144 of the
restriction on transfer, the Company agrees to issue or cause its corporate and
securities counsel to issue all required consents or opinions that may be
required to effect the transfer of the Securities and removal of any legend on
such shares of Common Stock upon transfer. The Company agrees that he shall use
all reasonable best efforts to cause such consents or opinions of counsel to be
transmitted to the Company's transfer agent within 72 hours of receipt of a
request by the Purchaser, provided that all required certifications or
representations required to effect such transfer have been provided with such
request. The Company will pay all legal expenses required to effect such
transfer contemplated by this Section 4.3.
SECTION 5. OMITTED
SECTION 6. REGISTRATION.
6.1 Piggyback Registration. If, at any time, the Company shall determine to
register any of its securities for its own account or for the account of others,
other than a registration relating solely to "employee benefit plans" (Form
S-8), or a registration relating solely to an SEC Rule 145 transaction (Form
S-4), or a registration on any registration form which does not permit secondary
sales, the Company will give written notice to the Purchaser of its intention to
effect such a registration not later than thirty (30) calendar days prior to the
anticipated date of filing with the SEC of a registration statement with respect
to such registration. Such notice shall offer the Purchaser the opportunity to
include in such registration statement all or part of the Registerable
Securities of Common Stock (a "Piggyback Registration"). Subject to the
provisions hereof, the Company shall include in such Piggyback Registration all
Registerable Securities of Common Stock with respect to which the Company has
received a written request from the Purchaser for inclusion therein within
fifteen (15) calendar days after the receipt by the Company of Purchaser's
notice. The Company shall be obligated to effect not more than one (1) Piggyback
Registration.
If a Piggyback Registration is being made with respect to an underwritten
registration on behalf of the Company and the managing underwriter or
underwriters advise the Company in writing that in their opinion the total
number or dollar amount of securities of any class requested to be included in
such registration is sufficiently large to adversely affect the success of such
offering, the Company shall include in such registration: (i) first, all
securities the Company proposes to sell to the public, the proceeds of which
shall go to the Company (ii) second, up to the full number of the Registerable
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Securities of Common Stock or Additional Common Stock requested to be included
in such registration in excess of the number or dollar amount of securities the
Company proposes to sell which, in the opinion of such managing underwriter or
underwriters, can be sold without adversely affecting the offering.
6.2 Expenses. All expenses incurred in connection with any registration
pursuant to this Section 6, including without limitation, all registration,
filing and qualification fees (including those attributable to the Registrable
shares of Common Stock), printing expenses, fees and disbursements of counsel
for the Company and fees and expenses of counsel for the Company incurred
pursuant to Section 6 of this Agreement and expenses of any comfort letters or
special audits of the Company's financial statements incidental to or required
by such registration shall be borne by the Company (excluding underwriting
discounts and selling commissions payable with respect to the sale of
Registrable shares of Common Stock or Additional Common Stock).
6.3 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 6,
the Company will, at its expense:
(a) keep such registration statement effective and file any necessary
post-effective amendments and use its best efforts to maintain the effectiveness
thereof until the earlier of (i) such time as the Company reasonably determines,
based upon an opinion of counsel, that the Purchaser will be eligible to sell
all of the Registrable shares of Common Stock then owned by the Purchaser
without registration in the open market in compliance with the Securities Act
and without regard to volume restrictions or (ii) for a period of 18 months from
the date of effectiveness of the Registration Statement;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement as may be necessary to keep such registration,
qualification or compliance effective and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered thereby
during the applicable period;
(c) update, correct, amend and supplement such registration,
qualification or compliance as necessary;
(d) furnish such number of preliminary and final prospectuses and
other documents incident thereto as the Company from time to time may reasonably
request;
(e) register or qualify such Registrable shares of Common Stock for
offer and sale under the Blue Sky or securities laws of such jurisdictions as
the Company may reasonably designate to enable him to consummate the disposition
of the Registrable shares of Common Stock in such jurisdiction, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any State;
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(f) timely file all reports required to be filed by it under the
Securities Act or the 1934 Act and the rules and regulations adopted by the SEC
thereunder, all to the extent required to enable the Purchaser to sell the
Registrable shares of Common Stock without registration under the Securities Act
pursuant to (i) Rule 144 adopted by the SEC under the Securities Act, as such
rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC;
(g) take all action necessary to render the Registrable shares of
Common Stock eligible for inclusion on AMEX for trading thereon; and
(h) upon the sale of any Registrable shares of Common Stock pursuant
to such Registration Statement remove all restrictive legends from all
certificates or other instruments evidencing the Registrable shares of Common
Stock.
6.4 Further Information. If Registrable shares of Common Stock owned by the
Purchaser are included in the Registration Statement, such Purchaser shall
furnish to the Company such information regarding itself as the Company may
reasonable request and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 6.
SECTION 7. INDEMNIFICATION.
7.1 Indemnification of the Purchaser. The Company agrees to indemnify and
hold harmless, to the extent permitted by law, the Purchaser, its directors and
officers and each person who control the Purchaser (within the meaning of the
Securities Act) against any and all losses, claims, damages, liabilities and
expenses caused, by arising out of or directly or indirectly relating to (i) any
inaccuracy in or any breach of the representations, warranties, covenants and
agreements of the Company contained in the Agreement and all Schedules and
Exhibits thereto; or (ii) any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus filed pursuant to Section 6 hereof or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the Purchaser expressly for use in such registration statement or
prospectus. Notwithstanding anything to the contrary herein, the Purchaser shall
be entitled to receive the indemnification amount (i) in cash; (ii) by issuance
of additional shares of common stock of the Company in the amount (based on the
price per share at which the shares of Common Stock have been puchased under
this Agreement) equivalent to the indemnification amount (as determined in good
faith by the Company's Board of Directors), which shares shall be issued to the
Purchaser by the Company for no consideration; or (iii) any combination of cash
and shares, provided all such issuances of shares are in compliance with federal
securities laws.
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7.2 Indemnification of the Company. The Purchaser agrees to furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any registration statement or prospectus and
agrees to indemnify and hold harmless, to the extent permitted by law, the
Company, its directors and officers and each person who controls the Company
(within the meaning of the Securities Act) against any and all losses, claims,
damages, liabilities and expenses caused by (i) any breach of the
representations, warranties, covenants, and agreements of the Purchaser
contained in this Agreement; or (ii) any untrue or alleged untrue statement of
material fact or any omission of a material fact required to be stated in any
registration statement, prospectus or preliminary prospectus filed pursuant to
Section 6 hereof or necessary to make the statements therein not misleading, but
only to the extent that such untrue or alleged untrue statement or omission is
contained or omitted in any information or affidavit so furnished in writing by
the Purchaser, and in no event will the Purchaser be obligated to indemnify the
Company, its directors, officers or any person who controls the Company in an
amount in excess of the proceeds to be derived from the sale of Registerable
Securities of Common Stock in the offering giving rise to a claim for
indemnification.
7.3 Contribution. If the indemnification provided for in this Section 7 is
judicially determined to be unavailable to an indemnified person in respect of
any losses, claims, damages or liabilities referred to herein, then, in lieu of
indemnifying such indemnified person hereunder, each party shall contribute to
the amount paid or payable by such indemnified person as a result of such
losses, claims, damages or liabilities (and expense relating thereto) (i) in
such proportion as is appropriate to reflect the relative benefits to the
Company, on the one hand, and the Purchaser, on the other hand, or (ii) if the
allocation provided by clause (i) above is not available, in such proportion as
is appropriate to reflect not only the relative benefits referred to in such
clause (i) but also the relative fault of each, as well as any other relevant
equitable considerations.
7.4 Defense of Action. Any person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it or him seeks indemnification; and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is not
assumed, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). An indemnifying party will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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7.5 Remedies Non Exclusive. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
SECTION 8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.
8.1 Conditions. The obligations of the Purchaser to consummate the
Agreement and the transactions contemplated hereby are subject to the
satisfaction of the following conditions on or prior to the Closing Date except
to the extent that any such condition can be and is waived by the Purchaser:
(a) Representations; Warranties; Covenants. Each of the
representations and warranties of the Company contained in Section 2 hereof
shall be true and correct in all material respects as though made at the time of
and as of the Closing Date; the Company shall, at or before the Closing Date,
have performed all of its obligations hereunder which by the terms hereof are to
be performed on or before the Closing Date, including the covenants set forth in
Section 4.
(b) Certificate of Good Standing. The Company will deliver a
Certificate of Good Standing of the Company issued by the California Secretary
of State as of the Closing Date. The Good Standing Certificate is attached
hereto as Exhibit 8.1(b).
(c) Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
foreign country that are required in connection with the lawful issuance and
sale of the shares of Common Stock pursuant to this Agreement shall be duly
obtained and effective as of the Closing Date.
(d) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Purchaser's special counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
SECTION 9. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS.
9.1 Conditions. The obligations of the Company to consummate the Agreement
and the transactions contemplated hereby are subject to the satisfaction of the
following conditions on or prior to the Closing Date except to the extent that
any such condition can be and is waived by the Company:
9.2 Representations; Warranties; Covenants. Each of the representations and
warranties of the Purchaser contained in Section 3 hereof shall be true and
correct in all material respects as though made at the time of and as of the
Closing; the Purchaser shall, at or before the Closing, have performed all of
its obligations hereunder which by the terms hereof are to be performed on or
before the Closing. Unless the Company receives written notification to the
contrary at the Closing, the Company shall be entitled to assume the preceding
is accurate at the Closing.
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SECTION 10. MISCELLANEOUS.
10.1 Law Governing. This Agreement shall be construed under and governed by
the laws of the State of California applicable to contracts made and to be fully
performed therein.
10.2 Arbitration. Disputes arising under this Agreement other than under
Section 1.3 shall be settled by three arbitrators pursuant to the rules of the
American Arbitration Association (the "AAA") for Commercial Arbitration (the
"Rules"). Such arbitration shall be held in Alameda County, California or New
York, New York, at the Purchaser's option, or at such other location as mutually
agreed to by the parties to the dispute. Subject to any applicable limitations
contained in this Agreement, arbitration may be commenced at any time by any
party giving notice to the other party that a dispute has been referred to
arbitration under this Section 10.2. The arbitrators shall be selected by the
joint agreement of the parties hereto, but if they do not so agree within twenty
(20) days after the date of the notice referred to above, the selection shall be
made pursuant to the Rules from the panel of arbitrators maintained by the AAA.
Any award of the arbitrators shall be accompanied by a written opinion giving
the reasons for the award. The expense of the arbitration shall be borne by the
parties in the manner determined in writing by the arbitrators. This arbitration
provision shall be specifically enforceable by the parties. The determination of
the arbitrators pursuant to this Section 10.2 shall be final and binding on the
parties and may be entered for enforcement before any court of competent
jurisdiction.
10.3 Broker or Finder. The Purchaser represents and warrants that no broker
or finder has acted for such party in connection with this Agreement or the
transactions contemplated by this Agreement and that no broker or finder is
entitled to any broker's or finder's fee or other commission in respect thereof
based in any way on agreements, arrangements or understandings made by the
Purchaser.
10.4 Notices. All notices or other communications required or permitted
hereunder shall be in writing (except as otherwise provided herein) and shall be
deemed duly given when received by delivery in person, by facsimile, telex or
telegram or by an overnight courier service or three (3) days after deposit in
the U.S. Mail, certified with postage prepaid, addressed as follows:
If to the Company: Digital Power Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ Wax, CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
13
With copies to: ▇▇▇▇▇▇ Eng & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Eng, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser: --------------------------
--------------------------
--------------------------
With copies to: --------------------------
--------------------------
--------------------------
or to such other addresses as a party may designate by five (5) days' prior
written notice to the other party.
10.5 Survival of Representations, Warranties and Covenants. Notwithstanding
any investigation made by any party to this Agreement, all representations,
warranties, covenants and obligations made by the Company and the Purchaser
herein shall survive indefinitely the execution of this Agreement and the sale
and delivery of the shares of Common Stock and shares of Additional Common
Stock.
10.6 Entire Agreement. This Agreement, including the exhibits and schedules
referred to herein, is complete and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof, and all inducements to the making of this Agreement relied upon by
either party hereto, have been expressed herein or in such exhibits and
schedules.
10.7 Assignment. This Agreement may not be assigned by either the Purchaser
or the Company without the prior written consent of the other party. This
Agreement shall be enforceable by and shall inure to the benefit of and be
binding upon the parties hereto and their successors and no others.
10.8 Fees and Expenses. Except as otherwise specifically provided herein,
each party will bear its own expenses in connection with the negotiation and
consummation of the transactions contemplated by this Agreement.
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10.9 Publicity and Disclosure. Except as may be required by federal
securities laws, no press release or public disclosure, either written or oral,
of the transactions contemplated by this Agreement shall be made by the
Purchaser without the prior approval of the Company.
10.10 Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
10.11 Amendments and Waivers. Except as otherwise provided herein, any
provision in any of the Agreement may be amended or waived only if the Company
and the Purchaser consent in writing.
[THIS SPACE WAS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above.
COMPANY
DIGITAL POWER CORPORATION
By: ______________________________
▇▇▇▇▇▇▇▇ Wax, Chief Executive Officer
PURCHASER
By: ________________________________