Exhibit 10.2

 

SUBSCRIPTION AGREEMENT

 

Digital Power Corporation

48430 Lakeview Blvd.

Fremont, CA 94538

 

Ladies and Gentlemen:

 

The undersigned (the “Investor”) hereby confirms its agreement with Digital
Power Corporation, a California corporation (the “Company”), as follows:

 

1.     This Subscription Agreement, including the Terms and Conditions for
Purchase of common stock of the Company, no par value (the “Common Stock”)
attached hereto as Annex I which are incorporated herein by this reference as if
fully set forth herein (the “Terms and Conditions” and, together with this
Subscription Agreement, this “Agreement”) is made as of the date set forth below
between the Company and the Investor.

 

2.     The Company has authorized the sale and issuance to the investor of
200,000 shares of Common Stock for an aggregate purchase price of USD$110,000
(the “Purchase Price”). The Investor will pay the Purchase Price by cancellation
of a promissory note in the principal face amount of $110,000 previously issued
by the Company to the Investor.

 

3.     The offering and sale of the Common Stock (the “Offering”) is being made
pursuant to (a) an effective Registration Statement on Form S-3, No. 333-215834
(the “Registration Statement”) filed by the Company with the Securities and
Exchange Commission (the “Commission”), including the Prospectus contained
therein (the “Base Prospectus”), (b) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the “Act”)), that have been or will be filed, if required,
with the Commission and delivered to the Investor on or prior to the date hereof
(the “Issuer Free Writing Prospectus”), containing only certain supplemental
information regarding the Common Stock, the terms of the Offering and/or the
Company, and (c) a Prospectus Supplement (the “Prospectus Supplement” and,
together with the Base Prospectus, the “Prospectus”) containing certain
supplemental information regarding the Common Stock and terms of the Offering
and the Company that has been or will be filed with the Commission and has been
delivered to the Investor prior to the Closing.

 

4.     The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 200,000 shares
of Common Stock for the Purchase Price. The Common Stock shall be purchased
pursuant to the Terms and Conditions.

 

5.     The manner of settlement of the shares of Common Stock purchased by the
Investor (the “Investor Shares”) shall be as follows:

 

Delivery by crediting the account of the Investor’s prime broker (as specified
by such Investor on Exhibit A annexed hereto) with the Depository Trust Company
(“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”) system, whereby
Investor’s prime broker shall initiate a DWAC transaction on the Closing Date
using its DTC participant identification number, and released by Computershare
Trust Company, the Company’s transfer agent (the “Transfer Agent”), at the
Company’s direction. NO LATER THAN 8:00 A.M. (EASTERN TIME) ON THE SECOND
BUSINESS DAY IMMEDIATELY AFTER THE DATE OF EXECUTION OF THIS AGREEMENT BY THE
INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

(I)     Deliver to the Company, this duly completed and executed Agreement and
the Purchase Price; and

 

(II)   DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED
WITH THE INVESTOR SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE
TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE INVESTOR SHARES.

 

 
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6.     The Investor represents that it has received (or otherwise had made
available to it by the filing by the Company of an electronic version thereof
with the Commission) the Base Prospectus, declared effective by the Commission
on February 8, 2017, which is a part of the Company’s Registration Statement and
the documents incorporated by reference therein, any Issuer Free Writing
Prospectus and the Prospectus Supplement (collectively, the “Disclosure
Package”), prior to or in connection with the receipt of this Agreement. The
Investor acknowledges that, prior to the delivery of this Agreement to the
Company, the Investor may receive certain additional information regarding the
Offering and the Company (the “Offering Information”). Such information may be
provided to the Investor by any means permitted under the Act, including the
Prospectus Supplement, a free writing prospectus and oral communications.

 

7.     No offer by the Investor to buy Common Stock will be accepted and no part
of the Investor Purchase Price will be delivered to the Company until the
Investor has received or has public access to the Disclosure Package and the
Offering Information and the Company has accepted such offer by countersigning a
copy of this Agreement, and any such offer may be withdrawn or revoked, without
obligation or commitment of any kind, at any time prior to the Company sending
(orally, in writing or by electronic mail) notice of its acceptance of such
offer. An indication of interest will involve no obligation or commitment of any
kind until the Investor has been delivered the Disclosure Package and Offering
Information and this Agreement is accepted and countersigned by or on behalf of
the Company.

 

8.     Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to the Investor:

 

(a)     Subsidiaries. The Company’s subsidiaries consist of (i) Digital Power
Limited, doing business as Gresham Power; (ii) Digital Power Lending, LLC; and
(iii) Microphase Corporation. Except for Microphase Corporation, the Company
owns directly all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities. The Company owns 56.4% of the outstanding shares of
common stock of Microphase Corporation.

 

(b)     Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of the
Transaction Documents, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”)) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

(c)    Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company and no further action is required by the Company and the Board of
Directors in connection herewith. The Transaction Documents have been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

 

 
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(d)     No Conflicts. The execution, delivery and performance by the Company of
the Transaction Documents to which it is a party, the issuance and sale of the
Shares and the consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

 

(e)     Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than: (i) the
filings required pursuant to Section 9.4 of this Agreement, and (ii) the notice
and/or application(s) to each applicable Trading Market for the issuance and
sale of the Shares and the listing of such Shares for trading thereon in the
time and manner required thereby (collectively, the “Required Approvals”).

 

(f)     Issuance of the Investor Shares; Registration. The Investor Shares are
duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company
has reserved from its duly authorized capital stock the maximum number of shares
of Common Stock issuable pursuant to this Agreement. The Company has prepared
and filed the Registration Statement in conformity with the requirements of the
Securities Act, which became effective on February 8, 2017, including the
Prospectus, and such amendments and supplements thereto as may have been
required to the date of this Agreement. The Registration Statement is effective
under the Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus has been issued by the Commission and no proceedings for that
purpose have been instituted or, to the knowledge of the Company, are threatened
by the Commission. The Company, if required by the rules and regulations of the
Commission, shall file the Prospectus with the Commission pursuant to Rule
424(b). At the time the Registration Statement and any amendments thereto became
effective, at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed and will conform in
all material respects to the requirements of the Securities Act and did not and
will 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 not misleading; and the Prospectus and any amendments or supplements
thereto, at time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, conformed and will conform in all material
respects to the requirements of the Securities Act and did not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

 

(g)   Capitalization. The capitalization of the Company as of the date of this
Agreement is as set forth as follows: (i) 12,354,546 share of Common Stock
outstanding; (ii) 100,000 shares of Series B Preferred Stock outstanding; (iii)
455,007 shares of Series C Preferred Stock outstanding; (iv) 378,776 shares of
Series D Preferred Stock outstanding; (v) 10,000 shares of Series E Preferred
Stock outstanding; (vi) outstanding options to purchase 2,716,000 shares of
Common Stock; (vii) outstanding warrants to purchase 7,171,162 shares of Common
Stock; and (viii) 1,320,000 shares of Common Stock that may be issued under
convertible notes. No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Other than the Series B Preferred
Stock, the issuance and sale of the Investor Shares will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Investors) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. The Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of the Board of
Directors or others is required for the issuance and sale of the Investor
Shares. There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

 

 

 
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(h)     SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

 

(i)     Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report filed prior
to the date hereof, (i) there has been no event, occurrence or development that
has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except as disclosed in the SEC Reports. The
Company does not have pending before the Commission any request for confidential
treatment of information. No event, liability, fact, circumstance, occurrence or
development has occurred or exists or is reasonably expected to occur or exist
with respect to the Company or its Subsidiaries or their respective businesses,
prospects, properties, operations, assets or financial condition that would be
required to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is
made.

 

(j)     Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Shares or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary any director or officer thereof (in his or her
capacity as such), is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty except as disclosed in an SEC Report. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer of the Company (in his or her capacity as such). The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

 

Other Agreements of the Parties.

 

9.1      Shares Sold Pursuant to a Registration Statement. If all or any portion
of the Investor Shares are sold at a time when there is an effective
registration statement to cover the resale of the Investor Shares, the Investor
shall be issued free of all legends. If at any time following the date hereof
the Registration Statement is not effective or is not otherwise available for
the sale or resale of the Investor Shares, the Company shall immediately notify
the holders of the Investor Shares in writing that such Registration Statement
is not then effective and thereafter shall promptly notify such holders when the
Registration Statement is effective again and available for the resale of the
Investor Shares (it being understood and agreed that the foregoing shall not
limit the ability of the Company to issue, or the Investor to sell, any of the
Investor Shares in compliance with applicable federal and state securities
laws).

 

 

 
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9.2     Furnishing of Information. Until the earliest of the time that the
Investor owns no Investor Shares, the Company covenants to maintain the
registration of the Common Stock under Section 12(b) or 12(g) of the Exchange
Act and to timely file (or obtain extensions in respect thereof and file within
the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not
then subject to the reporting requirements of the Exchange Act.

 

9.3     Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Shares for purposes of the rules and regulations of any Trading Market
such that it would require shareholder approval prior to the closing of such
other transaction unless shareholder approval is obtained before the closing of
such subsequent transaction.

 

 

9.4    Securities Laws Disclosure; Publicity; Rights Plan. The Company shall by
9:00 a.m. (New York City time) on the date after the execution of this
Agreement, file a Current Report on Form 8-K, including this Agreement as an
exhibit hereto, with the Commission. From and after the Form 8-K, the Company
represents to the Investor that it shall have publicly disclosed all material,
non-public information delivered to the Investor by the Company or any of its
Subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the issuance of Form 8-K, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, agents, employees
or Affiliates on the one hand, and any of the Investors or any of their
Affiliates on the other hand, shall terminate. The Company shall not publicly
disclose the name of the Investor, or include the name of the Investor in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of the Investor, except (a) as required by federal
securities laws and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the Investor
with prior notice of such disclosure permitted under this clause (b). No claim
will be made or enforced by the Company or, with the consent of the Company, any
other Person, that the Investor is an “Acquiring Person” under any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or similar anti-takeover plan or arrangement in effect or
hereafter adopted by the Company, or that the Investor could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Investor Shares under the Transaction Documents or under any other agreement
between the Company and the Investors.

 

9.5     Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, which
shall be disclosed pursuant to Section 9.4, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf will provide the
Investor or its agents or counsel with any information that constitutes, or the
Company believes constitutes, material non-public information, unless prior
thereto the Investor shall have consented to the receipt of such information,
which consent shall constitute the Investor’s agreement to keep such information
confidential. The Company understands and confirms that the Investor shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company. To the extent that the Company delivers any material, non-public
information to the Investor without the Investor’s consent, the Company hereby
covenants and agrees that the Investor shall not have any duty of
confidentiality to the Company, any of its Subsidiaries, or any of their
respective officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates not to trade on the basis of, such
material, non-public information, provided that the Investor shall remain
subject to applicable law. The Company understands and confirms that the
Investor shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.

 

 

 
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9.6     Indemnification of Investor. Subject to the provisions of this Section
9.6, the Company will indemnify and hold the Investor and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Investor (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, an
“Investor Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Investor Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in the Transaction
Documents or (b) any action instituted against the Investor Parties in any
capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Investor Parties, with respect to
any of the transactions contemplated by the Transaction Documents (unless such
action is based upon a breach of such Investor Party’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Investor Parties may have with any such stockholder or any
violations by such Investor Parties of state or federal securities laws or any
other conduct by such Investor Parties which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Investor Party in respect of which indemnity may be sought pursuant
to this Agreement, such Investor Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Investor Party. Any
Investor Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Investor Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Investor
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company will not be
liable to any Investor Party under this Agreement (y) for any settlement by an
Investor Party effected without the Company’s prior written consent, which shall
not be unreasonably withheld or delayed; or (z) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to any Investor
Party’s breach of any of the representations, warranties, covenants or
agreements made by such Investor Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 9.6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills relating to indemnifiable amounts
are received by the Company. The indemnity agreements contained herein shall be
in addition to any cause of action or similar right of any Investor Party
against the Company or others and any liabilities the Company may be subject to
pursuant to law.

 

9.7     Listing of Common Stock; Reservations of Common Stock. The Company
hereby agrees to use best efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and
concurrently with the Closing, the Company shall apply to list or quote all of
the Investor Shares on such Trading Market and promptly secure the listing of
all of the Investor Shares on such Trading Market. The Company further agrees,
if the Company applies to have the Common Stock traded on any other Trading
Market, it will then include in such application all of the Investor Shares, and
will take such other action as is necessary to cause all of the Underlying
Shares to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably necessary to continue
the listing or quotation and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. The Company agrees
to maintain the eligibility of the Common Stock for electronic transfer through
the Depository Trust Company or another established clearing corporation,
including, without limitation, by timely payment of fees to the Depository Trust
Company or such other established clearing corporation in connection with such
electronic transfer. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Investor Shares pursuant to this Agreement.

 

 
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Number of Shares of Common Stock: 200,000

 

Aggregate Investor Purchase Price: $110,000

 

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

 

 

Dated as of: August __, 2017  

 

 

 

 

 

 

 

                   

 

 

 

 

 

  INVESTOR                   By:            Print Authorized Signatory Name:    
            Title:                   Address:                                   
 

 

  

[Signature Page I to Digital Power Corporation Subscription Agreement]

 

 
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Agreed and Accepted
this ____th day of August, 2017:

 

 

 

 

Digital Power Corporation

 

By:__________________________________________

     Name: Amos Kohn

     Title: President and CEO

 

 

[Signature Page II to Digital Power Corporation Subscription Agreement]

 

 
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ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF COMMON STOCK

 

1.     Authorization and Sale of the Common Stock. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Common
Stock.

 

2.     Agreement to Sell and Purchase the Common Stock; Agent. At the Closing
(as defined in Section 3.1), the Company will sell to the Investor, and the
Investor will purchase from the Company, upon the terms and conditions set forth
herein, the number of shares of Common Stock set forth on the last page of the
Agreement to which these Terms and Conditions for Purchase of Common Stock are
attached as Annex I (the “Signature Page”) for the aggregate purchase price
therefor set forth on the Signature Page.

 

3.     Closing and Delivery of the Common Stock and Purchase Price.

 

3.1     Closing.      The completion of the purchase and sale of the Common
Stock (the “Closing”) shall occur at a place and time (the “Closing Date”) to be
specified by the Company and the Investor. At the Closing, (a) the Company shall
cause the Transfer Agent to deliver to the Investor the number of shares of
Common Stock set forth on the Signature Page registered in the name of the
Investor or, if so indicated on the Investor Questionnaire attached hereto as
Exhibit A, in the name of a nominee designated by the Investor, and (b) the
aggregate purchase price for the Common Stock being purchased by the Investor
will be delivered by or on behalf of the Investor to the Company.

 

3.2     Conditions to the Company’s Obligations. The Company’s obligation to
issue and sell the Common Stock to the Investor shall be subject to: (i) the
receipt by the Company of the purchase price for the Common Stock being
purchased hereunder as set forth on the Signature Page, (ii) the accuracy of the
representations and warranties made by the Investor and the fulfillment of those
undertakings of the Investor to be fulfilled prior to the Closing Date, and
(iii) the conditional acceptance of the Offering by the NYSE MKT.

 

4.     Representations, Warranties and Covenants of the Investor. The Investor
acknowledges, represents and warrants to, and agrees with, the Company that:

 

4.1     The Investor has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement, and (b) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
to the enforceability of any rights to indemnification or contribution that may
violate the public policy underlying any law, rule or regulation (including any
federal or state securities law, rule or regulation).

 

4.2     The Investor understands that nothing in this Agreement, the Prospectus,
the Disclosure Package, the Offering Information or any other materials
presented to the Investor in connection with the purchase of Common Stock
constitutes legal, tax or investment advice. The Investor has consulted such
legal, tax and investment advisors and made such investigation as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Common Stock.

 

5.     Survival of Representations, Warranties and Agreements; Third Party
Beneficiary. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Investor herein will survive the execution of this Agreement, the delivery to
the Investor of the shares of Common Stock being purchased and the payment
therefor.

 

6.     Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Investor.

 

 

 
Annex-1

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7.     Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and will not be deemed to be
part of this Agreement.

 

8.     Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

 

9.      Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law that would require the application of the laws of
any other jurisdiction.

 

10.     Counterparts. This Agreement may be executed in two or more
counterparts, each of which will constitute an original, but all of which, when
taken together, will constitute but one instrument, and will become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor along with
the Prospectus Supplement (or the filing by the Company of an electronic version
thereof with the Commission).

 

11.     Confirmation of Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of shares of Common Stock to such Investor.

 

 
Annex-2

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EXECUTION COPY

 

EXHIBIT A TO SUBSCRIPTION AGREEMENT

DIGITAL POWER CORPORATION

INVESTOR QUESTIONNAIRE

 

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:

 

1.

The exact name that your shares of Common Stock are to be registered in. You may
use a nominee name if appropriate:

   

2.

The relationship between the Investor and the registered holder listed in
response to item 1 above:

   

3.

The mailing address of the registered holder listed in response to item 1 above:

   

4.

The Social Security Number or Tax Identification Number of the registered holder
listed in the response to item 1 above:

   

5.

Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the shares of Common Stock are maintained):

   

6.

DTC Participant Number:

   

7.

Name of Account at DTC Participant being credited with the shares of Common
Stock:

   

8.

Account Number at DTC Participant being credited with the shares of Common
Stock.

 

 

Exhibit A-1