Item 1.01 Entry into a Material Definitive Agreement.
On September 5, 2016, Digital Power Corporation (the “
Company
”) entered into a Securities Purchase Agreement (the “
Agreement
”) with Philou Ventures, LLC, a Wyoming limited liability company (the “
Purchaser
”), and Telkoor Telecom Ltd., an Israeli company (the “
Seller
”) pursuant to which the Purchaser agreed to purchase all of the Seller’s 2,714,610 shares of the common stock in the Company, constituting approximately 40.06% of the Company’s outstanding shares of common stock. In consideration for such shares, the Purchaser agreed to pay Seller $1.5 million.
Pursuant to the Agreement, the Company entered into a Rescission Agreement with the Seller in order to resolve all financial issues between the parties, including the repurchase by Seller of 1,136,666 shares of common stock in Seller beneficially owned by the Company for their book value in Digital Power Corporation's financial statements as of June 30, 2016.
The Agreement includes customary representations, warranties and covenants by the parties as well as conditions to closing.
The Agreement provided that all of the directors of the Company other than Mr. Amos Kohn, are to resign as directors of the Company as of closing, and as soon as practicable after the closing, the Company is to take actions to enable four designees of the Purchaser to be appointed to the board of directors of the Company. On September 20, 2016, the Purchaser waived its rights to (i) require the resignation of Mr. Moti Rosenberg as a director of the Company and (ii) designate four (4) members to the Company's board of directors, and instead will have the right to designate only two (2) members to the board. The Purchaser agreed that one member of the Board may be designated by the remaining members of the Board immediately following Closing to fill one of the three vacancies on the Board.
The closing of the transactions under the Agreement and the Rescission Agreement occurred on September 22, 2016.
Pursuant to the Agreement, on September 22, 2016, Messrs. Israel Levi, Haim Yatim, and Ben-Zion Diamant resigned from the board of directors of the Company. On September 22, 2016, the remaining members of the board of directors of the Company filled one of the vacancies caused by the resignation of the foregoing directors by appointing Mr. Robert O. Smith to the board of directors. Following this appointment, the Company's board of directors currently consists of Messrs. Amos Kohn, Moti Rosenberg and Robert O. Smith.
Under the terms of the Agreement following the execution of the waiver referred to above, as soon as reasonably practicable after the closing, the Company is to take actions to enable two designees of the Purchaser to be appointed to the board of directors of the Company. The appointment of the Purchaser designees to the board of directors will be subject to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 thereunder.
The above descriptions of the Agreement and Rescission Agreement do not purport to be complete and are qualified in their entirety by reference to the Agreement and Rescission Agreement which are attached hereto as Exhibits 10.1 and 10.2, respectively, on the Company's Current Report on Form 8-K dated September 7, 2016.