TECHNOLOGY TRANSFER AGREEMENT
1. Parties. The parties ("the Parties") to this technology
transfer agreement ("this Agreement") are Digital Power
Corporation ("Digital") on the one hand, and Ki ▇▇▇▇ ▇▇▇▇
("Kang") and KDK Electronics, Inc. ("KDK"), on the other.
2. Effective Date. This Agreement is effective September 3,
1998 ("the Effective Date").
3. Recitals.
3.1. Digital has entered into certain agreements with Kang
and KDK ("the Agreements"), consisting of,
a) a certain design acquisition agreement dated
November 10, 1987 between Digital and Kang, a copy
of which is attached hereto as Exhibit 1.
b) a certain agreement dated June 29, 1990 between
KDK and Digital, a copy of which is attached
hereto as Exhibit 2.
c) all other agreements between or among Digital,
Kang, and KDK on or before September 2, 1998.
3.2. Digital wishes to acquire, from Kang and KDK, the clear
right, in perpetuity, to use, without the payment of
any further royalties or other consideration of any
kind, other than that provided under this Agreement,
certain technology received from Kang and KDK.
3.3. Digital believes that the technology to be acquired by
this Agreement will have substantial value to it over a
period of at least five years.
3.4. As a result of the foregoing, and for valuable
consideration, including the mutual covenants in this
Agreement, the Parties agree as follows:
4. Covenants.
4.1. Payment. Digital will pay a total of one hundred forty
thousand dollars ($140,000) to KDK and will issue a
total of thirty five thousand shares of its common
stock (the "Stock") to Kang and Soonho ▇▇▇ ▇▇▇▇. The
one hundred forty thousand dollars ($140,000) will be
paid as follows:
a) $7,000 due September 15, 1998,
b) $7,000 due November 1, 1998,
c) $10,000 due January 1, 1999, and
d) $7,000, or such lesser amount as may be necessary
to pay the entire balance, due on the first of
each month thereafter until the entire one hundred
forty thousand dollars ($140,000) is paid.
There will be a three day grace period after each due date
during which the payment may be made without penalty or
interest. Thereafter, Digital will incur simple interest of
ten percent per annum on any overdue amounts.
The Stock will be issued to Kang and Soonho ▇▇▇ ▇▇▇▇ as
community property as of the Effective Date. The
certificates will be issued within one hundred twenty (120)
days of the Effective Date. The Parties agree that, for
accounting and tax purposes, the value of the Stock will be
the closing price as reported in the Wall Street Journal as
of the Effective Date.
4.2. Technology Transfer. Digital, its successors, and its
assigns shall forever have the right to produce, sell,
incorporate, and otherwise use all products, designs,
technology, and intellectual property that it may have
received from Kang or KDK, pursuant to the Agreements
or otherwise, in any way that it wishes, without
limitation and without any obligation of any kind to
Kang, KDK, or anyone else. All contrary provisions of
the Agreements are hereby revoked and superseded.
Without limitation, under no circumstances will Digital
be obligated to pay any royalty, grant any option, or
transfer any stock to Kang or KDK other than any
payment or transfer that may be required under this
Agreement. All obligations of Digital of any kind to
Kang or KDK other than those in this Agreement are
hereby canceled, revoked, and superseded.
4.3. Restricted Securities. In order to enable Digital to
comply with the federal Securities Act of 1933 and
applicable state laws, Digital may require Kang and
Soonho ▇▇▇ ▇▇▇▇, as a condition of the issuance of the
Stock, to give written assurances satisfactory to
Digital, and Kang does hereby represent, that the
Shares are being acquired for their own account, for
investment only, with no view to the distribution of
the same, and that any disposition of all or any
portion of the shares shall not be made, unless and
until:
(a) There is then in effect a registration
statement under the Securities Act covering such
proposed disposition and such disposition is made in
accordance with such registration statement; or
(b)(i) Kang has notified Digital of the proposed
disposition and he has furnished Digital with a
detailed statement of the circumstances surrounding the
proposed disposition, and (ii) Kang has furnished
Digital with an opinion of counsel, reasonably
satisfactory to Digital, that such disposition will not
require registration of such securities under the
Securities Act and applicable state law.
Kang acknowledges that the Shares will be restricted
securities, that it understands the provisions of Rule
144 of the Securities and Exchange Commission, and that
the certificate or certificates evidencing such shares
of Common Stock will bear a legend substantially
similar to the following:
"The Shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or under the securities laws of any state.
They may not be sold,~transferred, or otherwise
disposed of in the absence of an effective registration
statement covering these securities under the said Act
or laws, or an opinion of counsel satisfactory to
Digital and its counsel that registration is not
required thereunder."
4.4. Adjustment for Changes in Capitalization. This
Agreement shall not affect Digital's right to effect
adjustments, recapitalizations, reorganizations, or
other changes in its or any other corporation's capital
structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Shares, the
dissolution or liquidation of Digital's or any other
corporation's assets or business, or any other
corporate act, whether similar to the events described
above or otherwise. If, before the certificate for the
Shares is issued to Kang and Soonho ▇▇▇ ▇▇▇▇, the
outstanding shares of Digital's common stock are
increased or decreased in number or changed into or
exchanged for a different number or kind of securities
of Digital or any other corporation by reason of a
recapitalization, reclassification, stock split,
reverse stock split, combination of shares, stock
dividend, or other similar event, an appropriate
adjustment of the number of the Shares issued under
this Agreement will be made to preserve the
proportional beneficial interest in the assets of
Digital represented, as of the Effective Date, by the
Shares.
5. Representations and Warranties.
5.1. Authority. The Parties represent and warrant that
they, through the signatories indicated below, are duly
authorized to enter into this Agreement, to make its
warranties and representations, to perform its
covenants, and to fulfill its conditions, and that none
of the rights, claims, or obligations being transferred
under this Agreement, have been conveyed, assigned, or
otherwise transferred to anyone who is not a Party to
this Agreement.
5.2. Reading. Each of the Parties represents that it has
carefully read and understood this entire Settlement
Agreement before executing it.
5.3. Legal Representation. Each of the Parties acknowledges
and agrees that it has been represented in the
preparation of this Agreement by legal counsel of its.
choosing. Each of the Parties further acknowledges the
receipt of the advice of independent legal counsel
prior to the execution of this Agreement, that the
legal nature and effect of this Agreement has been
fully explained to it by counsel, and that it fully
understands the terms and provisions of this Agreement,
its nature, and its effect. Each of the Parties
further represents that it is relying solely on the
advice of its own counsel in executing this Agreement
and has neither received nor relied upon any
representation or opinion of any of the other Parties
or of the counsel of any of the other Parties, except
for the representations contained in this Agreement.
5.4. No Other Representations. The Parties represent that
none of the other Parties to this Agreement or their
representatives have given them any legal, factual, or
other representations or opinions relating to this
Agreement other than those expressly contained in it.
6. Notice. Except as may be provided otherwise elsewhere in
this Agreement, any election, delivery, notice, or
communication required or permitted under this Agreement
shall be in writing and shall be deemed to have been given
if placed in the United States mail to the following
addresses, or such other addresses as the Parties may later
specify in writing. Except as may be provided otherwise
elsewhere in this Agreement, notwithstanding any defect in
the method of delivery that prevents it from being effective
upon mailing, such an election, delivery, notice, or other
communication, if it is in writing, shall be deemed given if
and when it is actually received by such of the Parties as
are entitled to receive it.
If to Digital, to:
▇▇▇ ▇▇▇▇▇
Digital Power Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. Eng
▇▇▇▇▇▇ Eng ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to KDK, to:
Ki ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney at Law
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
7. Integration. This Agreement constitutes the entire
agreement among the Parties concerning its subject matter
and supersedes all prior or contemporaneous contracts,
agreements, understandings, negotiations, and discussions of
the Parties, whether oral or written, concerning its subject
matter.
8. Expenses of Matters Settled. Each of the Parties shall bear
its own costs of suit, attorneys' fees, and other expenses
related to the matters being settled, and no Party shall
make any payment or reimbursement, or provide any
consideration, other than what may be described in this
Agreement.
9. No Other Agreements. The Parties affirm that other than
this Agreement, any contracts, agreements, or understandings
among the Parties, on any subject whatever, including but
not limited to promissory notes, employment contracts, and
other contracts that may have been entered into on or before
September 1, 1998 are terminated. Any agreements entered
into on or after September 3, 1998 will survive.
10. No Oral Modification. No amendment, supplement,
modification, waiver, or termination of this Agreement shall
be binding unless it contained in a writing signed by the
party against whom the amendment, supplement, modification,
waiver, or termination is being asserted.
11. Successors and Assigns. This Agreement shall be binding on
and inure to the benefit of the heirs, executors,
administrators, trustees, successors, assigns, and
transferees of the respective Parties.
12. Drafting. Each of the Parties represents that this
Agreement has been negotiated through its counsel and
jointly drafted and agrees that any ambiguity in it shall
not be construed against any of them.
13. Expenses of Enforcement. In any litigation arising out of
or relating to this Agreement, the prevailing party shall be
entitled to its reasonable expenses, attorneys' fees, and
costs, in addition to any other remedy that may be
available.
14. Counterparts. This Agreement may be executed in
counterparts, and each executed counterpart shall be deemed
to be a duplicate original of this Agreement.
DIGITAL POWER CORPORATION
DATED: 9/8/98 By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
KDK ELECTRONICS, INC.
DATED: 9/3/98 By: /s/ Ki ▇▇▇▇ ▇▇▇▇
Ki ▇▇▇▇ ▇▇▇▇
President
DATED: 9/3/98 By: /s/ Ki ▇▇▇▇ ▇▇▇▇
Ki ▇▇▇▇ ▇▇▇▇
Individually
Approved as to form:
▇▇▇▇▇▇ ENG LINN & ▇▇▇▇▇▇▇▇
A Law Corporation
DATED: 9/3/98 By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attorneys for Digital Power
Corporation
DATED: 9/3/98 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney for KDK Electronics, Inc.
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
DATED: 9/3/98 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Attorneys for KDK Electronics, Inc.
