Item 5.02. Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.

(e) On August 11, 2009, the Compensation Committee of the Board of Directors (the "Compensation Committee") of Digital Power Corporation (the "Company") granted Amos Kohn, the President and Chief Executive Officer of the Company, an option to purchase 50,000 shares of the Company's common stock, subject to the terms and conditions of the Company's 2002 Stock Option Plan, as discussed below.

The Employment Agreement, dated as of June 1, 2008, between the Company and Mr. Kohn (the "Employment Agreement") provides that he was to be granted an option to purchase 100,000 shares of the Company's common stock if (1) certain performance goals of the Company were met during the year ended December 31, 2008 and (2) Mr. Kohn served continuously as the Company's President and Chief Executive Officer through June 30, 2009. While Mr. Kohn did serve continuously as the Company's President and Chief Executive Officer through June 30, 2009, and continues to serve in such capacity, certain of the stated performance goals for the Company for 2008 were not achieved. On August 11, 2009, the Compensation Committee determined that, since the shortfall from the performance goals was not material, it would grant to Mr. Kohn an option to purchase 50,000 shares of the Company's common stock in lieu of the 100,000 shares of the Company's common stock provided for in the Employment Agreement. The Committee also determined that, in the event certain performance goals for the Company for the year ending December 31, 2009 are met, Mr. Kohn would be entitled to receive an option grant with respect to the remaining 50,000 shares.

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