Solitron Devices, Inc. (OTCMKTS:SODI) Files An 8-K Entry into a Material Definitive Agreement

Solitron Devices, Inc. (OTCMKTS:SODI) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01.

Entry into a Material Definitive Agreement.

The information set forth under Item 3.03 Material Modification
to Rights of Security Holders of this Current Report on Form 8-K
with respect to the entry into the NOL Rights Agreement (as
described below) is incorporated into this Item 1.01 by
reference.

Item 1.02. Termination of a Material Definitive
Agreement.

The information set forth under Item 3.03 Material Modification
to Rights of Security Holders of this Current Report on Form 8-K
with respect to the termination of the Prior Rights Agreement (as
described below) is incorporated into this Item 1.02 by
reference.

Section 3 Securities and Trading Markets

Item 3.03. Material Modification to Rights of Security
Holders.

Termination of Prior Rights Agreement

On May 12, 2017, Solitron Devices, Inc., a Delaware corporation
(Solitron or the Company), entered into Amendment
No. 1 (the Amendment) to the Rights Agreement, dated as of
May 29, 2012, (the Prior Rights Agreement) between the
Company and Continental Stock Transfer Trust Company.

The Amendment accelerates the final expiration date of the
Companys right representing the right to purchase one
one-hundredth of a share of Series A Junior Participating
Preferred Stock, $0.01 par value per share, of the Company (the
Prior Rights) from the close of business on May 29, 2022
to the close of business on May 12, 2017, and has the effect of
terminating the Prior Rights Agreement on that date. At the time
of the termination of the Prior Rights Agreement, all of the
Prior Rights distributed to holders of the Companys common stock
to the Prior Rights Agreement automatically expired.

The foregoing is a summary of the terms of the Amendment. The
summary does not purport to be complete and is qualified in its
entirety by reference to the Amendment, a copy of which is
attached herewith as Exhibit 4.1 to this Form 8-K and
incorporated herein by reference.

Adoption of NOL Rights Agreement

On May 12, 2017, the Board of Directors (the Board) of the
Company declared a dividend of one preferred stock purchase right
(a New Right) for each of the Companys issued and
outstanding shares of common stock, par value $0.01 per share
(the Common Stock). The dividend will be paid to the
stockholders of record at the close of business on May 12, 2017
(the Record Date). When exercisable, each New Right
entitles the registered holder, subject to the terms of the NOL
Rights Agreement (as defined below), to purchase from the Company
one one-hundredth of a share of the Companys Series A Junior
Participating Preferred Stock (the Preferred Stock) at a
price of $17.92 (the Purchase Price), subject to certain
adjustments. The description and terms of the New Rights are set
forth in the Rights Agreement dated as of May 12, 2017 (the
NOL Rights Agreement) between the Company and Continental
Stock Transfer Trust Company, as Rights Agent (the Rights
Agent
).

The purpose of the NOL Rights Agreement is to protect certain of
the Companys tax attributes (the Tax Attributes),
specifically the Company’s net operating losses, from becoming
subject to limitations if the Company experiences an ownership
change, as defined in Section 382 of the Internal Revenue Code of
1986, as amended (the Tax Code). A company generally
experiences such an ownership change if the percentage of its
stock owned by one or more 5 percent shareholders, as defined in
Section 382 of the Tax Code, increases by more than fifty
percentage points over the lowest percentage of stock owned by
such shareholders at any time during the prior rolling three-year
period or, if sooner, since the last ownership change experienced
by the Company. The NOL Rights Agreement is designed to reduce
the likelihood that the Company will experience an ownership
change under Section 382 of the Tax Code by (i) discouraging any
person or group from becoming a 4.99% stockholder and (ii)
discouraging any existing 4.99% stockholder from acquiring
additional shares of the Companys common stock.

The New Rights will not be exercisable until the earlier to occur
of (i) the tenth business day following a public announcement
that a person or group of affiliated or associated persons has
acquired beneficial ownership of 4.99% or more of the Common
Stock (an Acquiring Person) or (ii) ten business days (or
such later date as may be determined by action of the Board prior
to such time as any person or group of affiliated persons becomes
an Acquiring Person) following the commencement or announcement
of an intention to make a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group of 4.99% or more of the Common Stock (the
earlier of (i) and (ii) being referred to as the Distribution
Date
).

With respect to certificates representing shares of Common Stock
outstanding as of the Record Date, until the Distribution Date,
the New Rights will be evidenced by such certificates for shares
of Common Stock registered in the names of the holders thereof,
and not by separate Rights Certificates, as described further
below. With respect to book entry shares of Common Stock
outstanding as of the Record Date, until the Distribution Date,
the New Rights will be evidenced by a notation in book entry.
Until the Distribution Date or earlier redemption, exchange,
termination or expiration of the New Rights, new Common Stock
certificates issued after the close of business on the Record
Date upon the new issuance of the Common Stock will contain a
notation incorporating the NOL Rights Agreement by reference and
the Company will deliver a notice to that effect upon the new
issuance of book entry shares. Until the earlier of the
Distribution Date, earlier redemption, exchange, termination or
expiration of the New Rights, as described below, the transfer of
any shares of Common Stock outstanding on the Record Date will
also constitute the transfer of the New Rights associated with
such shares of Common Stock. As soon as practicable after the
Distribution Date, separate certificates evidencing the New
Rights (Right Certificates) will be mailed to holders of
record of the Common Stock as of the close of business on the
Distribution Date, and such Right Certificates alone will
evidence the New Rights.

The New Rights, which are not exercisable until the Distribution
Date, will expire on the earliest of (i) May 12, 2020; (ii) the
final adjournment of the Company’s 2017 annual meeting of
stockholders if stockholder approval of the NOL Rights Agreement
is not obtained prior to such time; (iii) the time at which the
New Rights are redeemed to the NOL Rights Agreement, (iv) the
time at which the New Rights are exchanged to the NOL Rights
Agreement; (v) the closing of certain merger or acquisition
transactions involving the Company; (vi) the close of business on
the effective date of the repeal of Section 382 of the Code if
the Board determines that the NOL Rights Agreement is no longer
necessary or desirable for the preservation of the Tax
Attributes; or (vii) the close of business on the first day of a
taxable year of the Company to which the Board determines that no
Tax Attributes may be carried forward or otherwise utilized (the
earliest of (i), (ii), (iii), (iv), (v), (vi) and (vii) is
referred to as the Expiration Date).

Each share of Preferred Stock purchasable upon exercise of the
New Rights will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment of 100 times the
dividend, if any, declared per share of Common Stock. In the
event of liquidation, dissolution or winding up of the Company,
the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1.00 per share (plus accrued
but unpaid dividends), provided that such holders of the
Preferred Stock will be entitled to an aggregate payment of 100
times the payment made per share of Common Stock. Each share of
Preferred Stock will entitle the holder thereof to 100 votes and
will vote together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each share of Preferred Stock will be
entitled to receive 100 times the amount received per share of
Common Stock. Preferred Stock will not be redeemable. These
rights are protected by customary anti-dilution provisions.
Because of the nature of the Preferred Stock’s dividend,
liquidation and voting rights, the value of one one-hundredth of
a share of Preferred Stock purchasable upon exercise of each New
Right should approximate the value of one share of Common Stock.

The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of
the New Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred
Stock or securities convertible into Preferred Stock at less than
the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness, cash, securities or assets (excluding regular
periodic cash dividends at a rate not in excess of 125% of the
rate of the last regular periodic cash dividend theretofore paid
or, in case regular periodic cash dividends have not theretofore
been paid, at a rate not in excess of 50% of the average net
income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends
payable in Preferred Stock (which dividends will be subject to
the adjustment described in clause (i) above)) or of subscription
rights or warrants (other than those referred to above).

In the event that a person becomes an Acquiring Person, each
holder of a New Right, other than New Rights that are or were
acquired or beneficially owned by the Acquiring Person (which New
Rights will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Common Stock
having a market value of two times the then current Purchase
Price of the New Right.

No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least one
percent (1%) in such Purchase Price. No fractional Preferred
Stock or Common Stock will be issued (other than fractions of
Preferred Stock which are integral multiples of one one-hundredth
of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts) and in lieu
thereof, a payment in cash will be made based on the market price
of the Preferred Stock or Common Stock on the last trading day
prior to the date of exercise.

At any time after a person becomes an Acquiring Person and prior
to the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Stock, the Board may cause the Company to
exchange the New Rights (other than New Rights owned by an
Acquiring Person which will have become void), in whole or in
part, for Common Stock at an exchange rate of one share of Common
Stock per New Right (subject to adjustment).

At any time before a person becomes an Acquiring Person, the
Board may redeem the New Rights in whole, but not in part, at a
price of $0.01 per New Right (the Redemption Price). The
redemption of the New Rights may be made effective at such time,
on such basis and with such conditions as the Board in its sole
discretion may establish. Immediately upon any redemption of the
New Rights, the right to exercise the New Rights will terminate
and the only right of the holders of New Rights will be to
receive the Redemption Price.

Until a New Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company beyond those as an
existing stockholder, including, without limitation, the right to
vote or to receive dividends.

Any of the provisions of the NOL Rights Agreement may be amended
by the Board as long as the New Rights are then redeemable. After
the New Rights are no longer redeemable, the Company may amend or
supplement the NOL Rights Agreement in any manner that does not
adversely affect the interests of the holders of the New Rights
(other than an Acquiring Person or an affiliate or associate of
an Acquiring Person).

The NOL Rights Agreement is attached hereto as Exhibit 4.2 and is
incorporated herein by reference. The description of the NOL
Rights Agreement herein does not purport to be complete and is
qualified in its entirety by reference to Exhibit 4.2.

Section 5 Corporate Governance and Management

Item 5.03. Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.

Prior Series A Junior Participating Preferred Stock

On August 9, 1991, the Company filed a Certificate of Designation
of Series A Junior Participating Preferred Stock with the
Secretary of State of the State of Delaware setting forth the
rights, powers and preferences of the Series A Junior
Participating Preferred Stock (the Series A Preferred
Shares
). The Certificate of Designation describes the rights,
powers and preferences of the Series A Preferred Shares issuable
upon exercise of the Prior Rights to the Prior Rights Agreement.

Promptly following the expiration of the Prior Rights and the
termination of the Prior Rights Agreement on May 12, 2017, the
Company filed a Certificate of Elimination (the Certificate of
Elimination
) with the Secretary of State of the State of
Delaware eliminating the Series A Preferred Shares and returning
them to authorized but undesignated shares of the Companys
preferred stock. The effective date of the Certificate of
Elimination was May 12, 2017.

The foregoing is a summary of the terms of the Certificate of
Elimination. The summary does not purport to be complete and is
qualified in its entirety by reference to the Certificate of
Elimination, a copy of which is attached herewith as Exhibit 3.1
to this Form 8-K and incorporated herein by reference.

New Series A Junior Participating Preferred Stock

In connection with the adoption of the NOL Rights Agreement, the
Board approved a Certificate of Designation of Series A Junior
Participating Preferred Stock (the Certificate of
Designation
). The Certificate of Designation was filed with
the Secretary of State of the State of Delaware and became
effective on May 12, 2017. See the description of the NOL Rights
Agreement in Item 3.03 of this Current Report on Form 8-K for a
more complete description of the rights and preferences of the
Preferred Stock.

The Certificate of Designation is attached hereto as Exhibit 3.2
and is incorporated herein by reference. The description of the
Certificate of Designation herein does not purport to be complete
and is qualified in its entirety by Exhibit 3.2.

Section 9 Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
3.1 Certificate of Elimination of Series A Junior Participating
Preferred Stock of Solitron Devices, Inc., dated May 12,
2017.
3.2 Certificate of Designation of Series A Junior Participating
Preferred Stock of Solitron Devices, Inc., dated May 12,
2017.
4.1 Amendment No. 1 to Rights Agreement, dated as of May 12,
2017, between Solitron Devices, Inc. and Continental Stock
Transfer Trust Company.
4.2 Rights Agreement, dated as of May 12, 2017, between Solitron
Devices, Inc. and Continental Stock Transfer Trust Company.


About Solitron Devices, Inc. (OTCMKTS:SODI)

Solitron Devices, Inc. designs, develops, manufactures and markets solid-state semiconductor components and related devices primarily for the military and aerospace markets. The Company manufactures a range of bipolar and metal oxide semiconductor (MOS) power transistors, power and control hybrids, junction and power MOS field effect transistors (Power MOSFETS), field effect transistors and other related products. Other products, such as Joint Army/Navy (JAN) transistors, diodes and Standard Military Drawings (SMD) voltage regulators, are sold as standard or catalog items. Its semiconductor products are classified as active electronic components, which include bipolar transistors and MOS transistors. Its semiconductor products are used as components of military, commercial and aerospace electronic equipment, such as ground and airborne radar systems, power distribution systems, missiles, missile control systems and spacecraft. Its products are also used on the space shuttle.

Solitron Devices, Inc. (OTCMKTS:SODI) Recent Trading Information

Solitron Devices, Inc. (OTCMKTS:SODI) closed its last trading session 00.00 at 4.25 with 3,114 shares trading hands.

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