SURGE COMPONENTS, INC. (OTCMKTS:SPRS) Files An 8-K Entry into a Material Definitive Agreement

SURGE COMPONENTS, INC. (OTCMKTS:SPRS) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01 Entry into aMaterial Definitive Agreement.

OnDecember22, 2016,Surge Components, Inc. (the
Company) and the current members (the
Insiders) of its Boardof Directors (the
Board) entered into a settlement agreement (the
SettlementAgreement) withMichael D. Tofias and
Bradley P. Rexroad (collectively, the

TheSettlementAgreement provides,among other things, that:

theStockholdersirrevocably withdrawtheirdirector nominations
for the Board and stockholder proposals for the Companys
annual meeting of stockholders for fiscal year 2015 (the
the Stockholders will vote all of their shares of common
stock of the Company in accordance with the Boards
recommendations with respect to the election of the Boards
director nominees, the ratification of the Companys
independent registered public accounting firm for the fiscal
year ending November 30, 2016 (the 2017
) and the ratification of the Companys rights
the Company will hold the Meeting on January 5, 2017 and will
hold its annual meeting of stockholders for fiscal year 2016
by December 29, 2017;
theBoardand the Stockholders will identify a mutually
acceptable independent director to join the Board as a Class
C director by February 28, 2017 and the Board will include
that new director among its director nominees for the 2017
the Company will not make any stock or option grants or grant
any other non-cash compensation to its current officers and
directors until December23, 2017;
the Company will take all steps to (i) change its state of
incorporation from the State of Nevada to the State of
Delaware and (ii) declassify the Board on a rolling basis by
June 30, 2017, and the Company will convene a special meeting
of stockholders of the Company for the purpose of approving
such actions, at which meeting the Stockholders and the
Insiders will vote all of their shares of common stock of the
Company in favor of such actions;
the Company will commence an issuer tender offer to all of
its stockholders to repurchase at least 5.0 million shares of
its common stock at a price of $1.43 per share (the
Tender Offer), which Tender Offer will be
completed by March 15, 2017;
until the day after the announcement of the completion of the
Tender Offer, the Board will be composed of no more than
seven individuals;
the Stockholders will tender all of the shares of common
stock of the Company that they hold beneficially or of record
in the Tender Offer, subject to limited exceptions;
the Companys officers and directors will not participate in
the Tender Offer and will not transfer or sell any of their
shares until six months after the Tender Offer is completed;
subject to certain conditions, if the Tender Offer is not
completed by March 15, 2017, the Company will (i) appoint the
Stockholders to the Board as Class A directors with terms
expiring at the Companys annual meeting of stockholders for
fiscal year 2018 (the 2019 Meeting) and (ii)
reduce the size of the Board to six directors, including the
the Stockholders will withdraw with prejudice their lawsuit
against the Company and the Insiders pending in the State of
Nevada; and
the Stockholders will be subject to customary standstill
provisions until the termination of the Settlement Agreement.

to the Settlement Agreement, the Company also agreed to reimburse
the expenses of the Stockholders associated with their investment
in the Company, including their proxy solicitation and litigation
costs, in an amount not to exceed $300,000.

The Settlement Agreementterminates on the date that is 15
business days prior to the deadline for the submission of
director nominations and stockholder proposals for the2019

The above summary is qualified in its entirety by reference to
the full text of theSettlementAgreement,a copyof whichisattached
herewithas Exhibit 10.1 to this Current Report on Form
8-K(Form 8-K)and incorporated herein by

Item8.01 Other Events.

On December22, 2016, the Companyissueda press release announcing
the entry into theSettlement Agreement. A copy of thepress
releaseisattachedherewith as Exhibit 99.1to this Form 8-K and is
incorporated herein by reference.

Item9.01 Financial Statements and Exhibits.




Exhibit Description

Settlement Agreement, datedas ofDecember22,2016,byand
amongSurge Components, Inc.,

Ira Levy, Steven J. Lubman, Alan Plafker, Lawrence
Chariton, Gary Jacobs and Martin Novick, and Messrs.
Michael D. Tofias and Bradley P. Rexroad.

99.1 Press Release,datedas ofDecember22, 2016.


Surge Components, Inc. (Surge) is a supplier of electronic products and components. The Company’s products include capacitors, which are electrical energy storage devices, and discrete components, such as semiconductor rectifiers, transistors and diodes, which are single function low power semiconductor products that are packaged alone as compared to integrated circuits, such as microprocessors. The products that the Company sells are utilized in the electronic circuitry of products, including automobiles, telecomm, audio, cellular telephones, computers, consumer electronics, garage door openers, household appliances, power supplies and security equipment. The products that the Company sells are sold to both original equipment manufacturers (OEMs) and to distributors of the lines of products it sells. Surge supplies a range of electronic components, which can be divided into approximately two categories, including capacitors and discrete components.

SURGE COMPONENTS, INC. (OTCMKTS:SPRS) Recent Trading Information

SURGE COMPONENTS, INC. (OTCMKTS:SPRS) closed its last trading session up +0.01 at 1.30 with 21,798 shares trading hands.

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