SURGE COMPONENTS, INC. (OTCMKTS:SPRS) Files An 8-K Entry into a Material Definitive Agreement
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
Stockholders).
TheSettlementAgreement provides,among other things, that:
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theStockholdersirrevocably withdrawtheirdirector nominations for the Board and stockholder proposals for the Companys annual meeting of stockholders for fiscal year 2015 (the Meeting); |
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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 Meeting) and the ratification of the Companys rights plan; |
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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; |
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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 Meeting; |
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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; |
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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; |
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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; |
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until the day after the announcement of the completion of the Tender Offer, the Board will be composed of no more than seven individuals; |
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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; |
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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; |
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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 Stockholders; |
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the Stockholders will withdraw with prejudice their lawsuit against the Company and the Insiders pending in the State of Nevada; and |
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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
Meeting.
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
reference.
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.
(d)Exhibits.
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Exhibit Number |
Exhibit Description | |
| 10.1 |
Settlement Agreement, datedas ofDecember22,2016,byand
Ira Levy, Steven J. Lubman, Alan Plafker, Lawrence |
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| 99.1 | Press Release,datedas ofDecember22, 2016. |
About SURGE COMPONENTS, INC. (OTCMKTS:SPRS)
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.