SOLITRON DEVICES, INC.
2007 STOCK INCENTIVE PLAN
 
1. ESTABLISHMENT, EFFECTIVE DATE AND TERM
 
Solitron Devices, Inc., a Delaware corporation, hereby establishes the "Solitron
Devices, Inc. 2007 Stock Incentive Plan." The effective date of the Plan shall
be June 4, 2007; which is the date the Plan was approved and adopted by the
Board. Unless earlier terminated pursuant to Section 13(k) hereof, the Plan
shall terminate on the tenth anniversary of the Effective Date.
 
2. PURPOSE
 
The purpose of the Plan is to enable the Company to attract, retain, reward and
motivate Eligible Individuals by providing them with an opportunity to acquire
or increase a proprietary interest in Solitron and to incentivize them to expend
maximum effort for the growth and success of the Company, so as to strengthen
the mutuality of the interests between the Eligible Individuals and the
shareholders of Solitron.
 
3. DEFINITIONS
 
As used in the Plan, the following terms shall have the meanings set forth
below: 
 
(a) "Award" means any Common Stock, Option, Restricted Stock, Stock Appreciation
Right or any other award granted pursuant to the Plan.
 
(b) "Award Agreement" means a written agreement entered into by Solitron and a
Participant setting forth the terms and conditions of the grant of an Award to
such Participant.
 
(c) "Board" means the board of directors of Solitron.
 
(d) "Cause" means, with respect to a termination of employment or service with
the Company, a termination of employment or service due to a Participant's
dishonesty, fraud, insubordination, willful misconduct, refusal to perform
services (for any reason other than illness or incapacity) or materially
unsatisfactory performance of the Participant's duties for the Company;
provided, however, that if the Participant and the Company have entered into an
employment agreement or consulting agreement which defines the term Cause, the
term Cause shall be defined in accordance with such agreement with respect to
any Award granted to the Participant on or after the effective date of the
respective employment or consulting agreement. The Committee shall determine in
its sole and absolute discretion whether Cause exists for purposes of the Plan.
 
(e) "Change in Control" means any change in control of Solitron of a nature
which would be required to be reported (a) in response to Item 6(e) of Schedule
14A of Regulation 14A, as in effect on the date of an agreement, promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b)
in response to Item 5.01 of the Current Report on Form 8-K, as in effect on the
date of an agreement, promulgated under the Exchange Act, or (c) in any filing
by the Company with the Securities and Exchange Commission; provided, however,
that without limitation, a Change of Control of the Company shall be deemed to
have occurred if:
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(i) Any "person" (as such term is defined in Sections 13(d)(3) and Section
14(d)(3) of the Exchange Act), other than the Company, any majority-owned
subsidiary of the Company, or any compensation plan of the Company or any
majority-owned subsidiary of the Company, becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of Solitron representing fifty percent (50%) or more of the
combined voting power of Solitron;
 
(ii) During any period of three consecutive years during the term of this
Agreement, the directors who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority of the Board,
unless the election of each director who was not a director at the beginning of
such period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of such period; or
 
(iii) The shareholders of Solitron approve (1) a reorganization, merger, or
consolidation with respect to which persons who were the shareholders of
Solitron immediately prior to such reorganization, merger, or consolidation do
not immediately thereafter own more than 50% of the combined voting power
entitled to vote generally in the election of the directors of the reorganized,
merged or consolidated entity; (2) a liquidation or dissolution of Solitron; or
(3) the sale of all or substantially all of the assets of Solitron, or of a
subsidiary of Solitron that accounts for 30% of the consolidated revenues of
Solitron, but not including a reorganization, merger or consolidation of
Solitron.
 
However, to the extent that Section 409A of the Code would cause an adverse tax
consequence to a Participant using the above definition, the term "Change in
Control" shall have the meaning ascribed to the phrase "Change in the Ownership
or Effective Control of a Corporation or in the Ownership of a Substantial
Portion of the Assets of a Corporation" under Treasury Department Regulation
1.409A-3(i)(5), as revised from time to time, and in the event that such
regulations are withdrawn or such phrase (or a substantially similar phrase)
ceases to be defined, as determined by the Committee.
 
(f) "Change in Control Price" means the price per share of Common Stock paid in
any transaction related to a Change in Control of Solitron.
 
(g) "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
 
(h) "Committee" means a committee or sub-committee of the Board consisting of
two or more members of the Board, none of whom shall be an officer or other
salaried employee of the Company, and each of whom shall qualify in all respects
as a "non-employee director" as defined in Rule 16b-3 under the Exchange Act. If
no Committee exists, the functions of the Committee will be exercised by the
Board. Notwithstanding the foregoing, with respect to the grant of Awards to
non-employee directors, the Committee shall be the Board.
 
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(i) "Common Stock" means the common stock, $.01 par value per share, of
Solitron. 
 
(j) "Company" means Solitron and all entities whose financial statements are
required to be consolidated with the financial statements of Solitron pursuant
to United States generally accepted accounting principles and any other entity
determined to be an affiliate as determined by the Committee in its sole and
absolute discretion.
 
(k) "Covered Individual" means any current or former member of the Committee,
any current or former officer of the Company, or any individual designated
pursuant to Section 5(b).
 
(l) "Detrimental Activity" shall mean (i) the disclosure to anyone outside the
Company, or the use in other than the Company's business, without written
authorization from the Company, of any confidential information or proprietary
information, relating to the business of the Company, acquired by a Participant
prior to a termination of the Participant's employment or service with the
Company; (ii) activity while employed or providing services that results, or if
known could result, in the termination of the Participant's employment or
service that is classified by the Company as a termination for Cause; (iii) any
attempt, directly or indirectly, to solicit, induce or hire (or the
identification for solicitation, inducement or hiring of) any non-clerical
employee of the Company to be employed by, or to perform services for, the
Participant or any person or entity with which the Participant is associated
(including, but not limited to, due to the Participant's employment by,
consultancy for, equity interest in, or creditor relationship with such person
or entity) or any person or entity from which the Participant receives direct or
indirect compensation or fees as a result of such solicitation, inducement or
hire (or the identification for solicitation, inducement or hire) without, in
all cases, written authorization from the Company; (iv) any attempt, directly or
indirectly, to solicit in a competitive manner any current or prospective
customer of the Company without, in all cases, written authorization from the
Company; (v) the Participant's Disparagement, or inducement of others to do so,
of the Company or their past and present officers, directors, employees or
products; (vi) without written authorization from the Company, the rendering of
services for any organization, or engaging, directly or indirectly, in any
business, which is competitive with the Company, or which organization or
business, or the rendering of services to such organization or business, is
otherwise prejudicial to or in conflict with the interests of the Company;
provided, however that competitive activities shall only be those competitive
with any business unit of the Company with regard to which the Participant
performed services at any time within the two (2) years prior to the termination
of the Participant's employment or service; or (vii) any other conduct or act
determined by the Committee, in its sole discretion, to be injurious,
detrimental or prejudicial to any interest of the Company. For purposes of
subparagraphs (i), (iii), (iv) and (vi) above, the Chief Executive Officer and
the General Counsel of the Company shall each have authority to provide the
Participant with written authorization to engage in the activities contemplated
thereby and no other person shall have authority to provide the Participant with
such authorization.
 
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(m) "Disability" means a "permanent and total disability" within the meaning of
Code Section 22(e)(3); provided, however, that if a Participant and the Company
have entered into an employment or consulting agreement which defines the term
Disability for purposes of such agreement, Disability shall be defined pursuant
to the definition in such agreement with respect to any Award granted to the
Participant on or after the effective date of the respective employment or
consulting agreement. The Committee shall determine in its sole and absolute
discretion whether a Disability exists for purposes of the Plan.
 
(n) "Disparagement" means making any comments or statements to the press, the
Company's employees or any individual or entity with whom the company has a
business relationship which would adversely affect in any manner: (i) the
conduct of the business of the Company (including, without limitation, any
products or business plans or prospects), or (ii) the business reputation of the
Company or any of its products, or its past or present officers, directors or
employees.
 
(o) "Dividend Equivalents" means an amount equal to the cash dividends paid by
the Company upon one share of Common Stock subject to an Award granted to a
Participant under the Plan.
 
(p) "Effective Date" shall mean June 4, 2007.
 
(q) "Eligible Individual" means any employee, officer, director (employee or
non-employee director) of the Company and any Prospective Employee to whom
Awards are granted in connection with an offer of future employment with the
Company.
 
(r) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
(s) "Exercise Price" means the purchase price of each share of Common Stock
subject to an Award.
 
(t) "Fair Market Value" means, unless otherwise required by the Code, as of any
date, the last sales price reported for the Common Stock on such date (i) as
reported by the national securities exchange in the United States on which it is
then traded or (ii) if not traded on any such national securities exchange, as
quoted on an automated quotation system sponsored by the National Association of
Securities Dealers, Inc., or if the Common Stock shall not have been reported or
quoted on such date, on the first day prior thereto on which the Common Stock
was reported or quoted; provided, however, that the Committee may modify the
definition of Fair Market Value to reflect any changes in the trading practices
of any exchange or automated system sponsored by the National Association of
Securities Dealers, Inc. on which the Common Stock is listed or traded. If the
Common Stock is not readily traded on a national securities exchange or any
system sponsored by the National Association of Securities Dealers, Inc., the
Fair Market Value shall be determined in good faith by the Committee.
 
(u) "Grant Date" means the date on which the Committee approves the grant of an
Award or such later date as is specified by the Committee and set forth in the
applicable Award Agreement.
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(v) "Non-Employee Director" means a director of Solitron who is not an active
employee of the Company.
 
(w) "Option" means a non-qualified option to purchase Common Stock granted
pursuant to Section 7 of the Plan.
 
(x) "Participant" means any Eligible Individual who holds an Award under the
Plan and any of such individual's successors or permitted assigns.
 
(y) "Person" shall mean any person, corporation, partnership, limited liability
company, joint venture or other entity or any group (as such term is defined for
purposes of Section 13(d) of the Exchange Act), other than a parent or
subsidiary.
 
(z) "Plan" means this Solitron Devices, Inc 2007 Stock Incentive Plan.
 
(aa) "Prospective Employee" means any individual who has committed to become an
employee of the Company within sixty (60) days from the date an Award is granted
to such individual.
 
(bb) "Solitron" means Solitron Devices, Inc., a Delaware corporation.
 
(cc) "Restricted Stock" means Common Stock subject to certain restrictions, as
determined by the Committee, and granted pursuant to Section 9 hereunder.
 
(dd) "Restricted Stock Unit" means the right to receive to receive a fixed
number of shares of Common Stock, or the cash equivalent, granted pursuant to
Section 9 hereunder.
 
(ee) "Stock Appreciation Right" means the right to receive all or some portion
of the increase in value of a fixed number of shares of Common Stock granted
pursuant to Section 8 hereunder.
 
(ff) "Transfer" means, as a noun, any direct or indirect, voluntary or
involuntary, exchange, sale, bequeath, pledge, mortgage, hypothecation,
encumbrance, distribution, transfer, gift, assignment or other disposition or
attempted disposition of, and, as a verb, directly or indirectly, voluntarily or
involuntarily, to exchange, sell, bequeath, pledge, mortgage, hypothecate,
encumber, distribute, transfer, give, assign or in any other manner whatsoever
dispose or attempt to dispose of.
 
4. ELIGIBILITY
 
Awards may be granted under the Plan to any Eligible Individual as determined by
the Committee from time to time on the basis of their importance to the business
of the Company pursuant to the terms of the Plan.
 
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5. ADMINISTRATION
 
(a) Committee. The Plan shall be administered by the Committee, which shall have
the full power and authority to take all actions, and to make all determinations
not inconsistent with the specific terms and provisions of the Plan deemed by
the Committee to be necessary or appropriate to the administration of the Plan,
any Award granted or any Award Agreement entered into hereunder. The Committee
shall have authority to issue Awards upon such terms (not inconsistent with the
provisions of this Plan) as the Committee may consider appropriate. The terms of
an Award may include (in addition to those contained in this Plan) such
conditions and limitations as the Committee may consider appropriate in its sole
discretion for the protection of the interests of the Company and its
shareholders, including, without limitation, restrictions on exercisability,
vesting or transferability, forfeiture provisions, and requirements for the
disgorgement of gain. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Award Agreement in
the manner and to the extent it shall deem expedient to carry the Plan into
effect as it may determine in its sole discretion. The decisions by the
Committee shall be final, conclusive and binding with respect to the
interpretation and administration of the Plan, any Award or any Award Agreement
entered into under the Plan.
 
(b) Advisors to Committee. The Committee may designate employees of the Company
and professional advisors to assist the Committee in the administration of the
Plan. The Committee may grant authority to the Chief Executive Officer of the
Company or any other employee of the Company to execute agreements or other
documents on behalf of the Committee in connection with the grant of an Award or
the administration of the Plan. The Committee may employ such legal counsel,
consultants, and agents as it may deem desirable for the administration of the
Plan and may rely upon any advice and any computation received from any such
counsel, consultant, or agent. The Company shall pay all expenses and costs
incurred by the Committee for the engagement of any such counsel, consultant, or
agent.
 
(c) Participants Outside the U.S. In order to conform with the provisions of
local laws and regulations in foreign countries in which the Company may
operate, the Committee shall have the sole discretion to (i) modify the terms
and conditions of the Awards granted under the Plan to Eligible Individuals
located outside the United States; (ii) establish subplans with such
modifications as may be necessary or advisable under the circumstances presented
by local laws and regulations; and (iii) take any action which it deems
advisable to comply with or otherwise reflect any necessary governmental
regulatory procedures, or to obtain any exemptions or approvals necessary with
respect to the Plan or any subplan established hereunder.  
 
(d) Liability and Indemnification. No Covered Individual shall be liable for any
action or determination made in good faith with respect to the Plan, any Award
granted or any Award Agreement entered into hereunder. The Company shall, to the
maximum extent permitted by applicable law and the Articles of Incorporation and
Bylaws of Solitron, indemnify and hold harmless each Covered Individual against
any cost or expense (including reasonable attorney fees reasonably acceptable to
the Company) or liability (including any amount paid in settlement of a claim
with the approval of the Company), and amounts advanced to such Covered
Individual necessary to pay the foregoing at the earliest time and to the
fullest extent permitted, arising out of any act or omission to act in
connection with the Plan, any Award granted hereunder or any Award Agreement
entered into hereunder. Such indemnification shall be in addition to any rights
of indemnification such individuals may have under applicable law or under the
Articles of Incorporation or Bylaws of Solitron. Notwithstanding anything else
herein, this indemnification will not apply to the actions or determinations
made by a Covered Individual with regard to Awards granted to such Covered
Individual under the Plan or arising out of such Covered Individual's own fraud
or bad faith.
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6. COMMON STOCK
 
(a) Shares Available for Awards. The Common Stock that may be issued pursuant to
Awards granted under the Plan shall be treasury shares or authorized but
unissued shares of the Common Stock. The total number of shares of Common Stock
that may be issued pursuant to Awards granted under the Plan shall be 800,000
shares.
 
(b) Reduction of Shares Available for Awards. Upon the granting of an Award, the
number of shares of Common Stock available under this Section hereof for the
granting of further Awards shall be reduced as follows:
 
(i) In connection with the granting of an Award that is settled in Common Stock,
the number of shares of Common Stock shall be reduced by the number of shares of
Common Stock subject to the Option or Stock Appreciation Right.
 
(ii) Awards settled in cash shall not count against the total number of shares
of Common Stock available to be granted pursuant to the Plan.
 
(c) Cancelled, Forfeited, or Surrendered Awards. Notwithstanding anything to the
contrary in this Plan, if any Award is cancelled, forfeited or terminated for
any reason prior to exercise or becoming vested in full, the shares of Common
Stock that were subject to such Award shall to the extent cancelled, forfeited
or terminated, immediately be available for future Awards granted under the Plan
as if said Award had never been granted; provided, however, that any shares of
Common Stock subject to an Award, other than a Stock Appreciation Right, which
is cancelled, forfeited or terminated in order to pay the Exercise Price,
purchase price or any taxes or tax withholdings on an Award shall not be
available for future Awards granted under the Plan. Any Common Stock subject to
a Stock Appreciation Right which is not issued upon settling such Stock
Appreciation Right shall be available for future Awards granted under the Plan.
 
(d) Recapitalization. If the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of Solitron by reason of any recapitalization,
reclassification, reorganization, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock of Solitron or other increase or decrease in such shares effected
without receipt of consideration by Solitron occurring after the Effective Date,
an appropriate and proportionate adjustment shall be made by the Committee to
(i) the aggregate number and kind of shares of Common Stock available under the
Plan; (ii) the calculation of the reduction of shares of Common Stock available
under the Plan; and/or (iii) the number and kind of shares of Common Stock
issuable upon exercise (or vesting) of outstanding Awards granted under the
Plan; (vi) the Exercise Price of outstanding Options granted under the Plan. No
fractional shares of Common Stock or units of other securities shall be issued
pursuant to any such adjustment under this Section 6(d), and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.
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7. OPTIONS
 
(a) Grant of Options. Subject to the terms and conditions of the Plan, the
Committee may grant to such Eligible Individuals as the Committee may determine,
Options to purchase such number of shares of Common Stock and on such terms and
conditions as the Committee shall determine in its sole and absolute
discretion. Each grant of an Option shall satisfy the requirements set forth in
this Section.
 
(b) Exercise Price. The Exercise Price of an Option shall be fixed by the
Committee and stated in the respective Award Agreement, provided that the
Exercise Price of the shares of Common Stock subject to such Option may not be
less than Fair Market Value of such Common Stock on the Grant Date, or if
greater, the par value of the Common Stock.
 
(c) Limitation on Option Period. Options granted under the Plan and all rights
to purchase Common Stock thereunder shall terminate no later than the tenth
anniversary of the Grant Date of such Options, or on such earlier date as may be
stated in the Award Agreement relating to such Option. In the case of Options
expiring prior to the tenth anniversary of the Grant Date, the Committee may in
its discretion, at any time prior to the expiration or termination of said
Options, extend the term of any such Options for such additional period as it
may determine, but in no event beyond the tenth anniversary of the Grant Date
thereof.
 
(d) Vesting Schedule and Conditions. No Options may be exercised prior to the
satisfaction of the conditions and vesting schedule provided for in the Award
Agreement relating thereto.
 
(e) Exercise. When the conditions to the exercise of an Option have been
satisfied, the Participant may exercise the Option only in accordance with the
following provisions. The Participant shall deliver to Solitron a written notice
stating that the Participant is exercising the Option and specifying the number
of shares of Common Stock which are to be purchased pursuant to the Option, and
such notice shall be accompanied by payment in full of the Exercise Price of the
shares for which the Option is being exercised, by one or more of the methods
provided for in the Plan. Said notice must be delivered to Solitron at its
principal office and addressed to the attention of Shevach Saraf, Chief
Executive Officer. The minimum number of shares of Common Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 800,000 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. An attempt to exercise any Option
granted hereunder other than as set forth in the Plan shall be invalid and of no
force and effect.
 
(f) Payment. Payment of the Exercise Price for the shares of Common Stock
purchased pursuant to the exercise of an Option shall be made by one of the
following methods:
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(i) by cash, certified or cashier’s check, bank draft or money order; or
 
(ii) through the delivery to Solitron of shares of Common Stock which have been
previously owned by the Participant for the requisite period necessary to avoid
a charge to Solitron's earnings for financial reporting purposes; such shares
shall be valued, for purposes of determining the extent to which the Exercise
Price has been paid thereby, at their Fair Market Value on the date of exercise;
without limiting the foregoing, the Committee may require the Participant to
furnish an opinion of counsel acceptable to the Committee to the effect that
such delivery would not result in Solitron incurring any liability under Section
16(b) of the Exchange Act; or
 
(iii) by any other method which the Committee in its sole and absolute
discretion and to the extent permitted by applicable law, may permit including
but not limited to a "cashless exercise sale and remittance procedure" pursuant
to which the Participant shall concurrently provide irrevocable instructions (A)
to a brokerage firm approved by the Committee to effect the immediate sale of
the purchased shares and remit to Solitron, out of the sale proceeds available
on the settlement date, sufficient funds to cover the aggregate Exercise Price
payable for the purchased shares plus all applicable federal, state and local
income, employment, excise, foreign and other taxes required to be withheld by
the Company by reason of such exercise and (B) to Solitron to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.
 
(g) Termination of Employment, Disability or Death. Unless otherwise provided in
an Award Agreement, upon the termination of the employment or other service of a
Participant with the Company for any reason, all of the Participant's
outstanding Options (whether vested or unvested) shall be subject to the rules
of this paragraph. Upon such termination, the Participant's unvested Options
shall expire. Notwithstanding anything in this Plan to the contrary, the
Committee may provide, in its sole and absolute discretion, that following the
termination of employment or other service of a Participant with the Company for
any reason (i) any unvested Options held by the Participant that vest solely
upon a future service requirement shall vest in whole or in part, at any time
subsequent to such termination of employment or other service, and or (ii) a
Participant or the Participant's estate, devisee or heir at law (whichever is
applicable), may exercise an Option, in whole or in part, at any time subsequent
to such termination of employment or other service and prior to the termination
of the Option pursuant to its terms. Unless otherwise determined by the
Committee, temporary absence from employment because of illness, vacation,
approved leaves of absence or military service shall not constitute a
termination of employment or other service.
 
(i) Termination for Reason Other Than Cause, Disability or Death. If a
Participant's termination of employment or other service is for any reason other
than death, Disability, Cause, or a voluntary termination within ninety (90)
days after occurrence of an event which would be grounds for termination of
employment or other service by the Company for Cause, any Option held by such
Participant, may be exercised, to the extent exercisable at termination, by the
Participant at any time within a period not to exceed ninety (90) days from the
date of such termination, but in no event after the termination of the Option
pursuant to its terms.
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(ii) Disability. If a Participant's termination of employment or other service
with the Company is by reason of a Disability of such Participant, the
Participant shall have the right at any time within a period not to exceed one
(1) year after such termination, but in no event after the termination of the
Option pursuant to its terms, to exercise, in whole or in part, any vested
portion of the Option held by such Participant at the date of such termination;
provided, however, that if the Participant dies within such period, any vested
Option held by such Participant upon death shall be exercisable by the
Participant's estate, devisee or heir at law (whichever is applicable) for a
period not to exceed one (1) year after the Participant's death, but in no event
after the termination of the Option pursuant to its terms.
 
(iii) Death. If a Participant dies while in the employment or other service of
the Company, the Participant's estate or the devisee named in the Participant's
valid last will and testament or the Participant's heir at law who inherits the
Option has the right, at any time within a period not to exceed one (1) year
after the date of such Participant's death, but in no event after the
termination of the Option pursuant to its terms, to exercise, in whole or in
part, any portion of the vested Option held by such Participant at the date of
such Participant's death.
 
(iv) Termination for Cause. In the event the termination is for Cause or is a
voluntary termination within ninety (90) days after occurrence of an event which
would be grounds for termination of employment or other service by the Company
for Cause (without regard to any notice or cure period requirement), any Option
held by the Participant at the time of such termination shall be deemed to have
terminated and expired upon the date of such termination.
 

 
8.
STOCK APPRECIATION RIGHTS

 
(a)  Grant of Stock Appreciation Rights. Subject to the terms and conditions of
the Plan, the Committee may grant to such Eligible Individuals as the Committee
may determine, Stock Appreciation Rights, in such amounts, and on such terms and
conditions as the Committee shall determine in its sole and absolute discretion.
Each grant of a Stock Appreciation Right shall satisfy the requirements as set
forth in this Section.
 
(b)  Terms and Conditions of Stock Appreciation Rights. Unless otherwise
provided in an Award Agreement, the terms and conditions (including, without
limitation, the limitations on the Exercise Price, exercise period, repricing
and termination) of the Stock Appreciation Right shall be substantially
identical (to the extent possible taking into account the differences related to
the character of the Stock Appreciation Right) to the terms and conditions that
would have been applicable under Section 7 above were the grant of the Stock
Appreciation Rights a grant of an Option.
 
(c)  Exercise of Stock Appreciation Rights. Stock Appreciation Rights shall be
exercised by a Participant only by written notice delivered to Solitron,
specifying the number of shares of Common Stock with respect to which the Stock
Appreciation Right is being exercised.
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(d)  Payment of Stock Appreciation Right. Unless otherwise provided in an Award
Agreement, upon exercise of a Stock Appreciation Right, the Participant or
Participant's estate, devisee or heir at law (whichever is applicable) shall be
entitled to receive payment, in cash, in shares of Common Stock, or in a
combination thereof, as determined by the Committee in its sole and absolute
discretion. The amount of such payment shall be determined by multiplying the
excess, if any, of the Fair Market Value of a share of Common Stock on the date
of exercise over the Fair Market Value of a share of Common Stock on the Grant
Date, by the number of shares of Common Stock with respect to which the Stock
Appreciation Rights are then being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to a Stock
Appreciation Right by including such limitation in the Award Agreement.
 

9.
RESTRICTED STOCK

 
(a) Grant of Restricted Stock. Subject to the terms and conditions of the Plan,
the Committee may grant to such Eligible Individuals as the Committee may
determine, Restricted Stock, in such amounts and on such terms and conditions as
the Committee shall determine in its sole and absolute discretion. Each grant of
Restricted Stock shall satisfy the requirements as set forth in this Section.
 
(b) Restrictions. The Committee shall impose such restrictions on any Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation; time based vesting restrictions, or the attainment of performance
goals.
 
(c) Certificates and Certificate Legend. With respect to a grant of Restricted
Stock, the Company may issue a certificate evidencing such Restricted Stock to
the Participant or issue and hold such shares of Restricted Stock for the
benefit of the Participant until the applicable restrictions expire. The Company
may legend the certificate representing Restricted Stock to give appropriate
notice of such restrictions. In addition to any such legends, each certificate
representing shares of Restricted Stock granted pursuant to the Plan shall bear
the following legend:
 
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, are subject
to certain terms, conditions, and restrictions on transfer as set forth in the
Solitron Devices, Inc. 2007 Stock Incentive Plan (the "Plan"), and in an
Agreement entered into by and between the registered owner of such shares and
Solitron Devices, Inc. (the "Company"), dated June 4, 2007 (the "Award
Agreement"). A copy of the Plan and the Award Agreement may be obtained from the
Secretary of the Company."
 
(d) Removal of Restrictions. Except as otherwise provided in the Plan, shares of
Restricted Stock shall become freely transferable by the Participant upon the
lapse of the applicable restrictions. Once the shares of Restricted Stock are
released from the restrictions, the Participant shall be entitled to have the
legend required by paragraph (c) above removed from the share certificate
evidencing such Restricted Stock and the Company shall pay or distribute to the
Participant all dividends and distributions held in escrow by the Company with
respect to such Restricted Stock.
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(e) Shareholder Rights. Unless otherwise provided in an Award Agreement, until
the expiration of all applicable restrictions, (i) the Restricted Stock shall be
treated as outstanding, (ii) the Participant holding shares of Restricted Stock
may exercise full voting rights with respect to such shares, and (iii) the
Participant holding shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such shares while they
are so held. If any such dividends or distributions are paid in shares of Common
Stock, such shares shall be subject to the same restrictions on transferability
and forfeitability as the shares of Restricted Stock with respect to which they
were paid. Notwithstanding anything to the contrary, at the discretion of the
Committee, all such dividends and distributions may be held in escrow by the
Company (subject to the same restrictions on forfeitability) until all
restrictions on the respective Restricted Stock have lapsed.
 
(f) Termination of Service. Unless otherwise provided in a Award Agreement, if a
Participant’s employment or other service with the Company terminates for any
reason, all unvested shares of Restricted Stock held by the Participant and any
dividends or distributions held in escrow by Solitron with respect to such
Restricted Stock shall be forfeited immediately and returned to the Company.
Notwithstanding anything in this Plan to the contrary, the Committee may
provide, in its sole and absolute discretion, that following the termination of
employment or other service of a Participant with the Company for any reason,
any unvested shares of Restricted Stock held by the Participant that vest solely
upon a future service requirement shall vest in whole or in part, at any time
subsequent to such termination of employment or other service.
 

 
10.
 CHANGE IN CONTROL

 
Unless otherwise provided in an Award Agreement, all Awards shall immediately
become exercisable or vested, without regard to any limitation imposed pursuant
to this Plan. Prior to a Change in Control of Solitron, the Committee may in its
sole and absolute discretion, provide on a case by case basis that (i) all
Awards shall terminate, provided that Participants shall have the right,
immediately prior to the occurrence of such Change in Control and during such
reasonable period as the Committee in its sole discretion shall determine and
designate, to exercise Awards in whole or in part, (ii)  all Awards shall
terminate provided that Participants shall be entitled to a cash payment equal
to the Change in Control Price with respect to shares subject to the Award net
of the Exercise Price thereof (if applicable), (iv) provide that, in connection
with a liquidation or dissolution of Solitron, Awards shall convert into the
right to receive liquidation proceeds net of the Exercise Price (if applicable)
and (v) any combination of the foregoing; provided, however, that all Awards
shall be treated as immediately exercisable and vested. The Committee shall not
take any action permitted by this Section unless counsel for Solitron determines
that such action will not result in adverse tax consequences to a Participant
under Section 409A of the Code. In the event that the Committee does not
terminate or convert an Award upon a Change in Control of Solitron, then the
Award shall be assumed, or substantially equivalent Awards shall be substituted,
by the acquiring, or succeeding corporation (or an affiliate thereof).
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11.
CHANGE IN STATUS OF PARENT OR SUBSIDIARY

 
Unless otherwise provided in an Award Agreement or otherwise determined by the
Committee, in the event that an entity which was previously a part of the
Company is no longer a part of the Company, as determined by the Committee in
its sole discretion, the Committee may, in its sole and absolute discretion (i)
provide on a case by case basis that some or all outstanding Awards held by a
Participant employed by or performing service for such entity may become
immediately exercisable or vested, without regard to any limitation imposed
pursuant to this Plan; (ii) provide on a case by case basis that some or all
outstanding Awards held by a Participant employed by or performing service for
such entity or business unit may remain outstanding, may continue to vest,
and/or may remain exercisable for a period not exceeding one (1) year, subject
to the terms of the Award Agreement and this Plan; and/or (iii) treat the
employment or other services of a Participant employed by such entity as
terminated if such Participant is not employed by Solitron or any entity that is
a part of the Company immediately after such event.
 

12.
REQUIREMENTS OF LAW

 
(a) Violations of Law. The Company shall not be required to sell or issue any
shares of Common Stock under any Award if the sale or issuance of such shares
would constitute a violation by the individual exercising the Award, the
Participant or the Company of any provisions of any law or regulation of any
governmental authority, including without limitation any provisions of the
Sarbanes-Oxley Act, and any other federal or state securities laws or
regulations. Any determination in this connection by the Committee shall be
final, binding, and conclusive. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Award, the issuance of
shares pursuant thereto or the grant of an Award to comply with any law or
regulation of any governmental authority.
 
(b) Registration. At the time of any exercise or receipt of any Award, the
Company may, if it shall determine it necessary or desirable for any reason,
require the Participant (or Participant’s heirs, legatees or legal
representative, as the case may be), as a condition to the exercise or grant
thereof, to deliver to the Company a written representation of present intention
to hold the shares for their own account as an investment and not with a view
to, or for sale in connection with, the distribution of such shares, except in
compliance with applicable federal and state securities laws with respect
thereto. In the event such representation is required to be delivered, an
appropriate legend may be placed upon each certificate delivered to the
Participant (or Participant’s heirs, legatees or legal representative, as the
case may be) upon the Participant's exercise of part or all of the Award or
receipt of an Award and a stop transfer order may be placed with the transfer
agent. Each Award shall also be subject to the requirement that, if at any time
the Company determines, in its discretion, that the listing, registration or
qualification of the shares subject to the Award upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with, the issuance or purchase of the shares thereunder, the Award may not be
exercised in whole or in part and the restrictions on an Award may not be
removed unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company in its sole discretion. The Participant shall provide the Company
with any certificates, representations and information that the Company requests
and shall otherwise cooperate with the Company in obtaining any listing,
registration, qualification, consent or approval that the Company deems
necessary or appropriate. The Company shall not be obligated to take any
affirmative action in order to cause the exercisability or vesting of an Award,
to cause the exercise of an Award or the issuance of shares pursuant thereto, or
to cause the grant of Award to comply with any law or regulation of any
governmental authority.
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(c) Withholding for Taxes; Set-Off for Debt. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock to a Participant under the
Plan, the Company shall have the right to require the Participant to remit to
the Company an amount sufficient to satisfy all federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. If such certificates have been delivered prior to
the time a withholding obligation arises, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
all federal, state or local withholding tax requirements at the time such
obligation arises and to withhold from other amounts payable to the Participant,
as compensation or otherwise, as necessary. Whenever payments under the Plan are
to be made to a Participant in cash, such payments shall be net of any amounts
sufficient to satisfy all federal, state and local withholding tax requirements.
In lieu of requiring a Participant to make a payment to the Company in an amount
related to the withholding tax requirement, the Committee may, in its
discretion, provide that at the Participant’s election, the tax withholding
obligation shall be satisfied by the Company’s withholding a portion of the
shares otherwise distributable to the Participant, such shares being valued at
their fair market value at the date of exercise, or by the Participant’s
delivering to the Company a portion of the shares previously delivered by the
Company, such shares being valued at their fair market value as of the date of
delivery of such shares by the Participant to the Company.
 
In addition, the Company shall have the right of set-off for debt to the Company
(Employee Debt) incurred by a Participant whose employment has terminated but
who exercises options subject to the Plan. In such instance, the Company may
withhold payment or portion of the shares otherwise distributable to the
Participant, such shares being valued at their fair market value at the date of
the exercise, in an amount equal to such Employee Debt (which may include, but
is not limited to, amounts owed the Company for breaches of any security
agreement, relocation expense agreement or other indebtedness).
 
(d) Governing Law. The Plan shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware.
 

13.
GENERAL PROVISIONS

 
(a) Award Agreements. All Awards granted pursuant to the Plan shall be evidenced
by an Award Agreement. Each Award Agreement shall specify the terms and
conditions of the Award granted and shall contain any additional provisions, as
the Committee shall deem appropriate, in its sole and absolute discretion
(including, to the extent that the Committee deems appropriate, provisions
relating to confidentiality, non-competition, non-solicitation and similar
matters). The terms of each Award Agreement need not be identical for Eligible
Individuals provided that all Award Agreements comply with the terms of the
Plan.
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(b) Purchase Price. To the extent the purchase price of any Award granted
hereunder is less than par value of a share of Common Stock and such purchase
price is not permitted by applicable law, the per share purchase price shall be
deemed to be equal to the par value of a share of Common Stock.
 
(c) Dividends and Dividend Equivalents. Except as provided by the Committee in
its sole and absolute discretion or as otherwise provided in this Plan, a
Participant shall not be entitled to receive, currently or on a deferred basis,
cash or stock dividends, Dividend Equivalents, or cash payments in amounts
equivalent to cash or stock dividends on shares of Commons Stock covered by an
Award which has not vested or an Option. The Committee in its absolute and sole
discretion may credit a Participant's Award with Dividend Equivalents with
respect to any Awards. To the extent that dividends and distributions relating
to an Award are held in escrow by the Company, or Dividend Equivalents are
credited to an Award, a Participant shall not be entitled to any interest on any
such amounts.
 
(d) Deferral of Awards. The Committee may from time to time establish procedures
pursuant to which a Participant may elect to defer, until a time or times later
than the vesting of an Award, receipt of all or a portion of the shares of
Common Stock or cash subject to such Award and to receive Common Stock or cash
at such later time or times, all on such terms and conditions as the Committee
shall determine. The Committee shall not permit the deferral of an Award unless
counsel for Solitron determines that such action will not result in adverse tax
consequences to a Participant under Section 409A of the Code. If any such
deferrals are permitted, then notwithstanding anything to the contrary herein, a
Participant who elects to defer receipt of Common Stock shall not have any
rights as a shareholder with respect to deferred shares of Common Stock unless
and until shares of Common Stock are actually delivered to the Participant with
respect thereto, except to the extent otherwise determined by the Committee.
 
(e) Prospective Employees. Notwithstanding anything to the contrary, any Award
granted to a Prospective Employee shall not become vested prior to the date the
Prospective Employee first becomes an employee of the Company.
 
(f) Issuance of Certificates; Shareholder's Rights. Solitron shall deliver to
the Participant a certificate evidencing the Participant's ownership of shares
of Common Stock issued pursuant to the exercise of an Award as soon as
administratively practicable after satisfaction of all conditions relating to
the issuance of such shares. A Participant shall not have any of the rights of a
shareholder with respect to such Common Stock prior to satisfaction of all
conditions relating to the issuance of such Common Stock, and, except as
expressly provided in the Plan, no adjustment shall be made for dividends,
distributions or other rights of any kind for which the record date is prior to
the date on which all such conditions have been satisfied.
 
(g) Transferability of Awards. A Participant may not Transfer an Award other
than by will or the laws of descent and distribution. Awards may be exercised
during the Participant's lifetime only by the Participant. No Award shall be
liable for or subject to the debts, contracts, or liabilities of any
Participant, nor shall any Award be subject to legal process or attachment for
or against such person. Any purported Transfer of an Award in contravention of
the provisions of the Plan shall have no force or effect and shall be null and
void, and the purported transferee of such Award shall not acquire any rights
with respect to such Award. Notwithstanding anything to the contrary, the
Committee may in its sole and absolute discretion permit the Transfer of an
Award to a Participant's "family member" as such term is defined in the Form S-8
Registration Statement under the Securities Act of 1933, as amended, under such
terms and conditions as specified by the Committee. In such case, such Award
shall be exercisable only by the transferee approved of by the Committee.
 
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(h) Buyout and Settlement Provisions. Except as otherwise prohibited in the
Plan, the Committee may at any time on behalf of Solitron offer to buy out any
Awards previously granted based on such terms and conditions as the Committee
shall determine which shall be communicated to the Participants at the time such
offer is made.
 
(i) Use of Proceeds. The proceeds received by Solitron from the issuance of
Common Stock pursuant to Awards granted under the Plan shall constitute general
funds of Solitron.
 
(j) Modification or Substitution of an Award. Subject to the terms and
conditions of the Plan, the Committee may modify outstanding Awards.
Notwithstanding the following, no modification of an Award shall adversely
affect any rights or obligations of the Participant under the applicable Award
Agreement without the Participant's consent. The Committee in its sole and
absolute discretion may rescind, modify, or waive any vesting requirements or
other conditions applicable to an Award.
 
(k) Amendment and Termination of Plan. The Board may, at any time and from time
to time, amend, suspend or terminate the Plan as to any shares of Common Stock
as to which Awards have not been granted. Except as otherwise provided for in
the Plan, no amendment, suspension or termination of the Plan shall, without the
consent of the holder of an Award, alter or impair rights or obligations under
any Award theretofore granted under the Plan. Awards granted prior to the
termination of the Plan may extend beyond the date the Plan is terminated and
shall continue subject to the terms of the Plan as in effect on the date the
Plan is terminated
 
(l) Section 409A of the Code. With respect to Awards subject to Section 409A of
the Code, this Plan is intended to comply with the requirements of such Section,
and the provisions hereof shall be interpreted in a manner that satisfies the
requirements of such Section and the related regulations, and the Plan shall be
operated accordingly. If any provision of this Plan or any term or condition of
any Award would otherwise frustrate or conflict with this intent, the provision,
term or condition will be interpreted and deemed amended so as to avoid this
conflict.
 
(m) Notification of 83(b) Election. If in connection with the grant of any Award
any Participant makes an election permitted under Code Section 83(b), such
Participant must notify the Company in writing of such election within ten (10)
days of filing such election with the Internal Revenue Service.
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(n) Detrimental Activity. All Awards shall be subject to cancellation by the
Committee in accordance with the terms of this Section 13(n) if the Participant
engages in any Detrimental Activity. To the extent that a Participant engages in
any Detrimental Activity at any time prior to, or during the one year period
after, any exercise or vesting of an Award but prior to a Change in Control, the
Company shall, upon the recommendation of the Committee, in its sole and
absolute discretion, be entitled to (i) immediately terminate and cancel any
Awards held by the Participant that have not yet been exercised, and/or (ii)
with respect to Awards of the Participant that have been previously exercised,
recover from the Participant at any time within two (2) years after such
exercise but prior to a Change in Control (and the Participant shall be
obligated to pay over to the Company with respect to any such Award previously
held by such Participant): (A) with respect to any Options exercised, an amount
equal to the excess of the Fair Market Value of the Common Stock for which any
Option was exercised over the Exercise Price paid (regardless of the form by
which payment was made) with respect to such Option; (B) with respect to any
Award other than an Option, any shares of Common Stock granted and vested
pursuant to such Award, and if such shares are not still owned by the
Participant, the Fair Market Value of such shares on the date they were issued,
or if later, the date all vesting restrictions were satisfied; and (C) any cash
or other property (other than Common Stock) received by the Participant from the
Company pursuant to an Award. Without limiting the generality of the foregoing,
in the event that a Participant engages in any Detrimental Activity at any time
prior to any exercise of an Award and the Company exercises its remedies
pursuant to this Section 13(n) following the exercise of such Award, such
exercise shall be treated as having been null and void, provided that the
Company will nevertheless be entitled to recover the amounts referenced above.
 
(o) Disclaimer of Rights. No provision in the Plan, any Award granted or any
Award Agreement entered into pursuant to the Plan shall be construed to confer
upon any individual the right to remain in the employ of or other service with
the Company or to interfere in any way with the right and authority of the
Company either to increase or decrease the compensation of any individual,
including any holder of an Award, at any time, or to terminate any employment or
other relationship between any individual and the Company. The grant of an Award
pursuant to the Plan shall not affect or limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets.
 
(p) Unfunded Status of Plan. The Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to such Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
 
(q) Nonexclusivity of Plan. The adoption of the Plan shall not be construed as
creating any limitations upon the right and authority of the Board to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable.
 
(r) Other Benefits. No Award payment under the Plan shall be deemed compensation
for purposes of computing benefits under any retirement plan of the Company or
any agreement between a Participant and the Company, nor affect any benefits
under any other benefit plan of the Company now or subsequently in effect under
which benefits are based upon a Participant's level of compensation.
 
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(s) Headings. The section headings in the Plan are for convenience only; they
form no part of this Agreement and shall not affect its interpretation.
 
(t) Pronouns. The use of any gender in the Plan shall be deemed to include all
genders, and the use of the singular shall be deemed to include the plural and
vice versa, wherever it appears appropriate from the context. 
 
(u) Successors and Assigns. The Plan shall be binding on all successors of the
Company and all successors and permitted assigns of a Participant, including,
but not limited to, a Participant's estate, devisee, or heir at law.
 
(v) Severability. If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
 
(w) Notices. Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, to Solitron, to its principal place of business, attention:
Shevach Saraf, Chief Executive Officer and if to the holder of an Award, to the
address as appearing on the records of the Company.
 
 
 
 
 
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