Exhibit 10.3


 


SOLITRON
DEVICES, INC.


 


STAND-ALONE
OPTION GRANT AGREEMENT


 


THIS
STAND-ALONE OPTION GRANT AGREEMENT (this “Agreement”) is effective as of the 17th day of May, 2004
(the “Grant Date”) by and between Solitron Devices, Inc., a Delaware corporation (the “Company”), and
Shevach Saraf (the “Optionee”).


 


RECITALS


 


WHEREAS,
the Optionee and the Company wish to memorialize herein in greater detail certain provisions of the Company's May 17, 2004 grant
to the Optionee.


 


NOW,
THEREFORE, in consideration of the mutual promises and covenants made herein and the mutual benefits to be derived herefrom
and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:


 


1.         Grant
of Option.  This Agreement evidences the Company’s May 17, 2004 grant to the Optionee of the right and
option (the "Option") to purchase, subject to and on the terms and conditions set forth herein, the aggregate of 175,636
shares (the “Option Shares”) of Company Common Stock (as defined below), at an exercise price equal to $1.05 per Option
Share, which is at least equal to the fair market value of such Option Shares on the Grant Date for purposes of Section 409A of
the Internal Revenue Code of 1986, as amended ("Section 409A of the Code"). For purposes of this Agreement, Company
Common Stock shall mean common stock of the Company, $0.01 par value per share, or, in the event that the outstanding Company
common stock is hereafter changed into or exchanged for different stock or securities, such other stock or securities, as provided
for herein.


 


2.          Method
of Exercise of Option and Option Period. The Option may be exercised in whole or in part by giving written notice to the
Company, in the form approved by the Company, specifying the number of Option Shares to be purchased, accompanied by payment in
full of the purchase price, in cash, or by check or any other consideration as may be acceptable to the Company in its
sole and absolute discretion. Unless terminated pursuant to this Agreement, this Option shall continue indefinitely.


 


3.          Tax
Withholding.  The Company may make such provisions and take such steps as it may deem necessary or appropriate
for the withholding of any taxes that the Company is required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the grant, vesting or exercise of an Option, including,
but not limited to: (i) an Optionee may elect, subject to the approval in advance by the Company, to satisfy the withholding requirement,
if any, in whole or in part, by having the Company withhold shares of Company Common Stock that would otherwise be transferred
to Optionee having a fair market value, on the date the tax is to be determined, equal to the Company's tax withholding obligation
in connection with the Option, provided that such election is made in writing and signed by the Optionee; (ii) withholding the
amount due from any such person’s wages or compensation due to such person; or (iii) requiring the Optionee to pay the Company
cash in the amount the Company is required to withhold with respect to such taxes as condition to the exercise of the Option.


 



    	 



    	 



    

 


4.          No
Transferability; Limited Exception to Transfer Restrictions.  The Option is not transferable and may be exercised
solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the
laws of descent and distribution.  The Company, in its sole discretion, may permit a transfer of the Option in whole
or in part to (a) a trust for the benefit of the Optionee, (b) a member of the Optionee’s immediate family (or a trust for
his or her benefit) or (c) pursuant to a domestic relations order. Any attempt to transfer, assign, pledge or otherwise dispose
of, or to subject to execution, attachment or similar process, the Option in whole or in part contrary to the provisions hereof
shall be void and ineffective and shall give no right to the purported transferee.


 


5.          No
Employment Rights.  Nothing contained in this Agreement shall confer upon the Optionee any right to continue
in the employ or other service of the Company or any of its subsidiaries, nor constitute any contract or agreement of employment
or other service, nor shall interfere in any way with the right of the Company to change the Optionee’s compensation or
other benefits or to terminate the employment of the Optionee, with or without cause; provided, however, that nothing
contained in this Agreement shall adversely affect any independent contractual right of the Optionee, including but not limited
to the Optionee’s rights under the Employment Agreement, without his consent thereto.


 


6.          Regulations.  This
Agreement, the grant and exercise of the Option hereunder and the obligation of the Company to issue Option Shares under the Option
shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national
securities exchanges and interdealer quotation systems as may be required.  Additionally, notwithstanding any other
provision in this Agreement, the Option may not be exercised in whole or in part unless and until the Option Shares to be issued
upon the exercise thereof have been registered under the Securities Act of 1933, as amended, and applicable state securities laws,
or are, in the opinion of counsel to the Company, exempt from such registration in the United States.  The Company shall
not be under any obligation to register under applicable federal or state securities laws any Option Shares to be issued upon
the exercise of the Option granted hereunder in order to permit the exercise of the Option in whole or in part and the issuance
and sale of Option Shares subject to the Option, although the Company may in its sole discretion register Option Shares at such
time as the Company shall determine.  If exemption from registration is utilized, the Option Shares to be issued upon
the exercise of the Option may bear the restrictive legends set forth in Section 7. Further, the Company may give appropriate
stop transfer instructions with respect to the Option Shares to the Company’s transfer agent.


 


7.          Legends.
All certificates representing the Option Shares shall, when applicable, have endorsed thereon the following legends:


 


“THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
OR QUALIFICATION THEREOF UNDER SUCH ACT AND SUCH APPLICABLE STATE OR OTHER JURISDICTION’S SECURITIES LAWS OR AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.”


 






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8.          Adjustment
and Termination upon Certain Events.


 


8.1        Adjustments.  If
following the Grant Date, there is any reclassification, recapitalization, stock split, stock dividend, reorganization, merger,
combination, consolidation, split-up, spin-off, combination, repurchase, or exchange of Company Common Stock or other securities
of the Company, or there shall occur any similar, unusual or extraordinary transaction or event in respect of the Company Common
Stock, then the Company shall make appropriate and equitable adjustment to any or all of (i) the number, percentage and/or
type of Company Common Stock (or other securities) which are the subject of the Option and/or, (ii)  the purchase, or
exercise price of the Option Shares pursuant to the Option.


 


8.2        Termination.
The Option shall expire upon exercise and, if the Optionee’s employment with and other service to the Company and its
subsidiaries terminates for any reason, the Option shall expire 1 year following such termination.


 


9.          Limitation
of Liability.  No shareholder of the Company, or any officer or employee of the Company acting on behalf of
the Company, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect
to this Agreement, and all shareholders of the Company and each and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination
or interpretation.


 


10.         Assignment.  Except
as expressly provided herein, neither this Agreement nor any of the rights or obligations hereunder may be assigned or delegated
by any party hereto without the express written consent of the other party hereto, provided, however, that no consent will be
required for the assignment to any successor to all or substantially all of the Company’s assets or business (whether by
purchase, merger, consolidation or otherwise).


 


11.         Notices.  All
notices provided for in this Agreement will be in writing signed by the party giving such notice sent by (i) registered or certified
mail, return receipt requested, (ii) any prepaid overnight courier delivery service then in general use, (iii) hand or (iv) facsimile
transmission or similar means of communication if such transmission of such notice is confirmed immediately by any of the other
means set forth above, as follows:


 


If
to the Company:


 


Solitron
Devices, Inc.


3301
Electronics Way


West
Palm Beach, Florida 33407


 






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If
to Optionee:  


 


Shevach
Saraf


3301
Electronics Way


West
Palm Beach, Florida 33407


 


or
at such other address as will be indicated to either party in writing.  Notice of change of address will be effective
only upon receipt. A notice provided in the manner required herein will be deemed given: (i) if delivered personally, upon delivery;
(ii) if sent by overnight courier, on the first business day after it is sent; (iii) if mailed, three business days after mailing;
and (iv) if sent by fax, upon actual receipt of the fax or confirmation thereof (whichever is first).


 


12.        Waiver.  The
Company’s failure to enforce any provision of this Agreement will not constitute a waiver of its right to enforce such provision.  The
parties reserve the right to waive by mutual written consent for a specific period and under specific conditions any provision
of this Agreement, provided that such waiver shall be limited to the period and conditions specified by mutual written consent
and shall in no way constitute a general waiver, or be considered as evidence of any given interpretation of any provision so
waived.


 


13.        Governing
Law; Jurisdiction.  This Agreement will be governed and construed in accordance with the laws of the State of
Florida applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts
of law. Each party agrees that any action or proceedings relating to this Agreement seeking injunctive relief or enforcement of
an arbitration award may be instituted against such party in any appropriate court in the State of Florida and hereby irrevocably
submits to the jurisdiction of the State of Florida and Federal courts of the State of Florida and waives any claim of forum nonconveniens
with respect thereto.


 


14.        Descriptive
Headings.  The Section headings contained herein are for reference purposes only and will not in any way affect
the meaning or interpretation of this Agreement.


 


15.        Severability.  If
any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible,
to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.


 


16.        Entire
Agreement.  The parties hereto acknowledge that each has read this Agreement, understands it, and agrees to
be bound by its terms.  The parties further agree that this Agreement, the Employment Agreement and any modifications
made pursuant hereto and thereto constitute the complete and exclusive written expression of the terms of the agreement between
the parties, and supercede all prior or contemporaneous proposals, oral or written, understandings, representations, conditions,
warranties, covenants, and all other communications between the parties relating to the Option.  This Agreement may
not be amended, changed or modified absent a writing signed by both parties.  


 


17.        Counterparts.  This Agreement may be executed in one or more counterparts, which, together, will constitute
one and the same agreement.


 


18.        Section
409A of the Code. The Agreement is intended not to provide for deferral of compensation for purposes of Section 409A of
the Code. The provisions of the Agreement shall be interpreted in a manner that promotes the intent expressed in the immediately
preceding sentence and the Agreement shall be administered accordingly. If any provision, term or condition of the Agreement would
otherwise frustrate or conflict with this intent, the provision, term or condition will be interpreted and deemed amended so as
to avoid such conflict.


 


In
the event that following the application of the immediately preceding paragraph, the Option is subject to Section 409A of the
Code, the provisions of Section 409A of the Code and the regulations issued thereunder are incorporated herein by reference to
the extent necessary for the Option to comply therewith. In such event, the provisions of the Agreement shall be interpreted in
a manner that satisfies the requirements of Section 409A of the Code and the related regulations, and the Agreement shall be administered
accordingly. If any provision of the Plan or any term or condition of any Option 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.


 


Notwithstanding
any other provisions of the Agreement, the Company does not guarantee to the Optionee that the Option is exempt from or complies
with Section 409A of the Code, nor will the Company indemnify, defend or hold harmless any individual with respect to the tax
consequences of any failure to be so exempt or to so comply.


 


19.         Compliance
With Laws.  Notwithstanding anything else contained herein to the contrary, this Agreement, the granting and
vesting of the Option and the offer, issuance and delivery of Company Common Stock under this Agreement are subject to compliance
with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities laws)
and to such approvals by any listing, regulatory or governmental authority as may be necessary or advisable in connection therewith.
Any securities delivered in respect of this Agreement will be subject to such restrictions, and the person acquiring such securities
will, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements.


 


[Signatures
on the Next Page]


 









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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on May 13, 2013.


 


	 	SOLITRON DEVICES, INC.
	 	 
	 	/s/ Jacob Davis
	 	Name:	Dr. Jacob Davis
	 	Title:	Chairman, Compensation Committee


 


	 	SHEVACH SARAF
	 	 
	 	
        /s/ Shevach Saraf 



 


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