Document:

Exhibit
4.1

 

AMENDMENT
NO. 1 TO RIGHTS AGREEMENT

 

This
Amendment No. 1 to Rights Agreement (this “Amendment”), dated as of May 12, 2017, between Solitron Devices, Inc.,
a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation,
as Rights Agent (the “Rights Agent”), amends the Rights Agreement, dated as of May 29, 2012, between the Company and
the Rights Agent (the “Rights Agreement”); all capitalized terms not defined herein shall have the meanings ascribed
to such terms in the Rights Agreement.

 

WHEREAS,
the Board of Directors of the Company has determined that it is desirable to amend the Rights Agreement as set forth herein;

 

WHEREAS,
subject to certain limited exceptions, Section 27 of the Rights Agreement provides that the Company may in its sole and absolute
discretion (and the Rights Agent shall if the Company so directs) amend the Rights Agreement without the approval of any holders
of the Rights;

 

WHEREAS,
this Amendment is permitted by Section 27 of the Rights Agreement; and

 

WHEREAS,
pursuant to Section 27, the Company hereby directs that the Rights Agreement shall be amended as set forth in this Amendment.

 

NOW
THEREFORE, in consideration of the foregoing premises and mutual covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Rights Agent hereby
agree as follows:

 

Section
1.  Amendment to Section 1(o). Section 1(o) of the Rights Agreement is hereby amended to read in its entirety as follows:

 

“(o)
“Final Expiration Date” shall mean the Close of Business on May 12, 2017.”

 

Section
2.  Addition of New Section 35. The Rights Agreement is amended by adding a new Section 35 thereof which shall read
as follows:

 

“Section
35. Termination. Notwithstanding any provision of this Agreement to the contrary, except for those provisions herein that
expressly survive the termination of this Agreement, this Agreement shall terminate and shall have no further force or effect
as of May 12, 2017 and all Rights established hereunder shall automatically expire at such time.”

 

Section
3.  Effective Date; Certification. This Amendment shall be deemed effective as of the date first written above, as if executed
on such date. The officer of the Company executing this Amendment hereby certifies to the Rights Agent that the amendment to the
Rights Agreement set forth in this Amendment is in compliance with Section 27 of the Rights Agreement and the certification contained
in this Section 3 shall constitute the certification required by Section 27 of the Rights Agreement.

 

    	 		 

     

    

 

Section
4.  Governing Law. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by, and construed in accordance with, the laws of such State applicable to contracts made and to be
performed entirely within such State; provided, however, that all provisions regarding the rights, obligations, duties and liabilities
of the Rights Agent hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable
to contracts made and to be performed entirely within such State.

 

Section
5.  Severability. The terms, provisions, covenants or restrictions of this Amendment shall be deemed severable and the invalidity
or unenforceability of any term, provision, covenant or restriction shall not affect the validity or enforceability of any other
term, provision, covenant or restriction hereof.  If any term, provision, covenant or restriction of this Amendment, or the
application thereof to any person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable term, provision,
covenant or restriction shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent
and purpose of such invalid or unenforceable term, provision, covenant or restriction and (b) the remainder of this Amendment
and the application of such term, provision, covenant or restriction to other Persons or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such
term, provision, covenant or restriction, or the application thereof, in any other jurisdiction; provided further, that if any
such excluded term, provision, covenant or restriction shall adversely affect the rights, immunities, duties or obligations of
the Rights Agent, the Rights Agent shall be entitled to resign immediately.

 

Section
6.  Counterparts. This Amendment may be executed in any number of counterparts (including by facsimile, PDF or similar method)
and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

 

Section
7.  No Modification. Except as expressly set forth herein, this Amendment shall not by implication or otherwise alter, modify,
amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Rights Agreement,
all of which are ratified and affirmed in all respects and shall continue in full force and effect.

 

Section
8.  Headings. The headings of the sections of this Amendment have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof.

 

 

[Signature
Page Follows]

 

 

    	 	2	 

     

    

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date and year first above written.

 

	 	SOLITRON
    DEVICES, INC.
	 	 	 
	 	By:	/s/
    Tim Eriksen
	 	Name:	Tim
    Eriksen
	 	Title:	Chief
    Executive Officer

 

	 	CONTINENTAL
    STOCK TRANSFER & TRUST COMPANY,
	 	as Rights Agent
	 	 	 
	 	By:	/s/
    Henry Farrell
	 	Name:	Henry
    Farrell
	 	Title:	Vice
    President and Account Administrator

 

 

 

3Exhibit 4.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Solitron
                                         Devices, Inc.

 

and

 

Continental
Stock Transfer & Trust Company

 

as
Rights Agent

 

Rights
Agreement

 

Dated
as of May 12, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

     

    

 

RIGHTS
AGREEMENT

 

Rights
Agreement, dated as of May 12, 2017 (this “Agreement”), between Solitron Devices, Inc., a Delaware corporation
(the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as Rights Agent
(the “Rights Agent”).

 

RECITALS

 

WHEREAS,
the Board of Directors (the “Board”) of the Company adopted this Agreement, and has authorized and declared
a dividend of one preferred stock purchase right (a “Right”) for each share of Common Stock (as defined in
Section 1.6) of the Company outstanding at the close of business on May 12, 2017 (the “Record Date”)
and has authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each share
of Common Stock that shall become outstanding between the Record Date and the earliest of the Distribution Date and the Expiration
Date (as such terms are defined in Sections 3.1 and 7.1), each Right initially representing the right to purchase one one-hundredth
(subject to adjustment) of a share of Series A Junior Participating Preferred Stock (the “Preferred Stock”)
of the Company having the rights, powers and preferences set forth in the form of Certificate of Designation of Series A Junior
Participating Preferred Stock attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth, provided, however, that Rights may be issued with respect to Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section 22;

 

WHEREAS,
an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”),
in respect of the Company may jeopardize or endanger the value or availability of certain of the Company’s tax attributes
(the, “Tax Attributes”); and

 

WHEREAS,
the Company views its Tax Attributes as a valuable asset of the Company, which is likely to inure to the benefit of the Company
and its stockholders, and the Company believes that it is in the best interests of the Company and its stockholders that the Company
provide for the protection of the Tax Attributes on the terms and conditions set forth herein; and

 

WHEREAS,
in addition, the Board has determined that it is desirable and in the best interests of the Company and its stockholders that
steps be taken to preserve for the Company’s stockholders the long-term value of the Company in the event of a takeover.

 

     

     

    

 

NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section
1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

 

1.1.
       “Acquiring Person” shall mean any Person who or which, together with
all Affiliates and Associates of such Person, from and after the date of this Agreement shall be the Beneficial Owner of 4.99%
or more of the Common Stock then outstanding, but shall not include (i) an Exempt Person, (ii) any Person who or which becomes
the Beneficial Owner of 4.99% or more of the Common Stock solely as a result of equity compensation awards granted to such Person
by the Company or as a result of an adjustment to the number of shares of Common Stock represented by such equity compensation
award pursuant to the terms thereof, unless and until such time, in the case of this clause (ii), as such Person or one or more
of its Affiliates or Associates thereafter acquires Beneficial Ownership of one additional share of Common Stock (other than Common
Stock acquired as described in clause (ii) or pursuant to a dividend or distribution paid or made by the Company on the outstanding
Common Stock in Common Stock or pursuant to a split or reclassification of the outstanding Common Stock) or (iii) any Existing
Holder, unless and until such time as such Existing Holder shall become the Beneficial Owner of (A) one or more additional shares
of Common Stock (excluding any shares of Common Stock acquired after the first public announcement of the adoption of this Agreement
in the manner described in the immediately preceding clause (ii) or pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock in Common Stock or pursuant to a split or reclassification of the outstanding Common Stock)
or (B) less than 4.99% of the Common Stock then outstanding (after which time, if such Person shall be the Beneficial Owner of
4.99% or more of the Common Stock then outstanding (other than by virtue of acquiring Beneficial Ownership of any shares of Common
Stock in the manner described in the immediately preceding clause (ii) or pursuant to a dividend or distribution paid or made
by the Company on the outstanding Common Stock in Common Stock or pursuant to a split or reclassification of the outstanding Common
Stock), such Person shall be or become deemed an “Acquiring Person”). Notwithstanding the foregoing, no Person shall
become an “Acquiring Person” as the result of an acquisition of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares Beneficially Owned by such Person to 4.99% or more
of the Common Stock then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 4.99% or
more of the Common Stock then outstanding solely by reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of one or more additional shares of Common Stock (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Stock in Common Stock or pursuant to a split or subdivision
of the outstanding Common Stock), then such Person shall be deemed to be an “Acquiring Person” unless, upon becoming
the Beneficial Owner of such additional Common Stock, such Person does not Beneficially Own 4.99% or more of the Common Stock
then outstanding. Notwithstanding the foregoing, if the Board determines in good faith that a Person who would otherwise be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this Section 1.1, has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it Beneficially Owned a percentage of Common Stock that
would otherwise cause such Person to be an “Acquiring Person” or (B) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement),
and such Person divests as promptly as practicable (as determined in good faith by the Board) a sufficient number of shares of
Common Stock so that such Person would no longer be an Acquiring Person, as defined pursuant to the foregoing provisions of this
Section 1.1, then such Person shall not be deemed to be or have become an “Acquiring Person” at any time for
any purposes of this Agreement. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding
at any particular time, for purposes of determining the particular percentage of such outstanding Common Stock of which any Person
is the Beneficial Owner, shall be made pursuant to and in accordance with Section 382 of the Code and the Treasury Regulations
promulgated thereunder.

 

    	 	2	 

     

    

 

1.2.
       “Affiliate” and “Associate” shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), as in effect on the date of this Agreement, and, to the extent not included
within the foregoing clause of this Section 1.2, shall also include, with respect to any Person, any other Person (other than
an Exempt Person or an Existing Holder) whose Common Stock would be deemed constructively owned by such first Person, owned by
a “single entity” with respect to such first Person as defined in Section 1.382-3(a)(1) of the Treasury Regulations,
or otherwise aggregated with shares owned by such first Person, pursuant to the provisions of Section 382 of the Code and the
Treasury Regulations promulgated thereunder.

 

1.3.
       A Person shall be deemed the “Beneficial Owner” of and shall be deemed
to “Beneficially Own” or have “Beneficial Ownership” of any securities:

 

1.3.1.       which
such Person or any of such Person’s Affiliates or Associates directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (A) voting power which includes the power to vote, or to direct
the voting of, such security (except that a Person shall not be deemed to be the Beneficial Owner of any security under this clause (A)
if such voting power arises solely from a revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by means of a solicitation statement
filed on Schedule 14A), and/or (B) investment power which includes the power to dispose, or to direct the disposition of
such security;

 

1.3.2.       which
such Person or any of such Person’s Affiliates or Associates directly or indirectly, has the Right to Acquire; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, (w) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (x) securities which such Person has a Right to Acquire upon the
exercise of Rights at any time prior to the time that any Person becomes an Acquiring Person (except to the extent the acquisition
or transfer of such rights, options or warrants would be treated as exercised on the date of its acquisition or transfer under
Section 1.382-4(d) of the Treasury Regulations under Section 382 of the Code), or (y) securities issuable upon the exercise of
Rights from and after the time that any Person becomes an Acquiring Person if such Rights were acquired by such Person or any
of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3.1 or Section 22
(“Original Rights”) or pursuant to Section 11.9 or Section 11.15 with respect to
an adjustment to Original Rights;

 

    	 	3	 

     

    

 

1.3.3.       which
are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with whom such Person
or any of such Person’s Affiliates or Associates, has an agreement, arrangement or understanding to act together for the
purpose of acquiring, holding, voting or disposing of any securities of the Company, provided that the foregoing shall apply only
if the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity” under Section
1.382-3(a)(1) of the Treasury Regulations under Section 382 of the Code (except that a Person shall not be deemed to be the Beneficial
Owner of any security under this clause 1.3.3 if such voting power arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, Section 14(a) of
the Exchange Act by means of a solicitation statement filed on Schedule 14A);

 

1.3.4.       of
which such Person would otherwise be deemed to be the beneficial owner pursuant to Rule 13d-3 under the Exchange Act; or

 

1.3.5.       which
such Person would be deemed to actually or constructively own for purposes of Section 382 of the Code, or any successor provision
or replacement provision.

 

No
Person shall be deemed to be the “Beneficial Owner” of, to have “Beneficial Ownership” of or to “Beneficially
Own” any securities which such Person or any of such Person’s Affiliates or Associates would otherwise be deemed to
“Beneficially Own” pursuant to this Section 1.3 (x) solely as a result of any merger or other acquisition agreement
between the Company and such Person (or one or more of such Person’s Affiliates or Associates), or any tender, voting or
support agreement entered into by such Person (or one or more of such Person’s Affiliates or Associates) in connection therewith,
if, prior to such Person becoming an Acquiring Person, the Board has approved such merger or other acquisition agreement, or such
tender, voting or support agreement, (y) solely as a result of the Right to Acquire such securities unless the acquisition or
transfer of such Right to Acquire would be deemed, on the date of such acquisition or transfer, to constitute the exercise of
such Right to Acquire for the purposes of Section 1.382-4(d) of the Treasury Regulations promulgated under Section 382 of the
Code, or (z) solely as a result of any agreement, arrangement, understanding or relationship unless the effect thereof is to treat
such Person, or any of such Person’s Affiliates or Associates, as an “entity” under Section 1.382-3(a)(1) of
the Treasury Regulations promulgated under Section 382 of the Code.

 

No
Person who is an officer, director or employee of an Exempt Person shall be deemed, solely by reason of such Person’s status
or authority as such, to be the “Beneficial Owner” of, to have “Beneficial Ownership” of or to “Beneficially
Own” any securities that are “Beneficially Owned” (as defined in this Section 1.3), including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director or employee of an Exempt Person.

 

1.4.
       “Business Day” shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

1.5.
       “close of business” on any given date shall mean 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 p.m., New York time,
on the next succeeding Business Day.

 

1.6.
       “Common Stock” shall mean the common stock, par value $0.01 per share,
of the Company.

 

    	 	4	 

     

    

 

1.7.
       “Exempt Person” shall mean (i) the Company, any Subsidiary of the
Company, in each case including, without limitation, the officers and board of directors thereof acting in their fiduciary capacity,
or any employee benefit plan of the Company or of any Subsidiary of the Company or any entity or trustee holding shares of capital
stock of the Company for or pursuant to the terms of any such plan, or for the purpose of funding other employee benefits for
employees of the Company or any Subsidiary of the Company, (ii) any Person deemed to be an “Exempt Person” in accordance
with Section 28, and (iii) any other Person whose Beneficial Ownership (together with all Affiliates and Associates of
such Person) of shares in excess of 4.99% of the then-outstanding Common Stock will not, as determined by the Board in its sole
discretion, jeopardize or endanger the value or availability to the Company of the Tax Attributes, or if the Board has determined
in good faith that such Person shall be an “Exempt Person”; provided, however, that any Person deemed
to be an “Exempt Person” pursuant to subclauses (ii) or (iii) will cease to be an “Exempt Person” if the
Board thereafter makes a determination that such Person’s Beneficial Ownership (together with all Affiliates and Associates
of such Person) would, notwithstanding its prior determination to the contrary, jeopardize or endanger the value or availability
to the Company of the Tax Attributes.

 

1.8.
       “Existing Holder” shall mean any Person (together with all Affiliates
and Associates of such Person) who, immediately prior to the first public announcement of the adoption of this Agreement, is the
Beneficial Owner of 4.99% or more of the Common Stock then outstanding, together with any Affiliates and Associates of such Person.
Any Existing Holder who (together with all Affiliates and Associates of such Existing Holder), after the first public announcement
of the adoption of this Agreement becomes the Beneficial Owner of less than 4.99% of the Common Stock then outstanding shall cease
to be an Existing Holder and shall be subject to all the provisions of this Agreement in the same manner as any Person who is
not and was not an Existing Holder.

 

1.9.
       “Person” shall mean any individual, partnership, joint venture, limited
liability company, firm, corporation, unincorporated association, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.

 

1.10.
       “Right to Acquire” shall mean a legal, equitable or contractual right
to acquire any securities (whether directly or indirectly and whether exercisable immediately, or only after the passage of time,
compliance with regulatory requirements, fulfillment of a condition or otherwise), pursuant to any agreement, arrangement or understanding,
whether or not in writing (excluding customary agreements entered into in good faith with and between an underwriter and selling
group members in connection with a firm commitment underwriting registered under the Securities Act of 1933, as amended (the “Securities
Act”)), or upon the exercise of any option, warrant or right, through conversion of a security, pursuant to the power
to revoke a trust, discretionary account or similar arrangement, pursuant to the power to terminate a repurchase or similar so-called
“stock borrowing” agreement or arrangement, or pursuant to the automatic termination of a trust, discretionary account
or similar arrangement.

 

1.11.
       “Stock Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, the filing of a report pursuant to Section 13(d) of
the Exchange Act or pursuant to a comparable successor statute) by the Company or an Acquiring Person that an Acquiring Person
has become such or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority
of the Board shall become aware of the existence of an Acquiring Person.

 

    	 	5	 

     

    

 

1.12.
       “Subsidiary” of any Person shall mean any partnership, joint venture,
limited liability company, firm, corporation, unincorporated association, trust or other entity of which a majority of the voting
power of the voting equity securities or equity interests is owned, of record or beneficially, directly or indirectly, by such
Person.

 

1.13.
       A “Trigger Event” shall be deemed to have occurred upon any Person
becoming an Acquiring Person.

 

1.14.
       The following terms shall have the meanings defined for such terms in the Sections set
forth below:

 

	 	Term	Section
	 	 	 
	 	Adjustment
    Shares	11.1.2
	 	Agreement	Preamble
	 	Board	Recitals
	 	Book
    Entry Shares	3.1
	 	Code	Recitals
	 	common
    stock equivalent	11.1.3
	 	Company	Preamble
	 	current
    per share market price	11.4.1
	 	Current
    Value	11.1.3
	 	Distribution
    Date	3.1
	 	equivalent
    preferred stock	11.2
	 	Exchange
    Act	1.2
	 	Exchange
    Consideration	27.1
	 	Exemption
    Request	28
	 	Expiration
    Date	7.1
	 	Final
    Expiration Date	7.1
	 	Original
    Rights	1.3.2
	 	Preferred
    Stock	Recitals
	 	Purchase
    Price	4
	 	Record
    Date	Recitals
	 	Redemption
    Date	7.1
	 	Redemption
    Price	23.1
	 	Requesting
    Person	28
	 	Right	Recitals
	 	Right
    Certificate	3.1
	 	Rights
    Agent	Preamble
	 	Securities
    Act	1.10
	 	Security	11.4.1
	 	Spread	11.1.3
	 	Substitution
    Period	11.1.3
	 	Summary
    of Rights	3.2
	 	Tax
Attributes

        
	Recitals

        

	 	Trading
        Day	11.4.1
	 	Trust	27.1
	 	Trust
    Agreement	27.1

 

    	 	6	 

     

    

 

Section
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3, shall prior to the Distribution Date also be the holders
of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. In the
event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agent
shall be as the Company shall determine. Contemporaneously with such appointment, if any, the Company shall notify the Rights
Agent thereof.

 

Section
3. Issuance of Right Certificates.

 

3.1.
       Rights Evidenced by Stock Certificates. Until the earlier of (i) the tenth (10th)
Business Day after the Stock Acquisition Date or (ii) the tenth (10th) Business Day after the date of the commencement
of, or first public announcement of, the intent of any Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person (other than an Exempt Person) becoming an Acquiring Person (the earlier
of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights (unless earlier expired,
redeemed or terminated) will be evidenced (subject to the provisions of Section 3.2) by the certificates for Common Stock
registered in the names of the holders thereof or, in the case of uncertificated shares of Common Stock registered in book entry
form (“Book Entry Shares”), by notation in book entry (which certificates for Common Stock and Book Entry Shares shall
also be deemed to be Right Certificates) and not by separate certificates, and (y) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of the underlying Common Stock. The preceding sentence notwithstanding,
prior to the occurrence of a Distribution Date specified as a result of an event described in clause (ii) (or such later Distribution
Date as the Board may select pursuant to this sentence), the Board may postpone, one or more times, the Distribution Date which
would occur as a result of an event described in clause (ii) beyond the date set forth in such clause (ii). Nothing herein shall
permit such a postponement of a Distribution Date after a Person becomes an Acquiring Person, except as a result of the operation
of the third sentence of Section 1.1. As soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign and the Company (or, if requested, the Rights Agent) will send, by first-class, postage-prepaid
mail, to each record holder of Common Stock as of the close of business on the Distribution Date (other than any Acquiring Person
or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the records of the Company, one
or more certificates for Rights, in substantially the form of Exhibit B hereto (a “Right Certificate”),
evidencing one Right (subject to adjustment as provided herein) for each share of Common Stock so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

 

    	 	7	 

     

    

 

3.2.
       Summary of Rights. On the Record Date or as soon as practicable thereafter, the
Company will send or cause to be sent a copy of a Summary of Rights to Purchase Preferred Stock, in substantially the form attached
hereto as Exhibit C (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record
holder of Common Stock as of the close of business on the Record Date (other than any Acquiring Person or any Associate or Affiliate
of any Acquiring Person), at the address of such holder shown on the records of the Company. With respect to certificates for
Common Stock and Book Entry Shares outstanding as of the close of business on the Record Date, until the Distribution Date (or
the earlier Expiration Date), the Rights will be evidenced by such certificates for Common Stock registered in the names of the
holders thereof or Book Entry Shares, as applicable, together with a copy of the Summary of Rights and the registered holders
of the Common Stock shall also be registered holders of the associated Rights. Until the Distribution Date (or the earlier Expiration
Date), the surrender for transfer of any certificate for Common Stock or Book Entry Shares outstanding at the close of business
on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby and the Book Entry Shares, as applicable.

 

3.3.
       New Certificates and Uncertificated Shares After Record Date. Certificates for
Common Stock which become outstanding after the Record Date but prior to the earliest of the Distribution Date or the Expiration
Date, shall have impressed, printed, stamped, written or otherwise affixed onto them the following legend:

 

This
certificate also evidences and entitles the holder hereof to certain rights as set forth in an Agreement between Solitron Devices,
Inc. (the “Company”) and Continental Stock Transfer & Trust Company, as Rights Agent, dated as of May 12,
2017, as the same may be amended from time to time (the “Agreement”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as
set forth in the Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the Agreement without charge after receipt of a written request
therefor. As described in the Agreement, Rights which are owned by, transferred to or have been owned by Acquiring Persons
or Associates or Affiliates thereof (as defined in the Agreement) and their transferees shall become null and void and will no
longer be transferable.

 

With
respect to any Book Entry Shares, such legend shall be included in a notice to the record holder of such shares in accordance
with applicable law. Until the Distribution Date (or the earlier Expiration Date), the Rights associated with the Common Stock
represented by such certificates and such Book Entry Shares shall be evidenced by such certificates and the Book Entry Shares
alone, and the surrender for transfer of any such certificates or Book Entry Shares, except as otherwise provided herein, shall
also constitute the transfer of the Rights associated with the Common Stock represented thereby. In the event that the Company
purchases or acquires any Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock that are no longer outstanding.

 

    	 	8	 

     

    

 

Notwithstanding
this Section 3.3, neither the omission of the legend, nor the failure to provide the notice thereof, shall affect the enforceability
of any part of this Agreement or the rights of any holder of the Rights.

 

Section
4. Form of Right Certificates. The Right Certificates (and the forms of election to purchase shares, certification
and assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or trading system on which
the Rights may from time to time be listed or quoted, or to conform to usage. Subject to the terms and conditions hereof, the
Right Certificates, whenever issued, shall be dated as of the Record Date, and shall show the date of countersignature by the
Rights Agent, and on their face shall entitle the holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price per one one-hundredth of a share of Preferred Stock set forth therein
(the “Purchase Price”), but the number of such one one-hundredths of a share of Preferred Stock and the Purchase
Price shall be subject to adjustment as provided herein.

 

Section
5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by the Chief
Executive Officer, the Chief Financial Officer, the President, the Chief Operating Officer, any Vice-President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, shall have affixed thereto the Company’s
seal or a facsimile thereof, and shall be attested by the Secretary or any Assistant Secretary of the Company or by such other
officers as the Board may designate, either manually or by facsimile signature. The Right Certificates shall be countersigned,
either manually or by facsimile signature, by an authorized signatory of the Rights Agent, but it shall not be necessary for the
same signatory to countersign all of the Right Certificates hereunder. No Right Certificate shall be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate
may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.

 

Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right Certificates, the certificate number of each of
the Right Certificates and the date of each of the Right Certificates.

 

    	 	9	 

     

    

 

Section
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 11.1.2 and Section 14, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to Section 11.1.2 or that have been exchanged pursuant
to Section 27) may be transferred, split up or combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up
or combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender,
together with any required form of assignment and certificate duly completed, the Right Certificate or Right Certificates to be
transferred, split up or combined or exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Right Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon, the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may require payment from the holders of Right Certificates
of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up or combination
or exchange of such Right Certificates.

 

Subject
to the provisions of Section 11.1.2, at any time after the Distribution Date and prior to the Expiration Date, upon receipt
by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver
a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.

 

Section
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.

 

7.1.
       Exercise of Rights. Subject to Section 11.1.2 and except as otherwise
provided herein, the registered holder of any Right Certificate may exercise the Rights evidenced thereby in whole or in part
at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and certification
on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price for the total number of one one-hundredths of a share of Preferred Stock
(or other securities, cash or other assets) as to which the Rights are exercised, at or prior to the time (the “Expiration
Date”) that is the earliest of (i) the close of business on May 12, 2020 (the “Final Expiration Date”),
(ii) the final adjournment of the Company’s 2017 annual meeting of stockholders if stockholder approval of this Agreement
is not obtained prior to such time, (iii) the time at which the Rights are redeemed as provided in Section 23 (the “Redemption
Date”), (iv) the time at which the Rights are exchanged as provided in Section 27, (v) the closing of any merger
or other acquisition transaction involving the Company pursuant to an agreement of the type described in the penultimate paragraph
of Section 1.3, (vi) the close of business on the effective date of the repeal of Section 382 of the Code if the Board
determines that this 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.

 

    	 	10	 

     

    

 

7.2.
       Purchase. The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall be initially $17.92, shall be subject to adjustment from time to time as provided
in Sections 11 and 26 and shall be payable in lawful money of the United States of America in accordance with Section
7.3.

 

7.3.
       Payment Procedures. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and certification duly executed, accompanied by payment of the aggregate Purchase
Price for the total number of one one-hundredths of a share of Preferred Stock to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9, in cash or by certified
or cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make available, if the Rights Agent is the transfer agent) certificates
for the number of shares of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depository agent, requisition from the depositary agent depositary receipts
representing interests in such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with all such requests, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with Section 14
or otherwise in accordance with Section 11.1.3, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name
or names as may be designated by such holder and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities
of the Company, pay cash and/or distribute other property pursuant to Section 11.1.3, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and
when appropriate.

 

7.4.
       Partial Exercise. In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to his or
her duly authorized assigns, subject to the provisions of Section 14.

 

    	 	11	 

     

    

 

7.5.
       Full Information Concerning Ownership. Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported exercise as set forth in this Section 7 unless the certificate contained
in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise shall
have been duly completed and executed by the registered holder thereof and the Company shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.

 

Section
8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the
Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the Company.

 

Section
9. Reservation and Availability of Capital Stock. The Company covenants and agrees that, from and after the Distribution
Date, it will cause to be reserved and kept available out of its authorized and unissued Preferred Stock (and, following the occurrence
of a Trigger Event, out of its authorized and unissued Common Stock or other securities or out of its shares held in its treasury)
the number of shares of Preferred Stock (and, following the occurrence of a Trigger Event, Common Stock and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding Rights.

 

So
long as the Preferred Stock (and, following the occurrence of a Trigger Event, Common Stock and/or other securities) issuable
upon the exercise of Rights may be listed on any national securities exchange or traded in the over-the-counter market, the Company
shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance
to be listed or admitted to trading on such exchange or market upon official notice of issuance upon such exercise.

 

The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Stock (and, following
the occurrence of a Trigger Event, Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.

 

    	 	12	 

     

    

 

From
and after such time as the Rights become exercisable, the Company shall use its best efforts, if then necessary to permit the
issuance of Preferred Stock upon the exercise of Rights, to register and qualify such Preferred Stock under the Securities Act
and any applicable state securities or “Blue Sky” laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as possible after such filing and keep such registration
and qualifications effective until the earlier of the date as of which the Rights are no longer exercisable for such securities
and the Expiration Date. The Company may temporarily suspend, for a period of time not to exceed one hundred twenty (120) days,
the exercisability of the Rights in order to prepare and file a registration statement under the Securities Act and permit it
to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless
the requisite qualification in such jurisdiction shall have been obtained and until a registration statement under the Securities
Act (if required) shall have been declared effective.

 

The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Stock (or Common Stock
and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates for Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until any such tax shall have been paid (any such tax being
payable by the registered holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s
satisfaction that no such tax is due.

 

Section
10. Preferred Stock Record Date. Each person in whose name any certificate for Preferred Stock (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are closed, such person shall be deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or
other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Stock for which the Rights shall
be exercisable, including, without limitation, the right to vote or to receive dividends or other distributions, and shall not
be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

Section
11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of shares of
Preferred Stock or other securities or property purchasable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.

 

    	 	13	 

     

    

 

11.1.
       Post-Execution Events.

 

11.1.1.       Corporate
Dividends, Reclassifications, Etc. In the event the Company shall, at any time after the date of this Agreement, (A) declare
and pay a dividend on the Preferred Stock payable in Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11.1.1,
the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares
of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. If an event occurs which would require an adjustment under both Section 11.1.1 and Section
11.1.2, the adjustment provided for in this Section 11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to, Section 11.1.2.

 

11.1.2.       Acquiring
Person Events; Triggering Events. Subject to Section 27, in the event that a Trigger Event occurs, then, from and after
the first occurrence of such event, each holder of a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof at a price per Right equal to the then current Purchase Price multiplied by the number of one one-hundredths
of a share of Preferred Stock for which a Right is then exercisable (without giving effect to this Section 11.1.2), in
accordance with the terms of this Agreement and in lieu of Preferred Stock, such number of shares of Common Stock as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable (without giving effect to this Section 11.1.2) and (y) dividing that
product by 50% of the current per share market price of the Common Stock (determined pursuant to Section 11.4) on the first
of the date of the occurrence of, or the date of the first public announcement of, a Trigger Event (the “Adjustment Shares”);
provided that the Purchase Price and the number of Adjustment Shares shall thereafter be subject to further adjustment
as appropriate in accordance with Section 11.6. Notwithstanding the foregoing, upon the occurrence of a Trigger Event,
any Rights that are or were acquired or Beneficially Owned by (1) any Acquiring Person or any Associate or Affiliate thereof,
(2) a transferee of any Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (3) a transferee of any Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of this Section 11.1.2, and subsequent transferees, shall become void without any further action, and any holder
(whether or not such holder is an Acquiring Person or an Associate or Affiliate of an Acquiring Person) of such Rights shall thereafter
have no right to exercise such Rights under any provision of this Agreement or otherwise. From and after the Trigger Event, no
Right Certificate shall be issued pursuant to Section 3 or Section 6 that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any Right Certificate delivered to the Rights Agent that represents Rights
that are or have become void pursuant to the provisions of this paragraph shall be canceled.

 

    	 	14	 

     

    

 

The
Company shall use all reasonable efforts to ensure that the provisions of this Section 11.1.2 are complied with, but shall
have no liability to any holder of Right Certificates or any other Person as a result of its failure to make any determinations
with respect to any Acquiring Person or its Affiliates, Associates or transferees hereunder.

 

11.1.3.       Insufficient
Shares. The Company may at its option substitute for Common Stock issuable upon the exercise of Rights in accordance with
the foregoing Section 11.1.2 a number of shares of Preferred Stock or fraction thereof such that the current per share
market price of one share of Preferred Stock multiplied by such number or fraction is equal to the current per share market price
of one share of Common Stock. In the event that upon the occurrence of a Trigger Event there shall not be sufficient Common Stock
authorized but unissued, or held by the Company as treasury shares, to permit the exercise in full of the Rights in accordance
with the foregoing Section 11.1.2, the Company shall take all such action as may be necessary to authorize additional Common
Stock for issuance upon exercise of the Rights, provided, however, that if the Company determines that it is unable to
cause the authorization of a sufficient number of additional shares of Common Stock, then, in the event the Rights become exercisable,
the Company, with respect to each Right and to the extent necessary and permitted by applicable law and any agreements or instruments
in effect on the date hereof to which it is a party, shall: (A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the “Current Value”), over (2) the Purchase Price (such excess, the
“Spread”) and (B) with respect to each Right (other than Rights which have become void pursuant to Section
11.1.2), make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Preferred Stock, (4) other equity securities of the Company (including, without
limitation, shares, or fractions of shares, of preferred stock which, by virtue of having dividend, voting and liquidation rights
substantially comparable to those of the Common Stock, the Board has deemed in good faith to have substantially the same value
as the Common Stock) (each such share of preferred stock or fractions of shares of preferred stock constituting a “common
stock equivalent”)), (5) debt securities of the Company, (6) other assets or (7) any combination of the foregoing having
an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board based upon the advice
of a nationally recognized investment banking firm selected in good faith by the Board; provided, however, that if the
Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following
the occurrence of a Trigger Event, then the Company shall be obligated to deliver, to the extent necessary and permitted by applicable
law and any agreements or instruments in effect on the date hereof to which it is a party, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price, Common Stock (to the extent available) and then, if necessary, such
number or fractions of Preferred Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board shall determine in good faith that it is unlikely that sufficient additional
Common Stock would be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above
may be extended and re-extended to the extent necessary, but not more than ninety (90) days following the occurrence of a Trigger
Event, in order that the Company may seek stockholder approval for the authorization of such additional shares (such period as
may be extended, the “Substitution Period”). To the extent that the Company determines that some actions need
be taken pursuant to the second and/or third sentences of this Section 11.1.3, the Company (x) shall provide that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended as well as a public
announcement at such time as the suspension is no longer in effect. For purposes of this Section 11.1.3, the value of a
share of Common Stock shall be the current per share market price (as determined pursuant to Section 11.4) on the date
of the occurrence of a Trigger Event and the value of any “common stock equivalent” shall be deemed to have the same
value as the Common Stock on such date. The Board may, but shall not be required to, establish procedures to allocate the right
to receive Common Stock upon the exercise of the Rights among holders of Rights pursuant to this Section 11.1.3.

 

    	 	15	 

     

    

 

11.2.
       Dilutive Rights Offering. In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock entitling them (for a period expiring within forty-five
(45) calendar days after such record date) to subscribe for or purchase Preferred Stock (or securities having the same rights,
privileges and preferences as the Preferred Stock (“equivalent preferred stock”)) or securities convertible
into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred
stock (or having a conversion or exercise price per share, if a security convertible into or exercisable for Preferred Stock or
equivalent preferred stock) less than the current per share market price of the Preferred Stock (as determined pursuant to Section
11.4) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock and shares of equivalent preferred stock outstanding on such record date plus the number of shares of Preferred
Stock and shares of equivalent preferred stock which the aggregate offering price of the total number of shares of Preferred Stock
and/or shares of equivalent preferred stock to be offered (and/or the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current per share market price and the denominator of which shall be the number of shares
of Preferred Stock and shares of equivalent preferred stock outstanding on such record date plus the number of additional Preferred
Stock and/or shares of equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Preferred Stock
and shares of equivalent preferred stock owned by or held for the account of the Company or any Subsidiary of the Company shall
not be deemed outstanding for the purpose of any such computation. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not been fixed.

 

    	 	16	 

     

    

 

11.3.
       Distributions. In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash, securities or assets
(other than a regular periodic cash dividend 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 a dividend payable in Preferred Stock (which dividend, for purposes of this Agreement, shall be subject to the provisions of
Section 11.1.1(A))) or convertible securities, or subscription rights or warrants (excluding those referred to in Section
11.2), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be the current per share market price
of the Preferred Stock (as determined pursuant to Section 11.4) on such record date, less the fair market value (as determined
in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets, securities or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable
to one share of Preferred Stock and the denominator of which shall be such current per share market price of the Preferred Stock
(as determined pursuant to Section 11.4); provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.

 

    	 	17	 

     

    

 

11.4.
       Current Per Share Market Value.

 

11.4.1.       General.
For the purpose of any computation hereunder, the “current per share market price” of any security (a “Security”
for the purpose of this Section 11.4.1) on any date shall be deemed to be the average of the daily closing prices per share
of such Security for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market price of the Security is determined during
any period following the announcement by the issuer of such Security of (i) a dividend or distribution on such Security payable
in shares of such Security or securities convertible into such shares or (ii) any subdivision, combination or reclassification
of such Security, and prior to the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification, then, and in each such case, the “current per
share market price” shall be appropriately adjusted to reflect the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed
or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported
thereby or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the
Board. If on any such date no such market maker is making a market in the Security, the fair value of the Security on such date
as determined in good faith by the Board shall be used. The term “Trading Day” shall mean a day on which the
principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business
or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. If the Security
is not publicly held or not so listed or traded, or if on any such date the Security is not so quoted and no such market maker
is making a market in the Security, “current per share market price” shall mean the fair value per share as determined
in good faith by the Board or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment
banking firm selected by the Board, which shall have the duty to make such determination in a reasonable and objective manner,
whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

 

11.4.2.       Preferred
Stock. Notwithstanding Section 11.4.1, for the purpose of any computation hereunder, the “current per share market
price” of the Preferred Stock shall be determined in the same manner as set forth above in Section 11.4.1 (other
than the last sentence thereof). If the current per share market price of the Preferred Stock cannot be determined in the manner
described in Section 11.4.1, the “current per share market price” of the Preferred Stock shall be conclusively
deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current per
share market price of the Common Stock (as determined pursuant to Section 11.4.1). If neither the Common Stock nor the
Preferred Stock are publicly held or so listed or traded, or if on any such date neither the Common Stock nor the Preferred Stock
are so quoted and no such market maker is making a market in either the Common Stock or the Preferred Stock, “current per
share market price” of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board,
or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected
by the Board, which shall have the duty to make such determination in a reasonable and objective manner, which determination shall
be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For purposes of this Agreement,
the “current per share market price” of one one-hundredth of a share of Preferred Stock shall be equal to the “current
per share market price” of one share of Preferred Stock divided by 100.

 

    	 	18	 

     

    

 

11.5.
       Insignificant Changes. No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price. Any adjustments which by reason
of this Section 11.5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to the nearest one one-hundredth of a share
of Preferred Stock or the nearest one-hundredth of a share of Common Stock or other share or security, as the case may be.

 

11.6.
       Shares Other Than Preferred Stock. If as a result of an adjustment made pursuant
to Section 11.1, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock
of the Company other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Stock contained in Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the
provisions of Sections 7, 9, 10 and 14 with respect to the Preferred Stock shall apply on like terms to any such
other shares.

 

11.7.
       Rights Issued Prior to Adjustment. All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.

 

11.8.
       Effect of Adjustments. Unless the Company shall have exercised its election as
provided in Section 11.9, upon each adjustment of the Purchase Price as a result of the calculations made in Sections
11.2 and 11.3, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a share of Preferred Stock (calculated
to the nearest one one-hundredth of a share of Preferred Stock) obtained by (i) multiplying (x) the number of one one-hundredths
of a share of Preferred Stock covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.

 

    	 	19	 

     

    

 

11.9.
       Adjustment in Number of Rights. The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of one one-hundredths
of a share of Preferred Stock issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11.9, the Company may, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights
to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price)
and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public
announcement.

 

11.10.
       Right Certificates Unchanged. Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the number of one
one-hundredths of a share of Preferred Stock which were expressed in the initial Right Certificates issued hereunder.

 

11.11.
       Par Value Limitations. Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if any, of the Preferred Stock or other shares of capital
stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Stock or other such
shares at such adjusted Purchase Price.

 

11.12.
       Deferred Issuance. In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of that number
of shares of Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Stock and shares of other capital stock or other securities, assets or cash of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive
such additional shares upon the occurrence of the event requiring such adjustment.

 

11.13.
       Reduction in Purchase Price. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any of the Preferred Stock
at less than the current market price, issuance wholly for cash of Preferred Stock or securities which by their terms are convertible
into or exchangeable for Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or issuance of rights, options
or warrants referred to hereinabove in this Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.

 

    	 	20	 

     

    

 

11.14.
       Company Not to Diminish Benefits of Rights. The Company covenants and agrees
that after the earlier of the Stock Acquisition Date or Distribution Date it will not, except as permitted by Section 23,
Section 26 or Section 27, take (or permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will substantially diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.

 

11.15.
       Adjustment of Rights Associated with Common Stock. Notwithstanding anything contained
in this Agreement to the contrary, in the event that the Company shall at any time after the date hereof and prior to the Distribution
Date (i) declare or pay any dividend on the outstanding Common Stock payable in shares of Common Stock, (ii) effect a subdivision
or consolidation of the outstanding Common Stock (by reclassification or otherwise than by the payment of dividends payable in
shares of Common Stock), or (iii) combine the outstanding Common Stock into a greater or lesser number of shares of Common Stock,
then in any such case, the number of Rights associated with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date or in accordance with Section 22 shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained
by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction,
the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the
occurrence of such event. The adjustments provided for in this Section 11.15 shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation is effected.

 

Section
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section
11, the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate.

 

Section
13. [Reserved]

 

    	 	21	 

     

    

 

Section
14. Fractional Rights and Fractional Shares.

 

14.1.
       Cash in Lieu of Fractional Rights. The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence fractional Rights (except prior to the Distribution Date
in accordance with Section 11.15). In lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of this Section 14.1, the current market value
of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported
in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by such system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board. If on any such date no such market maker is making a market in the Rights, the current market value
of the Rights on such date shall be the fair value of the Rights as determined in good faith by the Board, or, if at the time
of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board,
which shall have the duty to make such determination in a reasonable and objective manner, which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all purposes.

 

14.2.
       Cash in Lieu of Fractional Shares of Preferred Stock. The Company shall not be
required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock) upon exercise or exchange of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock).
Interests in fractions of shares of Preferred Stock in integral multiples of one one-hundredth of a share of Preferred Stock may,
at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth
of a share of Preferred Stock, the Company shall pay to the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same fraction of the current per share market price of
one share of Preferred Stock (as determined in accordance with Section 14.1) for the Trading Day immediately prior to the
date of such exercise or exchange.

 

14.3.
       Cash in Lieu of Fractional Shares of Common Stock. The Company shall not be required
to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock upon
the exercise or exchange of Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of a whole share of Common Stock (as determined in accordance with
Section 14.1) for the Trading Day immediately prior to the date of such exercise or exchange.

 

    	 	22	 

     

    

 

14.4.
       Waiver of Right to Receive Fractional Rights or Shares. The holder of a Right
by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise
or exchange of a Right, except as permitted by this Section 14.

 

Section
15. Rights of Action. All rights of action in respect of this Agreement, except the rights of action given to the Rights
Agent under Section 18, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce this Agreement, and may
institute and maintain any suit, action or proceeding against the Company to enforce this Agreement, or otherwise enforce or act
in respect of his right to exercise the Rights evidenced by such Right Certificate (or, prior to the Distribution Date, such Common
Stock) in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and shall be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any Person (including, without limitation, the Company)
subject to this Agreement.

 

Section
16. Agreement of Right Holders. Every holder of a Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:

 

(a)
       prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the Common Stock;

 

(b)
       as of and after the Distribution Date, the Right Certificates are transferable only
on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer with all required certifications completed; and

 

(c)
       the Company and the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or
the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to the contrary.

 

    	 	23	 

     

    

 

Section
17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the Preferred Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in
any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof.

 

Section
18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder in accordance with a fee schedule to be mutually agreed upon and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.

 

The
Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for the Preferred
Stock or the Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

 

Section
19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation, limited liability company or other
entity into which the Rights Agent or any successor Rights Agent may be merged, converted or with which it may be consolidated,
or any corporation, limited liability company or other entity resulting from any merger, conversion or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any corporation or limited liability company succeeding to
the corporate trust or stock transfer business of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation, limited liability company or other entity would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

    	 	24	 

     

    

 

In
case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates
so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Agreement.

 

Section
20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:

 

20.1.
       Legal Counsel. The Rights Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

 

20.2.
       Certificates as to Facts or Matters. Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of
the President, any Vice-President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

 

20.3.
       Standard of Care. The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.

 

20.4.
       Reliance on Agreement and Right Certificates. The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except
as to its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.

 

20.5.
       No Responsibility as to Certain Matters. The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11.1.2) or any adjustment required under the provisions of Sections 3, 11, 23 or 27 or
responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any
such change or adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization
or reservation of any Preferred Stock or other securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable.

 

    	 	25	 

     

    

 

20.6.
       Further Assurance by Company. The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.

 

20.7.
       Authorized Company Officers. The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder from any one of the Chief Executive Officer, the
Chief Financial Officer, the President, the Chief Operating Officer, any Vice-President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection
with its duties under this Agreement, and it shall not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting while waiting for these instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its duties or obligations under this Agreement and
the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable
to the Company for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application
on or after the date specified therein (which date shall not be less than three (3) Business Days after the date any such officer
actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior
to taking of any such action (or the effective date in the case of omission), the Rights Agent shall have received written instructions
in response to such application specifying the action to be taken or omitted.

 

20.8.
       Freedom to Trade in Company Securities. The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company
or obtain a pecuniary interest in any transaction in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

 

20.9.
       Reliance on Attorneys and Agents. The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act, omission, default, neglect or misconduct, provided
that reasonable care was exercised in the selection and continued employment thereof.

 

    	 	26	 

     

    

 

20.10.
       Incomplete Certificate. If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed to certify the holder is not an Acquiring Person
(or an Affiliate or Associate thereof), the Rights Agent shall not take any further action with respect to such requested exercise
or transfer without first consulting with the Company.

 

20.11.
       Rights Holders List. At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall promptly deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the holders of record of Rights.

 

Section
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ notice in writing mailed to the Company and to each transfer agent of the Common
Stock and/or Preferred Stock, as applicable, by registered or certified mail. Following the Distribution Date, the Company shall
promptly notify the holders of the Right Certificates by first-class mail of any such resignation. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock and/or Preferred Stock, as applicable, by registered
or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the resigning, removed, or incapacitated Rights Agent shall remit to the Company,
or to any successor Rights Agent designated by the Company, all books, records, funds, certificates or other documents or instruments
of any kind then in its possession which were acquired by such resigning, removed or incapacitated Rights Agent in connection
with its services as Rights Agent hereunder, and shall thereafter be discharged from all duties and obligations hereunder. Following
notice of such removal, resignation or incapacity, the Company shall appoint a successor to such Rights Agent. If the Company
shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder
of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the
laws of the State of New York or the State of Delaware (or any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York or the State of Delaware) in good standing, having
an office in the State of New York or the State of Delaware, which is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock and/or Preferred Stock, as applicable, and, following the Distribution
Date, mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

    	 	27	 

     

    

 

Section
22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by
its Board to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution Date and prior to the Expiration Date, the Company
shall, with respect to Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded, or upon exercise, conversion or exchange of securities hereinafter issued by the Company, in
each case existing prior to the Distribution Date, issue Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences
to the Company or the Person to whom such Right Certificate would be issued and (ii) no such Right Certificate shall be issued
if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

 

Section
23. Redemption.

 

23.1.
       Right to Redeem. The Board may, at its option, at any time prior to a Trigger
Event, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, recapitalization or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the “Redemption Price”), and the Company may, at its option,
pay the Redemption Price in Common Stock (based on the “current per share market price,” determined pursuant to Section
11.4, of the Common Stock at the time of redemption), cash or any other form of consideration deemed appropriate by the Board.
The redemption of the Rights by the Board may be made effective at such time, on such basis and subject to such conditions as
the Board in its sole discretion may establish.

 

23.2.
       Redemption Procedures. Immediately upon the action of the Board ordering the
redemption of the Rights (or at such later time as the Board may establish for the effectiveness of such redemption), and without
any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so held. The Company shall promptly give public notice
of such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. The Company shall promptly give, or cause the Rights Agent to give, notice of such redemption to
the holders of the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or in Section 27, and other than in connection with the
purchase, acquisition or redemption of Common Stock prior to the Distribution Date.

 

    	 	28	 

     

    

 

Section
24. Notice of Certain Events. In case the Company shall propose at any time after the earlier of the Stock Acquisition
Date and the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make
any other distribution to the holders of Preferred Stock (other than a regular periodic cash dividend 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 dividends, or a stock dividend on, or a subdivision, combination or reclassification
of the Common Stock), or (b) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any
additional Preferred Stock or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding Preferred Stock), or (d) to
effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person (other than pursuant to a merger or other acquisition agreement of
the type excluded from the definition of “Beneficial Ownership” in Section 1.3), or (e) to effect the liquidation,
dissolution or winding up of the Company, or (f) to declare or pay any dividend on the Common Stock payable in Common Stock or
to effect a subdivision, combination or consolidation of the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock), then, in each such case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the
holders of the Preferred Stock and/or Common Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (a) or (b) above at least ten (10) days prior to the record date for determining holders
of the Preferred Stock for purposes of such action, and in the case of any such other action, at least ten (10) days prior to
the date of the taking of such proposed action or the date of participation therein by the holders of the Preferred Stock and/or
Common Stock, whichever shall be the earlier.

 

In
case any event set forth in Section 11.1.2 shall occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate, in accordance with Section 25, a notice
of the occurrence of such event, which notice shall describe the event and the consequences of the event to holders of Rights
under Section 11.1.2, and (ii) all references in this Section 24 to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, other securities.

 

    	 	29	 

     

    

 

Section
25. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder
of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as follows:

 

Solitron
Devices, Inc.

3301
Electronics Way

West
Palm Beach, FL 33407

Attn:
Chief Executive Officer

  

Subject
to the provisions of Section 21 and Section 24, any notice or demand authorized by this Agreement to be given or
made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

 

Continental
Stock Transfer & Trust Company

17
Battery Place, 8th Floor

New
York, New York 10004

Attn:
Compliance Department

 

Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate
(or, prior to the Distribution Date, to the holder of any certificate representing Common Stock) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry
books of the Company; provided that prior to the Distribution Date a filing by the Company with the Securities and Exchange Commission
shall constitute sufficient notice to the holders of securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given.

 

Section
26. Supplements and Amendments. For so long as the Rights are then redeemable, the Company may in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement in any
respect without the approval of any holders of Rights or Common Stock. From and after the time that the Rights are no longer redeemable,
the Company may, and the Rights Agent shall, if the Company so directs, from time to time supplement or amend this Agreement without
the approval of any holders of Rights (i) to cure any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (ii) to make any other changes or provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or desirable, including but not limited to extending
the Final Expiration Date; provided, however, that no such supplement or amendment shall adversely affect the interests
of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such supplement or amendment may cause the Rights again to become redeemable or cause this Agreement again to become amendable
as to an Acquiring Person or an Affiliate or Associate of an Acquiring Person other than in accordance with this sentence; provided
further, that the right of the Board to extend the Distribution Date shall not require any amendment or supplement hereunder.
Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment.

 

    	 	30	 

     

    

 

Section
27. Exchange.

 

27.1.
       Exchange of Common Stock for Rights. At any time after the occurrence of a Trigger
Event, the Board may, at its option, exchange Common Stock for all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of Section 11.1.2) by exchanging at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such amount per Right being hereinafter referred to as the “Exchange Consideration”).
Notwithstanding the foregoing, the Board shall not be empowered to effect such exchange at any time after any Acquiring Person
shall have become the Beneficial Owner of 50% or more of the Common Stock then outstanding. The exchange of the Rights by the
Board may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.
Without limiting the foregoing, prior to effecting an exchange pursuant to this Section 27, the Board may direct the Company to
enter into a Trust Agreement in such form and with such terms as the Board shall then approve (the “Trust Agreement”).
If the Board so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement
(the “Trust”) all of the shares of Common Stock issuable pursuant to the exchange (or any portion thereof that
have not theretofore been issued in connection with the exchange). From and after the time at which such shares are issued to
the Trust, all stockholders then entitled to receive shares pursuant to the exchange shall be entitled to receive such shares
(and any dividends or distributions made thereon after the date on which such shares are deposited in the Trust) only from the
Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement. Any shares of Common Stock issued
at the direction of the Board in connection herewith shall be validly issued, fully paid and nonassessable shares of Common Stock,
and the Company shall be deemed to have received as consideration for such issuance a benefit having a value that is at least
equal to the aggregate par value of the shares so issued.

 

27.2.
       Exchange Procedures. Immediately upon the action of the Board ordering the exchange
for any Rights pursuant to Section 27.1 and without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive the Exchange Consideration.
The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange of the Common Stock for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on
the number of Rights (other than the Rights that have become void pursuant to the provisions of Section 11.1.2) held by
each holder of Rights.

 

    	 	31	 

     

    

 

27.3.
       Insufficient Shares. The Company may at its option substitute, and, in the event
that there shall not be sufficient Common Stock issued but not outstanding or authorized but unissued to permit an exchange of
Rights for Common Stock as contemplated in accordance with this Section 27, the Company shall substitute to the extent
of such insufficiency, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares
of Preferred Stock or fraction thereof (or equivalent preferred stock, as such term is defined in Section 11.2) such that
the current per share market price (determined pursuant to Section 11.4) of one share of Preferred Stock (or equivalent
preferred stock) multiplied by such number or fraction is equal to the current per share market price of one share of Common Stock
(determined pursuant to Section 11.4) as of the date of such exchange. In the case of a substitution described in the immediately
preceding sentence, references to “Common Stock” shall be replaced with “Preferred Stock” where applicable
throughout Section 27 of this Agreement and any other provisions where appropriate to effect and properly reflect this substitution.

 

Section
28. Process to Seek Exemption. Any Person who desires to effect any acquisition of Common Stock that would, if consummated,
result in such Person (together with its Affiliates and Associates) Beneficially Owning 4.99% or more of the then outstanding
Common Stock (or, in the case of an Existing Holder, one or more additional shares of Common Stock) (a “Requesting Person”)
may, prior to the Stock Acquisition Date and in accordance with this Section 28, request that the Board grant an exemption
with respect to such acquisition under this Agreement so that such Person would be deemed to be an “Exempt Person”
under subsection (ii) of Section 1.7 hereof for purposes of this Agreement (an “Exemption Request”). An Exemption
Request shall be in proper form and shall be delivered by registered mail, return receipt requested, to the Secretary of the Company
at the principal executive office of the Company. To be in proper form, an Exemption Request shall set forth (i) the name and
address of the Requesting Person, (ii) the number and percentage of shares of Common Stock then Beneficially Owned by the Requesting
Person, together with all Affiliates and Associates of the Requesting Person, and (iii) a reasonably detailed description of the
transaction or transactions by which the Requesting Person would propose to acquire Beneficial Ownership of Common Stock aggregating
4.99% or more of the then outstanding Common Stock (or, in the case of an Existing Holder, one or more additional shares of Common
Stock) and the maximum number and percentage of shares of Common Stock that the Requesting Person proposes to acquire. The Board
shall make a determination whether to grant an exemption in response to an Exemption Request as promptly as practicable (and,
in any event, within ten (10) Business Days) after receipt thereof; provided, that the failure of the Board to make a determination
within such period shall be deemed to constitute the denial by the Board of the Exemption Request. The Board shall only grant
an exemption in response to an Exemption Request if the Board determines in its sole discretion that the acquisition of Beneficial
Ownership of Common Stock by the Requesting Person will not jeopardize or endanger the value or availability to the Company of
the Tax Attributes. Any exemption granted hereunder may be granted in whole or in part, and may be subject to limitations or conditions
(including a requirement that the Requesting Person agree that it will not acquire Beneficial Ownership of shares of Common Stock
in excess of the maximum number and percentage of shares approved by the Board), in each case as and to the extent the Board shall
determine necessary or desirable to provide for the protection of the Company’s Tax Attributes. Any Exemption Request may
be submitted on a confidential basis and, except to the extent required by applicable law, the Company shall maintain the confidentiality
of such Exemption Request and the Board’s determination with respect thereto.

 

    	 	32	 

     

    

 

Section
29. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person or corporation other
than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date,
the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock).

 

Section
31. Determination and Actions by the Board. The Board shall have the exclusive power and authority to administer this
Agreement and to exercise the rights and powers specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions
of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or amend this Agreement). All such actions, calculations,
interpretations and determinations that are done or made by the Board in good faith shall be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights, as such, and all other parties.

 

Section
32. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

Section
33. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made
under the internal laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely within such State.

 

Section
34. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section
35. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

[Signature
Page Follows]

 

    	 	33	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.

 

	 	SOLITRON DEVICES, INC.
	 	 	 
	 	By 	/s/ Tim Eriksen
	 	Name:	Tim Eriksen
	 	Title:	Chief Executive Officer
	 	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY
	 	 	 
	 	By 	/s/ Henry Farrell
	 	Name:	Henry Farrell
	 	Title:	Vice President & Account Administrator 

 

    	 	34	 

     

    

 

EXHIBIT
A

 

FORM
OF

 

CERTIFICATE OF DESIGNATION

of

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

 

Solitron devices, INC.

Pursuant to Section 151 of the General Corporation

Law of the State of Delaware

 

Solitron
Devices, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

 

That
pursuant to the authority vested in the Board of Directors of the Corporation (the “Board of Directors”) in accordance
with the provisions of the Certificate of Incorporation of the said Corporation, as heretofore amended (the “Certificate
of Incorporation”), the said Board of Directors adopted the following resolution creating a series of 500,000 shares of
Preferred Stock designated as “Series A Junior Participating Preferred Stock”:

 

RESOLVED,
that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of the Certificate
of Incorporation, a series of Preferred Stock, par value $0.01 per share, of the Corporation be and hereby is created, and that
the designation and number of shares thereof and the voting and other powers, preferences and relative, participating, optional
or other rights of the shares of such series and the qualifications, limitations and restrictions thereof are as follows:

 

Series
A Junior Participating Preferred Stock

 

1.       Designation
and Amount. There shall be a series of Preferred Stock that shall be designated as “Series A Junior Participating Preferred
Stock,” and the number of shares constituting such series shall be 500,000. Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to less than the number of shares then issued and outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation.

 

    	 	A-1	 

     

    

 

2.       Dividends
and Distributions.

 

(A)       Subject
to the prior and superior rights of the holders of any shares of any class or series of stock of the Corporation ranking prior
and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of
Series A Junior Participating Preferred Stock, in preference to the holders of shares of any class or series of stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock in respect thereof, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash
on the 15th day of March, June, September and December, in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 and (b) the sum of (1) the Adjustment Number (as defined below) times the aggregate per
share amount of all cash dividends, plus (2) the Adjustment Number times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in shares of Common Stock, par value $0.01 per share,
of the Corporation (the “Common Stock”), or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), in each case declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series
A Junior Participating Preferred Stock. The “Adjustment Number” shall initially be 100. In the event the Corporation
shall at any time after May 12, 2017 (i) declare and pay any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

 

    	 	A-2	 

     

    

 

(B)       The
Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares
of Common Stock).

 

(C)       Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date; in which case dividends
on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

 

3.       Voting
Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

 

(A)       Each
share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to a number of votes equal to the Adjustment
Number on all matters submitted to a vote of the stockholders of the Corporation.

 

(B)       Except
as required by law, by Section 3(C) and by Section 10 hereof, holders of Series A Junior Participating Preferred Stock shall have
no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate action.

 

    	 	A-3	 

     

    

 

(C)       If,
at the time of any annual meeting of stockholders for the election of directors, the equivalent of six quarterly dividends (whether
or not consecutive) payable on any share or shares of Series A Junior Participating Preferred Stock are in default, the number
of directors constituting the Board of Directors shall be increased by two. In addition to voting together with the holders of
Common Stock for the election of other directors of the Corporation, the holders of record of the Series A Junior Participating
Preferred Stock, voting separately as a class to the exclusion of the holders of Common Stock, shall be entitled at said meeting
of stockholders (and at each subsequent annual meeting of stockholders), unless all dividends in arrears on the Series A Junior
Participating Preferred Stock have been paid or declared and set apart for payment prior thereto, to vote for the election of
two directors of the Corporation, the holders of any Series A Junior Participating Preferred Stock being entitled to cast a number
of votes per share of Series A Junior Participating Preferred Stock as is specified in paragraph (A) of this Section 3. To the
extent the Board of Directors is divided into classes, with the directors in the classes serving staggered terms, at the time
of the election of directors elected by the holders of the Series A Junior Participating Preferred Stock pursuant hereto, each
such additional director shall not be a member of any such class, but shall serve until the next annual meeting of stockholders
for the election of directors, or until his successor shall be elected and shall qualify, or until his right to hold such office
terminates pursuant to the provisions of this Section 3(C). Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have been so elected pursuant to the provisions of this
Section 3(C) may be removed at any time, without cause, only by the affirmative vote of the holders of the shares of Series A
Junior Participating Preferred Stock at the time entitled to cast a majority of the votes entitled to be cast for the election
of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be filled
by the vote of such holders. If and when such default shall cease to exist, the holders of the Series A Junior Participating Preferred
Stock shall be divested of the foregoing special voting rights, subject to revesting in the event of each and every subsequent
like default in payments of dividends. Upon the termination of the foregoing special voting rights, the terms of office of all
persons who may have been elected directors pursuant to said special voting rights shall forthwith terminate, and the number of
directors constituting the Board of Directors shall be reduced by two. The voting rights granted by this Section 3(C) shall be
in addition to any other voting rights granted to the holders of the Series A Junior Participating Preferred Stock in this Section
3.

 

4.       Certain
Restrictions.

 

(A)       Whenever
quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

(i)       declare
or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock other than (A) such redemptions or purchases that may be deemed to occur upon the exercise of stock options, warrants
or similar rights or grant, vesting or lapse of restrictions on the grant of any other performance shares, restricted stock, restricted
stock units or other equity awards to the extent that such shares represent all or a portion of (x) the exercise or purchase price
of such options, warrants or similar rights or other equity awards and (y) the amount of withholding taxes owed by the recipient
of such award in respect of such grant, exercise, vesting or lapse of restrictions; (B) the repurchase, redemption, or other acquisition
or retirement for value of any such shares from employees, former employees, directors, former directors, consultants or former
consultants of the Corporation or their respective estate, spouse, former spouse or family member, pursuant to the terms of the
agreements pursuant to which such shares were acquired;

 

    	 	A-4	 

     

    

 

(ii)       declare
or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then entitled; or

 

(iii)       purchase
or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders of Series A Junior Participating Preferred Stock, or
to such holders and holders of any such shares ranking on a parity therewith, upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes,
shall determine will result in fair and equitable treatment among the respective series or classes.

 

(B)       The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.

 

5.       Reacquired
Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired promptly after the acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors, subject to any conditions and restrictions on issuance set forth herein.

 

6.       Liquidation,
Dissolution or Winding Up. (A) Upon any liquidation, dissolution or winding up of the Corporation, voluntary or otherwise,
no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount per share (the “Series A Liquidation Preference”) equal
to the greater of (i) $1.00 plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, and (ii) the Adjustment Number times the per share amount of all cash and other property to be distributed
in respect of the Common Stock upon such liquidation, dissolution or winding up of the Corporation.

 

    	 	A-5	 

     

    

 

(B)       In
the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other classes and series of stock of the Corporation, if any, that rank on a parity with
the Series A Junior Participating Preferred Stock in respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Series A Junior Participating Preferred Stock and the holders of such parity shares
in proportion to their respective liquidation preferences.

 

(C)       Neither
the merger or consolidation of the Corporation into or with another entity nor the merger or consolidation of any other entity
into or with the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.

 

7.       Consolidation,
Merger, Etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which
the outstanding shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share equal to the Adjustment Number times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.

 

8.       No
Redemption. Shares of Series A Junior Participating Preferred Stock shall not be subject to redemption by the Corporation.

 

9.       Ranking.
The Series A Junior Participating Preferred Stock shall rank junior to all other series of Preferred Stock as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, unless the terms of any such series
shall provide otherwise, and shall rank senior to the Common Stock as to such matters.

 

10.       Amendment.
At any time that any shares of Series A Junior Participating Preferred Stock are outstanding, the Certificate of Incorporation
of the Corporation shall not be amended, by merger, consolidation or otherwise, which would materially alter or change the powers,
preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds of the outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.

 

11.       Fractional
Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share that shall entitle the holder,
in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

 

    	 	A-6	 

     

    

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate this 12th day of May, 2017.

 

	 	SOLITRON DEVICES, INC.
	 	 	 
	 	By 	
	 	Name:	Tim Eriksen
	 	Title:	Chief Executive Officer

 

    	 	A-7	 

     

    

 

EXHIBIT
B

 

Form
of Right Certificate

 

Certificate
No. R-_______ Rights

 

NOT
EXERCISABLE AFTER MAY 12, 2020 OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS
DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

 

Right
Certificate

 

SOLITRON
DEVICES, INC.

 

This
certifies that ________________, or registered assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of May 12,
2017, as the same may be amended from time to time (the “Agreement”), between Solitron Devices, Inc., a Delaware
corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as
Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date and
prior to 5:00 P.M. (New York time) on May 12, 2020, at the offices of the Rights Agent, or its successors as Rights Agent, designated
for such purpose, one one-hundredth of a fully paid, nonassessable share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the “Preferred Stock”), of the Company, at a purchase price of $17.92 per one one-hundredth
of a share of Preferred Stock, subject to adjustment (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase and certification duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-hundredths of a share of Preferred Stock which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of May 12, 2017 based
on the Preferred Stock as constituted at such date. Capitalized terms used in this Right Certificate without definition shall
have the meanings ascribed to them in the Agreement. As provided in the Agreement, the Purchase Price and the number of shares
of Preferred Stock which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.

 

This
Right Certificate is subject to all of the terms, provisions and conditions of the Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Agreement are on file at the principal offices of the Company and the
Rights Agent.

 

    	 	B-8	 

     

    

 

This
Right Certificate, with or without other Right Certificates, upon surrender at the offices of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of one one-hundredths of a share of Preferred Stock as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.

 

Subject
to the provisions of the Agreement, the Board may, at its option, (i) redeem the Rights evidenced by this Right Certificate at
a redemption price of $0.01 per Right or (ii) exchange Common Stock for the Rights evidenced by this Certificate, in whole or
in part.

 

No
fractional Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (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), but in lieu thereof a cash payment will be made, as provided in the Agreement.

 

No
holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Agreement.

 

If
any term, provision, covenant or restriction of the Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of the Agreement shall
remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

This
Right Certificate shall not be valid or binding for any purpose until it shall have been countersigned by the Rights Agent.

 

    	 	B-9	 

     

    

 

WITNESS
the facsimile signature of the proper officers of the Company and its corporate seal.

 

Dated
as of ________________

 

	Attest:	 	SOLITRON DEVICES, INC.
	 	 	 	 	 
	By: 		 	By: 	  
		Name:	 		Name:
		Title:	 	 	Title:

 

Countersigned:

 

CONTINENTAL
STOCK TRANSFER & TRUST COMPANY

as
Rights Agent

  

	By:
		 
	 	Authorized
Signature	 

 

    	 	B-10	 

     

    

 

Form
of Reverse Side of Right Certificate

 

FORM
OF ASSIGNMENT

 

(To
be executed by the registered holder if such holder

desires
to transfer the Right Certificate.)

 

FOR
VALUE RECEIVED __________________________________________________________________

hereby
sells, assigns and transfers unto _______________________________________________________

 ______________________________________________________________________________________

_______________________________________________________________________________________

  

(Please
print name and address of transferee)

 

Rights
evidenced by this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute
and appoint  Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full
power of substitution.

 

Dated:
______________

 

	 	
	 	Signature

 

Signature
Guaranteed:

 

		 	 

 

Signatures
must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended.

 

    	 	B-11	 

     

    

 

 

The undersigned
hereby certifies that:

 

(1)
       the Rights evidenced by this Right Certificate are not Beneficially Owned by and are
not being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

 

(2)
       after due inquiry and to the best knowledge of the undersigned, the undersigned did
not acquire the Rights evidenced by this Right Certificate from any person who is, was or subsequently became an Acquiring Person
or an Affiliate or Associate thereof.

 

Dated:
______________

 

	 	
	 	Signature

 

    	 	B-12	 

     

    

 

FORM
OF ELECTION TO PURCHASE

 

(To
be executed if holder desires to

exercise the Right Certificate.)

 

To
Solitron Devices, Inc.:

 

The
undersigned hereby irrevocably elects to exercise __________________ Rights represented by this Right Certificate to purchase
the Preferred Stock issuable upon the exercise of such Rights (or such other securities or property of the Company or of any other
Person which may be issuable upon the exercise of the Rights) and requests that certificates for such stock be issued in the name
of:

 

___________________________________________________________

(Please print name and address)

 

_____________________________________________________________

 

If
such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:

 

Please
insert social security

or other identifying number

 

____________________________________________________________

                                       (Please print name and address)

 

____________________________________________________________

 

Dated:
__________________

 

	 	
	 	Signature

 

Signature
Guaranteed:

 

Signatures
must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended.

 

    	 	B-13	 

     

    

 

The
undersigned hereby certifies that:

 

(1)
       the Rights evidenced by this Right Certificate are not Beneficially Owned by and are
not being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

 

(2)
       after due inquiry and to the best knowledge of the undersigned, the undersigned did
not acquire the Rights evidenced by this Right Certificate from any person who is, was or subsequently became an Acquiring Person
or an Affiliate or Associate thereof.

 

Dated:_______________

 

 

	 	
	 	Signature

 

 

 

NOTICE

 

The
signature in the foregoing Form of Assignment and Form of Election to Purchase must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

In
the event the certification set forth above in the Form of Assignment or Form of Election to Purchase is not completed, the Company
will deem the Beneficial Owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate hereof and such Assignment or Election to Purchase will not be honored.

 

    	 	B-14	 

     

    

 

EXHIBIT
C

 

AS
DESCRIBED IN THE RIGHTS AGREEMENT, UNDER CERTAIN CIRCUMSTANCES, RIGHTS WHICH ARE HELD BY OR HAVE BEEN HELD BY AN ACQUIRING PERSON
OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF SHALL BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.

  

SUMMARY
OF RIGHTS TO PURCHASE

PREFERRED
SHARES

 

The
Board of Directors of Solitron Devices, Inc. (the “Company”) has declared a dividend of one preferred stock
purchase right (a “Right”) for each share of common stock, par value $0.01 per share (the “Common
Stock”), of the Company outstanding at the close of business on May 12, 2017 (the “Record Date”).
As long as the Rights are attached to the Common Stock, the Company will issue one Right (subject to adjustment) with each new
share of Common Stock so that all such shares will have attached Rights. When exercisable, each Right will entitle the registered
holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (the “Preferred
Stock”) at a price of $17.92 per one one-hundredth of a share of Preferred Stock, subject to adjustment (the “Purchase
Price”). The description and terms of the Rights are set forth in a Rights Agreement, dated as of May 12, 2017,
as the same may be amended from time to time (the “Agreement”), between the Company and Continental Stock Transfer
& Trust Company, as Rights Agent (the “Rights Agent”).

 

By
adopting the rights agreement, the Board of Directors is seeking to protect certain of the Company’s tax attributes (the
“Tax Attributes”). The Tax Attributes can be a valuable asset of the Company, which may inure to the benefit
of the Company and its stockholders. However, if the Company experiences an “ownership change,” as defined in Section
382 of the Internal Revenue Code (the “Code”), its ability to take advantage of the Tax Attributes could be
substantially limited, which could significantly impair the value of the asset. Generally, an “ownership change” occurs
if the percentage of the Company’s stock owned by one or more “five percent stockholders” increases by more
than fifty percentage points over the lowest percentage of stock owned by such stockholders at any time during the prior three-year
period or, if sooner, since the last “ownership change” experienced by the Company. A rights agreement with a 4.99%
“trigger” threshold is intended to act as a deterrent to any person acquiring 4.99% or more of the outstanding shares
of Common Stock without the approval of the Board of Directors. This would protect the Tax Attributes because changes in ownership
by a person owning less than 4.99% of the Common Stock are not included in the calculation of “ownership change” for
purposes of Section 382 of the Code. In addition, by adopting the rights agreement, the Board of Directors is seeking to preserve
for the Company’s stockholders the long-term value of the Company in the event of a takeover.

 

    	 	C-1	 

     

    

 

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 of Directors 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 called the “Distribution Date”), the Rights
will be evidenced, with respect to any of the Common Stock certificates outstanding as of the Record Date, by such Common Stock
certificate (or, with respect to any shares of Common Stock held in book entry form, by the notation in book entry) together with
a copy of this Summary of Rights. The Agreement provides that any person who beneficially owned 4.99% or more of the Common Stock
on the date the Agreement was adopted, together with any affiliates and associates of that person (each an “Existing
Holder”), shall not be deemed to be an “Acquiring Person” for purposes of the Agreement unless the Existing
Holder becomes the beneficial owner of (x) a percentage of the Common Stock then outstanding that is more than the aggregate percentage
of the outstanding Common Stock that such Existing Holder beneficially owns as of the date of the Agreement or (y) less than 4.99%
of the Common Stock then outstanding (after which, if the Existing Holder becomes the beneficial owner of 4.99% or more of the
Common Stock then outstanding, the Existing Holder shall be deemed to be an “Acquiring Person”). The Agreement further
provides that any Person that would otherwise become an Acquiring Person pursuant to the Agreement solely as a result of equity
compensation awards granted to such Person by the Company or as a result of an adjustment to the number of shares of Common Stock
represented by such equity compensation award pursuant to the terms thereof, shall not be deemed to be an “Acquiring Person”
unless and until such time as such Person or one or more of its Affiliates or Associates thereafter acquires Beneficial Ownership
of one additional share of Common Stock (other than Common Stock acquired in the manner described in this sentence). The Agreement
includes a procedure whereby the Board of Directors will consider requests to exempt certain proposed acquisitions of Common Stock
from the applicable ownership trigger if the Board determines that the requested acquisition will not jeopardize or endanger the
value or availability of the Tax Attributes to the Company. The Agreement also provides that the Board may declare that any person
that has otherwise become an “Acquiring Person” shall be exempt from the operation of the Plan, notwithstanding any
acquisition resulting in such person otherwise becoming an Acquiring Person, if the Board determines in its sole discretion that
such person’s beneficial ownership will not jeopardize or endanger the value or availability of the Tax Attributes, or if
the Board otherwise determines in good faith that such person shall be an exempt person.

 

The
Agreement provides that until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights),
the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or earlier redemption, exchange,
termination or expiration of the Rights), new Common Stock certificates issued after the close of business on the Record Date
upon transfer or new issuance of the Common Stock will contain a notation incorporating the Agreement by reference, and the Company
will deliver a notice to that effect upon the transfer or new issuance of book entry shares. Until the Distribution Date (or earlier
redemption, exchange, termination or expiration of the Rights), the surrender for transfer of any certificates for Common Stock
or any book entry shares, with or without such notation, notice or a copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the Common Stock represented by such certificate or the book entry shares. As soon as practicable
following the Distribution Date, separate certificates evidencing the 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 separate Right Certificates
alone will evidence the Rights.

 

    	 	C-2	 

     

    

 

The
Rights are not exercisable until the Distribution Date. The Rights will expire on May 12, 2020, subject to the Company’s
right to extend such date (the “Final Expiration Date”), unless earlier redeemed or exchanged by the Company.

 

Each
share of Preferred Stock purchasable upon exercise of the 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 any 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 have
100 votes and will vote together with the Common Stock. Finally, in the event of any merger, consolidation or other transaction
in which 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 antidilution 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 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 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 convertible securities 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 Right, other than Rights that are or were acquired or beneficially
owned by the Acquiring Person (which 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 Right.

 

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 of Directors may cause the Company to exchange the Rights (other than 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
Right (subject to adjustment).

 

    	 	C-3	 

     

    

 

No
adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 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 date prior to the date of exercise.

 

The
Rights may be redeemed in whole, but not in part, at a price of $0.01 per Right (the “Redemption Price”) by
the Board of Directors at any time prior to the time that an Acquiring Person has become such. The redemption of the Rights may
be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.

 

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

 

A
copy of the Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Current Report on Form 8-K.
A copy of the Agreement is available free of charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Agreement, which is incorporated herein by reference.

 

 

C-4

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