Exhibit 10.5
THIS OPTION AGREEMENT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO. THIS OPTION
AGREEMENT IS ALSO SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH
HEREIN.
NON-STATUTORY STOCK OPTION
AGREEMENT
THIS OPTION GRANT AGREEMENT (the
“Agreement”), dated as of
(the “Grant Date”), is entered into between API
NANOTRONICS CORP., a Delaware corporation (the
“Company”), and
(the “Option-holder”).
WHEREAS, the Option-holder is a director of the
Company;
WHEREAS, the Company desires to afford the Option-holder
an opportunity to purchase shares of common stock (“Common
Stock”) in the Company as provided in this Agreement,
effective as of the Grant Date;
WHEREAS, the Board of Directors of the Company has
determined that
$
represents the fair market value of the Option Shares on the Grant
Date; and
WHEREAS, the Compensation Committee and the Board of
Directors of the Company has approved the issuance of this option
to Option-holder pursuant to the API Nanotronics Corp. 2006 Equity
Incentive Plan (the “Plan”).
NOW, THEREFORE,
in consideration of the premises and
the mutual covenants set forth in this Agreement and for other good
and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto have agreed, and do hereby agree,
as follows:
This option is issued by the Company
as of the Grant Date pursuant to the Plan.
Capitalized terms used herein and
not defined herein shall have the meaning set forth in the
Plan.
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2.
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Grant of
Option, Option Price and Term .
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a) Grant . Subject to the
terms and conditions of this Agreement, the Company hereby grants
to the Option-holder, as compensation for his services as a
director of the Company, the right and option
(“Option”) to purchase
( )
shares of Common Stock of the Company (“Option
Shares”). This Option is intended to be neither an
“incentive stock option” as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the
“Code”), nor an option granted pursuant to an
“employee stock purchase plan” as defined in
Section 423 of the Code.
b) Option Price . For each of
the Option Shares purchased, upon purchase thereof the
Option-holder shall pay to the Company
($ ) (the
“Option Price”) which the parties agree represents the
fair market value of the Option Shares on the Grant Date.
Accordingly, the aggregate Option Price to purchase all of the
Option Shares subject to the Option granted hereunder is
$ (the
“Aggregate Option Price”).
c) No Fractional Shares . The
Company shall not be required to issue any fractional Option Shares
hereunder. The fair market value of any fractional Option Shares to
be issued to the Option-holder upon exercise of an Option issued
under this Agreement shall be paid by the Company to the
Option-holder in cash.
d) Option Term . The term of
the Option granted hereunder shall be a period from the date hereof
until
(the “Option Period”). The termination of the Option
Period shall result in the termination and cancellation of such
Option. In no event shall the Option be exercisable at any time
after the expiration of the Option Period.
The Options granted herein shall
vest in accordance with the Schedule attached hereto.
a) Exercise for Cash . The
vested portion of this Option may be exercised, in whole at any
time or in part from time to time, commencing
,
and prior to 5:00 P.M., Toronto Time, on
,
by the Option-holder by the surrender of this Option (with the
subscription form provided by the Company duly executed) to the
Company at its principal office, together with proper payment of
the Option Price times the number of shares of Common Stock to be
received. Payment for Option Shares shall be made by certified or
official bank check payable to the order of the Company or if
applicable, without cash pursuant to a cashless net exercise. If
this Option is exercised in part, this Option must be exercised for
a number of whole shares of the Common Stock, and the Option-holder
is entitled to receive a new Option covering the Option Shares
which have not been exercised. Upon such surrender of this Option
the Company will (a) issue a certificate or certificates in
the name of the Option-holder for the largest number of whole
shares of the Common Stock to which the Option-holder shall be
entitled (or mark the Option to denote the exercise) and, if this
Option is exercised in whole, in lieu of any fractional share of
the Common Stock to which the Option-holder shall be entitled, pay
to the Option-holder cash in an amount equal to the fair value of
such fractional share
2
(determined in such reasonable
manner as the Board of Directors of the Company shall determine),
and (b) deliver the other securities and properties receivable
upon the exercise of this Option, or the proportionate part thereof
if this Option is exercised in part, pursuant to the provisions of
this Option.
b) Cashless Net Exercise . At
the Company’s option, in lieu of exercising this Option in
the manner set forth in paragraph 4(a) above, this Option may be
exercised, in whole or in part, by surrender of the Option without
payment of any other consideration, commission or remuneration, by
execution of the cashless exercise subscription form (in the form
provided by the Company duly executed). The number of shares to be
issued in exchange for the Option will be computed by subtracting
the Option Exercise Price from, in the Company’s sole
discretion, and in compliance with all applicable laws, rules,
regulations, and Company policies, and subject to Section 409A
of the Code, either (i) the last sale price of the Common
Stock on the date of receipt of the cashless exercise subscription
form, or if the Share are not publicly traded, (ii) the most
recent negotiated value used in connection with any sale of the
Company’s securities or in connection with any business
combination involving the Company (the “FMV Price”),
and multiplying that amount by the number of shares represented by
the Option, and dividing by the FMV Price as of the same date. If
this Option is exercised in whole, in lieu of any fractional share
of the Common Stock to which the Option-holder shall be entitled,
the Company shall pay to the Option-holder cash in an amount equal
to the fair value of such fractional share (determined in such
reasonable manner as the Board of Directors of the Company shall
determine). If this Option is exercised in part, this Option must
be exercised for a number of whole shares of the Common Stock, and
the Option-holder is entitled to receive a new Option covering the
Option Shares which have not been exercised.
c) Same Day Sale . Where
permitted by law and Company policies provided that a public market
for the Company’s stock exists: (i) through a
“same day sale” commitment from Option-holder and a
broker-dealer that is a member of the National Association of
Securities Dealers (a “ FINRA Dealer ”) whereby
Option-holder irrevocably elects to exercise the Option and to sell
a portion of the Shares so purchased to pay for the exercise price
and whereby the FINRA Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company;
or (ii) through a “margin” commitment from
Option-holder and a FINRA Dealer whereby Option-holder irrevocably
elects to exercise the Option and to pledge the Shares so purchased
to the FINRA Dealer in a margin account as security for a loan from
the FINRA Dealer in the amount of the exercise price, and whereby
the FINRA Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company. Option-holder
shall be solely responsible for any income or other tax
consequences from any payment for Shares with Option-holder’s
Common Stock of the Company.
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5.
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Termination of Service
.
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a) Upon the termination of the
Option-holder’s service as a
