Exhibit 10.4
INCENTIVE STOCK OPTION
AGREEMENT
API NANOTRONICS CORP.
2006 EQUITY INCENTIVE
PLAN
THIS AGREEMENT is dated and made
effective as of
by
and between API NANOTRONICS CORP., a Delaware corporation (the
“ Company ”), and
(“ Optionee ”).
WITNESSETH:
WHEREAS, Optionee on the date hereof
is an employee of the Company or one of its Subsidiaries;
and
WHEREAS, the Company desires to
grant an incentive stock option to Optionee to purchase shares of
the Company’s Common Stock pursuant to the Company’s
2006 Equity Incentive Plan, as amended (the “ Plan
”); and
WHEREAS, the Compensation Committee
of the Company has authorized the grant of an incentive stock
option to Optionee and has determined that, on the Effective Date,
the Fair Market Value of Option Stock of the Company is not less
than the exercise price per share provided below.
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Grant of Option .
The Company hereby grants to Optionee as of the date hereof the
right and option (the “ Option ”) to purchase up
to
( )
shares of Option Stock (“ Shares ”) at an
exercise price of
$
per share on the terms and conditions set forth herein and subject
to the terms and conditions of the Plan. This Option is intended to
qualify as an “incentive stock option” within the
meaning of Section 422, or any successor provision, of the
Internal Revenue Code of 1986, as amended (the “ Code
”), and the regulations thereunder.
All capitalized terms not defined in
this Agreement shall have the meaning set forth in the
Plan.
2. Duration and
Exercisability .
a. Vesting/Exercise Period .
The Option shall become exercisable as to portions of the Shares as
follows: (i) the Option shall not be exercisable with respect
to any of the Shares until the first anniversary of the Effective
Date (the “ First Vesting Date ”); (ii) if
Optionee has continuously provided services to the Company or any
Subsidiary from the Effective Date through the First Vesting Date
and has not been Terminated (as hereafter defined) on or before the
First Vesting Date, then on the First Vesting Date the Option shall
become exercisable as to
percent ( %) of the Shares; and
(iii) thereafter, provided that Optionee continuously provides
services to the Company or any Subsidiary of the Company and is
not
Terminated, upon each of the four successive
anniversaries of the First Vesting Date, the Option shall become
exercisable as to an additional
percent ( %) of the Shares; provided,
that the Option shall in no event ever become exercisable with
respect to more than 100% of the Shares.
b. Expiration . The Option
shall expire on the tenth anniversary of the Effective Date
(“ Expiration Date ”) and must be exercised, if
at all, on or before the earlier of the Expiration Date and any
date on which the Option terminated in accordance with the
provisions of Section 3.
c. Lapse Upon Expiration . To
the extent that this Option is not exercised prior to the
applicable expiration date set forth in Section 2(b) or
Section 3 of this Agreement, all rights of Optionee under this
Option shall thereupon be forfeited.
3. Termination
.
a. Termination for Any Reason
Other than Death, Disability or a Change of Control . If
Optionee is Terminated for any reason other than his death,
Disability or a Change of Control (both terms as hereafter
defined), this Option shall be exercisable only to the extent the
Option was exercisable on the date of Termination, but had not
previously been exercised, and shall expire on the earlier of
(i) the close of business three months after the Termination
Date (as hereafter defined) and (ii) the Expiration Date.
Notwithstanding the foregoing, if the Optionee is terminated for
Cause, then the Option shall terminate immediately on the
Optionee’s Termination Date.
b. Termination Because of Death
or Disability . If Optionee is Terminated because of his death
or his Disability (or Optionee dies within three (3) months
after a Termination other than because of his Disability or because
of the existence of Cause), then this Option shall be exercisable
by Optionee, or the person or persons to whom Optionee’s
rights under this Option shall have passed by Optionee’s will
or by the laws of descent and distribution, only to the extent the
Option was exercisable on the date of Optionee’s Termination,
but had not previously been exercised, and shall expire on the
earlier of: (i) the close of business six months after
Optionee’s Termination Date and (ii) the Expiration
Date.
c. Definitions .
“ Termination ”
or “ Terminated ” means that Optionee has for
any reason ceased to provide services as an employee of the Company
or Subsidiary of the Company, except in the case of sick leave,
military leave, or any other leave of absence approved by the
Committee, provided that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of
such leave is guaranteed by contract or statute. The Committee
shall have sole discretion to determine whether Optionee has ceased
to provide services and the effective date on which Optionee ceased
to provide services (the “ Termination Date
”).
2
“ Disability ”
means a permanent and total disability within the meaning of
Section 22(e)(3) of the Code (as provided under
Section 422(c)(6), or such applicable successor provision, of
the Code), as determined by the Committee.
“ Cause ” means
that Optionee:
(a) shall have been convicted of any
felony or a crime involving fraud, theft, misappropriation,
dishonesty or embezzlement;
(b) shall have committed intentional
acts that materially impair the goodwill or business of the Company
or any Subsidiary or cause material damage to its property,
goodwill or business; or
(c) shall have failed to perform his
material duties to the Company or any Subsidiary (other than as a
result of a short-term disability (i.e., a disability that does not
fall within the previously defined parameters of a Disability)), or
a short term disability or medical emergency involving a member of
the Optionee’s immediate family, or as a result of any
Company approved leave).
4. Manner of Exercise
.
a. General . The Option may
be exercised only by Optionee (or other proper party in the event
of death or Disability), subject to the conditions of the Plan and
this Agreement, and subject to such other administrative rules as
the Committee deems advisable, by delivering written notice of
exercise to the Company at its principal office. The notice shall
state the number of Shares exercised and shall be accompanied by
payment in full of the Option price for all Shares exercised
pursuant to the notice. Any exercise of the Option shall be
effective upon receipt of such notice by the Company together with
payment that complies with the terms of the Plan and this
Agreement. The Option may
