Exhibit 10.3

EMPLOYEE STOCK OPTION AGREEMENT
UNDER THE 2007 EQUITY INCENTIVE PLAN
OF ADVANCED PHOTONIX, INC.
 
As amended by the Board of Directors on January 20, 2012.
 
In consideration of services to be rendered by you (the “Optionee”) to Advanced
Photonix, Inc., a Delaware corporation (the “Company") or one of its
subsidiaries, you have been granted an option (the “Option”) under the Company’s
2007 Equity Incentive Plan (the “2007 Plan”), which is incorporated herein by
reference, to purchase from the Company a number of shares of Class A Common
Stock of the Company (the “Shares”) at the price per Share as listed on Exhibit
A annexed hereto and subject to the terms and conditions of this Agreement and
the 2007 Plan.
 
1.  OPTION TERMS AND CONDITIONS.  The date of grant, the maximum number of
Shares the Option entitles the Optionee to purchase, whether the Option is
intended to qualify as an Incentive Stock Option (“ISO”) or as a non-incentive
stock option (“non-ISO”), the Option expiration date, the Option exercise price
per Share and the date or dates on which the Option will vest (i.e., will become
first exercisable) are as set forth on Exhibit A.
 
2.  TERM OF OPTION AND EXERCISABILITY.  Subject to the provisions of Paragraphs
5, 6, 7 and 8 hereof, the Option shall expire on the date specified on Exhibit A
and shall become first exercisable as to the Shares covered by the Option in one
or more installments on the date(s) specified on Exhibit A. Notwithstanding the
foregoing, the Option may not be exercised as to less than 100 Shares at any
time (or the remaining Shares covered by the Option, if less than 100 Shares);
and the Option may not be exercised until fulfillment of all applicable
conditions precedent referred to in Paragraph 9 hereof. The exercise price of
the Option shall be paid in full in cash at the time of exercise or as set forth
in clause (c) or (d) of Paragraph 3 hereof. In addition, the Option may not be
exercised prior to the expiration of six months from the date of Option grant.
Except as provided in Paragraphs 5, 6, 7 and 8 hereof, the Option may not be
exercised unless the Optionee shall have been in the continuous employ of the
Company or of one or more of its subsidiaries from the date of Option grant to
the date of the exercise of the Option.
 
3.  METHOD OF EXERCISING OPTION.  The Option may be exercised by the Optionee
(or his or her permitted transferee as set forth in Paragraph 10 hereof) by
written notice to the Company. The Option exercise shall specify the number of
Shares as to which the Option is being exercised. Payment of the exercise price
for all of the Shares as to which the Option is being exercised may be made: (a)
by wire transfer, check or money order payable to the order of the Company, (b)
by withholding Shares deliverable upon exercise of the Option with a fair market
value equal to the exercise price for all of the Shares as to which the Option
is being exercised, (c) if permitted under the Company’s policies then in effect
(including, but not limited to, the Company’s Securities Trading Policy), by
authorizing the Company to arrange a sale on behalf of the Optionee of some or
all of the Shares to be acquired upon the exercise of the Option and the
remittance to the Company of a sufficient portion of the sale proceeds to pay
the exercise price for all of the Shares as to which the Option is being
exercised, any withholding or employment taxes and all applicable fees,
including brokerage fees, resulting from such exercise and sale, (d) by
delivering (either by delivering physical certificates duly endorsed in blank
for transfer to the Company or by submitting certificates by attestation) Shares
having a fair market value equal to the exercise price for all of the Shares as
to which the Option is being exercised, or (e) by a combination of (i) cash and
(ii) Shares as described in clauses (b) or (d) above; provided, however, (A)
that with respect to the method of payment set forth in clause (b) above, the
withholding of Shares deliverable upon exercise of the Option shall not be
permitted with respect to the exercise of any Option intended to qualify as an
ISO, and (B) that with respect to the method of payment set forth in clauses (b)
and (d) above, “fair market value” shall mean the closing price of the Stock on
the NYSE Amex Exchange (or such other exchange on which the Stock is listed) on
the trading date (which, for purposes of this Section 3, means a day on which
the NYSE Amex Exchange (or such other exchange on which the Stock is listed) is
open for trading) immediately preceding the date the Option is exercised.
 
 
 
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Promptly following the Option exercise, the Company will instruct the Company’s
transfer agent and stock registrar to deliver for the account of the Optionee
(or his or her permitted transferee) the number of Shares with respect to which
the Option was exercised, less the number of Shares sold or withheld for
purposes of payment pursuant to clauses (b), (c) or (e) above and less the
number of Shares delivered to the Company by attestation pursuant to clause (d)
or (e) above. The Optionee shall not have any of the rights of a stockholder
with respect to the Shares issuable upon exercise of the Option until the Shares
shall have been issued. In the event the Option shall be exercised (if permitted
hereunder) by a person other than the Optionee, such permitted transferee shall
provide appropriate proof of his or her right to exercise the Option to the
Company in accordance with its policies and procedures. Shares issued upon the
exercise of the Option as provided herein shall be fully paid and
non-assessable.
 
4.  EMPLOYMENT.  In consideration of the granting of the Option and regardless
of whether the Option shall be exercised, the Optionee will fulfill all the
duties and obligations of his or her employment by the Company or its
subsidiary. Nothing in this Agreement shall confer upon the Optionee any right
to similar option grants in future years or any right to be continued in the
employ of the Company or its subsidiaries or shall interfere in any way with the
right of the Company or any such subsidiary to terminate or otherwise modify the
terms of the Optionee's employment.
 
5.  TERMINATION OF EMPLOYMENT.  Except as otherwise provided in Paragraph 6, 7
or 8 hereof, in the event that the employment of the Optionee by the Company or
its subsidiary terminates, the Option shall be exercisable (to the extent that
the Option was vested and therefore exercisable at the time of the Optionee’s
termination of employment) for three months following such termination of
employment, but no later than the expiration date specified on Exhibit A;
provided, however, if the Option is a non-ISO and if the Optionee continues to
provide services to the Company as a consultant or non-employee director
following the termination of his or her employment by the Company or its
subsidiary, then the Optionee shall not be deemed to have terminated his or her
employment for purposes of this sentence during the period of such consultancy
or while so serving as a non-employee director. Notwithstanding anything to the
contrary in this Agreement or the 2007 Plan, if the Optionee’s employment is
terminated by the Company or any of its subsidiaries for gross misconduct,
including without limitation, violations of applicable Company policies or legal
or ethical standards, all rights under the Option (including vested rights)
shall terminate on the employment termination date. In addition, this Agreement
may be terminated by the Company, and upon any such termination the Option
underlying this Agreement (to the extent then unexercised) shall be null and
void as of the date of such termination, upon a breach by the Optionee of any of
his or her obligations to the Company pursuant to any written agreement between
the Optionee and the Company, including without limitation, any agreement
relating to confidentiality, intellectual property or restrictions on
competition and solicitation. 
 
 
 
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6.  DEATH OF OPTIONEE.  In the event of the Optionee’s death while serving as an
employee of the Company or its subsidiary or following termination of the
Optionee's employment with the Company or its subsidiary as a result of the
Optionee's “Disability” (as defined in Paragraph 7 hereof), then provided the
Option was granted to the Optionee at least one year prior to the Optionee’s
employment termination date, the then unvested portion of the Option shall vest
and become immediately exercisable as of such employment termination date and
the Option shall remain exercisable until the expiration date specified on
Exhibit A.
 
7.  DISABILITY OF OPTIONEE.  In the event the employment of the Optionee by the
Company or its subsidiary terminates as a result of the Optionee's Disability,
then provided the Option was granted to the Optionee at least one year prior to
the Optionee's employment termination date, the then unvested portion of the
Option (if any) shall continue to vest (i.e., continue to become first
exercisable) and the Option shall remain exercisable in accordance with the
terms set forth on Exhibit A as if the Optionee's employment by the Company or
its subsidiary had not terminated. The term “Disability” as used in this
Agreement shall have the meaning set forth in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended.
 
8.  RETIREMENT OF OPTIONEE.  In the event of a termination of the Optionee’s
employment by the Company or its subsidiary as a result of his or her
“Retirement”, then provided the Option was granted to the Optionee at least one
year prior to the Optionee's employment termination date, the portion of the
Option which has vested and thus is exercisable as of the Optionee’s employment
termination date shall remain exercisable until the expiration date specified on
Exhibit A. The term “Retirement” as used in this Agreement means the termination
of the Optionee's employment with the Company or its subsidiary on or after (a)
the Optionee’s 65th birthday or (b) the Optionee’s 55th birthday if the Optionee
has completed ten years of service with the Company or any of its subsidiaries.
 
9.  CONDITION PRECEDENT TO EXERCISE OF OPTION.  In the event that the exercise
of the Option or the issuance of the Shares upon exercise thereof shall be
subject to, or shall require, any prior exchange listing, stockholder approval
or other condition or act, pursuant to the applicable laws, regulations or
policies of any stock exchange, federal, state or local government or its
agencies, then the Option shall not be exercisable until the fulfillment of such
condition.
 
 
 
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10.  NON-TRANSFERABILITY.  The Option shall not be transferable otherwise than
by will or the laws of descent and distribution and is exercisable during the
lifetime of the Optionee only by him or her or his or her guardian or legal
representative and following his or her death will be exercisable by the
Optionee’s estate, upon presentation to the Company of letters testamentary or
other documentation satisfactory to the Company. Notwithstanding the foregoing,
if the Option is a non-ISO, if permitted by the Committee the Option shall be
transferable by gift during the Optionee’s life to one or more members of the
Optionee's immediate family, including trusts for the benefit of such family
members and partnerships or limited liability companies in which such family
members are the only owners. In the event the Optionee wishes to transfer his or
her rights in the Option by gift as permitted by this Paragraph, the Optionee
shall provide the Company a written request for such transfer in form and
substance reasonably satisfactory to the Committee. No transferee shall have any
rights in the Option until such request has been accepted by the Committee. A
transferred non-ISO shall be subject to all of the same terms and conditions of
the 2007 Plan and this Agreement as if such Option had not been transferred.
More particularly (but without limiting the generality of the foregoing),
Options may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment, pledge, hypothecation or other
disposition and the levy of any execution, attachment or similar process upon
the Option shall be null and void and without effect.
 
11.  EFFECT ON OTHER BENEFITS.  In no event shall the value of the Shares
covered by the Option granted under this Agreement at any time be included as
compensation or earnings for purposes of determining any other compensation,
retirement benefit or other benefit offered to employees of the Company or its
subsidiaries under any benefit plan of the Company unless otherwise specifically
provided for in such benefit plan.
 
12.  AVAILABLE SHARES; LEGAL COMPLIANCE.  The Company shall at all times during
the term of the Option reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of this Agreement, shall pay all
original issue and transfer taxes with respect to the issuance of such Shares
and all other fees and expenses necessarily incurred by the Company in
connection therewith and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the Company,
shall be applicable thereto.
 
13.  ADMINISTRATION.  The Compensation Committee (the “Committee”) shall have
full authority and discretion, subject only to the express terms of the 2007
Plan, to decide all matters relating to the administration and interpretation of
the 2007 Plan and this Agreement, and the Optionee agrees to accept all such
Committee determinations as final, conclusive and binding. The Company may
retain a third-party plan administrator or may designate an internal department
to assist in the administration of the 2007 Plan.
 
14.  COSTS.  The Company shall not charge the Optionee for any part of the
Company’s cost to administer and operate the 2007 Plan. If the Company decides
to hire a third-party plan administrator to assist in the administration of the
2007 Plan, the Optionee may be charged fees by such third-party plan
administrator in connection with the Optionee’s exercise of the Option, sale of
Shares or other transactions which he or she effects through such third-party
plan administrator.
 
 
 
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15.  AMENDMENT.  This Agreement shall be subject to the terms of the 2007 Plan,
as may be amended by the Company from time to time, except that no amendment of
the 2007 Plan adopted after the date of this Agreement shall adversely affect
the Optionee’s rights hereunder without his or her consent. In addition to the
foregoing, this Agreement may be amended by the Committee, provided that no such
amendment shall adversely affect the Optionee’s rights hereunder without his or
her consent.
 
16.  TAXES.  The Optionee must pay the Company upon demand any and all amounts
due for the purpose of satisfying the Company’s liability, if any, to withhold
federal, state or local income tax or employment tax (plus interest or penalties
thereon, if any, caused by a delay in making such payment) incurred by reason of
the Optionee’s exercise of the Option or the sale of Shares in connection
therewith. If permitted under the 2007 Plan or the Company’s policies then in
effect, the Optionee may satisfy his or her obligation hereunder by authorizing
the Company to arrange a sale on behalf of the Optionee of an appropriate number
of Shares being issued on exercise of the Option and the remittance to the
Company of sufficient proceeds to cover the Optionee’s obligations hereunder. In
addition, the Company shall, to the extent permitted by law, have the right to
deduct such amount from any payment of any kind otherwise due to the Optionee.
 
17.  DATA PRIVACY.  By entering into this Agreement, the Optionee (a) authorizes
the Company (and its subsidiaries) or any agent of the Company providing
recordkeeping services for the 2007 Plan to disclose to each other such
information and data as either of them shall request in order to facilitate the
grant of options and the administration of the 2007 Plan; (b) waives any data
privacy rights the Optionee may have with respect to such information; and (c)
authorizes the Company or any agent of the Company providing recordkeeping
services for the 2007 Plan to store and transmit such information in electronic
form.
 
18.  NOTICES.  All notices and communications by the Optionee (or his or her
permitted transferee), including executive officers or directors of the Company
who are deemed reporting persons under Section 16 of the Securities Exchange
Act, in connection with this Agreement or the exercise of the Option granted
hereunder shall be delivered to the Company in writing by electronic mail,
nationally recognized overnight courier or certified mail, postage prepaid to
the attention of Richard D. Kurtz, President, Advanced Photonix, Inc., 2925
Boardwalk, Ann Arbor, Michigan 48104 (e-mail: rkurtz@advancedphotonix.com). All
notices and communications by the Company to the Optionee (or his or her
permitted transferee) in connection with this Agreement shall be given in
writing and shall be delivered electronically to the Optionee’s e-mail address
appearing on the records of the Company, or by nationally recognized overnight
courier or certified mail, postage prepaid to the Optionee’s residence or to
such other address as may be designated in writing by the Optionee.
 
19.  ENTIRE AGREEMENT AND WAIVER.  This Agreement and the 2007 Plan contain the
entire understanding of the parties and supersede any prior understanding and
agreements between them representing the subject matter hereof. To the extent
that there is an inconsistency between the terms of the 2007 Plan and this
Agreement, the terms of the 2007 Plan shall control. There are no other
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto relating to the subject matter hereof which are not
fully expressed herein or in the 2007 Plan. Any waiver or any right or failure
to perform under this Agreement shall be in writing signed by the party granting
the waiver and shall not be deemed a waiver of any subsequent failure to
perform.
 
 
 
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20.  SEVERABILITY AND VALIDITY.  The various provisions of this Agreement are
severable and any determination of invalidity or unenforceability of any one
provision shall have no effect on the remaining provisions.
 
21.  GOVERNING LAW.  The interpretation, enforceability and validity of this
Agreement shall be governed by the substantive laws (but not the choice of law
rules) of the State of Michigan.
 
22.  HEADINGS.  Paragraph and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of the Option or any provision
hereof.
 
23.  SUBSIDIARY.  As used herein, the term “subsidiary” shall mean any present
or future corporation which would be a “subsidiary corporation” of the Company,
as that term is defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended.
 
* * *
 
By my signature below (i) I am accepting the stock option described on Exhibit
A, subject to the terms and conditions contained in this Employee Stock Option
Agreement and the 2007 Plan, and (ii) I acknowledge receipt of a copy of the
Advanced Photonix, Inc. 2007 Equity Incentive Plan and of the Plan Information
relating thereto.
 
Dated: [__________]
 

 
Accepted:
 

 
___________________________________
 
Name: [Employee Name]
 
 
 
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EXHIBIT A
TO THE
EMPLOYEE STOCK OPTION AGREEMENT
UNDER THE 2007 EQUITY INCENTIVE PLAN
OF ADVANCED PHOTONIX, INC.
 

 
 Name of Optionee:
 
Type of Award (IS0 or Non-ISO):
 
Number of Shares Subject to Option:
 
Date of Grant:
 
Expiration Date:
 
Exercise Price (per Share):
 
Vesting Schedule: 
 

 

 
 
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