Exhibit 10.27

STEPHEN PUDLES

STOCK OPTION AGREEMENT

API NANOTRONICS CORP.

2006 EQUITY INCENTIVE PLAN

THIS AGREEMENT is dated and made effective as of April 22, 2008 (“Effective
Date”) by and between API NANOTRONICS CORP., a Delaware corporation (the
“Company”), and Stephen Pudles (“Optionee”).

WITNESSETH:

WHEREAS, Optionee became an employee of the Company on the date hereof; and

WHEREAS, the employment agreement (the “Employment Agreement”) dated
March 3, 2008 between the Company and the Optionee requires that the Company
grant him the options set forth herein as soon as practicable;

WHEREAS, the Company desires to grant stock options to Optionee on the Effective
Date 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 Board of Directors of the Company and its Compensation Committee
has authorized the grant of stock options to Optionee and has determined that
the Fair Market Value of Common Stock of the Company on the Effective Date shall
be 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 Effective
Date the right and option (the “Incentive Option”) to purchase up to 11,236,650
shares of Common Stock (“Time Based Shares”) and the right and option (the
“Nonqualified Option” and collectively with the Incentive Option, the “Option”)
to purchase up to 7,491,100 shares of Common Stock (the “Performance Shares” and
collectively, with the Time Based Shares, the “Shares”) at an exercise price of
$0.0925 per Share on the terms and conditions set forth herein and subject to
the terms and conditions of the Plan. The Incentive 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 subject to the limitations set forth in
Section 9(b) of the Plan. The Nonqualified Option is not intended to qualify as
an “incentive stock option” under Section 422 of the Code.

All capitalized terms not defined in this Agreement shall have the meaning set
forth in the Plan.

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2. Duration and Exercisability.

a. Vesting/Exercise Period of Incentive Option. The Incentive Option shall
become exercisable as to portions of the Time Based Shares as follows: (i) the
Incentive Option shall not be exercisable with respect to any of the Time Based
Shares until the first anniversary of the Effective Date; (ii) on such first
anniversary of the Effective Date the Incentive Option shall become exercisable
as to thirty-three and one-third percent (33-1/3%) of the Time Based Shares;
(iii) on the second anniversary of the Effective Date, the Incentive Option
shall become exercisable as to an additional thirty-three and one-third percent
(33-1/3%) of the Time Based Shares; and (iv) on the third anniversary of the
Effective Date, the Incentive Option shall become exercisable as to an
additional thirty-three and one-third percent (33-1/3%) of the Time Based
Shares; subject to the Optionee’s continuous employment with the Company through
the vesting date. The Time Based Shares that may be treated as subject to
purchase pursuant to an “incentive stock option” within the meaning of
Section 422 of the Code in any given year shall be limited to conform to the
$100,000 limit set forth at Section 9.1(b) of the Plan and Section 422 of the
Code.

b. Vesting/Exercise Period of Nonqualified Option. The Nonqualified Option with
respect to the Performance Shares will vest in three equal annual installments
tied to the next three fiscal year ends of the Company as specified below but
only if the specified performance targets for the applicable fiscal year are
achieved. Such performance targets shall be based upon EBITDA targets and other
performance targets (collectively, the “Performance Targets”) determined by the
Board in consultation with Optionee. The Performance Targets for the
Nonqualified Option with respect to (i) the first one-third (1/3) of the
Performance Shares shall be determined within 120 days of March 3, 2008,
(ii) the second one-third (1/3) of the Performance Shares shall be determined no
later than 30 days prior to the Company’s May 2009 fiscal year end and (iii) the
third and final one-third (1/3) of the Performance Shares shall be determined no
later than 30 days prior to the Company’s May 2010 fiscal year end. The
Performance Shares will vest in three equal annual installments 60 days after
the end of each of the first three fiscal years, starting with the fiscal year
commencing June 1, 2008, subject to (i) achievement of the Performance Targets
for the applicable fiscal year and (ii) Optionee’s continuous employment with
the Company through the vesting date.

c. Change of Control. If a Change in Control occurs during the term of
Optionee’s employment with the Company, the Option, to the extent that it has
not already become exercisable, will immediately become exercisable with respect
to 50% of the Time Based Shares and 50% of the Performance Shares with respect
to which the Option is not then exercisable.

d. 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 terminates in
accordance with the provisions of Section 3.

 

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e. Lapse Upon Expiration. To the extent that this Option is not exercised prior
to the applicable expiration date set forth in Section 2(d) 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 or Disability. If Optionee is
Terminated for any reason other than his death or Disability (as such term is
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. Change of Control. In the case of a Change of Control, the terms of the
Option may be modified by the Committee as provided in the Plan.

d. Definitions.

“Cause” shall have the meaning set forth in the Employment Agreement.

“Change of Control” shall have the meaning set forth in the Plan.

“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.

“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”).

 

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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, whether
Time Based Shares or Performance Shares are being purchased, and whether or not
such Shares are being exercised pursuant to an “incentive stock option” and
shall be accompanied by payment in full of the Option exercise price for all
Shares exercised pursuant to the notice subject to the remainder of this
Section 4. 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 be exercised with respect to any number
or all of the shares as to which it can then be exercised and, if partially
exercised, may be so exercised as to the unexercised Shares at any time and from
time to time prior to expiration of the Option as provided in this Agreement.

b. Form of Payment. Subject to approval by the Committee, payment of the Option
exercise price by Optionee shall be in the form of cash, personal check,
certified check, or where permitted by law and provided that a public market for
the Company’s stock exists: (i) through a “same day sale” commitment from
Optionee and a broker-dealer that is a member of the Financial Industry
Regulatory Authority, Inc. (a “FINRA Dealer”) whereby Optionee 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 Optionee and a FINRA Dealer
whereby Optionee 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. Optionee shall be solely responsible for
any income or other tax consequences from any payment for Shares with Optionee’s
Common Stock of the Company.

c. Stock Transfer Records. Provided that the notice of exercise and payment are
in form and substance satisfactory to counsel for the Company, as soon as
practicable after the effective exercise of all or any part of the Option,
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the Shares purchased, and the Company shall deliver to Optionee, or to
the FINRA Dealer, as the case may be, one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary
stamp taxes shall be paid by the Company. Optionee shall pay all other costs of
the Company incurred to issue such Shares to such FINRA Dealer.

Shares purchased pursuant to exercise hereunder: (i) may be deposited with a
FINRA Dealer designated by Optionee, in street name, if so provided in such
exercise notice accompanied by all applications and forms reasonably required by
the Committee to effect such deposit, or (ii) may be issued to Optionee and such
other person, as joint owners with the right of survivorship, as is specifically
described in such exercise notice. Optionee shall be solely responsible for any
income or other tax consequences of such a designation of ownership hereunder
(or the severance thereof).

 

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5. Miscellaneous.

a. Employment Rights as Shareholder. This Agreement shall not confer on Optionee
any right with respect to continuance of employment by the Company or any
Subsidiary, nor shall it affect the right of the Company to Terminate such
employment. Optionee’s employment rights are governed solely by his Employment
Agreement. Optionee shall have no rights as a shareholder with respect to Shares
subject to this Option until such Shares are issued to Optionee upon the
exercise of this Option. No adjustment shall be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 12 of the Plan.

b. Securities Law Compliance. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and Optionee
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the Company’s Common
Stock may be listed at the time of such issuance or transfer. The Company shall
not be required to sell or issue any Shares if such issuance would constitute a
violation of any provision of any law or regulation of any governmental
authority.

c. Mergers, Recapitalization, Stock Splits, Etc. The provisions of Sections 14
and 17 of the Plan, as amended effective the Effective Date, shall govern all
Options in the event of any reorganization, merger, consolidation,
recapitalization, reclassification, change in par value, stock split-up,
combination of shares or dividend payable in capital stock, or other such
transaction described under Sections 14 and 17 of the Plan, and the Company
reserves all discretion provided therein.

d. Withholding Taxes on Disqualifying Disposition. In the event of a
disqualifying disposition of the Shares acquired through the exercise of this
Option pursuant to the exercise of an “incentive stock option” as defined in
Section 422 of the Code, Optionee hereby agrees to promptly provide the Company
written notice of such disposition, which notice shall be deemed delivered when
received by the Company. Upon notice of a disqualifying disposition, the Company
may take such action as it deems appropriate to insure that, if necessary to
comply with all applicable federal or state income tax laws or regulations, all
applicable federal and state payroll, income or other taxes are withheld from
any amounts payable by the Company to Optionee. If the Company is unable to
withhold such federal and state taxes, for whatever reason, Optionee hereby
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal or state law. Optionee may,
subject to the approval and discretion of the Committee or such administrative
rules it may deem advisable, elect to have all or a portion of such tax
withholding obligations satisfied by delivering shares of the Company’s Common
Stock having a fair market value equal to such obligations. For the purpose of
this Section 5(d), a “disqualifying disposition” means a sale or other transfer
of any Shares purchased pursuant to the exercise of an “incentive stock

 

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option” as defined in Section 422 of the Code hereunder on or before the later
of (i) the date two (2) years after the Effective Date and (ii) the date one
(1) year after transfer of such Shares to Optionee upon exercise of the Option,
as more particularly set forth at Section 422(a)(1) of the Code.

e. Nontransferability. The Option may not be transferred in any manner other
than by will or by the laws of descent and distribution and may be exercised
during the lifetime of Participant only by Participant. The terms of the Option
shall be binding upon the executors, administrators, successors and assigns of
Participant.

f. 2006 Equity Incentive Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, as amended the Effective Date, a copy of which Plan has
been made available to Optionee and is hereby incorporated into this Agreement.
This Agreement shall be subject to and in all respects limited and conditioned
as provided in the Plan. The Plan governs this Option and, in the event of any
questions as to the construction of this Agreement or in the event of a conflict
between the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.

g. Stock Legend. The Committee may require that the certificates for any Shares
purchased by Optionee (or, in the case of death, Optionee’s successors) bear an
appropriate legend to reflect the restrictions of applicable law.

h. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Optionee and any successor or
successors of Optionee permitted by Section 3 or Section 5(e) of this Agreement.

i. Interpretation. The Committee shall have the sole discretion to interpret and
administer the Plan. Any determination made by the Committee with respect to any
Option shall be final and binding on the Company and on all persons having an
interest in the Option granted under this Agreement and the Plan.

j. Entire Option. The Plan, as amended, is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements with respect to such subject matter.

k. Successors and Assigns. The Company may assign any of its rights under the
Option. The Option shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, the Option shall be binding upon Optionee and Optionee’s
heirs, executors, administrators, legal representatives, successors and assigns.

l. Governing Law. The Option shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without regard to that body of
law pertaining to choice of law or conflict of law.

 

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

 

API Nanotronics Corp.     OPTIONEE By:  

/s/ Phillip DeZwirek

   

/s/ Stephen Pudles

Its:   /s/ Chairman     [Signature]       Stephen Pudles

 

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