Document:

Form of modified Severance Compensation Agreement

 Exhibit 10.1 
 MSC.SOFTWARE CORPORATION 
 SEVERANCE COMPENSATION AGREEMENT 
 THIS AGREEMENT, effective             , 200_, is between MSC.Software Corporation, a Delaware
corporation (the “Company”) and              (the “Executive”). 
 The
Company’s Compensation Committee and Board of Directors has determined that it is appropriate to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility of a change in control of the Company. 
 This Agreement sets forth the
severance compensation which the Company agrees it will pay to the Executive if the Executive’s employment with the Company terminates under one of the circumstances described herein following a Change in Control of the Company (as defined
herein). 
  

	 1.
	 Term. This Agreement shall terminate, except to the extent that any obligation of the Company hereunder remains
unpaid as of such time, upon the earliest of (i) December 31st of any year after 200_ provided that either party has given at least 60
days prior written notice to the other party of its or his intention to terminate this Agreement under this paragraph 1(i); (ii) the termination of the Executive’s employment with the Company based on death, Disability (as defined in
Section 3(b)), Retirement (as defined in Section 3(c)) or Cause (as defined in Section 3(d)) or by the Executive other than for Good Reason (as defined in Section 3(e)); and (iii) two years from the date of a Change in
Control of the Company if the Executive has not terminated his employment for Good Reason as of such time. 

  

	2.	Change in Control. No compensation shall be payable under this Agreement unless and until (a) there shall have been a Change in Control of the Company, while the
Executive is still an employee of the Company and (b) the Executive’s employment by the Company thereafter shall have been terminated in accordance with Section 3. For purposes of this Agreement, a Change in Control of the Company
shall be deemed to have occurred if: 

  

	 	(i)	there shall be consummated any consolidation or merger of the Company and, as a result of such consolidation or merger (x) less than 50% of the outstanding common shares and
50% of the voting shares of the surviving or resulting corporation are owned, immediately after such consolidation or merger, by the owners of the Company’s common shares immediately prior to such consolidation or merger, or (y) any person
(as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of
the surviving or resulting corporation’s outstanding common shares; or 

  

	 	(ii)	any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company shall be consummated;
or 

  

	 	(iii)	the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company; or 

  

	 	(iv)	any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 20% or more of the Company’s outstanding common shares; or 

	 	(v)	during any period of two consecutive years, individuals who at the beginning of such period constitute the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election or the nomination for election by the Company’s shareholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of
the period. 

  

	3.	Termination Following Change in Control 

  

	 	(a)	If a Change in Control of the Company shall have occurred while the Executive is still an employee of the Company, the Executive shall be entitled to the compensation provided in
Section 4 upon the subsequent termination of the Executive’s employment with the Company by the Executive or by the Company unless such termination is as a result of (i) the Executive’s death; (ii) the Executive’s
Disability (as defined in Section 3(b) below); (iii) the Executive’s Retirement (as defined in Section 3(c) below); (iv) the Executive’s termination by the Company for Cause (as defined in Section 3(d) below); or
(v) the Executive’s decision to terminate employment other than for Good Reason (as defined in Section 3(e) below). 

  

	 	(b)	Disability. If, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his duties with the Company on a
full-time basis for twelve months and within 30 days after written notice of termination is thereafter given by the Company the Executive shall not have returned to the full-time performance of the Executive’s duties, the Company may terminate
this Agreement for “Disability.” 

  

	 	(c)	Retirement. The term “Retirement” as used in this Agreement shall mean termination by the Company or the Executive of the Executive’s employment based on the
Executive having reached age 65 or such other age as shall have been fixed in any written arrangement regarding the Executive’s retirement established with the Executive’s consent with respect to the Executive. 

  

	 	(d)	Cause. The Company may terminate the Executive’s employment for Cause. For purposes of this Agreement only, the Company shall have “Cause” to terminate the
Executive’s employment hereunder only on the basis of fraud, misappropriation or embezzlement on the part of the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Company’s Board of Directors at a meeting of the Board called and held
for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty
of conduct set forth in the second sentence of this Section 3(d) and specifying the particulars thereof in detail. 

  

	 	(e)	Good Reason. The Executive may terminate the Executive’s employment for Good Reason at any time during the term of this Agreement. For purposes of this Agreement
“Good Reason” shall mean any of the following without the Executive’s express written consent: 

  

	 	(i)	the assignment to the Executive by the Company of duties inconsistent with the Executive’s position, duties, responsibilities and status with the Company immediately prior to a
Change in Control of the Company, or a change in the Executive’s titles or offices as in effect immediately prior to a Change in Control of the Company, or any removal of the Executive from or any failure to reelect the Executive to any of such
positions, except in connection with the termination of his employment for Disability, Retirement or Cause or as a result of the Executive’s death or by the Executive other than for Good Reason; 

	 	(ii)	a reduction by the Company in the Executive’s base salary as in effect on the Date of Termination; 

  

	 	(iii)	any failure by the Company to continue in effect any benefit plan or arrangement (including, without limitation, the Company’s retirement plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive is participating at the time of a Change in Control of the Company (or any other plans providing the Executive with substantially similar benefits) (hereinafter referred to as
“Benefit Plans”), or the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of a Change in Control of the Company; 

  

	 	(iv)	any failure by the Company to continue the Executive’s eligibility to participate in annual executive bonus arrangements in which the Executive is participating at the time of
a Change in Control of the Company (or any plans or arrangements providing him with substantially similar benefits) (hereinafter referred to as “Incentive Plans”) or the taking of any action by the Company which would significantly reduce
the Executive’s opportunity to earn incentive compensation which is related to performance results as compared to performance expectations periodically determined by the Company; 

  

	 	(v)	a relocation of the Company’s principal executive offices, or the Executive’s relocation to any place other than the location at which the Executive performed the
Executive’s duties prior to a Change in Control of the Company, except for required travel by the Executive on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations at the time
of a Change in Control of the Company; 

  

	 	(vi)	any failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled at the time of a Change in Control of the Company;

  

	 	(vii)	any material breach by the Company of any provision of this Agreement; 

  

	 	(viii)	any failure by the Company to obtain the assumption in writing of this Agreement by any successor or assign of the Company, unless consent given by Executive;

  

	 	(ix)	any purported termination of the Executive’s employment, which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(f), and for
purposes of this Agreement, no such purported termination shall be effective; or 

  

	 	(x)	the failure of the Company to maintain Directors’ and Officers’ Liability Insurance on terms not materially less favorable to the Executive than the terms of the policy
presently in effect. 

	 	(f)	Notice of Termination. Any termination by the Company pursuant to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the provision so indicated. For purposes of this Agreement, such purported termination by the Company shall not be effective without such Notice of Termination.

  

	 	(g)	Date of Termination. “Date of Termination” shall mean (a) if this Agreement is terminated by the Company for Disability, 30 days after Notice of Termination is
given to the Executive (provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such 30-day period) or (b) if the Executive’s employment is terminated by the Company
for any other reason, the date on which a Notice of Termination is given; provided that if within 30 days after any Notice of Termination is given to the Executive by the Company the Executive notifies the Company that a dispute exists concerning
the termination, the Date of Termination shall be the date the dispute is finally determined, whether by mutual agreement by the parties or upon final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected.) 

  

	 	(h)	Separation from Service. A “Separation from Service” occurs when the Executive dies, retires, or otherwise has a termination of employment with the Company that
constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder. 

  

	4.	Compensation Under this Agreement 

  

	 	(a)	If within two years after a Change in Control of the Company the Executive’s employment with the Company is terminated either by the Company without Cause or by the Executive
for Good Reason (and other than by reason of the Executive’s death, Disability or Retirement, the Company shall make the following payments to the Executive: 

  

	 	(i)	the full base salary to which the Executive is entitled through the Date of Termination; 

  

	 	(ii)	accrued and unpaid vacation calculated at Executive’s then current base salary rate; 

  

	 	(iii)	An amount equal to the Executive’s current Annual Bonus Award under any Company annual incentive plan for the fiscal year in which the Notice of Termination is given,
multiplied by the percentage determined by dividing the number of days in the Company’s fiscal year that have elapsed prior to the date on which the Notice of Termination is given by the total number of days in such fiscal year. As used in this
clause (iii) the Executive’s Annual Bonus Award means the dollar amount which would have been paid to Executive for the fiscal year in which the Notice of Termination is given under the then current Company executive incentive compensation
plan, based on the assumption that the Target Level of performance would be reached by the Company and the Executive. 

	 	(iv)	an amount equal to two and one-half (2.5) times the sum of the Executive’s annualized base salary and Annual Bonus Award (as defined in clause (iii) above) for the
year in which the Notice of Termination is given, provided, however, that the amounts to be paid to the Executive under this clause (iv) shall be reduced by the amount payable to the Executive under clause (iii) of this Section 4(a).

  

	 	(b)	Upon a Change in Control, all outstanding and unvested equity awards granted by the Company to the Executive will be immediately vested and, in the case of options and similar
awards, exercisable as of the Change in Control date. 

  

	 	(c)    (i)	If any payment or distribution by the Company to or for the benefit of the Executive, whether pursuant to the terms of this Agreement or otherwise (a “Payment”), is
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (the “Code”) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall make an additional payment (a “Gross-Up Payment”) to or on behalf of the Executive in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such taxes) including, without limitation, any federal, state, or local income and employment taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the Payment, such Gross-Up Payment to be made within 10 days after the determination that the Payment is subject to the Excise Tax is made in accordance with the provisions
hereof. 

  

	 	(ii)	Subject to the provisions of paragraph 4c(iii) hereof, all determinations under this paragraph 4(c), including whether a Gross-Up Payment is required and the amount of the Gross-Up
Payment, shall be made by a certified public accounting firm immediately before the Change in Control occurs (the “Accounting Firm”), which shall provide detailed supporting calculations to both the Company and the Executive within 15
business days after the Change in Control (or any other change in ownership or effective control that triggers application of the Excise Tax) and, if a termination for Good Reason occurs, within 15 days after the termination for Good Reason. All
fees and expenses of the Accounting Firm shall be borne solely by the Company. The initial Gross-Up Payment determined pursuant to this paragraph 4(c)(ii) shall be paid by the Company to the Executive, or tax authority, whichever is required, within
five days after it receives the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on
the Executive’s applicable federal tax return will not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding on the Company and the Executive. Notwithstanding the foregoing, as a
result of uncertainty in applying Section 4999 of the Code, it is possible that the Company will not have made Gross-Up Payments that it should have made hereunder (an “Underpayment”). If the Company exhausts its remedies pursuant to
paragraph 4(c)(iii) hereof and the Executive thereafter is required to pay any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment, inform the Company and the Executive of the Underpayment in writing, and, within five days
of receiving such written report, the Company shall pay the amount of such Underpayment to or for the benefit of the Executive. 

	 	(iii)	The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but not later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is
required to be paid. The Executive shall not pay such claim before the expiration of 30 days following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such is
due). If the Company notifies the Executive in writing before the expiration of such 30-day period that it desires to contest such claim, the Executive shall (1) give the Company any information reasonably requested by the Company relating to
such claim, and (2) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an
attorney selected by the Company, provided that the Company shall pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any tax, including interest and penalties, imposed as a result of such representation and payment of costs and expenses. The Company shall control all proceedings in connection with such contest and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or to contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any appropriate administrative tribunal or court,
as the Company shall determine; provided, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any tax, including interest or penalties, imposed with respect to such advance. The Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or contest any other issue. 

  

	 	(iv)	If, after the Executive receives an advance by the Company pursuant to paragraph 4(c)(iii) hereof, the Executive becomes entitled to receive a refund claimed pursuant to such
paragraph 4(c)(iii), the Executive shall (subject to the Company’s complying with the requirements of such paragraph 4(c)(iii) promptly pay to the Company the amount of such refund (together with any interest thereon, after taxes applicable
thereto). If, after the Executive receives an amount advanced by the Company pursuant to paragraph 4(c)(iii) hereof, a determination is made that the Executive shall not be entitled to any refund claimed pursuant to such paragraph 4(c)(iii), and the
Company does not notify the Executive in writing of its intent to contest such denial of refund before the expiration of 30 days after such determination, the Executive shall not be required to repay such advance, and the amount of such advance
shall offset, to the extent thereof, the amount of the required Gross-Up Payment. 

  

	 	(v)	The protections afforded to the Executive under this paragraph 4(c) shall apply during the term of this Agreement, and with respect to any Payments made during the term of this
Agreement or otherwise required by this Agreement, regardless of whether the Executive’s employment by the Company terminates and, if the Executive’s employment by the Company does terminate, regardless of the reason for such termination.

	 	 (d)
	 The amounts required to be paid under Section 4(a) shall be paid by the Company to the Executive in cash in a lump
sum no later than the tenth (10th) day
after the Executive’s Separation from Service. Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)), the
Executive shall not be entitled to any payments upon a termination of his employment until the earlier of (i) the date which is six (6) months after his Separation from Service for any reason other than death, or (ii) the date of the
Executive’s death. Any amounts otherwise payable to the Executive following a termination of his employment that are not so paid by reason of this Section 4(d) shall be paid as soon as practicable after the date that is six (6) months
after the Executive’s separation from service (or, if earlier, the date of the Executive’s death) and, in the event of such a delay, the amount of the benefit that is so delayed shall accrue interest from the date the amount was otherwise
payable (but for such delay) through the date upon which payment is actually made. For this purpose, interest shall accrue monthly and the applicable annualized rate of interest shall be at the rate of 8% . The provision for a six-month delay in
payment under this Section 4(d) shall only apply if, and to the extent, required to comply with Code Section 409A. 

  

	 	(e)	Any payments required under this Section 4 shall be paid net of applicable federal, state and local tax withholding. 

  

	 	(f)	If the Company is required to make payments to the Executive under Section 4(a), the Company, until the earlier of (i) two and one-half (2.5) years after the Date of
Termination or (ii) commencement of full-time employment by the Executive with a new employer, shall maintain in full force and effect, for the continued benefit of the Executive, medical and dental programs or arrangements in which the
Executive was entitled to participate immediately prior to the Date of Termination, provided that continued participation by the Executive is possible under the general terms and provisions of such plans and programs. 

  

	 	(g)	Except for the payment referred to in clause (i) of Section 4(a) none of the payments to the Executive under this Section 4 shall be counted for the purpose of
computing the Executive’s benefits under any pension, profit sharing, deferred compensation or other employee benefit plan maintained by the Company. 

  

	5.	No Obligation to Mitigate Damages; No Effect on Other Contractual Rights; No Additional Severance Right. 

 The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the
Executive’s existing rights, or rights which would accrue solely as a result of the passage of time, under any Benefit Plan, Incentive Plan or Securities Plan, employment agreement or other contract, plan or arrangement. Notwithstanding the
foregoing, in the event that Executive becomes entitled to a payment under Section 4(a)(iv) of this Agreement, the Executive shall not be eligible for an additional severance payment arising out of the same event of termination and to the
extent Executive is nevertheless so entitled to such additional payment through application of law (the “Legal Severance Amount”), then the payment under Section 4(a)(iv) shall be correspondingly reduced by an amount equal to the
Legal Severance Amount and the Company is entitled to apply such setoff right. 

	6.	Successor to the Company. 

  

	 	(a)	The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if such succession or assignment had not taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive’s employment for Good Reason. As used in this Agreement, “Company” shall mean the Company as herein before defined and any successor or assign to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 6 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. If at any time during the term of this Agreement the Executive is
employed by any corporation, a majority of the voting securities of which is then owned by the Company, “Company” as used in Section 3, 4, 12 and 13 hereof shall in addition include such employer. In such event, the Company agrees
that it shall pay or shall cause such employer to pay any amounts owed to the Executive pursuant to Section 4 of this Agreement. 

  

	 	(b)	This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate. 

  

	7.	Non-compete. Without the consent in writing of the Board, Executive will not, at any time during employment with the Company and for a period of two and one-half
(2.5) years following termination of Executive’s employment for any reason (except as stated below), engage in the management or control of, or serve as an employee, consultant, agent, proprietor, principal, partner, major shareholder,
corporate officer or director of, any person, firm, corporation or business (collectively, as “Competing Entity”) that directly and substantially competes with the products and services of the Company. For purposes of this Agreement, a
Competing Entity is limited to an entity that derives a significant amount or percentage of its total annual revenue from the sale of virtual product development software and related services and competes in one or more of the same geographic
markets as the Company. It is agreed that the ownership of not more than two percent (2%) of the equity securities of any company having securities listed on an exchange or regularly traded in the over-the-counter market shall not, of itself,
be deemed inconsistent with this Section 7. 

  

	8.	Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, as follows: 

  

			
	 If to the Company:
	  	MSC.Software Corporation
		  	Executive Vice President, Business Administration,
Legal Affairs and Secretary
		  	2 MacArthur Place
		  	Santa Ana, CA 92707
		
	 If to the Executive:
	  	(Appropriate Name and Address)

 or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt. 

	9.	Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, which are not
set forth expressly in this Agreement. Without limiting the foregoing, this Agreement supercedes in its entirety that certain MSC.Software Corporation Severance Compensation Agreement effective
             by and between the Company and Executive. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

  

	10.	Validity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. 

  

	11.	Counterparts. This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and
the same instrument. 

  

	12.	Legal Fees and Expenses. The Company shall pay all legal fees and expenses, which the Executive may incur as a result of the Company’s contesting the validity,
enforceability or the Executive’s interpretation of, or determinations under, this Agreement. 

  

	13.	Confidentiality. The Executive shall retain in confidence any and all confidential information known to the Executive concerning the Company and its business so long as such
information is not otherwise publicly disclosed. 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written. 
  

									
	ATTEST:	 		 	
				
	 	 		 	By:	 	 
		 		 		 		 	(Signature of Executive)
					
		 		 		 	By:	 	 
		 		 		 		 	Chairman of the Board and
		 		 		 		 	Chief Executive OfficerINCENTIVE STOCK OPTION AGREEMENT

 Exhibit 10.15 
 INCENTIVE STOCK OPTION AGREEMENT 
 API NANOTRONICS CORP. 
 2006 EQUITY INCENTIVE PLAN 
 THIS
AGREEMENT is dated and made effective as of May 30, 2008 by and between API NANOTRONICS CORP., a Delaware corporation (the “Company”), and Thomas W. Mills, Sr. (“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 Board of Directors of the Company originally authorized the grant of an incentive stock option to Optionee on December 26, 2006 (the “Effective Date”); and 
 WHEREAS, the Company and the Optionee previously agreed as of July 2, 2007 to reprice that certain Incentive Stock Option Agreement, dated as of the
Effective Date, between the Company and the Optionee; and 
 WHEREAS, the Company and the Optionee have agreed to reprice the Incentive Stock
Option Agreement dated July 2, 2007; and 
 WHEREAS, the Board of Directors of the Company has determined that, on the date hereof, 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 Five Hundred Thousand (500,000) shares of Option Stock (“Shares”) at an exercise
price of $0.1005 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 twenty percent (20%) 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 twenty percent (20%) of the Shares; provided, that the Option shall in no event ever become exercisable with respect to more than 100% of the Shares. The Shares vesting under the Option have been limited to the
number of Shares allowed to conform to the $100,000 limit set forth at Section 9.1(b) of the Plan. 
 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. 
  

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 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”). 
 “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 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 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 

  

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“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). 
 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 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. 
  

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 c. Mergers, Recapitalization, Stock Splits, Etc. The provisions of Sections 14 and 17 of the Plan,
as amended effective as of the date hereof, 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, 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 on or before the later of (i) the date two (2) years after the date hereof 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 as of 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. 
  

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 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. 
 m.
Restatement. This incentive stock option agreement amends and restates that certain incentive stock option agreement dated as of July 2, 2007 between Optionee and the Company. 
 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/ Stephen Pudles
	 		 		 	 /s/ Thomas W. Mills, Sr.

	Its:	 	 CEO
	 		 		 	[Signature]
		 		 		 		 	Thomas W. Mills, Sr.

  

 6

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