Exhibit 10.1

A GREEMENT , G ENERAL R ELEASE AND C ONFIDENTIALITY S TATEMENT

This A GREEMENT , G ENERAL R ELEASE AND C ONFIDENTIALITY S TATEMENT (this “Agreement”) is made and entered into as of the 11 ^th day of May, 2009, by and among API Nanotronics Corp., a Delaware corporation and API E LECTRONICS , I NC ., a Delaware corporation (collectively, “API”), and T HOMAS W. M ILLS , S R . (“Employee”).

R ECITALS :

A. Employee’s employment with API will end effective March 19, 2009 (the “Separation Date”).

B. Employee first received a copy of this Agreement on March 19, 2009 and received a copy of this version of the Agreement on April 28, 2009.

C. API enters into this Agreement based solely on Employee’s representation that this Agreement will resolve any and all claims Employee has or could have against API for any issue relating to his employment or the end of his employment with API and all affiliates of API and that Employee has waived any right to pursue any lawsuit against API with respect to his employment, the separation of that employment, or any other issue that arose prior to his execution of this Agreement.

D. In an effort to end the employment relationship on an amicable basis, and in consideration of the mutual covenants, promises, and obligations contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the Parties hereby agree as follows:

A GREEMENT :

1. Definition. Throughout this Agreement, the term “API” shall encompass the following:

(a) API, as well as any division thereof, parent, subsidiary, affiliated entity, or related entity, predecessors, successors and assigns of any of the foregoing; and

(b) Any current or former officer, director, trustee, agent, employee, shareholder, representative, insurer, or employee benefit or welfare program or plan (including administrators, trustees, fiduciaries, and insurers of such program or plan) of an entity referenced in or encompassed by Subparagraph 1(a).

2. Resignations; Future Employment. Employee hereby resigns from his position as an officer of API, including without limitation, as President and Chief Operating Officer for API Nanotronics Corp., a member of API’s Board of Directors and all other officer positions and directorships he held with API, effective as of the Separation Date. All authority granted Employee by API shall be revoked as of the Separation Date. At API’s request, Employee shall execute any and all documents necessary to confirm Employee’s resignation from API. Employee’s employment with API shall end on the Separation Date. Employee agrees that as a

condition of this Agreement, Employee will not seek reemployment with API at any time and should Employee apply in the future, his application for employment will not be considered by API and will be null and void. Employee acknowledges that promptly after the Separation Date API is required to issue a press release announcing Employee’s resignation and promptly after the Effective Date API is required to issued a press release with respect to this Agreement. Employee also acknowledges that API shall make such filings with the United States Securities and Exchange Commission with respect to Employee’s resignation and this Agreement as required by law and as it deems appropriate.

3. Severance Payment and Other Consideration. API, in consideration for the promises contained herein, agrees as follows:

(a) API will continue to pay Employee’s weekly salary of two thousand four hundred three and 85/100 ($2403.85) (less withholdings and deductions required by law) for fifty-two (52) weekly pay periods (the “Severance Period”), payable to Employee via direct deposit on API’s regular paydays. Such payments shall begin within 14 days after the Effective Date. The payments due to Employee pursuant to this Section 3(a) cannot be offset by amounts due from Employee to API pursuant to any cause of action or claim, except as set forth in Section 9(d) and 10(h).

(b) API and Employee agree that no amounts are due to Employee for accrued and unpaid vacation as of the Separation Date.

(c) API will pay the monthly lease payments of $652.00 due under Employee’s car lease with Smithtown Motors Corp. for a period of twelve months from the Separation Date.

(d) From the Separation Date until the Effective Date, and during the Severance Period, API shall continue Employee’s coverage under its medical and dental plans (the “Medical Plans”) at the same benefit level Employee received immediately prior to the Separation Date. Notwithstanding the foregoing, in no event will API pay for or continue Employee’s coverage under the Medical Plans during the Severance Period if Employee becomes eligible for coverage under another group health plan. After the Severance Period, Employee will no longer be covered by API’s Medical Plans. At that time, Employee will have any conversion rights available under the Medical Plans and as otherwise provided by law, including the Comprehensive Omnibus Budget Reconciliation Act (“COBRA”). The period during which Employee will be entitled to continuation coverage under COBRA shall begin on the day after the Severance Period. If Employee elects to continue coverage under the Medical Plans, Employee shall be responsible for the payment of premiums, as permitted by law. Employee agrees to immediately notify API in writing, if Employee becomes eligible for such coverage under another group health plan. Such notice shall be given to API Electronics Group Corp. c/o Filtran Ltd., 229 Colonnade Road, Nepean, Ontario K2E 7K3, Attn: Chief Financial Officer.

(e) From the Separation Date until the Effective Date, and during the Severance Period, API shall continue Employee’s coverage under its Short Term

-2-

Disability, Long Term Disability, Group Life Insurance and the Accidental Death and Dismemberment Plans (“Insurance Plans”). After the Severance Period, Employee will have any conversion rights available under the Insurance Plans.

(f) Employee shall not participate in the API Retirement Savings Plan after the Separation Date. Employee will be entitled to benefits earned and vested (if any) prior to the Separation Date pursuant to the applicable API Retirement Savings Plan provisions.

(g) Employee will not be eligible for a bonus for the Fiscal Year 2009 or anytime thereafter, or any portion thereof.

The payments described in this Section 3 reflect consideration provided to Employee over and above anything of value to which Employee is already entitled. In paying the amount specified in this Section 3, API makes no representation as to the tax consequences or liability arising from said payment. Moreover, the parties understand and agree that any tax consequences and/or liability arising from the payment to Employee shall be the sole responsibility of Employee. To this extent, Employee acknowledges and agrees that he will pay any and all federal, state and local income tax which may be determined to be due in connection with the payments described in this Section 3. Employee also agrees to indemnify API from all tax and/or other liability (including, but not limited to, fines, penalties, interest, and costs) arising from or relating to the payment described in this Section 3 and/or imposed by the Internal Revenue Service, the State of New York, or any other taxing agency or tribunal as a result of API’s failure to withhold taxes on the payments described in this Section 3 or any portion thereof.

Employee acknowledges and agrees that the consideration and sums included in this Section 3 are the maximum sums ever to be due to Employee from API, and he hereby relinquishes and waives any rights to other forms of payment or benefits under any other agreement between Employee and API, whether written, oral, express or implied.

(h) Employee shall be entitled to keep desk, credenza and three matching chairs that formerly belonged to the former owner of Solid State Power. Employee shall arrange to pick-up said items, within seven (7) days of the Effective Date (as defined below)

(i) API shall pay Employee $35,000 in full and complete satisfaction of all claims of Employee to shares of common stock of API or any other securities of API. Such amount shall be paid to employee by check and sent to Employee by API on the day following the Effective Date.

4. General Release and Waiver from Employee. In consideration for the payments reflected in Section 3, Employee (for himself, his agents, assigns, heirs, executors, and administrators) hereby releases and discharges API fr