Exhibit 10.3

API TECHNOLOGIES, INC.

MANAGEMENT BONUS PLAN

January 21, 2011

SECTION 1 – NATURE AND PURPOSE.

1.1 Purpose.

The API Technologies, Inc. Management Bonus Plan (the “Plan”) is hereby
established effective upon the closing (the “Closing”) of the acquisition of
SenDEC Corporation, (“SenDEC”), by a wholly owned subsidiary of API
Technologies, Inc. (“API” or the “Company”), pursuant to the terms of the
Agreement and Plan of Merger entered into by the Company, API and certain other
signatory parties dated January 9, 2011, as amended by that certain Amendment to
Agreement and Plan of Merger, dated as of January 19, 2011 (as amended, the
“Merger Agreement” and such transaction, the “Merger”). The purpose of the Plan
is to provide for the payment by the Company of cash bonuses to eligible
employees and advisors of SenDEC if certain target earnings milestones are
achieved in the time periods set forth below.

SECTION 2 – DEFINITIONS.

For purposes of the Plan, the following terms are defined as follows:

2.1 Additional Participants means those Participants listed on Exhibit A as
Additional Participants, as the same may be amended from time to time by the
Plan Administrator (who shall consider in good faith any input provided by the
SenDEC Representative with respect thereto).

2.2 Actual Bonus Amount means the actual bonus amount as calculated in
accordance with Section 4.1(b) and Exhibit B for each of the Bonus Periods.

2.3 Actual EBITDA Performance means SenDEC’s earnings before interest, taxes,
depreciation and amortization as determined for SenDEC as a separate subsidiary
of API, calculated in accordance with Generally Accepted Accounting Principles
(“GAAP”), adjusted by adding back (i) all of transaction costs relating to the
Merger as incurred in 2010 and 2011; (ii) any payments under this Bonus Plan and
any payments to SenDEC’s shareholders as Earn-Out, as defined in the Merger
Agreement, (iii) $3,425,000 paid as a bonus to certain members of SenDEC
management on December 31, 2010 and to certain members of the Board of Directors
of SenDEC on Closing and (iv) any expenses, overhead or otherwise, that may be
allocated to SenDEC from time to time as a result of being treated as part of
the API consolidated group.

2.4 Bonus Payment means the amount actually payable to a Participant under the
Plan in accordance with the terms of this Plan.

 

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2.5 Bonus Period means each of the First Bonus Period, Second Bonus Period,
Third Bonus Period and Cumulative Milestone Period (collectively, the “Bonus
Periods”).

2.6 Bonus Pool means, for any Bonus Period, the Actual Bonus Amount less (1) the
amount of Bonus Payments allocated to the Key Participants listed on Exhibit A
(whether such amount is actually earned and paid or forfeited) and (2) the
amount of Bonus Payments allocated and earned and paid to the Additional
Participants listed on Exhibit A. For avoidance of doubt, amounts forfeited by
Additional Participants for any Bonus Period shall be added to the Bonus Pool
for such Bonus Period.

2.7 Cumulative Milestone Period means SenDEC’s fiscal years ending 2011 through
2013.

2.8 EBITDA Target means, with respect to the First Bonus Period, Second Bonus
Period, the Third Bonus Period and the Cumulative Milestone Period, as
applicable, the amounts set forth on Exhibit B.

2.9 Election Percentage means that percentage for each Bonus Period as set forth
in Exhibit B.

2.10 First Bonus Period means SenDEC’s fiscal year ending July 31, 2011.

2.11 Key Participant means each of those Participants listed as the Key
Participants on Exhibit A.

2.12 Maximum Bonus Amount means, for each Bonus Period, the amounts set forth in
Exhibit B (determined by multiplying the Election Percentage for each Bonus
Period by the Total Bonus Amount).

2.13 Participant means those persons listed on Exhibit A attached hereto,
including Key Participants and Additional Participants, as may be amended from
time to time pursuant to Section 6.2, plus Bonus Pool recipients selected
pursuant to Section 3.1(b).

2.14 Participation Percentage means that percentage that applies if the EBITDA
Target is not achieved for any Bonus Period as described in Exhibit B.

2.15 Payment Date means the date on which the Actual Bonus Amount is paid to
Participants by the Plan Administrator.

2.16 Plan Administrator means the Board of Directors of the Company (the
“Board”), or a committee designated by the Board to administer the Plan,
provided that so long as Ken Fiske remains on the Board, such committee shall
include Ken Fiske as one of its members.

2.17 SenDEC Representative shall mean Ken Fiske so long as Ken Fiske shall
remain the Chief Executive Officer of SenDEC, and thereafter the then-present
Chief Executive Officer of SenDEC.

 

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2.18 Second Bonus Period means SenDEC’s fiscal year ending July 31, 2012.

2.19 Target Bonus Percentage means the percentage specified for each Key
Participant as of the date hereof set forth on Exhibit A, and the percentage
that may be specified after the date hereof for each other Participant sharing
in the Bonus Pool, as will be set forth on Exhibit A, as amended from time to
time, representing the percentage of the Actual Bonus Amount each Participant is
eligible to receive on each Payment Date.

2.19 Third Bonus Period means SenDEC’s fiscal year ending July 31, 2013.

2.20 Total Bonus Amount means $11,000,000.

SECTION 3 – ELIGIBILITY FOR BENEFITS.

3.1 General Rules.

(a) Subject to the provisions set forth in Section 3.2 and Section 3.3, the Plan
Administrator or its designee will distribute a Bonus Payment for each Bonus
Period in which an Actual Bonus Amount is earned by SenDEC to each person
identified as a Participant with respect to such Bonus Period, including those
set forth on Exhibit A, subject to such Participant’s continued employment with
the Company through the day such bonus becomes payable pursuant to Section 5.1.
Notwithstanding any other provision of this Plan to the contrary, if a
Participant has executed an employment agreement or advisory agreement with
SenDEC with Company approval, then such employment agreement or advisory
agreement shall control with respect to such individual’s status as a
Participant under this Plan and right to receive a Bonus Payment on a Payment
Date. Any Bonus Payment to a Participant shall be made in the calendar year in
which the Bonus Period ends, and no later than October 31 of such calendar year.
In no event shall a Bonus Payment be paid in the tax year prior to the tax year
in which it is earned.

(b) Except with respect to the Key Participants and the Additional Participants,
for whom the Target Bonus Percentage remains fixed as set forth in Exhibit A,
the amount of a Bonus Payment on any Bonus Period to any other Participant shall
be determined as follows: within forty five (45) days after the end of each
Bonus Period in which Target EBITDA has been reached, the SenDEC Representative
shall prepare a proposed list of the Bonus Payments to be paid to Participants
from the Bonus Pool and shall submit that list to the Plan Administrator for
approval. The Plan Administrator shall either approve that list or, if such list
is not approved, consult in good faith with the SenDEC Representative, and
prepare a revised list, all of which shall happen prior to the date on which the
Actual EBITDA Performance is determined in accordance with Section 4.1(a), and
the persons on such list shall be considered Participants hereunder for such
Bonus Period.

3.2 Eligibility. Except where a Participant has executed an employment agreement
or advisory agreement with SenDEC with Company approval, in which case such
employment or advisory agreement shall control, each Participant will remain
eligible to participate, if,: (i) the individual has not disclosed to any
unauthorized person or entity any information regarding this Plan and has not
violated any other confidentiality agreement between the individual and the

 

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Company or SenDEC; (ii) the individual has not engaged in any theft, fraud,
embezzlement, dishonesty or similar conduct which has or is likely to result in
material damage to the Company or SenDEC or any of their respective customers,
members or subsidiaries; (iii) the individual has not, after the Closing, been
convicted of, or pled guilty or no contest to a felony or a crime involving
fraud; and (iv) the individual is otherwise not in material breach of the terms
and conditions of all agreements Participant has with the Company or SenDEC. The
eligibility determination under this Section 3.2 shall be made by the Plan
Administrator, who shall consider in good faith any input provided by the SenDEC
Representative with respect to such determination.

3.3 Termination of Plan Benefits. The Plan Administrator, who shall consider in
good faith any input provided by the SenDEC Representative with respect to such
matter, shall have the right to terminate a Participant’s participation in the
Plan if the Participant’s employment with SenDEC terminates for any reason,
provided, however, if the Participant has an employment agreement with SenDEC
with Company approval, such employment agreement will control the termination of
benefits under this Plan.

SECTION 4 – PLAN BENEFITS.

4.1 Determination of Actual Bonus Amounts.

(a) Within forty five (45) days after the end of each Bonus Period, the SenDEC
Representative shall prepare and deliver to the Plan Administrator an accounting
of the Actual EBITDA Performance recognized by SenDEC during the relevant Bonus
Period. Within fifteen (15) days following receipt of the Actual EBITDA
Performance calculations from the SenDEC Representative, the Plan Administrator
will either accept the accounting or notify the SenDEC Representative that it is
rejecting such accounting. In its rejection notice to the SenDEC Representative,
the Plan Administrator shall specify the reasons for such rejection. If the
Actual EBITDA Performance accounting is rejected, within fifteen (15) days of
the notice of rejection, the SenDEC Representative and the Plan Administrator
shall select a mutually satisfactory expert to determine the Actual EBITDA
Performance for the Bonus Period in question and such determination shall be
binding on all parties. The Company shall bear the costs of such expert. Any
determination made by such expert shall be made within twenty (20) days after
such expert is selected and in no event later than October 20 of the calendar
year in which such Bonus Period ends.

(b) The Company will pay the Actual Bonus Amount with respect to performance for
the First Bonus Period, Second Bonus Period, Third Bonus Period and Cumulative
Milestone Period as follows:

(i) If 100% of the EBITDA Target is achieved in any Bonus Period, then the
Actual Bonus Amount shall be equal to the Maximum Bonus Amount for that Bonus
Period.

(ii) Solely with respect to the First Bonus Period, Second Bonus Period and
Third Bonus Period, if at least 92% but less than 100% of the EBITDA Target is
achieved in any of those Bonus Periods, then the Actual Bonus Amount for such

 

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Bonus Period shall equal the product of (x) the Maximum Bonus Amount and (y) the
Participation Percentage (See Exhibit B). With respect to such Bonus Period, the
excess, if any of (x) the Maximum Bonus Amount for that Bonus Period over
(y) the Actual Bonus Amount calculated under this Subsection (ii) for that Bonus
Period, will be forfeited.

(iii) Solely with respect to the First Bonus Period, Second Bonus Period and
Third Bonus Period, if SenDEC achieves less than 92% of the EBITDA Target in any
of those Bonus Periods, then no Actual Bonus Amount will be paid with respect to
such Bonus Period and the Maximum Bonus Amount will be forfeited.

(iv) Solely with respect to the Cumulative Milestone Period, if at least 80% but
less than 100% of the EBITDA Target is achieved in the Cumulative Milestone
Period, then the Actual Bonus Amount for the Cumulative Milestone Period shall
equal the product of (x) the Maximum Bonus Amount and (y) the Participation
Percentage (See Exhibit B). With respect to the Cumulative Milestone Period, the
excess, if any of (x) the Maximum Bonus Amount for that Bonus Period over
(y) the Actual Bonus Amount calculated under this Subsection (ii) for the
Cumulative Milestone Period, will be forfeited.

(v) Solely with respect to the Cumulative Milestone Period, if SenDEC achieves
less than 80% of the EBITDA Target in the Cumulative Milestone Period, then no
Actual Bonus Amount will be paid with respect to the Cumulative Milestone Period
and the Maximum Bonus Amount will be forfeited.

(vi) For the avoidance of doubt, in the Cumulative Milestone Period, the EBITDA
Target for the Cumulative Milestone Period is equal to the sum of the EBITDA
Targets for the First Bonus Period, Second Bonus Period and Third Bonus Period
and the Actual EBITDA Performance is equal to the sum of the Actual EBITDA
Performance for each of the First Bonus Period, Second Bonus Period and Third
Bonus Period for purposes of determining the eligibility for the Maximum Bonus
Amount in accordance with Sections 4.1(b)(i), (ii) and (iii).

An Example of the calculation of the Actual Bonus Amounts hereunder is attached
hereto as Exhibit C.

(c) Any Actual Bonus Amount provided under this Section 4 shall be paid pursuant
to the time and form of payment provisions of Section 5.

SECTION 5 – TIME AND FORM OF PAYMENTS.

5.1 General Rules.

(a) Within 15 days after the date the Plan Administrator and the SenDEC
Representative agree on the Actual EBITDA Performance for the relevant Bonus
Period in accordance with Section 4.1(a), but in no event later than October 31
of the calendar year in which the Bonus Period ends, the Company shall pay the
Bonus Payment to Participants who are eligible to receive Bonus Payments,
including the individuals set forth on Exhibit A who are so eligible, for each
Bonus Period as described in Section 3.1(b).

 

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(b) Any Bonus Payment shall be paid in cash and in a single lump sum payment on
the applicable Payment Date.

(c) Amounts hereunder shall be reduced by all applicable withholdings, including
for federal, state and local taxes.

SECTION 6 – RIGHT TO INTERPRET PLAN; TERMS AND CONDITIONS; AMENDMENT AND
TERMINATION.

6.1 Exclusive Discretion. The Plan Administrator shall have the exclusive
discretion and authority to establish rules, forms, and procedures for the
administration of the Plan and to construe and interpret the Plan and to decide
any and all questions of fact, interpretation, definition, computation or
administration arising in connection with the operation of the Plan, including,
but not limited to, the eligibility to participate in the Plan and amount of
benefits paid under the Plan. The rules, interpretations, computations and other
actions of the Plan Administrator shall be binding and conclusive on all
persons.

6.2 Amendment or Termination. The Board reserves the right to amend or terminate
the Plan or the benefits provided hereunder at any time; provided, however, that
no amendment or termination will occur that adversely affects the rights under
the Plan of any Participant without the written consent of the SenDEC
Representative, and if a Key Participant is affected, then with the written
consent of that Key Participant as well. Unless otherwise required by law, no
approval of the shareholders of the Company shall be required for any amendment
or termination.

6.3 No Implied Employment Contract. The Plan shall not be deemed (i) to give any
employee or other person any right to be retained in the employ of the Company
or SenDEC, or (ii) to interfere with the right of the Company or SenDEC to
discharge any employee or other person at any time, with or without cause, which
right is hereby reserved.

6.4 Legal Construction. This Plan shall be governed by and construed under the
laws of the State of New York (without regard to principles of conflict of
laws). The Plan is intended to be a “bonus program” as defined under U.S.
Department of Labor regulation section 2510.3-2(c) and shall be construed and
interpreted accordingly.

6.5 Plan Benefits Unfunded. The liability of the Company to pay any amount to
any Participant is based solely on the contractual obligations created by the
Plan. The Plan constitutes a mere promise by the Company to pay benefits in the
future as determined in the sole discretion of the Plan Administrator. The
interest of a Participant in benefits payable under the Plan is an unsecured
claim against the general assets of the Company. No Participant has any interest
in any fund or in any specific asset of the Company by reason of any amounts
credited or deemed to be credited hereunder. Accordingly, Plan benefits are not
secured by any trust, pledge, lien or encumbrance on any property of the Company
or on the assets of any benefit trust. The Company intends that the Plan be
unfunded for tax purposes and for purposes of Title I of ERISA, if applicable.

 

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SECTION 7 – SECTION 409A

7.1 Construction. To the extent that payments or benefits under this Plan are
subject to (and not exempt from) Section 409A of the Internal Revenue Code of
1986, as amended and the regulations and other guidance promulgated thereunder
(“Section 409A”), then such amounts are intended to comply with Section 409A as
amounts payable on a “specified time” in accordance with Treas. Reg.
Section 1.409A-3(i)(1)(i), in each case, so none of the Bonus Payments to be
provided hereunder will be subject to the additional tax imposed under
Section 409A. Any ambiguities or ambiguous terms herein will be interpreted to
be exempt from or so comply with the requirements of Section 409A. The Company
and each Participant will work together in good faith to consider either
(i) amendments to this Plan; or (ii) revisions to the Plan with respect to the
payment of any Bonus Payments, which are necessary or appropriate to avoid
imposition of any additional tax or income recognition prior to the actual
payment to the Participant under Section 409A. Notwithstanding anything in the
Plan to the contrary, the Company reserves the right, in its sole discretion and
without the consent of any Participant, to take such reasonable actions and make
any amendments to the Plan as it deems necessary, advisable or desirable to
comply with Section 409A or to otherwise avoid income recognition under
Section 409A or imposition of any additional tax prior to the actual payment of
any Bonus Amounts.

SECTION 8 – GENERAL PROVISIONS.

8.1 Notices. Any notice, demand or request required or permitted to be given by
either the Company, SenDEC, the Plan Administrator or a Participant pursuant to
the terms of this Plan shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. mail, First Class with postage
prepaid, and addressed to the parties, in the case of the Company, at One North
Wacker Drive, Suite 4400, Chicago, IL 60606, Attn: General Counsel, and, in the
case of SenDEC and/or the Plan Administrator at 72 Perinton Parkway, Fairport,
NY 14450, Attn: Secretary, and in the case of any Participant, at the address as
set forth in SenDEC’s employment file maintained for the Participant as
previously furnished by the Participant, or such other address as a party may
request by notifying the other in writing.

8.2 ARBITRATION. ANY AND ALL DISPUTES ARISING OUT OF, OR RELATING TO THE TERMS
OF THIS PLAN AND THEIR INTERPRETATION, SHALL BE SUBJECT TO BINDING CONFIDENTIAL
ARBITRATION BEFORE JAMS, PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES &
PROCEDURES (“JAMS RULES”), IN MONROE COUNTY, NEW YORK. THE ARBITRATOR MAY GRANT
INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER
AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH NEW YORK LAW, INCLUDING THE NEW
YORK CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND
PROCEDURAL NEW YORK LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY
CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS
RULES

 

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CONFLICT WITH NEW YORK LAW, NEW YORK LAW SHALL TAKE PRECEDENCE. THE DECISION OF
THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE
ARBITRATION. THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO
INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE
ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE
OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY
PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE
ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT
AS PROHIBITED BY LAW. THE PARTIES WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN
THEM, RELATING TO THE TERMS OF THIS PLAN AND THEIR INTERPRETATION, RESOLVED IN A
COURT OF LAW BY A JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION
WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER
PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE
SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS PLAN.

8.3 Transfer and Assignment. The rights and obligations of a Participant under
this Plan may not be transferred or assigned without the prior written consent
of the Company. This Plan shall be binding upon any surviving entity resulting
from a change in control and upon any other person who is a successor by merger,
acquisition, consolidation or otherwise to the business formerly carried on by
the Company without regard to whether or not such person or entity actively
assumes the obligations hereunder.

8.4 Waiver. Any Party’s failure to enforce any provision or provisions of this
Plan shall not in any way be construed as a waiver of any such provision or
provisions, nor prevent any Party from thereafter enforcing each and every other
provision of this Plan. The rights granted the Parties herein are cumulative and
shall not constitute a waiver of any Party’s right to assert all other legal
remedies available to it under the circumstances.

8.5 Severability. Should any provision of this Plan be declared or determined to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired.

8.6 Section Headings. Section headings in this Plan are included for convenience
of reference only and shall not be considered part of this Plan for any other
purpose.

 

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IN WITNESS WHEREOF, API Technologies, Inc. and SenDEC Corp. have caused this
Plan to be signed, all as of the date first written above.

 

API TECHNOLOGIES, INC. By:  

/s/ Jonathan Pollack

Jonathan Pollack Executive Vice President

[SIGNATURE PAGE TO MANAGEMENT BONUS PLAN]

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IN WITNESS WHEREOF, API Technologies, Inc. and SenDEC Corp. have caused this
Plan to be signed, all as of the date first written above.

 

SENDEC CORP. By:  

/s/ Kenton W. Fiske

Kenton W. Fiske President and Chief Executive Officer

[SIGNATURE PAGE TO MANAGEMENT BONUS PLAN]