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Exhibit
10.3
 ISDA ®
  SCHEDULE
to the
2002 Master Agreement
   BANK OF AMERICA, N.A.,
   AMERICAN PACIFIC CORPORATION,
  PART 1: Termination Provisions
 (a)
    
    Specified Entitymeans in relation to Party A for the purpose of Sections 5(a)(v),
5(a)(vi), 5(a)(vii) and 5(b)(v):None;Specified Entitymeans in relation to Party B for the purpose of Sections 5(a)(v),
5(a)(vi), 5(a)(vii) and 5(b)(v):None.(b)
    
    Specified Transactionwill have the meaning specified in Section 14.(c)
    
    The Cross-Defaultprovisions of Section 5(a)(vi) (as amended in Part 5(d))
 
 In connection therewith, Specified Indebtednesswill not have the meaning specified in
Section 14, and such definition shall be replaced by the following: any obligation in
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respect of the payment of moneys (whether present or future, contingent or otherwise, as
principal or surety or otherwise), except that such term shall not include obligations in
respect of deposits received in the ordinary course of a partys banking business.Threshold Amountmeans with respect to Party A an amount equal to three percent (3%) of
the Shareholders Equity of Bank of America Corporation and with respect to Party B, one
million dollars ($1,000,000).With respect to Party B, the occurrence and continuance (beyond any specified cure periods)
of an Event of Default as defined under the Credit Agreement shall be an Event of Default
under this Agreement.Credit Agreementmeans the means the Second Lien Credit Agreement dated as of November
30, 2005, among Party A, Party B, the Guarantors and Lenders named therein, Wachovia Bank
National Association, as Administrative Agent and Wachovia Capital Markets, LLC, as Sole
Lead Arranger and Sole Book Runner (as amended, extended, supplemented or otherwise
modified in writing from time to time).Shareholders Equitymeans with respect to an entity, at any time, the sum (as shown in
the most recent annual audited financial statements of such entity) of (i) its capital
stock (including preferred stock) outstanding, taken at par value, (ii) its capital surplus
and (iii) its retained earnings, minus (iv) treasury stock, each to be determined in
accordance with generally accepted accounting principles.(d)
    
    The Credit Event Upon Mergerprovisions of Section 5(b)(v)
 
 (e)
    
    The Automatic Early Terminationprovision of Section 6(a)
 
 (f)
    
    Termination Currencymeans United States Dollars.(g)
    
    Additional Termination Eventwill apply.It shall be an Additional Termination Event hereunder, with respect to which Party B shall
be the sole Affected Party, if for any reason either Party As obligation to lend under the
Credit Agreement is terminated or Party A ceases to be a party to the Credit Agreement.
 PART 2: Tax Representations
 (a)
    
    Payer Tax Representations.For the purpose of Section 3(e) of this Agreement, Party A and
Party B will make the following representation:-It is not required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest under
Section 9(h) of this Agreement) to be made by it to the other party under this Agreement.
In making this representation, it may rely on (i) the accuracy of any representations made
by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the
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agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party
contained in Section 4(d) of this Agreement, except that it will not be a breach of this
representation where reliance is placed on clause (ii) above and the other party does not
deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its
legal or commercial position.(b)
    
    Payee Tax Representations.For the purpose of Section 3(f) of this Agreement, Party A and
Party B will make the following representations specified below, if any:-
 (i)
    
    The following representations will apply to Party A:Party A is a national banking association created or organized under the laws of
the United States of America and the federal taxpayer identification number is
94-1687665.(ii)
    
    The following representations will apply to Party B:Party B is a corporation created or organized under the laws of the State of
Delaware and the federal taxpayer identification number is 59-6490478.
 PART 3: Agreement to Deliver Documents
  (a)
    
    Tax forms, documents or certificates to be delivered are: None(b)
    
    Other documents to be delivered are:-
 Partyrequired to
    
    
    
    
    
    Covered bydeliver
    
    
    
    Date by which to
    
    Section 3(d)document
    
    Form/Document/Certificate
    
    be delivered
    
    RepresentationParty B
    
    Financial Statements,
Records and Reports as
specified and detailed in
the Credit Agreement as
may be amended from time
to time
    
    Delivery under
Credit Agreement
satisfies delivery
requirement
hereunder.
    
    YesParty B
    
    Credit Support Document(s)
    
    Delivery not
required as
previously
delivered.
    
    NoParty B
    
    Such other documents as
Party A may reasonably
request from time to time
    
    Upon Request
    
    No
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Partyrequired to
    
    
    
    
    
    Covered bydeliver
    
    
    
    Date by which to
    
    Section 3(d)document
    
    Form/Document/Certificate
    
    be delivered
    
    RepresentationParty A and Party B
    
    Certified copies of all
corporate authorizations
and any other documents
with respect to the
execution, delivery and
performance of this
Agreement and any Credit
Support Document
    
    Upon execution and
delivery of this
Agreement
    
    YesParty A and Party B
    
    Certificate of authority
and specimen signatures
of individuals executing
this Agreement and any
Credit Support Document
    
    Upon execution and
delivery of this
Agreement and
thereafter upon
request of the
other party
    
    Yes
 PART 4: Miscellaneous
 (a)
    
    Address for Notices.For the purpose of Section 12(a) of this Agreement:-Address for notice or communications to Party A:
 
 with a copy to:
 
 Address for financial statements to Party A:
 CA5-106-01-05
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Address for notice or communications to Party B:
 dkelley@apfc.com
 (b)
    
    Process Agent.For the purpose of Section 13(c):Party A appoints as its Process Agent: Not applicable.Party B appoints as its Process Agent: Not applicable.(c)
    
    Offices.The provisions of Section 10(a) will apply to this Agreement.(d)
    
    Multibranch Party.For the purpose of Section 10(b) of this Agreement:-Party A is a Multibranch Party and may enter into a Transaction through its Charlotte,
North Carolina, Chicago, Illinois, San Francisco, California, New York, New York, Boston,
Massachusetts or London, England Office or such other Office as may be agreed to by the
parties in connection with a Transaction.Party B is not a Multibranch Party.(e)
    
    Calculation Agent.The Calculation Agent is Party A.(f)
    
    Credit Support Document.Details of any Credit Support Document:-The following documents are Credit Support Documents. Party B agrees that the collateral
securing the obligations of Party B to Party A as described in the Credit Support Documents
shall also secure the obligations of Party B to Party A under this Agreement:
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(g)
    
    Credit Support Provider.
 Credit Support Provider means in relation to Party A:
    
    Not applicable.Credit Support Provider means in relation to Party B:
    
    each of the Guarantors, as such term
is defined in the Credit Agreement.
 (h)
    
    Governing Law.This Agreement will be governed by and construed in accordance with the laws
of the State of New York (without reference to its conflict of laws provisions, except for
Sections 5-1401 and 5-1402 of the New York General Obligations Law).(i)
    
    Netting of Payments.Unless the parties otherwise so agree, Multiple Transaction Payment
Netting will apply for the purpose of Section 2(c) of this Agreement, starting as of the date
of this Agreement, within the following group of Transactions, and not otherwise:FX Transactions (as defined in the FX Definitions) and Currency Option Transactions (as
defined in the FX Definitions) (but excluding payments with respect to option premiums and
cash settled options); andTransactions (as defined in the 1993 Commodity Derivatives Definitions, published by the
International Swaps and Derivatives Association, Inc.) (but excluding payments with respect
to option premiums).(j)
    
    Affiliatewill have the meaning specified in Section 14 of this Agreement.(k)
    
    Absence of Litigation.For the purpose of Section 3(c):- Specified Entity means in relation
to Party A, none;Specified Entity means in relation to Party B, any Affiliate of Party B.(l)
    
    No Agency.The provisions of Section 3(g) will apply to this Agreement.(m)
    
    Additional Representationwill apply. For the purpose of Section 3 of this Agreement, each of
the following will constitute an Additional Representation:-Relationship Between Parties.Each party will be deemed to represent to the other party on
the date on which it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):-
 (A)
    
    Non-Reliance.It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisors as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction, it being understood that information
and explanations related to the terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter into that Transaction. No
communication (written or oral) received from the other party will be deemed to be an
assurance or guarantee as to the expected results of that Transaction.
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(B)
    
    Assessment and Understanding.It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the risks of that Transaction.(C)
    
    Status of Parties.The other party is not acting as a fiduciary for or an
advisor to it in respect of that Transaction.(D)
    
    Eligible Contract Participant.It is an eligible contract participant as
defined in Section 1a(12) of the U.S. Commodity Exchange Act, 7 U.S.C. Section 1a(12).
 (n)
    
    Recording of Conversations.Each party (i) consents to the recording of telephone
conversations between the trading, marketing and other relevant personnel of the parties in
connection with this Agreement or any potential Transaction and (ii) agrees, to the extent
permitted by applicable law, that recordings may be submitted in evidence in any Proceedings.
 PART 5: Other Provisions
 (a)
    
    Delivery of Confirmations.For each Transaction entered into hereunder, Party A shall
promptly send to Party B a Confirmation (which may be via facsimile transmission). Party B
agrees to respond to such Confirmation within two Local Business Days, either confirming
agreement thereto or requesting a correction of any error(s) contained therein. Failure by
Party A to send a Confirmation or of Party B to respond within such period shall not affect
the validity or enforceability of such Transaction. Absent manifest error, there shall be a
presumption that the terms contained in such Confirmation are the terms of the Transaction.(b)
    
    Furnishing Specified Information.Section 4(a)(iii) is hereby amended by inserting promptly
upon the earlier of (1) in lieu of the word upon at the beginning thereof and inserting or
(2) such party learning that the form or document is required before the word any on the
first line thereof.(c)
    
    Waiver of Right to Trial by Jury.EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO
TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY CREDIT SUPPORT DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.(d)
    
    Cross Default.Section 5(a)(vi) of this Agreement is hereby amended adding the following
after the semicolon at the end thereof:
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(e)
    
    2002 Master Agreement Protocol.Annexes 1 to 18 and Section 6 of the ISDA 2002 Master
Agreement Protocol as published by the International Swaps and Derivatives Association, Inc.
on July 15, 2003 are incorporated into and apply to this Agreement. References in those
definitions and provisions to any ISDA Master Agreement will be deemed to be references to
this Master Agreement.
 (f)
    
    Consent to Disclosure.Party B consents to Party A effecting such disclosure as Party A may
deem appropriate to enable Party A to transfer Party Bs records and information to process
and execute Party Bs instructions, or in pursuance of Party As or Party Bs commercial
interest, to any of its Affiliates. For the avoidance of doubt, Party Bs consent to
disclosure includes the right on the part of Party A to allow access to any intended recipient
of Party Bs information, to the records of Party A by any means.
 (g)
    
    USA PATRIOT Act Notice.1 Party A hereby notifies Party B that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the Act), it is required to obtain, verify and record information that
identifies Party B, which information includes the name and address of Party B and other
information that will allow Party A to identify Party B in accordance with the Act.
 IN WITNESS WHEREOF
 BANK OF AMERICA, N.A.
    
    
    
    AMERICAN PACIFIC CORPORATIONName: Susan K. Payunk
    
    
    
    Name: Dana M. KelleyTitle: Senior Vice President
    
    
    
    Title: Treasurer and Acting chief Financial Officer
 
 1
    
    This provision is included as a means of
compliance with the notice requirements contained in the regulations under the
USA PATRIOT Act. 36