exv10w4



 








EXHIBIT 10.4




AMERICAN PACIFIC CORPORATION




INCENTIVE COMPENSATION PLAN




(as approved on March 11, 2008)




     1. Purposes. The purpose of the American Pacific Corporation Incentive Compensation Plan (the
“Plan”) is to provide an incentive for Executive Officers and other employees of American
Pacific Corporation (“AMPAC”) and its divisions and Subsidiaries (together with AMPAC, the
“Company”) to meet or surpass the short-term financial and performance goals of the
Company, including to (i) increase profitability of the Company, (ii) support achievement of the
Company’s annual business plan, (iii) help ensure a competitive compensation program vis-à-vis
other companies, (iv) provide an essential and meaningful pay-for-performance element within the
Company’s compensation program, and (v) achieve the highest level of performance to further the
Company’s goals, objectives, and strategies.



     2. Definitions.



          (a) “Administrator” means:




               (i) with respect to Participants who are Executive Officers, any Board committee composed of
at least two (2) independent members of the Board appointed by the Board to administer the Plan
(the “Independent Board Committee”), provided, however, that initially such
Administrator shall be the Corporate Governance Committee of the Board; and



               (ii) with respect to Participants who are not Executive Officers, the Incentive Compensation
Plan Committee.



          (b) “Board” means the Board of Directors of AMPAC or its successor entity.



          (c) “Parent” means a “parent corporation”, whether now or hereafter existing, as
defined in Section 424(e) of the Internal Revenue Code of 1986, as amended (the “Code”).



          (d) “Executive Officers” means the Company’s executive officers.



          (e) “Incentive Compensation Plan Committee” means a committee comprised of the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer and Vice President,
Administration of AMPAC.



          (f) “Payment Date” means the date on which the Incentive Bonus is paid.



          (g) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.



     3. Eligibility. The Administrator shall, from time to time, select those employees of the
Company, if any, who shall participate in the Plan with respect to a particular fiscal year of the
Company (each a “Participant”).



 









 





     4. Incentive Cash Bonuses. Subject to the terms of the Plan, the Company shall pay to each
Participant a cash bonus (an “Incentive Bonus”) based on the achievement of one or more
financial targets of the Company, as determined by the Board or the Independent Board Committee, as
applicable. In addition, the amount of the Incentive Bonus may be subject to each Participant’s
attainment of any applicable individual achievement requirements, as determined by the
Administrator. The Independent Board Committee, on an annual basis, shall determine whether the
financial effects of unique or infrequent activities of the Company, such as an acquisition or
disposition of a business by the Company, is included in the Company’s financial results for the
purposes of measuring achievement of financial targets. An Incentive Bonus may be calculated based
upon, among other things, a fixed percentage of a Participant’s base salary as of a specified date,
such as the first day of the fiscal year, as determined by the Administrator. Any Participant who
was not employed by the Company on the first day of the fiscal year in which such Participant has
been selected by the Administrator to participate in the Plan shall only be entitled to participate
on a pro rata basis rather than a full-year basis. Notwithstanding anything in Sections 3 or 4 to
the contrary, the Independent Board Committee shall have the right and power to reduce any
Incentive Bonus otherwise payable pursuant to the terms of this Plan in such manner as the
Independent Board Committee determines in its sole and absolute discretion (including a reduction
to zero).



     5. Payment of Incentive Cash Bonuses.



          (a) The Company shall make a payment of an Incentive Bonus within ninety (90) calendar days
following the end of the fiscal year of the Company to which the Incentive Bonus relates but in no
event later than March 15th of the calendar year following the year for which the
Incentive Bonus relates. Notwithstanding the preceding sentence, any payment of an Incentive Bonus
only shall be made following (i) the completion of audited financial statements for the Company for
the fiscal year of the Company to which the Incentive Bonus relates and (ii) the approval of such
payment by the Administrator.




          (b) The Company shall delay the payment of any Incentive Bonus to the extent necessary to
comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified
employees” of certain publicly-traded companies); in such event, the Incentive Bonus will be paid
on the first business day following the expiration of the six (6) month period following a
Participant’s separation from service.




     6. Termination of Employment. Except to the extent as otherwise provided in Section
5(b) above, a Participant must be employed by the Company on the Payment Date in order to
receive an Incentive Bonus. In the event that a Participant’s employment terminates prior to the
Payment Date for any reason, including death or disability, such Participant’s participation in the
Plan shall terminate immediately and the Company shall not be obligated to make any payment to such
Participant pursuant to the Plan.



     7. Withholding. Any Incentive Bonus to be paid to a Participant shall be subject to all
federal, state, local, non-U.S. and employment tax obligations (the “Tax Withholding
Obligation”), if any, required by law to be withheld. The Company may offset or withhold (from
any amount owed by the Company) or collect from the Participant an amount sufficient to satisfy the
Tax Withholding Obligation.



     8. Non-Assignability. No Participant shall have the power or right to transfer, assign,
anticipate, mortgage, or otherwise encumber his or her interest under the Plan; nor shall such
interest be subject to seizure for the payment of a Participant’s debts, judgments, alimony, or
separate maintenance or be transferable by operation of law in the event of a Participant’s
bankruptcy, insolvency, divorce or



EXHIBIT
10.4 – Page 2




 









 







separation. The Plan shall be binding upon and shall inure to the benefit of the Company and its
successors and assigns.




     9. Termination and Amendment of the Plan. The Board or the Independent Board Committee may
amend or terminate the Plan at any time and for any reason.



     10. Administration and Code Section 409A. Except as otherwise provided herein, the
Administrator shall have the power from time to time: (i) to construe and interpret the Plan and to
establish, amend and revoke rules and regulations for the administration of the Plan (including,
but not limited to, correcting any defect, supplying any omission, or reconciling any inconsistency
in the Plan) in the manner and to the extent it shall deem necessary or advisable to make the Plan
fully effective; (ii) to exercise its discretion with respect to the powers and rights granted to
it as set forth in the Plan; and (iii) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the Company with respect to
the Plan. All decisions and interpretations of the Administrator relating to the Plan shall be
binding on all persons, including the Company and all applicable Participants. The Administrator,
and all agents of the Administrator, shall not be personally liable for any action, omission,
determination or interpretation made in good faith with respect to the Plan and the Administrator,
and all agents of the Administrator, shall be fully indemnified by the Company with respect to any
claim, loss, damage, or expense arising from such action, omission, determination or interpretation
to the full extent permitted by law. In addition, the Company makes no representation that the
Plan will comply with Section 409A of the Code and makes no undertaking to prevent Section 409A of
the Code from applying to the Plan or any Incentive Bonus or to mitigate its effects on any
deferrals or payments made in respect of any Incentive Bonus. Participants are encouraged to
consult a tax adviser regarding the potential impact of Section 409A of the Code.



     11. Limitation of Liability. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a fiduciary relationship between the Company
(or any person connected therewith), and any Participant, employee, consultant or other person. In
no event shall the Company (or any person connected therewith) be liable to any person for the
failure of any Participant to be entitled to any particular tax consequences with respect to the
Plan or payments pursuant thereto.



     12. Employment Rights. The adoption of this Plan does not confer upon any Participant any
right to continued employment or service with AMPAC or any Parent or Subsidiary thereof or
interfere in any way with the right of AMPAC or applicable Subsidiary or Parent to terminate the
Participant’s employment or service at any time.



     13. Effect on Other Benefits. Any payments made pursuant to the Plan shall not be counted as
compensation for purposes of any other employee benefit plan, program or agreement sponsored,
maintained or contributed to by the Company unless expressly provided for in such employee benefit
plan, program or agreement.



     14. Unfunded, Unsecured Obligation. The Plan shall at all times be entirely unfunded and no
provisions shall at any time be made with respect to segregating assets of AMPAC or its Parent or
Subsidiaries or affiliates thereof for payment of any benefits hereunder. Additionally, nothing
contained herein shall be construed as giving a Participant or any other person any equity or other
interest of any kind in any assets of AMPAC or its Parent or Subsidiaries or affiliates thereof or
creating a trust of any kind or a fiduciary relationship of any kind between AMPAC or its Parent or
Subsidiaries or affiliates
thereof and any such person. As to any claim for any unpaid amounts under the Plan, a
Participant and any other person having a claim for payment shall be unsecured creditors. The Plan
is intended to constitute a “bonus program” within the meaning of Section 2510.3-2(c) of Title 29
of the Code of Federal Regulations and shall be administered in accordance with this
interpretation.



EXHIBIT
10.4 `– Page 3




 









 








     15. Non-Exclusive. Adoption of the Plan shall not be construed as creating any limitations on
the power of the Company to adopt such other incentive arrangements as it may deem desirable.



     16. Severability. If any provision of this Plan shall be determined to be illegal or
unenforceable, such determination shall in no manner affect the legality or enforceability of any
other provision hereof.



     17. Headings. The headings used herein are intended only for convenience in finding the
subject matter and do not constitute part of the text of this Plan and shall not be considered in
the interpretation of this Plan.



     18. Governing Law. This Plan shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to the conflict of law principles thereof.



     19. Effective Date. The Plan shall become effective on the date first approved by the Board.



EXHIBIT
10.4 – Page 4