employees, clients, consultants, or business associates, which wasproduced by any employee of the Company or its subsidiaries, in the course of his or her employmentor otherwise produced or acquired by or on behalf of the Company or its subsidiaries. AllProprietary Information not generally known outside of the Company’s organization, and allProprietary Information so known only through improper means, shall be deemed “ConfidentialInformation” (as such term is further defined below). Without limiting the foregoing definition,Proprietary and Confidential Information shall include, but not be limited to: (i) formulas,teaching and development techniques, processes, trade secrets, computer programs, electronic codes,inventions, improvements, and research projects; (ii) information about costs, profits, markets,sales, and lists of customers or clients; (iii) business, marketing, and strategic plans; and(iv) employee personnel files and compensation information. Executive should consult any Companyprocedures instituted to identify and protect certain types of Confidential Information, which areconsidered by the Company to be safeguards in addition to the protection provided by thisAgreement. Nothing contained in those procedures or in this Agreement is intended to limit theeffect of the other.     (e) **General Restrictions on Use**. During the period of Executive’s employment with the Company,Executive shall use Proprietary Information, and shall disclose Confidential Information, only forthe benefit of the Company and as is necessary to carry out his responsibilities under thisAgreement. Following termination, Executive shall neither, directly or indirectly, use anyProprietary Information nor disclose any Confidential Information, except as expressly andspecifically authorized in writing by the Company. The disclosure or publication to anyone who doesnot have a need to know, whether employed by the Company or not, of any Proprietary Informationthrough literature, speeches or discussion must be approved in advance in writing by the Company.   **4. Compensation.**     In consideration of the services to be rendered under this Agreement, Executive shall beentitled to the following:     (a) The Company initially shall pay Executive as compensation for services a base salary atthe annual rate of $306,800 (Three Hundred Six Thousand Eight Hundred Dollars) (which includes anautomobile allowance of $16,800), less applicable withholdings, or at such rate as the CorporateGovernance Committee of the Board of Directors may determine from time to time, should automobilecost and operation fluctuate. Such salary shall be payable in accordance with the standard payrollprocedures of the Company. Once the Company’s Corporate Governance Committee of the Board ofDirectors has increased such salary, it thereafter shall not be reduced. The annual compensationspecified in this Section 4, together with any increases in such compensation that the CorporateGovernance Committee of the Board of Directors may grant from time to time, is referred to in thisAgreement as “Base Compensation.”     (b) The Company shall review the Base Compensation on or around the anniversary of each yearof employment by Executive or at different intervals at the discretion of the Corporate GovernanceCommittee of the Board of Directors. Any increase in Executive’s Base Compensation shall be madeeffective as soon as practicable after such determination by the Corporate Governance Committee ofthe Board of Directors.     (c) Executive shall be eligible (i) to participate in all of the Company’s benefit plans madeavailable to all employees generally, (ii) to participate in all benefit plans made available toCompany officers holding the office of Vice President, Senior Vice President, Executive VicePresident, President, Chief Operating Officer, and Chief Executive Officer generally (to the extentthere are such generally-applicable benefit plans made available to such Company officers), and(iii) to receive perquisites ofemployment, as established by the Company with the approval of the Board of Directors fromtime to time.   **5. Termination of Employment**     (a) **Termination By Death**. Executive’s employment shall terminate upon the death of Executive.The Company shall pay to Executive’s beneficiaries or estate, as appropriate, compensation then dueand owing as of the date of death, and shall continue to pay Executive’s salary and benefits (tothe extent consistent with the terms of the relevant benefit plan), through the second full monthafter Executive’s death. As of the date of death, all stock options available to Executive throughthe Term Date shall be deemed accelerated and vested, and may be exercisedPage 2 of Exhibit 10.1
 

 
by the appropriaterepresentative of Executive’s estate, in accordance with the terms of such stock options.Thereafter, all obligations of Company under this Agreement shall cease. Nothing in this Sectionshall affect any entitlement of Executive’s heirs to the benefits of any life insurance or vestedfunds in employee benefit plans governed by provisions of state or federal laws, including but notlimited to 401(k), deferred compensation, pension, etc., plans.     (b) **Termination By Disability**. If, in the sole opinion of the Company, Executive suffers adisability, then, to the extent permitted by law, the Company may terminate Executive’s employment.The Company shall pay to Executive all compensation to which Executive is entitled through the lastday of the month in which Executive has been determined to have a disability, and thereafter, allof Company’s obligations under this Agreement shall cease. Nothing in this Section shall affectExecutive’s rights under any disability plan in which he is a participant. For purposes of thisAgreement, “disability” shall mean (i) Executive’s inability to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairment which can beexpected to result in death or can be expected to last for a continuous period of not less thantwelve (12) months, or (ii) Executive’s receipt, by reason of any medically determinable physicalor mental impairment which can be expected to result in death or can be expected to last for acontinuous period of not less than twelve (12) months, of income replacement benefits for a periodof not less than three (3) months under an accident and health plan covering employees of theCompany.     (c) **Termination For Convenience**. The Company may terminate Executive’s employment for itsconvenience prior to the Term Date. Should the Company exercise that right:     (i) The Company, in an attempt to ease Executive’s transition, and upon receipt of a mutuallysatisfactory release, shall continue to pay to Executive a sum of money equal to the BaseCompensation (less the amount allocated to the automobile allowance) for a period of three (3)years from the date the employment relationship with the Company terminates (the “TerminationDate”); provided, however, that such payments by the Company shall be offset, during the third yearfollowing the Termination Date, by earned income realized by Executive from all sources other thandirectors’ fees paid by the Company, which earned income Executive shall promptly report to theCompany. In addition, if Executive elects COBRA coverage under the Company’s group health plan, theCompany will pay Executive’s COBRA premiums until the earlier of (1) the eighteenth (18th) monthanniversary of the Termination Date or (2) Executive becomes covered by another employer’s grouphealth plan.     (ii) All shares of restricted stock granted to Executive, all unexercised options to purchaseCompany common stock and any other equity awards of the Company, in each case that are unvested atthe time of such termination of employment of Executive, shall become, immediately prior to theTermination Date, fully vested and, as applicable, exercisable.     (iii) The payments described in this Section 5(c) shall be conditioned upon Executive’scontinued compliance with the material obligations described in this Agreement. Should Executiveviolate any such obligations, as determined by the Company in the good faith, all further paymentobligations shall cease.     (d) **Termination By Company For Cause.**At any time, and without prior notice, the Company mayterminate Executive’s employment for Cause (as defined below). In such case, the Company shall payExecutive all compensation then due and owing; thereafter, all of the Company’s obligations underthis Agreement shall cease. Termination for “Cause” shall mean termination of Executive’semployment because of Executive’s (i) involvement in fraud, misappropriation or embezzlementrelated to the business or property of the Company and/or its subsidiaries or affiliates;(ii) conviction for, or guilty or “no contest” plea to, a felony; (iii) material breach of thisAgreement; and/or (iv) a pattern of failure to substantially perform his duties under thisAgreement, provided, however, that if such Cause is reasonably curable, the Company shall notterminate Executive’s employment hereunder unless the Company first gives notice of its intentionto terminate and the grounds of such termination, and Executive has not, within thirty (30) daysfollowing receipt of this notice, cured such Cause, to the satisfaction of the Company.     (e) **By Executive For His Convenience.**At any time, Executive may terminate his employment withthe Company for any reason, with or without cause, by providing the Company thirty (30) days’advance written notice. The Company shall have the option, in its complete discretion, to make suchtermination of employment effective atPage 3 of Exhibit 10.1
 

 
any time prior to the end of such notice period, providedthat the Company pays Executive all compensation due and owing through the last day actuallyworked, plus an amount equal to the then effective base salary, less applicable withholding,Executive would have earned through the balance of the above notice period; thereafter, all of theCompany’s obligations under this Agreement shall cease.     (f) **By Executive Following Change in Leadership**. Executive may terminate, without liability,his employment with the Company if another individual, other than Executive, succeeds the currentincumbent as Chief Executive Officer of the Company, provided Executive gives the Company ninety(90) days advance written notice of this reason for termination of his employment. If Executiveresigns for this reason, he will receive the benefits owed him upon occurrence of a “CorporateTransition,” as set forth in Section 5(g) below.     (g) **Corporate Transition.**     (i) **Corporate Transition Defined**. For purposes of this Agreement, a “Corporate Transition”shall include any of the following transactions to which the Company is a party: (A) a merger orconsolidation in which the Company is not the surviving entity and securities representing morethan fifty percent (50%) of the total combined voting power of the Company’s outstanding securitiesare transferred to a holder different from those who held such securities immediately prior to suchmerger; (B) the sale, transfer or other disposition of all or substantially all of the assets ofthe Company in liquidation or dissolution of the Company; (C) any reverse merger in which theCompany is the surviving entity but in which securities representing more than fifty percent (50%)of the total combined voting power of the Company’s outstanding securities are transferred to aholder(s) different from those who held such securities immediately prior to such merger; or(D) any cash dividend paid by the Company that, in the aggregate with all other dividends paid inany twelve month period, is greater than the combined earnings of the Company for the Company’s twofiscal years prior to such dividend payment date. In addition, a Corporate Transition shall alsoinclude a “Change in Control” as such term is defined in the Company’s 2008 Stock Incentive Plan.None of the foregoing events, however, shall be considered a Corporate Transition under thisAgreement unless the event also qualifies as a change in the ownership or effective control of theCompany, or a change in the ownership of a substantial portion of the assets of the Company, underSection 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended, the regulationsthereunder, and any other published interpretive authority, as issued or amended from time to time.Except as provided otherwise in this Section 5(g), in the event of a Corporate Transition, theprovisions of Sections 5(a) through (f) above shall not apply.     (ii) **Acceleration of Vesting at Time of Corporate Transition**. Should a Corporate Transitiontake place, all shares of stock granted to Executive and all unexercised options to purchaseCompany stock granted to Executive that are unvested at the time of the Corporate Transition shallbecome fully vested and exerciseable.     (iii) **Benefits Upon Occurrence of Corporate Transition**. Upon the occurrence of a CorporateTransition and subject to the obligations in Section 6(d) through (e) below, Executive shall beentitled tothe benefits described in Section 5(c) above, regardless of whether Executive’s employment isterminated in connection with such Corporate Transition.   **6.****Termination Obligations**     (a) **Return of Company’s Property**. Executive hereby acknowledges and agrees that all personalproperty, including, without limitation, all books, manuals, records, reports, notes, contracts,lists, blueprints, and other documents, or materials, or copies thereof, and equipment, furnishedto or prepared by Executive in the course of or incident to Executive’s employment, belong to theCompany and shall be promptly returned to Company upon termination of Executive’s employment.     (b) **Representations and Warranties Survive Termination of Employment**. The representations andwarranties contained herein shall survive termination of Executive’s employment and expiration ofthis Agreement.     (c) **Cooperation in Pending Work**. Following termination of Executive’s employment with theCompany for any reason, Executive shall fully cooperate with the Company in all matters relating tothe winding up of pending work on behalf of Company and the orderly transfer of work to otheremployees of Company. Executive shall also cooperate in the defense of any litigation, whetherjudicial or administrative, brought by any third partyPage 4 of Exhibit 10.1
 

 
against Company that relates in any way toExecutive’s knowledge, acts or omissions or duties while employed by the Company. If Executive’scooperation in the defense of any such action requires more than ten (10) hours of Executive’stime, Executive and the Company shall agree on appropriate remuneration for Executive’s time andexpenses.     (d) **Noncompetition.**Executive acknowledges and agrees that during his employment with theCompany, he has had, and will have, access to Confidential Information and the activities forbiddenby this subsection would necessarily involve the improper use and disclosure of this ConfidentialInformation. To forestall this use or disclosure, Executive agrees that during the period describedin Section 5(c) when payments to Executive are being made, or for two years after the terminationof Executive for reasons other than for the Company’s convenience, Executive shall not, directly orindirectly, (i) divert or attempt to divert from the Company (or any affiliate thereof) anybusiness of any kind in which the Company (or any affiliate thereof) is engaged; (ii) employ orrecommend for employment any person employed by the Company (or any affiliate thereof); or(iii) engage in any business activity that is competitive with the Company (or any affiliatethereof) in any state where the Company can demonstrate its intention to conduct business, unlessExecutive can prove that any of the above actions was done without the use of ConfidentialInformation. In addition to the above restrictions on competitive activity, and regardless ofwhether any use of Confidential Information is involved, Executive agrees that during the paymentperiod referred to in Section 5(c)(i) Executive shall not, directly or indirectly, (i) solicit anycustomer of the Company (or any affiliate thereof) known to Executive (while he was employed by theCompany) to have been a customer with respect to products or services competitive with products orservices offered by the Company; or (ii) solicit for employment any person employed by the Company(or any affiliate thereof).     (e) **Confidential Information**.     (i) Executive shall never, either during Executive’s employment with the Company orthereafter, use or employ for any purpose or disclose to any other individual or entity anyConfidential Information. Executive acknowledges and agrees that all Confidential Information isproprietary to the Company, is extremely important to the Company’s business, and that the use byor disclosure of such Confidential Information to a competitor could materially and adverselyaffect the Company, its business and its customers.     (ii) For purposes of this Agreement, the term “Company” shall refer to the Company and itssubsidiaries, and any other corporation or entity that is owned, controlled or affiliated, directlyor indirectly, by the Company or that is under common ownership or control with the Company.     (iii) For purposes of this Agreement, the term “Confidential Information” shall meaninformation in any form that is not generally known to the public that relates to the Company’spast, present or future operations, processes, products or services, or to any research,development, manufacture, purchasing, accounting, engineering, marketing, merchandising,advertising, selling, leasing, financing or business methods or techniques (including withoutlimitation customer lists, records of customer services, usages and requirements, sketches anddiagrams of Company or customer facilities and like and similar information relating to actual orprospective customers) that is or may be related thereto. All information disclosed to Executive orto which Executive obtains access during Executive’s employment with the Company, whether pursuantto this Agreement or otherwise, or to which Executive obtains access by reason of his employment bythe Company, that Executive has a reasonable basis to believe is or may be ConfidentialInformation, shall be presumed for purposes of this Agreement to be Confidential Information.   **7. 409A Provisions**     This Agreement is intended to comply with the provisions of Section 409A of the InternalRevenue Code of 1986, as amended (the “Code”), and shall be construed accordingly; provided,however, that the Company makes no representation that the amounts or benefits payable under thisAgreement will comply with Code Section 409A and makes no undertaking to prevent Code Section 409Afrom applying to any amounts or benefits payable under this Agreement, or to mitigate its effectson any amounts or benefits payable under this Agreement. The payment of any amounts or benefitsunder this Agreement shall be delayed to the extent necessary to comply with Section409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified employees” of certainpublicly-traded companies) and in such event, any such amount to which Executive would otherwise beentitled during the six (6)Page 5 of Exhibit 10.1
 

 
month period immediately following his termination of employment willbe paid on the first business day following the expiration of such six (6) month period. For allpurposes under this Agreement, “Termination Date”, “termination of employment” and “terminate(s)”shall mean the occurrence of a “separation from service” as that term is defined in Code Section409A(a)(2)(A)(i) and Treas. Regs. Section 1.409A-1(h), and as amplified by any other officialguidance.   **8. Notices**     All notices or other communications required or permitted hereunder shall be made in writingand shall be deemed to have been duly given if delivered by hand or mailed, postage prepaid, bycertified or registered mail, return receipt requested, and addressed to the Company:American Pacific Corporation