Document:

exv10w3

 

EXHIBIT 10.3

AMERICAN PACIFIC CORPORATION

2008 STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK BONUS AWARD

	 	 	 	 	 	 	 
	 

	 	Grantee’s Name and Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

     You (the “Grantee”) have been granted shares of Common Stock of the Company (the “Award”),
subject to the terms and conditions of this Notice of Restricted Stock Bonus Award (the “Notice”),
the American Pacific Corporation 2008 Stock Incentive Plan (the “Plan”), as amended from time to
time, and the Restricted Stock Bonus Award Agreement (the “Agreement”) attached hereto, as follows.
Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Notice.

	 	 	 	 	 	 	 
	 

	 	Date of Award	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Vesting Commencement Date	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Total Number of Shares
of Common Stock Awarded
(the “Shares”)	 	 	 	 
	 

	 	 	 	 

	 	 

Vesting Schedule:

     Subject to the Grantee’s Continuous Service and other limitations set forth in this Notice,
the Plan and the Agreement, the Shares will “vest” in accordance with the following schedule:

	 	 	 	 	 
	[
	 	 	 	 
	 

	 

	 
	 
	 	 	 	 
	 

	 

	 
	 

	 	 	 	]
	 

	 

	 

     [During any authorized leave of absence, the vesting of the Shares as provided in this
schedule shall be suspended [after the leave of absence exceeds a period of [three (3)] months].
Vesting of the Shares shall resume upon the Grantee’s termination of the leave of absence and
return to service to the Company or a Related Entity. The Vesting Schedule of the Shares shall be
extended by the length of the suspension.]

     In the event of the Grantee’s change in status from Employee, Director or Consultant to any
other status of Employee, Director or Consultant, the Shares shall continue to vest in accordance
with the Vesting Schedule set forth above.

     For purposes of this Notice and the Agreement, the term “vest” shall mean, with respect to any
Shares, that such Shares are no longer subject to forfeiture to the Company. Shares that have not
vested are deemed “Restricted Shares.” If the Grantee would become vested in a fraction of a
Restricted Share, such Restricted Share shall not vest until the Grantee becomes vested in the
entire Share.

 

 

     Vesting shall cease upon the date of termination of the Grantee’s Continuous Service for any
reason, including death or Disability. In the event the Grantee’s Continuous Service is terminated
for any reason, including death or Disability, any Restricted Shares held by the Grantee
immediately following such termination of Continuous Service shall be deemed reconveyed to the
Company and the Company shall thereafter be the legal and beneficial owner of the Restricted Shares
and shall have all rights and interest in or related thereto without further action by the Grantee.
The foregoing forfeiture provisions set forth in this Notice as to Restricted Shares shall apply
to the new capital stock or other property (including cash paid other than as a regular cash
dividend) received in exchange for the Shares in consummation of any transaction described in
Section 11 of the Plan and such stock or property shall be deemed Additional Securities (as defined
in the Agreement) for purposes of the Agreement, but only to the extent the Shares are at the time
covered by such forfeiture provisions.

     The Award shall be subject to the provisions of Section 11 of the Plan in the event of a
Corporate Transaction or Change in Control.

     IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Award is to be governed by the terms and conditions of this Notice, the Plan and the Agreement.

	 	 	 	 	 
	 	American Pacific Corporation,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title:   	 	 
	 	 	 	 
	 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD
OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD
OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE AGREEMENT NOR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE
GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S CONTINUOUS SERVICE AT ANY TIME,
WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE
GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S STATUS
IS AT WILL.

     As a condition to receiving the Shares, the Grantee agrees to refrain from making an election
pursuant to Section 83(b) of the Code with respect to the Shares.

EXHIBIT 10.3 – Page 2

 

 

     The Grantee acknowledges receipt of a copy of the Plan and the Agreement and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts the Award subject
to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Notice and fully understands all provisions of this Notice, the Agreement
and the Plan. The Grantee hereby agrees that all questions of interpretation and administration
relating to this Notice, the Plan and the Agreement shall be resolved by the Administrator in
accordance with Section 11 of the Agreement. The Grantee further agrees to the venue selection in
accordance with Section 12 of the Agreement. The Grantee further agrees to notify the Company upon
any change in the residence address indicated in this Notice.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signed:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

Grantee
	 	 

EXHIBIT 10.3 – Page 3

 

 

AMERICAN PACIFIC CORPORATION

2008 STOCK INCENTIVE PLAN

RESTRICTED STOCK BONUS AWARD AGREEMENT

     1. Issuance of Shares. American Pacific Corporation, a Delaware corporation (the
“Company”), hereby issues to the Grantee (the “Grantee”) named in the Notice of Restricted Stock
Bonus Award (the “Notice”), the Total Number of Shares of Common Stock Awarded set forth in the
Notice (the “Shares”), subject to the Notice, this Restricted Stock Bonus Award Agreement (the
“Agreement”) and the terms and provisions of the Company’s 2008 Stock Incentive Plan (the “Plan”),
as amended from time to time, which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in this Agreement. All
Shares issued hereunder will be deemed issued to the Grantee as fully paid and nonassessable
shares, and the Grantee will have the right to vote the Shares at meetings of the Company’s
stockholders. The Company shall pay any applicable stock transfer taxes imposed upon the issuance
of the Shares to the Grantee hereunder.

     2. Transfer Restrictions. The Shares issued to the Grantee hereunder may not be sold,
transferred by gift, pledged, hypothecated, or otherwise transferred or disposed of by the Grantee
prior to the date when the Shares become vested pursuant to the Vesting Schedule set forth in the
Notice. Any attempt to transfer Restricted Shares in violation of this Section 2 will be null and
void and will be disregarded.

     3. Escrow of Stock. For purposes of facilitating the enforcement of the provisions of
this Agreement, the Grantee agrees, immediately upon receipt of the certificate(s) for the
Restricted Shares, to deliver such certificate(s), together with an Assignment Separate from
Certificate in the form attached hereto as Exhibit A, executed in blank by the Grantee with
respect to each such stock certificate, to the Secretary or Assistant Secretary of the Company, or
their designee, to hold in escrow for so long as such Restricted Shares have not vested pursuant to
the Vesting Schedule set forth in the Notice, with the authority to take all such actions and to
effectuate all such transfers and/or releases as may be necessary or appropriate to accomplish the
objectives of this Agreement in accordance with the terms hereof. The Grantee hereby acknowledges
that the appointment of the Secretary or Assistant Secretary of the Company (or their designee) as
the escrow holder hereunder with the stated authorities is a material inducement to the Company to
make this Agreement and that such appointment is coupled with an interest and is accordingly
irrevocable. The Grantee agrees that the Restricted Shares may be held electronically in a book
entry system maintained by the Company’s transfer agent or other third party and that all the terms
and conditions of this Section 3 applicable to certificated Restricted Shares will apply with the
same force and effect to such electronic method for holding the Restricted Shares. The Grantee
agrees that such escrow holder shall not be liable to any party hereto (or to any other party) for
any actions or omissions unless such escrow holder is grossly negligent relative thereto. The
escrow holder may rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time. Upon the vesting of Restricted Shares, the
escrow holder will, without further order or instruction, transmit to the Grantee the certificate
evidencing such Shares; provided, however, that no transmittal of certificates evidencing the
Shares will occur unless and until the Grantee has satisfied all Tax Withholding Obligations (as
defined in Section 5(c) below).

     4. Additional Securities and Distributions.

          (a) Any securities or cash received (other than a regular cash dividend) as the result of
ownership of the Restricted Shares (the “Additional Securities”), including, but not by way of
limitation, warrants, options and securities received as a stock dividend or stock split, or as a
result of a

EXHIBIT 10.3 – Page 4

 

 

recapitalization or reorganization or other similar change in the Company’s capital
structure, shall be retained in escrow in the same manner and subject to the same conditions and
restrictions as the Restricted Shares with respect to which they were issued, including, without
limitation, the Vesting Schedule set forth in the Notice. The Grantee shall be entitled to direct
the Company to exercise any warrant or option received as Additional Securities upon supplying the
funds necessary to do so, in which event the securities so purchased shall constitute Additional
Securities, but the Grantee may not direct the Company to sell any such warrant or option. If
Additional Securities consist of a convertible security, the Grantee may exercise any conversion
right, and any securities so acquired shall constitute Additional Securities. In the event of any
change in certificates evidencing the Shares or the Additional Securities by reason of any
recapitalization, reorganization or other transaction that results in the creation of Additional
Securities, the escrow holder is authorized to deliver to the issuer the certificates evidencing
the Shares or the Additional Securities in exchange for the certificates of the replacement
securities.

          (b) The Company shall disburse to the Grantee all regular cash dividends with respect to the
Shares and Additional Securities (whether vested or not), less any applicable withholding
obligations.

     5. Taxes.

          (a) No Section 83(b) Election. As a condition to receiving the Shares, the Grantee
agrees to refrain from making an election pursuant to Section 83(b) of the Code with respect to the
Shares.

          (b) Tax Liability. The Grantee is ultimately liable and responsible for all taxes owed
by the Grantee in connection with the Award, regardless of any action the Company or any Related
Entity takes with respect to any tax withholding obligations that arise in connection with the
Award. Neither the Company nor any Related Entity makes any representation or undertaking
regarding the treatment of any tax withholding in connection with the grant or vesting of the Award
or the subsequent sale of Shares subject to the Award. The Company and its Related Entities do not
commit and are under no obligation to structure the Award to reduce or eliminate the Grantee’s tax
liability.

          (c) Payment of Withholding Taxes. Prior to any event in connection with the Award
(e.g., vesting) that the Company determines may result in any tax withholding obligation, whether
United States federal, state, local or non-U.S., including any employment tax obligation (the “Tax
Withholding Obligation”), the Grantee must arrange for the satisfaction of the minimum amount of
such Tax Withholding Obligation in a manner acceptable to the Company.

               (i) By Share Withholding. The Grantee authorizes the Company to, upon the exercise of its
sole discretion, withhold from those Shares issuable to the Grantee the whole number of Shares
sufficient to satisfy the minimum applicable Tax Withholding Obligation. The Grantee acknowledges
that the withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding
Obligation. Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as
practicable, including through additional payroll withholding, any amount of the Tax Withholding
Obligation that is not satisfied by the withholding of Shares described above.

               (ii) By Sale of Shares. Unless the Grantee determines to satisfy the Tax Withholding
Obligation by some other means in accordance with clause (iii) below, the Grantee’s acceptance of
this Award constitutes the Grantee’s instruction and authorization to the Company and any brokerage
firm determined acceptable to the Company for such purpose to sell on the Grantee’s behalf a whole
number of Shares from those Shares issuable to the Grantee as the Company determines to be
appropriate to generate cash proceeds sufficient to satisfy the minimum applicable Tax Withholding

EXHIBIT
10.3 – Page 5

 

 

Obligation. Such Shares will be sold on the day such Tax Withholding Obligation arises (e.g., a
vesting date) or as soon thereafter as practicable. The Grantee will be responsible for all
broker’s fees and other costs of sale, and the Grantee agrees to indemnify and hold the Company
harmless from any losses, costs, damages, or expenses relating to any such sale. To the extent the
proceeds of such sale exceed the Grantee’s minimum Tax Withholding Obligation, the Company agrees
to pay such excess in cash to the Grantee. The Grantee acknowledges that the Company or its
designee is under no obligation to arrange for such sale at any particular price, and that the
proceeds of any such sale may not be sufficient to satisfy the Grantee’s minimum Tax Withholding
Obligation. Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as
practicable, including through additional payroll withholding, any amount of the Tax Withholding
Obligation that is not satisfied by the sale of Shares described above.

               (iii) By Check, Wire Transfer or Other Means. At any time not less than five (5) business days
(or such fewer number of business days as determined by the Administrator) before any Tax
Withholding Obligation arises (e.g., a vesting date), the Grantee may elect to satisfy the
Grantee’s Tax Withholding Obligation by delivering to the Company an amount that the Company
determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such
account as the Company may direct, (y) delivery of a certified check payable to the Company, or
(z) such other means as specified from time to time by the Administrator.

Notwithstanding the foregoing, the Company also may satisfy any Tax Withholding Obligation by
offsetting any amounts (including, but not limited to, salary, bonus and severance payments) due to
the Grantee by the Company.

     6. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Agreement, the Notice or the Plan, the Company may issue appropriate
“stop transfer” instructions to its transfer agent, if any, and, if the Company transfers its own
securities, it may make appropriate notations to the same effect in its own records. The Company
may issue a “stop transfer” instruction if the Grantee fails to satisfy any Tax Withholding
Obligations.

     7. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

     8. Restrictive Legends. The Grantee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto, to be placed upon
any certificate(s) evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

EXHIBIT 10.3 – Page 6

 

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE
TERMS OF THAT CERTAIN RESTRICTED STOCK BONUS AWARD AGREEMENT BETWEEN
THE COMPANY AND THE NAMED STOCKHOLDER. THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH SUCH
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

     9. Entire Agreement: Governing Law. The Notice, the Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and the Grantee
with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s
interest except by means of a writing signed by the Company and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the
parties. Should any provision of the Notice or this Agreement be determined to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable.

     10. Construction. The captions used in the Notice and this Agreement are inserted for
convenience and shall not be deemed a part of the Award for construction or interpretation. Except
when otherwise indicated by the context, the singular shall include the plural and the plural shall
include the singular. Use of the term “or” is not intended to be exclusive, unless the context
clearly requires otherwise.

     11. Administration and Interpretation. Any question or dispute regarding the
administration or interpretation of the Notice, the Plan or this Agreement shall be submitted by
the Grantee or by the Company to the Administrator. The resolution of such question or dispute by
the Administrator shall be final and binding on all persons.

     12. Venue. The parties agree that any suit, action, or proceeding arising out of or
relating to the Notice, the Plan or this Agreement shall be brought in the United States District
Court for the District of Nevada – Las Vegas (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a Nevada state court in the County of Clark) and that the parties
shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest
extent permitted by law, any objection the party may have to the laying of venue for any such suit,
action or proceeding brought in such court. If any one or more provisions of this Section 12 shall
for any reason be held invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its application valid
and enforceable.

     13. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery, upon deposit for delivery by an
internationally recognized express mail courier service or upon deposit in the United States mail
by certified mail (if the parties are within the United States), with postage and fees prepaid,
addressed to the other party at its address as shown in these instruments, or to such other address
as such party may designate in writing from time to time to the other party.

END OF AGREEMENT

EXHIBIT 10.3 – Page 7

 

 

EXHIBIT A

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

          FOR
VALUE RECEIVED,                  hereby sells, assigns and
transfers unto                                         ,                      (       ) shares of the Common Stock of
American Pacific Corporation, a Delaware corporation (the “Company”), standing in his name
on the books of, the Company represented by Certificate No.                       herewith, and does hereby irrevocably constitute and appoint the
Secretary of the Company attorney to transfer the said stock in the books of the Company
with full power of substitution.

	 	 	 	 	 	 	 	 	 
	DATED:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

[Please sign this document but do not date it. The date and information of the transferee
will be completed if and when the shares are assigned.]

EXHIBIT 10.3 – Page 8exv10w4

 

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

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