Exhibit 10.26

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of March 14, 2016 (the
“Effective Date”), by and between PAUL W. COBB (“Executive”) and PACIFIC
ARCHITECTS AND ENGINEERS INCORPORATED, a California corporation (“PAE”).

WHEREAS, PAE has entered into that certain Agreement and Plan of Merger, dated
as of January 14, 2016 (the “Merger Agreement”), by and among (i) PAE Holding
Corporation (“PAE Holding”), (ii) LG PAE, L.P., (iii) Shay Intermediate Holding
II Corporation (“Parent”) and (iv) Shay Merger Corporation (“Sub”), pursuant to
which Sub will merge with and into PAE Holding, with PAE Holding continuing as
the surviving corporation, subject to the terms and conditions of the Merger
Agreement;

WHEREAS, PAE has employed Executive pursuant to that certain letter agreement,
dated as of August 3, 2015 (the “Prior Agreement”);

WHEREAS, PAE and Executive are party to a Retention Agreement, dated
September 9, 2015 (as amended, the “Retention Agreement”);

WHEREAS, PAE desires to continue to employ Executive, and Executive desires to
continue such employment and enter into this Agreement, which sets forth the
terms and conditions under which Executive will continue to serve PAE, effective
as of the Effective Date; and

WHEREAS, the parties acknowledge that the terms of this Agreement shall, upon
the Effective Date, replace and supersede the Prior Agreement, which will
thereupon become null and void.

NOW, THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereto do hereby agree as follows:

ARTICLE I

Employment

SECTION 1.01. Term. The term of Executive’s employment under this Agreement
shall commence on the Effective Date and shall terminate on the second
anniversary of the Effective Date (the “Initial Period”); provided that such
term of employment shall automatically renew upon the expiration of the Initial
Period and on each subsequent anniversary thereof for one year (“Renewal
Period”), unless PAE delivers to Executive, or Executive delivers to PAE,
written notice (“Notice of Non-Renewal”) at least 60 days in advance of the
expiration of the Initial Period or any Renewal Period that such term of
employment shall not be extended, in which case such term of employment shall
end at the end of the Initial Period or Renewal Period in which such notice was
delivered and shall not be further extended. Notwithstanding the foregoing,
Executive’s employment with PAE shall be “at will” and, subject to the
provisions of Article IV and the notice requirements set forth above,
Executive’s employment under this Agreement may be terminated by PAE or
Executive at any time and for any reason, with or without prior notice.

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SECTION 1.02. Position and Duties. During the term of this Agreement, Executive
shall serve as the Senior Vice President and General Counsel of PAE reporting to
the Chief Executive Officer of PAE, performing duties and having
responsibilities customary for such position and as may from time to time be
assigned to Executive by the Chief Executive Officer of PAE. Executive shall
perform such services and duties in accordance with the policies, practices and
bylaws of PAE.

SECTION 1.03. Time and Effort. Executive shall serve PAE faithfully, loyally,
honestly and to the best of Executive’s ability. Executive shall devote all of
Executive’s business time and best efforts to the performance of Executive’s
duties on behalf of PAE. During Executive’s term of employment, Executive shall
not at any time or place or to any extent whatsoever, either directly or
indirectly, without the express written consent of the Board of Directors or
other governing body of PAE (the “Board”), engage in any outside employment or
in any activity that, in the reasonable judgment of PAE, is competitive with or
adverse to the business, practice or affairs of PAE or any of its affiliates,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, it shall not be a violation of this
Agreement for Executive to serve as a director of charitable organizations to
the extent such service has been approved by the Board (such approval not to be
unreasonably withheld).

ARTICLE II

Compensation

SECTION 2.01. Base Salary. During the term of Executive’s employment under this
Agreement, PAE shall, as compensation for the obligations set forth herein and
for all services rendered by Executive in any capacity during Executive’s
employment under this Agreement, including services as an officer, employee,
director or member of any governing body, or committee thereof, of PAE or any of
its affiliates, pay Executive a base salary (“Base Salary”) at the annual rate
of $387,000 per year, payable in substantially equal installments in accordance
with PAE’s standard payroll practices as in effect from time to time. In the
event that sickness or disability payments under any insurance programs of PAE
or otherwise shall become payable to Executive in respect of any period of
Executive’s employment under this Agreement, the salary installment payable to
Executive hereunder on the next succeeding salary installment payment date shall
be an amount computed by subtracting (a) the amount of such sickness or
disability payments that shall have become payable during the period between
such date and the immediately preceding salary installment date from (b) the
salary installment otherwise payable to Executive hereunder on such date.

SECTION 2.02. Annual Bonus. During the term of Executive’s employment under this
Agreement, Executive shall be eligible to participate in the annual incentive
compensation plans of PAE, as may be continued or established by the Board, in
its discretion, from time to time (the “Bonus Plan”) and shall have the
opportunity to earn a performance-based bonus (“Annual Bonus”) targeted at 75%
of Executive’s Base Salary (“Target Bonus”) and a maximum bonus opportunity for
above-target performance of up to 200% of Executive’s Target Bonus for the
fiscal year to which such Annual Bonus relates. The performance goals and Annual
Bonus payable for a given fiscal year under the Bonus Plan shall be determined
by the Board. Except as provided in Article IV, payment of the Annual Bonus will
be conditioned upon Executive’s continued employment though the payment date.

 

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ARTICLE III

Executive Benefits

SECTION 3.01. Benefit Plans. During the term of Executive’s employment under
this Agreement, Executive shall be entitled to participate in any benefit plans
(excluding severance, bonus, incentive or profit-sharing plans) offered by PAE
as in effect from time to time (collectively, “Benefit Plans”) on the same basis
as that generally made available to other employees of PAE to the extent
Executive may be eligible to do so under the terms of any such Benefit Plan.
Executive understands that any such Benefit Plans may be terminated or amended
from time to time by PAE in its discretion. Notwithstanding the first sentence
of this Section 3.01, nothing shall preclude Executive from participating during
the term of Executive’s employment under this Agreement in any present or future
bonus, incentive or profit-sharing plan or other plan of PAE for the benefit of
its employees, in each case as and to the extent approved or determined by the
Board in its discretion and subject to the other terms of this Agreement.

SECTION 3.02. Business Expenses. PAE will reimburse Executive for all reasonably
incurred business expenses, subject to the travel and expense policy established
by PAE from time to time, incurred by Executive during the term of Executive’s
employment under this Agreement in the performance of Executive’s duties
hereunder; provided that Executive furnishes to PAE adequate records and other
documentary evidence required to substantiate such expenditures.

SECTION 3.03. Vacation. During the term of Executive’s employment under this
Agreement, Executive shall receive not less than 25 paid vacation days per year,
which shall be accrued and taken in accordance with PAE’s vacation policy.

ARTICLE IV

Termination

SECTION 4.01. Exclusive Rights. The amounts payable under this Article IV are
intended to be, and are, exclusive and in lieu of any other rights or remedies
to which Executive may otherwise be entitled, including under common, tort or
contract law, under policies of PAE and its affiliates in effect from time to
time, under this Agreement or otherwise, in the event of Executive’s termination
of employment with PAE and its affiliates.

SECTION 4.02. Termination by PAE for Cause; Termination by Executive without
Good Reason. (a) If PAE terminates Executive for Cause or if Executive elects to
terminate Executive’s employment with PAE without Good Reason, Executive shall
be entitled to receive (i) Base Salary earned through the date of termination
that remains unpaid as of the date of Executive’s termination, (ii) any Annual
Bonus for any previously completed bonus period that has been earned and remains
unpaid as of the date of Executive’s termination,

 

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(iii) reimbursement for any unreimbursed business expenses properly incurred by
Executive prior to the date of Executive’s termination to the extent such
expenses are reimbursable under Section 3.02 and (iv) such benefits (excluding
benefits under any severance plan, program or policy then in effect), if any, to
which Executive may be entitled under the Benefit Plans as of the date of
Executive’s termination, which benefits shall be payable in accordance with the
terms of such Benefits Plans (the amounts described in clauses (i) through
(iv) of this Section 4.02(a) being referred to herein as the “Accrued Rights”).

(b) For purposes of this Agreement, the term “Cause” shall mean Executive’s:

(i) intentional failure to perform reasonably assigned duties;

(ii) personal dishonesty or willful misconduct in the performance of duties,
which causes or threatens to cause material injury to PAE or any of its
affiliates;

(iii) breach of fiduciary duties owed by Executive to PAE or any of its
affiliates resulting in personal profit to Executive;

(iv) willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar offenses); or

(v) any act by Executive involving (a) fraud, (b) any breach by Executive of
applicable regulations of competent authorities in relation to trading or
dealing with stocks, securities, or investments or (c) any willful or grossly
negligent act by the Executive resulting in an investigation by the Securities
and Exchange Commission, which, in each of cases (a), (b) and (c) above, the
Board determines in its reasonable and good faith discretion materially
adversely affects PAE or any of its affiliates or Executive’s ability to perform
his duties hereunder.

For purposes of this definition, an act, or failure to act, on Executive’s part
shall be deemed “willful” if done, or omitted to be done, by Executive
intentionally, in bad faith and without reasonable belief that the action or
omission was in the best interest of PAE. If PAE desires to terminate
Executive’s employment for Cause in the case of clauses (i), (ii), (iii) or
(v) of Section 4.02(b) and the basis for Cause, by its nature, is capable of
being cured, PAE shall first provide Executive with written notice of the
applicable event that constitutes the basis for Cause (a “Cause Notice”) within
ten days of the Board becoming aware of such event. Such notice shall
specifically identify such claimed breach. Executive shall have 15 days
following receipt of such Cause Notice (the “Cause Cure Period”) to cure such
basis for Cause, and PAE shall be entitled at the end of such Cause Cure Period
to terminate Executive’s employment under this Agreement for Cause; provided,
however, that, if such breach is cured within the Cause Cure Period or if PAE
does not terminate Executive’s employment with PAE within ten days after the end
of the Cause Cure Period, PAE shall not be entitled to terminate Executive’s
employment for Cause based on the event described in the Cause Notice; and
provided further that notwithstanding the foregoing, Executive will not be
entitled to the opportunity to cure a particular basis for Cause more than once
during any six-month period.

 

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(c) For purposes of this Agreement, the term “Good Reason” shall mean any of the
following actions, without Executive’s express prior written approval:

(i) any material reduction in Executive’s Base Salary or Target Bonus
opportunity;

(ii) subject to the terms and conditions of the applicable plan(s), any failure
by PAE to continue to provide retirement, fringe and welfare benefits to
Executive that are substantially similar in the aggregate to those afforded to
senior management employees of PAE;

(iii) any material adverse change in Executive’s duties or responsibilities;

(iv) any relocation of Executive’s principal place of business of 50 miles or
more, provided that such relocation also increases Executive’s commute by at
least 25 miles;

(v) any delivery to Executive by PAE of a Notice of Non-Renewal; or

(vi) any failure to pay Executive’s Base Salary and other amounts earned by
Executive within ten days after the date such compensation is due.

(d) Executive must provide written notice to PAE pursuant to Section 6.05 of
this Agreement of Executive’s intent to resign for Good Reason within 45 days of
the occurrence of an event described in Section 4.02(c) above (each, a “Good
Reason Event”) in order for Executive’s resignation for Good Reason to be
effective hereunder. Upon receipt of such notice, PAE shall have 30 days (60
days in the case of the Good Reason Event described in Section 4.02(c)(v) above)
(the applicable period, the “Good Reason Cure Period”) to rectify the Good
Reason Event. If PAE fails to rectify the Good Reason Event prior to the
expiration of the Good Reason Cure Period, then Executive may terminate
employment within 10 days following the expiration of the Good Reason Cure
Period and such termination will be considered for Good Reason and, in the event
Executive’s termination is in respect of the Good Reason Event described in
Section 4.02(c)(v) above, such termination will be considered for Good Reason
for all purposes of this Agreement notwithstanding the earlier expiration of the
term of Executive’s employment under this Agreement.

SECTION 4.03. Termination by PAE Other Than for Cause, Disability or Death;
Termination by Executive for Good Reason. If PAE elects to terminate Executive’s
employment for any reason other than Cause, Disability (as defined below) or
death or if Executive terminates Executive’s employment with PAE for Good
Reason, Executive shall be entitled to the Accrued Rights and, provided that
Executive has provided a general release in favor of PAE, PAE Holding, Parent
and their subsidiaries and affiliates, and their respective directors, officers,
employees, agents and representatives in form and substance reasonably
acceptable to PAE (the “Release”) and the Release has become effective and
irrevocable prior to the 60th day after such termination of employment,
Executive shall be entitled to the following:

 

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(a) If such termination occurs on or before January 1, 2017:

(i) Cash Payment. PAE shall pay to Executive a lump-sum cash payment in an
amount equal to 1.5 times the sum of Executive’s Base Salary (at the rate in
effect on the Effective Date or the date of Executive’s termination of
employment, whichever is greater) and Executive’s then-current Target Bonus,
which amount will be paid on or following the date the Release becomes effective
and in no event later than 65 days following the date of such termination.

(ii) Medical and Dental Insurance Benefit Continuation. For the 18 months after
the date of Executive’s termination of employment or, if earlier, the date on
which Executive becomes employed by a new employer that maintains a major
medical plan, Executive and Executive’s spouse and dependents (each as defined
under the applicable program) may elect to continue to participate in PAE’s
medical and dental plans at the level provided to similarly situated active
employees of PAE at PAE’s sole expense pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”); provided that Executive
timely elects COBRA continuation coverage in connection with his termination of
employment. Notwithstanding any provision of this Agreement to the contrary, to
the extent necessary to satisfy Section 105(h) of the Internal Revenue Code of
1986, as amended (the “Code”), or if PAE determines is necessary to avoid the
imposition of an excise tax on PAE, PAE will be permitted to alter the manner in
which medical and dental benefits are provided to Executive following
termination of Executive’s employment; provided that such alteration shall not
increase the after-tax cost to Executive of such benefits.

(iii) Retention Bonus. PAE will pay the unpaid portion of your Bonus (as defined
in the Retention Agreement) to you in a lump-sum within 30 days following the
date of such termination, which amount will be paid without regard to any
requirement that you execute the Release.

(b) If such termination occurs after January 1, 2017:

(i) Cash Payments. (i) PAE shall pay to Executive an amount equal to Executive’s
then-current Base Salary, payable in installments through the date that is 12
months after the date of Executive’s termination of employment (the “Severance
Period”) at the same times at which and in the same manner in which Executive’s
Base Salary would have been payable to Executive had a termination of employment
not occurred and (ii) PAE shall provide to Executive, during the calendar year
following the calendar year in which Executive’s termination of employment
occurs, an Annual Bonus for the fiscal year in which the termination occurs
equal to the Annual Bonus that Executive would have received if his employment
had not terminated prior to the end of the fiscal year (e.g., after determining
whether applicable performance goals have been achieved determined on a basis
consistent with past practice), pro-rated based on a fraction, the numerator of
which shall equal the number of days Executive was employed by PAE in the fiscal
year in which Executive’s termination occurs and the denominator of which shall
equal 365 (the “Pro-Rata Bonus”); provided, however, that, in the

 

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case of clause (i), PAE shall (x) commence such payments on the 60th day after
termination of Executive’s employment, except that any payments that would have
otherwise been paid to Executive following the date of the termination of
employment and prior to such 60th day shall be accumulated and paid to Executive
in a lump sum on the first payment date following such 60th day, and (y) not
continue such payments at any time following either (A) breach of the provisions
of Section 5.03 or 5.04 or (B) breach of the provisions of Article V (other than
Section 5.03 or 5.04) that (X) is materially damaging to the business or
reputation of PAE or any of its affiliates or (Y) occurs after PAE has notified
Executive of a prior breach of such Article V (other than Section 5.03 or 5.04).

(ii) Medical and Dental Insurance Benefit Continuation. During the Severance
Period, Executive and Executive’s spouse and dependents (each as defined under
the applicable program) shall receive medical and dental insurance coverage at
the same benefit levels as provided to active senior management employees of
PAE, for which PAE will (A) reimburse Executive during the Severance Period, for
the total amount of the monthly medical and dental insurance premiums payable by
Executive for continued benefits coverage pursuant to the COBRA, in excess of
the cost Executive paid for such coverage (on a monthly premium basis)
immediately prior to such termination of employment and (B) provide such
coverage for any remaining portion of the Severance Period at the same cost to
Executive as is generally provided to active senior management employees of PAE
(or, if it is not possible, or is cost-prohibitive for PAE to provide such
coverage for such remaining portion, PAE will pay Executive an additional
monthly amount, at the same time as cash severance payments are made pursuant to
Section 4.03(b)(i), of cash equal to the premiums PAE would have paid if
Executive had remained an active employee, subject to Section 6.13 hereof);
provided, however, that if, during the Severance Period, Executive becomes
employed by a new employer that provides medical and dental coverage, PAE’s
continuing medical and dental coverage (and any cash payments in lieu thereof)
shall become secondary to such new employer’s coverage with respect to claims
covered by such new employer’s medical and dental plans. Notwithstanding any
provision of this Agreement to the contrary, to the extent necessary to satisfy
Section 105(h) of the Code, or if PAE determines is necessary to avoid the
imposition of an excise tax on PAE, PAE will be permitted to alter the manner in
which medical and dental benefits are provided to Executive following
termination of Executive’s employment; provided that the after-tax cost to
Executive of such benefits shall not be greater than the cost applicable to
similarly situated executives of PAE who have not terminated employment.

(c) Release. For the avoidance of doubt, (x) the Release shall not require
Executive to release any rights to post-termination payments or benefits
afforded to him by this Agreement, or any vested benefits or rights pursuant to
the terms of PAE’s or its affiliates’ benefit plans or programs, and (y) if the
Release does not become effective and irrevocable within 60 days following the
date of Executive’s termination of employment pursuant to this Section 4.03(c),
PAE shall not be obligated to make any payments or provide any benefits under
Section 4.03(a) or (b) above and Executive shall only be entitled to the Accrued
Rights.

 

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SECTION 4.04. Termination for Disability or Death. Executive’s employment shall
terminate automatically upon Executive’s death. PAE may terminate Executive’s
employment upon the occurrence of Executive’s Disability. In the event of
Executive’s termination due to death or Disability, Executive, or Executive’s
estate, as the case may be, shall be entitled to receive the Accrued Rights, and
the Pro-Rata Bonus during the calendar year following the calendar year in which
Executive’s termination of employment occurs. For purposes of this Agreement,
the term “Disability” shall mean (a) the inability of Executive, due to illness,
accident or any other physical or mental incapacity, to perform Executive’s
duties in a normal manner for a period of 180 days (whether or not consecutive)
in any twelve-month period during the term of Executive’s employment under this
Agreement or (b) Executive being accepted for long-term disability benefits
under any long-term disability plan in which he is then participating. The Board
shall determine, according to the facts then available, whether and when the
Disability of Executive has occurred. Such determination shall not be arbitrary
or unreasonable and the Board will take into consideration the expert medical
opinion of a physician chosen by PAE, after such physician has completed an
examination of Executive. Executive agrees to make himself available for such
examination upon the reasonable request of PAE.

ARTICLE V

Executive Covenants

SECTION 5.01. PAE Interests. Executive acknowledges that PAE has expended
substantial amounts of time, money and effort to develop business strategies,
customer relationships, employee relationships, trade secrets and goodwill and
to build an effective organization, and that PAE has a legitimate business
interest and right in protecting those assets as well as any similar assets that
PAE may develop or obtain. Executive acknowledges that PAE is entitled to
protect and preserve the going concern value of PAE and its business and trade
secrets to the extent permitted by law. Executive acknowledges that PAE’s
business is worldwide in nature and international in scope. Executive
acknowledges and agrees that the restrictions imposed upon Executive under this
Agreement are reasonable and necessary for the protection of PAE’s goodwill,
confidential information, trade secrets and customer relationships, and that the
restrictions set forth in this Agreement will not prevent Executive from earning
a livelihood without violating any provision of this Agreement.

SECTION 5.02. Consideration to Executive. In consideration of PAE’s entering
into this Agreement and PAE’s obligations hereunder and other good and valuable
consideration, the receipt of which is hereby acknowledged, and acknowledging
hereby that PAE would not have entered into this Agreement without the covenants
contained in this Article V, Executive hereby agrees to be bound by the
provisions and covenants contained in this Article V.

SECTION 5.03. Non-Solicitation. Executive agrees that, for the period commencing
on the Effective Date and terminating 12 months after the date of Executive’s
termination of employment with PAE for any reason, Executive shall not, and
shall cause each of Executive’s affiliates (other than PAE) not to, directly or
indirectly: (a) solicit any person or entity that is or was a customer (or
prospective customer) of PAE to (i) purchase any goods or services related to
any Competitive Business (as defined below) that are of the type sold by PAE,
from anyone other than PAE or (ii) reduce its volume of goods or services
purchased from PAE, (b) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the Effective Date) between
PAE and suppliers, partners, members or investors of PAE, (c) other than on
behalf of PAE, solicit, recruit or hire any employee or consultant of PAE or any
person who has, at any time within two years prior to such solicitation,
recruitment or hiring, worked for or provided services to PAE, (d) solicit or
encourage any employee or consultant of PAE to leave the employment of, or to
cease providing services to, PAE or (e) assist any person or entity in any way
to do, or attempt to do, anything prohibited by this Section 5.03.

 

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SECTION 5.04. Non-Competition. (a) Executive agrees that, for the period
commencing on the Effective Date and terminating (A) 18 months after the date of
Executive’s termination of employment with PAE for any reason if such
termination occurs on or before January 1, 2017, or (B) 12 months after the date
of Executive’s termination of employment with PAE for any reason if such
termination occurs after January 1, 2017, Executive shall not, and shall cause
each of Executive’s affiliates (other than PAE) not to, directly or indirectly:
(i) engage in or establish any Competitive Business including selling goods or
services relating to any Competitive Business that are of the type sold by PAE,
(ii) assist any person or entity in any way to engage in or establish, or
attempt to engage in or establish, any Competitive Business, (iii) except as
provided in Section 5.04(c), be employed by, consult with, advise, permit his
name to be used by, or be connected in any manner with the ownership,
management, operation or control of any person or entity that directly or
indirectly engages in any Competitive Business, or (iv) engage in any course of
conduct that involves any Competitive Business that is substantially detrimental
to the business reputation of PAE.

(b) The term “Competitive Business” shall mean (A) any business or entity that
engages in business of the type conducted by PAE as of the date of Executive’s
termination of employment with PAE, (B) any business that is a contractor or
subcontractor under any government contract under which PAE is a contractor or
subcontractor as of the date of Executive’s termination of employment with PAE
or (C) any entity that is as of the date of Executive’s termination competing
for any government contract (including any re-compete or follow-on procurement)
on which PAE has bid or plans to bid.

(c) This Section 5.04 shall not prohibit Executive from practicing law or be
deemed breached solely as a result of the ownership by Executive or any of
Executive’s affiliates of: (i) less than an aggregate of 5% of any class of
stock of a public company engaged, directly or indirectly, in any Competitive
Business; (ii) less than 5% in value of any instrument of indebtedness of a
public company engaged, directly or indirectly, in any Competitive Business; or
(iii) a public company that engages, directly or indirectly, in any Competitive
Business if such Competitive Business accounts for less than 5% of such person’s
or entity’s consolidated annual revenues. A “public company” for purposes of
this Section 5.04(c) shall mean an entity whose common stock is traded on a
nationally recognized securities exchange.

SECTION 5.05. Confidential Information. Executive hereby acknowledges that
(a) in the performance of Executive’s duties and services pursuant to this
Agreement, Executive has received, and may be given access to, Confidential
Information and (b) all Confidential Information is or will be the property of
PAE. For purposes of this Agreement, “Confidential Information” shall mean
information, knowledge and data that is or will be used, developed, obtained or
owned by PAE relating to the business, products and/or services of PAE or the
business, products and/or services of any customer, sales officer, sales
associate or independent contractor thereof, including products, services, fees,
pricing, designs, marketing plans, strategies, analyses, forecasts, formulas,
drawings, photographs, reports, records, computer

 

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software (whether or not owned by, or designed for, PAE), other operating
systems, applications, program listings, flow charts, manuals, documentation,
data, databases, specifications, technology, inventions, new developments and
methods, improvements, techniques, trade secrets, devices, products, methods,
know-how, processes, financial data, customer lists, contact persons, cost
information, executive information, regulatory matters, personnel matters,
accounting and business methods, copyrightable works and information with
respect to any vendor, customer, sales officer, sales associate or independent
contractor of PAE, in each case whether patentable or unpatentable and whether
or not reduced to practice, and all similar and related information in whatever
form, and all such items of any vendor, customer, sales officer, sales associate
or independent contractor of PAE; provided, however, that Confidential
Information shall not include information that is generally known to the public
other than as a result of disclosure by Executive in breach of this Agreement or
in breach of any similar covenant made by Executive prior to entering into this
Agreement.

SECTION 5.06. Non-Disclosure. (a) Except as otherwise specifically provided in
Section 5.07, Executive will not, directly or indirectly, disclose or cause or
permit to be disclosed, to any person or entity whatsoever, or utilize or cause
or permit to be utilized, by any person or to any entity whatsoever, any
Confidential Information acquired pursuant to Executive’s employment with PAE
(whether acquired prior to or subsequent to the execution of this Agreement)
under this Agreement or otherwise.

(b) Executive will not disclose to anyone, other than Executive’s immediate
family and legal or financial advisors, the existence or contents of this
Agreement, except to the extent permitted in Section 5.07 or to comply with
Section 5.12, and, to the extent such information is disclosed to Executive’s
immediate family or legal or financial advisors, will instruct those parties to
comply with the non-disclosure requirements of this Section 5.06.

SECTION 5.07. Permitted Disclosure. Executive may (a) utilize and disclose the
Confidential Information only to the extent reasonably necessary and required in
the discharge of Executive’s duties as an employee of PAE and (b) disclose
Confidential Information only to the extent Executive (i) is obligated to
disclose such Confidential Information pursuant to any confidentiality agreement
executed by or on behalf of PAE or Executive prior to the Effective Date,
(ii) is obligated to disclose such Confidential Information or else would
reasonably likely be held in contempt by a court of law or suffer other censure,
sanction, or penalty, (iii) is required to disclose such Confidential
Information by law, or (iv) discloses such information in the context of
litigation between PAE and Executive.

SECTION 5.08. Assignment of Inventions; Further Assurances. All rights to
discoveries, inventions, improvements and innovations (including all data and
records pertaining thereto) related to the business of PAE or its current or
former affiliates, whether or not patentable, copyrightable, registrable as a
trademark, or reduced to writing, that Executive may discover, invent or
originate during the term of Executive’s service to PAE or its affiliates
(whether before, on or after the Effective Date), either alone or with others
and whether or not during working hours or by the use of the facilities of PAE
(“Inventions”), shall be the exclusive property of PAE or its designee.
Executive shall promptly disclose all Inventions to PAE. Executive shall take
all requested actions and execute all requested documents to assist PAE, or its
designee, at PAE’s expense, in every way to secure PAE’s or its designee’s above
rights in

 

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the Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto in any and all countries, and to
pursue any patents or registrations with respect thereto. This covenant shall
survive the termination of this Agreement. If PAE or its designee is unable for
any other reason to secure Executive’s signature on any document for this
purpose, then Executive hereby irrevocably designates and appoints PAE or its
designee and their duly authorized officers and agents, as the case may be, as
Executive’s agent and attorney-in-fact, to act for and in Executive’s behalf and
stead to execute any documents and to do all other lawfully permitted acts in
connection with the foregoing.

SECTION 5.09. Records. All memoranda, books, records, documents, papers, plans,
information, letters and other data relating to Confidential Information or the
business and customer accounts of PAE, whether prepared by Executive or
otherwise, coming into Executive’s possession shall be and remain the exclusive
property of PAE and Executive shall not, during the term of Executive’s
employment with PAE or thereafter, directly or indirectly assert any interest or
property rights therein. Upon termination of employment with PAE for any reason,
Executive will immediately return to PAE all such memoranda, books, records,
documents, papers, plans, information, letters and other data, and all copies
thereof or therefrom, and Executive will not retain, or cause or permit to be
retained, any copies or other embodiments of the materials so returned.
Executive further agrees that he will not retain or use for Executive’s account
at any time any trade names, trademark or other proprietary business designation
used or owned in connection with the business of PAE.

SECTION 5.10. Non-Disparagement. Executive has not prior to the Effective Date,
whether in writing or orally, criticized or disparaged PAE, nor shall Executive
during the period commencing on the Effective Date and terminating five years
after the date of Executive’s termination of employment with PAE for any reason
(the “Non-Disparagement Period”), unless in the context of litigation between
PAE and Executive or under penalty of perjury, whether in writing or orally,
criticize or disparage PAE or any of its respective current or former
affiliates, directors, officers, employees, members, partners, agents or
representatives, including Platinum Equity, LLC and its affiliated investment
funds. PAE shall instruct the PAE Parties (as defined below) not to, whether in
writing or orally, criticize or disparage Executive during the Non-Disparagement
Period, unless in the context of litigation between PAE and Executive or under
penalty of perjury. For purposes of this Agreement, the term “PAE Parties” shall
mean the executive officers and designated spokespersons of PAE, acting in their
capacity as representatives of PAE.

SECTION 5.11. Specific Performance. Executive agrees that any breach by
Executive of any of the provisions of this Article V shall cause irreparable
harm to PAE that could not be made whole by monetary damages and that, in the
event of such a breach, Executive shall waive the defense in any action for
specific performance that a remedy at law would be adequate, and PAE shall be
entitled to specifically enforce the terms and provisions of this Article V
without the necessity of proving actual damages or posting any bond or providing
prior notice, in addition to any other remedy to which PAE may be entitled at
law or in equity.

SECTION 5.12. Notification of Subsequent Employer. Prior to accepting employment
with any other person or entity during any period during which Executive remains
subject to any of the covenants set forth in Section 5.03 or Section 5.04,
Executive shall provide such prospective employer with written notice of such
provisions of this Agreement, with a copy of such notice delivered
simultaneously to PAE in accordance with Section 6.05.

 

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ARTICLE VI

Miscellaneous

SECTION 6.01. Assignment. This Agreement shall not be assignable by Executive.
The parties agree that any attempt by Executive to delegate Executive’s duties
hereunder shall be null and void. This Agreement may be assigned by PAE to a
person or entity that is an affiliate or a successor in interest to
substantially all the business operations of PAE. Upon such assignment, the
rights and obligations of PAE hereunder shall become the rights and obligations
of such affiliate or successor person or entity. As used in this Agreement, the
term “PAE” shall mean PAE as hereinbefore defined in the recital to this
Agreement and any permitted assignee to which this Agreement is assigned.

SECTION 6.02. Successors. This Agreement shall be binding upon and shall inure
to the benefit of the successors and permitted assigns of PAE and the personal
or legal representatives, executors, administrators, successors, distributees,
devisees and legatees of Executive. Executive acknowledges and agrees that all
Executive’s covenants and obligations to PAE, as well as the rights of PAE under
this Agreement, shall run in favor of and will be enforceable by PAE, its
subsidiaries and its successors and permitted assigns.

SECTION 6.03. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties and with respect to the transactions
contemplated hereby and subject matter hereof and supersedes and replaces any
and all prior agreements (including the Prior Agreement and the Retention
Agreement), understandings, statements, representations and warranties, written
or oral, express or implied and/or whenever and howsoever made, directly or
indirectly relating to the subject matter hereof. Notwithstanding the above,
Executive’s covenants set forth in Article V shall operate independently of, and
shall be in addition to, any similar covenants to which Executive is subject
pursuant to any other agreement with PAE or any of PAE’s affiliates.

SECTION 6.04. Amendment. Except as provided in Section 6.14(d) hereof, this
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.

SECTION 6.05. Notice. All documents, notices, requests, demands and other
communications that are required or permitted to be delivered or given under
this Agreement shall be in writing and shall be deemed to have been duly
delivered or given when received.

 

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If to PAE:   

Pacific Architects and Engineers Incorporated

c/o Platinum Equity, LLC

360 North Crescent Drive, South Building

Beverly Hills, CA 90210

Attention: Eva Kalawski

Facsimile: (310) 712-1863

E-mail: EKalawski@platinumequity.com

with copies to:   

Latham & Watkins LLP

555 11th Street, N.W.

Suite 1000

Washington, DC 20004

Attention: David I. Brown

Facsimile: (202) 637-2201

E-mail: David.Brown@lw.com

If to Executive:    At the last address that PAE has in its personnel records
for Executive.

Each of the parties may change the address to which notices under this Agreement
shall be sent by providing written notice to the other in the manner specified
above.

SECTION 6.06. Governing Law and Jurisdiction. (a) This Agreement and any
disputes arising under or related hereto (whether for breach of contract,
tortious conduct or otherwise) shall be governed and construed in accordance
with the laws of the State of New York, without reference to its conflicts of
law principles. Each party irrevocably agrees that any legal action, suit or
proceeding against them arising out of or in connection with this Agreement or
the transactions contemplated by this Agreement or disputes relating hereto
(whether for breach of contract, tortuous conduct or otherwise) shall be brought
exclusively in the United States District Court for the Eastern District of
Virginia, or, if such court does not have subject matter jurisdiction, the state
courts of Virginia located in Arlington County and hereby irrevocably accepts
and submits to the exclusive jurisdiction and venue of the aforesaid courts in
personam, with respect to any such action, suit or proceeding.

(b) Each party hereby waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect to any litigation directly
or indirectly arising out of, under or in connection with this Agreement. Each
party (i) certifies that no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 6.06(b).

 

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(c) Each party in any dispute or legal action arising under this Agreement shall
be responsible for bearing its own expenses, attorneys’ fees and other costs in
such dispute or legal action.

SECTION 6.07. Severability. If any term, provision, covenant or condition of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable in any jurisdiction, then such provision,
covenant or condition shall, as to such jurisdiction, be modified or restricted
to the extent necessary to make such provision valid, binding and enforceable,
or, if such provision cannot be modified or restricted, then such provision
shall, as to such jurisdiction, be deemed to be excised from this Agreement and
any such invalidity, illegality or unenforceability with respect to such
provision shall not invalidate or render unenforceable such provision in any
other jurisdiction, and the remainder of the provisions hereof shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

SECTION 6.08. Survival. The rights and obligations of PAE and Executive under
the provisions of this Agreement, including Articles V and VI, shall survive and
remain binding and enforceable, notwithstanding any termination of Executive’s
employment with PAE, to the extent necessary to preserve the intended benefits
of such provisions.

SECTION 6.09. Cooperation. Executive shall provide Executive’s reasonable
cooperation to PAE in connection with any suit, action or proceeding (or any
appeal therefrom) that relates to events occurring during Executive’s employment
with PAE or any of its affiliates other than a suit between Executive, on the
one hand, and PAE, on the other hand, provided that PAE shall reimburse
Executive for expenses reasonably incurred in connection with such cooperation.

SECTION 6.10. Executive Representation. Executive hereby represents to PAE that
the execution and delivery of this Agreement by Executive and PAE and the
performance by Executive of Executive’s duties hereunder shall not constitute a
breach of, or otherwise contravene, or be prevented, interfered with or hindered
by, the terms of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.

SECTION 6.11. No Waiver. The provisions of this Agreement may be waived only in
writing signed by the party or parties entitled to the benefit thereof. A waiver
or any breach or failure to enforce any provision of this Agreement shall not in
any way affect, limit or waive a party’s rights hereunder at any time to enforce
strict compliance thereafter with every provision of this Agreement.

SECTION 6.12. Set Off. PAE’s obligation to pay Executive the amounts provided
and to make the arrangements provided hereunder shall be subject to set off,
counterclaim or recoupment of amounts owed by Executive to PAE or its
affiliates, except as provided in Section 6.14.

SECTION 6.13. Withholding Taxes. PAE may withhold from any amounts payable under
this Agreement such Federal, state, local and foreign taxes as may be required
to be withheld pursuant to any applicable law or regulation.

 

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SECTION 6.14. Section 409A. (a) It is intended that the provisions of this
Agreement comply with Section 409A (“Section 409A”) of the Code, and all
provisions of this Agreement shall be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under
Section 409A.

(b) Neither Executive nor any of his creditors or beneficiaries shall have the
right to subject any deferred compensation (within the meaning of Section 409A)
payable under this Agreement or under any other plan, policy, arrangement or
agreement of or with PAE or any of its affiliates (this Agreement and such other
plans, policies, arrangements and agreements, the “Company Plans”) to any
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment. Except as permitted under Section 409A, any deferred
compensation (within the meaning of Section 409A) payable to Executive or for
Executive’s benefit under any Company Plan may not be reduced by, or offset
against, any amount owing by Executive to PAE or any of its affiliates.

(c) If, at the time of Executive’s separation from service (within the meaning
of Section 409A), (i) Executive shall be a specified employee (within the
meaning of Section 409A and using the identification methodology selected by PAE
from time to time) and (ii) PAE shall make a good faith determination that an
amount payable under a Company Plan constitutes deferred compensation (within
the meaning of Section 409A) the payment of which is required to be delayed
pursuant to the six-month delay rule set forth in Section 409A in order to avoid
taxes or penalties under Section 409A, then PAE (or its affiliate, as
applicable) shall not pay such amount on the otherwise scheduled payment date
but shall instead accumulate such amount and pay it on the first business day
after such six-month period.

(d) Notwithstanding any provision of this Agreement or any Company Plan to the
contrary, in light of the uncertainty with respect to the proper application of
Section 409A, PAE reserves the right to make amendments to any Company Plan as
PAE deems necessary or desirable to avoid the imposition of taxes or penalties
under Section 409A. In any case, Executive is solely responsible and liable for
the satisfaction of all taxes and penalties that may be imposed on Executive or
for Executive’s account in connection with any Company Plan (including any taxes
and penalties under Section 409A), and neither PAE nor any affiliate shall have
any obligation to indemnify or otherwise hold Executive harmless from any or all
of such taxes or penalties.

(e) For purposes of Section 409A, each payment hereunder will be deemed to be a
separate payment as permitted under Treasury Regulation
Section 1.409A-2(b)(2)(iii). Notwithstanding anything herein to the contrary,
Executive shall not be entitled to any payments or benefits payable hereunder as
a result of Executive’s termination of employment with PAE that constitute
“deferred compensation” under Section 409A unless such termination of employment
qualifies as a “separation from service” within the meaning of Section 409A (and
any related regulations or other pronouncements thereunder),

(f) Except as specifically permitted by Section 409A, any benefits and
reimbursements provided to Executive under this Agreement during any calendar
year shall not affect any benefits and reimbursements to be provided to
Executive under this Agreement in any other calendar year, and the right to such
benefits and reimbursements cannot be liquidated or exchanged for any other
benefit. Furthermore, reimbursement payments shall be made to Executive as soon
as practicable following the date that the applicable expense is incurred, but
in no event later than the last day of the calendar year following the calendar
year in which the underlying expense is incurred.

 

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SECTION 6.15. Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile of PDF), each of which shall be deemed to
be an original instrument and all of which together shall constitute a single
instrument. If any signature is delivered by facsimile transmission or by PDF,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf the signature is executed) with the same force and
effect as if such facsimile or PDF signature were an original thereof.

SECTION 6.16. Construction. (a) The headings in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.

(b) As used in this Agreement, words such as “herein,” “hereinafter,” “hereby”
and “hereunder,” and the words of like import refer to this Agreement, unless
the context requires otherwise. The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.

(c) As used in Articles V and VI, the term “PAE” includes PAE and its
subsidiaries and affiliates and their predecessors, successors and assigns.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.

 

PACIFIC ARCHITECTS AND ENGINEERS

INCORPORATED,

    by   /s/ John Heller   Name: John Heller   Title: Chief Executive Officer
PAUL W. COBB,   /s/ Paul W. Cobb