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                                                                    EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made by and between
PACIFIC AEROSPACE & ELECTRONICS, INC., a Washington corporation having its
principal place of business at 430 Olds Station Road, Wenatchee, Washington (the
"Company"), and CHARLES A. MIRACLE, a resident of Washington (the "Executive").

                                     RECITAL

         The Company desires to continue the employment of the Executive, who is
presently the Chief Financial Officer, Vice President Finance, and Assistant
Secretary of the Company, and the Executive is willing to continue his
employment with the Company in accordance with the terms hereinafter set forth.

                                    AGREEMENT

                 The Company and the Executive agree as follows:

                                    ARTICLE 1
                               EMPLOYMENT; DUTIES

         1.1      Employment. The Company hereby employs the Executive as the
Chief Financial Officer and Vice President Finance of the Company, and the
Executive accepts such employment, upon the terms and conditions set forth in
this Agreement.

         1.2      Duties. The duties to be performed by the Executive under this
Agreement are as specified in the Company's Bylaws and as may be reasonably
prescribed from time to time by the Chief Executive Officer or the Board of
Directors of the Company (the "Board").

         1.3      Hours. During the Term (as defined below), excluding any
periods of vacation, sick leave or other time off to which the Executive is
entitled, and without limiting the Executive's ability to participate in
unrelated business or other activities on his personal time, the Executive
agrees to devote his full attention and working time to the business and affairs
of the Company and, to the extent necessary to discharge his duties hereunder,
to use his best efforts to perform faithfully and efficiently such duties.

                                    ARTICLE 2
                                TERM OF AGREEMENT

         The term of this Agreement shall commence on November 4, 2002 and end
on the second anniversary of such date, or on such date as this Agreement may be
earlier terminated pursuant to Article 6 (the "Term"); provided, that the
covenants set forth in Article 5 shall survive termination of this Agreement
according to their terms.

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                                    ARTICLE 3
                                  COMPENSATION

         3.1      Base Salary. For services rendered by the Executive under this
Agreement, the Company agrees to pay to the Executive, and the Executive agrees
to accept, an initial annual base salary of $100,000, and for the second year of
the Term, the Executive shall be entitled to an increase of five percent (5%) in
his annual base salary (the initial base salary and the subsequent base salary
being referred to as the "Base Salary"). The Company shall pay the Executive's
Base Salary in installments not less frequently than monthly, less all amounts
required by law to be withheld, deducted or collected, in accordance with the
Company's normal payroll policies for other executive officers, as such policies
may be changed from time to time.

         3.2      Discretionary Bonus. In addition to the Base Salary, the
Executive may be eligible for bonus compensation, as determined by the Chief
Executive Officer or the Board in his or its discretion.

                                    ARTICLE 4
                                 OTHER BENEFITS

         4.1      Savings and Retirement Plan. The Executive shall be entitled
to participate in all savings and retirement plans or programs generally
applicable to other executive officers of the Company.

         4.2      Welfare Benefits. The Executive and qualified dependents shall
be eligible for participation in, and shall be eligible to receive all benefits
under, welfare benefit plans, practices, policies, and programs maintained by
the Company generally for the benefit of other executive officers of the
Company. These may, but will not necessarily, include medical, prescription,
dental, optical, disability, severance, individual, dependent and group life,
accidental death, and travel accident insurance plans and programs.

         4.3      Fringe Benefits. The Executive shall be entitled to fringe
benefits generally applicable to other executive officers of the Company.

         4.4      Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable business related expenses incurred by the
Executive upon the Company's receipt of accountings of such expenses in
accordance with practices, policies, and procedures generally applicable to
other executive officers of the Company.

         4.5      Vacation. The Executive shall be entitled to four (4) weeks of
paid vacation time annually in accordance with the plans, policies, and programs
generally applicable to other executive officers of the Company.

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                                    ARTICLE 5
                                 DUTY OF LOYALTY

         5.1      Protected Information.

         5.1.1    Access to Protected Information. The Company has advised the
Executive, and the Executive has acknowledged, that it is the policy of the
Company to maintain as secret and confidential all Protected Information (as
defined below) and that Protected Information has been and will be developed at
substantial cost and effort to the Company. The Executive acknowledges that he
will have access to Protected Information with respect to the Company, which
information is a valuable, special, and unique asset of the Company's business
and operations, and that disclosure of such Protected Information would cause
irreparable damage to the Company.

         5.1.2    Covenant. At all times during the Executive's employment and
after the termination thereof, regardless of the reason for such termination,
the Executive shall not, directly or indirectly, divulge, furnish or make
accessible to any person, firm, corporation, association or other entity, or use
in any manner, any Protected Information, or cause any Protected Information to
enter the public domain, except as may be required in the regular course of the
Executive's employment by the Company.

         5.1.3    Employee-Created Protected Information. The Executive agrees
to promptly disclose to the Company all Protected Information developed in whole
or in part by the Executive during his employment with the Company which relates
to the Company's business. Such Protected Information is, and shall remain, the
exclusive property of the Company. All writings created during the Executive's
employment with the Company (excluding writings unrelated to the Company's
business) are considered to be "works-for-hire" which were created for the
benefit of the Company, and the Company shall own all rights in such writings.
Washington law requires the following notice to be given to the Executive:

         This Agreement does not require the Executive to assign to the Company
any invention by the Executive for which no equipment, supplies, facility or
trade secret information of the Company was used and which was developed
entirely on the Executive's own time unless (i) the invention related directly
to the Company's business or to the Company's actual or demonstrably anticipated
research or development, or (ii) the development results from any work performed
by the Executive for the Company.

         5.1.4    Return of Confidential Records. All forms of information
containing or relating in any way to Protected Information and all physical
property made or compiled by the Executive during his employment with the
Company shall be the Company's exclusive property. All such information and any
copies thereof and all physical property of the Company shall be held by the
Executive in trust solely for the benefit of the Company and shall be delivered
to the Company upon termination of the Executive's employment or at any other
time upon the Company's request.

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         5.1.5    Protected Information. For the purposes of this Agreement,
"Protected Information" means trade secrets, confidential and proprietary
business information of the Company, any information of the Company other than
information which has entered the public domain (unless the Executive wrongfully
caused such information to enter the public domain) and all valuable and unique
information and techniques acquired, developed or used by the Company relating
to its business, operations, employees, customers and suppliers, which give the
Company a competitive advantage over those who do not know the information and
techniques and which are protected by the Company from unauthorized disclosure,
including but not limited to, customer lists (including potential customers),
sources of supply, processes, patented or proprietary technologies, plans,
materials, pricing information, internal memoranda, marketing plans, internal
policies, and products and services which may be developed from time to time by
the Company and its agents or employees.

         5.2      Non-Competition.

         5.2.1    Covenant. The Executive agrees that during his employment with
the Company and for a period of twenty-four (24) months after the termination of
his employment, regardless of the reason for such termination, he will not,
directly or indirectly, in any capacity, (a) engage or participate in, or become
employed by or render advisory or consulting or other services in connection
with, any Prohibited Business, as defined below, or (b) make any financial
investment, whether in the form of equity or debt, or own any interest, directly
or indirectly, in any Prohibited Business.

         5.2.2    Exception. Nothing in this Section 5.2 shall prohibit the
Executive from (a) owning any shares in a publicly traded mutual fund,
regardless of the amount, or (b) owning a two percent (2%) or less interest in
any private company or two percent (2%) or less of the outstanding equity
securities of any entity whose equity securities are listed on a national
securities exchange or publicly traded in any over-the-counter market.

         5.2.3    Prohibited Business. For purposes of this Agreement,
"Prohibited Business" means any business entity that is engaged in activities or
produces products that are directly or indirectly competitive with those of the
Company anywhere in the United States and which has contact, or seeks to
establish contact (including without limitation by making or soliciting sales or
submitting bids), with any business or governmental entity in the United States
that is, at any time, a customer of the Company, for the purpose of engaging in
any such competitive activity.

         5.3      Non-Interference with Employment Relationships. The Executive
agrees that during his employment with the Company and for a period of
twenty-four (24) months after the termination of his employment, regardless of
the reason for such termination, he will not directly or indirectly (a) solicit,
induce, or encourage any employee, consultant, independent contractor or other
service provider of the Company to leave his or her employment with the Company
or to cease providing services to the Company, (b) interfere with any employment
or service provider relationship between the Company and any of its employees,
or (c) hire or encourage or assist any other person to hire any person who was
an employee, consultant, independent contractor or other service provider of the
Company within the previous three (3) months.

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         5.4      Disclosure of Business Opportunities. The Executive agrees to
promptly and fully disclose to the Company, and not to divert to his own use or
benefit or the use or benefit of others, any business opportunities involving
any existing or prospective line of business, supplier, product or activity of
the Company or any business opportunities that otherwise should be afforded to
the Company.

         5.5      Survival of Undertakings and Injunctive Relief.

         5.5.1    Survival. The provisions of this Article 5 shall survive the
Term of this Agreement and the termination of the Executive's employment,
irrespective of the reasons therefor. In the event of any violation of this
Article 5, the Executive further agrees that the time periods set forth in such
Article shall be extended by the period of such violation.

         5.5.2    Reasonableness. The Executive acknowledges and agrees that the
restrictions imposed upon him by this Article 5 are reasonable in scope,
duration and geography and are designed to protect the Protected Information and
the continued success of the Company without unduly restricting the Executive's
future employment by others.

         5.5.3    Injunctive Relief and Other Remedies. The Executive
acknowledges and agrees to the following:

                  (a) In view of the Protected Information which the Executive
         has or will acquire or has or will have access to, and in view of the
         necessity of the restrictions contained in this Article 5, any
         violation of any provision of this Article 5 will cause irreparable
         injury to the Company with respect to the resulting disruption in its
         operations. By reason of the foregoing, the Executive consents and
         agrees that if the Executive violates any of the provisions of this
         Article 5, the Company shall be entitled, in addition to any other
         remedies that it may have, including money damages, to an injunction to
         be issued by a court of competent jurisdiction, restraining the
         Executive from committing or continuing any violation of such sections
         of this Agreement.

                  (b) The laws and public policies of the various states of the
         United States may differ as to the validity and enforceability of
         covenants set forth in this Agreement. It is the intention of the
         parties that the provisions of this Agreement be enforced to the
         fullest extent permissible under the laws and policies of each
         jurisdiction in which enforcement may be sought, and that the
         unenforceability of any provisions, or parts thereof, of this Agreement
         in one jurisdiction shall not render unenforceable or impair the
         remainder of the provisions, or parts thereof, of this Agreement in any
         other jurisdiction. Accordingly, if any provision, or part thereof, of
         this Agreement is determined to be invalid or unenforceable, such
         invalidity or unenforceability shall be deemed to apply only in the
         particular jurisdiction in which such determination is made and not
         with respect to any other jurisdiction. Further, any such provision or
         part thereof found to be invalid or unenforceable in a particular
         jurisdiction shall be modified to give the fullest effect to the intent
         of the parties' intention as is enforceable and valid under such laws
         and policies.

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         5.6      References to the Company. All references to the Company in
this Article 5 shall be deemed to include any subsidiary, parent, successor in
interest, or other affiliate of the Company.

                                    ARTICLE 6
                            TERMINATION OF EMPLOYMENT

         6.1      Termination by Mutual Agreement. The Executive's employment
may be terminated at any time during the Term by mutual agreement of the
parties, or as otherwise provided in this Article 6.

         6.2      Termination Due to Death or Disability.

         6.2.1    The Executive's employment shall be terminated immediately in
the event of his death or Disability (as defined below).

         6.2.2    In the event of a termination due to the Executive's death or
Disability, the Executive or his estate, as the case may be, shall be entitled,
in lieu of any other compensation whatsoever, to:

                  (a) payment of the Base Salary through the date of his death
         or Disability;

                  (b) any annual bonus awarded and payable but not yet paid;

                  (c) reimbursement of expenses incurred but not paid prior to
         such termination of employment; and

                  (d) such rights to other benefits as may be provided in
         applicable plans and programs of the Company, including, without
         limitation, applicable employee benefit plans and programs, according
         to the terms and provisions of such plans and programs.

         6.2.3    In addition to the foregoing, if the Executive dies prior to
the end of the Term, the Company shall pay to the beneficiary designated in
writing by the Executive (the "Beneficiary") or, if no such Beneficiary is
designated, to the Executive's estate, an amount equal to the lesser of (a) the
Base Salary that would have been paid through the end of the Term, and (b) three
(3) months of the Base Salary, which shall be payable in a lump sum.

         6.2.4    For purposes of this Agreement, "Disability" means a physical
or mental incapacity that prevents the Executive from performing the essential
functions of his position with the Company for a period of ninety (90) days as
determined:

                  (a) in accordance with any long-term disability plan provided
         by the Company of which the Executive is a participant, and

                  (b) by the following procedure (in the event that the
         Executive is not a participant in any long-term disability plan): the
         Executive agrees to submit to medical examinations

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         by a licensed healthcare professional selected by the Company, in its
         sole discretion, to determine whether a Disability exists. In addition,
         the Executive may submit to the Company documentation of a Disability,
         or lack thereof, from a licensed healthcare professional of his choice.
         Following a determination of a Disability or lack of Disability by the
         Company's or the Executive's licensed healthcare professional, the
         other party may submit subsequent documentation relating to the
         existence of a Disability from a licensed healthcare professional
         selected by such other Party. In the event that the medical opinions of
         such licensed healthcare professionals conflict, such licensed
         healthcare professionals shall appoint a third licensed healthcare
         professional to examine the Executive, and the opinion of such third
         licensed healthcare professional shall be dispositive.

         6.3      Termination for Cause.

         6.3.1    The Company may terminate the Executive's employment without
notice at any time for Cause (as defined below).

         6.3.2    Upon any termination for Cause, the Executive shall not be
entitled to payment of any compensation other than his Base Salary and benefits
accrued under this Agreement up to the date of such termination.

         6.3.3    For purposes of this Agreement, "Cause" shall mean:

                  (a) continued neglect, after notice thereof and failure to
         remedy within thirty (30) days, or willful misconduct by the Executive
         with respect to his duties and obligations under this Agreement;

                  (b) unauthorized expenditure of the Company's funds;

                  (c) unethical business practices in connection with the
         Company's business;

                  (d) any material breach by the Executive of any term or
         provision of this Agreement;

                  (e) any act or action of the Executive involving embezzlement
         or dishonesty related to the Company or the Company's business or
         misappropriation of the Company's assets,

                  (f) abuse of alcohol or prescription drugs or use of any
         unlawful drugs; or

                  (g) conviction of any felony.

         6.4      Termination without Cause.

         6.4.1    The Company may terminate the Executive's employment without
notice at any time without Cause.

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         6.4.2    In the event of any such termination, the Executive shall be
entitled to receive from the Company, in lieu of any other payments and
benefits:

                  (a) payment of the Base Salary through the date of
         termination;

                  (b) an amount equal to three (3) months of his Base Salary
         then in effect, payable in accordance with the normal payroll practices
         of the Company for other executive officers, including deductions,
         withholdings, and collections as required by law;

                  (c) continued participation for three (3) months after
         termination in all employee health and medical benefit plans and
         programs in which the Executive and his eligible dependents were
         participants immediately prior to termination, if such continued
         participation is permitted under the general terms and provisions of
         such plans and programs; provided, however, that if such participation
         is not permitted, the Company shall provide the Executive with the
         economic equivalent of such coverage; and provided further that if the
         Executive becomes eligible to participate in any other health and
         medical benefit plan or program which confers provides similar
         benefits, the Executive and his eligible dependents shall cease to
         receive benefits under this subparagraph in respect of the Company's
         plan or program; and

                  (d) such rights to other benefits as may be provided in
         applicable plans and programs of the Company, including, without
         limitation, applicable employee benefit plans and programs, according
         to the terms and provisions of such plans and programs.

         6.5      No Mitigation. The Executive shall not be required to mitigate
the amount of any payment provided for in Section 6.4.2(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
Section 6.4.2(b) be reduced by any compensation earned by the Executive as a
result of his employment by another entity or person, self-employment or
otherwise.

         6.6      Conditions to Payment. No payments provided for in Section
6.4.2(b) shall be payable to the Executive unless and until the Executive signs
a general release of claims and waiver of rights arising out of his employment
with the Company or the termination of such employment in a form reasonably
satisfactory to both parties.

                                    ARTICLE 7
                                  MISCELLANEOUS

         7.1      Assignment, Successors. The Company may freely assign its
rights and obligations under this Agreement to a successor of the Company's
business without the prior written consent of the Executive. This Agreement
shall be binding upon and inure to the benefit of the Executive and the
Executive's estate and the Company and any assignee of or successor to the
Company.

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         7.2      Nonalienation of Benefits. Benefits payable under this
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, either voluntary or involuntary, prior to actually being
received by the Executive, and any such attempt to dispose of any right to
benefits payable hereunder shall be void.

         7.3      Severability. If any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any section or part of a section so declared
to be unlawful or invalid shall, if possible, be construed in a manner which
will give effect to the terms of such section or part of a section to the
fullest extent possible while remaining lawful and valid.

         7.4      Amendment and Waiver. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and the
Executive. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term, covenant, agreement
or condition shall not be deemed a waiver of any later default thereof or of any
other term, covenant, agreement or condition.

         7.5      Notices. All notices and other communications hereunder shall
be in writing and either hand delivered or delivered by overnight courier or
first class registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

         If to the Company:         PACIFIC AEROSPACE & ELECTRONICS, INC.
                                    430 Olds Station Road
                                    Wenatchee, WA 98801
                                    Attn: President

         If to the Executive:       Charles A. Miracle

                                    _________________________

                                    _________________________

         Any party may from time to time designate a new address by notice given
in accordance with this section. Notice and communications shall be effective
when actually received by the addressee.

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         7.6      Applicable Law. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
Washington, without regard to its choice of law principles.

         7.7      Effect on Other Agreements. This Agreement supersedes all
prior agreements, promises, and representations regarding employment by the
Company and severance or other payments contingent upon termination of
employment, including, without limitation, any severance plan generally
applicable to other executive officers of the Company.

         7.8      Counterpart Originals. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

         7.9      Entire Agreement. This Agreement forms the entire agreement
between the parties hereto with respect to any severance payment and with
respect to the subject matter contained in this Agreement. All prior agreements
concerning the subject matter hereof shall be null and void and superseded by
this Agreement.

         7.10     Acknowledgment. The Executive represents and acknowledges the
following:

                  (a) he has carefully read this Agreement in its entirety;

                  (b) he understands the terms and conditions contained herein;

                  (c) he has had the opportunity to review this Agreement with
         legal counsel of his own choosing and has not relied on any statements
         made by the Company or its legal counsel as to the meaning of any term
         or condition contained herein or in deciding whether to enter into this
         Agreement; and

                  (d) he is entering into this Agreement knowingly and
         voluntarily.

         Executed as of the date first written above.

                         PACIFIC AEROSPACE & ELECTRONICS, INC.

                     By: _______________________________________________________
                         Donald A. Wright, President and Chief Executive Officer

                         Date: _______________________________

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                                  THE EXECUTIVE
                    _________________________________________
                    Charles A. Miracle

                    Date: ___________________________________

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