Compensation Committee Charter

PURPOSE:

The compensation committee of the Board of Directors (the “Compensation Committee”) of API Technologies Corp. (the “Company”) is a standing committee of the Company’s Board of Directors (the “Board”). The Compensation Committee shall have the authority to determine and approve, or recommend to the Board, the compensation of the Company’s executive officers and such other employees as the Board may designate to the Compensation Committee for determination. To the extent the Company ever offers compensation for directors, the Compensation Committee shall also establish all components of compensation for such directors. The Compensation Committee shall also prepare the report of the Compensation Committee for inclusion in the Company’s annual proxy statement.

STRUCTURE AND MEMBERSHIP:

Charter. At least annually, this Charter shall be reviewed and reassessed by the Compensation Committee and any proposed changes shall be submitted to the Board for approval.
Members. The Compensation Committee shall consist of a minimum of two members appointed by the Board, which Compensation Committee members are also members of the Board. The Board may remove members of the Compensation Committee, with or without cause.
Independence. Each member of the Compensation Committee shall be an “independent director”, as such term is defined in NASDAQ Rule 5605(a)(2). Additionally, members of the Compensation Committee shall qualify as “non-employee directors” for purposes of Rule 16-3 under the Securities Exchange Act of 1934 and as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code.
Chair. Unless the Board elects a Chair of the Compensation Committee, the Compensation Committee shall elect a Chair by majority vote.
Compensation. The compensation of Compensation Committee members shall be as determined by the Board.

OUTSIDE ADVISORS

The Compensation Committee shall have the authority to retain such outside consultants or advisors as it determines appropriate to assist in the performance of its functions, or to advise or inform the Compensation Committee, including sole authority to retain and terminate any compensation consultant used to assist the Compensation Committee in the evaluation of compensation for the Company’s executive officers, directors, and such other employees as may be designated by the Board to the Committee, and to approve the outside consultant’s or advisor’s fees and other retention terms

DUTIES, RESPONSIBILITIES, AND PROCESSES

The Compensation Committee shall discharge its responsibilities, and shall assess the information provided by the Company’s management, in accordance with its business judgment. The functions of the Compensation Committee, on behalf of the Board, shall include having responsibility for the following:

Compensation Philosophy and Program. In consultation with senior management, the Compensation Committee shall establish the Company’s general compensation philosophy, and oversee the development and implementation of executive compensation programs and policies with respect to the engagement of individuals as independent contractors of the Company. The Committee shall review on a periodic basis the Company’s executive compensation programs and make any modifications that the Committee may deem necessary or advisable.
CEO Compensation. The Compensation Committee shall annually review and approve the Company’s goals and objectives relevant to the compensation of the Company’s Chief Executive Officer (the “CEO”) and shall evaluate the performance of the CEO in light of those goals and objectives. Based on such evaluation, the Committee shall have the authority to determine and approve, or recommend to the Board for approval, the CEO’s compensation level (including base salary, incentive compensation and equity-based awards), whether for a new CEO, an existing CEO or as part of a termination package. In determining incentive compensation, the Compensation Committee shall consider, among other factors it deems appropriate from time to time, the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to management in prior years. The CEO shall not be present during any voting or deliberations with respect to his or her compensation.
Senior Executive Compensation.The Compensation Committee shall periodically review and shall have the authority to determine and approve, or review and recommend to the Board for approval, all other senior executive officer compensation, including salary, bonus and incentive compensation levels; deferred compensation; executive perquisites (including post-service perquisites); equity compensation (including awards to induce employment); severance arrangements; change-in-control benefits; and other forms of senior executive officer compensation.
The Compensation Committee shall periodically review and make recommendations to the Board with respect to incentive-compensation plans, equity-based plans, retirement plans, deferred compensation plans and welfare benefit plans. The Compensation Committee shall determine and approve, or review and recommend to the Board for approval, all equity compensation grants, plans and amendments to existing compensation plans. Notwithstanding the foregoing, if the Company has a Stock Option Committee with respect to a stock option plan, stock option grants under such stock option plan shall also be subject to the Stock Option Committee approval.
Appointment and Monitoring of Named Fiduciaries. With respect to any funded employee benefit plan covering employees of the Company subject to the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974, the Committee shall have the authority to appoint, terminate and monitor the named fiduciary or named fiduciaries of such plan, unless such fiduciaries are specified in the constituent plan documents.
Director Compensation. To the extent the Company compensates its directors, the Compensation Committee shall then periodically review and make recommendations to the Board with respect to director compensation.
Post-Service Arrangements and Perquisites. The Compensation Committee shall review periodically policies with respect to post-service arrangements and the perquisites provided to executive officers.
Compensation Discussion and Analysis. The Compensation Committee shall review and discuss with management the Compensation Discussion and Analysis section proposed for inclusion in the Company’s annual report on Form 10-K and annual proxy statement and recommend to the Board whether such section should be included.
Compensation Committee Report on Executive Compensation. The Compensation Committee shall produce and approve an annual report on executive compensation for inclusion in the Company’s annual proxy statement, in accordance with applicable rules and regulations of NASDAQ, the Securities and Exchange Commission and other regulatory bodies.
Long-term Strategy. In consultation with senior management, the Compensation Committee shall establish, review, and evaluate the long-term strategy of employee compensation and the types of stock and other compensation plans used by the Company.
Committee Performance Evaluation. The Compensation Committee shall review its own performance annually.
Additional Powers. The Compensation Committee shall also carry out such other duties as may be delegated to it by the Board from time to time.

PROCEDURES AND ADMINISTRATION

Meetings. Meetings. To discharge its responsibilities, the Compensation Committee shall meet as often as may be deemed necessary or appropriate in its judgment, but no less frequently than once every fiscal year, either in person or telephonically, and at such times and places as the Compensation Committee shall determine. The Committee may invite the CEO, the President, Chief Financial Officer, Chairman of the Board, Secretary, or any other officer desired by the Compensation Committee or its Chairman. No such person may be present during any discussions and deliberations of the Committee regarding the compensation of any such person. The Compensation Committee may also act by unanimous written consent in lieu of a meeting. The Compensation Committee shall keep such records of its meetings as it shall deem appropriate.
Subcommittees. When appropriate, as permitted under applicable law and the rules and listing standards of NASDAQ, the Compensation Committee may delegate authority to one or more subcommittees, the Board or management as it deems appropriate from time to time under the circumstances.
Reports to Board. The Compensation Committee shall report regularly to the Board.
Charter. The Compensation Committee shall periodically review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.

Adopted November 17, 2010