EMPLOYMENT AGREEMENT of KEVIN R. HOBEN

EMPLOYMENT AGREEMENT

of

KEVIN R. HOBEN

THIS EMPLOYMENT AGREEMENT (the “ Agreement ”) dated as of December 15, 2008 and effective as of the Effective Date (as defined below) is made between OMEGA FLEX, INC., a Pennsylvania corporation (the “ Company ”), and Kevin R. Hoben (“ Executive ”).

WHEREAS, the Company has employed the Executive pursuant to an Employment Agreement (the “Employment Agreement”) made as of the 15 ^th day of April, 1996; and

WHEREAS, the Company and the Executive now wish to enter into a new Agreement, superseding the Employment Agreement;

NOW, THEREFORE, in consideration of the mutual agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company agrees to employ Executive and Executive agrees to serve the Company as an employee pursuant to the terms and subject to the conditions that follow.

DEFINITIONS

“ Affiliates of the Company ” shall mean any other person controlling, controlled by, or under common control with the Company.

“ Cause ” shall mean any of the following, in the good faith determination of the Board of Directors: a) the willful and continued failure of Executive to perform substantially the Executive’s duties with the Company or one of its Affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after written notice and a demand for substantial performance is delivered to Executive by the Board of Directors, which specifically identifies the manner in which the Board of Directors believes that Executive has not substantially performed Executive’s duties, and such failures have not been cured by the Executive within thirty (30) days after receipt of the notice and demand; b) willful or gross misconduct; c) conviction of or made a plea of guilty or nolo contendere to, a felony; or d) a material breach of his or her obligations under Section 7 or Section 8 hereof. For purposes of this definition of “Cause”, no act or failure to act on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without the reasonable belief that Executive’s actions or omission was in the best interests of the Company.

“ Change of Control ” shall mean the occurrence of one or more of the following events:

(A)         the consummation of a merger or consolidation of the Company with or into any other corporation or other entity in which holders of the Company’s voting securities

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immediately prior to such merger or consolidation will not, directly or indirectly, continue to hold at least a majority of the voting power of the outstanding voting securities of the Company;

(B)         a sale, lease, exchange or other transfer (in one transaction or a related series of transactions) of all or substantially all of the Company’s assets;

(C)         the acquisition by any person or any group of persons, acting together in any transaction or related series of transactions, of such quantity of the Company’s voting securities which causes such person, or group of persons, to own beneficially, directly or indirectly, as of the time immediately after such transaction or series of transactions, 50% or more of the combined voting power of the outstanding voting securities of the Company other than as a result of an acquisition of securities by the Company which by reducing the voting securities outstanding increases the proportionate voting power represented by the voting securities owned by any such person or group of persons to 50% or more of the combined voting power of such voting securities;

(D)         a change in the composition of the Board within any two (2) year period such that a majority of the members of the Board are not Continuing Directors. As used herein, the term “ Continuing Directors ” shall mean as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of the Board of Directors of the Company as of the Effective Date, or (ii) was nominated for election or elected to the Company’s Board of Directors with the approval of, or whose election to the Board of Directors was ratified by, at least a majority of the Continuing Directors who were members of the Company’s Board of Directors at the time of that nomination or election; or

(E)         the liquidation or dissolution of the Company; provided, however, that in no case shall (1) the public offering and sale of the Company’s Common Stock by its stockholders pursuant to a registered secondary offering or (2) the voluntary or involuntary bankruptcy of the Company constitute a Change in Control.

“ Company Failure to Renew ” shall mean the delivery by the Company of a notice of intent not to renew pursuant to Section 1.

“ Confidential Information ” shall mean any information relating directly or indirectly to the business of the Company and its Affiliates which is not generally known to the public and which the Company or its Affiliates protect as proprietary including inventions, improvements, concepts, structures, formulae, techniques, processes, apparata, know how, trade secrets, customer requirements, plans, records and data, and may also include customer lists and knowledge about the general business affairs of the Company; whether conveyed in written, graphic, aural, physical or electronic form; however, Confidential Information does not include information which Executive can demonstrate was known to or was in the possession of Executive prior to disclosure by the Company or its Affiliates, was generally available to the public or was otherwise part of the public domain after the time of disclosure to Executive by the Company or its Affiliates or became so through no act or omission of Employee, or was properly provided to Executive by an independent third party who has or had no obligation of secrecy to the Company or its Affiliates.

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“ Effective Date ” shall mean the date of execution of this Agreement.

“ Good Reason ” shall mean in the absence of written consent of Executive (i) a reduction by the Company in the Executive’s annual base salary from such Executive’s annual base salary then in effect, (ii) a material diminution in bonus compensation related to factors other than business or economic conditions, poor performance by the Executive, limits on executive compensation imposed by law or regulation, or new requirements in the Internal Revenue Code or Employee Retirement Income Security Act (“ERISA”); (iii) a forced relocation of the Executive’s place of employment to a location greater than twenty five (25) miles from his or her place of employment as of the Effective Date or (iv) a material diminution in the Executive’s principal duties and responsibilities. A change or restructuring of the reporting structure of the Company or of the person to whom Executive directly reports shall not, in and of itself, constitute a material diminution of Executive’s duties and responsibilities for purposes of clause (iv). Notwithstanding the foregoing, in the event that Executive provides written notice of termination for Good Reason in reliance upon this provision, the Company shall have the opportunity to cure such circumstances within thirty (30) days of receipt of such notice.

“ Permanent Disability ” shall mean a physical or mental incapacity or disability which renders Executive unable to render the services required hereunder (A) for one hundred eighty (180) days in any twelve (12) month period or (B) for a period of ninety (90) consecutive days.

“ Person ” shall mean any natural person or any corporation, partnership, joint venture, trust, firm or other entity.

“ Retirement ” shall mean when Executive is fifty-five (55) years of age or older and has been employed by the Company for five (5) or more years and such Executive terminates employment for no other reason.

“ Severance Period ” shall mean as applicable, the period beginning on the date of termination of Executive’s employment pursuant to Section 5(d), 5(e), or a Company Failure to Renew, and ending on the date which is one (1) year thereafter.

“ Special Severance ” shall mean an amount equal to the average Incentive Bonus paid or earned but unpaid to Executive in respect of the three (3) previous fiscal years.

“ Successor ” shall mean with respect to the Company, any other corporation or other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or a material part of its assets.

1.             Employment . The Company hereby agrees to employ Executive, and Executive hereby agrees to accept employment with the Company, upon the terms and conditions contained in this Agreement, effective as of the Effective Date. Executive’s employment with the Company shall continue, subject to earlier termination of such employment pursuant to the terms hereof, until the second (2nd) anniversary of the Effective Date and thereafter shall automatically renew each year thereafter for an additional one (1) year period, unless a notice of intent not to renew shall be delivered in accordance with Section 13 by the Company, at least six (6) months prior to such anniversary date or prior to the expiration of each additional one year renewal

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period, as the case may be (such term, as and when so extended, the “ Employment Period ”). Executive represents to the Company that he has no present intention to terminate employment with the Company.

2.             Duties . During the Employment Period, Executive shall serve on a full-time basis as President and Chief Executive Officer of the Company. Executive shall oversee, direct and manage all business operations of the Company, including such further duties and responsibilities as may be assigned to him from time to time by the Board of Directors of the Company. Executive shall report directly to the Board of Directors of the Company. Executive shall devote his full business time, attention and energies and use his best efforts in his employment with the Company; provided, however, that this Agreement shall not be interpreted as prohibiting Executive from in accordance with the policies and procedures of the Company, managing his personal affairs or engaging in charitable or civic activities, so long as, in each case, such activities do not interfere in any material respect with the performance of Executive’s duties and responsibilities hereunder. Additionally, the Executive may establish a principal place of residence outside of the State of Connecticut, provided that the location of such residence does not interfere in any material respect with the performance of Executive’s duties and responsibilities hereunder.

3.             Compensation and Benefits . In consideration of entering into this Agreement and as full compensation for Executive’s services hereunder, during the Employment Period, Executive shall receive the following compensation and benefits:

(a)           Base Salary . The Company shall pay to Executive a base salary (“ Base Salary ”) of $325,480 per year, payable in accordance with the payroll policies from time to time in effect at the Company. Executive’s Base Salary may be subject to increase (but shall not be subject to decrease) on an annual basis as the Board of Directors of the Company or any committee thereof (the “ Board of Directors ”) shall determine.

(b)           Incentive Bonuses . Executive shall be entitled to participate in such incentive bonus programs as the Board of Directors may adopt from time to time (“ Incentive Bonus ”).

(c)           Vacation . Executive shall be entitled to twenty (20) days of paid vacation per calendar year, accrued in accordance with the usual vacation policies in effect at the Company, and to all paid holidays.

(d)           Other Benefits . Executive shall participate in and be eligible to receive, but without duplication, all other benefits (i.e., benefits other than those of the types covered in Sections 3(a) - (c)) offered to senior executives of the Company, including, without limitation, retirement income plans, health and welfare plans, and short and long term disability plans, under and in accordance with the provisions of any employee benefit plan adopted or to be adopted by the Company (collectively, the “ Benefit Plans ”) other than any severance benefits offered to senior executives in accordance with any such plan. Except as set forth herein, Executive shall not be entitled to any other benefits.

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(e)           Car Allowance . Executive shall be entitled to lease a car at Company expense under the terms of his current arrangement with the Company.

4.             Reimbursement for Expenses . During the Employment Period, Executive shall be entitled to incur on behalf of the Company reasonable and necessary expenses in connection with his duties in accordance with Company’s policies and the Company shall pay for or reimburse Executive for all such expenses upon presentation of proper receipts therefore. The Executive shall comply with such reasonable limitations and reporting requirements with respect to such expenses as the Board of Directors may establish from time to time.

5.             Termination . Executive’s employment hereunder may be terminated as follows (each, a “ Termination Event ”):

(b)          At the option of the Company, by the Board of Directors (acting through the Chairman or Secretary) or by written notice to Executive in the event of the Permanent Disability of Executive.

(d)          At the option of the Company without cause, on thirty (30) days prior written notice to the Company, subject to the Company’s obligations under Section 6(c) hereof;

(e)          At the option of Executive for Good Reason, on thirty (30) days prior written notice to the Company but no later than ninety (90) days after the Executive becomes aware, or reasonably should be aware, of the occurrence of events giving rise to such “Good Reason”;

(f)           At the option of Executive, at any time, for any reason other than “Good Reason” under Section 5(e), on ninety (90) days prior written notice to the Company;