Aeroflex Incorporated
                             1998 Stock Option Plan
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SECTION 1.  GENERAL PROVISIONS
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1.1.  Name and General Purpose
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        The name of this plan is the  Aeroflex  Incorporated  1998 Stock  Option
Plan (hereinafter called the "Plan"). The Plan is intended to be a broadly-based
incentive  plan which enables  Aeroflex  Incorporated  (the  "Company")  and its
subsidiaries  and  affiliates to foster and promote the interests of the Company
by  attracting  and  retaining   directors,   officers  and  employees  of,  and
consultants  to, the Company who  contribute to the  Company's  success by their
ability, ingenuity and industry, to enable such directors,  officers,  employees
and  consultants  to  participate  in the  long-term  success  and growth of the
Company by giving  them a  proprietary  interest  in the  Company and to provide
incentive  compensation   opportunities  competitive  with  those  of  competing
corporations.

1.2  Definitions
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          a.   "Affiliate"  means any  person or entity  controlled  by or under
               common  control with the Company,  by virtue of the  ownership of
               voting securities, by contract or otherwise.

          b.   "Board" means the Board of Directors of the Company.

          c.   "Change in Control" means a change of control of the Company,  or
               in any person  directly or  indirectly  controlling  the Company,
               which shall mean:

               (a) a change in  control  as such term is  presently  defined  in
               Regulation 240.12b-(f) under the Securities Exchange Act of 1934,
               as amended (the "Exchange Act"); or

               (b) if any  "person"  (as such term is used in Section  13(d) and
               14(d) of the Exchange Act) other than the Company or any "person"
               who on the date of this Agreement is a director or officer of the
               Company,  becomes  the  "beneficial  owner"  (as  defined in Rule
               13(d)-3  under the  Exchange  Act)  directly  or  indirectly,  of
               securities of the Company  representing  twenty  percent (20%) or
               more  of the  voting  power  of the  Company's  then  outstanding
               securities; or

               (c) if during any period of two (2) consecutive  years during the
               term of  this  Plan,  individuals  who at the  beginning  of such
               period constitute the Board of Directors, cease for any reason to
               constitute at least a majority thereof.

          d.   "Committee" means the Committee referred to in Section 1.3 of the
               Plan.

          e.   "Common  Stock" means shares of the Common Stock,  par value $.10
               per share, of the Company.

          f.   "Company" means Aeroflex  Incorporated,  a corporation  organized
               under  the  laws of the  State  of  Delaware  (or  any  successor
               corporation).

          g.   "Fair Market Value" means the market price of the Common Stock on
               the New York Stock Exchange consolidated  reporting system on the
               date of the grant or on any other date on which the Common  Stock
               is to be valued hereunder. If no sale shall have been reported on
               the New York Stock Exchange consolidated reporting system on such
               date, Fair Market Value shall be determined by the Committee.
<PAGE>
          h.   "Non-Employee  Director" shall have the meaning set forth in Rule
               16(b)  promulgated  by the  Securities  and  Exchange  Commission
               ("Commission").

          i.   "Option" means any option to purchase  Common Stock under Section
               2 of the Plan.

          j.   "Option  Agreement"  means  the  option  agreement  described  in
               Section 2.4 of the Plan.

          k.   "Participant" means any director, officer, employee or consultant
               of the Company,  a Subsidiary  or an Affiliate who is selected by
               the Committee to participate in the Plan.

          l.   "Subsidiary" means any corporation in which the Company possesses
               directly or indirectly  50% or more of the combined  voting power
               of all classes of stock of such corporation.

          m.   "Total  Disability"  means  accidental  bodily injury or sickness
               which  wholly  and   continuously   disabled  an  optionee.   The
               Committee,   whose  decisions  shall  be  final,   shall  make  a
               determination of Total Disability.

1.3  Administration of the Plan
     --------------------------

     The Plan shall be administered  by the Board or by the Committee  appointed
by the Board consisting of two or more members of the Board all of whom shall be
Non-Employee  Directors.  The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.

          Subject  to this  Section  1.3,  the  Committee  shall  have  sole and
complete authority to adopt, alter, amend or revoke such  administrative  rules,
guidelines and practices  governing the operation of the Plan as it shall,  from
time to time, deem  advisable,  and to interpret the terms and provisions of the
Plan.

          The  Committee  shall keep minutes of its meetings and of action taken
by it without a meeting.  A majority of the Committee shall constitute a quorum,
and the acts of a majority  of the  members  present  at any  meeting at which a
quorum is  present,  or acts  approved  in writing by all of the  members of the
Committee without a meeting, shall constitute the acts of the Committee.

1.4  Eligibility
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     Stock  Options may be granted  only to  directors,  officers,  employees or
consultants of the Company or a Subsidiary or Affiliate. Any person who has been
granted any Option may, if he is otherwise  eligible,  be granted an  additional
Option or Options.

1.5  Shares
     ------
          The aggregate  number of shares reserved for issuance  pursuant to the
Plan shall be 750,000  shares of Common Stock,  or the number and kind of shares
of stock or other  securities  which shall be substituted  for such shares or to
which such shares shall be adjusted as provided in Section 1.6.

          Such  number of shares  may be set  aside  out of the  authorized  but
unissued shares of Common Stock or out of issued shares of Common Stock acquired
for and held in the Treasury of the Company, not reserved for any other purpose.
Shares  subject  to, but not sold or issued  under,  any Option  terminating  or
expiring  for any reason  prior to its  exercise in full will again be available
for Options thereafter granted during the balance of the term of the Plan.
<PAGE>


1.6  Adjustments Due to Stock Splits,
      Mergers, Consolidation, Etc.
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          If, at any time,  the Company shall take any action,  whether by stock
dividend,  stock split,  combination of shares or otherwise,  which results in a
proportionate  increase  or  decrease  in the  number of shares of Common  Stock
theretofore issued and outstanding,  the number of shares which are reserved for
issuance  under the Plan and the  number  of shares  which,  at such  time,  are
subject to Options shall, to the extent deemed appropriate by the Committee,  be
increased or  decreased  in the same  proportion,  provided,  however,  that the
Company shall not be obligated to issue fractional shares.

          Likewise,  in the  event of any  change in the  outstanding  shares of
Common  Stock  by  reason  of  any  recapitalization,   merger,   consolidation,
reorganization, combination or exchange of shares or other corporate change, the
Committee shall make such substitution or adjustments, if any, as it deems to be
appropriate,  as to the  number  or kind of  shares  of  Common  Stock  or other
securities  which are  reserved  for  issuance  under the Plan and the number of
shares or other securities which, at such time are subject to Options.

          In the event of a Change  in  Control,  at the  option of the Board or
Committee,  (a) all  Options  outstanding  on the date of such Change in Control
shall, for a period of sixty (60) days following such Change in Control,  become
immediately  and fully  exercisable,  and (b) an optionee  will be  permitted to
surrender for  cancellation  within sixty (60) days after such Change in Control
any Option or portion of an Option  which was  granted  more than six (6) months
prior to the date of such  surrender,  to the extent not yet  exercised,  and to
receive a cash  payment in an amount  equal to the  excess,  if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the Option or portion thereof surrendered, over the aggregate purchase price for
such Shares under the Option.

1.7  Non-Alienation of Benefits
     --------------------------
          Except as herein  specifically  provided,  no right or unpaid  benefit
under the Plan shall be subject to alienation,  assignment, pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant  or other person  entitled to benefits  hereunder  should attempt to
alienate,  assign,  pledge or charge any benefit  hereunder,  then such  benefit
shall, in the discretion of the Committee, cease.

1.8  Withholding or Deduction for Taxes
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          If, at any  time,  the  Company  or any  Subsidiary  or  Affiliate  is
required,  under  applicable laws and regulations,  to withhold,  or to make any
deduction for any taxes,  or take any other action in connection with any Option
exercise,  the  Participant  shall be  required  to pay to the  Company  or such
Subsidiary or Affiliate, the amount of any taxes required to be withheld, or, in
lieu thereof,  at the option of the Company,  the Company or such  Subsidiary or
Affiliate may accept a sufficient  number of shares of Common Stock to cover the
amount required to be withheld.

1.9  Administrative Expenses
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          The  entire  expense of  administering  the Plan shall be borne by the
Company.

1.10 General Conditions
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          a.   The Board or the Committee may, from time to time, amend, suspend
               or terminate any or all of the  provisions of the Plan,  provided
               that, without the Participant's  approval,  no change may be made
               which would alter or impair any right theretofore  granted to any
               Participant.

          b.   With  the  consent  of  the  Participant  affected  thereby,  the
               Committee  may  amend or  modify  any  outstanding  Option in any
               manner not  inconsistent  with the terms of the Plan,  including,
               without limitation, and irrespective of the provisions of Section
               2.3(c)  below,  to  accelerate  the  date or dates as of which an
               installment of an Option becomes exercisable.
<PAGE>
          c.   Nothing  contained in the Plan shall  prohibit the Company or any
               Subsidiary  or  Affiliate  from  establishing   other  additional
               incentive compensation  arrangements for employees of the Company
               or such Subsidiary or Affiliate.

          d.   Nothing  in the Plan  shall be deemed to limit,  in any way,  the
               right of the Company or any  Subsidiary or Affiliate to terminate
               a  Participant's  employment with the Company (or such Subsidiary
               or Affiliate) at any time.

          e.   Any  decision  or  action  taken by the  Board  or the  Committee
               arising  out  of  or  in   connection   with  the   construction,
               administration,  interpretation  and  effect of the Plan shall be
               conclusive  and  binding  upon all  Participants  and any  person
               claiming under or through any Participant.

          f.   No member of the Board or of the  Committee  shall be liable  for
               any act or action, whether of commission or omission, (i) by such
               member except in  circumstances  involving  actual bad faith, nor
               (ii) by any other member or by any officer, agent or employee.

1.11  Compliance with Applicable Law
      ------------------------------
          Notwithstanding any other provision of the Plan, the Company shall not
be  obligated  to issue any shares of Common  Stock,  or grant any  Option  with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable  Federal and State laws pertaining to the
issuance of  securities  and the Company  may require any stock  certificate  so
issued to bear a legend, may give its transfer agent  instructions  limiting the
transfer  thereof,  and may  take  such  other  steps,  as in its  judgment  are
reasonably required to prevent any such violation.

1.12  Effective Dates
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          The Plan was  adopted by the Board on April 29,  1998.  The Plan shall
terminate on April 28, 2008.


Section 2.  OPTION GRANTS
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2.1  Authority of Committee
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          Subject to the  provisions of the Plan,  the Committee  shall have the
sole and complete  authority to determine (i) the  Participants  to whom Options
shall be granted;  (ii) the number of shares to be covered by each  Option;  and
(iii) the conditions and limitations,  if any, in addition to those set forth in
Sections 2 and 3 hereof,  applicable  to the  exercise  of an Option,  including
without limitation,  the nature and duration of the restrictions,  if any, to be
imposed upon the sale or other  disposition of shares  acquired upon exercise of
an Option.

          Stock  Options  granted  under the Plan shall be  non-qualified  stock
options.

          The Committee shall have the authority to grant Options.

2.2  Option Exercise Price
     ---------------------
          The price of stock  purchased  upon the  exercise  of Options  granted
pursuant to the Plan shall be the Fair Market Value thereof at the time that the
Option is granted.
<PAGE>
          The  purchase  price is to be paid in full in cash,  certified or bank
cashier's  check or, at the option of the  Company,  Common  Stock valued at its
Fair Market Value on the date of exercise,  or a combination  thereof,  when the
Option is exercised and stock  certificates  will be delivered only against such
payment.

2.3  Option Grants
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          Each Option will be subject to the following provisions:

          a.   Term of Option
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               An Option  will be for a term of not more than ten years from the
date of grant.

          b.   Exercise
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              (i) By an Employee:
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              Subject to the power of the Committee  under Section 1.10(b) above
              and  except in the  manner  described  below upon the death of the
              optionee,  an Option  may be  exercised  only in  installments  as
              follows:  up to one-half  of the  subject  shares on and after the
              first  anniversary of the date of grant,  up to all of the subject
              shares on and after the second such anniversary of the date of the
              grant of such Option but in no event later than the  expiration of
              the term of the Option.

              An Option shall be exercisable during the optionee's lifetime only
              by the  optionee  and shall  not be  exercisable  by the  optionee
              unless,  at all  times  since the date of grant and at the time of
              exercise, such optionee is an employee of or providing services to
              the  Company,  any  parent  corporation  of  the  Company  or  any
              Subsidiary or Affiliate, except that, upon termination of all such
              employment  or provision of services  (other than by death,  Total
              Disability,  or by  Total  Disability  followed  by  death  in the
              circumstances provided below), the optionee may exercise an Option
              at any time within three months  thereafter but only to the extent
              such Option is exercisable on the date of such termination.

              Upon termination of all such employment by Total  Disability,  the
              optionee may exercise  such Options at any time within three years
              thereafter,  but only to the extent such Option is  exercisable on
              the date of such termination.

              In the event of the death of an optionee  (i) while an employee of
              or providing  services to the Company,  any parent  corporation of
              the Company or any  Subsidiary or Affiliate,  or (ii) within three
              months after  termination  of all such  employment or provision of
              services  (other than for Total  Disability) or (iii) within three
              years after termination on account of Total Disability of all such
              employment or provision of services, such optionee's estate or any
              person who acquires  the right to exercise  such option by bequest
              or  inheritance  or by  reason of the  death of the  optionee  may
              exercise such  optionee's  Option at any time within the period of
              three years from the date of death. In the case of clauses (i) and
              (iii) above,  such Option shall be exercisable in full for all the
              remaining shares covered  thereby,  but in the case of clause (ii)
              such  Option  shall  be  exercisable  only  to the  extent  it was
              exercisable on the date of such termination.
<PAGE>
              (ii) By Persons other than Employees:
                   ------------------------------- 
              If the  optionee  is not an  employee of the Company or the parent
              corporation  of  the  Company  or  any  Subsidiary  or  Affiliate,
              the vesting of such optionee's right to exercise his Options shall
              be  established  and  determined  by the  Committee  in the Option
              Agreement covering the Options granted to such optionee.

              Notwithstanding the foregoing provisions regarding the exercise of
              an  Option  in  the  event  of  death,  Total  Disability,   other
              termination  of  employment or provision of services or otherwise,
              in no event  shall an  Option be  exercisable  in whole or in part
              after the termination date provided in the Option Agreement.

         c.   Transferability
              --------------- 
              An  Option  granted  under  the  Plan  shall  not be  transferable
              otherwise than by will or by the laws of descent and distribution,
              except as may be permitted by the Board or the Committee.

2.4  Agreements
     ----------
         In  consideration  of any Options  granted to a  Participant  under the
Plan,  each such  Participant  shall  enter  into an Option  Agreement  with the
Company  providing,  consistent  with the Plan,  such terms as the Committee may
deem advisable.