AMENDED EMPLOYMENT AGREEMENT



     AGREEMENT  made  as  of the 1st day of  February,  1999  and
amended  as  of the 17th day of March, 2000 by and  between  Acme
Electric Corporation, a New York corporation having an office  at
400  Quaker Road, East Aurora, New York, (the "Company") and  Mr.
Robert J. McKenna, residing at 5 Hummingbird Court, Orchard Park,
New York, ("Mr. McKenna").

                      W I T N E S S E T H:

     WHEREAS,  Mr.  McKenna is Chief Executive  Officer  ("CEO"),
Chairman and President of the Company; and

     WHEREAS,  the  Company  believes that  it  is  in  its  best
interest  to assure the continued service of Mr. McKenna  as  its
CEO,   Chairman  and  President  on  the  terms  and   conditions
hereinafter set forth; and

     WHEREAS,  Mr.  McKenna  is desirous of receiving  assurances
that,  should  a "change in control" as hereinafter defined  take
place at the Company, he will be provided with security as to his
position, compensation and benefits.

     NOW,  THEREFORE, in consideration of the premises and mutual
agreement  hereinafter  contained, the parties  hereto  agree  as
follows:

     1.    The Company hereby employs Mr. McKenna and Mr. McKenna
hereby  accepts employment with the Company as its CEO,  Chairman
and President upon the terms and conditions herein contained.

     2A.   The  initial Term shall be for a period commencing  on
the  date  hereof and terminating three years from  the  date  of
commencement or three years from its most recent extension  date,
whichever is later.

          At  the  end  of each month during the Term,  the  Term
shall  be automatically continued and extended for one additional
month,  unless on or before fifteen days prior to the end of  any
month  during the Term, the Company shall give to Mr. McKenna  or
Mr.  McKenna  shall give to the Company a notice not  to  extend.
Then,  in  such  event,  the  Term as  theretofore  automatically
extended  shall  be  deemed further extended for  one  additional
month,  and  thereafter  there  shall  be  no  further  automatic
extensions.   (As an example, should the Company or  Mr.  McKenna
give  to  the  other  party a written notice  not  to  extend  on
November 15, 2000, the Agreement would be deemed extended to, and
would  expire  on, December 31, 2003.)  "Term" as  used  in  this
Agreement  shall be deemed to mean the period of employment  from
the  date  hereof  through February 1, 2002, or as  automatically
extended pursuant to this Paragraph 2A.

     2B.   Should  the Company breach this Agreement pursuant  to
the provisions of Paragraphs 8A, 8B, 8C and 9 herein, Mr. McKenna
shall be entitled to the following:

          a.    Payments  in an amount equal to the  base  salary
     payable  each  year  of  the  then  remaining  Term  of  the
     Agreement, with such base salary to be in an amount equal to
     Mr.  McKenna's base salary in effect prior to  such  breach,
     plus bonus each year of the remaining Term of the Agreement.
     The  bonus amount each year will be equal to the average  of
     Mr.  McKenna's greatest two out of the previous three years'
     bonuses, or 50% of base salary, whichever is greater.

          b.    Company  paid full medical, dental and disability
     insurance benefits and life insurance benefits comparable to
     those  enjoyed prior to such breach, which shall extend  for
     the  duration of the lives of Mr. McKenna and his spouse  or
     until  Mr. McKenna accepts other full-time employment  which
     provides  the  same or similar benefits  and  he  elects  to
     accept such other benefits in lieu  of the benefits provided
     by  the  Company.  In the event that Mr. McKenna  elects  to
     accept  such other benefits, he and his spouse preserve  the
     right  to  require  the  Company to reinstate  the  benefits
     enjoyed  at the time of the breach for the duration  of  the
     lives of Mr. McKenna and his spouse.

          c.    The continuation over the then remaining Term  of
     this  Agreement, in such amounts and in a manner  consistent
     with  that  provided immediately prior to such  breach,  of:
     contributions  in  Mr. McKenna's behalf based  on  his  base
     salary  to the Company's Pension Plan for Salaried Employees
     and  to  the  Supplemental Executive  Retirement  Plan;  Mr.
     McKenna's  Company furnished automobile; and dues  and  fees
     for Mr. McKenna's club memberships.

          d.    Payments made pursuant to this Paragraph 2B shall
     be  made  monthly  from the date the Company  breached  this
     Agreement  throughout  the  then  remaining  Term   of   the
     Agreement,  or at Mr. McKenna's option in a lump sum  within
     thirty (30) days of notification of such breach.  Such  lump
     sum shall be an amount equal to the discounted present value
     of  the  payments  which  were to  be  paid  over  the  Term
     specified herein discounted at a rate of 5% per annum.

     2C.   "Change  in  Control" as used in this Agreement  shall
mean any one of the following:

          a.    An  acquisition of 35% or more of the  beneficial
     ownership,  directly or indirectly, of  the  Company's  then
     outstanding  stock, or merger or consolidation  by  or  with
     another person, entity or group;

          b.    A tender offer or tender offers for the Company's
     stock in which 35% or more of the then outstanding stock  of
     the  Company  is  tendered or purchased by a person,  single
     entity or affiliated group;

          c.      A    reclassification    of    securities    or
     recapitalization   of  the  Company   which,   directly   or
     indirectly,  disproportionately increases or  decreases  the
     outstanding shares of any class of equity securities of  the
     Company by 35% or more;

          d.     A   sale,  lease,  exchange,  mortgage,  pledge,
     transfer  or  other disposition of all or substantially  all
     the assets of the Company approved by the Board of Directors
     to which Mr. McKenna dissented;

          e.    A  change  in  control shall be  deemed  to  have
     occurred if at any time less than 51% of the members of  the
     Board   of  Directors  shall  be  persons  who  were  either
     nominated  for  election by the Board of Directors  or  were
     elected by the Board of Directors.

     3.    Except as otherwise herein provided during the Term of
the  Agreement, the Company shall employ Mr. McKenna as its  CEO,
Chairman  and  President and he shall serve the Company  in  such
capacity,  performing the normal duties of a  CEO,  Chairman  and
President of a corporation in the Company's business, subject  at
all  times to the direction and control of the Board of Directors
of  the  Company,  shall devote his time,  attention,  skill  and
energy  to  the business, welfare and affairs of the Company  and
shall  use  his  best  efforts to promote the  interests  of  the
Company, it being understood that the conduct of such duties does
not  require his attendance at the offices of the Company  during
any  particular  fixed periods.  Mr. McKenna hereby  consents  to
continue  to serve as a Director of the Company or any subsidiary
thereof without additional compensation.

     4A.   The Company shall pay and Mr. McKenna shall accept  as
compensation for all services to be rendered hereunder and during
the  Term  a base salary determined by the Board of Directors  of
the  Company pursuant to its normal procedure for setting  yearly
salaries  for officers of the Company ($295,000 per annum  as  of
March  17,  2000).  Such payments hereunder shall be  payable  in
accordance  with the prevailing salary payroll practices  of  the
Company  and subject to such deductions as are agreed to  by  Mr.
McKenna.  Nothing contained in this Agreement shall be deemed  to
prevent the Company during the Term hereof from giving bonuses or
other  additional consideration to Mr. McKenna from time to  time
as  determined by the Board of Directors or, except as  otherwise
specifically provided herein, prevent Mr. McKenna from  receiving
benefits  in  accordance with any benefit plan  or  program  made
available  by the Company to its officers, salaried employees  or
directors.

     4B.   The  Company  shall  reimburse  Mr.  McKenna  for  all
expenses  reasonably  incurred by  him  in  connection  with  his
performance  of services to the Company, including  entertainment
and  travel.   Mr.  McKenna  shall  be  entitled  to  receive  or
participate  in  all other fringe benefits, such as  medical  and
hospital  plans,  profit-sharing plans and pension  plans,  stock
options under the then existing corporate stock option plan,  and
use  and  maintenance of an automobile of a type and in a  manner
consistent  with  the practices prevailing at  the  time  of  the
execution of this Agreement.

     5A.   Mr. McKenna acknowledges that during the course of his
employment hereunder he will acquire, possess and become  exposed
to  confidential and proprietary information and materials of the
Company.  Accordingly, during his employment hereunder and for  a
period of eighteen (18) months thereafter, he shall not, for  any
reason  whatever, except in the regular authorized course of  the
Company's business under appropriate secrecy provisions, directly
or  indirectly, use or exploit or disclose or divulge  to  anyone
(who  is  not authorized to receive the same), without the  prior
written  permission of the Company, any proprietary  information,
including,  but  not limited to, trade secrets,  know-how,  data,
materials  or  other knowledge relating to or pertaining  to  the
business  of the Company, unless the same (i) has been  published
and/or has become a part of the public domain other than by  acts
of  omission by Mr. McKenna; (ii) has been lawfully furnished  or
made known to Mr. McKenna by a third party without restriction on
disclosure  or use; and (iii) was in Mr. McKenna's possession  at
the  time he first became associated with the Company and was not
acquired  by Mr. McKenna either directly or indirectly  from  the
Company.

     5B.   All  documents, records, prototypes or other  tangible
embodiments  or  evidence  of  the  discoveries,  trade  secrets,
information,   know-how,  data,  materials  or  other   knowledge
previously referred to, which may at any time be acquired  by  or
come  into  the  possession of Mr. McKenna during his  employment
hereunder  (except materials excluded in Subparagraph A  hereof),
are  the  sole and exclusive property of the Company and must  be
surrendered  to  the  Company,  without  demand  therefor,   upon
termination  of Mr. McKenna's employment hereunder, or  upon  the
request by the Company at any other time; and, in addition, prior
to  such termination of employment or upon the reasonable request
by  the  Company  at  any other time, Mr.  McKenna  will  prepare
materials  to  accurately and adequately describe, set  forth  or
embody  any of the foregoing and deliver the same to the  Company
in order to accomplish or complete the transfer of any and all of
the  foregoing  to  the Company and shall be  reimbursed  by  the
Company  for  all  of  his reasonable out-of-pocket  expenses  in
connection therewith.

     5C.   Mr.  McKenna  agrees to execute all documents  and  to
take  all such other action as the Company may reasonably require
(being   reimbursed  for  all  of  his  reasonable  out-of-pocket
expenses  in  this connection) in order to assign to the  Company
any and all rights to any materials prepared by him during and in
connection with his employment hereunder.

     6A.     Mr.  McKenna  agrees  that,  during  his  employment
hereunder  for a period of eighteen (18) months after termination
of  his  employment hereunder for whatever reason (except in  the
event such termination is caused by (a) a material breach of this
Agreement  by  the Company, or (b) the Company's  bankruptcy  (as
defined in Paragraph 14 hereof)), he shall not (without the prior
written  consent  of  the Company) (i) solicit  as  a  client  or
customer  in competition with the Company any persons or entities
which were, during his employment hereunder, clients or customers
of  the  Company, (ii) enter into any business arrangements  with
any  of  the  foregoing which could be reasonably  deemed  to  be
materially  competitive  with  or  materially  injurious  to  any
business  in  which the Company is engaged at the  time  of  such
termination,  or (iii) solicit, or be instrumental in any way  in
causing,  any  other person to leave the employ of  the  Company.
Mr.  McKenna further agrees that he shall not (without the  prior
written  consent  of the Company) for a period of  eighteen  (18)
months after the termination of his employment hereunder for  any
reason (except in the event the termination is caused by a breach
of  this  Agreement  by  the Company),  directly  or  indirectly,
individually  or  as  a director, partner, employee,  officer  or
agent, engage in any employment, performance of services or other
activity on behalf of any company if such employment, performance
of  services  or other activity can be reasonably  deemed  to  be
materially  competitive  with  or  materially  injurious  to  any
business  in  which the Company is engaged at the  time  of  such
termination.

     6B.   For  purposes only of determining whether services  by
Mr. McKenna during the aforesaid eighteen (18) month period after
his  termination  of  employment hereunder shall  be  "materially
competitive  with or materially injurious to the Company"  within
the   meaning  of  this  paragraph,  either  party  may  initiate
arbitration  proceedings to make such determination  pursuant  to
Paragraph 13 hereof.

     6C.   If Mr. McKenna commits a material breach of any of the
provisions of Paragraph 5A, 5B, 5C or 6A, the Company shall  have
the  right  and  remedy  to  have  such  provisions  specifically
enforced by any court having equity jurisdiction, since any  such
breach or threatened breach will cause irreparable injury to  the
Company and money damages will not provide an adequate remedy  to
the  Company.  The initiation of, or participation in,  any  such
proceeding  shall  not  constitute a waiver  of  the  arbitration
provisions of Paragraph 10.

     7.    During  the  Term, Mr. McKenna will  not  directly  or
indirectly  engage  in the business of, or  own  or  control  any
interest  in (except as a passive investor owning less  than  ten
percent  (10%)  of  the  equity securities  of  a  publicly-owned
company),  or  act  as a director, officer  or  employee  of,  or
consultant  to,  any  individual,  partnership,  joint   venture,
corporation  or  other  business entity  directly  or  indirectly
engaged  anywhere in the United States in any business  competing
with  the  business  carried on by the  Company  or  any  of  its
subsidiaries.

     8A.   It  is  specifically understood and  agreed  that  the
Company may terminate this Agreement and its obligations  to  Mr.
McKenna  hereunder prior to a change in control or upon voluntary
retirement  by  Mr.  McKenna  from  active  employment  with  the
Company.   Notwithstanding the foregoing, at any time during  the
Term  of  this  Agreement, after a change of  control  has  taken
place, any termination or notice of termination shall be deemed a
breach  of  this  Agreement and a notice not to extend,  and  the
provisions  of Paragraph 2B above shall apply so as to  have  the
effect of fixing the Term as provided herein and terminating  Mr.
McKenna's employment with the Company.

     8B.  At any time during the Term of this Agreement, after  a
change in control has taken place, should the Company reduce  the
compensation or benefits then being paid to Mr. McKenna, it shall
be  deemed a breach of this Agreement and a notice not to extend,
and  the  provisions of Paragraph 2B above shall apply so  as  to
have  the  effect  of  fixing the Term  as  provided  herein  and
terminating Mr. McKenna's employment with the Company.

     8C.  At any time during the Term of this Agreement, after  a
change in control has taken place, should the Company change  Mr.
McKenna's  position  or duties without his  written  consent,  it
shall  be deemed a breach of this Agreement and a notice  not  to
extend,  and the provisions of Paragraph 2B above shall apply  so
as  to have the effect of fixing the Term as provided herein  and
terminating Mr. McKenna's employment with the Company.

     9.    In  the  event that during Mr. McKenna's lifetime  and
during the Term of this Agreement, after a change in control  has
taken  place, the Company defaults as to any payment  under  this
Agreement  or  fails to make any payments provided  for  in  this
Agreement  and  fails to cure such default or make  such  payment
within  ten  (10) days after written notice thereof,  or  written
demand therefor, or in the event that the Company terminates this
Agreement  for  cause and it is ultimately determined  that  such
termination  was wrongful, Mr. McKenna may elect  to  treat  such
default or wrongful termination as a breach of this Agreement and
shall  he  entitled  to  recover all of his  expenses,  including
reasonable  attorneys'  fees,  in prosecuting  or  defending  any
actions  or  proceedings arising out of,  or  in  any  other  way
relating to, the matters referred to in this paragraph,  and  the
provisions of Paragraph 2B of this Agreement shall apply.

     10.   Any  controversy, claim or dispute arising out  of  or
relating  to  this Agreement, including without  limitation,  any
claim  for  breach  of  this  Agreement,  shall  be  settled   by
arbitration  in  accordance  with  the  Rules  of  the   American
Arbitration  Association (AAA) obtaining  at  the  time  of  such
proceeding, except that the authority of the arbitrators shall be
limited  to the interpretation and enforcement of the  terms  and
conditions of this Agreement and the arbitrators shall set  forth
in  writing the reasons for their decisions.  Judgment  upon  any
award  rendered by the arbitrators pursuant hereto may be entered
in any court having jurisdiction thereof and thereafter enforced.
Either  party  shall  have  the  right  to  initiate  arbitration
proceedings.  Any arbitration shall take place under the auspices
of   the  AAA  in  Buffalo,  New  York.   There  shall  be  three
arbitrators.  Each party shall appoint one arbitrator.  If either
party  fails to appoint an arbitrator within five (5)  days  from
the  date  upon which the notice of the initiating party  of  its
intention  to  arbitrate is received by the other party  to  such
proceedings, the AAA shall make the appointment for  that  party.
The  two  arbitrators appointed in the manner provided for  above
shall  appoint a third arbitrator, mutually acceptable  to  them.
If  the  two arbitrators first appointed cannot, for any  reason,
agree  upon a third arbitrator, or an acceptable person is unable
to  act, the AAA shall appoint the third arbitrator in accordance
with its rules.

     11.   Mr. McKenna may terminate this Agreement prior to  the
date  of expiration of the Term herein above set forth by written
notice  to  the Company if the Company shall file a  petition  in
bankruptcy,  make  a  voluntary assignment  for  the  benefit  of
creditors,  file a petition or an answer seeking  an  arrangement
with creditors or take advantage of any insolvency law, or if the
Company  applies for or consents to the appointment of a receiver
or  trustee  of  all or a substantial part of its assets,  or  an
order,  judgment  or  decree shall be entered  in  any  court  of
competent  jurisdiction  appointing  a  receiver  of  all  or   a
substantial  part  of  its assets, and such  order,  judgment  or
decree  shall continue unstayed and in effect for any consecutive
period of ninety (90) days.

     12.  This Agreement and all rights hereunder are personal to
Mr.  McKenna and shall not be assignable; provided, however, that
all  of  Mr. McKenna's rights under the Agreement shall inure  to
the  benefit of his heirs, distributees, personal representatives
or  designees or other legal representatives, as the case may be.
Any person, firm or corporation succeeding to the business of the
Company  by  merger, purchase, consolidation or otherwise,  shall
assume  by contract or operations of law the obligations  of  the
Company  hereunder;  provided, however, that the  Company  shall,
notwithstanding such assumption or assignment, remain liable  and
responsible  for fulfilling the obligations of the Company  under
this Agreement.

           This  Agreement supersedes and replaces  any  and  all
present  written  or  oral agreements of employment  between  the
parties  hereto,  and  all  such  agreements  are  hereby  deemed
canceled,  revoked  and of no further force or effect;  provided,
however,  that  in  the  event that Mr. McKenna's  employment  is
terminated  prior  to a change in control or under  circumstances
not  involving  a  breach  of  this Agreement,  Mr.  McKenna,  in
addition to the other benefits provided by this Agreement,  shall
be entitled to an amount equal to six (6) months base salary paid
in  a  lump sum in accordance with the letter of August 12,  1992
from the Company to Mr. McKenna.

     13.   Without in any way implying that any provisions hereof
is  invalid or unenforceable, the validity or unenforceability of
any  provision  hereof  shall in no way affect  the  validity  or
enforceability of any other provision.

     14.   This Agreement constitutes the whole agreement between
the  parties  hereto,  and there are no terms  other  than  those
stated  herein.  No variation hereof shall be deemed valid unless
in  writing and signed by the parties hereto, and no discharge of
the terms hereof shall be deemed valid unless by full performance
by  the  parties  hereto or by a writing signed  by  the  parties
hereto.  No waiver by either party of any provisions or condition
of  this  Agreement to be performed by them should  be  deemed  a
waiver of any other provisions of this Agreement.

     15.   Any  notice,  statement,  report,  request  or  demand
required or permitted to be given by this Agreement shall  be  in
writing,  and  shall  be  sufficient if  addressed  and  sent  by
certified mail, return receipt requested, to the parties  at  the
addresses  set  forth above, or at such other place  that  either
party  may  designate by notice to the other and shall be  deemed
given when so mailed.

     16.   This  Agreement  has  been  made  in,  and  shall   be
interpreted according to the laws of, the State of New York.  The
parties hereto submit to the jurisdiction of  the courts  of  the
New  York 7upreme Court, County of Erie, for the purpose  of  any
actions  or  proceedings  which may be required  to  enforce  the
provisions  of this Agreement or an award made in any arbitration
proceeding initiated hereunder.

     IN  WITNESS  WHEREOF, the parties have  hereunto  set  their
respective hands and seals causing these presents to be  executed
as of the day and year first above written.

Witnessed:


/s/ John J. Zak                         /s/
                                        Robert J. McKenna


Witnessed:                              ACME ELECTRIC CORPORATION


/s/ Maryann J. Graf                     By: /s/
                                        Randall L. Clark
                                        Chairman, Compensation Committee



BFLODOCS:335560_1 (76X401)