AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

This  Amendment  No.  1 (this  "Amendment")  to the  Employment  Agreement  (the
"Employment  Agreement") dated as of March 1, 1999 by and between Harvey R. Blau
(the "Executive") and Aeroflex  Incorporated (the "Company"),  hereby amends the
Employment Agreement, effective as of September 1, 1999, as set forth below.

     1.  Requirement  of Deferral.  To the extent that any Bonus Amount would be
nondeductible  by the  Company  in the  Relevant  Tax Year  solely  by reason of
Section  162(m),  and if a Change  in  Control  (as  defined  in the  Employment
Agreement)  has not occurred on or before the last day of the Relevant Tax Year,
then the Deferred  Amount (if any) shall not be paid at the time provided for in
Section 4 of the Employment Agreement, but instead shall be deferred and paid in
accordance with this Amendment.

     2. Credits to Account.  The Company shall credit each Deferred  Amount to a
bookkeeping account in the name of the Executive (the "Account") on the date the
Deferred  Amount would (absent this  Amendment) have been paid to the Executive.
The Company  shall also credit the Account  monthly with interest on the balance
therein at the prime rate as pub lished in the Wall Street Journal, as in effect
from time to time,  less one percentage  point.  The Account shall be reduced as
and to the extent  distributions  are made from the Account pursuant to Sections
4, 6 and 7 of this Amendment.

     3.  Election  Form for Time and Form of  Payments  and  Beneficiaries.  The
Executive may elect, on an Election Form, or such other form as the Committee or
its  delegee  may from  time to time  prescribe,  the time or times at which the
balance in the Account shall be paid to the Executive;  provided, that except as
provided in Sections 6 and 7 of this Amendment, in no event shall any portion of
the balance of the Account be paid to the Executive before the 10th business day
following the termination of the Executive's employment with the Company and its
affiliates.  The Election Form shall permit the Executive to elect a beneficiary
or beneficiaries to receive the balance in his Account in the event of his death
before payment of such balance in full. Any Election Form filed by the Executive
within 30 days after the date of this Amendment  shall be immediately  effective
and shall remain in effect until  superseded as set forth in the next  sentence.
Any  Election  Form filed by the  Executive  more than 30 days after the date of
this Amendment shall become effective on the first anniversary of its filing, at
which  time it  shall  supersede  any  election  form  previously  filed  by the
Executive  and  shall  remain in effect  until  superseded  as set forth in this
sentence. Notwithstanding the foregoing, no Election Form shall become effective
after any payments from the Account have been made pursuant to Section 4 of this
Amendment, other than payments pursuant to Sections 6 and 7.

     4. Payments from Account.  If at the time of the  termination  of the Execu
tive's employment with the Company and its affiliates, there is no election form
in effect  for the  Executive,  the  Company  shall pay him (or his  estate,  if
applicable)  the balance in his Account in a single  lump-sum cash  payment,  as
promptly as practicable following the 10th business day after the termination of
the  Executive's  employment with the Company and its affiliates for any reason.
In all other cases,  the Company shall pay the Executive (or his  beneficiary or
beneficia ries, if applicable) the balance in his Account in accordance with the
election form that is in effect for the Executive.
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     5. Incompetence of the Executive.  Notwithstanding the foregoing, if at the
time any portion of the Account becomes payable to the Executive,  the Executive
has been  determined  to be legally  incompetent,  the  Committee  may cause the
Company to make payment of such  portion to the  Executive's  legal  guardian or
such other person or persons as the Commit tee considers  appropriate  on behalf
of  the  Executive,  and  such  payment  shall  fully  discharge  the  Company's
obligations  with  respect to the Account and all persons  having or claiming to
have an interest therein, including without limitation the Executive.

     6.  Hardship  Withdrawals.  Notwithstanding  any  other  provision  of this
Amendment,  the  Executive  or any of his  beneficiaries  may  withdraw all or a
portion  of his  Account  in the  event  of  unforeseeable  emergency.  For this
purpose,  unforeseeable emergency means that funds are necessary in light of the
immediate and heavy unexpected  financial needs of the Executive or beneficiary.
Any such withdrawal shall be limited to the amount required (taking into account
the net after-tax  amount that will be available  from such  withdrawal) to meet
any  immediate  financial  need  that is not  reasonably  available  from  other
sources. All determina tions as to whether, and in what amounts, withdrawals are
permitted  pursuant to this Section 6 shall be made by the Committee in its sole
discretion.  Withdrawals shall be paid in cash as soon as practicable  following
approval of the withdrawal request by the Committee.

     7.  Automatic  Withdrawals.  Notwithstanding  any other  provision  of this
Amendment,  if the Committee  determines  that it is possible for the Company to
pay the Executive all or any portion of the amounts credited to his Account at a
time  when he is still  employed  with  the  Company  or any of its  affiliates,
without  the amount so paid being  nondeduct  ible by reason of Section  162(m),
then such amount shall be paid to the Executive.

     8. Unfunded Arrangement. The Account and the amounts credited thereto shall
be unfunded obligations of the Company, and neither the Executive nor any of his
benefi ciaries shall have any interest in the assets of the Company  relating to
or arising out of the Account, except as general creditor, of the Company.

     9.  Definitions.  (a) The "Bonus  Amount" for a Relevant Tax Year means the
amount that would (absent this Amendment)  become payable  pursuant to Section 4
of the Employment Agreement and would (absent the application of Section 162(m))
be deductible by the Company in that Relevant Taxable Year.

     (b) The  Deferred  Amount for a Relevant Tax Year means all or a portion of
the Bonus  Amount for the  Relevant  Tax Year,  equal to the lesser of the Bonus
Amount and the Nondeductible Amount for the Relevant Tax Year.

     (c) The "Code" means the Internal Revenue Code of 1986, as amended.

     (d) The "Committee"  means the  Compensation/Stock  Option Committee of the
Board of Directors of the Company.
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     (e) "Election Form" means a form  substantially in the form attached hereto
as Exhibit A, or such other form as the  Committee  or its delegee may from time
to time prescribe,  duly completed by the Executive and filed with the Committee
or its delegee.

     (f) The "Nondeductible  Amount" for a Relevant Tax Year means the excess of
(i) the "applicable employee  remuneration" under Section 162(m) with respect to
the  Execu  tive for  such  Relevant  Tax Year  over  (ii) the  portion  of such
applicable employee  remuneration that does not exceed the dollar limitation set
forth in Section  162(m)(1) of the Code (without regard to Section  162(m)(4)(F)
of the Code); provided, that if there is no such excess, then the "Nondeductible
Amount" for that Relevant Tax Year is zero.

     (g) The  "Relevant  Tax Year"  with  respect  to any Bonus  Amount or Nonde
ductible Amount means the taxable year of the Company in which the Company would
(absent  Section  162(m) of the Code) be  entitled  to deduct  such  amount  for
federal income tax purposes.

     (h)  "Section  162(m)"  means  Section  162(m) of the Code and the Treasury
Regulations thereunder.

     10.  Except as  specifically  provided in this  Amendment,  the  Employment
Agreement is in all other respects ratified and confirmed without amendment.

     11. For purposes of this  Amendment,  any provisions of the Code other than
Section  162(m) that might result in a denial of a tax  deduction (as opposed to
such  provisions  affecting  the  timing of such  deduction)  shall be  ignored,
including without limitation Section 280G of the Code.

     IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
date first above written.

                              AEROFLEX INCORPORATED

                              By:/s/ Michael Gorin
                                 -------------------------------
                              Name:  Michael Gorin
                              Title:    President

                              /s/ Harvey R. Blau
                                 -------------------------------
                                  Harvey R. Blau

<PAGE>
                                    EXHIBIT A

                                  ELECTION FORM

To: Chairman, Compensation/Stock Option Committee
                 Aeroflex Incorporated
                 35 South Service Road
                 Plainview, New York  11803
                 cc: Charles Badlato

From:  Harvey R. Blau
Date:  ______________

     Pursuant to Amendment No. 1 dated as of September 1, 1999 (the "Amendment")
to the Employment  Agreement (the "Employment  Agreement")  dated as of March 1,
1999 by and between me and Aeroflex Incorporated (the "Company"),  I hereby make
the following  elections  with respect to the payment of the Account (as defined
in the Amendment):

     1.   Time of payments (other than in the event of my death)

          The  balance  in my  Account  shall  become  payable  (or  begin to be
          payable) as promptly as practicable following the date indicated below
          (choose one):
               ( ) the 10th business day after the  termination of my employment
               with the Company and its affiliates
               ( ) the later of ________  (fill in a specific  date) or the 10th
               business  day after the  termination  of my  employment  with the
               Company and its affiliates

     2.   Form of payments (other than in the event of my death)

          The balance in my Account shall be payable to me in the form indicated
          below (choose one):
               ( )  a single lump-sum payment
               ( ) monthly  over a period of __ years  (fill in  number,  not to
               exceed  15),   with  each   monthly   payment   representing   an
               approximately  equal  portion of the balance in my account on the
               date  payments  begins,  plus an  appropriate  share of  interest
               credited to the Account after that date
<PAGE>
          3.   Beneficiary for payments in the event of my death

          Upon my death,  any balance in my Account  that has not  already  been
          paid to me shall be  payable  to the  following  individual(s)  in the
          proportions indicated:

          Name                Address                  Percentage



          4.   Form of  payments  in the  event of my death  The  balance  in my
               Account that becomes  payable to the  individual(s)  indicated in
               Section  3 above  upon my  death  shall  be  payable  in the form
               indicated below (choose one):

               ( )  a single lump-sum payment

               ( ) in continuing  monthly  installments  in  accordance  with my
               election in Section 2 above

               ( ) monthly  over a period of __ years  (fill in  number,  not to
               exceed  15),   with  each   monthly   payment   representing   an
               approximately  equal  portion of the balance in my account on the
               date of my death,  plus an appropriate share of interest credited
               to the Account after that date

          5.   Change in Control override:

               If there is a "Change in Control"  (as defined in the  Employment
               Agreement), then I elect as follows (choose one):

               ( )  the  balance  in my  Account  shall  be  paid  to me  (or my
               beneficiary  if I have  previously  died)  in a  single  lump-sum
               payment as soon as practi  cable  after the Change in Control

               ( ) the  balance in my Account  shall  continue  to be payable in
               accordance with Sections 1-4 above, as applicable

I recognize and acknowledge that: (i) if I fail to complete Section 3 above, any
balance in my Account  upon my death will be paid to my estate in a single  lump
sum; (ii) if I other wise fill out this form  incorrectly or  incompletely,  the
Committee  reserves  the right to declare it  ineffective  or to deem it to have
been completed in such manner as it determines,  in its sole  discretion,  to be
consistent  with my  intent;  and (iii) if this form is filed  more than 30 days
after  [insert  date  of  Amendment],  it will  become  effective  on the  first
anniversary of the date it is filed, except that if any payments from my Account
have previously been made, it shall not become effective.


                                 -------------------------------
                                   Harvey R. Blau

Received by ___________________ on __________[Committee or its delegee to insert
name and date]