December 31, 2008

Mr. Robert Kot299 Delevan
RoadDelanson, NY 12053

Re:Amendment to MTII VP & GM Employment Letter

Dear Bob:

This letter amends and restates our
agreement, dated March 27, 2007, with respect to your employment with MTI
Instruments, Inc. (MTII or Company) as Vice President and General Manager of
MTII, and is intended to comply with Section 409A of the Internal Revenue Code,
as amended, and the final Treasury Regulations promulgated thereunder (Section
409A). The terms of your employment agreement, as amended and restated,
effective December 31, 2008, are set forth below:

1.Base
Salary. Your base salary will be at the rate
of $195,000per year, less all applicable taxes and withholdings.

2.Bonus. You will be eligible to receive
an annual bonus of $30,000 per calendar year if the Compensation Committee
determines in its sole discretion, after the annual audit is completed, that
MTII has achieved its annual revenue and profit goals, with the amount increased
to $40,000 if those goals were exceeded by at least 10%. You must be an active
employee of MTII on the date any bonus is distributed in order to be eligible
for and to earn any bonus. Nothing in this section is intended to prevent the
Compensation Committee of MTI from granting you a discretionary bonus.

3.Stock
Options. On December 23, 2007, the
Compensation Committee of MTI awarded you a grant of options for 75,000 shares
of MTI common stock, pursuant to the Companys 2006 Equity Incentive Plan, all
options having a 7 year term, subject to the terms of the option plan and option
agreement and the following vesting terms: a) options for 25,000 shares vested
immediately; b) options for 35,000 shares shall vest as to 8,750 shares on the
first anniversary of the grant date, then vest on each quarterly anniversary
thereafter (i.e., beginning March 2009) if the Compensation Committee of the MTI Board
determines that MTII met its 2008 annual revenue and profits goals; c) options
for 15,000 shares shall vest as to 3,750 shares on the first anniversary of the
grant date then vest each quarterly anniversary thereafter (i.e., beginning March 2009)
if the Compensation Committee of the MTI Board determines that MTII exceeded its
2008 annual revenue and profits goals by at least 10%. The options were priced
based on the closing price of the Companys stock on the NASDAQ Global Market
System on December 21, 2007 of $0.79 (pre-8-for-1 split).

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The Compensation Committee of MTI may
grant you options at their discretion in the future.

4.Other
Benefits. You may participate in any and all
benefit programs that MTII makes available to employees and officers of MTII
from time to time, including MTIIs 401(k) plan and health insurance plan.
Benefits are subject to change at any time in MTIIs sole discretion. You will
be eligible for 23 days of paid time off (PTO) annually, which shall accrue
based upon MTII regular PTO procedures.

5.At-Will Employment. This letter shall
not be construed as an agreement, either express or implied, to employ you for
any stated term, and shall in no way alter MTIIs policy of employment at-will,
under which both MTII and you remain free to end the employment relationship for
any reason, at any time, with or without notice. Similarly, nothing in this
letter shall be construed as an agreement, either express or implied, to pay you
any compensation or grant you any benefit beyond the end of your employment with
MTII, except as otherwise provided herein.

6.Termination of Employment. If MTII
terminates your employment withoutcause (as
defined below), MTII shall, for four months following your date of termination:
(i) continue to pay to you your base salary at the rate in effect at the time of
your termination, in accordance with MTIIs regularly established payroll
procedure; and (ii) provided you elect to continue receiving group medical
insurance pursuant to the federal COBRA law, 29 U.S.C. § 1161et. seq., continue to pay
the share of the premium for health coverage that is paid by MTII for active and
similarly situated employees who receive the same type of coverage. It is
intended that these COBRA payments are exempt from Section 409A. For purposes of
this agreement, cause shall mean (i) a finding by the Board of Directors that
you have engaged in gross misconduct, negligence, theft, dishonesty, fraud, or
gross dereliction of duties; or (ii) your indictment on any felony charge or a
misdemeanor charge involving theft, moral turpitude or a violation of the
federal securities laws (whether or not related to your conduct at work).

As a condition to your receipt of these
severance benefits, you must execute, return to the Company and not revoke a
severance agreement and release in a form acceptable to MTII within 60 days of
your termination (the Release Deadline). Such payments shall be paid in equal
installments on each regular pay cycle commencing, if such payments are exempt
from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii),
on the date the Release is effective, with the first such payment including the
amount due from the date of termination. For purposes of this agreement, your
termination of employment shall mean your separation from service (within the
meaning of Section 409A).

7.Section 409A Delay: Each payment
hereunder subject to Section 409A will be considered a separate payment for
purposes of Section 409A. To the extent that it is determined by the Company in
good faith that all or a portion of any payments hereunder subject to Section
409A made in connection with your separation from service are not exempt from
Section 409A and that you are a specified employee (within the meaning of
Section 409A) at the time of your separation from service, then payment of such
non-exempt payments shall not be made until the date that is 6 months and one
day after your separation from service (or, if earlier, your death), with any
payments that are required to be delayed being accumulated during the 6 month
period and paid in a lump sum on the date that is 6 months and one day following
your separation from service and any subsequent payments, if any, being paid in
accordance with the dates and terms set forth herein.

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8.Proprietary Information, Developments, Non-Competition and
Non-SolicitationAgreement. During the course of your employment you will be exposed to,
and be responsible for developing, trade secrets and confidential information of
the Company. Therefore, as a condition of your employment, you are required to
continue to comply with the Proprietary Information, Developments,
Non-Competition and Non-Solicitation Agreement (the Non-Competition/Proprietary
Information Agreement), dated and executed by you on March 27, 2007, which is
incorporated by reference in its entirety.

9.Representations. You represent that
you are not bound by any employment contract, restrictive covenant or other
restriction preventing you from continuing employment with or carrying out your
responsibilities for MTII, or that is in any way inconsistent with the terms of
this letter agreement.

10.Amendments. Any amendment to this
letter agreement shall be made in writing and signed by the parties hereto.

11.Applicable Law. This letter agreement
shall be governed by and construed in accordance with the laws of the State of
New York (without reference to the conflict of laws provisions thereof). Any
action, suit or other legal proceeding arising under or relating to any
provision of this Agreement shall be commenced only in a court of the State of
New York (or, if appropriate, a federal court located within the State of New
York), and MTII and you each consents to the jurisdiction of such a court. MTII
and you each hereby irrevocably waives any right to a trial by jury in any
action, suit or other legal proceeding arising under or relating to any
provision of this letter agreement.

12.Miscellaneous. You agree to devote
your full business time, energy, loyalty, efforts and attention to the business
and affairs of MTII. The provisions of any other agreement (other than any offer
letter and the agreement amended and restated by this agreement) between you and
MTII or any of its affiliates, including, but not limited to, any
non-competition agreement, shall continue to be effective in accordance with the
terms of any such agreement.

13.Section 409A. This letter is intended
to comply with the provisions of Section 409A and the letter shall, to the
extent practicable, be construed in accordance therewith. Notwithstanding
anything stated herein to the contrary, each of the salary continuation payments
provided in connection with your involuntary termination (not in connection with
a termination of your employment by reason of death or disability) is intended
to be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) and to the extent it is exempt pursuant to such section, it will
in any event be paid no later than the last day of your second (2nd) taxable
year following the taxable year in which your involuntary termination has
occurred. Terms defined in the letter shall have the meanings given such terms
under Section 409A if and to the extent required in order to comply with Section
409A. Notwithstanding the foregoing, to the extent that the letter or any
payment or benefit hereunder shall be deemed not to comply with Section 409A,
then neither the Company or the Board of Directors, nor its or their designees
or agents, shall be liable to you or any other person for any actions, decisions
or determinations made in good faith.

[Signature Page Follows]

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If the
foregoing is acceptable to you, please countersign this letter in the space
provided below and return it to me.

Sincerely,

MTI INSTRUMENTS, INC.

|/s/
      Peng K. Lim                                  | 
|------------------------------------------------------ | 
|Peng K. LimPresident and Chief
      Executive Officer | 

|Agreed and
      Accepted by: | /s/ Robert Kot   | on | 12/31/08
|----------------------------- | ---------------- | -- | --------
|                              | Robert
      Kot |    | (Date)  

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