Exhibit 10.38 AMENDMENT NO. 1 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amendment No. 1 is made as of August 13, 2002, by and between Mercury Air Group, Inc., a Delaware corporation (hereinafter referred to as "Employer"), and Mr. Joseph A....

                                                                   Exhibit 10.38

                               AMENDMENT NO. 1 TO
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

      This Amendment No. 1 is made as of August 13, 2002, by and between Mercury
Air Group, Inc., a Delaware corporation (hereinafter referred to as "Employer"),
and Xx. Xxxxxx X. Xxxxxx (hereinafter referred to as "Employee").

      WHEREAS, Employer and Employee entered into that certain Amended and
Restated Employment Agreement dated May 22, 2002 (as amended, the "Employment
Agreement"); and

      WHEREAS, Employer and Employee wish to amend the Employment Agreement to
reflect the wishes of the Compensation Committee of Employer and amend (I)
Paragraph Eleventh section (a) Rights Following Termination Without Cause , (ii)
Paragraph Twelfth section (b) Rights Following Voluntary Termination After a
Change of Control and (iii) Paragraph Thirteenth Death During Employment both
in their entirety;

      NOW, THEREFORE, the parties hereby agree to amend the Employment Agreement
as follows:

      Eleventh: Termination Without Cause

            (a) Rights Following Termination Without Cause. Should Employee be
      discharged by Employer at any time during the term of this Agreement
      except as provided in Article Tenth, Employer hereby agrees to: (i) pay
      Employee within thirty (30) days from such discharge the Base Compensation
      that would otherwise be paid to him over the remaining term of this
      Agreement; and (ii) Employer shall pay to Employee a pro rated bonus for
      the portion of the fiscal year during which he was employed prior to such
      termination. For purposes of the foregoing pro ration, the bonus for the
      fiscal year in which the termination occurs shall be calculated in
      accordance with the terms of and on the schedule set forth in Article
      Third of this Agreement. Following such calculation, the bonus for the
      total fiscal year shall be multiplied by a fraction, the numerator of
      which shall be the number of days in the fiscal year of termination during
      which Employee was employed by Employer, and the denominator of which
      shall be 365. The result of such calculation shall determine the pro rated
      bonus paid to Employee

      Twelfth : Rights to Voluntary Termination by Employee

            (b) Rights Following Voluntary Termination After a Change of
      Control. Following any voluntary termination of employment by Employee
      pursuant paragraph (a) of this Article Twelfth, Employee shall be entitled
      to be paid by Employer within thirty (30) days of such termination by
      Employee, the entire balance of his Base Compensation remaining to be paid
      to Employee over the full remaining term of this Agreement.

      Thirteenth: Death During Employment

            If Employee dies during the term of this Agreement, Employer shall
      pay to




      the estate of Employee the Base Compensation which would otherwise be
      payable to Employee up to the end of the month in which his death occurs.
      In addition, Employer shall maintain a life insurance policy or policies
      providing Ten Million Dollars ($10,000,000) in death benefits payable to
      Employee's estate or other designated beneficiary. Employee shall be
      entitled to and the owner of the cash surrender value of all such
      insurance policies in excess of the premiums paid by Employer (if any).
      Notwithstanding any other provision of this Agreement, following any
      termination of Employee's employment with Employer: (a) Employer shall
      cease paying the premiums on any such life insurance policy and shall be
      entitled to withdraw (or be paid by Employee in the form of a set-off
      against any severance payments due or otherwise) its portion of the cash
      surrender value of the life insurance policies; and (b) Employee shall be
      entitled, in his discretion, to continue such policies for his benefit by
      payment of the premiums and shall be entitled to the full cash surrender
      value of such policies following withdrawal or repayment of Employer's
      interest in the cash surrender value. Employee and Employer will execute
      such assignments as are necessary to reflect this allocation of the death
      and cash surrender values of any life insurance policies paid for by
      Employer on the life of Employee.

      All other terms and conditions of the Employment Agreement remain
unchanged and in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.

                                   MERCURY AIR GROUP, INC.


                                   Xx. Xxxxxxx X. Xxxxx, Chairman of the Board


                                   Xxxxxx X. Xxxxxx, Individually