UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 3, 2008

OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ...............to..................

Commission File No. 0-5411

Herley Industries, Inc.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2413500
- -------- ----------
State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)

101 North Pointe Blvd., Lancaster, Pennsylvania 17601
- ----------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (717) 735-8117
--------------

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.10 par value the NASDAQ Stock Market LLC
- ---------------------------- ------------------------------
(Title of Class) Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: None
----

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

[ ] Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

The aggregate market value of the Registrant's voting Common Stock held by
non-affiliates of the Registrant, based on the closing sale price of the Common
Stock of $12.97 as reported on The Nasdaq Global Market as of February 1, 2008,
the last business day of the Registrant's most recently completed second fiscal
quarter, was approximately $166,514,000.

The number of shares outstanding of Registrant's Common Stock, $ .10 par value
on October 3, 2008 was 13,526,402.

Documents incorporated by reference: None
- -----------------------------------

EXPLANATORY NOTE

Herley Industries, Inc., (the "Company," "we," "us" or "our") is filing this
Amendment No. 1 on Form 10-K/A to our Report on Form 10K for the fiscal year
ended August 3, 2008 (the "Report") for the purpose of including information
that was to be incorporated by reference from our definitive proxy statement
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). We will not file our proxy statement within 120 days of
our fiscal year ended August 3, 2008, and are, therefore, amending and restating
in their entirety Items 10, 11, 12, 13 and 14 of Part III of the Report.

Except as described above, no other amendments are being made to the Report.
This Form 10-K/A does not reflect events occurring after the October 21, 2008
filing of our Report or modify or update the disclosure contained in the Report
in any way other than as required to reflect the amendments discussed above and
reflected below.

This amendment should be read in conjunction with our Annual Report for the
fiscal year ended August 3, 2008 filed on Form 10K on October 21, 2008.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors of the Registrant

Director
Name of Director Age Principal Occupation Since
---------------- --- -------------------- --------

Myron Levy 68 Chairman of the Board
and Chief Executive Officer 1992
Rear Admiral Edward K. Walker, Jr. (Ret.) 75 Vice Chairman of the Board 1997
(1)(2)(3)
Dr. Edward A. Bogucz (1)(3)(4) 52 Executive Director of the New York Center 2003
of Excellence in Environmental Systems
Rear Admiral Robert M. Moore (Ret.) (1)(2)(4) 69 Business and Financial Management Consultant 2003
John A Thonet 58 President of Thonet Associates 1991
Carlos C. Campbell (2)(3)(4) 71 Business and Financial Management Consultant 2005
- --------------------
<FN>
(1) Member of Compensation Committee
(2) Member of Corporate Governance Committee
(3) Member of Nominating Committee
(4) Member of Audit Committee
</FN>

Mr. Myron Levy was appointed Chairman of the Board in June 2006 after serving as
Vice Chairman of the Board since August 2003, and has been our Chief Executive
Officer since August 2001. Prior thereto, Mr. Levy served as President since
June 1993, as Executive Vice President and Treasurer since May 1991, and as Vice
President for Business Operations and Treasurer since October 1988. For more
than ten years prior to joining the Company, Mr. Levy, a certified public
accountant, was employed in various executive capacities, including
Vice-President, by Griffon Corporation.

Rear Admiral Edward K. Walker, Jr. (Ret.) was appointed Vice Chairman of the
Board in June 2006. Rear Admiral Walker served as the Director of Corporate
Strategy for Resource Consultants, Inc., a privately held corporation supporting
the Department of Defense and other government agencies, after his retirement
from the United States Navy in 1988 until 2000. Prior to his retirement from the
United States Navy, Rear Admiral Walker served for 34 years in various naval
officer positions, including Commander of the Naval Supply Systems Command, and
Chief of Supply Corps. He holds a Bachelor's Degree from the United States Naval
Academy and Master's Degree in Business Administration from The George
Washington University.

Dr. Edward A. Bogucz is currently Executive Director of the New York Center of
Excellence in Environmental Systems, a university-industry consortium that
includes 12 universities and research institutions. Previously, Dr. Bogucz
served as Dean of Engineering and Computer Science at Syracuse University from
1995 through 2003. Dean Bogucz earned his bachelor's and doctoral degrees in
mechanical engineering from Lehigh University and a Master's Degree from
Imperial College, University of London. His teaching and research expertise
includes fluid dynamics, energy systems, computational methods, and
multidisciplinary analysis and design. As Dean, he led the strengthening of the
College of Engineering and Computer Science in selected areas, including RF and
microwave devices, information fusion, systems assurance, and environmental
technologies.

Rear Admiral Robert M. Moore (Ret.) is a consultant in business and financial
management. He is a retired Rear Admiral, U.S. Navy. His 35-year career in the
Navy culminated in his last assignment in charge of the Navy's worldwide supply
system. He holds a Bachelor's Degree from the University of Texas and a Master's
Degree in Business Administration from Harvard University.

Mr. John A. Thonet has been Secretary since January 2003, and is President of
Thonet Associates, an environmental consulting firm specializing in land
planning and zoning matters, for the past ten years.

Carlos C. Campbell operates a consulting business in Reston, Virginia and serves
on the Board of Directors for Resource America, Inc. and Pico Holdings, Inc.,
both publicly traded companies. He is a veteran of nine years as a Naval Flight
Officer and served in the Administration of President Reagan as the Assistant
Secretary for Economic Development, U.S. Department of Commerce.

Executive Officers of the Registrant

Name Age Position
---- --- --------

Myron Levy 68 Chairman of the Board, Chief Executive Officer,
and Director
Jeffrey L. Markel 60 Chief Operating Officer
Kevin J. Purcell 50 Vice President and Chief Financial Officer
- --------------------

Jeffrey L. Markel was appointed Chief Operating Officer in June 2007. Prior to
joining Herley, Mr. Markel was employed at BAE Systems serving as President of
the Network Enabled Systems Line of Business since 1997. From 1994 to 1997 he
was Vice President of Program Management for GEC Marconi. His prior employment
was at Hazeltine Corporation, with his last position there being Vice President,
Communication Systems. Mr. Markel has over 38 years of experience in the defense
industry encompassing electronic systems, sub-systems, and components. His
educational background includes a Bachelor of Science in Mechanical Engineering
and a Bachelor of Arts in Applied Science from Lehigh University, as well as a
Masters in Business Administration from Long Island University.

Kevin J. Purcell was appointed Vice President and Chief Financial Officer in
June 2006. Prior to joining Herley, Mr. Purcell served as Vice President
Finance, Contracts and Compliance for Smiths Aerospace LLC, Customer Services
Americas. Previously, Mr. Purcell served other companies in senior financial
positions including Vice President and CFO, Controller and Director. In
addition, he worked for a number of years in the Government Contractor Advisory
Services group of KPMG. Mr. Purcell received his B.B.A. degree in financial
accounting from Iona College and his M.B.A. degree from Pepperdine University.
He is a Certified Public Accountant and a Certified Management Accountant.

Committees of the Board of Directors

Audit Committee and Audit Committee Financial Expert

The Board has a standing Audit Committee. The Board has affirmatively determined
that each director who serves on the Audit Committee is independent, as the term
is defined by applicable Nasdaq and Securities and Exchange Commission ("SEC")
rules. During fiscal 2008, the Audit Committee of the Board of Directors of the
Company consisted of Robert M. Moore (Chairman), Carlos C. Campbell, and Edward
A. Bogucz. The members of the audit committee have substantial experience in
assessing the performance of companies, gained as members of the Company's board
of directors and audit committee, as well as by serving in various capacities in
other companies or governmental agencies. As a result, they each have an
understanding of financial statements. However, none of them keep current on all
aspects of generally accepted accounting principles. Accordingly, the board of
directors does not consider any of them to be a financial expert as that term is
defined in applicable regulations. Nevertheless, the board of directors believes
that they competently perform the functions required of them as members of the
audit committee and, given their backgrounds; it would not be in the best
interest of the Company to replace any of them with another person to qualify a
member of the audit committee as a financial expert.

The Audit Committee regularly meets with our independent registered public
accounting firm outside the presence of management.

Compensation Committee

Our Compensation Committee annually establishes, subject to the approval of the
Board of Directors and any applicable employment agreements, the salaries which
will be paid to our executive officers during the coming year, and administers
our stock-based benefit plans. The Compensation Committee currently consists of
Edward A. Bogucz, Chairman, Edward K. Walker, Jr. and Robert M. Moore. Each
member of the Compensation Committee is a director who is not employed by us or
any of our affiliates, and are independent directors under NASDAQ listing
standards.

Nominating Committee

Our Nominating Committee currently consisting of Carlos C. Campbell, Chairman,
Edward K. Walker, Jr., and Edward A. Bogucz, each of whom is an independent

director, identifies individuals qualified to become Board members, recommends
to the Board nominees to fill vacancies in membership of the Board as they occur
and, prior to each Annual Meeting of Shareholders, recommends a slate of
nominees for election as Directors at such meeting.

Governance and Ethics Committee

Our Governance and Ethics Committee, currently consisting of Edward K. Walker,
Jr., Chairman, Robert M. Moore and Carlos C. Campbell, each of whom is an
independent director, monitors developments in corporate governance principles
and other corporate governance matters and makes recommendations to the Board of
Directors regarding the adoption of additional corporate governance principles.

Shareholder Recommendations for Board Nominees

The Governance and Nominating Committee will consider shareholder
recommendations for candidates for the Board. The name of any recommended
candidate for director, together with a brief biographical sketch, a document
indicating the candidate's willingness to serve, if elected, and evidence of the
nominating shareholder's ownership of Company stock, should be sent to the
attention of the Secretary of the Company.

Compliance with Section 16(a) of The Securities Exchange Act of 1934 -
Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who beneficially own more than 10% of our common
stock (collectively, "Reporting Persons") to file initial reports of ownership
and reports of changes in ownership of our common stock with the Securities and
Exchange Commission. Reporting Persons are required by SEC regulations to
furnish us with copies of all Section 16(a) reports they file. To our knowledge,
based solely on our review of the copies of such reports received or written
representations from certain Reporting Persons that no other reports were
required, we believe that during fiscal 2008, all Reporting Persons timely
complied with all applicable filing requirements.

Corporate Governance - Code of Ethics

We have adopted a Corporate Code of Business Ethics (the "Code") that applies to
all employees, including our principal executive officer, principal financial
officer, and directors of the Company. The Code is broad in scope and is
intended to foster honest and ethical conduct, including accurate financial
reporting, compliance with laws and the like. If any substantive amendments are
made to the Code or if there is any grant of waiver, including any implicit
waiver, from a provision of the Code to our Chief Executive Officer or Chief
Financial Officer, we will disclose the nature of such amendment or waiver in a
report on Form 8-K.

Item 11. Executive Compensation

Compensation Discussion and Analysis

This section discusses the principles underlying our executive compensation
policies and decisions and the most important factors relevant to an analysis of
these policies and decisions. It provides qualitative information regarding the
manner and context in which compensation is awarded to and earned by our Named
Executive Officers ("NEOs") (as defined in the Summary Compensation Table below)
and places in perspective the data presented in the tables and narrative that
follow.

Compensation Philosophy and Overview

We believe that the most effective compensation program is one that is designed
to reward the achievement of our financial and strategic goals, and which aligns
executives' interests with those of our shareholders.

The compensation plans for our executive officers have three principal elements:
a base salary, discretionary cash incentive bonuses linked to achievement of
financial and strategic goals and equity-based incentive compensation. In
addition, we provide our executive officers a variety of benefits that in most
cases are available generally to all of our salaried employees. We view the
components of compensation as related but distinct. Although the Compensation
Committee of our Board of Directors (the "Committee") reviews the total
compensation of our executive officers, we do not believe that significant
compensation derived from one component of compensation should necessarily
negate or reduce compensation from other components. We do believe that the
executive compensation package should be fair and reasonable when taken as a
whole.

We have not adopted any formal policies or guidelines for allocating
compensation between long-term and currently paid out compensation or between
cash and non-cash compensation. However, our philosophy is to keep cash
compensation at a competitive level while providing the opportunity to be
significantly rewarded through equity if our company and our stock price perform
well over time.

We also believe that executive officers should have a greater percentage of
their equity compensation in the form of stock options rather than restricted

stock or restricted stock unit awards, as stock options have greater risk
associated with them than these other equity grants. We believe that our
executive officers should have a larger portion of their equity incentive awards
at risk as compared with our other employees.

Role of Executive Officers in Compensation Decisions

Mr. Myron Levy, our Chief Executive Officer, annually reviews the performance of
each of our other executive officers. The conclusions reached by Mr. Levy and
his recommendations based on these reviews, including with respect to salary
adjustments, incentive awards and equity award amounts, are presented by Mr.
Levy to the Committee. The Committee can exercise its discretion in modifying
any recommended adjustments or awards to executives. The Committee makes all
final compensation decisions for each of our executive officers.

Committee meetings typically have included, for all or a portion of each
meeting, not only the Committee members but also our Chief Executive Officer.

Role of the Compensation Committee

The Compensation Committee currently consists of Edward A. Bogucz, Chairman,
Edward K. Walker, Jr. and Robert M. Moore. Each member of the Compensation
Committee is a director who is not employed by us or any of our affiliates, and
are independent directors under NASDAQ listing standards.

The Committee ensures that our executive compensation and benefits program is
consistent with our compensation philosophy and our corporate governance
guidelines and is empowered to make decisions regarding executive officers total
compensation, and subject to the approval of the Board, our Chief Executive
Officer's total compensation.

The Committee reviews our overall compensation strategy at least annually to
ensure that it promotes shareholder interests, supports our strategic and
tactical objectives and provides for appropriate rewards and incentives for our
executive officers. The Committee's most recent overall compensation review
occurred in October 2008.

Accounting and Tax Implications of Our Compensation Policies

In designing our compensation programs, the Committee considers the financial
accounting and tax consequences to the Company as well as the tax consequences
to our employees. We account for equity compensation paid to our employees under
SFAS 123(R), which requires us to estimate and record and expense over the
service period of the award. The SFAS 123(R) cost of out equity awards is
considered by management as part of our equity grant recommendations to the
Committee. Our equity grant practices have been impacted by SFAS 123(R), which
we adopted in the first quarter of our 2006 fiscal year.

Section 162(m) of the Internal Revenue Code places a limit of $1 million on the
amount of compensation that we may deduct for income tax purposes in any one
year with respect to our five most highly compensated executive officers. The $1
million limit does not apply to compensation that is considered "performance
based" under applicable tax rules. Our executive stock options are intended to
qualify as "performance-based," so that compensation attributable to those
options is fully tax deductible.

We also consider the tax impact to employees in designing our compensation
programs, particularly our equity compensation programs. For example, employees
generally control the timing of taxation with respect to the exercise of stock
options.

Components of our Executive Compensation Program

Base Salary

We establish base salaries that are sufficient, in the Committee's judgment, to
retain and motivate our NEOs while taking into account the unique circumstances
of our Company. In determining appropriate salaries, the Committee considers
each NEO's scope of responsibility and accountability within our Company and
reviews the NEO's compensation, individually and relative to other officers, as
well as similarly situated companies. We have entered into employment agreements
with our NEOs which provide for adjustments as set forth more fully below in the
section titled "Employment Agreements." In fiscal 2008, there were no increases
in any NEO's salary beyond what is called for in the individual employment
agreements, such as cost-of-living increases.

Discretionary Cash Incentive Bonuses

The Committee believes that discretionary cash bonus compensation for NEOs
should be directly linked to our overall corporate financial performance,
individual performance and our success in achieving both our short-term and
long-term strategic goals. In assessing the performance of our Company and our
NEOs during fiscal 2008, the Committee considered our performance in the
following areas:

o Increase levels of component integration and value added content;
o Enhancement of our manufacturing capabilities;
o Pursuit of selective commercial opportunities;
o Maintaining leadership in microwave technology;
o Strengthening and expanding customer relationships; and
o Maintaining our reputation for integrity.

In fiscal 2008, the Committee awarded Mr. Levy an additional performance payment
of $380,931 for fiscal year 2007 (which was paid in fiscal 2008) based on a
number of factors, including his performance as Chairman of the Board and CEO
and the comparison of his salary to our other NEOs, as well as our peer group.
Mr. Levy is to receive a payment of $300,000 for fiscal 2008 for his performance
as Chairman and CEO in guiding the Company through a difficult period, including
the recently settled criminal proceedings and the Company's ongoing compliance
requirements under its administrative order with the U.S. Government. Mr.
Purcell received a bonus of $50,000 for fiscal 2007 paid in fiscal 2008; and Mr.
Markel is to receive an incentive for fiscal 2008 of $300,000 as provided in his
employment agreement. These awards by the Committee for fiscal 2008 are detailed
in the Summary Compensation Table on page 7.

Our bonuses are structured to be deductible under Section 162(m) of the Internal
Revenue Code which denies publicly-held corporations a federal income tax
deduction for compensation in excess of $1 million paid to the CEO and the four
other most highly compensated officers during a fiscal year unless the
compensation is "performance-based." We believe that our process of awarding
cash bonuses satisfies this requirement; however, there can be no assurance that
any amounts paid as discretionary cash bonuses will be deductible.

Equity-Based Long Term Incentive Compensation

We believe that our equity incentive compensation arrangements are an important
factor in developing an overall compensation program that is competitive with
our peer group of companies and that aligns the interests of our NEOs with those
of our shareholders.

We believe that stock options effectively align the long-term interests of
management with our shareholders. Additionally, we believe that our NEO's should
have a greater percentage of their equity awards at risk as compared with our
other employees. Since NEOs do not benefit from stock options unless the price
of our stock increases after the grant date as compared with the grant price,
they clearly provide NEOs with an added incentive to build shareholder value. We
have not in the past, repriced the exercise price for stock options that have
been granted when the future stock price has decreased below the exercise price
of such stock options. The date of our awards of stock options is established by
the Committee at a meeting held approximately four to six weeks prior to the
date of grant. Grants of stock options vest over a period of years in order to
serve as an inducement for the NEOs to remain in the employ of our Company. It
is contemplated that we will continue to offer stock options as the principal
component of our equity compensation arrangement for our NEOs, however, no stock
options were granted for fiscal 2008 to our NEOs.

The number of shares of stock options awarded to our NEOs is established by the
Committee in consultation with our CEO, taking into account a number of factors,
including the position, job performance and overall responsibility of each NEO.
Since the value of the stock options granted to our NEOs is based upon the price
of our shares, the Committee believes that the granting of stock options is a
significant incentive to our NEOs to continue to build shareholder value. The
Committee also believes that the multi-year vesting periods for the stock
options will be helpful in linking equity compensation to long-term performance.

Executive Benefits and Perquisites

All of our executives are eligible to participate in our employee benefit plans,
including medical, dental, life insurance and 401(k) plans. These plans are
available to all salaried employees and do not discriminate in favor of
executive officers. It is generally our policy not to extend significant
perquisites to our executives that are not available to our employees generally.
We have no current plans to make changes to levels of benefits and perquisites
provided to executives.

Executive Compensation Tables

Summary Compensation Table

The following table sets forth the annual compensation awarded to, earned by, or
paid to our Chairman, Chief Executive Officer ("Principle Executive Officer"),
our Chief Financial Officer ("Principle Financial Officer") and our other most
highly compensated executive officers other than the Chief Executive Officer who
were serving as executive officers at the end of the last completed fiscal year
as required under SEC rules (collectively, the "Named Executive Officers" or
"NEOs") for services rendered for the fiscal years ended August 3, 2008 and July
29, 2007.

Non-Equity
Name and Principal Option Incentive Plan All Other
Position Year Salary Bonus (2) Awards (3) Compensation Compensation (7) Total
-------- ---- ------ --------- ---------- ------------ ---------------- ---------

Myron Levy, 2008 $735,613 (1) - - $300,000 (4) $25,158 $ 760,771
Chairman of the 2007 713,126 - - 750,000 (5) 18,677 1,481,803
Board and Chief
Executive
Officer
Jeffrey L. Markel, 2008 $352,719 (1) - $543,350 $300,000 (6) $23,116 $1,219,185
Chief Operating 2007 47,116 $ - 299,346 - - 346,462
Officer (5
Kevin J. Purcell 2008 $227,622 $50,000 $ 49,942 - $10,308 $ 337,872
Chief Financial 2007 220,000 10,000 75,871 - 14,660 320,531
Officer
- --------
<FN>
(1) Includes a cost of living adjustment of $26,531 in fiscal 2008 and $27,371
in fiscal 2007 for Mr. Levy and $1,844 in fiscal 2008 for Mr. Markel under
their employment agreements.
(2) Executive bonuses are paid at the discretion of the board of directors.
(3) Amounts represent the aggregate expense recognized for financial statement
reporting purposes in accordance with SFAS 123(R) for stock options granted
to the NEOs in prior fiscal years (disregarding estimates of forfeitures
for service-based vesting). SFAS 123(R) expense for the stock options is
based on the fair value of the options on the date of grant using the
Black-Scholes option-valuation model. No options were granted to the NEOs
in fiscal 2008.
(4) Represents performance payment for fiscal 2008.
(5) Represents incentive compensation under employment agreement in fiscal 2007
and an additional performance payment of $380,931 for fiscal year 2007 paid
in fiscal 2008.
(6) Mr. Markel was appointed Chief Operating Officer on June 4, 2007 at an
annual rate of compensation of $350,000. Under the terms of his employment
agreement, Mr. Markel is to receive a minimum incentive payment of $300,000
for fiscal year 2008.
(7) The following table describes each component of the "All Other
Compensation" column in the "Summary Compensation Table" above. Other
compensation in 2008 for Mr. Markel includes reimbursement for relocation
expenses of $8,533.
</FN>

Other
Personal
Matching Including
Fiscal Contribution Medical Personal
Year to Employee Supplemental Insurance Use of
Savings Plan Life Insurance Benefits auto Total
---- ------------ -------------- -------- ---- -----

Myron Levy 2008 $ 9,000 $ 4,763 $ 7,862 $ 3,533 $ 25,158
2007 8,800 4,572 1,552 3,753 18,677
Jeffrey L. Markel 2008 9,000 714 - 13,402 23,116
2007 - - - - -
Kevin J. Purcell 2008 9,000 606 - 702 10,308
2007 8,800 225 - 5,635 14,660

Grants of Plan-Based Awards in Fiscal 2008

No stock options were granted to the Named Executive Officers during fiscal
2008.

Outstanding Equity Awards at Fiscal 2008 Year End

The following table provides information with respect to each unexercised stock
option held by the Named Executive Officers as of August 3, 2008.

Option Awards
--------------
Number of Number of
securities securities
underlying underlying
unexercised unexercised Option Option
options (#) options Exercise Expiration
Name Exercisable (#) Unexercisable Price ($) Date
---- ----------- ----------------- --------- ----

Myron Levy 225,000 - $ 10.45 5/18/2010
150,000 - $ 8.38 3/12/2011
250,000 - $ 13.10 12/3/2011
250,000 - $ 19.52 5/21/2012
200,000 - $ 17.98 5/2/2015
Jeffrey L. Markel 100,000 150,000 $ 15.77 5/9/2017
Kevin J. Purcell 10,000 15,000 $ 19.38 9/2/2011

Option Exercises in Fiscal 2008

No stock options were exercised during fiscal 2008 by the Named Executive
Officer.

Employment Agreements

Myron Levy entered into an employment agreement with us, dated as of July 29,
2002 which expires December 31, 2013, subject to extension for additional
one-year periods annually each January 1 with a final expiration date of
December 31, 2015 (as amended December 9, 2003). The agreement provides for an
annual salary as of August 3, 2008 at the rate of $739,300 as adjusted under the
agreement for a semi-annual cost of living adjustment based on the consumer
price index. The agreement also provides for minimum annual incentive
compensation of 3% of our pretax income as adjusted. At the end of the
employment period, the agreement provides for a ten-year consulting period at an
annual compensation rate equivalent to one-half of Mr. Levy's annual salary in
effect at the end of the employment period, subject to annual cost of living
adjustments.

The employment agreement with Mr. Levy provides for certain payments following
death or disability, and also provides that, in the event there is a change in
control, as defined, he has the option to terminate the agreement and receive a
lump-sum payment equal to the sum of the salary payable for the remainder of the
employment term, plus the annual incentive (based on the average of the three
highest annual incentive awarded during the ten preceding years) for the
remainder of the employment term. As of August 3, 2008, the amount payable in
the event of such termination would be approximately $8,357,000.

Mr. Jeffrey Markel entered into an employment agreement with us as of May 30,
2007 which expires July 31, 2011, subject to extension for additional one-year
periods annually beginning July 31, 2008 with a final expiration date of July
31, 2012. The agreement provides for an initial annual salary of $365,800
(adjusted for a semi-annual cost of living adjustment based on the consumer
price index), and an initial award of 250,000 non-qualified stock options at the
closing stock price on the date prior to execution of the agreement of $15.77
per share. The options vest 20% upon award and 20% annually over the next four
years. The agreement also provides for incentive compensation to be paid at the
discretion of the Board of Directors, however, incentive compensation for the
fiscal year ended August 3, 2008 is to be paid at a minimum of $300,000. The
agreement also provides for a consulting period of ten years at the end of the
employment period at an annual compensation of $100,000. In the event of a
change in our control, as defined, the executive has the option to terminate the
agreement at any time after July 31, 2010 and receive a lump-sum payment equal
to the sum of: (1) his salary payable for the remainder of the employment term,
(2) the annual bonuses (based on the average of the annual bonuses awarded
during the term of the employment agreement) for the remainder of the employment
term, and (3) a lump sum payment of $500,000 representing full consideration
under the consulting period.

Kevin J. Purcell entered into an employment agreement with us, dated as of June
7, 2006 which expires June 6, 2009. The agreement provides for an annual salary
as of August 3, 2008 at the rate of $233,210, subject to review by the Board of
Directors, plus an annual bonus at the discretion of the Board of Directors.

Estimate of Potential Payments upon Termination or Change in Control

The following table provides an estimate of the potential payments and benefits
that each of the NEOs would be entitled to receive upon termination of
employment under various circumstances and upon a change of control. The table
does not include payments the executive would be entitled to receive in the
absence of one of these specified events such as from the exercise of
previously-vested stock options, which amount can be calculated from the
Outstanding Equity Awards at Fiscal 2008 Year End table. The table also does not
include benefits that are provided on a non-discriminatory basis to salaried
employees generally, including amounts payable under the Company's 401(k) plan.

Termination
without Cause or
Termination a Constructive
without Cause Termination
prior to Change Change in after a Change
Name Benefit in Control Control(1) in Control(4)
----- -------- ------- ----------- ----------

Myron Levy Severance (5) $ 8,357,000 $ 8,357,000 $ 8,357,000

Jeffrey L. Markel Severance (5) $ 2,497,000 (2) (3) $ 2,497,000 (2)
<FN>
- -------
(1) Change in control is defined as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934; or 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 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-five percent (25%), (20% in the case of Mr.
Levy and 50.1% in the case of Mr. Markel), of the voting power of the
Company's then outstanding securities; or if individuals who constitute the
Board of Directors cease for any reason to constitute at least a majority
thereof.
(2) In the event of termination without cause or a "constructive termination",
Mr. Markel would be entitled to receive a lump-sum payment of approximately
$1,997,000 representing three times his salary and estimated incentive,
plus $500,000 in settlement of his consulting agreement.
(3) In the event of a change in control as defined in (1) above, Mr. Markel has
the option to terminate his employment agreement at any time after July 31,
2010 and receive a lump-sum payment presently estimated at $1,862,000.
(4) A "constructive termination" event is (1) a material reduction of the
annual base and incentive compensation opportunities specified in the
officer's employment agreement to which he does not consent, (2) a failure
of Herley's successor after a change of control to assume the officer's
employment agreement, (3) a substantial change in the officer's position or
responsibility or (4) the officer's position relocates to more than 35
additional commute miles.
(5) If any payments or benefits received by Messrs. Levy or Markel would be
subject to the "golden parachute" excise tax under Section 4999 of the
Internal Revenue Code, we would be required to pay him such additional
amounts as may be necessary to place him in the same after-tax position as
if the payments had not been subject to the excise tax.
</FN>

Equity Compensation Plan Information

The following table sets forth the indicated information as of August 3, 2008
with respect to our equity compensation plans:

(c)
Number of securities
(a) remaining available
Number of securities (b) for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
- ------------- ------------------- ------------------- ------------------------

Equity compensation
plans approved by
security holders 2,263,418 $ 13.23 32,250
Equity compensation
plans not approved
by security holders 1,248,807 $ 17.64 228,700
--------- -------
Total 3,512,225 $ 14.80 260,950
========= =======

The following information is provided about our stock option plans:

2006 New Employee Stock Option Plan. The 2006 New Employee Stock Option
Plan covers 500,000 shares of common stock (as amended June 8, 2007). Options
granted under the plan are non-qualified stock options. Under the terms of the
plan, the exercise price for options granted under the plan will be the fair
market value at the date of grant. The nature and terms of the options to be
granted are determined at the time of grant by the compensation committee or the
board of directors. The options expire no later than ten years from the date of
grant, subject to certain restrictions. Options for 4000 and 250,000 shares were
granted under this plan during the fiscal years ended August 3, 2008 and July
29, 2007, respectively. Options for 213,000 shares of common stock are available
for grant and 287,000 were outstanding at August 3, 2008.

2003 Stock Option Plan. The 2003 Stock Option Plan covers 1,000,000 shares
of common stock. Options granted under the plan are non-qualified stock options.
Under the terms of the plan, the exercise price of options granted under the
plan will be the fair market value at the date of grant. The nature and terms of
the options to be granted are determined at the time of grant by the
compensation committee or the board of directors. If not specified, 100% of the
shares can be exercised one year after the date of grant. The options expire not
later than ten years from the date of grant, subject to certain restrictions.
Options for 12,000 shares of common stock were cancelled and no options were
granted during the fiscal year ended August 3, 2008. Options for 97,000 shares
were granted under this plan during the fiscal year ended July 29, 2007. Options
for 15,700 shares of common stock are available for grant and 954,800 were
outstanding at August 3, 2008.

2000 Stock Option Plan. The 2000 Stock Option Plan covers 1,500,000 shares
of common stock. Options granted under the plan are non-qualified stock options.
Under the terms of the plan, the exercise price of options granted under the
plan will be the fair market value at the date of grant. The nature and terms of
the options to be granted are determined at the time of grant by the
compensation committee or the board of directors. If not specified, 100% of the
shares can be exercised one year after the date of grant. The options expire not
later than ten years from the date of grant, subject to certain restrictions.
Options for 26,000 shares were granted under this plan during the fiscal year
ended July 29, 2007. Options for 30,500 shares of common stock were cancelled
and no options were granted during the fiscal year ended August 3, 2008. Options
for 32,250 shares of common stock are available for grant and 1,194,000 were
outstanding at August 3, 2008.

1998 Stock Option Plan. The 1998 Stock Option Plan, which has now expired
with respect to the granting of new options, covers 2,250,000 shares of common
stock. Options granted under the plan may be incentive stock options qualified
under Section 422 of the Internal Revenue Code of 1986, as amended or
non-qualified stock options. Under the terms of the plan, the exercise price of
options granted under the plan will be the fair market value at the date of
grant. Prices for incentive stock options granted to employees who own 10% or
more of our stock are at least 110% of market value at the date of grant. The
nature and terms of the options to be granted are determined at the time of
grant by the compensation committee or the board of directors. If not specified,
100% of the shares can be exercised one year after the date of grant. The
options expire not later than ten years from the date of grant, subject to
certain restrictions. Non-qualified stock options for 33,500 shares were granted
under this plan during the fiscal year ended July 29, 2007. Options for 51,000
shares of common stock were cancelled and no options were granted during the
fiscal year ended August 3, 2008. At August 3, 2008 options to purchase
1,002,342 shares of common stock were outstanding under this plan.

1997 Stock Option Plan. The 1997 Stock Option Plan, which has now expired
with respect to the granting of new options, covers 2,500,000 shares of common
stock. Options granted under the plan may be incentive stock options qualified
under Section 422 of the Internal Revenue Code of 1986, as amended or
non-qualified stock options. Under the terms of the plan, the exercise price of
options granted under the plan will be the fair market value at the date of
grant. Prices for incentive stock options granted to employees who own 10% or

more of our stock are at least 110% of market value at the date of grant. The
nature and terms of the options to be granted are determined at the time of
grant by the compensation committee or the board of directors. If not specified,
100% of the shares can be exercised one year after the date of grant. The
options expire not later than ten years from the date of grant, subject to
certain restrictions. At August 3, 2008 options to purchase 67,076 shares of
common stock were outstanding under this plan.

1996 Stock Option Plan. The 1996 Stock Option Plan, which has now expired
with respect to the granting of new options, covers 1,000,000 shares of common
stock. Options which have been granted under the plan are non-qualified stock
options. Under the terms of the plan, the exercise prices of the options granted
under the plan were at the fair market value at the date of grant. The options
expire not later than ten years from the date of grant. At August 3, 2008,
non-qualified options to purchase 7,007 shares of common stock were outstanding
under this plan.

Employee Savings Plan

We maintain an Employee Savings Plan ("Plan") which qualified as a thrift plan
under Section 401(k) of the Internal Revenue Code (the "Code"). Effective August
1, 2006, the Plan was amended to allow employees to elect salary deferrals up to
the maximum dollar amounts permissible under Code Section 402(g) not to exceed
the limits of Code Section 401(k), 404 and 415. For the Plan year beginning
August 1, 2005, the Plan was amended to be considered a "Safe Harbor" plan,
where a contribution will be made to eligible participants in an amount equal to
100% of the amount of each participant's elective deferral that does not exceed
3% of compensation, plus 50% of the amount of the elective deferral that exceeds
3% of compensation up to a maximum contribution of 5% of compensation. Under the
Safe Harbor provision, all contributions are 100% vested when made. Additional
Company contributions can be made by us, depending on profits. The aggregate
benefit payable to an employee is dependent upon the employee's rate of
contribution, the earnings of the fund, and the length of time such employee
continues as a participant. ICI also has a "Safe Harbor" plan, where a
contribution will be made to eligible participants in an amount equal to 100% of
the amount of each participant's elective deferral that does not exceed 6% of
compensation, subject to the Code limitations discussed above. We recognized
expenses of approximately $1,368,000, $1,766,000 and $1,773,000 under the plans
for the fifty-three weeks ended August 3, 2008, and the fifty-two weeks ended
July 29, 2007 and July 30, 2006, respectively. We also contributed to a similar
plan through EWST whereby we match employee elective contributions up to a
maximum of 5% of compensation. Expenses recognized for 2008, 2007 and 2006 were
approximately $86,000, $75,200 and $55,900, respectively. For the year ended
August 3, 2008, $9,000 was contributed by us to this plan for each of Messrs.
Levy, Markel, and Purcell. A total of $76,375 was contributed for all officers
and directors as a group.

Directors' Compensation

Directors who are also employees of the Company are not separately compensated
for their services as directors.

Cash Compensation to Board Members. Directors who are not our employees receive
an annual fee of $15,000 and a fee of $1,500 for each board of directors meeting
attended. The Corporate Governance Committee Chairman receives an annual fee of
$15,000, and other members of the Corporate Governance Committee receive $5,000
annually. The Audit Committee Chairman receives an annual fee of $25,000, and
other members of the Audit Committee receive $10,000 annually. The Compensation
Committee Chairman receives an annual fee of $7,500, and other members of the
Compensation Committee receive $5,000 annually. The Nominating Committee
Chairman receives an annual fee of $7,500, and other members of the Nominating
Committee receive $5,000 annually.

Equity Compensation to Board Members. The Company grants options to purchase
shares of the Company's Common Stock to its outside directors on a periodic
basis. No options were granted to its outside directors during fiscal 2008.

Other. Board members are reimbursed for reasonable expenses in attending
meetings of the Board of Directors and for expenses incurred in connection with
their complying with our corporate governance policies. The Company also
provides directors' and officers' liability insurance and indemnity agreements
for our directors. No other compensation is provided to our directors.

Non-management Directors' Compensation for Fiscal 2008

The following table provides information with respect to all compensation
awarded to, earned by or paid to each person who served as a director (except
for Mr. Levy, our Chief Executive Officer, who receives no additional
compensation for his service on our Board) for all of fiscal 2008. Other than as
set forth in the table and the narrative that follows it, to date we have not
paid any fees to or reimbursed any expenses of our directors, except for
expenses incurred in connection with attendance at board meetings which in the
aggregate are less than $10,000 each, made any equity or non-equity awards to
directors, or paid any other compensation to directors.

Fees Earned
or Paid in Option
Name Cash ($) Awards ($) Total ($)
----- -------- ------ ---------

Rear Admiral Edward K. Walker, Jr. $100,000 (1) - $100,000
(Ret.)
Dr. Edward A. Bogucz $45,000 $45,000
-
Rear Admiral Robert M. Moore (Ret.) $52,500 $52,500
-
John A. Thonet $22,500 $22,500
-
Carlos C. Campbell $35,000 $35,000
-
- ----------
<FN>

(1) Includes $37,500 paid to Mr. Walker under a consulting arrangement for
services relating to corporate governance and ethics.
</FN>

Compensation Committee Interlocks and Insider Participation

In fiscal 2008, our Compensation Committee consisted of Dr. Edward A. Bogucz,
Chairman, and Messrs. Edward K. Walker, Jr., and Robert M. Moore. None of these
persons were our officers or employees during fiscal 2008 nor had any
relationship requiring disclosures in this Annual Report. Mr. Walker has a
consulting arrangement with us for services relating to corporate governance and
ethics at an annual fee of $75,000.

Indemnification Agreements

We have entered into separate indemnification agreements with our officers and
directors. We have agreed to provide indemnification with regard to certain
legal proceedings so long as the indemnified officer or director has acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, our best interests and with respect to any criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. We only provide
indemnification for expenses, judgments, fines and amounts paid in settlement
actually incurred by the relevant officer or director, or on his or her behalf,
arising out of proceedings brought against such officer or director by reason of
his or her corporate status.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters

The following table presents certain information regarding the beneficial
ownership of our common stock as of October 3, 2008 by (a) each beneficial owner
of 5% or more of our outstanding stock known to us, based solely on filings with
the Securities and Exchange Commission, (b) each of our directors, (c) each of
our Named Executive Officers and (d) all of our directors and executive officers
as a group.

The percentage of beneficial ownership for the table is based on 13,526,402
shares of our common stock outstanding as of October 3, 2008. To our knowledge,
except under community property laws or as otherwise noted, the persons and
entities named in the table have sole voting and sole investment power over
their shares of our common stock. Unless otherwise indicated, each beneficial
owner listed below maintains a mailing address of c/o Herley Industries, Inc.,
101 North Pointe Boulevard, Lancaster, PA 17601.

The number of shares beneficially owned by each shareholder is determined under
SEC rules and is not necessarily indicative of beneficial ownership for any
other purpose. Under these rules, beneficial ownership includes those shares of
common stock over which the shareholder has sole or shared voting or investment
power and those shares of common stock that the shareholder has the right to
acquire within 60 days after October 3, 2008 through the exercise of any stock
option. The "Percentage of Shares" column treats as outstanding all shares
underlying such options held by the shareholder, but not shares underlying
options held by other shareholders.

Common Stock % of Outstanding
Name of Beneficial Owner Beneficially Owned (1) (2) Shares
- ------------------------ -------------------------- ----------------

Myron Levy 1,527,515 10.5%
Jeffrey L. Markel (3) 100,000 *
Kevin J. Purcell (4) 10,000 *
Carlos C. Campbell 35,000 *
John A. Thonet (5) 107,649 *
Adm. Edward K. Walker, Jr. (Ret.) 58,500 *
Dr. Edward A. Bogucz 37,575 *
Adm. Robert M. Moore (Ret.) 37,500 *
GAMCO Investors (6) 2,806,272 20.7%
Third Avenue Management, Inc. (7) 2,666,093 19.7%
Dimensional Fund Advisors, Inc. (8) 1,189,257 8.8%
Wells Capital Management, Inc. (9) 1,178,756 8.7%
Lee N. Blatt (10) 1,544,399 10.4%
Directors and executive
officers as a group
(8 persons) 1,913,739 12.8%
<FN>
- -------
* Indicates ownership of less than one percent.

(1) No officer or director owns more than one percent of the outstanding shares
of common stock unless otherwise indicated. Ownership represents sole
voting and investment power.

(2) Includes beneficial ownership of the following number of shares that may be
acquired within 60 days of October 3, 2008 pursuant to stock options
awarded under our stock option plans:

Myron Levy 1,075,000 John A. Thonet 87,500
Adm. Edward K. Walker, Jr. 57,000 Jeffrey L. Markel 100,000
Dr. Edward A. Bogucz 37,500 Kevin J. Purcell 10,000
Adm. Robert M. Moore 37,500 Carlos C. Campbell 35,000
Directors and executive
officers as a group 1,439,500

(3) Mr. Markel was appointed Chief Operating Officer in June 2007.
(4) Mr. Purcell was appointed Vice President and Chief Financial Officer in
June 2006.
(5) Does not include 155,998 shares, owned by Mr. Thonet's children, Hannah and
Rebecca Thonet, and 30,669 shares owned by his wife, Kathi Thonet. Mr.
Thonet disclaims beneficial ownership of these shares.
(6) Address is One Corporate Center, Rye, NY 10580. (7) Address is 622 Third
Avenue, New York, NY 10017. (8) Address is 1299 Ocean Avenue, Santa Monica,
CA 90401.
(9) Address is 525 Market Street, 10th Floor, San Francisco, CA 94105.
(10) Includes beneficial ownership of 1,301,000 shares that may be acquired
within 60 days of September 28, 2007 pursuant to stock options. Mr. Blatt
entered into a voting trust agreement wherein sole voting power to
1,301,000 shares under stock options held by him and 21,099 shares held in
his IRA was granted to the Company's Chairman, Myron Levy. Mr. Blatt's
address is 471 N. Arrowhead Trail, Vero Beach, FL 32963
</FN>

Item 13. Certain Relationships and Related Transactions, and Director
Independence.

Effective October 12, 2006 and as a condition to entering into an Administrative
Agreement with the Department of the Navy we entered into an agreement (the
"Agreement") with Lee N. Blatt which provides that all outstanding stock options
previously issued to him which are all vested and fully exercisable shall
continue to be exercisable by him or, following his death, by his designated
beneficiaries, on or before the expiration date of the specific option. In the
event of a "change of control" of the Company as defined in the Employment
Agreement all remaining payments due under the Agreement become immediately due
and payable.

Prior to the acquisition of Micro Ssystems, Inc. ("MSI"), MSI had leased one of
its two buildings in Fort Walton Beach, Florida from MSI Investments, a Florida
General Partnership. MSI Investments is owned by four individuals, two of whom
are currently employees of MSI and one serves as a consultant.

We entered into a 10 year lease agreement with a partnership partially owned by
the children of an officer of the Company for our facility in Farmingdale, NY.
The lease provides for initial minimum annual rent of $312,000 subject to
escalation of approximately 4% annually throughout the 10 year term.
Additionally, in March 2000, we entered into another 10 year lease with the same
partnership for additional space. The initial minimum annual rent of $92,000 is
subject to escalation of approximately 4% annually. On August 24, 2005, we
amended the agreement to incorporate the two individual leases into a single
lease and extended the term of the lease to August 31, 2010. During the fourth

quarter of fiscal 2008 we decided to close our manufacturing facility in
Farmingdale, NY and transfer its contracts and assets to our other facilities in
Whippany, New Jersey; Woburn, Massachusetts; Lancaster, Pennsylvania; and
Jerusalem, Israel. It is expected that the closure of the facility will be
substantially completed by the end of December 2008.

Item 14. Principal Accountant Fees and Services.

Marcum & Kliegman LLP is our independent registered public accounting firm and
performed the audit of our consolidated financial statements for fiscal years
2008, and 2007. The following table sets forth estimated fees for the audits of
the fiscal years ended August 3, 2008 and July 29, 2007 performed by Marcum &
Kliegman LLP:

2008 2007
---- ----

Audit Fees (1) $ 638,500 $ 568,000
Audit related fees (2) $ 28,179 $ 60,000
<FN>

- ---------------

(1) Audit Fees includes fees for professional services provided in connection
with the audits of our financial statements, the review of our quarterly
financial statements, Sarbanes-Oxley 404 related services, consents, and
audit services provided in connection with other statutory or regulatory
filings. All such services were pre-approved by the Audit committee.

(2) Audit related fees includes the audit of our 401k plan.
</FN>

The Audit Committee has sole authority to appoint, determine funding for, retain
and oversee our independent auditors and to pre-approve all audit services and
permissible non-audit services. The Audit Committee has delegated to Adm. Moore
the authority to pre-approve audit-related and non-audit services not prohibited
by law to be performed by our independent registered public accounting firm and
associated fees, provided that he reports any pre-approval of audit-related or
non-audit related services and fees to the full Audit Committee at its next
regular meeting.

Marcum & Kliegman LLP did not render any other non-audit related services during
fiscal years 2008 and 2007.

SIGNATURES:

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on December 1, 2008.

HERLEY INDUSTRIES, INC.

By: /S/ Myron Levy
-------------------------------------
Myron Levy, Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on December 1, 2008 by the following persons in the
capacities indicated:

By: /S/ Myron Levy Chairman of the Board,
----------------------------------
Myron Levy Chief Executive Officer and Director
(Principal Executive Officer)

By: /S/ Kevin J. Purcell Vice President and
------------------------------------
Kevin J. Purcell Chief Financial Officer
(Principal Financial Officer)

By: /S/ John A. Thonet Secretary and Director
------------------------------------
John A. Thonet

By: /S/ Carlos C. Campbell Director
------------------------------------
Carlos C. Campbell

By: /S/ Edward K. Walker, Jr. Director
------------------------------------
Edward K. Walker, Jr.

By: /S/ Robert M. Moore Director
------------------------------------
Robert M. Moore

By: /S/ Edward A. Bogucz Director
------------------------------------
Edward A. Bogucz