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
-----------------------------------
<PAGE>
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
<TABLE>
<CAPTION>
                                                                                                        Director
         Name of Director                        Age      Principal Occupation                            Since
         ----------------                        ---      --------------------                          --------
  <S>                                            <C>      <C>                                             <C>
  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>
</TABLE>
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.

                                       2
<PAGE>
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

                                       3
<PAGE>
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

                                        4
<PAGE>
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.

                                       5
<PAGE>
     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.

                                       6

<PAGE>
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.
<TABLE>
<CAPTION>
                                                                               Non-Equity
  Name and Principal                                             Option      Incentive Plan      All Other
       Position          Year       Salary       Bonus (2)     Awards (3)     Compensation    Compensation (7)      Total
       --------          ----       ------       ---------     ----------     ------------    ----------------   ---------
 <S>                    <C>        <C>                          <C>             <C>              <C>             <C>
 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>
</TABLE>
<TABLE>
<CAPTION>
                                                                       Other
                                                                      Personal
                                 Matching                             Including
                      Fiscal   Contribution                 Medical   Personal
                       Year     to Employee   Supplemental  Insurance  Use of
                               Savings Plan  Life Insurance Benefits    auto       Total
                       ----    ------------  -------------- --------    ----       -----
<S>                    <C>        <C>           <C>          <C>        <C>      <C>
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
</TABLE>
                                       7
<PAGE>
     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.
<TABLE>
<CAPTION>
                                                Option Awards
                                                --------------
                           Number of         Number of
                           securities        securities
                           underlying        underlying
                          unexercised       unexercised        Option        Option
                          options (#)         options         Exercise    Expiration
         Name             Exercisable    (#) Unexercisable   Price ($)        Date
         ----             -----------    -----------------   ---------        ----
<S>                        <C>               <C>              <C>          <C>
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
</TABLE>
     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.

                                       8
<PAGE>
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.
<TABLE>
<CAPTION>
                                                                                       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)
            -----           --------              -------         -----------          ----------
     <S>                  <C>                   <C>                 <C>                <C>
     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>
</TABLE>
                                       9
<PAGE>
Equity Compensation Plan Information

The following  table sets forth the indicated  information  as of August 3, 2008
with respect to our equity compensation plans:
<TABLE>
<CAPTION>
                                                                                                 (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))
-------------                           -------------------     -------------------    ------------------------
<S>                                            <C>                     <C>                     <C>
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
                                               =========                                      =======
</TABLE>
     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

                                       10
<PAGE>
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.

                                       11
<PAGE>
     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 $10,000 each,  made any equity or non-equity  awards to
directors, or paid any other compensation to directors.
<TABLE>
<CAPTION>
                                         Fees Earned
                                         or Paid in      Option
 Name                                     Cash ($)       Awards ($)    Total ($)
 -----                                    --------       ------        ---------
 <S>                                      <C>              <C>           <C>
 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>
</TABLE>
     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.

                                       12
<PAGE>
<TABLE>
<CAPTION>
                                                           Common Stock          % of Outstanding
Name of Beneficial Owner                            Beneficially Owned (1) (2)       Shares
------------------------                            --------------------------   ----------------
<S>                                                            <C>                    <C>
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>
</TABLE>
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

                                       13
<PAGE>
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:
<TABLE>
<CAPTION>
                                               2008             2007
                                               ----             ----
          <S>                               <C>               <C>
          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>
</TABLE>
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.

                                       14
<PAGE>
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


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