EXHIBIT 10.18


                        FIFTH AMENDMENT TO LOAN AGREEMENT

     THIS FIFTH AMENDMENT TO LOAN AGREEMENT (the "Fifth Amendment"), is made and
entered into this 13th day of October,  2009,  by and among  HERLEY  INDUSTRIES,
INC.  (the  "Borrower"),  MANUFACTURERS  AND TRADERS TRUST COMPANY and PNC BANK,
NATIONAL  ASSOCIATION,  successor to Bank of Lancaster County, a division of BLC
Bank N.A.,  successor to Bank of  Lancaster  County,  N.A.  (each a "Lender" and
collectively,  the "Lenders") and  MANUFACTURERS  AND TRADERS TRUST COMPANY,  as
agent (in such capacity, the "Agent").

                               B A C K G R O U N D

     A.  Borrower  has  borrowed  from Lenders and desires to continue to borrow
from Lenders in connection with the operation of its business(es).  On April 30,
2007,  the parties  entered into a Loan  Agreement,  upon which monies have been
advanced, which was amended by an Amendment to Loan Agreement dated May 2, 2008,
a Second Amendment to Loan Agreement dated September 11, 2008, a Third Amendment
to Loan  Agreement  dated May 4, 2009 and a Fourth  Amendment to Loan  Agreement
dated July 30, 2009 (as amended,  the "Loan  Agreement").  The Loan Agreement is
incorporated  herein by reference and made a part hereof.  All capitalized terms
used herein without  definition  which are defined in the Loan  Agreement  shall
have the meanings set forth therein.

     B. Borrower has requested  Lenders to amend certain  provisions of the Loan
Agreement.

     C. The parties desire to enter into this Fifth Amendment to effectuate such
amendments.

     D. Borrower has no defense,  charge,  defalcation,  claim,  plea, demand or
set-off against the Loan Agreement or any of the Loan Documents.

     NOW,  THEREFORE,  for  valuable  consideration,  receipt of which is hereby
acknowledged,  and  intending to be legally  bound  hereby,  the parties  hereto
covenant and agree as follows:

     1. That the above Background is incorporated herein by reference.

     2. That  Section  2.5(a) of the Loan  Agreement be and hereby is amended to
substitute  "25 basis points (0.25%) per annum" for "20 basis points (0.20%) per
annum"  appearing  therein  as and  for  the  Unused  Facility  Fee and to add a
requirement that the Borrower agrees to pay to the Agent for the ratable benefit
of the Lenders a "Used  Facility Fee" equal to 25 basis points (0.25%) per annum
(calculated  on the basis of a 360 day year for the actual days  elapsed) of the
used portion of the Aggregate  Revolving Credit Commitments during any period(s)
that the Tangible Net Worth of the Borrower,  on a consolidated  basis,  is less
than  $90,000,000.00.  For  purposes  of  calculating  the used  portion  of the
Aggregate  Revolving Credit  Commitments,  Letters of Credit made under the Loan
shall  be  deemed  to be  unused  portions  of the  Aggregate  Revolving  Credit
Commitments.  The Used Facility Fee shall be paid in immediately available funds
and shall be  calculated  on the basis of the average  daily used portion of the
Aggregate  Revolving  Credit  Commitments  and  shall be  payable  quarterly  in
arrears.  When  received,  the Agent will promptly  remit to each Lender its pro
rata share of the Used  Facility Fee based upon such Lender's  Revolving  Credit
Percentage.
<PAGE>
     3. That  Section  2.5(b) of the Loan  Agreement be and hereby is amended to
substitute "one and one-half percent  (1.50%)" for "one and one-quarter  percent
(1.25%)"  appearing therein as and for the amount of the annual letter of credit
fee that is now due and payable by the Borrower on the  aggregate  amount of new
letters of credit and  annual  renewals  on the  anniversary  dates of  existing
letters of credit pursuant to Section 2.4(b).

     4. That  Section  6.9 of the Loan  Agreement  be and  hereby is  amended to
provide  that the  Borrower  shall  not  permit  the  Tangible  Net Worth of the
Borrower,  on a consolidated basis, to be less than  $80,000,000.00  through the
second  quarter of fiscal  year 2010 or less than  $85,000,000.00  for the third
quarter of fiscal year 2010 or less than  $90,000,000.00  for the period  ending
fiscal year end 2010 and thereafter,  to be tested quarterly.  The Lenders waive
non-compliance  by the Borrower  with the  Tangible  Net Worth  covenant for the
period ending fiscal year end August 2, 2009.

     5. That the Borrower shall pay to the Agent for the ratable  benefit of the
Lenders a waiver and modification fee in the amount of $40,000.00 upon execution
of this Fifth Amendment.

     6.  That the  Borrower  reaffirms  and  restates  the  representations  and
warranties  set forth in  Section 7 of the Loan  Agreement,  as  amended by this
Fifth Amendment,  and all such  representations and warranties shall be true and
correct  on the date  hereof  with the same  force and effect as if made on such
date, except as they may specifically refer to an earlier date(s).  The Borrower
represents and warrants (which  representations and warranties shall survive the
execution and delivery  hereof) to the Agent and the Lenders that (i) this Fifth
Amendment has been duly  authorized,  executed and  delivered  and  constitute a
legal,  valid and binding  obligation of the  Borrower,  and is  enforceable  in
accordance  with its terms;  (ii) the Borrower is not in default  under the Loan
Agreement  or any of the  other  Loan  Documents,  and the  Borrower  is in full
compliance with all of the terms and conditions thereof;  (iii) no event exists,
or is likely to exist in the future,  which with the passage of time, notice, or
both,  will  constitute a default  under the Loan  Agreement or any of the other
Loan  Documents;  and (iv) there have been no  material  adverse  changes in the
Borrower's  financial  condition or operations which would cause the Borrower to
be in  default  under  any of the  financial  covenants  contained  in the  Loan
Documents.

     7.  That the terms  and  conditions,  paragraph  sections,  collateral  and
guaranty requirements,  representations and warranties of the Loan Agreement and
Loan Documents,  together with all  understandings by and between the parties to
this Fifth Amendment evidenced by writings of the same or subsequent date not in
conflict with the above modifications under this Fifth Amendment shall remain in
full force and effect as the agreement of the parties relative to the Loans, and
are hereby ratified, reaffirmed and confirmed. Any past, present or future delay
or failure of the Agent and the Lenders to demand or enforce strict  performance
of each term and  condition of the Loan  Agreement and Loan  Documents,  and any
past, present or future delay or failure of the Agent or the Lenders to exercise
any right,  power or privilege shall not be deemed or construed as a waiver with
respect to the same or any other matter, or preclude the future exercise of such
right,  power or  privilege,  or be  construed  or  deemed  to be a waiver of or
acquiescence in any such default.

     8. That all  references to the Loan  Agreement,  the Loan Documents and the
other  documents  and  instruments   delivered  pursuant  to  or  in  connection
therewith, as well as in writings of the same or subsequent date, shall mean the
Loan  Agreement  as amended  hereby  and as each may in the  future be  amended,
restated, supplemented or modified from time to time. Further, all references to

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<PAGE>
Bank of Lancaster County, N.A. in the Loan Agreement, the Loan Documents and the
other documents and instruments delivered pursuant to or in connection therewith
shall  now be  deemed  to have  been  made and to refer  to PNC  Bank,  National
Association,  successor  to Bank of  Lancaster  County,  a division of BLC Bank,
N.A., successor to Bank of Lancaster County, N.A.

     9.  That the  parties  hereto  shall,  at any  time,  and from time to time
following  the execution of this Fifth  Amendment,  execute and deliver all such
further  instruments  and take  all such  further  action  as may be  reasonably
necessary  or  appropriate  in order to carry out the  provisions  of this Fifth
Amendment.

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the Borrower,
the Lenders and the Agent have  caused  this Fifth  Amendment  to be executed by
their proper corporate officers thereunto duly authorized as of the day and year
first above written.

ATTEST/WITNESS:                    HERLEY INDUSTRIES, INC.

/s/ John Carroll                   By:   Anello Garefino
-------------------------------         ----------------------------------------

Title: VP Human Resources          Title: Chief Financial Officer
-------------------------------         ----------------------------------------
                                         MANUFACTURERS AND TRADERS
                                         TRUST COMPANY, in its capacities as
                                         Agent and Lender


                                         By: /s/ Jane E. McMinn
                                            ------------------------------------
                                            Jane E. McMinn, Vice President


                                         PNC BANK, NATIONAL ASSOCIATION


                                         By: /s/ Sharon Mueller
                                             -----------------------------------


                                         Title: Vice President
                                                --------------------------------



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