Exhibit 10.1 Employment Agreement, effective as of February 14, 2004, between
             Anaren, Inc. and Carl W. Gerst, Jr.

                              EMPLOYMENT AGREEMENT

            This sets forth the terms of the Employment Agreement ("Agreement")
made effective as of February 14, 2004 between Anaren, Inc. ("Employer"), a New
York corporation with common stock publicly traded on the NASDAQ, and Carl W.
Gerst, Jr. ("Employee" or "Mr. Gerst"), an individual currently residing at 115
E. Genesee Street, Skaneateles, New York 13152.

                                    RECITALS

A.    Mr. Gerst is a co-founder of Anaren and is currently employed by Anaren as
      its Chief Technical Officer.

B.    Mr. Gerst has served on Anaren's Board of Directors since the Company was
      first incorporated in 1967, and currently is Vice Chairman of the Board.

C.    Anaren desires to retain the services of Mr. Gerst and to induce him to
      remain with Anaren.

D.    The Compensation Committee of Anaren's Board recommended, and the Board
      unanimously approved at its February 14, 2004 regular meeting, that the
      Company enter into an Employment Agreement with Mr. Gerst whereby in the
      event of a Change of Control of the Company, defined below, and Mr.
      Gerst's employment is involuntarily terminated, or if Mr. Gerst becomes
      disabled or ceases to be employed with Employer after the Term of this
      Employment Agreement, Mr. Gerst would be entitled to certain severance pay
      and benefits as provided for in this Agreement.


<PAGE>

            IN CONSIDERATION of the mutual covenants and representations
contained herein, and other good and valuable consideration, receipt of which is
acknowledged, the parties agree as follows:

      1. Employment.

            (a) Term. Employer shall continue to employ Employee, and Employee
shall continue to serve, as its Chief Technical Officer for a forty (40) month
term commencing on February 14, 2004 and ending on June 30, 2007 ("Period of
Employment"), subject to termination as provided in this Agreement.

            (b) Salary. During the Period of Employment, Employee's Base Salary
shall be set by Employer's Board of Directors but shall not be below $250,000
("Base Salary"), provided Employee continues to work his current normal work
schedule. Employee's Base Salary is payable in accordance with Employer's
regular payroll procedures for executive employees.

            (c) Successor Agreement. In the event Employee elects not to retire
at the end of the Period of Employment, Employee and Employer shall commence
good faith negotiations for a successor agreement, to be completed by May 31,
2007. If Employee elects to retire or Employer and Employee cannot agree on the
terms of Employee's continued employment by June 30, 2007, Employee shall be
entitled to be paid, as "Severance Compensation", an amount equal to three years
of the Base Salary in effect on the date Employee's employment ends. Payments
required pursuant to the preceding sentence shall be paid, unless otherwise
agreed upon by the parties, in thirty-six (36) substantially equal installments,
with the first installment paid within 3 business days following the date
Employee's employment ends, and each succeeding installment paid on a monthly
basis thereafter. If Mr.


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Gerst deceases prior to payment of the total Severance Compensation provided for
in this section (1(c)), Employer shall pay Mr. Gerst's spouse, Anne Marie Gerst,
any remaining severance compensation payments that were otherwise owed to Mr.
Gerst. It is the parties intent to pay the severance payments required by this
provision in such a manner to minimize any income tax obligations that would
otherwise be applicable. For the period during which the Severance Compensation
is paid, Employee shall not be eligible to participate in any Employer fringe
benefit plan except to the extent Employee is eligible for any post retirement
medical plan provided by Employer.

      2. Duties During The Period Of Employment. Employee shall continue to
perform his Chief Technical Officer duties, subject to the direction of
Employer's President & CEO and the discharge of such other duties and
responsibilities to Employer as may from time to time be reasonably assigned to
Employee by Employer's President & CEO. Employee shall devote his best efforts
to the affairs of Employer, serve faithfully and to the best of Employee's
ability, and devote all of Employee's working time and attention, knowledge,
experience, energy and skill to the business of Employer, except that Employee
may affiliate with professional associations, and civic organizations.

      3. Termination. Employee's employment by Employer shall be subject to
termination as follows:

            (a) Expiration of the Term. This Agreement shall terminate
automatically at the expiration of the Period of Employment, unless the parties
enter into a written agreement extending Employee's employment, except for the
continuing obligation of the parties as specified hereunder.


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<PAGE>

            (b) Termination Upon Death or Disability. This Agreement shall
terminate upon Employee's death or disability as follows:

                  (i)   This Agreement shall terminate automatically upon
                        Employee's death. In the event this Agreement is
                        terminated as a result of Employee's death, Employer
                        shall continue payments of Employee's Base Salary for a
                        period of ninety (90) days following Employee's death to
                        the beneficiary designated by Employee on the
                        "Beneficiary Designation Form" attached to this
                        Agreement as Appendix A.

                  (ii)  Employer may terminate this Agreement upon Employee's
                        disability. For the purpose of this Agreement,
                        Employee's inability to perform Employee's regular
                        duties by reason of physical or mental illness or injury
                        for a period of twenty-six (26) successive weeks
                        ("Disability Period") shall constitute "Disability." The
                        determination of Disability shall be made by a physician
                        selected by Employer and a physician selected by
                        Employee; provided, however, that if the two physicians
                        so selected shall disagree, the determination of
                        Disability shall be submitted to Arbitration in
                        accordance with the rules of the American Arbitration
                        Association, and the decision of the Arbitrator shall be
                        binding on both parties. During the Disability Period,
                        Employee shall be entitled to continue to receive his
                        regular Base Salary pursuant to Employer's short term
                        disability policy (and supplemented, if necessary, by


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<PAGE>

                        Employee's accrued but unused sick leave), reduced by
                        any other benefits to which Employee may be entitled for
                        the disability period on account of such disability,
                        including, but not limited to, benefits provided under
                        New York's Workers' Compensation law.

                  (iii) Upon termination of this Agreement due to Employee's
                        death or disability, Employer shall treat as immediately
                        exercisable each unexpired stock option held by Employee
                        that is not exercisable or that has not been fully
                        exercised, so as to permit Employee (or his beneficiary)
                        to purchase any portion or all of the Employer common
                        stock not yet purchased pursuant to each such option
                        until the one year anniversary of Employee's death or
                        disability.

                  (iv)  In the case of termination due to death, Mr. Gerst's
                        beneficiary will be entitled to life insurance proceeds
                        equal to three times Mr. Gerst's base salary at the time
                        of death. In the event these life insurance proceeds are
                        not paid to Mr. Gerst's beneficiary, Anaren will pay Mr.
                        Gerst's beneficiary the Severance Compensation provided
                        for in paragraph 1(c). Severance Compensation shall also
                        be payable to Mr. Gerst at the end of the Disability
                        Period if termination of this Agreement is due to
                        Employee's disability as defined in Section 3(b)(ii)
                        above.

            (c) Termination by Employer for Cause. Employer may terminate
Employee's employment immediately for "cause" by written notice to Employee. For
purpose of


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<PAGE>

this Agreement, termination shall be for "cause" if the termination results from
any of the following events:

                  (i)   material breach of this Agreement;

                  (ii)  documented misconduct as an executive or director of
                        Employer, including, but not limited to,
                        misappropriating any funds or property of Employer, or
                        attempting to obtain any personal benefit from any
                        transaction to which Employer is a party or from any
                        transaction which any third party in which Employee has
                        an interest which is adverse to the interest of
                        Employer, unless, in either case, Employee shall have
                        first obtained the written consent of Employer's
                        President & CEO;

                  (iii) unreasonable neglect or refusal to perform the duties
                        assigned to Employee;


                  (iv)  conviction of a crime other than a vehicle and traffic
                        misdemeanor;

                  (v)   documented failure to follow the reasonable, written
                        instructions of the Employer's President & CEO or the
                        Board of Directors of Employer; or

                  (vi)  any knowing and material violation of the Security and
                        Exchange Commissions or NASDAQ's rules or regulations.

            Notwithstanding any other term or provision of this Agreement to the
contrary, if Employee's employment is terminated for cause, Employee shall
forfeit all rights to payments and benefits otherwise provided pursuant to this
Agreement; provided, however, that Base Salary will be paid to Employee through
the date of termination.


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<PAGE>

            (d) Termination by Employee for Good Reason. Employee's employment
with Employer may be terminated by Employee for "good reason". For purposes of
this Agreement "good reason" shall mean:

                  (i)   the assignment to Employee of any duties inconsistent
                        with Employee's position (including any change in his
                        status, offices, and titles) authority, duties,
                        responsibilities, or work location as contemplated by
                        paragraphs 1 and 2 of this Agreement; or

                  (ii)  any failure by Employer to comply with any of the
                        provisions of this Agreement, other than an isolated,
                        insubstantial and inadvertent failure not occurring in
                        bad faith and which is remedied by Employer promptly
                        after receipt of notice thereof given by Employee.

            (e) Termination by Employer for Reasons Other Than Cause or by
Employee for Good Reason. In the event Employer terminates Employee for reasons
other than cause, or in the event Employee terminates employment for good
reason, Employer shall pay/provide to Employee :

                  (i)   the greater of (A) the Severance Compensation described
                        in and payable in accordance with subparagraph 1(d) of
                        this Agreement or (B) Employee's regular Base Salary for
                        the balance of the Period of Employment, paid in a
                        single sum within 60 days following termination; and

                  (ii)  the right to exercise each unexpired stock option held
                        by Employee that is not exercisable or that has not been
                        fully exercised, so as to


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<PAGE>

                        permit the Employee to purchase any portion or all of
                        the Employer stock not yet purchased pursuant to each
                        such option until the first anniversary of the
                        Employee's termination.

      4. Fringe Benefits.

            (a) Benefit Plans. During the Period of Employment, Employee shall
be eligible to participate in Employer's Deferred Compensation Plan for Certain
Executive Employees, any employee pension benefit plans (as determined and
defined under Section 3(2) of the Employee Retirement Income Security Act of
1974 as amended), Employer paid group life insurance plans, medical plans,
dental plans, short term and long term disability plans, business travel
insurance programs and other fringe benefit programs maintained by Employer for
the benefit of its executive employees, including but not limited to four (4)
weeks of paid vacation. Except as modified by this Agreement, participation in
any of Employer's benefit plans and programs shall be based on, and subject to
satisfaction of, the eligibility requirements and other conditions of such plans
and programs.

            (b) Expenses. Upon submission to Employer of vouchers or other
required documentation, Employee shall be reimbursed for Employee's actual
out-of-pocket travel and other expenses reasonably incurred and paid by Employee
in connection with Employee's duties.

            (c) Other Benefits. During the Period of Employment, Employee shall
be entitled to receive the following additional benefits:

                  (i)   Reimbursement, plus an appropriate tax adjustment
                        ("gross-up"), of an amount equal to the annual premium
                        on a $1.0 million whole life insurance policy, which is
                        owned by Employee.


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<PAGE>

      5. Stock Options.

            (a) Prior Stock Option Grants. Pursuant to Employer's 1996 and 2000
incentive stock option plans, Employee has been granted options to purchase
shares of common stock of Employer. The parties hereby agree that the Plans and
any implementing option grant agreement shall be amended, if necessary, to
incorporate specific terms of this Agreement regarding the exercise of options
following Employee's termination of employment.

      6. Change of Control.

            (a) If Employee's employment with Employer is terminated by Employee
or Employer for any reason other than cause within two years following a "Change
of Control" that occurs during the Period of Employment, Employer shall:

                  (i)   pay Employee a severance benefit equal to the amount
                        (and at the time(s)) determined under subparagraph
                        3(e)(i) of this Agreement;

                  (ii)  treat as immediately exercisable each unexpired stock
                        option that is not otherwise exercisable or that has not
                        been fully exercised, so as to permit Employee to
                        purchase any portion or all of the Employer stock not
                        yet purchased pursuant to each such option until the
                        tenth anniversary of the date the option was granted to
                        Employee; and

                  (iii) waive all restrictions on any Employer stock granted to
                        Employee so as to permit Employee to dispose of any
                        restricted stock previously granted to Employee.

            (b) If any portion of the amounts paid to, or value received by
Employee following a "Change of Control" (whether paid or received pursuant to
his paragraph 6 or


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<PAGE>

otherwise) constitutes an "excess parachute payment" within the meaning of
Internal Revenue Code Section 280G, then the parties shall negotiate a
restructuring of payment dates and/or methods (but no payment amounts) to
minimize or eliminate the application of Section 280G. If an agreement to
restructure payments cannot be reached within sixty days of the date the first
payment is due under this paragraph 6, then payment shall be made without
restructuring. In that case, Employee shall be responsible for all taxes and
penalties payable by Employee as a result of Employee's receipt of an "excess
parachute payment".

            (c) For purpose of this paragraph 6, a "Change of Control" shall be
deemed to have occurred if:

                  (i)   any "person" including a "group" as determined in
                        accordance with Section 13D(3) of the Securities
                        Exchange Act of 1934, is or becomes a beneficial owner,
                        directly or indirectly, of securities of Employer
                        representing 30% or more of the combined voting power of
                        Employer's then outstanding securities;

                  (ii)  as a result of, or in connection with, any tender offer
                        or exchange offer, merger or other business combination
                        the persons who are directors of Employer before the
                        transaction shall cease to constitute a majority of the
                        Board of Directors of Employer or any successor to
                        Employer;

                  (iii) any tender offer or exchange offer, merger or other
                        business combination not approved by two-thirds of the
                        members of the Board of Directors in office immediately
                        prior to such event;


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<PAGE>

                  (iv)  Employer is merged or consolidated with another entity
                        and as a result of the merger or consolidation less than
                        70% of the outstanding voting securities of the
                        surviving or resulting corporation shall then be owned
                        in the aggregate by the former stockholders of Employer,
                        other than (A) affiliates within the meaning of the
                        Exchange Act or (B) any party to the merger or
                        consolidation;

                  (v)   A tender offer or exchange offer is made and consummated
                        for the ownership of securities of Employer representing
                        30% or more of the combined voting power of Employer's
                        then outstanding voting securities; or

                  (vi)  Employer transfers substantially all of its assets to
                        another corporation which is not controlled by Employer.

      7. Withholding. Employer shall deduct and withhold from compensation and
benefits provided under this Agreement all legally required taxes and any
benefit contributions required.

      8. Covenants.

            (a) Confidentiality. Employee shall not, without the prior written
consent of Employer, disclose or use in any way, either during his employment by
Employer or thereafter, except as required in the course of his employment by
Employer, any confidential business or technical information or trade secrets
acquired in the course of Employee's employment by Employer. Employee
acknowledges and agrees that it would be difficult to fully compensate Employer
for damages resulting from the breach or threatened breach of the foregoing
provision


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<PAGE>

and, accordingly, that Employer shall be entitled to temporary preliminary
injunctions and permanent injunctions to enforce this provision. Employer's
right to obtain injunctive relief shall not, however, diminish Employer's right
to claim and recover damages. Employee commits to use his best efforts to
prevent the publication or disclosure of any trade secret or any confidential
information concerning the business or finances of Employer or Employer's
affiliates, or any of its or their dealings, transactions or affairs which may
come to Employee's knowledge in the pursuance of its duties on behalf of
Employer.

            (b) No Competition. Employee's employment is subject to the
condition that during the term of his employment and for a period of thirty-six
(36) months from the date of the termination of his employment (the "Date of
Termination") Employee shall not, directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, individual proprietor,
lender, consultant or otherwise, or have any financial interest in, or aid or
assist anyone else in the conduct of any entity or business ("a Competitive
Operation") which principal business directly competes with Employer on the Date
of Termination. Ownership by Employee of not more than 5% of the voting stock of
any publicly held corporation shall not constitute a violation of this
paragraph.

            (c) Certain Affiliates of Employer. It is understood that Employee
may have access to technical knowledge, trade secrets and customer lists of
affiliates of Employer or companies which Employer may acquire in the future and
may serve as a member of the board of directors or as an officer or employee of
an affiliate of Employer. Employee commits that he shall not, during the term of
his employment by Employer or for a period of thirty-six (36) months thereafter,
in any way, directly or indirectly, own, manage, operate, control or participate


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<PAGE>

in the ownership, management, operation or control of, or be connected as an
officer, employee, partner, director, individual proprietor, lender, consultant
or otherwise aid or assist anyone else in any business or operation which
competes with or engages in the business of such an affiliate.

            (d) Termination of Payments. Upon the breach by Employee of any
covenant under this paragraph 8, Employer may offset and/or recover from
Employee immediately any and all of the Severance Compensation paid to Employee
under subparagraph 1(d) hereof in addition to any and all other remedies
available to Employer under law or in equity.

      9. Notices. Any notice which may be given hereunder shall be sufficient if
in writing and mailed by certified mail, return receipt requested, to Employee
at his residence and to Employer at P.O. Box 178, 6635 Kirkville Road, E.
Syracuse, New York 13057 or at such other addresses as either Employee or
Employer may, by similar notice, designate.

      10. Rules, Regulations and Policies. Employee shall abide by and comply
with all of the rules, regulations, and policies of Employer, including without
limitation Employer's policy of strict adherence to, and compliance with, any
and all requirements of the Security and Exchange Commission and the NASDAQ.

      11. No Prior Restrictions. Employee affirms and represents that Employee
is under no obligation to any former employer or other third party which is in
any way inconsistent with, or which imposes any restriction upon, the employment
of Employee by Employer, or Employee's undertakings under this Agreement.

      12. Return of Employer's Property. After Employee has received notice of
termination or at the end of the term of this Agreement whichever first occurs,
Employee shall immediately return to Employer all documents and other property
in his possession belonging to Employer.


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<PAGE>

      13. Construction and Severability. The invalidity of any one or more
provisions of this Agreement or any part thereof, all of which are inserted
conditionally upon their being valid in law, shall not affect the validity of
any other provisions to this Agreement; and in the event that one or more
provisions contained herein shall be invalid, as determined by a court of
competent jurisdiction, this instrument shall be construed as if such invalid
provisions had not been inserted.

      14. Governing Law. This Agreement was executed and delivered in New York
and shall be construed and governed in accordance with the laws of the State of
New York.

      15. Assignability and Successors. This Agreement may not be assigned by
Employee or Employer, except that this Agreement shall be binding upon, and
shall inure to the benefit of the successor of Employer through merger,
acquisition or corporate reorganization.

      16. Miscellaneous.

            (a) This Agreement constitutes the entire understanding and
agreement between the parties with respect to Employee's employment with
Employer and shall supersede all prior understandings and agreements.

            (b) This Agreement cannot be amended, modified or supplemented in
any respect, except by a subsequent written agreement entered into by the
parties.

            (c) The services to be performed by Employee are special and unique;
it is agreed that any breach of this Agreement by Employee shall entitle
Employer (or any successor or assigns of Employer), in addition to any other
legal remedies available to it, to apply to any court of competent jurisdiction
to enjoin such breach.

      17. Counterparts. This Agreement may be executed in counterparts, which
together shall constitute one in the same instrument.


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<PAGE>

      18. Jurisdiction and Venue. The jurisdiction of any proceeding between the
parties arising out of, or with respect to this Agreement, shall be with New
York State Supreme Court, and venue shall be in Onondaga County. Each party
shall be subject to the personal jurisdiction of Onondaga County Supreme Court.

                                          ANAREN, INC.

                                          By: /s/Lawrence A. Sala
                                              -------------------
                                          Lawrence A. Sala, President & CEO

                                          Date: April 21, 2004

                                          /s/ Carl W. Gerst, Jr.
                                          ----------------------
                                          Carl W. Gerst, Jr.
                                          Chief Technical Officer

                                          Date: April 20, 2004


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                                   APPENDIX A

                          BENEFICIARY DESIGNATION FORM

      Pursuant to the Employment Agreement between ANAREN, INC. and CARL W.
GERST, JR. dated as of February 14, 2004 ("Agreement"), I, Carl W. Gerst, Jr.
hereby designate Ann Marie Gerst, my spouse, as the beneficiary of amounts
payable upon my death in accordance with subparagraph 3(b)(ii) of the Agreement.
My beneficiary's current address is the same as mine.

Dated: April 20, 2004                                    /s/ Carl W. Gerst, Jr.
                                                         ----------------------
                                                             Carl W. Gerst, Jr.

/s/David M. Ferrara
-------------------
     Witness


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