Unassociated Document


    Exhibit
10.2

    


    AMENDMENT
#3 TO

    CARL
W. GERST, JR. EMPLOYMENT AGREEMENT

    


    This sets forth Amendment #3 to the
Employment Agreement entered into between Anaren, Inc. (“Employer”) and Carl W.
Gerst, Jr. (“Mr. Gerst”) dated February 14, 2004.

     

    RECITALS

     

    1.           The
original term of the Employment Agreement was scheduled to expire as of June 30,
2007.

     

    2.           Pursuant
to Amendment #1 and Amendment #2 to the Employment Agreement, the term of the
Employment Agreement was extended and now expires on June 30, 2009, subject to
the termination provisions provided in the Employment Agreement.

     

    3.           Amendment
#2 to the Employment Agreement also modified the date as of which “Severance
Compensation” would be payable to Mr. Gerst pursuant to the Employment
Agreement.

     

    4.           The
Compensation Committee of Employer’s Board of Directors has authorized the
payment of the Severance Compensation to Mr. Gerst on January 12, 2009 in
accordance with the terms of this Amendment #3.

     

    5.           The
Compensation Committee of Employer’s Board of Directors also has authorized
additional changes to the Employment Agreement to reflect the application of
Internal Revenue Code Section 409A to certain provisions of the Employment
Agreement.

     

    TERMS

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.           Paragraph
1(c) of the Employment Agreement is hereby amended to provide that the Severance
Compensation shall be paid to Mr. Gerst in a single lump sum on January 12,
2009.  The amount payable to Mr. Gerst shall equal the present value
of 36 monthly installments of $20,833.33, if such installment payments began on
January 15, 2009 and continued on the 15th day of
each month thereafter until an aggregate total of 36 installments were paid and
if a discount rate of 6.1% was applied.  The foregoing lump sum
payment of Severance Compensation shall be reduced by required income and
employment tax withholding.  Upon making the lump sum payment to Mr.
Gerst, or in the event of his death, to his spouse, the Employer will have no
further obligation to Mr. Gerst or his spouse for the payment of Severance
Compensation under any circumstances.  In all cases, the Employer
shall have no further obligation to pay Severance Compensation upon the death of
both Mr. Gerst and his spouse.

     

    2.           Clauses
(i) and (ii) of subparagraph 3(e) of the Employment Agreement are amended and
restated to provide in their entirety as follows (the amended portions are
underscored):

    
      
        	 	 	 
	
                 
      

              	
                (i)

              	
                the excess (if any) of
      (A) Employee's regular Base Salary for the balance of the Period of
      Employment, minus (B) the Severance Compensation paid to or on behalf of
      Employee pursuant to subparagraph 1(c) of this Agreement (as
      amended), 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 permit the
      Employee to purchase any portion or all of the Employer stock not yet
      purchased pursuant to each such option until the earliest of
      the first anniversary of the Employee’s termination, the latest date upon
      which the option could have expired by its original terms under any
      circumstances, or the tenth anniversary of the date the option was
      granted.

            


    

    


    
      
        
        

      

      
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    3.           Clause
(ii) of subparagraph 6(a) of the Employment Agreement is amended and restated to
provide in its entirety as follows (the amended portion is
underscored):

    
      
        	 	 	 
	
                 
      

              	
                (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 or, if earlier, until
      the latest date upon which the option could have expired by its original
      terms under any
circumstances.

              


      

    

    


    4.           Subparagraph
6(b) of the Employment Agreement is amended and restated to provide in its
entirety as follows (the amended portions are underscored):

     

    (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 this paragraph 6 or
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 to minimize or eliminate the
application of Internal Revenue Code
Section 280G; but only if and to the extent such restructuring will not result
in the premature recognition of income or the imposition of excise taxes under
Internal Revenue Code Section 409A.  If an agreement to
restructure payments is not 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 “excess parachute payments”; provided that Employer shall
reimburse Employee for any excise taxes owed by Employee on such “excess
parachute payments” and for income and excise taxes owed on the
reimbursement.  Reimbursement shall be made within 90 days of the date
that Employee remits the related excise and income taxes.

    


    5.           Paragraph
13 of the Employment Agreement is amended by adding the following at the end of
Paragraph 13:

     

    This
Agreement shall be interpreted and applied in all circumstances in a manner that
is consistent with the intent of the parties that amounts payable pursuant to
this Agreement shall not be subject to the premature income recognition or
adverse tax provisions of Internal Revenue Code Section
409A.  Accordingly, to the extent payments and/or benefits provided
pursuant to this Agreement result in the deferral of compensation under Internal
Revenue Code Section 409A, such payments and/or benefits that become payable as
a result of Employee’s separation from service shall not be provided earlier
than six months following Employee’s separation from service, if Employee is a
“specified employee” within the meaning of Internal Revenue Code Section
409A.

    


    
      
         

      

      
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    6.           All
other terms of the Employment Agreement, as amended, will remain in full force
and effect.

     

     

    ANAREN,
INC.

    
      
        
          
            
              
                	 	 
	 	 
	
                        s/s Lawrence A. Sala

                      	
                        s/s Carl W. Gerst, Jr.

                      
	
                        Lawrence
      A. Sala

                      	
                        Carl
      W. Gerst, Jr.

                      
	
                        President
      and CEO

                      	 
      
	 
      	 
      
	
                        Dated:  December
      30, 2008

                      	
                        Dated:  December
      30,
2008

                      


              

            

          

        

      

    

     

    
      
         

      

      
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