Document:

Amended and Restated 2001 Incentive Plan

 Exhibit 4.2 
 OSCIENT PHARMACEUTICALS CORPORATION 
 AMENDED AND RESTATED 
 2001 INCENTIVE PLAN 
 1. DEFINED TERMS

 Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to
those terms. 
 2. GENERAL 
 The Plan has
been established to advance the interests of the Company by giving selected Employees, directors and other persons (including both individuals and entities) who provide services to the Company or its Affiliates stock-based incentives or incentives
based on Performance Criteria. 
 3. ADMINISTRATION 
 The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions
of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to carry out the purposes of the Plan. Once an Award has been communicated in writing to a Participant, the Administrator may
not, without the Participant’s consent, alter the terms of the Award so as to affect adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so in writing at the time of such
communication. In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator shall exercise its discretion consistent with qualifying the Award for such exception.

 4. LIMITS ON AWARD UNDER THE PLAN 
 a. Number of Shares. The maximum number of shares of Stock of the Company that may be delivered in satisfaction of Awards granted under the Plan shall be: (i) 5,000,000, plus (ii) the number of
unused Prior Plan shares of Stock. For purposes of this Section 4.a., shares of Stock shall be treated as unused Prior Plan shares (i) if they were available for issuance under the Prior Plan on the Effective Date (including, without
limitation, shares of Stock underlying awards outstanding under the Prior Plan on the Effective Date to the extent that such shares had not been delivered prior to the Effective Date), (ii) if they were subject to awards under the Prior Plan,
other than restricted stock awards, that were outstanding on the day preceding the Effective Date to the extent such Prior Plan awards are exercised or are satisfied, or terminate or expire, on or after the Effective Date without the delivery of
such shares, or (iii) if they were outstanding on the day preceding the Effective Date as restricted stock awards under the Prior Plan and are thereafter forfeited. For purposes of the first sentence of this Section 4.a., the following
shares shall not be considered to have been delivered under the Plan: (A) shares remaining under an Award that terminates without having been exercised in full; (B) shares subject to an Award, where cash is delivered to a Participant in
lieu of such shares; (C) shares of Restricted Stock that have been forfeited in accordance with the terms of the applicable Award; and (D) shares held back in satisfaction of tax withholding requirements from shares that would otherwise
have been delivered pursuant to an Award. The number of shares of Stock delivered under an Award shall be determined net of any previously acquired shares of Stock tendered by the Participant in payment of withholding taxes. To the extent consistent
with the requirements 

 
of Section 422 of the Code and regulations thereunder, and with other applicable legal requirements (including applicable stock exchange or similar
requirements), Stock issued under awards of an acquired company that are converted, replaced, or adjusted in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan. 
 b. Type of Shares. Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued
Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan. 
 c. Option
& SAR Limits. The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year, the maximum number of shares of Stock subject to SARs granted to any person in any calendar year and
the aggregate maximum number of shares of Stock subject to other Awards (other than Restricted Stock Awards) that may be delivered to any person in any calendar year shall be 750,000, and the aggregate maximum number of shares of Stock subject to
Restricted Stock Awards that may be delivered to any person in any calendar year shall each be 200,000. 
 d. Other Award
Limits. No more than $500,000 may be paid to any individual with respect to any Cash Performance Award. In applying the limitation of the preceding sentence: (A) multiple Cash Performance Awards to the same individual that
are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to one limit of such amount, and (B) multiple Cash Performance Awards to the same
individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company shall be subject in the aggregate to a separate limit of such amount. With respect to any Performance Award other
than a Cash Performance Award or a Stock Option or SAR, the maximum Award opportunity shall be 200,000 shares of Stock or their equivalent value in cash, subject to the limitations of Section 4.c. 
 5. ELIGIBILITY AND PARTICIPATION 
 The Administrator
will select Participants from among those Employees, directors and other individuals or entities providing services to the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to
the success of the Company and its Affiliates. Eligibility for ISOs is further limited to those individuals whose employment status would qualify them for the tax treatment described in Sections 421 and 422 of the Code. 
 6. RULES APPLICABLE TO AWARDS 
 a. ALL AWARDS

 (1) Terms of Awards. The Administrator shall determine the terms of all Awards subject to
the limitations provided herein. 
 (2) Performance Criteria. Where rights under an Award depend
in whole or in part on satisfaction of Performance Criteria, actions by the Company that have an effect, however material, on such Performance Criteria or on the likelihood that they will be satisfied will not be deemed an amendment or alteration of
the Award. 
 (3) Transferability Of Awards. Except as the Administrator otherwise expressly
provides, Awards may not be transferred other than by will or by the laws of descent and distribution, and during a Participant’s 

 
lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant’s incapacity, the person or persons
legally appointed to act on the Participant’s behalf). 
 (4) Vesting, Etc. Without limiting
the generality of Section 3, the Administrator may determine the time or times at which an Award will vest (i.e., become free of forfeiture restrictions) or become exercisable and the terms on which an Award requiring exercise will
remain exercisable. Unless the Administrator expressly provides otherwise, immediately upon the cessation of the Participant’s employment or other service relationship with the Company and its Affiliates, an Award requiring exercise will cease
to be exercisable, and all Awards to the extent not already fully vested will be forfeited, except that: 
 (A) all Stock
Options and SARs held by the Participant immediately prior to the cessation of the Participant’s employment or other service relationship for reasons other than death and except as provided in (B) below, to the extent then exercisable,
will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6.a.(4), and shall
thereupon terminate; 
 (B) all Stock Options and SARs held by a Participant immediately prior to his or her death, to the
extent then exercisable, will remain exercisable by such Participant’s executor or administrator or the person or persons to whom the Stock Option or SAR is transferred by will or the applicable laws of descent and distribution, for the lesser
of (i) a one year ending with the first anniversary of the Participant’s death period (or such longer or shorter period as is determined by the Administrator) or (ii) the period ending on the latest date on which such Stock Option or
SAR could have been exercised without regard to this Section 6.a.(4) and shall thereupon terminate; and 
 (C) all Stock
Options and SARs held by the Participant whose cessation of employment or other service relationship is determined by the Administrator in its sole discretion to result for reasons which cast such discredit on the Participant as to justify immediate
termination of the Award shall immediately terminate upon such cessation. 
 Unless the Administrator expressly provides otherwise, a
Participant’s “employment or other service relationship with the Company and its Affiliates” will be deemed to have ceased, in the case of an employee Participant, upon termination of the Participant’s employment with the Company
and its Affiliates (whether or not the Participant continues in the service of the Company or its Affiliates in some capacity other than that of an employee of the Company or its Affiliates), and in the case of any other Participant, when the
service relationship in respect of which the Award was granted terminates (whether or not the Participant continues in the service of the Company or its Affiliates in some other capacity). 
 (5) Taxes. The Administrator will make such provision for the withholding of taxes as it deems necessary. The
Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements. 
 (6) Dividend Equivalents, Etc. The Administrator may provide for the payment of amounts in lieu of cash
dividends or other cash distributions with respect to Stock subject to an Award. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with, the
requirements of Section 409A to the extent applicable. 
 (7) Rights Limited. Nothing in the
Plan shall be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or
potential profit in Awards will not constitute 

 
an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the
Company or Affiliate to the Participant. 
 (8) Section 162(m). In the case of an Award
intended to be eligible for the performance-based compensation exception under Section 162(m), the Plan and such Award shall be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such
exception. In the case of a Performance Award intended to qualify as performance-based for the purposes of Section 162(m) (other than a Stock Option or SAR), the Committee shall in writing preestablish one or more specific Performance Criteria
no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)). Prior to payment of any Performance
Award (other than a Stock Option or SAR) intended to qualify as performance-based under Section 162(m), the Committee shall certify whether the Performance Criteria have been attained and such determination shall be final and conclusive. If the
Performance Criteria with respect to any such Award are not attained, no other Award shall be provided in substitution of the Performance Award. 
 b. AWARDS REQUIRING EXERCISE 
 (1) Time And Manner Of Exercise. Unless the
Administrator expressly provides otherwise, (a) an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a written notice of exercise (in form acceptable to the Administrator) signed
by the appropriate person and accompanied by any payment required under the Award; and (b) if the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the
Award has the right to do so. 
 (2) Exercise Price. The Administrator shall determine the
exercise price of each Stock Option and the base amount of each SAR, provided that such exercise price or base amount, as the case may be, may not be less than the fair market value of the Stock subject to the Stock Option or SAR, as the case may
be, determined as of the date of grant. Fair market value shall be determined by the Administrator consistent with the requirements of Section 422, where applicable, and Section 409A. An ISO granted to an Employee described in
Section 422(b)(6) of the Code must have an exercise price that is not less than 110% of such fair market value. 
 (3)
Payment Of Exercise Price, If Any. Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a) all payments
will be by cash or check acceptable to the Administrator, or (b) if so permitted by the Administrator, (i) through the delivery of shares of Stock which have been outstanding for at least six months (unless the Administrator approves a
shorter period) and which have a fair market value equal to the exercise price, (ii) by delivery of a promissory note of the person exercising the Award to the Company, payable on such terms as are specified by the Administrator, to the extent
permitted under applicable law, (iii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iv) by any combination of the foregoing
permissible forms of payment; and (c) where shares of Stock issued under an Award are part of an original issue of shares, the Award shall require an exercise price equal to at least the par value of such shares. 
 (4) ISOs. No ISO may be granted under the Plan after June 7, 2016, but ISOs previously granted may extend
beyond that date. 

 (5) Section 409A Exemption. Except as the Administrator
otherwise determines, no Award requiring exercise shall have deferral features, or shall be administered in a manner, that would cause such Award to fail to qualify for exemption from Section 409A. 
 c. AWARDS NOT REQUIRING EXERCISE 
 Awards of Restricted Stock and Unrestricted Stock may be made in return for either (i) services determined by the Administrator to have a value not less than the par value of the Awarded shares of Stock, or (ii) cash or other
property having a value not less than the par value of the Awarded shares of Stock plus such additional amounts (if any) as the Administrator may determine payable in such combination and type of cash, other property (of any kind) or services as the
Administrator may determine. Any Award resulting in a deferral of compensation subject to Section 409A shall be construed to the maximum extent possible, as determined by the Administrator, consistent with the requirements of Section 409A.

 7. EFFECT OF CERTAIN TRANSACTIONS 
 a. MERGERS, ETC. 
 In the event of a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the Company’s outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of
substantially all the Company’s assets, all outstanding Awards shall thereupon terminate, provided that all outstanding Awards shall become exercisable immediately prior to consummation of such merger, consolidation or sale of assets unless, if
there is a surviving or acquiring corporation, the Board has arranged, subject to consummation of the merger, consolidation or sale of assets, for the assumption of the Awards or the grant to participants of replacement awards by the surviving or
acquiring corporation or an affiliate of that corporation, which awards in the case of incentive options shall satisfy the requirements of section 424(a) of the Code. 
 The Board may grant Awards under the Plan in substitution for awards held by directors, employees, consultants or advisers of another
corporation who concurrently become directors, employees, consultants or advisers of the Company or a subsidiary of the Company as the result of a merger or consolidation of that corporation with the Company or a subsidiary of the Company, or as the
result of the acquisition by the Company or a subsidiary of the Company of property or stock of that corporation. The Company may direct that substitute awards be granted on such terms and conditions as the Board considers appropriate in the
circumstances. 
 b. CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK 
 (1) Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company’s capital structure, the Administrator will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan under Section 4.a. and to the maximum share
limits described in Section 4.c., and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any
other provision of Awards affected by such change. 
 (2) Certain Other Adjustments. The
Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to common stockholders other than those provided for 

 
in Section 7.a. and 7.b.(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation
of the Plan and to preserve the value of Awards made hereunder; provided, that no such adjustment shall be made without due regard for the qualification of ISOs under Section 422 of the Code, the requirements of Section 409A, and
the performance-based compensation rules of Section 162(m), where applicable. 
 (3) Continuing Application
of Plan Terms. References in the Plan to shares of Stock shall be construed to include any stock or securities resulting from an adjustment pursuant to Section 7.b.(1) or 7.b.(2) above. 
 8. LEGAL CONDITIONS ON DELIVERY OF STOCK 
 The Company
will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until the Company’s counsel has approved all legal matters in connection with the
issuance and delivery of such shares; if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon
official notice of issuance; and all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award,
such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any
restriction on transfer applicable to such Stock. 
 9. AMENDMENT AND TERMINATION 
 Subject to the last sentence of Section 3, the Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which
may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards; provided, that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of
the stockholders of the Company, effectuate a change for which stockholder approval is required in order for the Plan to continue to qualify under Section 422 of the Code and for Awards to be eligible for the performance-based exception under
Section 162(m). 
 10. NON-LIMITATION OF THE COMPANY’S RIGHTS 
 The existence of the Plan or the grant of any Award shall not in any way affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan. 
 11. GOVERNING LAW 
 The Plan shall be construed in
accordance with the laws of The Commonwealth of Massachusetts. 
 12. MISCELLANEOUS 
 (a) Waiver of Jury Trial. By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or
counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the 

 
future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a
jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or
counterclaim, seek to enforce the foregoing waivers. 
 (b) Limitation of Liability. Notwithstanding anything to the contrary in the
Plan, neither the Company nor the Administrator, nor any person acting on behalf of the Company or the Administrator, shall be liable to any Participant or to the estate or beneficiary of any Participant by reason of any acceleration of income, or
any additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code; provided, that nothing in this Section 12(b) shall limit the
ability of the Administrator or the Company to provide by express agreement with a Participant for a gross-up payment or other payment in connection with any such tax or additional tax. 

 EXHIBIT A 
 Definition of Terms 
 The following terms, when used in the Plan, shall have the meanings and
be subject to the provisions set forth below: 
 “Administrator”: The Board or, if one or more has been appointed, the
Committee. 
 “Affiliate”: Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding
Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests. Notwithstanding the
preceding, for purposes of determining eligibility for the grant of an Stock Option or SAR by reason of service with an Affiliate, the term “Affiliate” shall be limited to persons that stand in a relationship to the Company that would
result in the Company and such person being treated as a single employer under Section 414(b) or Section 414(c) of the Code, all in accordance with the definition of “service recipient” under Section 409A of the Code.

 “Award”: Any or a combination of the following: 
 (i) Stock Options. 
 (ii) SARs. 
 (iii) Restricted Stock. 
 (iv) Unrestricted Stock. 
 (v) Deferred Stock. 
 (vi) Securities (other than Stock Options) that are convertible into or
exchangeable for Stock on such terms and conditions as the Administrator determines. 
 (vii) Cash Performance Awards.

 (viii) Performance Awards. 
 (ix) Grants of cash, or loans, made in connection with other Awards in order to help defray in whole or in part the economic cost (including tax cost) of the Award to the Participant. 
 “Board”: The Board of Directors of the Company. 
 “Cash Performance Award”: A Performance Award payable in cash. 
 “Code”:
The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect. 
 “Committee”: One or more committees of the Board which in the case of Awards granted to officers of the Company shall be comprised solely of two or more outside directors within the meaning of Section 162(m). Any
Committee may delegate ministerial tasks to such persons (including Employees) as it deems appropriate. 
 “Company”:
Oscient Pharmaceuticals Corporation. 
 “Deferred Stock”: A promise to deliver Stock or other securities in the future on
specified terms. 
 “Effective Date”: The date on which the stockholders of the Company approve the Plan. 
 “Employee”: Any person who is employed by the Company or an Affiliate. 

 “ISO”: A Stock Option intended to be an “incentive stock option” within the
meaning of Section 422 of the Code. No Stock Option Awarded under the Plan will be an ISO unless the Administrator expressly provides for ISO treatment. 
 “Participant”: An Employee, director or other person providing services to the Company or its Affiliates who is granted an Award under the Plan. 
 “Performance Award”: An Award subject to Performance Criteria. The Committee in its discretion may grant Performance Awards that are
intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify. 
 “Performance Criteria”: Specified criteria the satisfaction of which is a condition for the exercisability, vesting or full enjoyment of an Award. For purposes of Performance Awards that are intended
to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion shall mean an objectively determinable measure of performance relating to any of the following (determined either on a consolidated basis
or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): (i) sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, amortization or other items, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or
credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; network deployment; sales of particular products or services; customer acquisition, expansion and retention; or any combination of the foregoing; or
(ii) acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) and refinancings;
transactions that would constitute a change of control; or any combination of the foregoing. A Performance Criterion measure and targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved
result or avoidance of loss. 
 “Plan”: The Oscient Pharmaceuticals Corporation 2001 Incentive Plan as from time to time
amended and in effect. 
 “Prior Plan”: The Oscient Pharmaceuticals Corporation 2001 Amended and Restated Incentive Plan in
effect prior to the Effective Date. 
 “Restricted Stock”: An Award of Stock subject to restrictions requiring that such
Stock be redelivered to the Company if specified conditions are not satisfied. 
 “Section 162(m)”: Section 162(m) of
the Code. 
 “Section 409A”: Section 409A of the Code. 
 “SARs”: Rights entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function
(determined by the Administrator using such factors as it deems appropriate) of the amount by which the Stock has appreciated in value above a specified base amount. 
 “Stock”: Common Stock of the Company, par value $ .10 per share. 
 “Stock
Options”: Options entitling the recipient to acquire shares of Stock upon payment of the exercise price. 
 “Unrestricted
Stock”: An Award of Stock not subject to any restrictions under the Plan.EXHIBIT 10.26

                             HERLEY INDUSTRIES, INC.

                       2006 New Employee Stock Option Plan
                       -----------------------------------

SECTION 1.  GENERAL PROVISION
            -----------------

1.1  Name and General Purpose
     ------------------------

     The name of this plan is the  Herley  Industries,  Inc.  2006 New  Employee
Stock Option Plan (hereinafter called the "Plan").  The Plan is intended to be a
broadly-based  incentive  plan  which  enables  Herley  Industries,   Inc.  (the
"Company")  and its  subsidiaries  and  affiliates  to foster  and  promote  the
interests  of the Company by  attracting  new  employees to the Company who will
contribute to the Company's success by their ability, ingenuity and industry, to
enable such employees to participate in the long-term  success and growth of the
Company by giving  them a  proprietary  interest  in the  Company and to provide
incentive  compensation   opportunities  competitive  with  those  of  competing
corporations.

1.2  Definitions
     -----------

     a.   "Affiliate"  means any person or entity  controlled by or under common
          control  with the  Company,  by  virtue  of the  ownership  of  voting
          securities, by contract or otherwise.

     b.   "Board" means the Board of Directors of the Company.

     c.   "Change in Control"  means a change of control of the  Company,  or in
          any person directly or indirectly controlling the Company, which shall
          mean:

          (a) a  change  in  control  as  such  term  is  presently  defined  in
          Regulation  240.12b-(2) under the Securities  Exchange Act of 1934, as
          amended (the "Exchange Act"); or

          (b) 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 on the
          date of this  Agreement  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 percent (20%) or more of the voting power of the
          Company's then outstanding securities; or

          (c) if during any period of two (2) consecutive  years during the term
          of  this  Plan,  individuals  who  at the  beginning  of  such  period
          constitute the Board of Directors,  cease for any reason to constitute
          at least a majority thereof.

     d.   "Committee"  means the  Committee  referred  to in Section  1.3 of the
          Plan.

     e.   "Common  Stock" means shares of the Common  Stock,  par value $.10 per
          share, of the Company.

     f.   "Company" means Herley Industries, Inc., a corporation organized under
          the laws of the State of Delaware (or any successor corporation).

     g.   "Fair Market  Value" means the market price of the Common Stock on the
          National   Association  of  Securities  Dealers  Automated   Quotation
          ("NASDAQ")  system on the date of the  grant or on any  other  date on
          which the  Common  Stock is to be valued  hereunder.  If no sale shall
          have been reported on the NASDAQ on such date, Fair Market Value shall
          be determined by the Committee.

                                       1
<PAGE>

     h.   "Non-Employee Director" shall have the meaning set forth in Rule 16(b)
          promulgated  by the  Securities  and  Exchange
          Commission ("Commission").

     i.   "Option" means any option to purchase  Common Stock under Section 2 of
          the Plan.

     j.   "Option Agreement" means the option agreement described in Section 2.4
          of the Plan.

     k.   "Participant"  means any new employee of the Company,  a Subsidiary or
          an Affiliate  whose options are issued in  connection  with his or her
          initial employment and who is selected by the Committee to participate
          in the Plan.

     l.   "Subsidiary"  means any  corporation  in which the  Company  possesses
          directly or indirectly 50% or more of the combined voting power of all
          classes of stock of such corporation.

     m.   "Total  Disability"  means accidental  bodily injury or sickness which
          wholly and  continuously  disabled an optionee.  The Committee,  whose
          decisions  shall  be  final,  shall  make  a  determination  of  Total
          Disability.

1.3  Administration of the Plan
     --------------------------

     The Plan shall be administered  by the Board or by the Committee  appointed
by the Board consisting of two or more members of the Board all of whom shall be
Non-Employee  Directors.  The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.

     Subject to this  Section 1.3,  the  Committee  shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and  practices  governing  the  operation of the Plan as it shall,  from time to
time, deem advisable, and to interpret the terms and provisions of the Plan.

     The Committee  shall keep minutes of its meetings and of action taken by it
without a meeting.  A majority of the Committee shall  constitute a quorum,  and
the acts of a majority of the  members  present at any meeting at which a quorum
is present,  or acts  approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.

1.4  Eligibility
     -----------

     Options may be granted only to new employees of the Company or a Subsidiary
or  Affiliate  whose  options are issued in  connection  with his or her initial
employment.

1.5  Shares
     ------

     The aggregate  number of shares reserved for issuance  pursuant to the Plan
shall be  250,000  shares of Common  Stock,  or the number and kind of shares of
stock or other securities which shall be substituted for such shares or to which
such shares shall be adjusted as provided in Section 1.6.

     Such number of shares may be set aside out of the  authorized  but unissued
shares of Common Stock or out of issued shares of Common Stock  acquired for and
held in the Treasury of the Company, not reserved for any other purpose.  Shares
subject to, but not sold or issued under, any Option terminating or expiring for
any reason  prior to its  exercise in full will again be  available  for Options
thereafter granted during the balance of the term of the Plan.

                                       2

<PAGE>

1.6  Adjustments Due to Stock Splits, Mergers, Consolidation, Etc.
     -------------------------------------------------------------

     If, at any time,  the  Company  shall  take any  action,  whether  by stock
dividend,  stock split,  combination of shares or otherwise,  which results in a
proportionate  increase  or  decrease  in the  number of shares of Common  Stock
theretofore issued and outstanding,  the number of shares which are reserved for
issuance  under the Plan and the  number  of shares  which,  at such  time,  are
subject to Options shall, to the extent deemed appropriate by the Committee,  be
increased or  decreased  in the same  proportion,  provided,  however,  that the
Company shall not be obligated to issue fractional shares.

     Likewise,  in the event of any change in the  outstanding  shares of Common
Stock by reason of any recapitalization, merger, consolidation,  reorganization,
combination or exchange of shares or other corporate change, the Committee shall
make such substitution or adjustments, if any, as it deems to be appropriate, as
to the number or kind of shares of Common  Stock or other  securities  which are
reserved  for  issuance  under  the  Plan  and the  number  of  shares  or other
securities which, at such time are subject to Options.

     In the  event  of a  Change  in  Control,  at the  option  of the  Board or
Committee,  (a) all  Options  outstanding  on the date of such Change in Control
shall become  immediately  and fully  exercisable,  and (b) an optionee  will be
permitted to surrender for cancellation within sixty (60) days after such Change
in Control any Option or portion of an Option  which was  granted  more than six
(6) months prior to the date of such surrender, to the extent not yet exercised,
and to receive a cash payment in an amount  equal to the excess,  if any, of the
Fair  Market  Value (on the date of  surrender)  of the  shares of Common  Stock
subject  to the  Option  or  portion  thereof  surrendered,  over the  aggregate
purchase price for such Shares under the Option.

1.7  Non Alienation of Benefits
     --------------------------

     Except as herein  specifically  provided,  no right or unpaid benefit under
the Plan shall be subject to  alienation,  assignment,  pledge or charge and any
attempt to  alienate,  assign,  pledge or charge the same shall be void.  If any
Participant  or other person  entitled to benefits  hereunder  should attempt to
alienate,  assign,  pledge or charge any benefit  hereunder,  then such  benefit
shall, in the discretion of the Committee, cease.

1.8  Withholding or Deduction for Taxes
     ----------------------------------

     If, at any time,  the Company or any  Subsidiary  or Affiliate is required,
under applicable laws and regulations, to withhold, or to make any deduction for
any taxes, or take any other action in connection with any Option exercise,  the
Participant  shall be  required  to pay to the  Company  or such  Subsidiary  or
Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
at the option of the Company,  the Company or such  Subsidiary  or Affiliate may
accept a  sufficient  number  of shares  of  Common  Stock to cover  the  amount
required to be withheld.

1.9  Administrative Expenses
     -----------------------

     The entire expense of administering the Plan shall be borne by the Company.

1.10 General Conditions
     ------------------

     a.   The Board or the Committee may, from time to time,  amend,  suspend or
          terminate  any or all of the  provisions of the Plan,  provided  that,
          without the Participant's  approval, no change may be made which would
          alter or impair any right theretofore granted to any Participant.

                                       3

<PAGE>

     b.   With the consent of the Participant  affected  thereby,  the Committee
          may  amend  or  modify  any  outstanding  Option  in  any  manner  not
          inconsistent   with  the  terms  of  the  Plan,   including,   without
          limitation,  and  irrespective  of the  provisions  of Section  2.3(c)
          below,  to accelerate  the date or dates as of which an installment of
          an Option becomes exercisable;  provided, that the Committee shall not
          have the right to reprice any outstanding Options.

     c.   Nothing  contained  in the Plan  shall  prohibit  the  Company  or any
          Subsidiary or Affiliate from establishing  other additional  incentive
          compensation  arrangements  for  employees  of  the  Company  or  such
          Subsidiary or Affiliate.

     d.   Nothing in the Plan shall be deemed to limit, in any way, the right of
          the  Company  or  any   Subsidiary   or   Affiliate   to  terminate  a
          Participant's   employment  or  service  with  the  Company  (or  such
          Subsidiary or Affiliate) at any time.

     e.   Any decision or action taken by the Board or the Committee arising out
          of  or  in   connection   with   the   construction,   administration,
          interpretation  and effect of the Plan shall be conclusive and binding
          upon all  Participants  and any person  claiming  under or through any
          Participant.

     f.   No member of the Board or of the Committee shall be liable for any act
          or action,  whether of  commission  or  omission,  (i) by such  member
          except in  circumstances  involving  actual bad faith, nor (ii) by any
          other member or by any officer, agent or employee.

1.11 Compliance with Applicable Law
     ------------------------------

     Notwithstanding  any other  provision of the Plan, the Company shall not be
obligated to issue any shares of Common Stock,  or grant any Option with respect
thereto,  unless it is advised by  counsel  of its  selection  that it may do so
without  violation of the  applicable  Federal and State laws  pertaining to the
issuance of  securities  and the Company  may require any stock  certificate  so
issued to bear a legend, may give its transfer agent  instructions  limiting the
transfer  thereof,  and may  take  such  other  steps,  as in its  judgment  are
reasonably required to prevent any such violation.

1.12 Effective Dates
     ---------------

     The Plan was  adopted  by the  Board on  August  1,  2006.  The Plan  shall
terminate on July 31, 2016.

Section 2. OPTION GRANTS
           -------------

2.1  Authority of Committee
     ----------------------

     Subject to the  provisions of the Plan,  the Committee  shall have the sole
and complete  authority to determine (i) the  Participants to whom Options shall
be granted;  (ii) the number of shares to be covered by each  Option;  and (iii)
the  conditions  and  limitations,  if any,  in  addition  to those set forth in
Sections 2 and 3 hereof,  applicable  to the  exercise  of an Option,  including
without limitation,  the nature and duration of the restrictions,  if any, to be
imposed upon the sale or other  disposition of shares  acquired upon exercise of
an Option.

     Options granted under the Plan shall be non-qualified stock options.

     The Committee shall have the authority to grant Options.

                                       4
<PAGE>

2.2  Option Exercise Price
     ---------------------

     The exercise  price set forth in the Option  Agreement at the time of grant
shall not be less than the Fair  Market  Value of the  Common  Stock at the time
that the Option is granted.

     The  purchase  price  is to be  paid in full  in  cash,  certified  or bank
cashier's  check or, at the option of the  Company,  Common  Stock valued at its
Fair Market Value on the date of exercise,  or a combination  thereof,  when the
Option is exercised and stock  certificates  will be delivered only against such
payment.

2.3  Option Grants
     -------------

     Each Option will be subject to the following provisions:

     a.   Term of Option
          --------------

          An Option  will be for a term of not more than ten years from the date
     of grant.

     b.   Exercise
          --------

          (i)  By an Employee:
               --------------

               Unless  otherwise  provided  by the  Committee  and except in the
               manner described below upon the death of the optionee,  an Option
               may be exercised only in installments as follows:

                    Up to 20% on and after the first  anniversary  of the of the
                    date of the grant of such Option;

                    Up to 40% on and after the second anniversary of the date of
                    grant of the date of the grant of such Option;

                    Up to 60% on and after the third  anniversary of the date of
                    grant of the date of the grant of such Option;

                    Up to 80% on and after the fourth anniversary of the date of
                    grant of the date of the grant of such Option;

                    Up to all of the  subject  shares  on and  after  the  fifth
                    anniversary of the date of grant of the date of the grant of
                    such Option,  but in no event later than the  expiration  of
                    the term of the Option.

               An Option shall be  exercisable  during the  optionee's  lifetime
               only by the optionee and shall not be exercisable by the optionee
               unless,  at all times  since the date of grant and at the time of
               exercise,  such optionee is an employee of or providing  services
               to the  Company,  any parent  corporation  of the  Company or any
               Subsidiary or Affiliate,  except that,  upon  termination  of all
               such  employment  or provision of services  (other than by death,
               Total Disability, or by Total Disability followed by death in the
               circumstances  provided  below),  the  optionee  may  exercise an
               Option at any time within three months thereafter but only to the
               extent   such  Option  is   exercisable   on  the  date  of  such
               termination.

                                       5

<PAGE>

               Upon termination of all such employment by Total Disability,  the
               optionee  may  exercise  such Options at any time within one year
               thereafter,  but only to the extent such Option is exercisable on
               the date of such termination.

               In the event of the death of an optionee (i) while an employee of
               or providing  services to the Company,  any parent corporation of
               the Company or any Subsidiary or Affiliate,  or (ii) within three
               months after  termination of all such  employment or provision of
               services  (other than for Total  Disability)  or (iii) within one
               year after termination on account of Total Disability of all such
               employment or provision of services,  such  optionee's  estate or
               any person who  acquires  the right to  exercise  such  option by
               bequest or  inheritance or by reason of the death of the optionee
               may exercise such optionee's Option at any time within the period
               of three years from the date of death. In the case of clauses (i)
               and (iii) above, such Option shall be exercisable in full for all
               the remaining shares covered  thereby,  but in the case of clause
               (ii) such Option shall be  exercisable  only to the extent it was
               exercisable  on the date of such  termination  of  employment  or
               service.

          (ii) By Persons other than Employees:
               -------------------------------

               If the  optionee  is not an employee of the Company or the parent
               corporation  of the Company or any  Subsidiary or Affiliate,  the
               vesting of such optionee's right to exercise his Options shall be
               established  and  determined  by  the  Committee  in  the  Option
               Agreement covering the Options granted to such optionee.

               Notwithstanding the foregoing  provisions  regarding the exercise
               of an  Option  in the event of  death,  Total  Disability,  other
               termination  of employment or provision of services or otherwise,
               in no event  shall an Option be  exercisable  in whole or in part
               after the termination date provided in the Option Agreement.

     c.   Transferability
          ---------------

     An Option granted under the Plan shall not be  transferable  otherwise than
     by will or by the  laws  of  descent  and  distribution,  except  as may be
     permitted by the Board or the Committee.

2.4  Agreements
     ----------

     In  consideration  of any Options granted to a Participant  under the Plan,
each such  Participant  shall  enter into an Option  Agreement  with the Company
providing,  consistent  with the  Plan,  such  terms as the  Committee  may deem
advisable.

                                       6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]