Document:

Unassociated Document

    EXHIBIT
      10.1

    

    PROMISSORY
      NOTE

    

     

    June
      13, 2007

     

    

    
      	Jersey City, New
              Jersey	 	
              $57,000 

            
	 	 	 

    

          

    

    FOR
      VALUE RECEIVED, the
      undersigned, ARIEL
      WAY, INC.,
      a
      Florida corporation (the “Company”),
      promises to pay CORNELL
      CAPITAL PARTNERS, L.P.
      (the
“Lender”)
      at 101
      Hudson Street, Suite 3700, Jersey City, New Jersey 07302 or other address as
      the
      Lender shall specify in writing, the principal sum of Fifty
      Seven Thousand U.S. Dollars and 00/100 ($57,000) (the
      “Principal
      Amount”)
      and
      interest at the annual rate of eleven percent (11%) on the unpaid balance
      pursuant to the following terms: 

    

    1.  Principal
      and Interest. For
      value
      received on the date hereof the Company hereby promises to pay to the order
      of
      the Lender in lawful money of the United States of America and in immediately
      available funds the Principal Amount, together with interest on the unpaid
      principal of this Note on or before June 13, 2008. 

    

    2.  Right
      of Prepayment.
      The
      Company at its option shall have the right to prepay, with three (3) business
      days advance written notice, a portion or all outstanding principal plus accrued
      Interest under this Note.

    

    3.  Use
      of Proceeds.
      The
      Company acknowledges that the proceeds received in exchange for this Note shall
      be used in their entirety to pay in full the settlement payment to Loral Skynet
      Network Services, Inc. pursuant to the Settlement Agreement and General Release
      dated June 1, 2007. 

    

    4.  Waiver
      and Consent.
      To the
      fullest extent permitted by law and except as otherwise provided herein, the
      Company waives demand, presentment, protest, notice of dishonor, suit against
      or
      joinder of any other person, and all other requirements necessary to charge
      or
      hold the Company liable with respect to this Note.

    

    5.  Costs,
      Indemnities and Expenses.
      In the
      event of default as described herein, the Company agrees to pay all reasonable
      fees and costs incurred by the Lender in collecting or securing or attempting
      to
      collect or secure this Note, including reasonable attorneys’ fees and expenses,
      whether or not involving litigation, collecting upon any judgments and/or
      appellate or bankruptcy proceedings. The Company agrees to pay any documentary
      stamp taxes, intangible taxes or other taxes which may now or hereafter apply
      to
      this Note or any payment made in respect of this Note, and the Company agrees
      to
      indemnify and hold the Lender harmless from and against any liability, costs,
      attorneys’ fees, penalties, interest or expenses relating to any such taxes, as
      and when the same may be incurred.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    6.  Event
      of Default.
      An
      “Event
      of Default”
shall
      be deemed to have occurred upon the occurrence of any of the following: (i)
      the
      Company should fail for any reason or for no reason to make any payment of
      the
      interest or principal pursuant to this Note within ten (10) days of the date
      due
      as prescribed herein; (ii) the Company shall fail to observe or perform any
      other covenant, agreement or warranty contained in, or otherwise commit any
      material breach or default of any material provision of this Note or the
      Security Agreement (as defined below), which is not cured within ten (10) days
      notice of the default; or (iii) the Company or any subsidiary of the
      Company shall commence, or there shall be commenced against the Company or
      any
      subsidiary of the Company under any applicable bankruptcy or insolvency laws
      as
      now or hereafter in effect or any successor thereto, or the Company or any
      subsidiary of the Company commences any other proceeding under any
      reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
      insolvency or liquidation or similar law of any jurisdiction whether now or
      hereafter in effect relating to the Company or any subsidiary of the Company
      or
      there is commenced against the Company or any subsidiary of the Company any
      such
      bankruptcy, insolvency or other proceeding which remains undismissed for a
      period of sixty-one (61) days; or the Company or any subsidiary of the Company
      is adjudicated insolvent or bankrupt; or any order of relief or other order
      approving any such case or proceeding is entered; or the Company or any
      subsidiary of the Company suffers any appointment of any custodian, private
      or
      court appointed receiver or the like for it or any substantial part of its
      property which continues undischarged or unstayed for a period of sixty one
      (61)
      days; or the Company or any subsidiary of the Company makes a general assignment
      for the benefit of creditors; or the Company or any subsidiary of the Company
      shall fail to pay, or shall state that it is unable to pay, or shall be unable
      to pay, its debts generally as they become due; or the Company or any subsidiary
      of the Company shall call a meeting of its creditors with a view to arranging
      a
      composition, adjustment or restructuring of its debts; or the Company or any
      subsidiary of the Company shall by any act or failure to act expressly indicate
      its consent to, approval of or acquiescence in any of the foregoing; or any
      corporate or other action is taken by the Company or any subsidiary of the
      Company for the purpose of effecting any of the foregoing.

    

    Upon
      an
      Event of Default (as defined above), the entire principal balance and accrued
      interest outstanding under this Note, and all other obligations of the Company
      under this Note, shall be immediately due and payable without any action on
      the
      part of the Lender, interest shall accrue on the unpaid principal balance at
      twenty four percent (24%) or the highest rate permitted by applicable law,
      if
      lower, and the Lender shall be entitled to seek and institute any and all
      remedies available to it. 

    

    7.  Conversion.
      If
      this
      Note is not fully repaid by the Maturity Date, then the remaining outstanding
      principal and accrued and unpaid interest under this Note shall be convertible
      into shares of common stock of the Company at the sole option of the Lender,
      in
      whole or in part at any time and from time to time at a conversion price equal
      to the lesser of (a) $0.10 or (b) ninety five percent (95%) of the lowest
      Volume Weighted Average Price of the common stock during the twenty (20) trading
      days immediately preceding the date of conversion as quoted by Bloomberg, LP.
      The Company shall deliver common stock certificates in respect of a conversion
      to the Lender prior to the Fifth (5th) trading day after such conversion.
      Notwithstanding the foregoing, the Lender may not convert this Note or receive
      shares of common stock as payment of interest hereunder to the extent such
      conversion or receipt of such interest payment would result in the Lender,
      together with any affiliate thereof, beneficially owning (as determined in
      accordance with Section 13(d) of the Exchange Act and the rules promulgated
      thereunder) in excess of 4.99% of the then issued and outstanding shares of
      common stock, including shares issuable upon conversion of, and payment of
      interest on, this Note held by the Lender after application of this Section
      7.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    8.  Maximum
      Interest Rate.
      In no
      event shall any agreed to or actual interest charged, reserved or taken by
      the
      Lender as consideration for this Note exceed the limits imposed by New Jersey
      law. In the event that the interest provisions of this Note shall result at
      any
      time or for any reason in an effective rate of interest that exceeds the maximum
      interest rate permitted by applicable law, then without further agreement or
      notice the obligation to be fulfilled shall be automatically reduced to such
      limit and all sums received by the Lender in excess of those lawfully
      collectible as interest shall be applied against the principal of this Note
      immediately upon the Lender’s receipt thereof, with the same force and effect as
      though the Company had specifically designated such extra sums to be so applied
      to principal and the Lender had agreed to accept such extra payment(s) as a
      premium-free prepayment or prepayments.

    

    9.  Cancellation
      of Note.
      Upon the
      repayment by the Company of all of its obligations hereunder to the Lender,
      including, without limitation, the principal amount of this Note, plus accrued
      but unpaid interest, the indebtedness evidenced hereby shall be deemed canceled
      and paid in full. Except as otherwise required by law or by the provisions
      of
      this Note, payments received by the Lender hereunder shall be applied first
      against expenses and indemnities, next against interest accrued on this Note,
      and next in reduction of the outstanding principal balance of this
      Note.

    

    10.  Severability.
      If any
      provision of this Note is, for any reason, invalid or unenforceable, the
      remaining provisions of this Note will nevertheless be valid and enforceable
      and
      will remain in full force and effect. Any provision of this Note that is held
      invalid or unenforceable by a court of competent jurisdiction will be deemed
      modified to the extent necessary to make it valid and enforceable and as so
      modified will remain in full force and effect.

    

    11.  Amendment
      and Waiver.
      This
      Note may be amended, or any provision of this Note may be waived, provided
      that
      any such amendment or waiver will be binding on a party hereto only if such
      amendment or waiver is set forth in a writing executed by the parties hereto.
      The waiver by any such party hereto of a breach of any provision of this Note
      shall not operate or be construed as a waiver of any other breach.

    

    12.  Successors.
      Except
      as otherwise provided herein, this Note shall bind and inure to the benefit
      of
      and be enforceable by the parties hereto and their permitted successors and
      assigns.

    

    13.  Assignment.
      This
      Note shall not be directly or indirectly assignable or delegable by the Company.
      The Lender may assign this Note as long as such assignment complies with the
      Securities Act of 1933, as amended.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    14.  No
      Strict Construction.
      The
      language used in this Note will be deemed to be the language chosen by the
      parties hereto to express their mutual intent, and no rule of strict
      construction will be applied against any party.

    

    15.  Further
      Assurances.
      Each
      party hereto will execute all documents and take such other actions as the
      other
      party may reasonably request in order to consummate the transactions provided
      for herein and to accomplish the purposes of this Note.

    

    16.  Notices,
      Consents, etc.  Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof must be in writing and will be deemed to have
      been
      delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
      when
      sent by facsimile (provided confirmation of transmission is mechanically or
      electronically generated and kept on file by the sending party); or (iii) one
      (1) trading day after deposit with a nationally recognized overnight delivery
      service, in each case properly addressed to the party to receive the same.
      The
      addresses and facsimile numbers for such communications shall be:

    

    

    
      	
              If
                to Company:

            	
              Ariel
                Way, Inc.

            
	 	
              8000
                Towers Crescent Drive

            
	 	
              Suite
                1220, Vienna, VA 22182

            
	 	
              Attention:
                Chief Executive Officer

            
	 	 
	 	 
	
              If
                to the Lender:

            	
              Cornell
                Capital Partners, L.P.

            
	 	
              101
                Hudson Street, Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Attention:
                Mark A. Angelo

            
	 	
              Telephone:
                (201) 985-8300

            
	 	
              Facsimile:
                (201) 985-8266

            
	 	 
	
              With
                a copy to:

            	
              David
                Gonzalez, Esq.

            
	 	
              101
                Hudson Street, Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Telephone:
                (201) 985-8300

            
	 	
              Facsimile:
                (201) 985-8266

            
	 	
               

            

    

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) trading days prior to the effectiveness of such change.
      Written confirmation of receipt (A) given by the recipient of such notice,
      consent, waiver or other communication, (B) mechanically or electronically
      generated by the sender's facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (C)
      provided by a nationally recognized overnight delivery service, shall be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    17.  Remedies,
      Other Obligations, Breaches and Injunctive Relief.
      The
      Lender’s remedies provided in this Note shall be cumulative and in addition to
      all other remedies available to the Lender under this Note, at law or in equity
      (including a decree of specific performance and/or other injunctive relief),
      no
      remedy of the Lender contained herein shall be deemed a waiver of compliance
      with the provisions giving rise to such remedy and nothing herein shall limit
      the Lender’s right to pursue actual damages for any failure by the Company to
      comply with the terms of this Note. No remedy conferred under this Note upon
      the
      Lender is intended to be exclusive of any other remedy available to the Lender,
      pursuant to the terms of this Note or otherwise. No single or partial exercise
      by the Lender of any right, power or remedy hereunder shall preclude any other
      or further exercise thereof. The failure of the Lender to exercise any right
      or
      remedy under this Note or otherwise, or delay in exercising such right or
      remedy, shall not operate as a waiver thereof. Every right and remedy of the
      Lender under any document executed in connection with this transaction may
      be
      exercised from time to time and as often as may be deemed expedient by the
      Lender. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Lender and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the Lender shall be entitled,
      in
      addition to all other available remedies, to an injunction restraining any
      breach, and specific performance without the necessity of showing economic
      loss
      and without any bond or other security being required. 

    

    18.  Governing
      Law; Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      Jersey, without giving effect to any choice of law or conflict of law provision
      or rule (whether of the State of New Jersey or any other jurisdictions) that
      would cause the application of the laws of any jurisdictions other than the
      State of New Jersey. Each party hereby irrevocably submits to the exclusive
      jurisdiction of the Superior Court of the State of New Jersey sitting in Hudson
      County, New Jersey and the United States Federal District Court for the District
      of New Jersey sitting in Newark, New Jersey, for the adjudication of any dispute
      hereunder or in connection herewith or therewith, or with any transaction
      contemplated hereby or discussed herein, and hereby irrevocably waives, and
      agrees not to assert in any suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of any such court, that such suit, action
      or proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof to such party at the
      address for such notices to it under this Agreement and agrees that such service
      shall constitute good and sufficient service of process and notice thereof.
      Nothing contained herein shall be deemed to limit in any way any right to serve
      process in any manner permitted by law. 

    

    19.  No
      Inconsistent Agreements.
      None of
      the parties hereto will hereafter enter into any agreement, which is
      inconsistent with the rights granted to the parties in this Note.

    

    20.  Third
      Parties.
      Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      or
      give to any person or entity, other than the parties to this Note and their
      respective permitted successor and assigns, any rights or remedies under or
      by
      reason of this Note.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    21.  Waiver
      of Jury Trial.
      AS A MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO THE COMPANY THE MONIES
      HEREUNDER, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
      PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER
      DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

    

    22.  Entire
      Agreement.  This
      Note (including any recitals hereto) set forth the entire understanding of
      the
      parties with respect to the subject matter hereof, and shall not be modified
      or
      affected by any offer, proposal, statement or representation, oral or written,
      made by or for any party in connection with the negotiation of the terms hereof,
      and may be modified only by instruments signed by all of the parties
      hereto.

    

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      this
      Promissory Note is executed by the undersigned as of the date
      hereof.

    

    

    

    

    
      	 	
              CORNELL
                CAPITAL PARTNERS, L.P.

            
	 	
              By:
                Yorkville Advisors, LLC

            
	 	
              Its:
                Investment Manager

            
	 	 
	 	
              By:
                ______________________________

            
	 	
              Name: Mark
                Angelo

            
	 	
              Its: Portfolio
                Manager

            
	 	 
	 	
              ARIEL
                WAY, INC. 

            
	 	 
	 	
              By:
                ______________________________

            
	 	
              Name: Arne
                Dunhem

            
	 	
              Title: Chairman
                and Chief Executive Officer

            
	 	 

    

     

    
      
         

      

        7CHANGE OF CONTROL AGREEMENT

            This CHANGE OF CONTROL AGREEMENT is dated as of June 22, 2007
between ANAREN, INC., a New York Corporation ("Anaren"), and _______________
("Employee"). The term "Anaren" shall mean all of its subsidiaries, whether
directly or indirectly owned.

                                    Recitals

      A. Employee is currently employed by Anaren as
            -----------------------.

      B.    Anaren desires to retain the services of Employee and to induce
            Employee to remain with Anaren.

      C.    In consideration of the agreements of the parties contained in this
            Agreement, and intending to be legally bound by the terms of this
            Agreement, the parties agree as follows:

                                      Terms

1. Term of Agreement.

      The term of this Agreement shall be for the period from the date of this
Agreement to June 30, 2011 and shall automatically expire effective June 30,
2011, unless otherwise renewed by the parties.

2. Change of Control.

      (a) Subject to the other terms, conditions and limitations of this
Agreement, if Employee's employment by Anaren ends within one year following a
"Change of Control" that occurs during the term of this Agreement, and if such
termination is due to Employee's involuntary termination of employment for
reasons other than "Cause," then Anaren shall:

            (i) Pay to Employee an aggregate severance benefit determined as
follows:

<PAGE>

                  (A)   If Employee has completed 20 or more years of service
                        with Anaren, then the severance benefit shall equal
                        the sum of (I) 200 percent of Employee's then current
                        base annual salary, plus (II) an amount equal to the
                        sum of the previous two years' management incentive
                        bonus earned by Employee for the two fiscal years
                        that ended immediately prior to the fiscal year
                        during which the "Change of Control" occurs;  and

                  (B)   If Employee has completed less than 20 years of
                        service with Anaren, then the severance benefit shall
                        equal the sum of (I) 100 percent of Employee's then
                        current base annual salary, plus (II) an amount equal
                        to the management incentive bonus earned by Employee
                        in the fiscal year that ended immediately prior to
                        the fiscal year during which the "Change of Control"
                        occurs.

            (ii) Treat as immediately exercisable all options granted by Anaren
to Employee to acquire Anaren common stock that are not exercisable or that have
not been exercised; and

            (iii) Treat as immediately vested all restricted Anaren stock, or
any restricted stock received by Employee in exchange for Anaren stock, if any,
issued to Employee; and

            (iv) Subject to the cancellation provisions described in paragraph
2(c) below, provide Employee with continuation of life, disability and health
insurance benefits, under the same terms and conditions that Anaren provides
such insurance to its active employees for a period of 24 months (12 months, if
Employee has completed less than 20 years of service with Anaren).

                                       2
<PAGE>

      (b) Subject to the cancellation provisions described in paragraph 2(c)
below, the severance benefit described in paragraph 2(a)(i) shall be paid in
substantially equal monthly installments over a period of 24 months (12 months,
if Employee has completed less than 20 years of service with Anaren), beginning
with Anaren's first regular payroll following Employee's termination of
employment. If Employee dies prior to receiving all of the payments due pursuant
to paragraph 2(a)(i), then any unpaid amounts shall be paid to the beneficiary
designated by Employee on the "Beneficiary Designation Form" attached to this
Agreement as Appendix A.

      (c) If Employee becomes reemployed by Anaren, or another employer during
the first 12 month period in which severance payments are made, Anaren shall
have no further obligation to pay severance benefits, including insurance
benefits, after the 12 month period has expired. If Employee becomes employed
after the 12 month period, but before the expiration of the 24 month period, all
severance payments and insurance benefits will cease upon commencement of
Employee's employment. Employee acknowledges that he/she has an obligation to
promptly notify Anaren upon acceptance of employment.

      (d) Upon expiration of the period described in paragraph 2(a)(iv),
Employee (and Employee's qualified beneficiaries) shall be eligible to commence
COBRA continuation benefits, in accordance with the COBRA provisions of Anaren's
group health plan.

      (e) 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 2 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 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 cannot be reached within sixty days of the date the first
payment is due under this paragraph 2, 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".

                                       3
<PAGE>

      (f) Payments made and benefits provided pursuant to this paragraph 2 shall
be subject to withholding for income, employment and other similar taxes Anaren
may be required to withhold.

      (g) As a condition to Anaren's obligation to provide the payments and
benefits pursuant to this paragraph 2, Employee must first execute a General
Release, that releases and discharges Anaren from all claims of any type arising
out of Employee's employment or the termination of employment.

      (h) For purposes of this Agreement, a "Change of Control," shall be deemed
to have occurred if:

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

            (ii) as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination (a "Transaction"), the
persons who were directors of Anaren, Inc. before the Transaction shall cease to
constitute a majority of the Board of Directors of Anaren, Inc. or any
successor;

                                       4
<PAGE>

            (iii) Anaren, Inc. is merged or consolidated with another
corporation 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 Anaren, Inc.;

            (iv) a tender offer or exchange offer is made and consummated for
the ownership of securities of Anaren, Inc. representing 30% or more of the
combined voting power of Anaren, Inc.'s then outstanding voting securities; or

            (v) Anaren, Inc. transfers substantially all of its assets to
another corporation which is not controlled by Anaren, Inc.

3. Termination For "Cause".

      (a) Notwithstanding any contrary provision contained in paragraph 2,
Anaren may terminate Employee's employment and this Agreement for "Cause"
(defined below) at any time, effective upon receipt by Employee of written
notice of termination. Upon termination of employment for "Cause," Employee
shall be entitled only to the salary due Employee from Anaren to the date of
receipt by Employee of written notice of termination.

      (b) Termination for "Cause" for purposes of this Agreement shall include,
but not be limited to, any of the following:

            (i) any act of fraud or the commission of a felony; or

            (ii) intentional disclosure of confidential or proprietary Anaren
information to the detriment of Anaren; or

            (iii) unreasonable neglect or refusal to perform the material duties
of his or her position, unless such neglect or refusal is cured within a
reasonable period of time (of at least 30 days) following written notice to
Employee of such neglect or refusal.

                                       5
<PAGE>

4. Covenants.

      (a) Confidentiality. Employee shall not, without the prior written consent
of Anaren, disclose or use in any way, either during employment by Anaren or
thereafter, except as required in the course of employment by Anaren, any
confidential business or technical information or trade secrets acquired in the
course of Employee's employment by Anaren. Employee acknowledges and agrees that
it would be difficult to fully compensate Anaren for damages resulting from the
breach or threatened breach of the foregoing provision and, accordingly, that
Anaren shall be entitled to temporary preliminary injunctions and permanent
injunctions to enforce this provision. Anaren's right to obtain injunctive
relief shall not, however, diminish Anaren's right to claim and recover damages.
Employee commits to use his or her best efforts to prevent the publication or
disclosure of any trade secret or any confidential information concerning the
business or finances of Anaren or Anaren's subsidiaries, 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 Anaren.

      (b) No Competition. Employee's employment is subject to the condition that
during the term of his or her employment and for a period of 24 months (12
months, if Employee has completed less than 20 years of service with Anaren)
from the date of the termination of 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 which principal
business directly competes with Anaren 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.

                                       6
<PAGE>

      (c) Termination of Payments. Upon the breach by Employee of any covenant
under this paragraph 4, Anaren may offset and/or recover from Employee
immediately any and all of the severance compensation paid to Employee under
paragraph 2 hereof in addition to any and all other remedies available to Anaren
under law or in equity.

5. Miscellaneous.

      (a) Notices. Any and all notices with respect to this Agreement shall be
sufficient if furnished personally in writing or sent by certified mail, return
receipt requested, to the last known address or other address designated by the
parties to this Agreement.

      (b) Entire Agreement; Release From Prior Agreements. This Agreement
represents the entire agreement between the parties regarding the subject matter
of the Agreement and specifically supersedes any and all oral or written
agreements previously entered into by the parties, and each party releases the
other party of all obligations and liabilities with respect to any prior
employment agreements between the parties.

      (c) Governing Law. This Agreement, having been made and duly executed
within the State of New York, shall be construed and governed in accordance with
and pursuant to New York law.

      (d) Waiver. In the event that any breach of this Agreement by Employee or
Anaren is waived by act or failure to act, such waiver shall not constitute a
waiver of any subsequent breach by either party.

                                       7
<PAGE>

      (e) Severability and Construction. If any provision of this Agreement
shall be held invalid or unenforceable, such invalidity or unenforceability
shall affect only that particular provision and shall not affect or render
invalid or unenforceable any other provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
were not a part of the Agreement. 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, the parties intend to maximize the
application of the exceptions to deferred compensation treatment stated in
Treasury Regulation sections 1.409A-1(b)(9)(iii) and (v) that generally exempt
from the treatment of deferred compensation payments and benefits that are
provided under a separation pay plan to the extent limited payments are made,
and/or limited benefits are provided, for a limited period of time following
Employee's separation from service. However, 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 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.

      (f) Binding Effect. This Agreement may not be assigned by Employee or
Anaren, except that this Agreement shall be binding upon and shall inure to the
benefit of any successor of Anaren through merger, corporate reorganization,
Change of Control or otherwise. Anaren shall use its reasonable best efforts to
ensure that any successor to Anaren provides the successor's written
acknowledgement of the successor's obligations under this Agreement. Such a
written acknowledgement, however, shall not be a condition to the successor's
assumption of the obligations imposed on the successor by this Agreement.

                                       8
<PAGE>

      (g) Arbitration and Fees. Any dispute between the parties relating to the
terms of this Agreement, or any interpretation, construction or enforcement
hereof, shall first be submitted to non-binding arbitration in Syracuse, New
York in accordance with the rules and regulations of the American Arbitration
Association then in effect. Each party shall be responsible for its own costs
and expenses in pursuing non-binding arbitration, and any arbitration fees or
costs shall be shared equally between the parties. However, if Employee is a
party in an arbitration to collect payments due pursuant to this Agreement and
prevails in collecting payments due in the arbitration or settlement of the
arbitration, Anaren shall reimburse Employee for reasonable attorneys' fees
incurred by Employee in connection with such arbitration; provided that (i) the
foregoing right to reimbursement shall be limited to eligible expenses incurred
within the first 60 months that follow Employee's termination of employment,
(ii) reimbursement of eligible expenses shall be made by the last day of
Employee's taxable year following the taxable year in which the expenses were
incurred, and (iii) the right to reimbursement is not subject to liquidation or
exchange for any other benefit.

                                       9
<PAGE>

      IN WITNESS WHEREOF, the parties have signed this Agreement after full
opportunity to read and discuss the provisions of the Agreement, and both
parties voluntarily assent to this Agreement with full understanding of its
provisions.

                                          EMPLOYEE

                                          ----------------------------------

                                          ANAREN, INC.

                                          By:_______________________________
                                                Lawrence A. Sala
                                                President & CEO

                                       10
<PAGE>

                                   APPENDIX A

                          BENEFICIARY DESIGNATION FORM

      Pursuant to the Change of Control Agreement between Anaren, Inc. and
_______________, dated as of June 22, 2007 ("Agreement"), I,
_________________, hereby designate ___________________________, my
____________, as the beneficiary of amounts payable upon my death in
accordance with paragraph 2(b) of the Agreement.  My beneficiary's current
address is
-------------------------------------------------------------------.

      My contingent beneficiary is ___________________________, my
------------.

My contingent beneficiary's address is
---------------------------------------------.

Dated: _____________                      ___________________________

--------------------------

Witness

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