HERLEY INDUSTRIES INC /NEW, S-3, 1997-09-12

HERLEY INDUSTRIES INC /NEW
S-3, 1997-09-12
SEARCH, DETECTION, NAVAGATION, GUIDANCE, AERONAUTICAL SYS

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As filed with the Securities and Exchange Commission September 12, 1997
Registration No. 333 -

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3

REGISTRATION STATEMENT

under

THE SECURITIES ACT OF 1933
HERLEY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Delaware 23-2413500
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

10 Industry Drive Myron Levy, President
Lancaster, Pennsylvania 17603-4025 Herley Industries, Inc.
(717) 397-2777 10 Industry Drive
(Address, including zip code and telephone Lancaster, Pennsylvania 17603-4025
number, including area code, of registrant's (717) 397-2777
principal executive offices) Name address and telephone number,
including area code, of agent for
service)
-------
Copy to:
David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820

Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box [ ].

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X ].

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ].

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering [ ].

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]
<PAGE>

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------

Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 234,895 shs. $17.125 $4,022,577 $1,219
$.10 per share
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee, based
on the closing price of the Common Stock as reported in the consolidated
reporting system on September 3, 1997.
</FN>
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
HERLEY INDUSTRIES, INC.

Cross Reference Sheet

Showing location in Prospectus of Information Required by Items on Form S-3

<TABLE>
<CAPTION>
Item No. Prospectus Caption
- ------- ------------------

1. Forepart of the Registration Outside Front Cover
Statement and Outside Front Cover Page Page of Prospectus
of Prospectus

2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages of
Prospectus

3. Summary Information, Risk Factors and *
Ratio of Earnings to Fixed Charges

4. Use of Proceeds Use of Proceeds

5. Determination of Offering Price Outside Front Cover Page;
Selling Securityholders

6. Dilution *

7. Selling Security Holders Selling Securityholders

8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution

9. Description of Securities to be *
Registered

10. Interests of Named Experts and Counsel Legal Opinion;
Experts

11. Material Changes *

12. Incorporation of Certain Information Incorporation of
by Reference Certain Documents
By Reference

13. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
<FN>
*Omitted since answer to item is negative or inapplicable
</FN>
</TABLE>
Information contained herein is subjected to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

<PAGE>

SUBJECT TO COMPLETION
Dated September 12, 1997

HERLEY INDUSTRIES, INC.

234,895 Shares of Common Stock, $.10 par value

The 234,895 shares of Common Stock, par value $.10 par share, (the
"Shares") of Herley Industries, Inc. (the "Company" or "Herley") being covered
by this Prospectus are being offered for sale from time to time by or for the
accounts of the Selling Securityholders. The Selling Securityholders are the
former stockholders of Metraplex Corporation. They acquired the shares pursuant
to the terms of a Merger Agreement dated July 8, 1997 with Herley pursuant to
which the Metraplex stockholders received 0.32938 shares of Herley Common Stock
for each share of Metraplex Common Stock. See "Selling Securityholders." The
Shares may be offered by the Selling Securityholders from time to time in
transactions on the Nasdaq National Market System, in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Shares to or through
broker-dealers and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or the
purchaser of the Shares for whom such broker-dealers may act as agent or to whom
they sell as principal or both (which compensation to a particular broker-dealer
might be in excess of customary
commissions). See "Selling Securityholders" and "Plan of Distribution."

None of the proceeds from the sale of the Shares by the Selling
Securityholders will be received by the Company. The Company will bear the
expenses in connection with the offering, including filing fees and the
Company's legal and accounting fees, estimated at $10,000.

The Company's Common Stock is traded on the NASDAQ National Market
System (NASD Symbol: HRLY). On September 3, 1997, the last reported sale price
of the Company's Common Stock as reported by the NASDAQ National Market System
was $ 17-1/8 per share.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is September , 1997

<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement under the Securities
Act of 1933, as amended (the "Act"), with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits relating thereto. For further
information with respect to the Company and the shares of Common Stock offered
by this Prospectus, reference is made to such Registration Statement and the
exhibits thereto. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement for a full statement of the provisions
thereof; each such statement contained herein is qualified in its entirety by
such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained at the office
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's Regional Offices at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates, and from the Securities and Exchange Commission's Web site at
the address http://www.sec.gov. In addition, the Company's Common Stock is
listed on the NASDAQ Stock Market, and copies of the foregoing materials and
other information concerning the Company can be inspected at the offices of the
Nasdaq Stock Market at 1735 K Street, N.W., Washington, DC 20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended July
28, 1996.

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended May
4, 1997.

(3) The description of the class of securities to be offered which is
contained in a Registration Statement filed under Section 12 of the Securities
and Exchange Act of 1934 (File No. 0-5411), including any amendment or report
filed for the purpose of updating such description.

All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
this offering of Common Stock shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the date of filing of such documents.

Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference (except for
exhibits thereto unless specifically incorporated by reference therein).
Requests for such copies should be directed to the Secretary, Herley Industries,
Inc., 10 Industry Drive, Lancaster, PA 17603, (717) 397-2777.

2
<PAGE>

THE COMPANY

Herley Industries, Inc. ("Herley" or the "Company") principally designs,
manufactures and sells flight instrumentation products, primarily to aerospace
companies, the U.S. government, and several foreign governments. One of the
Company's main products is a variety of transponders which are used to enhance
radar signals to accurately track the flight of space launch vehicles and
aircraft.

The transponders are used in conjunction with target command and control
systems, also manufactured by the Company, in the training of troops and the
testing of weapons. These command and control systems are housed in shelters on
training and testing ranges in the U.S. and in foreign countries. The Company
has an established base of approximately 100 command and control systems
installed around the world. These command and control systems are both shelter
mounted and portable radar units. Herley also manufactures microwave devices
used in its flight instrumentation products and in connection with the radar and
defense electronic systems on tactical fighter aircraft.

Since its inception in 1965, the Company has designed and manufactured
microwave devices for use on various tactical military programs. In June 1986,
the Company acquired a small engineering company engaged in the design and
development of transponders. This acquisition enabled the Company to enter the
flight instrumentation business beginning with the design and manufacture of
range safety transponders. In September 1992, the Company acquired substantially
all of the assets of Micro-Dynamics, Inc. of Woburn, Massachusetts, a microwave
subsystem designer and manufacturer. In June 1993, the Company acquired Vega
Precision Laboratories, Inc. ("Vega") of Vienna, Virginia , and moved the
operations to Lancaster, Pennsylvania in October, 1993. In March 1994, the
Company entered into an exclusive license agreement for the manufacture,
marketing and sale of the Multiple Aircraft GPS Integrated Command & Control
(MAGIC2) systems. In July 1995, the Company acquired certain assets and the
business of Stewart Warner Electronics Corp. of Chicago, Illinois, a
manufacturer of high frequency radio and IFF interrogator systems.

With these recent acquisitions, the Company has reorganized into three
operating facilities; HERLEY-VEGA SYSTEMS, operating in Lancaster, Pennsylvania;
HERLEY-MDI operating in Woburn, Massachusetts, and Stewart Warner Electronics
Co. operating in Chicago, Illinois. In January 1996, the Company created its
Global Security Systems division, a marketing group, to serve the international
marketplace.

The Company manufactures flight instrumentation products, encompassing
transponder products and command & control systems; and microwave products
including microwave integrated circuits, receiver-protectors, and magnetrons.
Revenues from flight instrumentation products accounted for approximately 69%,
58% and 62%, and revenues from microwave products accounted for approximately
31%, 42% and 38%, of net revenues for the fiscal years 1996, 1995 and 1994,
respectively.

Herley's business strategy is to expand its product line by acquisition and
by designing and manufacturing other flight instrumentation products for sale to
the Company's existing domestic customers. In addition, the Company due to its
broad product line, will seek to expand its foreign business. These major
products include transponders, flight termination receivers, telemetry systems
and telemetry data encoders. The Company believes that significant growth
potential for the sale of flight instrumentation products to the space launch
industry has been created by changes in government space policy, enabling
private industry to launch satellites, and new technologies providing for
broader use of satellites.

3
<PAGE>

Products

The Company manufactures and sells transponders, microwave devices, command
and control systems, and other related products, in one industry segment,
military electronics. The Company's business is not considered to be seasonal in
nature.

USE OF PROCEEDS

The Company will not receive any proceeds from this offering.

4
<PAGE>

PRICE RANGE OF COMMON STOCK

(a) The Company's Common Stock is traded in the over-the-counter National
Market System under the symbol HRLY. The following table sets forth the high and
low closing sales price as reported by NASDAQ - National Market System for the
Company's Common Stock for the periods indicated.
<TABLE>
<CAPTION>
Common Stock
High Low

Fiscal Year 1995
<S> <C> <C>
First Quarter . . . . . . . . . . . . . $ 5-1/2 $ 3-5/8
Second Quarter. . . . . . . . . . . . . 4-1/8 2-9/16
Third Quarter . . . . . . . . . . . . . 3-13/16 1-3/4
Fourth Quarter. . . . . . . . . . . . . 5-5/8 3-3/16

Fiscal Year 1996
First Quarter . . . . . . . . . . . . . 6-1/8 4-7/8
Second Quarter. . . . . . . . . . . . . 8-1/4 5-1/8
Third Quarter . . . . . . . . . . . . . 10-5/8 7
Fourth Quarter. . . . . . . . . . . . . 12-1/4 8

Fiscal Year 1997
First Quarter . . . . . . . . . . . . . 10-5/8 8-1/4
Second Quarter. . . . . . . . . . . . . 14-1/4 9-3/4
Third Quarter . . . . . . . . . . . . . 11-7/8 8-1/8
Fourth Quarter. . . . . . . . . . . . . 14-1/4 8-1/4

Fiscal Year 1998
First Quarter (through September 3, 1997) . . 17-5/8 13-1/2
</TABLE>

The closing price on September 3, 1997 was $17-1/8.

(b) As of September 3, 1997, there were approximately 1,000 record holders
of the Company's Common Stock.

DIVIDEND POLICY

The Company has never paid any cash dividends on its Common Stock. There
have been no stock dividends declared or paid by the Company on its Common Stock
during the past two years. Payment of future dividends, if any, will be
dependent upon the earnings and financial position of the Company and such
factors as the Board of Directors shall deem appropriate.

5
<PAGE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The primary function of the Compensation Committee is to oversee policies
relating to executive compensation including salary, incentive bonuses, fringe
benefits and stock option awards. Its objective is to attract and retain
qualified individuals by providing competitive compensation, while, at the same
time, linking such compensation to corporate objectives. The Committee believes
that providing a direct relationship between corporate results and executive
compensation will best serve shareholder interest. This link between executive
compensation and corporate performance is facilitated through incentive bonuses
based on earnings and also through stock option awards. Salary ranges for the
chief executive officer and other executive officers are based on the underlying
accountability of each executive's position, which is reviewed on a regular
basis, subject to the terms and conditions of employment agreements.

RELATIONSHIP OF COMPENSATION TO PERFORMANCE
FOR OFFICERS AND CHIEF EXECUTIVE OFFICER

The Compensation Committee annually establishes, subject to any applicable
employment agreements, the salaries which will be paid to the Company's
executive officers during the coming year. In setting salaries, the Committee
takes into account several factors, including competitive compensation data, the
extent to which an individual may participate in the stock option plans
maintained by the Company and its affiliates, and qualitative factors bearing on
an individual's experience, responsibilities, management and leadership
abilities and job performance.

The Compensation Committee: Thomas J. Allshouse
David H. Lieberman

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities ("Reporting Persons") to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. (the "NASD"). These Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Forms 3, 4 and 5 they file
with the SEC and NASD.

Based solely upon the Company's review of the forms it has received, the
Company believes that all reporting persons complied on a timely basis with all
filing requirements applicable to them with respect to transactions during
fiscal years 1996 and 1997.

6
<PAGE>

PERFORMANCE CHART

The following graph sets forth the cumulative total stockholder return to
the Company's stockholders during the five-year period ended July 28, 1996, as
well as an overall stock market index (NASDAQ Stock Market-US) and the Company's
peer group index (S&P Aerospace/Defense):

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HERLEY INDUSTRIES, INC., THE NASDAQ STOCK MARKET-US INDEX AND
THE S & P AEROSPACE/DEFENSE INDEX
<TABLE>
<CAPTION>

Measurement Period Herley NASDAQ S & P
(Fiscal Year Covered) Industries, Inc. Stock Market Aerospace/Defense

7
<PAGE>

SELLING SECURITYHOLDERS

The following table sets forth the ownership of the Selling
Securityholders, the number of shares of Common Stock beneficially owned by each
of the Selling Securityholders, and the number of shares which may be offered
for resale pursuant to this Prospectus. Except as otherwise disclosed herein,
none of the Selling Securityholders has had any position, office or other
material relationship with the Company or its predecessors or affiliates within
the past three years.

The information included below is based upon information provided by the
Selling Securityholders. Because the Selling Securityholders may offer all,
some or none of their shares, no definitive estimate as to the number of shares
that will be held by the Selling Securityholders after such offering can be
provided.
<TABLE>
<CAPTION>
Number of Shares of Common Stock
Selling Securityholder Beneficially Owned Prior to the Offering
- ----------------------- ----------------------------------------

<S> <C>
Susan S. Anderson and
Kelvin M. Anderson, JT TEN 230 Shares
Richard Ashwick 522 Shares
Robert C. Benn 2,064 Shares
Irvin N. Bingham, Jr. and
Janet L. Bingham, JT TEN 257 Shares
John J. Bowerman 128 Shares
James L. Bowyer 128 Shares
Raymond G. Brandenburg and
Mieko K. Brandenburg, JT TEN 25 Shares
Kay E. Bresee and
Jeff D. Bresee, JT TEN 77 Shares
Gerard E. Breyton and
Monique C. Breyton, JT TEN 8,630 Shares
Alan T. Christie 7,172 Shares
Darren M. Church and
Lauren A. Church, JT TEN 1,312 Shares
The Crow Family Trust
Jack H. Crow and
Margaret D. Crow, Trustors 2,452 Shares
V. Edward Dent 465 Shares
Dorothy L. Ekeblad 258 Shares
Frederick A. Ekeblad 2,584 Shares
Russell A. Ekeblad 516 Shares
Gordon R. Erickson 8,403 Shares
Dolores C. Feher 661 Shares
Paul L. Feher, Jr. 660 Shares
Sherle Ann Feher 660 Shares
Frederic L. Ferry and
Lucille A. Ferry 128 Shares
Richard S. Fontaine 775 Shares

8
<PAGE>

Edward C. Freer 775 Shares
Steven R. Friend 436 Shares
Prabodh K. Ghai 128 Shares
Lynda Smith Glandorf 128 Shares
Nicholas A. Grosso or
Anna M. Grosso 10,904 Shares
Florence E. Guss 32 Shares
Samuel G. Guss 32 Shares
Linda L. Harris 3 Shares
Alexander Hehmeyer, Trust
c/o Alexander Hehmeyer, Trustee 5,167 Shares
Alexander M. Hehmeyer 515 Shares
Alexander M. Hehmeyer Cust.
Alexander Marliave Hehmeyer
Unif. Gift. Min. Act CA 257 Shares
Alexander M. Hehmeyer Cust.
Jeffery Paxton Hehmeyer
Unif. Gift. Min. Act CA 257 Shares
Sheila M. Hehmeyer 267 Shares
Reinhardt L. Hergenrother &
Carmela Hergenrother, JT TEN 2,894 Shares
Guy M. Himes and
Kathryn S. Himes, JT TEN 128 Shares
John A. Holt &
Ann C. Holt JT TEN 641 Shares
Margaret A. Jefferson 60 Shares
Robert C. Johnson 155 Shares
Edward A. Kefauver 8 Shares
Helmut J. Kracke 1,007 Shares
Elizabeth C. Land 3,295 Shares
Gay V. Land 5,578 Shares
Michael J. Legenzov and
Doreen A. Legenzov, JT TEN 25 Shares
Stephen A. Lieber 386 Shares
Joseph S. Linarducci 26,233 Shares
A. Maria Linarducci 1,520 Shares
Adele Linarducci 1,520 Shares
Barbara Linarducci 1,520 Shares
Carol Linarducci 1,520 Shares
Eugene J. Lindberg, Jr. 966 Shares
Robert G. Luke and
Linda M. Luke, JT TEN 515 Shares
Robert J. McDonald
c/o Vale Petroleum Corporation 2,326 Shares
Estate of P.H. McGannon Kearney 5,947 Shares
Metraplex Corporation ESOP Trust 18,007 Shares
Prudence M. Owen 32 Shares

9
<PAGE>

Erica M. Randolph 5 Shares
Charles P. Reisel 904 Shares
Terrence Rickrode 1,805 Shares
George A. Roots 2,348 Shares
Fred M. Rosenthal 1,185 Shares
Glenn K. Rosenthal 197 Shares
Christine H. Rosso
c/o Anti-Trust Bureau 515 Shares
Christine H. Rosso, Custodian
Christie H. Rosso
Unif. Gift. Min. Act IL 257 Shares
Christine H. Rosso, Custodian
Mark H. Rosso
Unif. Gift. Min. Act IL 257 Shares
Ryfield & Company
c/o Union National Bank
Special Asset Management 28,075 Shares
Thomas D. Salley 128 Shares
Carl P. Smith 35,038 Shares
Kelly Evan Smith 128 Shares
David F. Sniffin 131 Shares
Kenneth H. Stanley, Jr. and/or
John Brennan 329 Shares
Gillian V. Steel, Custodian
Alexandra Steel 329 Shares
Karen K. Stewart 641 Shares
Steven L. Stoyke 14 Shares
Margaret W. Strock 2,215 Shares
Orvis J. Strock 3,037 Shares
Nancy T. James 3,062 Shares
Horace A. Teass, Jr. 3,062 Shares
Horace A. Teass, Jr. 779 Shares
Andrew Thomas 4,052 Shares
William D. Wargo, Jr. 1,056 Shares
Charles B. Weaver, Jr. 12,018 Shares
Susan Weiseman 1,520 Shares
Louise E. Wilcox 517 Shares
</TABLE>
10

<PAGE>

PLAN OF DISTRIBUTION

The Shares are traded on the NASDAQ Stock Market National Market System
under the symbol HRLY. The Shares may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the NASDAQ Stock Market National
Market System, including ordinary broker's transactions, privately-negotiated
transactions or through sales to one or more broker-dealers for resale of such
shares as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees or commissions may be paid
by the Selling Securityholders in connection with such sales of securities.

At the time a particular offer of securities is made by or on behalf of the
Selling Securityholders, to the extent required, a prospectus will be
distributed which will set forth the number of shares being
offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for shares purchased from the Selling Securityholders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
and the proposed selling price to the public.

LEGAL OPINION

Certain legal matters in connection with this offering will be passed upon
for the Company by Blau, Kramer, Wactlar & Lieberman, P.C., Jericho, New York
11753. David H. Lieberman, a member of the firm, is a director of the Company.
Mr. Lieberman owns 600 shares of Common Stock of the Company and options and
warrants to purchase 20,000 shares of Common Stock.

EXPERTS

The financial statements and schedules included in this prospectus and
elsewhere in the Registration Statement, to the extent and for the periods
indicated in their reports, have been audited by Arthur Andersen LLP and
Wolinetz, Gottlieb & Lafazan, P.C., independent public accountants, and are
included herein in reliance upon the authority of said firms as experts in
giving said reports.

<PAGE>

No dealer, salesperson, or other person has been authorized by the Company to
give any information or to make any representations other than those contained
in this Prospectus and, if given or made, such other information or
representations must not be relied upon as having been so authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities other than the securities to which it
relates, or an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation would be unlawful. Neither delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----

<S> <C>
Available Information .......................... 2
Incorporation of Certain Documents
by Reference ................................. 2
The Company .................................... 3
Use of Proceeds ................................ 4
Price Range of Common Stock .................... 5
Dividend Policy ................................ 5
Compensation Committee Report on
Executive Compensation ....................... 6
Relationship of Compensation to Performance
for Officers and Chief Executive Officers .... 6
Compliance with Section 16(a) of the
Securities Exchange Act ........................ 6
Performance Chart .............................. 7
Selling Security Holders ....................... 8
Plan of Distribution ........................... 11
Legal Opinion .................................. 11
Experts ........................................ 11

</TABLE>

HERLEY INDUSTRIES, INC.

234,895 Shares of
Common Stock

----------

PROSPECTUS

----------

September [__], 1997

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
Filing Fee .................................. $ 1,219
Legal and Accounting Fees ................... 5,000
Miscellaneous ............................... 3,781
-------
Total ....................................... $10,000
=======
</TABLE>
The Company will pay all of these expenses.

Item 15. Indemnification of Directors and Officers

Under provisions of the By-Laws of the Company, each person who is or was a
director or officer of the Company may be indemnified by the Company to the full
extent permitted or authorized by the General Corporation Law of Delaware.

Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of the Company, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.

If unsuccessful in defense of a third-party civil suit or if a criminal
suit is settled, such a person may be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgements, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful.

If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person may be indemnified under such
law only against expenses (including attorneys' fees) incurred in the defense or
settlement of such suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company except
that if such a person is adjudged to be liable in such suit for negligence or
misconduct in the performance of his duty to the Company, he cannot be made
whole even for expenses unless the court determines that he is fairly and
reasonably entitled to indemnity for such expenses.

The Company and its officers and directors of the Company are covered by
officers and directors liability insurance. The policy coverage is $3,000,000,
which includes reimbursement for costs and fees. There is a maximum deductible
under the policy of $200,000 for each claim. The Company has entered into
Indemnification Agreements with certain of its officers and directors. The
Agreements provide for reimbursement for all direct and indirect costs of any
type or nature whatsoever (including attorneys' fees and related disbursements)
actually and reasonably incurred in connection with either the investigation,
defense or appeal of a Proceeding, as defined, including amounts paid in
settlement by or on behalf of an Indemnitee.

II-1
<PAGE>

Item 16. Exhibits

2.1 Agreement and Plan of Reorganization dated as of June 8, 1997 among
the Company, Metraplex Acquisition Corporation and Metraplex
Corporation.
4.1 Registration Rights Agreement between the Company and the Selling
Securityholders.
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Wolinetz, Gottlieb & Lafazan, LLP.
23.3 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in
Exhibit 5 hereof)
24 Powers of Attorney (included in the signature pages hereof)

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Act"), each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed
by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act
shall be deemed to be part of the registration statement as of the time it was
declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Lancaster, Pennsylvania on the 4th day of September, 1997.

Herley Industries, Inc.

By:/s/ Lee N. Blatt
-----------------------
Lee N. Blatt
Chairman of the Board

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on September 4, 1997, by the
following persons in the capacities indicated. Each person whose signature
appears below also constitutes and appoints Lee N. Blatt and Myron Levy, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and all other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.

Signature Title
--------- -----

/s/ Lee N. Blatt
- ---------------------- Chairman of the Board
Lee N. Blatt (Chief Executive Officer)

/s/ Myron Levy
- ---------------------- President and Director
Myron Levy

/s/ Anello Garefino
- ---------------------- Vice President - Finance,
Anello C. Garefino Treasurer (Chief Financial
Officer and Principal
Accounting Officer)
/s/ Thomas J. Allshouse
- ---------------------- Director
Thomas J. Allshouse

/s/ David H. Lieberman
- ---------------------- Secretary and Director
David H. Lieberman

- ---------------------- Director
John Thonet

II-3

Exhibit 2.1

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

HERLEY INDUSTRIES, INC.

METRAPLEX ACQUISITION CORP.

AND

METRAPLEX CORPORATION

Dated as of July 8, 1997

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page

ARTICLE I
<S> <C>
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Effective Time; Closing. . . . . . . . . . . . . . . . -1-
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . -2-
1.4 Certificate of Incorporation; Bylaws . . . . . . . . . -2-
1.5 Directors and Officers . . . . . . . . . . . . . . . . -2-
1.6 Effect on Capital Stock. . . . . . . . . . . . . . . . -2-
1.7 Dissenting Shares. . . . . . . . . . . . . . . . . . . -3-
1.8 Surrender of Certificates. . . . . . . . . . . . . . . -4-
1.9 No Further Ownership Rights in Metraplex Capital Stock -5-
1.10 Lost, Stolen or Destroyed Certificates . . . . . . . . -6-
1.11 Tax and Accounting Consequences. . . . . . . . . . . . -6-
1.12 Taking of Necessary Action; Further Action . . . . . . -6-

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF METRAPLEX. . . . . . . . -6-
2.1 Organization of Metraplex. . . . . . . . . . . . . . . -6-
2.2 Metraplex Capital Structure. . . . . . . . . . . . . . -7-
2.3 Obligations With Respect to Capital Stock. . . . . . . -7-
2.4 Authority. . . . . . . . . . . . . . . . . . . . . . . -7-
2.5 Section 203 of the Delaware General Corporation Law
Not Applicable. . . . . . . . . . . . . . . . . . . . -8-
2.6 Metraplex Financial Statements . . . . . . . . . . . . -9-
2.7 Absence of Certain Changes or Events . . . . . . . . . -9-
2.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.9 Intellectual Property. . . . . . . . . . . . . . . . .-10-
2.10 Compliance; Permits; Restrictions. . . . . . . . . . .-10-
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . .-11-
2.12 Brokers' and Finders' Fees . . . . . . . . . . . . . .-11-
2.13 Employee Benefit Plans . . . . . . . . . . . . . . . .-11-
2.14 Absence of Liens and Encumbrances. . . . . . . . . . .-12-
2.15 Environmental Matters. . . . . . . . . . . . . . . . .-12-
2.16 Labor Matters. . . . . . . . . . . . . . . . . . . . .-13-
2.17 Agreements, Contracts and Commitments. . . . . . . . .-13-
2.18 Change of Control Payments . . . . . . . . . . . . . .-14-
2.19 Board Approval . . . . . . . . . . . . . . . . . . . .-14-
2.20 Minute Books . . . . . . . . . . . . . . . . . . . . .-14-

<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Herley AND MERGER SUB . .-15-
3.1 Organization of Herley . . . . . . . . . . . . . . . .-15-
3.2 Herley Capital Structure . . . . . . . . . . . . . . .-15-
3.3 Obligations With Respect to Capital Stock. . . . . . .-16-
3.4 Authority. . . . . . . . . . . . . . . . . . . . . . .-16-
3.5 SEC Filings; Herley Financial Statements . . . . . . .-17-
3.6 Absence of Certain Changes or Events . . . . . . . . .-18-
3.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . .-18-
3.8 Intellectual Property. . . . . . . . . . . . . . . . .-18-
3.9 Compliance; Permits; Restrictions. . . . . . . . . . .-19-
3.10 Litigation . . . . . . . . . . . . . . . . . . . . . .-19-
3.11 Brokers' and Finders' Fees . . . . . . . . . . . . . .-20-
3.12 Employee Benefit Plans . . . . . . . . . . . . . . . .-20-
3.13 Absence of Liens and Encumbrances. . . . . . . . . . .-20-
3.14 Environmental Matters. . . . . . . . . . . . . . . . .-21-
3.15 Labor Matters. . . . . . . . . . . . . . . . . . . . .-21-
3.16 Agreements, Contracts and Commitments. . . . . . . . .-21-
3.17 Change of Control Payments . . . . . . . . . . . . . .-23-
3.18 Minute Books . . . . . . . . . . . . . . . . . . . . .-23-

ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . .-23-
4.1 Conduct of Business. . . . . . . . . . . . . . . . . .-23-

ARTICLE V
ADDITIONAL AGREEMENTS. . .. . . . . . . . . . . . . . . . .-25-
5.1 Registration Rights. . . . . . . . . . . . . . . . . .-25-
5.2 Meeting of Metraplex Stockholders. . . . . . . . . . .-26-
5.3 Access to Information; Confidentiality . . . . . . . .-26-
5.4 No Solicitation by Metraplex . . . . . . . . . . . . .-26-
5.5 Public Disclosure. . . . . . . . . . . . . . . . . . .-27-
5.6 Legal Requirements . . . . . . . . . . . . . . . . . .-27-
5.7 Third Party Consents . . . . . . . . . . . . . . . . .-28-
5.8 FIRPTA . . . . . . . . . . . . . . . . . . . . . . . .-28-
5.9 Notification of Certain Matters. . . . . . . . . . . .-28-
5.10 Best Efforts and Further Assurances. . . . . . . . . .-28-
5.11 Stock Options; Employee Stock Purchase Plan. . . . . .-28-

<PAGE>
5.12 Tax-Free Reorganization. . . . . . . . . . . . . . . .-29-
5.13 Metraplex Employee Benefits. . . . . . . . . . . . . .-29-
5.14 Repurchase of Herley Common Stock. . . . . . . . . . .-29-
5.15 Employment Agreement . . . . . . . . . . . . . . . . .-30-

ARTICLE VI
CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . .-30-
6.1 Conditions to Obligations of Each Party to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . -30-
6.2 Additional Conditions to Obligations of Metraplex. . .-30-
6.3 Additional Conditions to the Obligations of Herley
and Merger Sub . . . . . . . . . . . . . . . . . . . -31-

ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER. . . .. . . . . . . . . .-32-
7.1 Termination. . . . . . . . . . . . . . . . . . . . . .-32-
7.2 Notice of Termination; Effect of Termination . . . . .-33-
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . .-34-
7.4 Amendment. . . . . . . . . . . . . . . . . . . . . . .-34-
7.5 Extension; Waiver. . . . . . . . . . . . . . . . . . .-34-

ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . .-35-
8.1 Non-Survival of Representations and Warranties . . . .-35-
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . .-35-
8.3 Interpretation; Knowledge. . . . . . . . . . . . . . .-36-
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . .-36-
8.5 Entire Agreement . . . . . . . . . . . . . . . . . . .-36-
8.6 Severability . . . . . . . . . . . . . . . . . . . . .-36-
8.7 Other Remedies; Specific Performance . . . . . . . . .-36-
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . .-37-
8.9 Rules of Construction. . . . . . . . . . . . . . . . .-37-
8.10 Assignment . . . . . . . . . . . . . . . . . . . . . .-37-
</TABLE>
INDEX OF EXHIBITS
-----------------

Exhibit A Registration Rights Agreement
Exhibit B Employment Agreement

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of July 8, 1997 among Herley Industries, Inc., a Delaware
corporation ("Herley"), Metraplex Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Herley ("Merger Sub"), and
Metraplex Corporation, a Delaware corporation ("Metraplex").

RECITALS
--------

A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"), Herley
and Metraplex will enter into a business combination transaction pursuant to
which Merger Sub will merge with and into Metraplex (the "Merger").

B. Herley and Merger Sub, on the one hand, and Metraplex on the other hand,
desire to make certain representations and warranties and other agreements in
connection with the Merger.

C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").

NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

ARTICLE I
THE MERGER

1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Metraplex, the separate corporate existence of Merger Sub shall cease and
Metraplex shall continue as the surviving corporation. Metraplex as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."

1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in accordance with the relevant provisions of Delaware
Law (the time of such filing (or such later time as may be agreed in writing by
the parties and specified in the Certificate of Merger) being the "Effective
Time") as soon as practicable on or after the Closing Date (as herein defined).
Unless the context otherwise requires, the term "Agreement" as used herein
refers collectively to this Agreement and the Certificate of Merger. The closing
of the Merger (the "Closing") shall take place at the offices of Blau, Kramer,

<PAGE>

Wactlar & Lieberman, P.C. at a time and date to be specified by the parties,
which shall be no later than July 31, 1997, or at such other time, date and
location as the parties hereto agree in writing (the "Closing Date").

1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of Metraplex and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Metraplex and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.

1.4 Certificate of Incorporation; Bylaws.

(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that at the Effective Time the Certificate of Incorporation of the
Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be "Metraplex Corporation"

(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.

1.5 Directors and Officers. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, until their respective successors are duly elected or appointed and
qualified. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, until their
successors are duly elected or appointed and qualified.

1.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, Metraplex or the holders of
any of the following securities:

(a) Conversion of Metraplex Capital Stock. Each share of Common Stock,
par value $.01 per share, of Metraplex (the "Metraplex Capital Stock") issued
and outstanding immediately prior to the Effective Time (other than Unallocated
ESOP Shares, which are defined in, and shall be converted pursuant to Section
1.6(d) and any Dissenting Shares (as defined in and to the extent provided in
Section 1.7(a)) will be canceled and extinguished and automatically converted
(subject to Sections 1.6(e) and (f)) into 0.32938 (the "Exchange Ratio") shares
of Common Stock, par value $.10 per share, of Herley (the "Herley Common Stock")
upon surrender of the certificate representing such share of Metraplex Capital
Stock in the manner provided in Section 1.8 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 1.10).
<PAGE>

(b) Cancellation of Herley-Owned Stock. Each share of Metraplex
Capital Stock held in the treasury of Metraplex or owned by Merger Sub, Herley
or any direct or indirect wholly owned subsidiary of Metraplex or of Herley
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.

(c) Stock Options. At the Effective Time all options to purchase
Metraplex Capital Stock then outstanding under Metraplex's Incentive Stock
Option Plan (collectively, the "Metraplex Stock Option Plans") shall be
terminated on or prior to the Effective Date.

(d) Employee Stock Ownership Plan. The Metraplex Employee Stock
Ownership Plan (the "Metraplex ESOP"), shall be terminated on or prior to the
Effective Date, the 43,437 shares of Metraplex Common Stock allocated under the
Metraplex ESOP shall be converted into a number of shares of Herley Common Stock
based on the Exchange Ratio and the 121,216 shares of Metraplex Common Stock
unallocated under the Metraplex ESOP (the "Unallocated ESOP Shares") shall be
converted by Metraplex into the right to receive 3,700 shares of Herley Common
Stock.

(e) Capital Stock of Merger Sub. Each share of Common Stock, par value
$.001 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of Common Stock, par value $.001 per share,
of the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the Surviving Corporation.

(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Herley Common Stock or Metraplex Capital Stock), reorganization,
recapitalization or other like change with respect to Herley Common Stock or
Metraplex Capital Stock occurring on or after the date hereof and prior to the
Effective Time.

(g) Fractional Shares. No fraction of a share of Herley Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Metraplex Capital Stock who would otherwise be entitled to a fraction
of a share of Herley Common Stock (after aggregating all fractional shares of
Herley Common Stock to be received by such holder) shall receive from Herley an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) the average closing price of a share of Herley
Common Stock for the ten most recent days that Herley Common Stock has traded
ending on the trading day immediately prior to the Effective Time, as reported
on the Nasdaq SmallCap Market.

1.7 Dissenting Shares.
-----------------

(a) Notwithstanding any provision of this Agreement to the contrary,
the shares of any holder of Metraplex Capital Stock who has demanded and
perfected appraisal rights for such shares in accordance with Delaware Law and

<PAGE>

who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares") shall not be converted into or represent
a right to receive Herley Common Stock pursuant to Section 1.6, but the holder
thereof shall only be entitled to such rights as are granted by Delaware Law.

(b) Notwithstanding the foregoing, if any holder of shares of
Metraplex Capital Stock who demands appraisal of such shares under Delaware Law
shall effectively withdraw the right to appraisal, then, as of the later of the
Effective Time and the occurrence of such withdrawal, such holder's shares shall
automatically be converted into Herley Common Stock, without interest thereon,
upon surrender of the certificate representing such shares.

(c) Metraplex shall give Herley (i) prompt notice of any written
demands for appraisal of any shares of Metraplex Capital Stock, withdrawals of
such demands, and any other instruments served pursuant to Delaware Law and
received by Metraplex which relate to any such demand for appraisal and (ii) the
opportunity to participate in all negotiations and proceedings which take place
prior to the Effective Time with respect to demands for appraisal under Delaware
Law. Metraplex shall not, except with the prior written consent of Herley or as
may be required by applicable law, voluntarily make any payment with respect to
any demands for appraisal of Metraplex Capital Stock or offer to settle or
settle any such demands.

1.8 Surrender of Certificates.
-------------------------

(a) Exchange Agent. Herley shall select American Stock Transfer and
Trust Company or another institution reasonably satisfactory to Metraplex to act
as the exchange agent (the "Exchange Agent") in the Merger. Herley shall be
responsible for paying for the fees and the costs of this Exchange Agent.

(b) Herley to Provide Common Stock. Promptly, but no later than three
business days after the Effective Time, Herley shall make available to the
Exchange Agent for exchange in accordance with this Article 1, the shares of
Herley Common Stock issuable pursuant to Section 1.6 in exchange for outstanding
shares of Metraplex Capital Stock, and cash in an amount sufficient for payment
in lieu of fractional shares pursuant to Section 1.6(g) and any dividends or
distributions that holders of shares of Metraplex Capital Stock may be entitled
pursuant to Sections 1.6(g) and 1.8(d).

(c) Exchange Procedures. Promptly, but no later than five business
days after the Effective Time, Herley shall cause the Exchange Agent to mail to
each holder of record (as of the Effective Time) of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of Metraplex Capital Stock whose shares were
converted into shares of Herley Common Stock pursuant to Section 1.6, cash in
lieu of any fractional shares pursuant to Section 1.6(g) and any dividends or
other distributions pursuant to Section 1.8(d), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the

<PAGE>

Exchange Agent and shall be in such form and have such other provisions as
Herley may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Herley Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(g) and any dividends or other distributions pursuant to Section
1.8(d). Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Herley, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing the number of whole
shares of Herley Common Stock, payment in lieu of fractional shares which such
holder has the right to receive pursuant to Section 1.6(g) and any dividends or
distributions payable pursuant to Section 1.8(d), and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each outstanding
Certificate will be deemed from and after the Effective Time, for all corporate
purposes, subject to Section 1.8(d) as to the payment of dividends, to evidence
the ownership of the number of full shares of Herley Common Stock into which
such shares of Metraplex Capital Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6(g) and any dividends or distributions
payable pursuant to Section 1.8(d).

(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Herley Common Stock with a record date after the Effective Time will
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Herley Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder thereof certificates representing whole shares of Herley Common Stock
issued in exchange therefor, without interest, along with the amount of
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole shares of Herley Common Stock.

(e) Transfers of Ownership. If any certificate for shares of Herley
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Herley or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Herley Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of Herley or any
agent designated by it that such tax has been paid or is not payable.

(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, neither the Exchange Agent, Herley, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Herley Common Stock or
Metraplex Capital Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.

1.9 No Further Ownership Rights in Metraplex Capital Stock. All shares of
Herley Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid in respect thereof

<PAGE>

pursuant to Section 1.6(g) and 1.8(d)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Metraplex Capital
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Metraplex Capital Stock which were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.

1.10 Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such whole number of shares of
Herley Common Stock into which the shares of Metraplex Capital Stock evidenced
thereby shall have been converted, cash for fractional shares, if any, as may be
required pursuant to Section 1.6(g) and any dividends or distributions payable
pursuant to Section 1.8(d); provided, however, that Herley may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Herley or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.

1.11 Tax and Accounting Consequences. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Income Tax Regulations.

1.12 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Metraplex and Merger Sub, the officers and directors of
Metraplex and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is consistent with this Agreement.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF METRAPLEX

Metraplex represents and warrants to Herley and Merger Sub, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by Metraplex to Herley (the "Metraplex Schedules"), as follows:

2.1 Organization of Metraplex. Metraplex and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power to own, lease
and operate its property and to carry on its business as now being conducted and
as proposed to be conducted, and is duly qualified to do business and in good

<PAGE>

standing as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a Material Adverse Effect (as defined below) on
Metraplex. Metraplex has delivered to Herley a true and complete list of all of
Metraplex's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary and Metraplex's equity interest therein. Metraplex has delivered
or made available a true and correct copy of the Certificate of Incorporation
and Bylaws of Metraplex and similar governing instruments of its subsidiaries,
each as amended to date, to counsel for Herley. When used in connection with
Metraplex, the term "Material Adverse Effect" means, for purposes of this
Agreement, any change, event or effect that is materially adverse to the
business, assets (including intangible assets), financial condition or results
of operations of Metraplex and its subsidiaries taken as a whole, provided,
however, that the continuation of current trends in such business, assets
(including intangible assets), financial condition or results of operations
(including without limitation further losses) shall not be deemed to constitute
a Material Adverse Effect, but material deviations therefrom shall constitute a
Material Adverse Effect.

2.2 Metraplex Capital Structure. The authorized capital stock of Metraplex
consists of 823,263 shares of Common Stock, par value $.01 per share, of which
there were 702,047 shares issued and outstanding as of June [1], 1997, not
including the 121,216 shares which have not been allocated under the Metraplex
ESOP. All outstanding shares of Metraplex Capital Stock are duly authorized,
validly issued, fully paid and non-assessable and are not subject to preemptive
rights created by statute, the Certificate of Incorporation or Bylaws of
Metraplex or any agreement or document to which Metraplex is a party or by which
it is bound. As of June 1, 1997, Metraplex had reserved an aggregate of 35,000
shares of Common Stock, net of exercises, for issuance to employees, consultants
and non-employee directors pursuant to the Metraplex Stock Option Plans, under
which options are outstanding for an aggregate of 10,000 shares, all of which
outstanding options shall be terminated on or prior to the Effective Date. All
shares of Metraplex Capital Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. The Metraplex Schedules list each outstanding option to
acquire shares of the Common Stock of Metraplex at June 1, 1997, the name of the
holder of such option, the number of shares subject to such option, the exercise
price of such option, the number of shares as to which such option will have
vested at such date and whether the exercisability of such option will be
accelerated in any way by the transactions contemplated by this Agreement or for
any other reason, and indicate the extent of acceleration, if any. Metraplex is
required to repurchase the shares of stock owned by participants in the
Metraplex ESOP as required by law. Metraplex will be terminating the ESOP prior
to the Effective Time and advising Merger Sub and Herley of the number of shares
to be distributed to the ESOP, as determined by the ESOP's trustees.

2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2, there are no equity securities of any class of Metraplex, or any
securities exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except for securities
Metraplex owns, directly or indirectly through one or more subsidiaries, there
are no equity securities of any class of any subsidiary of Metraplex, or any
security exchangeable or convertible into or exercisable for such equity

<PAGE>

securities, issued, reserved for issuance or outstanding. Except as set forth in
Section 2.2, there are no options, warrants, equity securities, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Metraplex or any of its subsidiaries is a party or by which it is bound
obligating Metraplex or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition, of any shares of
capital stock of Metraplex, or any of its subsidiaries or obligating Metraplex
or any of its subsidiaries to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement. There are no registration rights and, to the knowledge of Metraplex,
there are no voting trusts, proxies or other agreements or understandings with
respect to any equity security of any class of Metraplex or with respect to any
equity security of any class of any of its subsidiaries.

2.4 Authority.
---------

(a) Metraplex has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Metraplex, subject only to the approval of this
Agreement by Metraplex's stockholders and the filing and recordation of the
Certificate of Merger pursuant to Delaware Law. A vote of the holders of at
least a majority of the outstanding shares of the Metraplex Capital Stock is
required for Metraplex's stockholders to approve this Agreement. This Agreement
has been duly executed and delivered by Metraplex and, assuming the due
authorization, execution and delivery by Herley and Merger Sub, constitutes the
valid and binding obligation of Metraplex, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity. Except as set forth in the Metraplex
Schedules, the execution and delivery of this Agreement by Metraplex does not,
and the performance of this Agreement by Metraplex will not, (i) conflict with
or violate the Certificate of Incorporation or Bylaws of Metraplex or the
equivalent organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval of Metraplex's stockholders of the Merger as contemplated
in Section 5.2 and compliance with the requirements set forth in Section 2.4(b)
below, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Metraplex or any of its subsidiaries or by which its or any
of their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair Metraplex's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Metraplex or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Metraplex or any of its subsidiaries is a
party or by which Metraplex or any of its subsidiaries or its or any of their
respective properties are bound or affected, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, defaults or other
occurrences that would not have a Material Adverse Effect on Metraplex. The
Metraplex Schedules list all material consents, waivers and approvals under any
of Metraplex's or any of its subsidiaries' agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby.
<PAGE>

(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Metraplex in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the laws of any
foreign country and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Metraplex or Herley or have a material adverse effect
on the ability of the parties to consummate the Merger.

2.5 Metraplex Financial Statements.
------------------------------

Attached hereto as Schedule 2.6 are the Financial Statements of
Metraplex ( Metraplex Financial Statements ) for the calendar years ended March
31, 1997, 1996 and 1995.

(a) For the relevant periods, the Metraplex Financial Statements: (1)
are complete and correct in all material respects; (2) present fairly the
financial position of Metraplex and its subsidiaries at such dates and the
results of operations and cash flows for the respective periods ended on such
dates; and (3) were prepared in accordance with generally accepted accounting
principles ( GAAP ), consistently applied during the periods, and are in
accordance with the books and records maintained by Metraplex and its
subsidiaries, with no differences between such Metraplex Financial Statements
and the financial records maintained and accounting methods applied by Metraplex
for tax purposes, except as disclosed in the notes to the Metraplex Financial
Statements.

(b) The balance sheet of Metraplex contained in the Metraplex
Financial Statements as of March 31, 1997 is hereinafter referred to as the
"Metraplex Balance Sheet." Except as disclosed in the Metraplex Financial
Statements, neither Metraplex nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Metraplex and its subsidiaries taken as a whole, except liabilities
(i) provided for in the Metraplex Balance Sheet, or (ii) incurred since the date
of the Metraplex Balance Sheet in the ordinary course of business consistent
with past practices.

2.6 (a) Absence of Certain Changes or Events. Since the date of the
Metraplex Balance Sheet through the date of this Agreement, there has not been:
(i) any Material Adverse Effect on Metraplex, (ii) any material change by

<PAGE>

Metraplex in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (iii) any revaluation by Metraplex of any of
its assets having a Material Adverse Effect on Metraplex, including, without
limitation, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business.

2.7 Taxes. Metraplex and each of its subsidiaries has filed all tax returns
required to be filed by any of them and has paid (or Metraplex has paid on its
behalf), or has set up an adequate reserve for the payment of, all taxes
required to be paid as shown on such returns, and the most recent Metraplex
Financial Statements reflect an adequate reserve for all taxes payable by
Metraplex and its subsidiaries accrued through the date of such financial
statements. Except as reasonably would not be expected to have a Material
Adverse Effect on Metraplex, no deficiencies for any taxes have been proposed,
asserted or assessed against Metraplex or any of its subsidiaries. For the
purpose of this Agreement, the term "tax" shall include all Federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts.

2.8 Intellectual Property.
---------------------

(a) To the knowledge of Metraplex and its subsidiaries, Metraplex and its
subsidiaries own, or have the right to use, sell or license all patents,
trademarks, trade names, service marks, copyrights and other intellectual
property necessary or required for the conduct of their respective businesses as
presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Metraplex IP Rights"), except for any
failure to own or have the right to use, sell or license that would not have a
Material Adverse Effect on Metraplex.

(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Metraplex IP Rights (the
"Metraplex IP Rights Agreements"), will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any Metraplex IP Rights
or impair the right of Metraplex and its subsidiaries, the Surviving Corporation
or Herley to use, sell or license any Metraplex IP Rights or portion thereof,
except for the occurrence of any such breach, forfeiture, termination or
impairment that would not individually or in the aggregate, result in a Material
Adverse Effect on Metraplex.

(c) To the knowledge of Metraplex and its subsidiaries (i) neither the
manufacture, marketing, license, sale or intended use of any product or
technology currently licensed or sold or under development by Metraplex or any
of its subsidiaries violates any license or agreement between Metraplex or any
of its subsidiaries and any third party or infringes any intellectual property
right of any other party; and (ii) there is no pending or, to the knowledge of
Metraplex, threatened claim, arbitration or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any Metraplex IP Rights,
nor has Metraplex received any written notice asserting that any Metraplex IP
Rights or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other party, except, with respect to
clauses (i) and (ii), for any violations, infringements, claims or litigation
that would not have a Material Adverse Effect on Metraplex.
<PAGE>

(d) Metraplex has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Metraplex IP Rights.

2.9 Compliance; Permits; Restrictions.
---------------------------------

(e) Neither Metraplex nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Metraplex or any of its subsidiaries or by which its or any
of their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Metraplex or any of its subsidiaries is
a party or by which Metraplex or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any conflicts, defaults
or violations which would not have a Material Adverse Effect on Metraplex. No
investigation or review by any governmental or regulatory body or authority is
pending or, to the knowledge of Metraplex, threatened against Metraplex or its
subsidiaries, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each such case, those the
outcome of which would not have a Material Adverse Effect on Metraplex.

(f) Metraplex and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of Metraplex and its subsidiaries
taken as a whole (collectively, the "Metraplex Permits"). Metraplex and its
subsidiaries are in compliance with the terms of Metraplex Permits, except where
the failure to hold the same or to so comply would not have a Material Adverse
Effect on Metraplex.

2.10 Litigation. There is no action, suit, proceeding, claim, arbitration
or investigation pending, or as to which Metraplex or any of its subsidiaries
has received any notice of assertion nor, to Metraplex's knowledge, is there a
threat of an action, suit, proceeding, claim, arbitration or investigation
against Metraplex or any of its subsidiaries or which in any manner challenges
or seeks to prevent, enjoin, alter or delay any of the transactions contemplated
by this Agreement.

2.11 Brokers' and Finders' Fees. Metraplex has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.

2.12 Employee Benefit Plans.
----------------------

<PAGE>

trade or business (an "ERISA Affiliate") which is under common control with
Metraplex within the meaning of Section 414 of the Code (the "Metraplex Employee
Plans"), Metraplex has made available to Herley a true and complete copy of, to
the extent applicable, (i) such Metraplex Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Metraplex
Employee Plan, (iv) the most recent summary plan description for each Metraplex
Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any Metraplex Employee Plan subject to Title IV of
ERISA and (vi) the most recent United States Internal Revenue Service ("IRS")
determination letter issued with respect to any Metraplex Employee Plan.

(b) Each Metraplex Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Tax Reform Act of 1986 stating that such
Metraplex Employee Plan is so qualified and nothing has occurred since the date
of such letter that could reasonably be expected to affect the qualified status
of such plan. Each Metraplex Employee Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law.
Neither Metraplex nor any ERISA Affiliate of Metraplex has incurred or is
reasonably expected to incur any material liability under Title IV of ERISA in
connection with any Metraplex Employee Plan.

(c) Neither Metraplex nor any ERISA Affiliate thereof has withdrawn in
a complete or partial withdrawal from any multi-employer plan within the meaning
of Section 4001(a)(3) of ERISA prior to the Effective Time. Neither Metraplex
nor any ERISA Affiliate thereof has contributed to or been obligated to
contribute to any multi-employer plan within the meaning of Section 4001(a)(3)
of ERISA.

2.13 Absence of Liens and Encumbrances. Metraplex and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens or encumbrances except as reflected in the Metraplex
Financial Statements and except for liens for taxes not yet due and payable, the
perfection of purchase money security interests, as provided by law, to vendors
of property to Metraplex and such imperfections of title and encumbrances, if
any, which would not have a Material Adverse Effect on Metraplex.

2.14 Environmental Matters.
---------------------

(a) Hazardous Material. Except as would not have a Material Adverse
Effect on Metraplex, no underground storage tanks and no amount of any substance
that has been designated by any Governmental Entity or by applicable federal,
state or local law to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of 1976, as amended,

<PAGE>

and the regulations promulgated pursuant to said laws, (a "Hazardous Material"),
but excluding office and janitorial supplies, are present in the soil,
groundwater, building materials or ambient air of any real property currently
occupied by Metraplex as a result of the deliberate actions of Metraplex or any
of its subsidiaries, and Metraplex has not received any notice that it is
allegedly liable for the presence of Hazardous Materials in, on or under any
other property, including the land and the improvements, ground water and
surface water thereof, that Metraplex or any of its subsidiaries has at any time
owned, operated, occupied or leased.

(b) Hazardous Materials Activities. Except as would not have a
Material Adverse Effect on Metraplex, neither Metraplex nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date, nor has Metraplex or any of its
subsidiaries disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively "Hazardous Materials Activities")
in violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.

(c) Permits. Metraplex and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"Metraplex Environmental Permits") necessary for the conduct of Metraplex's and
its subsidiaries' Hazardous Material Activities as currently conducted and other
businesses of Metraplex and its subsidiaries as such activities and businesses
are currently being conducted, except where the failure to so hold would not
have a Material Adverse Effect on Metraplex.

(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to Metraplex's knowledge, threatened concerning any Metraplex
Environmental Permit or any Hazardous Materials Activity of Metraplex or any of
its subsidiaries. Metraplex is not aware of any fact or circumstance which could
involve Metraplex or any of its subsidiaries in any environmental litigation or
impose upon Metraplex or any of its subsidiaries any environmental liability
that would have a Material Adverse Effect on Metraplex.

2.15 Labor Matters. To Metraplex's knowledge, there are no activities or
proceedings of any labor union to organize any employees of Metraplex or any of
its subsidiaries and there are no strikes, or material slowdowns, work stoppages
or lockouts, or threats thereof by or with respect to any employees of Metraplex
or any of its subsidiaries. Metraplex and its subsidiaries are and have been in
compliance with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including, without limitation,
ERISA (as defined below), WARN or any similar state or local law), except for
any noncompliance that would not have a Material Adverse Effect on Metraplex.

2.16 Agreements, Contracts and Commitments. Except as set forth in the
Metraplex Schedules, neither Metraplex nor any of its subsidiaries is a party to
or is bound by:

(a) any collective bargaining agreements;
<PAGE>

(b) any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements;

(c) any employment or consulting agreement, contract or commitment
with any officer or director level employee, not terminable by Metraplex or any
of its subsidiaries on thirty (30) days notice without liability, except to the
extent general principles of wrongful termination law may limit Metraplex's or
any of its subsidiaries' ability to terminate employees at will;

(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement; except that the
termination of the Metraplex ESOP will result in 100% vesting.

(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
Metraplex or any of its subsidiaries and any of its officers or directors;

(f) any agreement, contract or commitment containing any covenant
limiting the freedom of Metraplex or any of its subsidiaries to engage in any
line of business or compete with any person;

(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $10,000 and not
cancelable without penalty;

(h) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;

(i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;

(j) any joint marketing or development agreement;

(k) any distribution agreement (identifying any that contain
exclusivity provisions); or

(l) any other agreement, contract or commitment (excluding real and
personal property leases) which involve payment by Metraplex or any of its
subsidiaries under any such agreement, contract or commitment of $10,000 or more
in the aggregate and is not cancelable without penalty within thirty (30) days.
<PAGE>

Neither Metraplex nor any of its subsidiaries, nor to Metraplex's knowledge
any other party to a Metraplex Contract (as defined below), has breached,
violated or defaulted under, or received notice that it has breached violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Metraplex is a party or by which
it is bound of the type described in clauses (a) through (l) above (any such
agreement, contract or commitment, an "Metraplex Contract") in such a manner as
would permit any other party to cancel or terminate any such Metraplex Contract,
or would permit any other party to seek damages, which would have a Material
Adverse Effect on Metraplex.

2.17 Change of Control Payments. There are no plans or agreements pursuant
to which any amounts may become payable (whether currently or in the future) to
current or former officers or directors of Metraplex as a result of or in
connection with the Merger.

2.18 Board Approval. The Board of Directors of Metraplex has, as of the
date of this Agreement, determined (i) that the Merger is fair to and in the
best interests of Metraplex and its stockholders, and (ii) to recommend that the
stockholders of Metraplex approve this Agreement.

2.19 Minute Books. The minute books of Metraplex made available to counsel
for Herley are the only minute books of Metraplex and contain a reasonably
accurate summary, in all material respects, of all meetings of directors (or
committees thereof) and stockholders or actions by written consent since the
time of incorporation of Metraplex.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Herley AND MERGER SUB

Herley and Merger Sub represent and warrant to Metraplex, subject to the
exceptions specifically disclosed in the schedules supplied by Herley to
Metraplex (the "Herley Schedules"), as follows:

3.1 Organization of Herley. Herley and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power to own, lease
and operate its property and to carry on its business as now being conducted and
as proposed to be conducted, and is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a Material Adverse Effect (as defined below) on
Herley and its subsidiaries taken as a whole. Herley has delivered to Metraplex
a true and complete list of all of Herley's subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and Herley's equity interest
therein. Herley has delivered or made available a true and correct copy of the
Certificate of Incorporation and Bylaws of Herley and similar governing
instruments of its subsidiaries, each as amended to date, to counsel for

<PAGE>

Metraplex. When used in connection with Herley, the term "Material Adverse
Effect" means, for purposes of this Agreement, any change, event or effect that
is materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of Herley and its subsidiaries
taken as a whole; provided, however, that the continuation of current trends in
such business, assets (including intangible assets), financial condition or
results of operations (including without limitation further losses) shall not be
deemed to constitute a Material Adverse Effect, but material deviations
therefrom shall constitute a Material Adverse Effect.

3.2 Herley Capital Structure. The authorized capital stock of Herley
consists of 10,000,000 shares of Common Stock, par value $.10 per share, of
which there were approximately 3,020,000 shares issued and outstanding as of
June 1, 1997. The authorized capital stock of Merger Sub consists of 1,000
shares of Common Stock, par value $.001 per share, 100 shares of which, as of
the date hereof, are issued and outstanding and are held by Herley. All
outstanding shares of the Common Stock of Herley are duly authorized, validly
issued, fully paid and non-assessable and are not subject to preemptive rights
created by statute, the Certificate of Incorporation or Bylaws of Herley or any
agreement or document to which Herley is a party or by which it is bound. As of
June 1, 1997, Herley had reserved an aggregate of 2,000,000 shares of Common
Stock, net of exercises, for issuance to employees, consultants and non-employee
directors pursuant to Herley's 1992 Non-Qualified Stock Option Plan, 1996 Stock
Option Plan and 1997 Stock Option Plan (collectively, the "Herley Stock Option
Plans"), under which options are outstanding for an aggregate 1,218,476 shares.
As of June 1, 1997, Herley had reserved an aggregate of 250,000 shares of Common
Stock, net of cancellations, for issuance to certain officers and directors
under certain warrant agreements (collectively, the "Herley Warrants"). All
shares of the Common Stock of Herley subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. The Herley Schedules list each outstanding option or warrant
to acquire shares of the Common Stock of Herley at June 30, 1997, the name of
the holder of such option or warrant, the number of shares subject to such
optionor warrant, the exercise price of such option or warrant, the number of
shares as to which such option or warrant will have vested at such date and
whether the exercisability of such option or warrant will be accelerated in any
way by the transactions contemplated by this Agreement or for any other reason,
and indicate the extent of acceleration, if any.

3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2, there are no equity securities of any class of Herley, or any
securities exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except for securities
Herley owns, directly or indirectly through one or more subsidiaries, there are
no equity securities of any class of any subsidiary of Herley, or any security
exchangeable or convertible into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth in Section
3.2, there are no options, warrants, equity securities, calls, rights (including
preemptive rights), commitments or agreements of any character to which Herley
or any of its subsidiaries is a party or by which it is bound obligating Herley
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of Herley
or any of its subsidiaries or obligating Herley or any of its subsidiaries to

<PAGE>

grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. There are no registration
rights and, to the knowledge of Herley there are no voting trusts, proxies or
other agreements or understandings with respect to any equity security of any
class of Herley or with respect to any equity security of any class of any of
its subsidiaries.

3.4 Authority.
---------

(a) Each of Herley and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Herley and, in the case of this
Agreement, Merger Sub, subject to the filing and recordation of the Certificate
of Merger pursuant to Delaware Law. This Agreement has been duly executed and
delivered by each of Herley and Merger Sub and, assuming the due authorization,
execution and delivery of this Agreement by Metraplex, subject to the conditions
set forth herein, this Agreement constitutes the valid and binding obligations
of each of Herley and Merger Sub, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement by
each of Herley and Merger Sub do not, and the performance of this Agreement by
each of Herley and Merger Sub will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Herley or the Certificate of
Incorporation or Bylaws of Merger Sub or the equivalent organizational documents
of any of its other subsidiaries, (ii) subject to compliance with the
requirements set forth in Section 3.4(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Herley or any of
its subsidiaries (including Merger Sub) or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Herley's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Herley
or any of its subsidiaries (including Merger Sub) pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Herley or any of its subsidiaries
(including Merger Sub) is a party or by which Herley or any of its subsidiaries
(including Merger Sub) or its or any of their respective properties are bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, defaults or other occurrences that would not have a
Material Adverse Effect on Herley. The Herley Schedules list all material
consents, waivers and approvals under any of Herley's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.

(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Herley or Merger Sub in connection with the execution and delivery of

<PAGE>

this Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (ii) the filing of a Current Report on Form 8-K
with the Securities Exchange Commission ( SEC ), (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the laws of any
foreign country and (iv) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not have a Material
Adverse Effect on Metraplex or Herley or have a material adverse effect on the
ability of the parties to consummate the Merger.

3.5 SEC Filings; Herley Financial Statements.
----------------------------------------

(a) Herley has filed all forms, reports and documents required to be
filed with the SEC since and including March 1997, and has made available to
Metraplex such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Herley may file
subsequent to the date hereof) are referred to herein as the "Herley SEC
Reports." As of their respective dates, the Herley SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act of 1933 ( Securities
Act ) or the Securities Exchange Act of 1934 ( Exchange Act ), as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Herley SEC Reports, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Herley's subsidiaries is required to file any
forms, reports or other documents with the SEC.

(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Herley SEC Reports (the "Herley
Financials"), including any Herley SEC Reports filed after the date hereof until
the Closing, (x) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (y) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-QSB under the Exchange Act) and (z) fairly presented the consolidated
financial position of Herley and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount. The balance sheet of Herley
contained in Herley SEC Reports as of March 31, 1997 is hereinafter referred to
as the "Herley Balance Sheet." Except as disclosed in the Herley Financials,
neither Herley nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of Herley
and its subsidiaries taken as a whole, except liabilities (i) provided for in
the Herley Balance Sheet, or (ii) incurred since the date of the Herley Balance
Sheet in the ordinary course of business consistent with past practices.
<PAGE>

(c) Herley has heretofore furnished to Metraplex a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Herley with the SEC
pursuant to the Securities Act or the Exchange Act.

3.6 Absence of Certain Changes or Events. Since the date of the Herley
Balance Sheet through the date of this Agreement, there has not been: (i) any
Material Adverse Effect on Herley, (ii) any material change by Herley in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (iii) any revaluation by Herley of any of its assets having
a Material Adverse Effect on Herley, including, without limitation, writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business.

3.7 Taxes. Herley and each of its subsidiaries has filed all tax returns
required to be filed by any of them and has paid (or Herley has paid on its
behalf), or has set up an adequate reserve for the payment of, all material
taxes required to be paid as shown on such returns and the most recent financial
statements contained in the Herley SEC Reports reflect an adequate reserve for
all material taxes payable by Herley and its subsidiaries accrued through the
date of such financial statements. Except as reasonably would not be expected to
have a Material Adverse Effect on Herley, no deficiencies for any taxes have
been proposed, asserted or assessed against Herley or any of its subsidiaries.

3.8 Intellectual Property.
---------------------

(a) To the knowledge of Herley and its subsidiaries, Herley and its
subsidiaries own, or have the right to use, sell or license all patents,
trademarks, trade names, service marks, copyrights and other intellectual
property necessary or required for the conduct of their respective businesses as
presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Herley IP Rights"), except for any
failure to own or have the right to use, sell or license that would not have a
Material Adverse Effect on Herley.

(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Herley IP Rights (the
"Herley IP Rights Agreements"), will not cause the forfeiture or termination or
give rise to a right of forfeiture or termination of any Herley IP Rights or
impair the right of Herley and its subsidiaries to use, sell or license any
Herley IP Rights or portion thereof, except for the occurrence of any such
breach, forfeiture, termination or impairment that would not individually or in
the aggregate, result in a Material Adverse Effect on Herley.

<PAGE>

(c) To the knowledge of Herley and its subsidiaries, (i) neither the
manufacture, marketing, license, sale or intended use of any product or
technology currently licensed or sold or under development by Herley or any of
its subsidiaries violates any license or agreement between Herley or any of its
subsidiaries and any third party or infringes any intellectual property right of
any other party; and (ii) there is no pending or, to the knowledge of Herley,
threatened claim, arbitration or litigation contesting the validity, ownership
or right to use, sell, license or dispose of any Herley IP Rights, nor has
Herley received any written notice asserting that any Herley IP Rights or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party, except, with respect to clauses (i) and
(ii), for any violations, infringements, claims or litigation that would not
have a Material Adverse Effect on Herley.

(d) Herley has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Herley IP Rights.

3.9 Compliance; Permits; Restrictions.
---------------------------------

(a) Neither Herley nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Herley or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Herley or any of its subsidiaries is a
party or by which Herley or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any conflicts, defaults
or violations which would not have a Material Adverse Effect on Herley. No
investigation or review by any governmental or, to the knowledge of Herley,
regulatory body or authority is pending or threatened against Herley or its
subsidiaries, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each such case, those the
outcome of which would not have a Material Adverse Effect on Herley.

(b) Herley and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to the operation of the business of Herley and its subsidiaries taken
as a whole (collectively, the "Herley Permits"). Herley and its subsidiaries are
in compliance with the terms of Herley Permits, except where the failure to hold
the same or to so comply would not have a Material Adverse Effect on Herley.

3.10 Litigation. There is no action, suit, proceeding, claim, arbitration
or investigation pending, or as to which Herley or any of its subsidiaries has
received any notice of assertion nor, to Herley's knowledge, is there a written
threat of an action, suit, proceeding, claim, arbitration or investigation
against Herley or any of its subsidiaries which would have a Material Adverse
Effect on Herley, or which in any manner challenges or seeks to prevent, enjoin,
alter or delay any of the transactions contemplated by this Agreement.
<PAGE>

3.11 Brokers' and Finders' Fees. Herley has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.

3.12 Employee Benefit Plans.
----------------------

(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA) maintained or contributed to by
Herley or any ERISA Affiliate thereof which is under common control with Herley
within the meaning of Section 414 of the Code (the "Herley Employee Plans"),
Herley has made available to Metraplex a true and complete copy of, to the
extent applicable, (i) such Herley Employee Plan, (ii) the most recent annual
report (Form 5500), (iii) each trust agreement related to such Herley Employee
Plan, (iv) the most recent summary plan description for each Herley Employee
Plan for which such a description is required, (v) the most recent actuarial
report relating to any Herley Employee Plan subject to Title IV of ERISA and
(vi) the most recent IRS determination letter issued with respect to any Herley
Employee Plan.

(b) Each Herley Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
covering the provisions of the Tax Reform Act of 1986 stating that such Herley
Employee Plan is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
plan. Each Herley Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law. Neither Herley
nor any ERISA Affiliate of Herley has incurred or is reasonably expected to
incur any material liability under Title IV of ERISA in connection with any
Herley Employee Plan.

(c) Neither Herley nor any ERISA Affiliate thereof has withdrawn in a
complete or partial withdrawal from any multi-employer plan within the meaning
of Section 4001(a)(3) of ERISA prior to the Effective Time. Neither Herley nor
any ERISA Affiliate thereof has contributed to or been obligated to contribute
to any multi-employer plan within the meaning of Section 4001(a)(3) of ERISA.

3.13 Absence of Liens and Encumbrances. Herley and each of its subsidiaries
has good and valid title to, or, in the case of leased properties and assets,
valid leasehold interests in, all of its material tangible properties and
assets, real, personal and mixed, used in its business, free and clear of any
liens or encumbrances except as reflected in the Herley Financials and except
for liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which would not have a Material Adverse Effect on Herley.

3.14 Environmental Matters.
---------------------

(a) Hazardous Material. Except as would not have a Material Adverse
Effect on Herley, no underground storage tanks and no Hazardous Materials (but

<PAGE>

excluding office and janitorial supplies) are present in the soil, ground water,
building materials or ambient air of any real property currently occupied by
Herley and its subsidiaries, as a result of the deliberate actions of Herley or
any of its subsidiaries, and neither Herley nor any of its subsidiaries has
received any notice that it is allegedly liable for the presence of Hazardous
Materials in, on or under any other property, including the land and the
improvements, ground water and surface water thereof, that Herley or its
subsidiaries has at any time owned, operated, occupied or leased.

(b) Hazardous Materials Activities. Except as would not have a
Material Adverse Effect on Herley, neither Herley nor any of its subsidiaries
has transported, stored, used, manufactured, disposed of, released or exposed
its employees or others to Hazardous Materials in violation of any law in effect
on or before the Closing Date, nor has Herley or any of its subsidiaries engaged
in any Hazardous Materials Activities in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.

(c) Permits. Herley and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "Herley
Environmental Permits") necessary for the conduct of Herley's and its
subsidiaries' Hazardous Material Activities as currently conducted and other
businesses of Herley and its subsidiaries as such activities and businesses are
currently being conducted, except where the failure to so hold would not have a
Material Adverse Effect on Herley.

(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to Herley's knowledge, threatened concerning any Herley
Environmental Permit or any Hazardous Materials Activity of Herley or any of its
subsidiaries. Herley is not aware of any fact or circumstance which could
involve Herley or any of its subsidiaries in any environmental litigation or
impose upon Herley or any of its subsidiaries any environmental liability that
would have a Material Adverse Effect on Herley.

3.15 Labor Matters. To Herley's knowledge, there are no activities or
proceedings of any labor union to organize any employees of Herley or any of its
subsidiaries and there are no strikes, or material slowdowns, work stoppages or
lockouts, or threats thereof by or with respect to any employees of Herley or
any of its subsidiaries. Herley and its subsidiaries are and have been in
compliance with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including, without limitation,
ERISA, WARN or any similar state or local law), except for any noncompliance
that would not have a Material Adverse Effect on Herley.

3.16 Agreements, Contracts and Commitments. Except as set forth in the
Herley Schedules, neither Herley nor any of its subsidiaries is a party to or is
bound by:

(a) any collective bargaining agreements;
<PAGE>

(b) any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements;

(c) any employment or consulting agreement, contract or commitment
with any officer or director level employee, not terminable by Herley or any of
its subsidiaries on thirty (30) days notice without liability, except to the
extent general principles of wrongful termination law may limit Herley's or any
of its subsidiaries' ability to terminate employees at will;

(e) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
Herley or any of its subsidiaries and any of its officers or directors;

(f) any agreement, contract or commitment containing any covenant
limiting the freedom of Herley or any of its subsidiaries to engage in any line
of business or compete with any person;

(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $10,000 and not
cancelable without penalty;

(i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;

(j) any joint marketing or development agreement;

(k) any distribution agreement (identifying any that contain
exclusivity provisions); or

(l) any other agreement, contract or commitment (excluding real and
personal property leases) which involves payment by Herley or any of its
subsidiaries under any such agreement, contract or commitment of $10,000 or more
in the aggregate and is not cancelable without penalty within thirty (30) days.
<PAGE>

Neither Herley nor any of its subsidiaries, nor to Herley's knowledge any
other party to an Herley Contract (as defined below), has breached, violated or
defaulted under, or received notice that it has breached violated or defaulted
under, any of the material terms or conditions of any of the agreements,
contracts or commitments to which Herley is a party or by which it is bound of
the type described in clauses (a) through (l) above (any such agreement,
contract or commitment, an "Herley Contract") in such a manner as would permit
any other party to cancel or terminate any such Herley Contract, or would permit
any other party to seek damages, which would have a Material Adverse Effect on
Herley.

3.17 Change of Control Payments. There are no plans or agreements pursuant
to which any material amounts may become payable (whether currently or in the
future) to current or former officers or directors of Herley as a result of or
in connection with the Merger.

3.18 Minute Books. The minute books of Herley made available to counsel for
Metraplex are the only minute books of Herley and contain a reasonably accurate
summary, in all material respects, of all meetings of directors (or committees
thereof) and stockholders or actions by written consent since the time of
incorporation of Herley.

3.19 Board Approval. The Board of Directors of Herley and Merger Sub have,
as of the date of this Agreement, determined that the Merger is fair to and in
the best interests of Herley and Merger Sub and their stockholders.

ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME

4.1 Conduct of Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms or the Effective Time, Metraplex (which for the purposes of this
Article 4 shall include Metraplex and each of its subsidiaries) and Herley
(which for the purposes of this Article 4 shall include Herley and each of its
subsidiaries) agree, except (i) in the case of Metraplex as provided in Article
4 of the Metraplex Schedules and in the case of Herley as provided in Article 4
of the Herley Schedules, or (ii) to the extent that the other party shall
otherwise consent in writing, to carry on its business diligently and in
accordance with good commercial practice and to carry on its business in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has business dealings. In furtherance of the foregoing
and subject to applicable law, Metraplex and Herley agree to confer, as promptly
as practicable, prior to taking any material actions or making any material
management decisions with respect to the conduct of business. In addition,

<PAGE>

except in the case of Metraplex as provided in Article 4 of the Metraplex
Schedules and in the case of Herley as provided in Article 4 of the Herley
Schedules, without the prior written consent of the other, not to be
unreasonably withheld, neither Metraplex nor Herley shall do any of the
following, and neither Metraplex nor Herley shall permit its subsidiaries to do
any of the following:

(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize cash
payments in exchange for any options granted under any of such plans;

(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;

(c) Grant any severance or termination pay to any officer or employee
except payments in amounts consistent with policies and past practices or
pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing to the other, or adopt any new
severance plan;

(d) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Metraplex IP Rights or
the Herley IP Rights, as the case may be, or enter into grants to future patent
rights, other than in the ordinary course of business;

(e) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or split,
combine or reclassify any capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for any
capital stock;

(f) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock (i) except pursuant to rights of repurchase of any such
shares under any employee, consultant or director stock plan, and (ii) for the
repurchase by Herley of up to 300,000 shares of Herley Common Stock pursuant to
a stock buy-back program announced on March 5, 1997;

(g) Issue, deliver, sell, authorize or propose the issuance, delivery
or sale of, any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire and shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than (i)
the issuance of shares of Metraplex Capital Stock or Herley Common Stock, as the
case may be, pursuant to the exercise of stock options therefor outstanding as
of the date of this Agreement, (ii) options to purchase shares of Metraplex
Capital Stock or Herley Common Stock, as the case may be, to be granted at fair
market value in the ordinary course of business, consistent with past practice
and in accordance with existing stock option plans, (iii) shares of Metraplex
Capital Stock or Herley Common Stock, as the case may be, issuable upon the
exercise of the options referred to in clause (ii), (iv) shares of Metraplex
Capital Stock issuable to participants in the Metraplex ESOP consistent with the
terms thereof, and (v) shares of Herley Common Stock pursuant to the terms
hereof;

<PAGE>

(h) Cause, permit or propose any amendments to any charter document or
Bylaw (or similar governing instruments of any subsidiaries);

(i) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership interest,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Metraplex or Herley, as the case may be, or
enter into any joint ventures, strategic partnerships or alliances, other than
in the ordinary course of business consistent with past practice.

(j) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Metraplex or Herley, as the case may be, except in the ordinary
course of business consistent with past practice;

(k) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire debt securities of Metraplex or
Herley, as the case may be, or guarantee any debt securities of others;

(l) Adopt or amend any employee benefit or stock purchase or option
plan, or enter into any employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its officers or employees other than in the ordinary course of business,
consistent with past practice;

(m) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business;

(n) Make any grant of exclusive rights to any third party;

(o) Make any expenditure equal to or exceeding $15,000 except in the
ordinary course of business; or

(p) Agree in writing or otherwise to take any of the actions described
in Article 4 (a) through (o) above.
<PAGE>

ARTICLE V
ADDITIONAL AGREEMENTS

5.1 Registration Rights. Upon the delivery of written notice to Herley by
the holders of a majority of the Herley Common Stock issued in the Merger,
Herley will prepare and file with the SEC a Registration Statement with respect
to the Herley Common Stock, all as more fully set forth in a Registration Rights
Agreement between such holders and Herley substantially in the form of Exhibit A
hereto.

5.2 Meeting of Metraplex Stockholders. Promptly after the date hereof,
Metraplex will take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to convene the Metraplex Stockholders'
Meeting to be held as promptly as practicable, and in any event within 15 days
after the date of this Agreement, for the purpose of voting upon this Agreement.
Metraplex will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the approval of this Agreement and will take
all other reasonable action necessary or advisable to secure the vote or consent
of its stockholders required by the Delaware General Corporation Law to obtain
such approval (except to the extent permitted by Section 5.4).

5.3 Access to Information; Confidentiality.
--------------------------------------

(a) Each party will afford the other party and its accountants,
counsel and other representatives reasonable access during normal business hours
to the properties, books, records and personnel of the other party during the
period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of such party, as the other party may
reasonably request. No information or knowledge obtained in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.

(b) The parties acknowledge that Herley and Metraplex have previously
executed a Confidentiality Agreement (the "Confidentiality Agreement"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms, except as is necessary to comply
with the terms of this Agreement.

5.4 Solicitation by Metraplex.
-------------------------

(a) Prior to the approval of this Agreement by the stockholders of
Metraplex at the Metraplex Stockholders' Meeting, Metraplex may, to the extent
the Board of Directors of Metraplex determines, in good faith, after
consultation with outside legal counsel, that the Board's fiduciary duties under
applicable law require it to do so, participate in discussions or negotiations
with, and, subject to the requirements of paragraph (b), below, furnish
information to any person, entity or group after such person, entity or group
has delivered to Metraplex in writing, an unsolicited bona fide Acquisition
Proposal which the Board of Directors of Metraplex in its good faith reasonable

<PAGE>

judgment determines, after consultation with its independent financial advisors,
would result in a transaction more favorable to the stockholders of Metraplex
from a financial point of view than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of Metraplex (based upon the advice of
independent financial advisors), is reasonably capable of being financed by such
person, entity or group and which is likely to be consummated (a "Metraplex
Superior Proposal"). In addition, in connection with a possible Acquisition
Proposal, Metraplex may refer any third party to this Section 5.4 or make a copy
of this Section 5.4 available to a third party. In the event Metraplex receives
a Metraplex Superior Proposal, nothing contained in this Agreement (but subject
to the terms hereof) will prevent the Board of Directors of Metraplex from
approving such Metraplex Superior Proposal or recommending such Metraplex
Superior Proposal to Metraplex's stockholders, if the Board determines that such
action is required by its fiduciary duties under applicable law; in such case,
the Board of Directors of Metraplex may withdraw, modify or refrain from making
its recommendation concerning the approval of this Agreement; provided, however,
that Metraplex shall not accept or recommend to its stockholders, or enter into
any agreement concerning, a Metraplex Superior Proposal for a period of not less
than 48 hours after Herley's receipt of a copy of such Metraplex Superior
Proposal (or a description of the significant terms and conditions thereof, if
not in writing); provided, further, that Metraplex will provide Herley with no
less than 24 hours' prior written notice of its intention to enter into a letter
of intent with respect to any Acquisition Proposal. For the purposes of this
Agreement, an "Acquisition Proposal" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale of substantial
assets or similar transactions involving the entity or any subsidiaries of the
entity (other than sales of assets or inventory in the ordinary course of
business or permitted under the terms of this Agreement), (ii) sale of 5% or
more of the outstanding shares of capital stock of the entity (including without
limitation by way of a tender offer or an exchange offer), (iii) the acquisition
by any person of beneficial ownership or a right to acquire beneficial ownership
of, or the formation of any "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) which beneficially owns,
or has the right to acquire beneficial ownership of, 5% or more of the then
outstanding shares of capital stock of the entity (except for acquisitions for
passive investment purposes only in circumstances where the person or group
qualifies for and files a Schedule 13G with respect thereto); or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.

(b) Notwithstanding anything to the contrary in paragraph (a),
Metraplex will not provide any non-public information to a third party unless:
(x) Metraplex provides such non-public information pursuant to a nondisclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the Confidentiality Agreement; and (y)
such non-public information is the same information previously delivered to
Herley. Metraplex will provide Herley with no less than 24 hours' prior written
notice of its intention to enter into any nondisclosure agreement with any third
party.

5.5 Public Disclosure. Herley and Metraplex will consult with each other
before issuing any press release or otherwise making any public statement with

<PAGE>

respect to the Merger or this Agreement and will not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange or Nasdaq. The parties acknowledge that promptly following the
execution and delivery of this Agreement, Herley will issue a press release with
respect to the Merger and the Agreement.

5.6 Legal Requirements. Each of Herley, Merger Sub and Metraplex will take
all reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals of or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. Herley will use its commercially
reasonable efforts to take such steps as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable to the
issuance of Herley Common Stock pursuant hereto. Metraplex will use its
commercially reasonable efforts to assist Herley as may be necessary to comply
with the securities and blue sky laws of all jurisdictions which are applicable
in connection with the issuance of Herley Common Stock pursuant hereto.

5.7 Third Party Consents. As soon as practicable following the date hereof,
Herley and Metraplex will each use its commercially reasonable efforts to obtain
all material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.

5.8 FIRPTA. At or prior to the Closing, Metraplex, if requested by Herley,
shall deliver to the IRS a notice that the Metraplex Capital Stock is not a
"U.S. Real Property Interest" as defined and in accordance with the requirements
of Treasury Regulation Section 1.897-2(h)(2).

5.9 Notification of Certain Matters. Herley and Merger Sub will give prompt
notice to Metraplex, and Metraplex will give prompt notice to Herley, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Effective Time, or (b) any
material failure of Herley and Merger Sub or Metraplex, as the case may be, or
of any officer, director, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement. Notwithstanding the above, the delivery of any notice
pursuant to this section will not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.

5.10 Best Efforts and Further Assurances. Subject to the respective rights
and obligations of Herley and Metraplex under this Agreement, each of the
parties to this Agreement will use its best efforts to effectuate the Merger and
the other transactions contemplated hereby and to fulfill and cause to be

<PAGE>

fulfilled the conditions to closing under this Agreement. Each party hereto, at
the reasonable request of another party hereto, will execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.

5.11 Tax-Free Reorganization. Herley and Metraplex will each use its
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368 of the Code. Herley and
Metraplex will each make available to the other party and their respective legal
counsel copies of all returns requested by the other party.

5.12 Metraplex Employee Benefits. Subject to being able to do so
consistently with applicable laws, after the Effective Date, Herley will use its
commercially reasonable efforts to cause the Surviving Corporation to provide to
the employees of Metraplex employee benefits comparable to those under the
existing Metraplex plans generally available to Metraplex employees.

5.13 Repurchase of Herley Common Stock. Each holder of the Herley Common
Stock issued in the Merger, but not any transferee of such holder, other than
immediate family members, grandchildren and trusts which have as beneficiaries
immediate family members, including grandchildren who have been previously
gifted such Common Stock, shall have the right, in respect of any shares of
Herley Common Stock not sold pursuant to the Registration Statement described in
Section 5.1 hereof, to one demand only that Herley repurchase all of such shares
of Herley Common Stock and Herley shall be required to repurchase all of such
shares, upon the delivery by such holder to Herley of no less than thirty (30)
days prior written notice, as follows:

(a) on the third anniversary of the Effective Time, at a price of
$12.00 per share of Herley Common Stock; or

(b) on the fourth anniversary of the Effective Time, at a price of
$12.75 per share of Herley Common Stock; or

The purchase price for the Herley Common Stock repurchased pursuant to this
Section 5.13 shall be paid in full on the third, fourth or fifth anniversary of
the Effective Time, as the case may be. Herley's obligations under this Section
5.13 shall be evidenced by the Supplemental Agreement attached hereto as Exhibit
B to be executed and delivered by Herley at Closing.

5.14 Employment Agreement. At or prior to the Closing, Herley or Metraplex
will enter into an Employment Agreement with Glenn Rosenthal, substantially in
the form attached hereto as Exhibit C.

<PAGE>

ARTICLE VI
CONDITIONS TO THE MERGER

6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:

(a) Stockholder and Board of Directors Approval. This Agreement shall
have been approved and adopted, and the Merger shall have been duly approved, by
the requisite vote under applicable law by the stockholders of Metraplex within
20 days after the date of this Agreement..

(b) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.

6.2 Additional Conditions to Obligations of Metraplex. The obligations of
Metraplex to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by Metraplex:

(a) Representations and Warranties. The representations and warranties
of Herley and Merger Sub contained in this Agreement shall be true and correct
on and as of the Effective Time, except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such particular date), with the same force and effect as if made on and as of
the Effective Time, except, in all such cases where the failure to be so true
and correct, would not have a Material Adverse Effect on Herley; and Metraplex
shall have received a certificate to such effect signed on behalf of Herley by
the Chief Financial Officer of Herley.

(b) Agreements and Covenants. Herley and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and Metraplex shall have received a certificate to such
effect signed on behalf of Herley by the Chief Financial Officer of Herley;

(c) Material Adverse Effect. No Material Adverse Effect with respect
to Herley shall have occurred since the date of this Agreement;

(d) Legal Opinion. Metraplex shall have received a legal opinion from
Blau, Kramer, Wactlar & Lieberman, P.C., counsel to Herley, in a form attached
hereto as Exhibit D;
<PAGE>

(e) Herley will cause all of the obligations of Metraplex to
NationsBank and the subdebt holders to be paid at or promptly after Closing; and

(f) Herley will execute and deliver at Closing the Registration Rights
Agreement, Supplemental Agreement and Employment Agreement.

6.3 Additional Conditions to the Obligations of Herley and Merger Sub. The
obligations of Herley and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by
Herley:

(a) Representations and Warranties. The representations and warranties
of Metraplex contained in this Agreement shall be true and correct on and as of
the Effective Time, except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such particular
date), with the same force and effect as if made on and as of the Effective
Time, except, in all such cases where the failure to be so true and correct,
would not have a Material Adverse Effect on Metraplex; and Herley and Merger Sub
shall have received a certificate to such effect signed on behalf of Metraplex
by the Chief Executive Officer of Metraplex;

(b) Agreements and Covenants. Metraplex shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Herley shall have received a certificate to such effect
signed on behalf of Metraplex by the Chief Executive Officer of Metraplex;

(c) Material Adverse Effect. No Material Adverse Effect with respect
to Metraplex shall have occurred since the date of this Agreement;

(d) Legal Opinion. Herley shall have received a legal opinion from
Offit & Kurman, P. C., counsel to Metraplex, in the form attached hereto as
Exhibit E.

(e) Termination of Metraplex ESOP. Metraplex's ESOP shall have been
terminated and the parties shall have received an opinion from ESOP's legal
counsel and valuation from ESOP'S financial counsel, in form satisfactory to the
parties, including a determination that Herley, and its officers, directors,
agents and employees have no liability to the ESOP's participants as a result of
the termination, or otherwise.

ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER

7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of the Merger by
the stockholders of Merger Sub and Metraplex:
<PAGE>

(a) by mutual written consent duly authorized by the Boards of Directors of
Herley and Metraplex;

(b) by either Metraplex or Herley if the Merger shall not have been
consummated by July 31, 1997; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or failure
to act constitutes a breach of this Agreement;

(c) by either Metraplex or Herley if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (an "Order"), in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree or ruling is final and
nonappealable;

(d) by either Metraplex or Herley if the required approvals of the
stockholders of Metraplex contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of stockholders duly convened therefor or at any adjournment
thereof (provided that the right to terminate this Agreement under this Section
7.1(d) shall not be available to any party where the failure to obtain
stockholder approval of such party shall have been caused by the action or
failure to act of such party in breach of this Agreement);

(e) by either Metraplex or Herley, if Metraplex shall have accepted a
Metraplex Superior Proposal or by Herley if the Metraplex Board of Directors
recommends a Metraplex Superior Proposal to the stockholders of Metraplex;

(f) by Herley, if the Board of Directors of Metraplex shall have
withheld, withdrawn or modified in a manner adverse to Herley its recommendation
in favor of approving the Merger;

(g) by Metraplex, if the Board of Directors of Herley shall have
withheld, withdrawn or modified in a manner adverse to Metraplex its
recommendation in favor of the Merger;

(h) by Metraplex, upon a material breach of any representation,
warranty, covenant or agreement on the part of Herley set forth in this
Agreement, or if any representation or warranty of Herley shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall have
become untrue, provided that if such inaccuracy in Herley's representations and
warranties or breach by Herley is curable by Herley through the exercise of its
commercially reasonable efforts within fifteen (15) days of the time such

<PAGE>

representation or warranty shall have become untrue or such breach, then
Metraplex may not terminate this Agreement under this Section 7.1(h) during such
fifteen-day period provided Herley continues to exercise such commercially
reasonable efforts;

(i) by Herley, upon a material breach of any representation, warranty,
covenant or agreement on the part of Metraplex set forth in this Agreement, or
if any representation or warranty of Metraplex shall have become untrue in any
material respect, in either case such that the conditions set forth in Section
6.3(a) or Section 6.3(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided, that if such inaccuracy in the Metraplex's representations and
warranties or breach by Metraplex is curable by Metraplex through the exercise
of its commercially reasonable efforts within fifteen (15) days of the time such
representation or warranty shall have become untrue or such breach, then Herley
may not terminate this Agreement under this Section 7.1(i) during such
fifteen-day period provided Metraplex continues to exercise such commercially
reasonable efforts;

(j) by Metraplex, if there shall have occurred any Material Adverse
Effect with respect to Herley or Merger Sub since the date of this Agreement;

(k) by Herley, if there shall have occurred any Material Adverse
Effect with respect to Metraplex since the date of this Agreement.

7.2 Notice of Termination; Effect of Termination.
--------------------------------------------

Any termination of this Agreement under Section 7.1 above will be
effective immediately upon the delivery of written notice of the terminating
party to the other parties hereto. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect. Nothing herein shall relieve any party from liability for any
willful breach of this Agreement. No termination of this Agreement shall affect
the obligations of the parties contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement in accordance
with their terms.

7.3 Fees and Expenses.
-----------------

Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated. Herley shall cause to be paid within 5 days of closing,
the costs of Metraplex legal counsel, the Metraplex ESOP's legal counsel, legal
counsel advising on the tax treatment of the Merger, and Metraplex and Metraplex
ESOP's financial and accounting fees.

<PAGE>

7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of the parties hereto.

7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

ARTICLE VIII
GENERAL PROVISIONS

8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Metraplex, Herley and Merger Sub contained in this Agreement shall
survive for eighteen months from the Effective Time, and covenants contained
herein requiring performance shall survive the Effective Time until completion
of said performance.

8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):

(a) if to Herley or Merger Sub, to:

Herley Industries, Inc.
10 Industry Drive
Lancaster, PA 17603
Fax: (717)397-4475
Attn.: Lee N. Blatt
Chairman of the Board
<PAGE>

with a copy to:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: David H. Lieberman, Esq.
Telephone No.: (516) 822-4820
Telecopy No.: (516) 822-4824

(b) if to Metraplex, to:

Metraplex Corporation
7435 New Technology Way
Frederick, Maryland 21703-9458
Fax: (301 ) 663-3661
Attn.: Glenn K. Rosenthal
President and Chief Executive Officer

with a copy to:

Glenn D. Solomon, Esq.
Offitt & Kurman, P.A.
8 Park Center Court
Suite 200
Owings Mills, Maryland 21117
Telephone No. (410) 356-0600
Telecopy No. (410) 356-0602

8.3 Interpretation; Knowledge.
-------------------------

(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.

(b) For purposes of this Agreement, the term "knowledge" means, with
respect to any matter in question, that the executive officers of Metraplex or
Herley, as the case may be, have actual knowledge of such matter.
<PAGE>

8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

8.5 Entire Agreement. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, including the Metraplex Schedules and the Herley Schedules (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
it being understood that the Confidentiality Agreement shall continue in full
force and effect until the Closing and shall survive any termination of this
Agreement; and (b) are not intended to confer upon any other person any rights
or remedies hereunder, except as set forth herein.

8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.

8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.

8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the State of Delaware, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of Delaware for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction and such process.
<PAGE>

8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties.

IN WITNESS WHEREOF, Herley, Merger Sub, and Metraplex have caused this
Agreement to be signed by themselves or their duly authorized respective
officers, all as of the date first written above.

HERLEY INDUSTRIES, INC.

By: /s/ Myron Levy
----------------------------------------
Name: Myron Levy
------------------------------------
Title: President
------------------------------------

METRAPLEX CORPORATION

By: /s/ Glenn K. Rosenthal
----------------------------------------
Name: Glenn K. Rosenthal
------------------------------------
Title: President and CEO
------------------------------------

METRAPLEX ACQUISITION CORP.

By: /s/ Myron Levy
---------------------------------------
Name: Myron Levy
-----------------------------------
Title: President
-----------------------------------

<PAGE>

AMENDMENT TO AGREEMENT AND
--------------------------
PLAN OF REORGANIZATION
----------------------

This Amendment to Agreement and Plan of Reorganization (the "Amendment") is
made this 22nd day of July, 1997 by and among Herley Industries, Inc., a
Delaware corporation ("Herley"), Metraplex Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Herley ("Merger Sub"), and
Metraplex Corporation, a Delaware corporation ("Metraplex").

WHEREAS, the parties hereto executed an Agreement and Plan of
Reorganization dated July 8, 1997 (the "Agreement");

WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein.

NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1. Definitions. All capitalized terms used by not defined herein shall have
the meaning set forth in the Agreement.

2. Closing Date. The parties acknowledge and agree that the Closing Date is
July 22, 1997.

3. Effective Time. The parties agree that the Effective Time shall be
August 4, 1997 and Section 1.2 of the Agreement is hereby modified accordingly.

4. Metraplex Capital Structure. The first sentence of Section 2.2 of the
Agreement is hereby modified to read as follows:

The authorized capital stock of Metraplex consists of 5,000,000 shares
of Common Stock par value $.01 per share of which there were 702,047 shares

<PAGE>

issued and outstanding as of June 1, 1997, not including the 121,216 shares
which have not been allocated under the Metraplex ESOP; as of the Effective Time
an additional 11,233 shares of Common Stock shall be issued to the Metraplex
ESOP and allocated to the accounts of participants in the Metraplex ESOP.

5. Conditions to the Merger. Metraplex agrees that the condition set forth
in Section 6.2 (c) of the Agreement be and is hereby waived. Herley agrees that
the condition set forth in Section 6.3 (c) of the Agreement be and is hereby
waived.

6. Termination. The parties agree that, as a result of the Closing
occurring on the date hereof and the parties agreement that the Effective Date
of the Closing shall be August 4, 1997, Section 7.1(b) of the Agreement is
hereby deleted in its entirety. The parties further agree that Sections 7.1(j)
and (k) are hereby deleted in their entireties.

7. Miscellaneous. Except as specifically set forth herein, the Agreement
and its terms shall remain in full force and effect in accordance with its
provisions.

IN WITNESS WHEREOF, Herley, Merger Sub and Metraplex have caused this
Amendment to be signed by themselves or their duly authorized respective
officers, all as of the date first written above.

HERLEY INDUSTRIES, INC.

___________________________ By: /s/Myron Levy
--------------------------------------
Myron Levy, President

METRAPLEX CORPORATION

____________________________ By: /s/Glenn K. Rosenthal
--------------------------------------
Glenn K. Rosenthal, President and CEO

METRAPLEX ACQUISITION CORP.

_____________________________ By: /s/Myron Levy
-------------------------------------
Myron Levy, President

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT
-----------------------------

This Agreement (this "Agreement") is made and entered into as of June ,
1997, by and between Herley Industries, Inc., a Delaware corporation (the
"Company"), and each of the persons or entities executing this Agreement
(collectively referred to herein as the "Holders").

The parties hereby agree as follows:

1. Definitions.
-----------

(a) Registerable Securities. The terms "Registerable Securities" and
"Restricted Securities" shall mean the Company's common stock, par value $.10
per share (the "Common Stock"), which is acquired by the Holders pursuant to the
terms of the Agreement and Plan of Reorganization (the Reorganization Agreement)
dated the date hereof by and among the Company, Metraplex Corporation and
Metraplex Acquisition Corp., including in each case any shares received in
connection with any stock split, stock divided, recapitalization,
reclassification or other distribution payable or issuable in shares of Common
Stock.

(b) Restricted Securities. For the purposes of this Agreement, shares will
cease to be Restricted Securities when (i) a registration statement covering
such Restricted Securities has been declared effective and they have been
disposed of pursuant to such effective registration statement, or (ii) they are
distributed to the public under the Securities Act of 1933, as amended (the
"Securities Act"), or (iii) they have been otherwise transferred and the
Company, in accordance with applicable law and regulations, has delivered new
certificates or other evidences of ownership for them not subject to any stop
transfer order or other restriction on transfer.

(c) Registerable Securities. As to any particular shares, such shares will
cease to be Registerable Securities when they cease to be Restricted Securities.

2. Demand Registration.
-------------------

(a) Right to Demand. Subject to Section 2(b) hereof, at any time after the
Effective Date of the Merger contemplated by the Reorganization Agreement, the
Initiating Holders (as defined below) may make a written request to the Company
for registration under the Securities Act of all or part of their Registerable
Securities (a "Demand Registration"). Within 10 days after receipt of such
request, the Company will deliver a written notice (the "Notice") of such
registration request to all holders of Registerable Securities. The Company will
include in such registration all Registerable Securities with respect to which
the Company has received written requests for inclusion therein within 15
business days after the receipt by the applicable holder of the Notice. All
requests made pursuant to this Section 2(a) will specify the aggregate amount of
the Registerable Securities to be registered and will also specify the intended
methods of disposition thereof.

(b) Number of Demand Registrations. The holders of Registerable Securities

1
<PAGE>

shall be entitled, in the aggregate, to one Demand Registration, the
Registration Expenses of which shall be borne by the Company. The "Initiating
Holders" with respect to this Demand Registration shall mean the holders of a
majority of the Registrable Securities. The Company shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.

(c) Priority on Demand Registrations. If a Demand Registration is being
underwritten and if the managing underwriter or underwriters of such Demand
Registration (or, in the case of a Demand Registration not being underwritten,
holders of a majority of the Registerable Securities sought to be registered
therein) advise the Company in writing that in their opinion the number of
securities proposed to be sold in such Demand Registration exceeds the number
which can be sold in such offering, the Company will include in such
registration only the number of securities that, in the opinion of such managing
underwriter or underwriters (or holders of Registrable Securities, as the case
may be), can be sold, selected pro rata (based on the amount of securities owned
which carry registration rights) among the holders of Registrable Securities
which have requested to be included in such Demand Registration.

(d) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the Company will select a managing underwriter or
underwriters to administer the offering, which managing underwriter or
underwriters shall be reasonably satisfactory to the holders of a majority of
the Registerable Securities to be included in such Demand Registration.

(e) Notwithstanding anything in the foregoing Section 2 to the contrary,
the Company shall not be obligated to effect a Demand Registration at any time
when the Company, in the good faith judgment of its Board of Directors,
reasonably believes that the filing thereof at the time requested, or the
offering of securities pursuant thereto, would be detrimental to the interests
of Company or its shareholders, provided that notice of such determination be
given to the Initiating Holders within 30 days after written demand. The
effectuation of a Demand Registration cannot be suspended, pursuant to the
provisions of the preceding sentence, for more than 90 days after the date of
the Board's determination referenced in the preceding sentence.

3. Registration Procedures.
-----------------------

The Company will, in connection with any registration pursuant to Section 2
in which sellers of Registerable Securities are included, as expeditiously as
possible:

(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement on any appropriate form under the
Securities Act, which form shall be available for the sale of Registerable
Securities in accordance with the intended method or methods of distribution
thereof, and use its best efforts to cause such registration statement to become
effective; provided that at least three business days before filing with the
Commission of a registration statement or prospectus or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of any registration statement, the Company will furnish to each
seller of Registrable Securities draft copies of such registration statement,
and, upon the request of any seller of Registerable Securities, shall continue
to provide such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registerable Securities owned by such seller and to change the registration
statement as it relates to such seller as requested by such seller on a timely
basis, and to reasonably consider other changes to the registration statement
(but not including any document incorporated therein by reference) reasonably
requested by such seller on a timely basis, in light of the requirements of the
Securities Act and any other applicable laws and regulations; and provided,
further, that as to documents incorporated by reference, the Company shall

2
<PAGE>

provide documents incorporated by reference promptly upon request after the
filing of such documents;

(b) prepare and file with the Commission such amendments and post-effective
amendments to a registration statement as may be necessary to keep such
registration statement effective for up to 16 months; and cause the related
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed to the extent required pursuant to Rule 424 under the
Securities Act, during such 16 month period; and otherwise comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during the applicable period
in accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement or supplement to such prospectus;

(c) comply with all applicable rules and regulations of the Commission and
promptly make generally available to its security holders an earnings statement
covering a period of twelve months, (1) in an underwritten offering, commencing
at the end of any fiscal quarter in which Registerable Securities are sold to
underwriters, or (2) in a non-underwritten offering, beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the registration statement, which earnings statement in each case shall
satisfy the provisions of Section 11(a) of the Securities Act;

(d) use its best efforts to cause all Registerable Securities to be listed,
subject to notice of issuance, by the date of the first sale of Registerable
Securities pursuant to such registration statement, on each securities exchange,
if any, on which the Company's Common Stock is then listed.

The Company may require each seller of Registerable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing.

Each Holder agrees, and each other holder of Registerable Securities will
be required, in its request to register securities pursuant to this Agreement,
to agree, that, upon receipt of any notice from the Company of the happening of
any event which causes the prospectus not to be deemed current, such holder will
forthwith discontinue disposition of Registerable Securities pursuant to the
registration statement covering such Registerable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 3(c)(1) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed, and until it
has received copies of any additional or supplemental filings which are
incorporated by reference in such prospectus, and, if so directed by the
Company, such holder will deliver to the Company (at the expense of the Company)
all copies, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registerable Securities current at the time of
receipt of such notice.

4. Registration Expenses.
---------------------

All expenses incident to the performance of or compliance with this
Agreement by the Company, including, without limitation, all registration and
filing fees of the Commission, the National Association of Securities Dealers
Inc. and other agencies, fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registerable Securities), rating agency
fees, printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and expenses incurred
in connection with the listing, if any, of the securities to be registered on
any securities exchange and fees and disbursements of counsel for the Company

3
<PAGE>

and the Company's independent certified public accountants (including the
expenses of any special audit or "cold comfort" letters required by or incident
to such performance), securities acts liability insurance (if the Company elects
to obtain such insurance), the fees and expenses of any special experts retained
by the company in connection with such registration, and the fees and expenses
of any other person retained by the company (but not including any underwriting
discounts or commissions attributable to the sale of Registerable Securities or
other out-of-pocket expenses of the holders of Registerable Securities (or the
agents who act on their behalf) unless reimbursement is specifically approved by
the Company) will be borne by the Company. All such expenses are herein called
"Registration Expenses".

5. Indemnification; Contribution.
-----------------------------

(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each holder of Registerable
Securities, its officers and directors and each person who controls such holder
(within the meaning of the Securities Act), and any agent thereof against all
losses, claims, damages, liabilities and expenses incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
(including reasonable expenses of investigation) arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, except
insofar as the same arise out of or are based upon, any such untrue statement or
omission based upon information with respect to such holder furnished in writing
to the Company by such holder expressly for use therein.

(b) Indemnification by Holder of Registerable Securities. In connection
with any registration statement in which a holder of Registerable Securities is
participating, each such holder shall furnish to the Company in writing such
information with respect to such holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus, and each
such holder shall agree to indemnify, to the full extent permitted by law, the
Company, the directors and officers of the Company and each person who controls
the Company (within the meaning of the Securities Act) and any agent thereof,
against any losses, claims, damages, liabilities and expenses (including
reasonable attorney's fees and expenses of investigation) incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
arising out of or based upon any untrue or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact necessary
to make the statements therein (in the case of a prospectus, in the light of the
circumstances under which they are made) not misleading, to the extent, that
such untrue statement or omission is based upon information relating to such
holder furnished in writing to the Company expressly for use therein.

(c) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party of written notice of the commencement of any action,
proceeding, suit or investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or contribution pursuant to
this Agreement, such indemnified party shall notify in writing the indemnifying
party of such commencement or threat; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party hereunder, (x) unless the indemnifying party is actually
prejudiced thereby or (y) otherwise than under this Section 5. In case any such
action, suit or proceeding shall be brought against any indemnified party, and
(i) the indemnified party so notifies the indemnifying party, the indemnifying
party shall be entitled to participate therein (ii) shall assume the defense
thereof, with counsel reasonably satisfactory to the indemnified party and (iii)
shall pay all expenses. The indemnified party shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, unless (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party failed to assume the defense of

4
<PAGE>

such action, suit or proceeding or to employ counsel reasonably satisfactory to
the indemnified party therein or to pay all expenses or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and the indemnifying party
shall have been advised by counsel that there may be one or more legal defenses
available to the indemnified party which are different from or additional to
those available to the indemnifying party and which may result in a conflict
between the indemnifying party and such indemnified party (in which case, if the
indemnified party elects to employ separate counsel at the expense of the
indemnifying party and so notifies the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for the indemnified party,
which firm shall be designated in writing by the indemnified party).

(d) Contribution. If the indemnification provided for in this Section 5
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and indemnified party as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitation set forth in Section 5(e), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in clauses (i) and (ii) of the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

(e) Limitation. Anything to the contrary contained in this Section 5 or in
Section 6 hereof notwithstanding, no holder of Registerable Securities shall be
liable for indemnification and contribution payments aggregating an amount in
excess of the maximum amount received by such holder in connection with any sale
of Registerable Securities as contemplated herein.

6. Participation in Underwritten Registrations.
-------------------------------------------

No holder of Registerable Securities may participate in any underwritten
registration hereunder unless such holder (a) agrees to sell such holder's

5
<PAGE>

securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and to comply with
Rules 10b-6 and 10b-7 under the Exchange Act, and (b) completes and executes all
questionnaires, appropriate and limited powers of attorney, escrow agreements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangement.

7. Additional Provisions.
---------------------

(a) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Holders.

(b) Notices. All communications under this Agreement shall be sufficiently
given if delivered by hand or by overnight courier or mailed by registered or
certified mail, postage prepaid, addressed,

(1) if to the Company, to:

Herley Industries, Inc.
10 Industry Drive
Lancaster, Pennsylvania 17603
Attention: Mr. Lee N. Blatt

with a copy to:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: David H. Lieberman, Esq.

(2) if to the Holders,
to:

Glenn Rosenthal
Metraplex Corporation
7435 New Technology Way
Frederick, Maryland 21703-9458

with a copy to:

Glenn D. Solomon, Esq.
Offit & Kurman, P.A.
8 Park Center Court
Suite 200
Owings Mills, Maryland 21117

or, in the case of the Holders, at such other address as such Holder shall have
furnished in writing to the Company; or, in the case of the Company, at such
other address as the Company shall have furnished in writing to each Holder.

6
<PAGE>

(c) Successors and Assigns; Holders as Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and assigns, and the agreements of the Company herein shall inure to
the benefit of all holders of Registerable Securities and their respective
successors and assigns. Nothing in this Agreement shall be deemed to impose on
any of the Holders any obligations to or in respect of any other holder of
Registerable Securities.

(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Pennsylvania without regard to the
conflicts of laws principles thereof.

(g) Severability; Specific Enforcement. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal, or unenforceable in any respect of any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the Holders, the Company and the holders of Registerable
Securities shall be enforceable to the fullest extent permitted by law. Each of
the Holders and the Company acknowledges that the other party would not have an
adequate remedy at law for money damages in the event that any of the covenants
or agreements of the other party in this Agreement were not performed in
accordance with its terms and therefore agrees that the other party shall be
entitled to specific enforcement of such covenants or agreements and to
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.

(h) Entire Agreement; Survival; Termination. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement and the
Reorganization Agreement supersede all prior agreements and understandings
between the parties with respect to such subject matter.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

HERLEY INDUSTRIES, INC.

By:
------------------------------
Myron Levy, President

HOLDERS:

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

Exhibit 5

September 11, 1997

Securities and Exchange Commission
450 Fifth Avenue
Washington, D.C. 20549

Re: Herley Industries, Inc.
Registration Statement on Form S-3

Gentlemen:

Reference is made to the filing by Herley Industries, Inc. (the
"Company") of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission pursuant to the
provisions of the Securities Act of 1933, as amended, covering the registration
of 234,895 shares of Common Stock of the Company, par value $.10 per share (the
"Common Stock").

As counsel for the Company, we have examined its corporate records,
including its Certificate of Incorporation, By-Laws, its corporate minutes, the
form of its Common Stock certificate and Warrants and such other documents as we
have deemed necessary or relevant under the circumstances.

Based upon our examination, we are of the opinion that:

1. The Company is duly organized and validly existing under the laws of the
State of Delaware.

2. The shares of Common Stock subject to the Registration Statement have
been duly authorized and are legally issued, fully paid and
non-assessable.

We hereby consent to be named in the Registration Statement and in the
prospectus which constitutes a part thereof as counsel to the Company, and we
hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.

Very truly yours,

/s/ BLAU, KRAMER, WACTLAR & LIEBERMAN, P .C.

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors
Herley Industries, Inc.:

As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of our report dated September
27, 1996, included in Herley Industries, Inc. Form 10-K for the 52 weeks ended
July 28, 1996, and to all references to our Firm included in this Registration
Statement.

/s/ ARTHUR ANDERSON LLP
- -------------------

Lancaster, Pennsylvania
August 27, 1997

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

Board of Directors
Herley Industries, Inc.

We consent to the incorporation by reference in this Registration Statement of
Herley Industries, Inc. on Form S-3 of our report dated October 13, 1994 on the
consolidated statements of operations, stockholders' equity and cash flows for
the 52 weeks ended July 31, 1994, appearing in the Annual Report on Form 10-K of
Herley Industries, Inc. for the year ended July 28, 1996 and to the reference to
us under the heading "Experts" in this Registration Statement.

/s/ WOLINETZ, GOTTLIEB AND LAFAZAN P.C.
- ----------------------------------

Rockville Centre, New York
August 28, 1997