ASSET PURCHASE AGREEMENT







         ASSET  PURCHASE  AGREEMENT  ("Agreement")  made as of the  12th  day of

October, 2000, by and between AMERICAN MICROWAVE TECHNOLOGY,  INC., a California

corporation  (hereinafter  called  "Seller")  and  HERLEY  INDUSTRIES,  INC.,  a

Delaware corporation (hereinafter called "Buyer").



                              W I T N E S S E T H:



         WHEREAS, Seller is engaged in the business of manufacturing and selling

radio frequency power  amplifiers and desires to sell to Buyer its business unit

commonly  referred  to  as  medical   /scientific  unit  ("Business  Unit")  and

substantially  all of the Business Unit assets,  as herein  provided,  and Buyer

desires to purchase  the Business  Unit and assets,  all at the price and on the

terms and conditions hereinafter set forth.



         NOW, THEREFORE, for and in consideration of the mutual representations,

covenants and  warranties  herein  contained,  and intending to be legally bound

hereby, the parties hereto agree as follows:



ARTICLE 1.



         1.1  Purchase and Sale of Assets.  Subject to the terms and  conditions

hereof and based upon the representations,  warranties, covenants and agreements

of the parties  hereafter set forth,  Buyer hereby agrees to purchase and accept

from Seller, and Seller agrees to sell, assign,  transfer and convey to Buyer on

the Closing  Date (as  hereinafter  defined)  except as  otherwise  set forth in

Section 1.2 below and the Exhibits attached hereto, all of the assets used in or

related to the Business Unit, including without limitation,  all of the Business

Unit related tangible and intangible assets, rights, interests and properties of

every kind and nature,  wherever  located and by  whomever  possessed,  owned by

Seller as of the date hereof  (together with any proceeds thereof or any payment

thereon which may be received by Seller  subsequent to the date hereof),  except

as  otherwise  specifically  stated  herein,  free  and  clear  of all  security

interests, liens and encumbrances, including, without limitation, the following:



     (a) All Business Unit related real property, machinery and other equipment,

     telephone systems, vehicles,  furniture,  fixtures,  computers and computer

     software  and fixed  assets of  Seller  of any kind  whatsoever,  including

     without  limitation those Business Unit related assets reflected on the pro

     forma  Balance  Sheet of  Seller  ("Balance  Sheet")  which  reflects  only

     Business Unit related assets as described on Exhibit "A" attached hereto.



     (b) All  catalogues,  shipping  and office  supplies,  books of account and

     other financial records  necessary to or useful in the continued  operation

     of the  Business  Unit,  customer  lists and vendor  lists,  Business  Unit

     customer backlogs,  telephone numbers and telephone directory listings, the

     name AMT and any variation  thereof,  Business  Unit  patents,  copyrights,

     licenses and rights listed in Exhibit "B" attached hereto, all rights under





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     any Business Unit contracts  subject to consents required for assignment of

     government contracts,  licenses and permits, the Business Unit of Seller as

     an operating  business,  and all Business Unit related intangible assets of

     Seller of any kind whatsoever.



     (c) All other Business Unit related assets property and rights of Seller of

     any kind whatsoever,  including, but not limited to, tax refunds,  accounts

     receivable and prepaid expenses.



     (d)  All  Business  Unit  related  inventories  of  supplies,  merchandise,

     packaging  and  promotional  materials  including  raw  material,  works in

     process and finished goods as attached in Exhibit H.



     (e) All Business Unit related intellectual property rights.



         The assets,  property and rights to be  transferred  to Buyer by Seller

hereunder  on the Closing  Date are  hereafter  sometimes  called the  "Assets".

Notwithstanding  the  foregoing,  it is  expressly  agreed that Seller  shall be

entitled to use the name American  Microwave  Technology but not the name AMT in

connection with the assets and liabilities it retains.



         1.2      Excluded Assets.   The assets listed on Exhibit "E" are not

                  ---------------    Assets and are excluded from the purchase

                                     contemplated by this Agreement.



ARTICLE  2.



         2.1      Payment  of  Purchase  Price  and Assumption  of  Liabilities.

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

                  Subject  to  the  terms and conditions set forth in this

                  Agreement, Buyer shall, in full consideration of the Assets to

                  be sold and assigned to Buyer:



                  (a) Pay to Seller or as  otherwise  directed by Seller the sum

         of  Five  Million,   Four  Hundred  Thousand  Dollars  ($5,400,000)  by

         cashier's check, bank check or wire transfer on the Closing Date.



                    (b) On the Closing Date, assume the following liabilities of

                    Seller and no others:



                    (i) Accounts  payable as set forth in the  attached  Exhibit

                    "C", the aggregate of which shall not exceed $800,000.



                           (ii) Equipment lease  obligations as set forth in the

                  attached  Exhibit "D", the aggregate of which shall not exceed

                  $200,000.



                    (iii) All  liabilities set forth in Exhibit "A" in an amount

                    not to exceed $1,153,191.



         The  liabilities  and  obligations to be assumed and referred to in (i)

through (iii) above are hereinafter termed the "Assumed Liabilities".  Except as

expressly set forth in this  Agreement,  no liabilities or obligations of Seller

shall be assumed by Buyer.





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<PAGE>







          (c) Any provision of this  Agreement to the contrary  notwithstanding,

          Buyer  will not and does not  assume  the  following  liabilities  and

          obligations  of Seller even if, to any extent,  they were reflected in

          the Financials set forth at Exhibit "F" and arose in connection  with,

          were  incurred by or were  related to the  operation  of the  Business

          Unit:



          (i)  liabilities or obligations of Seller to any officer,  director or

          stockholder  of the Seller,  whether or not owed to such person in his

          capacity as such, any person  affiliated  with any of the foregoing or

          any person related to or sharing a household with any of the foregoing

          except  liabilities  for accrued  wages and salaries  reflected in the

          Balance Sheet.



          (ii)  expenses   incurred  by  the  Seller  in  connection   with  the

          transactions contemplated herein, including,  without limitation, fees

          and expenses of Seller's finder's fees to  Decisionpoint,  counsel and

          accountants.



          (iii) any obligation or liability of the Seller to the Buyer.



          (iv) any  foreign,  federal,  state o local  tax  based on  income  or

          revenues or interest or penalties relating thereto, whether arising by

          reason of the sale of the  Assets as herein  provided  or by reason of

          the  existence or  operations of the Seller prior to or after the date

          hereof  and any sales or use taxes  incurred  by Seller on or prior to

          the Closing.



          (v) to the  extent  not paid for  under  existing  insurance  policies

          assigned to Buyer  hereunder,  workman's  compensation  claims against

          Seller based on occurrences prior to the Closing Date.



          (vi) to the  extent  not paid for under  existing  insurance  policies

          assigned to Buyer hereunder, liabilities to third parties for tort and

          product liability claims made against Seller prior to the Closing Date

          based upon occurrences prior to the Closing Date.



          (vii) all  obligations of Seller  incurred after the date hereof other

          than those incurred in the ordinary course of business.

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