<PAGE>   1
                                                                   EXHIBIT 10.18

                           STOCK REPURCHASE AGREEMENT


               This Stock Repurchase Agreement ("Agreement") is entered into as
of this 7th day of March, 1997 by and among California Microwave, Inc., a
Delaware corporation ("CMI"), California Microwave Navigation System, Inc., a
Delaware corporation, Harry F. Eustace, Barbara Eustace, Garber International
Associates, and Dr. V. Garber. All of the parties hereto, other than CMI and
California Microwave Navigation System, Inc., are collectively referred to
herein as the "Shareholders." Harry F. Eustace and Barbara Eustace are
collectively referred to herein as the "Eustace Group." Garber International
Associates and Dr. V. Garber are collectively referred to herein as the "Garber
Group."


                                 R E C I T A L S

               A. CMI, the Shareholders and Cornix Systems entered into that
certain Shareholders' Agreement as of the 8th day of March, 1994 (the
"Shareholders' Agreement"), pursuant to which, among other things, the parties
formed California Microwave Navigation Systems, Inc. and the Shareholders and
Cornix Systems purchased shares of Common Stock of California Microwave
Navigation Systems, Inc. Cornix Systems subsequently transferred its shares of
Common Stock of California Microwave Navigation Systems, Inc. to the Eustace
Group. As of the date of this Agreement, the Common Stock of California
Microwave Navigation Systems, Inc. (other than shares of Common Stock owned by
CMI) is owned by the Shareholders in the amounts set forth opposite their names
on Exhibit A hereto.

               B. The Shareholders desire to sell their shares of Common Stock
of California Microwave Navigation Systems, Inc. to CMI and CMI desires to
purchase such shares, all on the terms and conditions stated hereinafter.

               NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:

               1.  Certain Definitions.  In addition to certain terms defined
elsewhere herein, the following defined terms have the meaning stated below:



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<PAGE>   2


                                                                   EXHIBIT 10.18



                After Tax Cash Flow in any given period prior to the end of
Fiscal Year 2000 means the cash receipts of the Company from Ukraine Projects or
Non-Ukraine Projects (including, for this purpose, all cash receipts earned by
CMI business units other than the Company that are performing services in
connection with Ukraine Projects or Non-Ukraine Projects), as applicable, minus
the cash payments paid by or on behalf of the Company (including, for this
purpose, cash payments made by CMI business units other than the Company that
are performing services in connection with Ukraine Projects or Non-Ukraine
Projects) with respect to such projects. Cash receipts shall include success
fees, interest received in CMI sponsor loans and repayments of CMI sponsor loans
or guarantees. Cash payments shall include direct cost expenditures, direct
operating expenses, standard overhead, capital expenditures (net of
depreciation) of the Company, financing and bonding costs, CMI sponsor loan
disbursements, direct material costs, other direct costs of sales and income
taxes paid. The parties have agreed that After Tax Cash Flow for the period
March 8, 1994 through June 30, 1996 was $(2,080,000). The parties further agreed
that the $300,000 TDA Grant, recorded as an offset to expenses in Fiscal Year
1996, shall be considered as part of After Tax Cash Flow from a Ukraine Project.
Beginning in Fiscal Year 2001, After Tax Cash Flow shall only include cash
receipts from collections of receivables of the Company outstanding at June 30,
2000, cash receipts from loan repayments, cash receipts of interest payments,
cash payments of accounts payable at June 30, 2000 and cash payments for
associated income taxes; i.e., operating results are excluded. General
allocations of CMI or group expenses and goodwill amortization shall not be
reflected in calculating After Tax Cash Flow. Guarantees issued by CMI, whether
in the form of standby letter of credit, surety bonds or corporate guarantee,
shall be treated as CMI sponsor loan disbursements and elimination of such
guarantees shall be accounted as CMI sponsor loan repayments. All After Tax Cash
Flows of the Company in Fiscal Years 1994, 1995 and 1996 shall be considered as
After Tax Cash Flow for Ukraine Projects. Calculation of After Tax Cash Flow
shall be made by the controller of CMI, whose determination shall be final.

               Backlog means, at any point in time, the cumulative amount of
orders which have not been converted into sales, as determined by the controller
of CMI based on the then-current accounting policies of CMI.

               Booked Amount means the amount of new orders which have
been added to the Backlog in any given Fiscal Year for Ukraine Projects or
Non-Ukraine Projects, as determined by the controller of CMI based on the


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<PAGE>   3


                                                                   EXHIBIT 10.18



then-current accounting policies of CMI.  Bookings shall be recorded in
accordance with then-current CMI accounting policies.

               CMI sponsor loans means loans made by CMI to specia purpose 
entities responsible for completing a Ukraine Project or a Non-Ukraine
Project (or CMI guarantees of loans made by third parties to such entities for
such purposes).

               Company means California Microwave Navigation Systems,
Inc., a Delaware corporation, unless and until that corporation or substantially
all of its assets are liquidated, sold or merged into CMI, after which Company
means the business unit which conducts the business operations formerly
conducted by California Microwave Navigation Systems, Inc.

               Eustace Factor means 0.833333 (i.e., 4000 divided by 4800).

               Final Determination Date means the later of June 30, 2000, or
the date when all CMI sponsor loans, if any, have been repaid and all CMI
sponsor guarantees, if any, have been discharged.

               Fiscal Year means each period commencing July 1 and ending
on June 30 of the next calendar year.  CMI's 1997 Fiscal Year ends June 30,
1997.

               Garber Factor means 0.166667 (i.e., 800 divided by 4800).

               Non-Ukraine Projects means all projects of the Company other
than Ukraine Projects.

               Operating Profit in any given period means the gross margin of
the Company from Ukraine Projects or Non-Ukraine Projects (including, for this
purpose, all gross margin earned by CMI business units other than the Companies
that are performing services in connection with Ukraine or non-Ukraine
Projects) plus success fee receipts (such as the Rockwell success fee) minus the
operating expenses (direct cost expenditures, direct operating expenses,
standard overhead, direct material costs and other direct costs of sale) of the
Company. Operating Profit shall exclude interest income and expense and
non-recurring revenues (e.g., revenues from the sale of a product line).
Insurance and other employee benefits provided to the Company by CMI and letter
of credit charges shall be charged to the Company on the same


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<PAGE>   4


                                                                   EXHIBIT 10.18



basis as is applicable to other subsidiaries of CMI, provided that there shall
be no allocation of general and administrative expenses of CMI to the Company.
Calculation of Operating Profit shall be made by the controller of CMI, whose
determination shall be final.

               Ukraine Projects means any project in the Country of Ukraine
booked by the Company.

               2. Acquisition of Shares of the Eustace Group. Subject to the
terms and conditions stated in this Agreement, at the Closing CMI shall purchase
from the Eustace Group, and the Eustace Group shall sell to CMI, all of the
outstanding shares, options or warrants or other rights to acquire shares of
Common Stock of the Company owned of record or beneficially by the Eustace
Group. The purchase price shall be one dollar per share plus the contingent
payments provided for in Section 2(a) herein.

                  (a) Subject to the provisions of Sections 2(c) and 4(c)
        below, CMI shall pay the Eustace Group contingent payments equal, in the
        aggregate, to the amount determined by the following formula:

                      PAYMENT      =       Eustace Factor x ((0.25 x After Tax
                                           Cash Flow from Non-Ukraine Projects)
                                           + (0.1625 x After Tax Cash Flow from
                                           Ukraine Projects)).

                  (b) Subject to the provisions of Section 4(c) below, CMI
        shall pay the Eustace Group the following advance payments:

                      i)  for each of CMI's Fiscal Years 1997, 1998 or 1999, the
               amount determined by the following formula:

                      PAYMENT      =       Eustace Factor X ((0.02 X Booked
                                           Amount for Non-Ukraine Projects
                                           booked in that Fiscal Year) + (0.012
                                           X Booked Amount for Ukraine Projects
                                           booked in that Fiscal Year)).

               Of each amount payable under this subsection, 50% shall be paid
               in cash by the end of the month following the month in which the
               particular project was booked and the remainder shall be paid in
               cash within sixty days following the end of the CMI Fiscal Year
               in which the particular project was booked.


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<PAGE>   5


                                                                   EXHIBIT 10.18




                      ii) for each of CMI's Fiscal Years 1997, 1998, 1999
               and 2000, the amount determined by the following formula:

                      PAYMENT      =       Eustace Factor X ((0.06 X Operating
                                           Profit for Non-Ukraine Projects in
                                           that Fiscal Year) + (0.038 X
                                           Operating Profit for Ukraine Projects
                                           in that Fiscal Year)).

               Of each amount payable under this subsection for each respective
               CMI Fiscal Year, 50% shall be paid in cash within sixty days
               after the end of such Fiscal Year and the remainder of each such
               amount shall be paid in cash within sixty days following the end
               of the following CMI Fiscal Year, together with 8% simple
               interest on such latter amount.

                      iii) for each Fiscal Year up to and including the
               Fiscal Year ending on the Final Determination Date, the amount
               determined by CMI's controller at the end of each Fiscal Year to
               be payable with respect to such Fiscal Year using the following
               formula:

                      PAYMENT       =      (Eustace Factor X ((0.25 X A) + 
                                           (0.1625 X B))) - C, where

                      A = the cumulative After Tax Cash Flow for Non-Ukraine
                      Projects through the end of the relevant Fiscal Year, plus
                      X.

                      B = the sum of $300,000 plus the cumulative After Tax Cash
                      Flow for Ukraine Projects through the end of the relevant
                      Fiscal Year, plus Y.

                      C = the cumulative amount advanced to the Eustace Group
                      through the end of such Fiscal Year pursuant to
                      subsections 2(b) i) and ii) above and this subsection 2(b)
                      iii), after giving effect to any payments required to be
                      made by CMI (but not yet made) for such Fiscal Year
                      pursuant to subsections 2(b) i) and ii), but prior to
                      giving effect to any payment required to be made by CMI
                      for the current Fiscal Year pursuant to this subsection
                      2(b) iii).



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<PAGE>   6


                                                                   EXHIBIT 10.18



                      X = 0.0 during Fiscal Years 1997, 1998 and 1999. Beginning
                      in Fiscal Year 2000, X = 0.06 times Backlog for
                      Non-Ukraine Projects as of June 30, 2000.

                      Y = 0.0 during Fiscal Years 1997, 1998 and 1999. Beginning
                      in Fiscal Year 2000, Y =0.039 times Backlog for Ukraine
                      Projects as of June 30, 2000.

               Amounts payable under this subsection for each respective CMI
               Fiscal Year shall be paid in cash or CMI Common Stock within
               sixty days after the end of such Fiscal Year. If, as of the end
               of any Fiscal Year the amount determined to be the amount payable
               under this subsection would be a negative number, no payment
               shall be made under this subsection iii) in respect of such
               Fiscal Year. All advance payments made by CMI under this Section
               2(b) shall be credited against the aggregate amount required to
               be paid by CMI pursuant to Section 2(a).

                  (c) Each member of the Eustace Group agrees that CMI may
        offset any advance payment otherwise required to be made under Section 2
        against any amount due under the existing promissory notes in favor of
        CMI, until such notes have been repaid in full. Each member of the
        Eustace Group agrees that, upon termination of this Agreement, CMI's
        controller shall calculate the aggregate amount payable under Section
        2(a) and the Eustace Group shall promptly repay CMI on demand the
        excess, if any, of the amount previously advanced to the Eustace Group
        under Section 2(b) over the aggregate amount payable under Section 2(a).

               3. Acquisition of Shares of the Garber Group. Subject to the
terms and conditions stated in this Agreement, at the Closing CMI shall purchase
from the Garber Group, and the Garber Group shall sell to CMI, all of the
outstanding shares, options or warrants or other rights to acquire shares of
Common Stock of the Company owned of record or beneficially by the Garber Group.
The purchase price shall be one dollar per share plus the contingent payments
provided for in Section 3(a) herein. Of the contingent payments, 62.5% shall be
allocated to Garber International Associates and the remaining 37.5% of the
contingent payments shall be allocated to Dr. V. Garber.



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<PAGE>   7


                                                                   EXHIBIT 10.18



                  (a) Subject to the provisions of Section 4(c) below, CMI
        shall pay the Garber Group contingent payments equal, in the aggregate,
        to the amount determined by the following formula:

                      PAYMENT      =       Garber Factor X ((0.25 X After Tax
                                           Cash Flow from Non-Ukraine Projects)
                                           + (0.1625 X After Tax Cash Flow from
                                           Ukraine Projects)) + (0.0875 X After
                                           Tax Cash Flow from Ukraine Projects).

                  (b) Subject to the provisions of Sections 3(c) and 4(c)
        below, CMI shall pay the Garber Group the following advance payments:

                        i) for each of CMI's Fiscal Years 1997, 1998 or 1999, 
               the amount determined by the following formula:

                      PAYMENT      =       Garber Factor X ((0.02 X Booked 
                                           Amount for Non-Ukraine Projects 
                                           booked in that Fiscal Year) + (0.012 
                                           X Booked Amount for Ukraine Projects 
                                           booked in that Fiscal Year)) + (0.008
                                           X Booked Amount for Ukraine Projects 
                                           booked in that Fiscal Year).

               Of each amount payable under this subsection, 50% shall be paid
               in cash by the end of the month following the month in which the
               particular project was booked and the remainder shall be paid in
               cash within sixty days following the end of the CMI Fiscal Year
               in which the particular project was booked.

                        ii) for each of CMI's Fiscal Years 1997, 1998, 1999
               and 2000, the amount determined by the following formula:

                      PAYMENT      =       Garber Factor X ((0.06 X Operating
                                           Profit for Non-Ukraine Projects in
                                           that Fiscal Year) + (0.038 X
                                           Operating Profit for Ukraine Projects
                                           in that Fiscal Year)) + (0.022 X
                                           Operating Profit for Ukraine Projects
                                           in that Fiscal Year).

               Of each amount payable under this subsection for each respective
               CMI Fiscal Year, 50% shall be paid in cash within sixty days
               after


                                       -7-

<PAGE>   8


                                                                   EXHIBIT 10.18



               the end of such Fiscal Year and the remainder of each such amount
               shall be paid in cash within sixty days following the end of the
               following CMI Fiscal Year, together with 8% simple interest on
               such latter amount.

                        iii) for each Fiscal Year up to and including the
               Fiscal Year ending on the Final Determination Date, the amount
               determined by CMI's controller at the end of each Fiscal Year to
               be payable with respect to such Fiscal Year using the following
               formula:

                      PAYMENT       =      (Garber Factor X ((0.25 X A) + 
                                           (0.1625 X B))) + (0.0875 X C) - D, 
                                           where

                      A = the cumulative After Tax Cash Flow for Non-Ukraine
                      Projects through the end of the relevant Fiscal Year, plus
                      X.

                      B = the sum of $300,000 plus the cumulative After Tax Cash
                      Flow for Ukraine Projects through the end of the relevant
                      Fiscal Year, plus Y.

                      C = the sum of $300,000 plus the cumulative After Tax Cash
                      Flow for Ukraine Projects through the end of the relevant
                      Fiscal Year, plus Z.

                      D = the cumulative amounts advanced to the Garber Group
                      through the end of such Fiscal Year pursuant to
                      subsections 3(b) i) and ii) above and this subsection 3(b)
                      iii), after giving effect to any payments required to be
                      made by CMI for such Fiscal Year pursuant to subsections
                      3(b) i) and ii) but not yet paid, but prior to giving
                      effect to any payment required to be made by CMI for the
                      current Fiscal Year pursuant to this subsection 3(b) iii).

                      X = 0.0 during Fiscal Years 1997, 1998 and 1999. Beginning
                      in Fiscal Year 2000, X = 0.06 times Backlog for
                      Non-Ukraine Projects as of June 30, 2000.



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<PAGE>   9


                                                                   EXHIBIT 10.18



                      Y = 0.0 during Fiscal Years 1997, 1998 and 1999. Beginning
                      in Fiscal Year 2000, Y = 0.039 times Backlog for Ukraine
                      Projects as of June 30, 2000.

                      Z = 0.0 during Fiscal Years 1997, 1998 and 1999. Beginning
                      in Fiscal Year 2000, Z = 0.021 times Backlog for Ukraine
                      Projects as of June 30, 2000.

               Amounts payable under this subsection for each respective CMI
               Fiscal Year shall be paid in cash or CMI Common Stock within
               sixty days after the end of such Fiscal Year. If, as of the end
               of any Fiscal Year the amount determined to be the amount payable
               under this subsection would be a negative number, no payment
               shall be made under this subsection iii) in respect of such
               Fiscal Year. All advance payments made under this Section 3(b)
               shall be credited against the aggregate amount required to be
               paid by CMI pursuant to Section 3(a).

                   (c) Each member of the Garber Group agrees that CMI may
        offset any advance payment otherwise required to be made under Section 3
        against any amount due under the existing promissory notes in favor of
        CMI, until such notes have been repaid in full. Each member of the
        Garber Group agrees that, upon termination of this Agreement, CMI's
        controller shall calculate the aggregate amount payable under Section
        3(a) and the Garber Group shall promptly repay CMI on demand the excess,
        if any, of the aggregate amount previously advanced to the Garber Group
        under Section 3(b) over the amount payable under Section 3(a).

               4. Certain Matters Applicable to the Stock Repurchases and
Payments. For purposes of Sections 2 and 3 above:

                  (a) After Tax Cash Flow, Operating Profit and Backlog
        shall be determined in accordance with generally accepted accounting
        principles and CMI accounting policies by CMI's controller. The $267,000
        advanced by CMI prior to March 8, 1994, shall be disregarded in making
        the calculations under the formulas contained in this Agreement. The
        Company shall keep accounting records sufficient to calculate bookings,
        Backlog, sales, expenses, After Tax Cash Flow and Operating Profit for
        Ukraine Projects and Non-Ukraine Projects. All operations of the


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<PAGE>   10


                                                                   EXHIBIT 10.18



        Company through the end of Fiscal Year 1996 shall be attributed to
        Ukraine Projects.

                  (b) With respect to payments required to be made under
        Sections 2(b)iii) and 3(b)iii), CMI has the right to make payment in
        cash or in CMI Common Shares or in a combination of cash and CMI Common
        Shares. If CMI uses CMI Common Shares, the value of such shares shall be
        the average closing sales price for CMI Common Shares in the Nasdaq
        National Market as reported in the Wall Street Journal (or if listed,
        the closing sales price on the largest exchange on which CMI Common
        Shares are listed) for the ten (10) trading days immediately succeeding
        the date of the event giving rise to the required payment. The CMI
        Common Shares to be so used shall, within four months of delivery, be
        covered by an effective registration statement on form S-1, S- 3 or S-4
        (or other equivalent forms) filed with the Securities and Exchange
        Commission under the Securities Act of 1933, as amended. No fractional
        CMI Common Shares shall be issued; any fractional interest shall be
        rounded off to the nearest whole share.

                  (c) Notwithstanding anything in this Agreement to the
        contrary, CMI's obligation to make any further payments to the Eustace
        Group under Section 2 hereof shall terminate under the circumstances
        provided in Section 12. Similarly, and notwithstanding anything in this
        Agreement to the contrary, CMI's obligation to make any further payments
        to the Garber Group under Section 3 hereof shall terminate under the
        circumstances provided in Section 12. There shall be no payments made
        under Section 2 or Section 3 with respect to orders which are booked
        after the date of termination of this Agreement, but termination shall
        not affect any rights to payment with respect to orders booked before
        termination. Any dispute over whether CMI's obligation to make such
        payments has been properly terminated shall be submitted to and
        determined by binding arbitration pursuant to Section 17 below.

                  (d) Sample calculations of potential contingent payments
        and advances under Sections 2 and 3 are attached as Exhibit B. These
        samples are merely illustrative and do not constitute projections or
        likely scenarios. No party makes any representation or warranty
        whatsoever to any other party about the validity of the samples or the
        likelihood that actual results will resemble the samples.



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<PAGE>   11


                                                                   EXHIBIT 10.18



               5. Closing and Closing Procedure. The closing of the transaction
contemplated by this Agreement shall take place at the corporate headquarters of
CMI, or at such other place as is agreed to by the parties, on March 14, 1997,
at 10:00 a.m. The date and time of the closing are herein called the "Closing
Date." At the closing on the Closing Date:

                  (a) Each Shareholder shall deliver to CMI stock
        certificates of the Company owned by such Shareholder as indicated on
        Exhibit A, duly endorsed for transfer and blank; and

                  (b) CMI shall deliver to each Shareholder $1 for each
        share of Common Stock of the Company sold to CMI pursuant to this
        Agreement.

               6. Representations and Warranties of CMI. CMI represents and
warrants that the following facts and circumstances are, and, as at the Closing
Date shall be, true and correct and acknowledges that such facts and
circumstances constitute the basis upon which the Shareholders are induced to
enter into this Agreement:

                  (a) Organization, Standing, Etc. CMI is a corporation duly
        organized and validly existing and in good standing under the laws of
        the State of Delaware. It has all requisite corporate power and
        authority to carry on its business, to enter into this Agreement, to
        loan money as contemplated hereby, and to carry out the provisions
        hereof.

                  (b) Authorization. All corporate action on the part of CMI
        necessary for the performance of its obligations hereunder has been
        taken. This Agreement is a valid and binding obligation of CMI,
        enforceable against it in accordance with its terms.

               7. Representations and Warranties of Shareholders. Each
Shareholder represents and warrants that the following facts and circumstances
are, and, as at the Closing Date shall be, true and correct and acknowledges
that such facts and circumstances constitute the basis upon which CMI is induced
to enter into this Agreement:

                  (a) Shares. The number of shares of Common Stock of the
        Company set forth opposite such Shareholder's name on Exhibit A are
        owned of record and beneficially by such Shareholder free and clear of
        any and all covenants, conditions, restrictions, voting trust
        arrangements,


                                      -11-

<PAGE>   12


                                                                   EXHIBIT 10.18



        liens, pledges, charges, claims, encumbrances, options and rights
        whatsoever. Upon the Closing, CMI shall own, of record and beneficially,
        all of such shares of Common Stock, free and clear of any and all
        covenants, conditions, restrictions, voting trust arrangements, liens,
        pledges, charges, claims, encumbrances, options and rights whatsoever.

                  (b) Authorization. This Agreement is a valid and binding
        obligation of such Shareholder, enforceable in accordance with its
        terms.

                  (c) Independent Decision. CMI has made no representations
        or warranties whatsoever as to the legal, financial or tax consequences
        to the Shareholder arising from or in connection with this Agreement.
        Such Shareholder has consulted with his own attorneys and financial and
        tax advisors and independently decided to enter into this Agreement.

               8. Covenants of the Shareholders. Each Shareholder agrees that
prior to the Final Determination Date or December 31, 2001, whichever is later:

                  (a) Such Shareholder shall not, in the geographic areas
        where the Company does business or plans to do business, on behalf of
        other than the Company or CMI (or its subsidiaries), engage or be
        interested, directly or indirectly, for himself or herself or for any
        other person, as principal, agent, employer, employee, officer,
        director, partner, salesman, supervisor, consultant or otherwise, in any
        business or activity which is competitive with the principal business
        conducted by the Company, namely, manufacturing and selling equipment
        for airways modernization and vessel traffic navigation. The provisions
        of this paragraph (a) shall expire as to the Eustace Group if the active
        involvement in the business of the Company of Harry F. Eustace is
        terminated other than for cause (as defined hereinafter). Similarly, the
        provisions of this paragraph (a) shall expire as to the Garber Group if
        the active involvement in the business of the Company of Dr. V. Garber
        is terminated other than for cause (as defined hereinafter).

                  (b) All trade secrets, confidential or proprietary
        information with respect to products, plans, marketing, and internal
        business and financial matters (collectively "Trade Secrets") which were
        learned by him or her in the course of his or her involvement with the
        Company or CMI, and any other Trade Secrets received, developed or
        learned in the course


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<PAGE>   13


                                                                   EXHIBIT 10.18



        of such employment, or received, developed or learned hereafter in the
        course of his or her future employment by or in association with the
        Company or CMI (or its subsidiaries) shall be treated as confidential
        and shall never be disclosed, other than as expressly authorized by CMI
        or the Company, or if the same become generally available to the public
        otherwise than by disclosure by him or her.

                  (c) He or she shall not induce any person who is an
        employee of CMI (or its subsidiaries) or the Company on this date or who
        shall become or continue as an employee of the Company or CMI (or its
        subsidiaries) hereafter to leave said employ for the period of this
        Covenant.

Each Shareholder acknowledges that the remedy at law for any breach of this
Covenant is inadequate and CMI and the Company shall be entitled to
injunctive relief.  This Covenant may be assigned by CMI to, or devolve upon,
any successor in interest to all or substantially all of its business and 
assets. It is the intent of the parties hereto that in the event one or more 
provisions,  or any part thereof of this Covenant shall be held unenforceable 
for any reason, this Covenant shall be construed to the maximum extent permitted
by law in a manner consistent with the intent of the parties as herein 
expressed.

               9. No Brokerage Fee. No party to this Agreement has committed or
agreed on behalf of itself or himself, or any other party hereto, to pay any
brokerage or finder's fees or commissions. Each party hereto agrees to indemnify
and hold the other parties hereto harmless against and in respect of any
obligations or liabilities such party may have incurred, contingent or
otherwise, for brokerage or finders' fees or agents commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby.

               10. Expenses. CMI, the Company, the Garber Group and the Eustace
Group shall pay all their own respective expenses in connection herewith,
including, without limiting the foregoing, legal and accounting fees.

               11. Survival of Representations and Warranties. All
representations, warranties, and agreements contained herein or made in writing
by or on behalf of any of the parties in connection with the transaction
contemplated hereby shall survive the execution and delivery of this


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<PAGE>   14


                                                                   EXHIBIT 10.18



Agreement, any investigation at any time made by or on behalf of any party, and
the closing of the transaction contemplated hereby.

               12. Termination.

                  (a) CMI may terminate all of its obligations under this
        Agreement effective upon written notice at any time from and after the
        occurrence of either of the following: (i) the Company fails to have
        Booked Amounts of an aggregate of $10,000,000 or more on or before June
        30, 1997; or (ii) Backlog falls below $500,000 at any time from and
        after July 1, 1998. Upon termination pursuant to this paragraph (a),
        there shall be no further payments under either Section 2 or Section 3
        of this Agreement.

                  (b) CMI may terminate its obligations to the Eustace Group
        under this Agreement effective upon written notice if Harry F. Eustace's
        active involvement in the business of the Company (as an employee or
        consultant) is terminated by the Company (or CMI) "for cause." Upon
        termination pursuant to this paragraph (b), there shall be no further
        payments under Section 2 of this Agreement.

                  (c) CMI may terminate its obligations to the Garber Group
        under this Agreement effective upon written notice if Dr. V. Garber's
        active involvement in the business of the Company (as an employee or
        consultant) is terminated by the Company (or CMI) "for cause." Upon
        termination pursuant to this paragraph (b), there shall be no further
        payments under Section 3 of this Agreement.

                  (d) For purposes of this Agreement, the following shall
        constitute grounds to terminate the active involvement in the business
        of the Company of Mr. Eustace or Dr. Garber, as the case may be, "for
        cause":

                        i) his death, disability for 90 or more days, or
               voluntary resignation as an employee or a consultant;

                        ii) his failure, refusal or neglect to perform his
               duties or obligations to the Company or CMI, provided he is given
               written notice of intent to terminate and fails to cure the same
               within 30 days after such written notice is given;


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<PAGE>   15


                                                                   EXHIBIT 10.18




                        iii) his gross negligence in the performance of his
               duties to the Company or CMI in a manner which is materially
               adverse, monetarily or otherwise, to CMI or its subsidiaries or
               affiliates;

                        iv) a finding by a court or other governmental body
               that one or more of his acts constituted a felony or other crime
               involving theft, fraud or dishonesty under the laws of the United
               States, any state thereof or any other country;

                        v) his violation of any law or regulation, or his
               engaging in dishonesty intended to cause personal enrichment at
               the expense of CMI or its subsidiaries, and in either case a good
               faith determination by CMI that his continued involvement in the
               business of the Company would be seriously detrimental to the
               company or CMI and its business or reputation; or

                        vi) his material breach of any provision of Section 8.

        If there is a dispute about whether a termination "for cause" is proper
        or improper and the parties fail to resolve the dispute, either involved
        party may submit the matter to binding arbitration pursuant to Section
        17.

                  (e) CMI covenants that until the earliest to occur of (i)
        the Final Determination Date, (ii) the date on which Backlog of the
        Company falls below $250,000, or (iii) the date, if any, on which the
        active involvement of Harry F. Eustace or Dr. V. Garber, as the case may
        be, has been terminated "for cause," CMI may not terminate the rights of
        the Eustace Group or Garber Group, respectively, to additional payments
        provided for in Sections 2 and 3 above, as the case may be. However, and
        notwithstanding anything to the contrary, the Company or CMI may
        terminate the active involvement in the business of the Company of Mr.
        Eustace, Dr. Garber or both, without cause; provided that, and in either
        such event, termination would not affect the rights of the Eustace Group
        or Garber Group, respectively, to the additional payments provided for
        in Sections 2 and 3 above, as the case may be.

              13. Notices. All notices, requests, demands and other
communications which are required to be given or which may be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first class mail, postage prepaid:


                                      -15-

<PAGE>   16


                                                                   EXHIBIT 10.18




                  (a) if to Harry F. Eustace or the Eustace Group, to Harry F.
        Eustace, 2809 Northglade Street, N.W., Washington, D.C. 20016;

                  (b) if to Dr. V. Garber or the Garber Group, to Dr. F. V.
        Garber, 1800 Diagonal Road, Suite 510, Alexandria, VA 22314;

                  (c) if to CMI, to the attention of President, Government
        Group, California Microwave, Inc., 555 Twin Dolphin Drive, Redwood City,
        CA 94065; or

                  (d) to such other address as any other party shall have
        specified by notice in writing to the other party.

               14. Entire Agreement. This writing contains the entire agreement
of the parties hereto and expressly supersedes the Shareholders' Agreement, the
terms of which are hereby terminated and extinguished. This Agreement may not be
modified, altered or changed in any manner whatsoever, except by a written
agreement signed by the parties hereto.

               15. Binding Effect, Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns; nothing in this Agreement, expressed or
implied, is intended to confer on any other person other than the parties hereto
or their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reasons of this Agreement.

               16. Assignability. Notwithstanding anything in Section 15 above
to the contrary, this Agreement shall not be assignable by any party hereto
without the prior written consent of the other parties, provided that this
Agreement shall be assignable to any person or entity that acquires
substantially all of the assets of CMI, the Government Group of CMI or the
Company.

               17. Arbitration. Any dispute, controversy or claim between the
parties arising out of or in connection with Section 4(c) or Section 12 of this
Agreement which the parties fail to resolve by negotiation shall be resolved in
accordance with the provisions of this Section 17. Any party may demand, by
written notice to the other parties, that any covered dispute be submitted to
arbitration conducted according to the provisions of this Section. If the
parties mutually agree upon one or more individual(s) to arbitrate the dispute,
such


                                      -16-

<PAGE>   17


                                                                   EXHIBIT 10.18



individuals shall arbitrate the dispute. If the parties mutually agree upon the
rules for conducting the arbitration, such rules shall govern the arbitration.
If, however, the parties cannot agree upon the identity of the arbitrators
and/or the rules for conducting the arbitration within fifteen (15) days after
the notice demanding arbitration, either parties may request the American
Arbitration Association (the "AAA"), to appoint, on an expedited basis, an
arbitrator who shall have substantial experience as an arbitrator, be
experienced in the subject matter of the dispute and be able to commence the
arbitration proceedings (with at least an initial hearing), according to the
requirements of this Section and other complimentary rules of the American
Arbitration Association, within thirty (30) days after appointment. The parties
shall exchange demands for relief and responses thereto, and may serve their
requests for production of documents pursuant to the Uniform Arbitration Act,
prior to the initial hearing. The arbitration proceedings shall be completed
within thirty (30) days after the initial hearing and the arbitrator's decision
shall be provided to the parties within thirty (30) days thereafter. The
decision of the arbitrator shall be final and binding provided such decision is
set forth in a writing by the arbitrator which recites the decision and all
findings and orders relative to the implementation thereof including, without
limitation, the amount and/or nature of any awards and the allocation of
responsibility among the parties to pay the AAA fees and the fees of the
attorneys and other professionals incurred by the parties, in accordance with
this Section. The arbitrator's decision may be enforced by any court of
competent jurisdiction. The place of arbitration shall be San Francisco,
California.

               18. Paragraph and Other Headings. The paragraph and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.

               19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.

               20. California Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of California.




                                      -17-

<PAGE>   18


                                                                   EXHIBIT 10.18






                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK












                                      -18-

<PAGE>   19


                                                                   EXHIBIT 10.18



               21. Attorneys Fees. In the event of any dispute under this
Agreement, the prevailing party shall be entitled to recovery of reasonable
attorneys fees.

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

                                      CALIFORNIA MICROWAVE, INC.


                                      By:_____________________________
                                      Title:__________________________


                                      CALIFORNIA MICROWAVE
                                      NAVIGATION SYSTEMS, INC.


                                      By:_____________________________
                                      Title:__________________________


                                      GARBER INTERNATIONAL
                                      ASSOCIATES


                                      By:_____________________________
                                      Title:__________________________



                                      ________________________________
                                             HARRY F. EUSTACE



                                      ________________________________
                                              BARBARA EUSTACE



                                      ________________________________
                                               DR. V. GARBER




                                      -19-

<PAGE>   20


                                                                   EXHIBIT 10.18




                                    EXHIBIT A



           Name                                             Shares
           ----                                             ------



Harry F. Eustace and Barbara Eustace                        4,000

Garber International Associates                               500

Dr. V. Garber                                                 300




                                       -i-

<PAGE>   21

                                                                   EXHIBIT 10.18

                                    EXHIBIT B
                                  (Page 1 of 2)

                           EXAMPLE - UKRAINE PROJECTS

<TABLE>
<CAPTION>

($Millions)

                                       FY96       FY97       FY98       FY99      FY00       FY01      FY02      TOTAL
                                       ----       ----       ----       ----      ----       ----      ----      -----
<S>                                    <C>       <C>        <C>         <C>       <C>        <C>       <C>       <C>
UKRAINE PROJECTS
----------------
BOOKINGS                                         22.00       0.00       0.00      0.00                          22.00

ENDING BACKLOG                                   22.00      10.00       0.00      0.00

SALES                                             0.00      12.00      10.00      0.00                          22.00

GROSS MARGIN                                      0.00       3.00       2.50      0.00                           5.50

EXPENSES                              -2.00      -0.63      -0.60      -0.60      0.00                          -3.83

SUCCESS FEES                                      1.60       0.00       0.00      0.00                           1.60
                                                 -----      -----      -----     -----                           ----

OPERATING PROFIT                      -2.00       0.97       2.40       1.90      0.00      0.00                 3.27



SPONSOR LOAN                                               -4.00      -4.00       2.00      3.00       3.00      0.00

INTEREST INCOME                                             0.00       0.00       0.85      0.63       1.32      2.80
                                                           -----      -----      -----     -----      -----      ----

PRETAX PROFIT                         -2.00       0.97     -1.60      -2.1        2.85      3.63       4.32      6.07

CUMM PRETAX                           -2.00      -1.03     -2.63      -4.73      -1.88      1.75       6.07

TAX PAYMENTS                                                                                0.61       1.51      2.12



NET ASSETS                             0.08       1.65      2.60       1.00       0.00      0.00       0.00

CASH FLOW                             -2.08      -0.60     -2.55      -0.50       3.85      3.02       2.81      3.95

CUMM CASH FLOW                                   -2.68     -5.23      -5.73      -1.88      1.14       3.95

 <CAPTION>

                                                           PAYMENTS EARNED


                                       FY96       FY97       FY98       FY99      FY00       FY01      FY02      TOTAL
                                       ----       ----       ----       ----      ----       ----      ----      -----
<S>                                   <C>        <C>        <C>        <C>       <C>        <C>       <C>        <C>
2b[i] Eustace                                    0.220      0.000      0.000                                     0.220

3b[i] Garber                                     0.220      0.000      0.000                                     0.220



2b[ii] Eustace                                   0.031      0.076      0.060     0.000                           0.167

3b[ii] Garber                                    0.027      0.068      0.054     0.000                           0.149



2b[iii] Eustace                                                                                         0.147    0.147

3b[iii] Garber                                                                                          0.083    0.083
                                                                                                        -----    -----

        Year Total                               0.498      0.144      0.114     0.000      0.000       0.230    0.986



TOTAL EUSTACE                                    0.251      0.076      0.060     0.000      0.000       0.147    0.534

TOTAL GARBER                                     0.247      0.068      0.054     0.000      0.000       0.083    0.452

</TABLE>



<PAGE>   22


                                                                   EXHIBIT 10.18


                                    EXHIBIT B
                                  (Page 2 of 2)

                         EXAMPLE - NON-UKRAINE PROJECTS

<TABLE>
<CAPTION>
($Millions)

                                       FY96       FY97       FY98       FY99      FY00       FY01      TOTAL
                                       ----       ----       ----       ----      ----       ----      -----
<S>                                    <C>       <C>        <C>         <C>       <C>        <C>       <C>
NON-UKRAINE
PROJECTS
-----------
BOOKINGS                                          2.00      8.00      10.00      12.00                 32.00

ENDING BACKLOG                                    0.00      5.00       7.00       9.00

SALES                                             2.00      3.00       8.00      10.00                 23.00

GROSS MARGIN                                      0.50      0.75       2.00       2.50                  5.75

EXPENSES                                         -0.15     -0.55      -0.70      -1.20                 -2.60

SUCCESS FEES                                      0.00      0.00       0.00       0.00                  0.00
                                                 -----     -----      -----      -----                  ----

OPERATING PROFIT                                  0.35      0.20       1.30       1.30                  3.15



SPONSOR LOAN                                      0.00      0.00       0.00       0.00       0.00       0.00

INTEREST INCOME                                             0.00       0.00       0.00       0.00       0.00
                                                          ------     ------     ------      -----       ----

PRETAX PROFIT                                     0.35      0.20       1.30       1.30       0.00       3.15

CUMM PRETAX                                       0.35      0.55       1.85       3.15       3.15

TAX PAYMENTS                                      0.12      0.07       0.46       0.46       0.00       1.10



NET ASSETS                           0.00         1.50      1.30       2.60       1.00       0.00

CASH FLOW                            0.00        -1.27      0.33      -0.46       2.45       1.00       2.05

CUMM CASH FLOW                                   -1.27     -0.94      -1.40       1.05       2.05

CCF + 6% BACKLOG                                                                             2.59

<CAPTION>
                                                        PAYMENTS EARNED


                                       FY96       FY97       FY98       FY99      FY00       FY01      TOTAL
                                       ----       ----       ----       ----      ----       ----      -----
<S>                                    <C>       <C>        <C>         <C>       <C>        <C>       <C>
2b[i] Eustace                                    0.033      0.133      0.167                           0.333
 
3b[i] Garber                                     0.007      0.027      0.033                           0.067



2b[ii] Eustace                                   0.017      0.010      0.065     0.065                 0.157

3b[ii] Garber                                    0.004      0.002      0.013     0.013                 0.032



2b[iii] Eustace                                                                             0.048      0.048

3b[iii] Garber                                                                              0.010      0.010
                                                                                            -----      -----

        Year Total                               0.061      0.172      0.278     0.078      0.058      0.647



TOTAL EUSTACE                                    0.051      0.143      0.232     0.065      0.048      0.539

TOTAL GARBER                                     0.010      0.029      0.046     0.013      0.010      0.108
</TABLE>