EMPLOYMENT AGREEMENT

                  This sets forth the Employment Agreement ("Agreement") made
effective as of July 1, 1997 between Anaren Microwave, Inc. ("Employer"), a New
York corporation with common stock publicly traded on the NASDAQ, and Lawrence
A. Sala ("Employee"), an individual currently residing at _____________________,
__________________.

                  IN CONSIDERATION of the mutual covenants and representations
contained herein, and other good and valuable consideration, receipt of which is
acknowledged, the parties agree as follows:

                  1. Employment.

                           (a) Term. Employer shall continue to employ Employee,
and Employee shall continue to serve, as President for a fifty-three (53) month
term commencing on July 1, 1997 and ending on November 30, 2001 ("Period of
Employment"), subject to termination as provided in this Agreement.

                           (b) Salary. During the period July 1, 1997 through
November 30, 1997, Employer shall pay Employee Base Salary at an annual rate of
$180,000 ("Base Salary"). Employee's Base Salary for the period December 1, 1997
through November 30, 1998, and for each succeeding 12 month period through
November 30, 2001, shall be determined by the Employer's Board of Directors but
shall not be set below $180,000 annually. Employee's Base Salary is payable in
accordance with Employer's regular payroll procedures for executive employees.

                           (c) Incentive Bonuses. Employee shall be entitled to
annual incentive bonuses pursuant to the terms of the Management Incentive Plan
which has been approved by the Board of Directors of Employer to cover key
management personnel of Employer. Upon termination of Employee's employment
pursuant to 

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subparagraph 3(a), (b), or (c), Employee shall be entitled to a pro
rata portion (based on Employee's complete months of active employment in the
applicable year) of the annual incentive bonus that is payable with respect to
the year during which the termination occurs, or in the case of a termination
upon Employee's disability pursuant to subparagraph 3(c), six months after the
disability period began.

                           (d) Successor Agreement. Beginning July 1, 2001,
Employee and Employer shall commence good faith negotiations, to be completed by
September 30, 2001, for Employee's continued employment by Employer after the
end of the Period of Employment. If Employee and Employer cannot agree on the
terms of Employee's continued employment by November 30, 2001, Employee shall be
entitled to be paid, as severance compensation, two years of the Base Salary in
effect on November 30, 2001, plus $50,000 for each fiscal year ending June 30,
2002 and June 30, 2003 (total of $100,000) in lieu of incentive bonuses that
Employee could have earned had he remained employed through the end of each
fiscal year. Payments required pursuant to the preceding sentence shall be paid
in accordance with Employer's regular payroll and incentive bonus payment
procedures from December 1, 2001 through November 30, 2003. For any period
during which Employee's Base Salary is continued as severance compensation,
Employee shall be eligible to continue to participate in Employer's group health
benefit and group term life insurance plans as if Employee was an active, full
time Employee. Employee's right to "COBRA" continuation coverage under
Employer's group health benefit plan shall commence the month following the end
of the period during which Employee received severance compensation and
continued health benefits.

                  2. Duties During The Period Of Employment. Employee shall have
full responsibility, subject to the control of Employer's Board of Directors,
for the management of all aspects of Employer's business and operations, and the
discharge of such other duties and responsibilities to Employer as may from time
to time be reasonably assigned to Employee by Employer's Board of Directors.
Employee shall report directly to the Board of Directors of Employer. Employee
shall devote his best efforts

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to the affairs of Employer, serve faithfully and to the best of Employee's
ability, and devote all of Employee's working time and attention, knowledge,
experience, energy and skill to the business of Employer, except that Employee
may affiliate with professional associations, and civic organizations. Employee
shall continue to serve as a Director of Employer's Board of Directors provided
he is duly elected by the shareholders of Employer, but shall receive only the
compensation and other benefits described in this Agreement.

                  3. Termination. Employee's employment by Employer shall be
subject to termination as follows:

                           (a) Expiration of the Term. This Agreement shall
terminate automatically at the expiration of the Period of Employment, unless
the parties enter into a written agreement extending Employee's employment,
except for the continuing obligation of the parties as specified hereunder.

                           (b) Termination Upon Death. This Agreement shall
terminate upon Employee's death. In the event this Agreement is terminated as a
result of Employee's death, Employer shall continue payments of Employee's Base
Salary for a period of ninety (90) days following Employee's death to the
beneficiary designated by Employee on the "Beneficiary Designation Form"
attached to this Agreement as Appendix A. Employee's beneficiary shall be free
to dispose of any restricted stock granted to Employee. Additionally, Employer
shall treat as immediately exercisable all unexpired stock options held by
Employee that are not exercisable or that have not been exercised, so as to
permit the beneficiary to purchase the balance of Employer common stock not yet
purchased pursuant to said options until the end of the one year period that
follows Employee's date of death.

                           (c) Termination Upon Disability. Employer may
terminate this Agreement upon Employee's disability. For the purpose of this
Agreement, Employee's inability to perform Employee's regular duties by reason
of physical or mental 

<PAGE>

illness or injury for a period of twenty-six (26) successive weeks ("Disability
Period") shall constitute "Disability." The determination of Disability shall be
made by a physician selected by Employer and a physician selected by Employee;
provided, however, that if the two physicians so selected shall disagree, the
determination of Disability shall be submitted to Arbitration in accordance with
the rules of the American Arbitration Association, and the decision of the
Arbitrator shall be binding on both parties.

                           During the Disability Period, Employee shall be
entitled to 100% of Employee's Base Salary pursuant to Anaren's short term
disability policy (and supplemented, if necessary, by Employee's accrued but
unused sick leave), reduced by any other benefits to which Employee may be
entitled for the disability period on account of such disability, including, but
not limited to, benefits provided under New York's Workers' Compensation law.

                           Upon termination pursuant to this Disability
provision, Employee shall be free to dispose of any restricted stock granted to
Employee. Additionally, Employer shall treat as immediately exercisable all
unexpired stock options held by Employee that are not exercisable or that have
not been exercised, so as to permit the Employee to purchase the balance of
Employer common stock not yet purchased pursuant to said options until the end
of the one year period following Employee's termination due to Disability.

                           (d) Termination for Cause. Employer may terminate
Employee's employment immediately for "cause" by written notice to Employee. For
purpose of this Agreement, termination shall be for "cause" if the termination
results from any of the following events:

                                    (i) material breach of this Agreement;

                                    (ii) documented misconduct as an executive
                           or director of Employer, including, but not limited
                           to, misappropriating any

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                           funds or property of Employer, or attempting to
                           obtain any personal benefit from any transaction to
                           which Employer is a party or from any transaction
                           which any third party in which Employee has an
                           interest which is adverse to the interest of
                           Employer, unless, in either case, Employee shall have
                           first obtained the written consent of the Board of
                           Directors of Employer;

                                    (iii) unreasonable neglect or refusal to
                           perform the duties assigned to Employee;

                                    (iv) conviction of a crime other than a
                           vehicle and traffic misdemeanor;

                                    (v) adjudication as bankrupt, which
                           adjudication has not been contested in good faith,
                           unless bankruptcy is caused directly by Employer's
                           unexcused failure to perform its obligations under
                           this Agreement;

                                    (vi) documented failure to follow the
                           reasonable, written instructions of the Board of
                           Directors of Employer; or

                                    (vii) any knowing violation of the Security
                           and Exchange Commissions or NASDAQ's rules or
                           regulations.

                  Notwithstanding any other term or provision of this Agreement
to the contrary, if Employee's employment is terminated for cause, Employee
shall forfeit all rights to payments and benefits otherwise provided pursuant to
this Agreement; provided, however, that Base Salary will be paid to Employee
through the date of termination.
                           
                          (e) Termination for Reasons Other Than Cause. In the
event Employer terminates Employee for reasons other than cause, Employee shall
be entitled to:

                                    (i) the greater of (A) severance pay
                           determined in accordance with the provisions of
                           Section 1(d) of 

<PAGE>

                           this Agreement (i.e., Base Salary and
                           payments in lieu of incentive bonus for two years
                           which shall be the two fiscal year ends following the
                           date of termination) and payable beginning with
                           Employer's first payroll period that begins following
                           Employee's date of termination, or (B) Employee's
                           regular Base Salary for the balance of the Period of
                           Employment,

                                    (ii) an amount equal to the difference
                           between the total purchase price paid by Employee for
                           the home currently owned and occupied by him in the
                           Syracuse area and the proceeds of the sale of such
                           home by Employee following the termination of his
                           employment if he elects to move outside of the
                           Metropolitan Syracuse area to take other employment,
                           and he establishes to the satisfaction of the Board
                           of Directors that he is unable despite reasonable
                           efforts to sell the home within one year from the
                           termination of his employment for a sum equal or
                           greater to the purchase price, or, in lieu thereof,
                           Employer may purchase the home for a sum equal to the
                           price Employee paid for it;

                                    (iii) dispose of any restricted stock
                           granted to Employee and exercise all unexpired stock
                           options held by Employee that are not exercisable or
                           that have not been exercised, so as to permit the
                           Employee to purchase the balance of Employer common
                           stock not yet purchased pursuant to said options
                           until the end of the one year period following
                           Employee's termination; and

                                    (iv) Employer-paid professional outplacement
                           services through a company of Employee's choice for a
                           period of 12 months following termination, not to
                           exceed $15,000.
<PAGE>

                  4. Fringe Benefits.

                           (a) Benefit Plans. During the period of employment,
Employee shall be eligible to participate in any employee pension benefit plans
(as determined and defined under Section 3(2) of the Employee Retirement Income
Security Act of 1974 as amended), Employer paid group life insurance plans,
medical plans, dental plans, short term and long term disability plans, business
travel insurance programs and other fringe benefit programs maintained by
Employer for the benefit of its executive employees. Participation in any of
Employer's benefit plans and programs shall be based on, and subject to
satisfaction of, the eligibility requirements and other conditions of such plans
and programs.

                           (b) Employee shall be eligible for an annual
physical, to be performed by a physician of his own choosing. Employee shall be
reimbursed up to $1,000 for related expenses not covered by Employer's health
insurance plan, or any other plan in which Employee is enrolled.

                           (c) Expenses. Upon submission to Employer of vouchers
or other required documentation, Employee shall be reimbursed for Employee's
actual out-of-pocket travel and other expenses reasonably incurred and paid by
Employee in connection with Employee's duties.

                           (d) Other Benefits. During the Period of Employment,
Employee shall be entitled to receive the following additional benefits:

                                    (i) $7,400, plus an appropriate tax
                           adjustment amount (gross- up), which will be paid to
                           Employee once each calendar year for Employee to pay
                           Northwestern Mutual Life Insurance Company for
                           premiums on a $500,000 whole life insurance policy,
                           which shall be owned by Employee.

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                                    (ii) Employer paid insurance premiums of
                           $1,368.30 per year for a supplemental disability
                           insurance policy provided by Northwestern Mutual Life
                           Insurance Company; and

                                    (iii) paid vacation of 4 weeks during each
                           calendar year and any holidays that may be provided
                           to all employees of Employer.

                  5. Stock Options.

                           (a) Prior Stock Option Grants.Pursuant to employer's
1988 and 1996 incentive stock option plans, employee has been granted options to
purchase shares of common stock of Employer. The parties hereby agree that the
Plans and any implementing option grant agreement shall be amended, if
necessary, to incorporate specific terms of this Agreement regarding the
exercise of options following Employee's termination of employment.

                           (b) Future grants. Employer shall request the
Compensation Committee of the Board of Directors of Employer to review whether
Employee should be granted additional options to purchase shares of common stock
of Employer.

                           6. Withholding. Employer shall deduct and withhold
from compensation and benefits provided under this Agreement all legally
required taxes and any benefit contributions required.

                  7. Covenants.

                           (a) Confidentiality. Employee shall not, without the
prior written consent of Employer, disclose or use in any way, either during his
employment by Employer or thereafter, except as required in the course of his
employment by Employer, any confidential business or technical information or
trade secrets acquired in the course of Employee's employment by Employer.
Employee acknowledges and agrees that it

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would be difficult to fully compensate Employer for damages resulting from the
breach or threatened breach of the foregoing provision and, accordingly, that
Employer shall be entitled to temporary preliminary injunctions and permanent
injunctions to enforce this provision. Employer's right to obtain injunctive
relief shall not, however, diminish Employer's right to claim and recover
damages. Employee commits to use his best efforts to prevent the publication or
disclosure of any trade secret or any confidential information concerning the
business or finances of Employer or Employer's affiliates, or any of its or
their dealings, transactions or affairs which may come to Employee's knowledge
in the pursuance of its duties on behalf of Employer.

                           (b) No Competition. Employee's employment is subject
to the condition that during the term of his employment and for a period of
twelve months from the date of the termination of his employment (the "Date of
Termination") Employee shall not, directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, individual proprietor,
lender, consultant or otherwise, or have any financial interest in, or aid or
assist anyone else in the conduct of any entity or business ("a Competitive
Operation") which principal business directly competes with Employer on the Date
of Termination. Ownership by Employee of not more than 5% of the voting stock of
any publicly held corporation shall not constitute a violation of this
paragraph.

                           (c) Certain Affiliates of Employer. It is understood
that Employee may have access to technical knowledge, trade secrets and customer
lists of affiliates of Employer or companies which Employer may acquire in the
future and may serve as a member of the board of directors or as an officer or
employee of an affiliate of Employer. Employee commits that he shall not, during
the term of his employment by Employer or for a period of 12 months thereafter,
in any way, directly or indirectly, own, manage, operate, control or participate
in the ownership, management, operation or 

<PAGE>

control of, or be connected as an officer, employee, partner, director,
individual proprietor, lender, consultant or otherwise aid or assist anyone else
in any business or operation which competes with or engages in the business of
such an affiliate.

                           (d) Termination of Payments. Upon the breach by
Employee of any covenant under this paragraph 7, Employer may offset and/or
recover from Employee immediately any and all severance benefits paid to
Employee under paragraph 1(d) hereof in addition to any and all other remedies
available to Employer under law or in equity.

                  8. Notices. Any notice which may be given hereunder shall be
sufficient if in writing and mailed by certified mail, return receipt requested,
to Employee at his residence and to Employer at P.O. Box 178, 6635 Kirkville
Road, E. Syracuse, New York 13057 or at such other addresses as either Employee
or Employer may, by similar notice, designate.

                  9. Rules, Regulations and Policies. Employee shall abide by
and comply with all of the rules, regulations, and policies of Employer,
including without limitation Employer's policy of strict adherence to, and
compliance with, any and all requirements of the Security and Exchange
Commission and the NASDAQ.

                  10. No Prior Restrictions. Employee affirms and represents
that Employee is under no obligation to any former employer or other third party
which is in any way inconsistent with, or which imposes any restriction upon,
the employment of Employee by Employer, or Employee's undertakings under this
Agreement.

                  11. Return of Employer's Property. After Employee has received
notice of termination or at the end of the term of this Agreement whichever
first occurs, Employee shall immediately return to Employer all documents and
other property in his possession belonging to Employer.

                  12. Construction and Severability. The invalidity of any one
or more provisions of this Agreement or any part thereof, all of which are
inserted 

<PAGE>

conditionally upon their being valid in law, shall not affect the validity of
any other provisions to this Agreement; and in the event that one or more
provisions contained herein shall be invalid, as determined by a court of
competent jurisdiction, this instrument shall be construed as if such invalid
provisions had not been inserted.

                  13. Governing Law. This Agreement was executed and delivered
in New York and shall be construed and governed in accordance with the laws of
the State of New York.

                  14. Assignability and Successors. This Agreement may not be
assigned by Employee or Employer, except that this Agreement shall be binding
upon, and shall inure to the benefit of the successor of Employer through
merger, acquisition or corporate reorganization.

                  15. Miscellaneous.

                           a. This Agreement constitutes the entire
understanding and agreement between the parties with respect to Employee's
employment with Employer and shall supersede all prior understandings and
agreements.

                           b. This Agreement cannot be amended, modified or
supplemented in any respect, except by a subsequent written agreement entered
into by the parties.

                           c. The services to be performed by Employee are
special and unique; it is agreed that any breach of this Agreement by Employee
shall entitle Employer (or any successor or assigns of Employer), in addition to
any other legal remedies available to it, to apply to any court of competent
jurisdiction to enjoin such breach.

                           d. The provisions of paragraph 1(d), and 7 shall
survive the termination of this Agreement.

                  16. Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one in the same instrument.

<PAGE>

                  17. Jurisdiction and Venue. The jurisdiction of any proceeding
between the parties arising out of, or with respect to this Agreement, shall be
with New York State Supreme Court, and venue shall be in Onondaga County. Each
party shall be subject to the personal jurisdiction of Onondaga County Supreme
Court.

Dated:                                 ANAREN MICROWAVE, INC.

                                            By:   /s/ Hugh A. Hair
                                                  ----------------------
                                                  CEO
                                                  Chairman of the Board

Dated: June 26, 1997                        Lawrence A. Sala
                                            -----------------------------
                                            

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                  APPENDIX A

                          BENEFICIARY DESIGNATION FORM

                  Pursuant to the Employment Agreement between ANAREN MICROWAVE,
INC. and LAWRENCE A. SALA, dated as of July 1, 1997 ("Agreement"), I, Lawrence
A. Sala, hereby designate ________________________, as the beneficiary of
amounts payable upon my death in accordance with paragraph 3(b) of the
Agreement. My beneficiary's current address ___________________.

Dated:   ___________________                _______________________________
                                                   Lawrence A. Sala


_________________________
         Witness