ANAREN MICROWAVE, INC.
                       MANAGEMENT INCENTIVE PLAN FOR 1998

1.   Objective

                  The principal objective of Anaren's Management Incentive Plan
is to provide a meaningful financial incentive, on an annual basis, to key
management employees to reward them for their contribution toward Anaren's
profitability.

2.  Eligibility
                  Eligibility is limited to key members of management who
because of their position have the ability to substantially impact the
profitability and overall success of the Company. The Company President shall
select employees eligible to participate in the Plan on an annual basis, subject
to the Board of Directors' approval. Employees eligible to participate in
Anaren's Performance Incentive Plan are not eligible to participate in this
Plan.

3.  Target Bonus

                  All participants in the Plan will have a "target" bonus
opportunity based on their job function which will equal a percentage of their
base salary earned during the Company's fiscal year (July 1 through June 30).
The target bonus amount established each year is subject to change.

4.  Incentive Award Payouts

                  Incentive awards shall be based on a combination of overall
corporate, functional and individual performance measured against
pre-established targeted goals. The corporate performance factor shall carry a
weighting of at least 50% of the total 

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incentive opportunity. Any participant who is an officer of the Company shall
not receive any bonus payment unless 75% of the corporate annual earnings target
is attained.

                  (a) Prior to the beginning of each fiscal year, a corporate
goal will be set by the Company President and approved by the Board of
Directors. Corporate goals will be based on various factors, including but not
limited to, earnings, revenue, appreciation in stock value, and order targets.
The amount of incentive earned will be based on achievement of the subfactors
that comprise the corporate goal. Each subfactor will be assigned a separate
target, and total incentive payment will depend on the number of subfactor
targets achieved.

                  (b) Functional and individual performance objectives will be
based on each participant's functional responsibilities, and will be jointly
established by the Company and the participant prior to the beginning of the
fiscal year as part of Anaren's annual performance evaluation program.
Individual performance measured against personal and functional objectives shall
determine the actual amount of incentive earned for the functional and
individual performance factors.

                  (c) A management incentive matrix shall be prepared for each
participant clearly designating both the corporate, functional and personal
targets and the associated incentive opportunities.

                  (d) All payouts shall be based on attainment of the specified
goal within the matrix and shall be determined by the participant's immediate
manager together with the Company President. Final approval of all incentive
awards shall be made by the Company President, except the President's bonus
award shall be approved by the compensation committee of the Board of Directors.

5.  Timing of Payment

                  All payments shall be made on or about September 1 following
the end of the fiscal year.

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6.  Termination of Employment

                  If an eligible participant's employment is terminated for any
reason other than death or retirement, at any time prior to the payment date,
all rights under the Plan will be terminated and the participant shall not be
eligible to receive any incentive payment.

    A.   Death and Retirement

                  If a participant is terminated during the fiscal year due to
death or retirement, the Company will pay a pro rata share of the incentive
earned to the participant's beneficiary (in the case of death), or directly to
the participant in the event of retirement. In either case, payment shall be
made at the time all other incentive payments are made.

7.  Plan Administration

                  The Company President together with the Company Vice President
of Human Resources and the Vice President of Finance will administer this plan.

8.  Employment At-Will

                  An employee's participation in this plan does not alter the
employee's "at-will" status with the Company. Accordingly, the employee's
employment relationship can be terminated at any time by either the Company or
the employee, absent a valid written contract to the contrary.

9.  Reservation of Rights

                  The Company reserves the exclusive right to interpret the
plan, in its sole discretion, and any determination it shall make regarding the
interpretation and 

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application of the plan shall be final and binding. While the Company intends to
continue this plan, it reserves the right to terminate the plan at the end of
any fiscal year, at its sole discretion.