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                                                                    EXHIBIT 10.3

                       GLENAYRE 1996 INCENTIVE STOCK PLAN

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CONTENTS

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                                                                                              PAGE
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<S>                                                                                           <C>
Article 1. Establishment, Purpose and Duration                                                  1

Article 2. Definitions                                                                          1

Article 3. Administration                                                                       5

Article 4. Shares Subject to the Plan                                                           5

Article 5. Eligibility and Participation                                                        6

Article 6. Stock Options                                                                        6

Article 7. Stock Appreciation Rights                                                            8

Article 8. Restricted Stock                                                                    10

Article 9. Performance Shares                                                                  11

Article 10. Performance Measures                                                               12

Article 11. Beneficiary Designation                                                            12

Article 12. Deferrals                                                                          12

Article 13. Rights of Key Persons                                                              12

Article 14. Change in Control                                                                  13

Article 15. Awards to Non-Officer Directors                                                    15

Article 15A. Restricted Stock Unit Awards to Non-Officer Directors                             16

Article 16. Amendment, Modification and Termination                                            18

Article 17. Withholding                                                                        19

Article 18. Indemnification                                                                    19

Article 19. Successors                                                                         19

Article 20. Legal Construction                                                                 19
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GLENAYRE 1996 INCENTIVE STOCK PLAN

ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION

         1.1      ESTABLISHMENT OF THE PLAN. Glenayre Technologies, Inc. hereby
establishes an incentive compensation plan to be known as the "Glenayre 1996
Incentive Stock Plan" as set forth in this document. The Plan permits the grant
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock and Performance Shares.

         Subject to approval by the Company's stockholders, the Plan shall
become effective as of May 22, 1996 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof. The Plan shall not become effective
unless stockholder approval is obtained.

         1.2      PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success and enhance the value of the Company by linking the personal interests
of Participants to those of the Company's stockholders, and by providing
Participants with an incentive for outstanding performance.

         The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract and retain the services of Participants upon
whose judgment, interest and special effort the successful conduct of its
operation largely is dependent.

         1.3      DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect, subject to
the right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 16 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award of an ISO be granted under the Plan after May 21, 2006.

ARTICLE 2. DEFINITIONS

         Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
word is capitalized:

         2.1      "AWARD" means, individually and collectively, a grant under
the Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units or Performance
Shares.

         2.2      "AWARD AGREEMENT" means an agreement entered into by the
Company and each Participant setting forth the terms and provisions applicable
to Awards granted under the Plan.

         2.3      "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company.

         2.4      "CHANGE IN CONTROL" of the Company shall have occurred when
any Acquiring Person (other than the Company, any employee benefit plan of the
Company or any person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall become the beneficial owner of 25% or more
of the shares of Common Stock of the Company then outstanding (except pursuant
to an offer for all outstanding shares of the Company's Common Stock at a price
and upon such terms and provisions as a majority of the Continuing Directors
determine to be in the best interests of the Company and its stockholders other
than the Acquiring Person or any Affiliate or Associate thereof


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on whose behalf the offer is being made), and the Continuing Directors no longer
constitute a majority of the Board. For purposes of this definition, the
following terms shall have the following meanings:

         (a)      "Acquiring Person" means any individual, firm, corporation or
                  other entity who or which, together with all Affiliates and
                  Associates, shall be the beneficial owner of a substantial
                  block of the Company's Common Stock.

         (b)      "Affiliate" and "Associate" shall have the respective meanings
                  ascribed to such terms in Rule 12b-2 as promulgated under the
                  Exchange Act.

         (c)      "Continuing Director" means any individual who is a member of
                  the Board, while such individual is a member of the Board, who
                  is not an Acquiring Person, or an Affiliate or Associate of an
                  Acquiring Person, or a representative or nominee of an
                  Acquiring Person or of any such Affiliate or Associate, and
                  was a member of the Board prior to the occurrence of the
                  Change in Control; or any successor of a Continuing Director,
                  while such successor is a member of the Board, and who is not
                  an Acquiring Person, or an Affiliate or Associate of an
                  Acquiring Person, or a representative or nominee of an
                  Acquiring Person or of any such Affiliate or Associate, and is
                  recommended or elected to succeed the Continuing Director by a
                  majority of the Continuing Directors.

         2.5      "CODE" means the Internal Revenue Code of 1986, as amended
from time to time. References to the Code shall include the valid and binding
governmental regulations, court decisions and other regulatory and judicial
authority issued or rendered thereunder.

         2.6      "COMMITTEE" means the Compensation and Plan Administration
Committee of the Board, as specified in Article 3 herein, appointed by the Board
to administer the Plan.

         2.7      "COMMON STOCK" means the $0.02 par value common stock of the
Company.

         2.8      "COMPANY" means Glenayre Technologies, Inc., a Delaware
corporation, and any successor as provided in Article 19 herein.

         2.9      "DIRECTOR" means any individual who is a member of the Board
of Directors.

         2.10     "DISABILITY," with respect to a Participant, means
"disability" as defined from time to time under any long-term disability plan of
the Company or Subsidiary with which the Participant is employed.

         2.11     "EARNINGS PER SHARE" means "earnings per common share" of the
Company determined in accordance with generally accepted accounting principles
that would be reported in the Company's Annual Report to Stockholders.

         2.12     "EFFECTIVE DATE" shall have the meaning ascribed to such term
in Section 1.1 hereof.

         2.13     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

         2.14     "FAIR MARKET VALUE," with respect to a share of the Company's
Common Stock at a particular time, shall be that value as determined by the
Committee which shall be (i) if such Common Stock is listed on a national
securities exchange (which includes the NASDAQ Stock


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Market), on any given date, (A) the closing price of a share of Common Stock, as
reported on the consolidated transaction reporting system for such exchange for
that date, or if shares of Common Stock were not traded on such date, on the
next preceding day on which shares of Common Stock were traded, or (B) if the
Common Stock is not reported on the consolidated transaction reporting system
for such exchange, the last price at which the Common Stock shall have been sold
regular way on a national securities exchange on said date, or, if no sales
occur on said date, then on the next preceding date on which there were such
sales of Common Stock; or (ii) if the Common Stock shall not be listed on a
national securities exchange, the mean between the average high bid and low
asked prices last reported by the National Association of Securities Dealers,
Inc. for the over-the-counter market on said date or, if no bid and asked prices
are reported on said date, then on the next preceding date on which there were
such quotations; or (iii) if at any time quotations for the Common Stock shall
not be reported by the National Association of Securities Dealers, Inc. for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange, the fair market value determined by the Committee on the
basis of available prices for such Common Stock or in such other manner as the
Committee may deem reasonable.

         2.15     "FREESTANDING SAR" means an SAR that is granted independently
of any Option.

         2.16     "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares, granted under Article 6 herein, and which is designated an Incentive
Stock Option intended to meet the requirements of Section 422 of the Code.

         2.17     "INSIDER" shall mean an individual who is, on the relevant
date, an officer, director or 10% beneficial owner of any class of the Company's
equity securities that is registered pursuant to Section 12 of the Exchange Act,
all as defined under Section 16 of the Exchange Act.

         2.18     "KEY PERSON" means an employee or officer of the Company or a
Subsidiary, in a managerial or other position, who can make important
contributions to the Company or a Subsidiary or a key person providing important
services to the Company or a Subsidiary, all as determined by the Committee in
its discretion.

         2.19     "NAMED EXECUTIVE OFFICER" means, for a calendar year, a
Participant who is one of the group of "covered employees" for such calendar
year within the meaning of Code Section 162(m) or any successor statute.

         2.20     "NET INCOME" means "net income" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Stockholders.

         2.21     "NET SALES" means the "net sales" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Stockholders.

         2.22     "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to
purchase Shares granted to Key Persons under Article 6 or to non-officer
Directors under Article 15 which is not intended to meet the requirements of
Code Section 422.

         2.23     "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option.

         2.24     "OPTION PRICE" means the price at which a Share may be
purchased by a Participant upon the exercise of an Option.


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         2.25     "PARTICIPANT" means a person who has outstanding an Award
granted under the Plan.

         2.26     "PERFORMANCE-BASED EXCEPTION" means the performance-based
exception set forth in Code Section 162(m)(4)(C) from the deductibility
limitations of Code Section 162(m).

         2.27     "PERFORMANCE SHARE" means an AWARD granted to a Participant
pursuant to Article 9 herein.

         2.28     "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Committee, at its discretion), and the Shares
are subject to a substantial risk of forfeiture, as provided in Article 8
herein.

         2.29     "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 8 herein.

         2.30     "SHARES" means shares of Common Stock of the Company.

         2.31     "STOCK APPRECIATION RIGHT" or "SAR" means an Award granted
alone or in connection with a related Option to a Participant pursuant to
Article 7 herein.

         2.32     "SUBSIDIARY" means any corporation, partnership, joint
venture, affiliate or other entity in which the Company has an ownership
interest, and which the Committee designates as a participating entity in the
Plan.

         2.33     "TANDEM SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased under
the Option, the Tandem SAR shall similarly be canceled).

         2.34     "TOTAL STOCKHOLDER RETURN" means the percentage change in
value of an initial investment in Shares over a specified period assuming
reinvestment of all dividends during the period.

         2.35     "EFFECTIVE AMENDMENT DATE" means the date on which the
stockholders of the Company approve the amendment to the Plan to increase the
number of Shares reserved for grants of Awards under the Plan by an additional
2,200,000 Shares.

         2.36     "SECOND EFFECTIVE AMENDMENT DATE" means that date on which the
stockholders of the Company approve the amendment to the Plan to increase the
number of Shares reserved for grants of Awards under the Plan by an additional
750,000 Shares.

         2.37     "THIRD EFFECTIVE AMENDMENT DATE" means that date on which the
stockholders of the Company approve the amendment to the Plan to increase the
number of shares reserved for grants of Awards under the Plan by an additional
2,500,000 Shares.

         2.38     "FOURTH EFFECTIVE AMENDMENT DATE" means that date on which the
stockholders of the Company approve the amendment to the Plan to increase the
number of Shares for grants of Awards under the Plan by an additional 2,000,000
Shares.


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         2.39     "RESTRICTED STOCK UNIT" OR "UNIT" means an Award granted to a
Participant pursuant to Article 15A herein.

ARTICLE 3. ADMINISTRATION

         3.1      THE COMMITTEE. The Plan shall be administered by the Plan
Administration Committee of the Board or by any other Committee appointed by the
Board consisting of not less than two (2) Directors. All of the members of the
Committee shall comply with the "disinterested administration" rules of Rule
16b-3 under the Exchange Act, if applicable. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors. In addition, any action taken with respect to Named
Executive Officers for purposes of meeting the Performance-Based Exception shall
be taken by the Committee only if all of the members of the Committee are
"outside directors" within the meaning of Code Section 162(m), subject to any
applicable transition rules under Code Section 162(m). If all of the members of
the Committee are not "outside directors," such action shall be taken by a
subcommittee of the Committee comprised of at least two members who are "outside
directors."

         3.2      AUTHORITY OF THE COMMITTEE. Except as limited by law, or by
the Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Key Persons who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and provisions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 16 herein),
amend the terms and provisions of any outstanding Award to the extent such terms
and provisions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. To the extent
permitted by law, the Committee may delegate its authority hereunder.

         3.3      DECISIONS BINDING. All determinations and decisions made by
the Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, employees, Participants and their
estates and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO THE PLAN.

         4.1      NUMBER OF SHARES AVAILABLE FOR GRANTS. Beginning on the
Effective Date, there is hereby reserved for grants of Awards under the Plan
2,200,000 Shares. Beginning on the Effective Amendment Date, there is hereby
reserved for grants of Awards under the Plan an additional 2,200,000 Shares.
Beginning on the Second Effective Amendment Date, there is hereby reserved for
grants of Awards under the Plan an additional 750,000 Shares, provided that the
persons who are eligible for such grants shall be limited to those persons
described in Section 5.1. Beginning on the Third Effective Amendment Date, there
is hereby reserved for grants of Awards under the Plan an additional 2,500,000
Shares. Beginning on the Fourth Effective Amendment Date, there is hereby
reserved for grants of Awards under the Plan an additional 2,000,000 Shares. The
number of Shares reserved for grants of Awards under this paragraph shall be
subject to adjustment as provided in Section 4.3.

         In no event shall a Participant receive an Award or Awards during any
one calendar year ending prior to the Second Effective Amendment Date covering
in the aggregate more than 250,000 Shares or during any one calendar year ending
on or after the Second Effective


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Amendment Date covering in the aggregate more than 500,000 Shares. The
limitation on awards to a Participant during a calendar year under this
paragraph shall be subject to adjustment as provided in Section 4.3.

         In no event shall the Committee grant Restricted Stock Awards under
Article 8 herein or Restricted Stock Unit Awards under Article 15A herein
covering in the aggregate more than 550,000 Shares of Common Stock.

         4.2      LAPSED AWARDS. If any Award granted under the Plan is
canceled, terminates, expires or lapses for any reason (with the exception of
the termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.

         4.3      ADJUSTMENTS IN AVAILABLE SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, in the number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan and in the limitation on awards to a Participant
during a calendar year, as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent the dilution or enlargement of
rights under the Plan; provided, however, that the number of Shares subject to
any Award shall always be a whole number.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

         5.1      ELIGIBILITY. Persons eligible to participate in the Plan are
Key Persons, as determined by the Committee, and any non-officer Director who
participates in the Plan pursuant to Article 15.

         The Key Persons who are eligible for grants of Awards covering the
750,000 Shares reserved under the Plan on the Second Effective Amendment Date
shall be limited to: (i) a Chief Executive Officer of the Company hired after
March 1, 1999; (ii) a Chief Financial Officer of the Company hired after March
1, 1999; and (iii) any other senior executive of the Company or a Subsidiary (as
determined by the Committee) hired after March 1, 1999.

         5.2      ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee may, from time to time, select from all eligible Key Persons those
to whom Awards shall be granted and shall determine the nature and amount of
each Award. Non-officer Directors shall be granted Awards in accordance with the
provisions of Article 15.

ARTICLE 6. STOCK OPTIONS

         6.1      GRANT OF OPTIONS. Subject to the terms and provisions of the
Plan, Options may be granted to Key Persons in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.

         6.2      AWARD AGREEMENT. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares to which the Option pertains and such other provisions as
the Committee shall determine. The Award Agreement also


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shall specify whether the Option is intended to be an ISO within the meaning of
Section 422 of the Code, or an NQSO whose grant is intended not to fall under
Code Section 422.

         6.3      OPTION PRICE. The Committee shall determine the Option Price
for each grant of an Option under this Article 6, which such Option Price shall
be set forth in the applicable Award Agreement; provided, however, that the
Option Price shall be at least equal to 100% of the Fair Market Value of a Share
on the date the Option is granted with respect to the grant of either (i) an
Option granted to a Named Executive Officer that is intended to satisfy the
Performance-Based Exception or (ii) an ISO.

         6.4      DURATION OF OPTIONS. Each Option shall expire at such time as
the Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the 10th anniversary date of its grant.

         6.5      EXERCISE OF OPTIONS. Options granted under this Article 6
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve and which shall be
set forth in the applicable Award Agreement, which need not be the same for each
grant or for each Participant.

         6.6      PAYMENT. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full payment
for the Shares.

         The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered to satisfy the Option Price must have been held by the Participant for
at least six months prior to their tender), or (c) by a combination of (a) and
(b).

         The Committee also may allow cashless exercise as permitted under the
Federal Reserve Board's Regulation G or Regulation T, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law.

         As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).

         6.7      RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise of an
Option granted under this Article 6 as it may deem advisable, including without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded and under any blue sky or state securities laws applicable
to such Shares.

         6.8      TERMINATION OF EMPLOYMENT. Each Option Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the Option following termination of the Participant's employment with the
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with the Participant, need not be uniform among all Options issued pursuant
to this Article 6, may reflect distinctions based on the reasons for termination
of employment and may include provisions relating to the Participant's
competition with the Company after termination of employment. In that regard, if
an Award Agreement permits exercise of an Option following the


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death of the Participant, the Award Agreement shall provide that such Option
shall be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the Option or shall have died
intestate, by the Participant's executor or other legal representative.

         6.9      NONTRANSFERABILITY of OPTIONS.

         (a)      INCENTIVE STOCK OPTIONS. No ISO granted under this Article 6
                  may be sold, transferred, pledged, assigned or otherwise
                  alienated or hypothecated, other than by will or by the laws
                  of descent and distribution. Further, all ISOs granted to a
                  Participant under the Plan shall be exercisable during his or
                  her lifetime only by such Participant.

         (b)      NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
                  Participant's Award Agreement, no NQSO granted under this
                  Article 6 may be sold, transferred, pledged, assigned or
                  otherwise alienated or hypothecated, other than by will or by
                  the laws of descent and distribution. Further, except as
                  otherwise provided in a Participant's Award Agreement, all
                  NQSOs granted to a Participant under this Article 6 shall be
                  exercisable during his or her lifetime only by such
                  Participant.

         6.10     NO RIGHTS. A Participant granted an Option shall have no
rights as a stockholder of the Company with respect to the Shares covered by
such Option except to the extent that Shares are issued to the Participant upon
the due exercise of the Option.

ARTICLE 7. STOCK APPRECIATION RIGHTS

         7.1      GRANT OF SARS. Subject to the terms and provisions of the
Plan, SARs may be granted to Key Persons in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.
The Committee may grant Freestanding SARs, Tandem SARs or any combination of
these forms of SARs.

         The Committee shall have complete discretion in determining the number
of Shares covered by SARs granted hereunder (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
provisions pertaining to such SARs. The number of Shares covered by a
Freestanding SAR shall be counted against the number of Shares available for
grants of Awards under Section 4.1, but the number of Shares covered by a Tandem
SAR shall not be so counted.

         The grant price of a Freestanding SAR shall equal the Fair Market Value
of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.

         7.2      EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may
be exercised only with respect to the Shares for which its related Option is
then exercisable.

         Notwithstanding any other provision of the Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than 100% of the
difference between the Option Price of the underlying ISO and the Fair Market
Value of the Shares subject to the underlying ISO at the time the Tandem SAR is
exercised; and (iii)


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the Tandem SAR may be exercised only when the Fair Market Value of the Shares
subject to the ISO exceeds the Option Price of the ISO.

         7.3      EXERCISE OF FREESTANDING SARS. Freestanding SARs may be
exercised upon whatever terms and provisions the Committee, in its sole
discretion, imposes upon them.

         7.4      SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR and such other
provisions as the Committee shall determine.

         7.5      TERM OF SARS. The term of an SAR granted under the Plan shall
be determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed 10 years.

         7.6      PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:

         (a)      The difference between the Fair Market Value of a Share on the
                  date of exercise over the grant price; by

         (b)      The number of Shares with respect to which the SAR is
                  exercised.

         At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value or in some combination thereof;
provided, however, that from and after the date of a Change in Control, the
exercise of an SAR may be settled only in cash.

         7.7      RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision
of the Plan, the Committee may impose such conditions on exercise of an SAR
(including without limitation, the right of the Committee to limit the time of
exercise to specified periods) as may be required to satisfy the requirements of
Section 16 (or any successor provision) of the Exchange Act.

         7.8      TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
SAR following termination of the Participant's employment with the Company and
its Subsidiaries. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with the
Participant, need not be uniform among all SARs issued pursuant to the Plan and
may reflect distinctions based on the reasons for termination of employment. In
that regard, if an Award Agreement permits exercise of an SAR following the
death of the Participant, the Award Agreement shall provide that such SAR shall
be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the SAR or shall have died intestate,
by the Participant's executor or other legal representative.

         7.9      NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under this Article 7 may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.

         7.10     NO RIGHTS. A Participant granted an SAR shall have no rights
as a stockholder of the Company with respect to the Shares covered by such SAR
except to the extent that Shares are issued to the Participant upon the due
exercise of the SAR.


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ARTICLE 8. RESTRICTED STOCK

         8.1      GRANT OF RESTRICTED STOCK. Subject to the terms and provisions
of the Plan, Restricted Stock may be granted to Key Persons in such number, and
upon such terms, and at any time and from time to time as shall be determined by
the Committee.

         8.2      RESTRICTED STOCK AWARD AGREEMENT. Each Restricted Stock grant
shall be evidenced by a Restricted Stock Award Agreement that shall specify the
Period of Restriction, the number of Shares of Restricted Stock granted and such
other provisions as the Committee shall determine.

         8.3      TRANSFERABILITY. Except as provided in this Article 8, the
Shares of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Agreement. All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.

         8.4      OTHER RESTRICTIONS. The Committee may impose such other
conditions and/or restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including without limitation, a
requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), time-based
restrictions on vesting following the attainment of the performance goals and/or
restrictions under applicable Federal or state securities laws.

         The Company shall retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.

         Except as otherwise provided in this Article 8 or in the applicable
Award Agreement, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the Participant
after the last day of the Period of Restriction.

         8.5      VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.

         8.6      DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may be credited with regular cash dividends paid with respect to the underlying
Shares while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate.

         In the event that any dividend constitutes a "derivative security" or
an "equity security" pursuant to Rule 16(a) under the Exchange Act, such
dividend shall be subject to a vesting period equal to the remaining vesting
period of the Shares of Restricted Stock with respect to which the dividend is
paid.

         8.7      TERMINATION OF EMPLOYMENT. Each Restricted Stock Award
Agreement shall set forth the extent to which the Participant shall have the
right to receive unvested Restricted Shares following termination of the
Participant's employment with the Company and its Subsidiaries. Such provisions
shall be determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with Participants, need not be uniform among
all Shares of Restricted Stock


                                       10

<PAGE>

issued pursuant to the Plan and may reflect distinctions based on the reasons
for termination of employment; provided, however, that except in cases of
terminations resulting from a Change in Control and terminations by reason of
death or Disability, payment of an Award of Restricted Stock which is intended
to qualify for the Performance-Based Exception may not occur before attainment
of the related performance goal.

ARTICLE 9. PERFORMANCE SHARES

         9.1      GRANT OF PERFORMANCE SHARES. Subject to the terms and
provisions of the Plan, Performance Shares may be granted to eligible Key
Persons in such amount and upon such terms, and at any time and from time to
time as shall be determined by the Committee. The number and/or vesting of
Performance Shares granted, in the Committee's discretion, shall be contingent
upon the degree of attainment of specified performance goals or other conditions
over a specified period (the "Performance Period"). The terms and provisions of
an Award of Performance Shares shall be evidenced by an appropriate Award
Agreement.

         9.2      VALUE OF PERFORMANCE SHARES. The value of a Performance Share
at any time shall equal the Fair Market Value of a Share at such time.

         9.3      FORM AND TIMING OF PAYMENT OF PERFORMANCE SHARES. During the
course of a Performance Period, the Committee shall determine the number of
Performance Shares as to which the Participant has earned a right to be paid
pursuant to the terms of the applicable Award Agreement. The Committee shall pay
any earned Performance Shares as soon as practicable after they are earned in
the form of cash, Shares or a combination thereof (as determined by the
Committee) having an aggregate Fair Market Value equal to the value of the
earned Performance Shares as of the date they are earned. Any Shares used to pay
out earned Performance Shares may be granted subject to any restrictions deemed
appropriate by the Committee. In addition, the Committee, in its discretion, may
cancel any earned Performance Shares and grant Stock Options to the Participant
which the Committee determines to be of equivalent value based on a conversion
formula stated in the Performance Shares Award Agreement.

         The Committee, in its discretion, may also grant dividend equivalents
rights with respect to earned but unpaid Performance Shares as evidenced by the
applicable Award Agreement. Performance Shares shall not have any voting rights.

         9.4      TERMINATION OF EMPLOYMENT. Each Performance Share Award
Agreement shall set forth the extent to which the Participant shall have the
right to receive unearned Performance Shares following termination of the
Participant's employment with the Company and its Subsidiaries. Such provisions
shall be determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with the Participant, need not be uniform
among all Performance Shares awarded pursuant to the Plan and may reflect
distinctions based on the reasons of termination of employment; provided,
however, that except in cases of terminations resulting from a Change in Control
and terminations by reason of death or Disability, payment of an Award of
Performance Shares which is intended to qualify for the Performance-Based
Exception may not occur before attainment of the related performance goal.

         9.5      NONTRANSFERABILITY. Except as otherwise provided in a
Participant's Award Agreement, Performance Shares may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
in a Participant's Award Agreement, a Participant's rights under the Plan shall
be exercisable during the Participant's lifetime only by the Participant.


                                       11

<PAGE>

ARTICLE 10. PERFORMANCE MEASURES

         The performance measure(s) to be used for purposes of Awards (other
than Options) to Named Executive Officers which are designed to qualify for the
Performance-Based Exception shall be chosen from among the following
alternatives:

         (a)      Earnings Per Share;

         (b)      Net Income;

         (c)      Net Sales; or

         (d)      Total Stockholder Return.

         In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have the
discretion to make such changes without obtaining stockholder approval.

ARTICLE 11. BENEFICIARY DESIGNATION

         Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.

ARTICLE 12. DEFERRALS

         The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock or the satisfaction
of any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.

ARTICLE 13. RIGHTS OF KEY PERSONS

         13.1     EMPLOYMENT. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company or Subsidiary. For purposes of the Plan, a transfer of a
Participant's employment between the Company and a Subsidiary, or between
Subsidiaries, shall not be deemed to be a termination of employment.

         13.2     PARTICIPATION. No Key Person shall have the right to be
selected to receive an Award under the Plan or, having been so selected, to be
selected to receive a future Award.


                                       12

<PAGE>

ARTICLE 14. CHANGE IN CONTROL

         14.1     TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a
Change in Control, unless otherwise specifically prohibited under applicable
laws, or by the rules and regulations of any governing governmental agencies or
national securities exchanges:

         (a)      Any and all Options and SARs granted hereunder shall become
                  immediately exercisable, and shall remain exercisable
                  throughout their entire term;

         (b)      Any restriction periods and restrictions imposed on shares of
                  Restricted Stock shall lapse; and

         (c)      The target payout opportunities attainable under all
                  outstanding Awards of Restricted Stock and Performance Shares
                  shall be deemed to have been fully earned for the entire
                  Performance Period(s) as of the effective date of the Change
                  in Control, and the vesting of all Awards shall be accelerated
                  as of the effective date of the Change in Control.

         14.2     LIMITATION ON CHANGE-IN-CONTROL BENEFITS. (a) It is the
intention of the Company and the Participants to reduce the amounts payable or
distributable to a Participant hereunder if the aggregate Net After Tax Receipts
(as defined below) to the Participant would thereby be increased, as a result of
the application of the excise tax provisions of Section 4999 of the Code.
Accordingly, anything in the Plan to the contrary notwithstanding, in the event
that the independent accountants regularly employed by the Company immediately
prior to any "change" described below (the "Accounting Firm") shall determine
that receipt of all Payments (as defined below) would subject the Participant to
tax under Section 4999 of the Code, it shall determine whether some amount of
Payments would meet the definition of a "Reduced Amount," (as defined below). If
the Accounting Firm determines that there is a Reduced Amount, the aggregate
Payments shall be reduced to such Reduced Amount in accordance with the
provisions of Section 14.2(b) below.

         For purposes of this Section 14.2(a):

                  (i)      A "Payment" shall mean any payment or distribution in
                           the nature of compensation to or for the benefit of a
                           Participant who is a "disqualified individual" within
                           the meaning of Section 280G(c) of the Code and which
                           is contingent on a "change" described in Section
                           280G(b)(2)(A)(i) of the Code with respect to the
                           Company, whether paid or payable pursuant to the Plan
                           or otherwise;

                  (ii)     "Plan Payment" shall mean a Payment paid or payable
                           pursuant to the Plan (disregarding this Section
                           14.2);

                  (iii)    "Net After Tax Receipt" shall mean the Present Value
                           of a Payment, net of all taxes imposed on the
                           Participant with respect thereto under Sections 1 and
                           4999 of the Code, determined by applying the highest
                           marginal rate under Section 1 of the Code which
                           applied to the Participant's Federal taxable income
                           for the immediately preceding taxable year;

                  (iv)     "Present Value" shall mean such value determined in
                           accordance with Section 280G(d)(4) of the Code; and

                  (v)      "Reduced Amount" shall mean the smallest aggregate
                           amount of Payments which (A) is less than the sum of
                           all Payments and (B) results in aggregate Net After
                           Tax Receipts


                                       13

<PAGE>

                           which are equal to or greater than the Net After Tax
                           Receipts which would result if all Payments were paid
                           to or for the benefit of the Participant.

         (b)      If the Accounting Firm determines that aggregate Payments
should be reduced to the Reduced Amount, the Committee shall promptly give the
Participant notice to that effect and a copy of the detailed calculation
thereof, and the Participant may then elect, in the Participant's sole
discretion, which and how much of the Payments, including without limitation
Plan Payments, shall be eliminated or reduced (as long as after such election
the Present Value of the aggregate Payments is equal to the Reduced Amount), and
shall advise the Committee in writing of such election within 10 days of the
Participant's receipt of notice. If no such election is made by the Participant
within such 10 day period, the Committee may elect which of the Payments,
including without limitation Plan Payments, shall be eliminated or reduced (as
long as after such election the Present Value of the aggregate Payments is equal
to the Reduced Amount) and shall notify the Participant promptly of such
election. All determinations made by the Accounting Firm under this Section 14.2
shall be binding upon the Company and the Participant and shall be made within
60 days immediately following the event constituting the "change" referred to
above. As promptly as practicable following such determination, the Company
shall pay to or distribute for the benefit of the Participant such Payments as
are then due to the Participant under the Plan.

         (c)      At the time of the initial determination by the Accounting
Firm hereunder, it is possible that amounts will have been paid or distributed
by the Company to or for the benefit of the Participant pursuant to the Plan
which should not have been so paid or distributed ("Overpayment") or that
additional amounts which will have not been paid or distributed by the Company
to or for the benefit of the Participant pursuant to the Plan could have been so
paid or distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the Accounting
Firm, based either upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Participant which the Accounting Firm
believes has a high probability of success or controlling precedent or other
substantial authority, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of the
Participant shall be treated for all purposes as a loan ab initio to the
Participant which the Participant shall repay to the Company together with
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no such loan shall be deemed to have been made
and no amount shall be payable by the Participant to the Company if and to the
extent such deemed loan and payment would not either reduce the amount on which
the Participant is subject to tax under Section 1 and Section 4999 of the Code
or generate a refund of such taxes.

         In the event that the Accounting Firm, based upon controlling precedent
or other substantial authority, determines that an Underpayment has occurred,
any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Participant together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code.

         14.3     TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards; provided, however, the Board of Directors, upon recommendation of the
Committee, may terminate, amend or modify this Article 14 at any time and from
time to prior to the date of a Change in Control.


                                       14

<PAGE>

ARTICLE 15. AWARDS TO NON-OFFICER DIRECTORS

         15.1     AWARDS UNDER PRIOR PLAN. Each non-officer Director on July 15,
1992 was granted an option under the Glenayre Technologies, Inc. Long-Term
Incentive Plan (the "Prior Plan") to purchase Common Stock on the later of
October 30, 1992 or the date such Director completed three years of service on
the Board. Each non-officer Director elected to the Board for the first time
after July 15, 1992 was granted an option under the Prior Plan to purchase
Common Stock on the third anniversary of the Director's service on the Board.
Thereafter, each non-officer Director was awarded an additional option under the
Prior Plan to purchase Common Stock on the third anniversary of the initial
option award.

         15.2     AWARDS UNDER THE PLAN. (a) Between May 22, 1996 (the date the
Plan was approved by the Company's stockholders) and April 17, 1997, the
provisions of this Section 15.2(a) applied to the grant of Nonqualified Stock
Options to non-officer Directors. Each non-officer Director, who was awarded an
option under the Prior Plan to purchase Common Stock as described in Section
15.1 shall be granted a Nonqualified Stock Option to purchase 18,000 shares of
Common Stock upon each third anniversary of the date on which such option was
granted under the Prior Plan, if he or she is then a non-officer Director. Each
non-officer Director who was not awarded an option under the Prior Plan shall be
granted a Nonqualified Stock Option to purchase 18,000 shares of Common Stock
upon the date such non-officer Director completes 3 years of service as a
non-officer Director and upon each third anniversary date thereafter, if he or
she is then a non-officer Director.

         (b)      On and after April 18, 1997, the following provisions of this
Section 15.2(b) shall apply to the grant of Nonqualified Stock Options to
non-officer Directors in lieu of the grant of Nonqualified Stock Options
pursuant to Section 15.2(a) hereof:

                  (1)      Each non-officer Director, who is first elected a
                  Director on or after April 18, 1997, shall be granted a
                  Nonqualified Stock Option to purchase 30,000 shares of Common
                  Stock on the date of his or her election as such and upon each
                  third anniversary date thereafter, if he or she is then a
                  non-officer Director.

                  (2)      Each non-officer Director, who first becomes a
                  non-officer Director on or after April 18, 1997 and who was an
                  officer Director immediately prior to becoming a non-officer
                  Director, shall be granted a Nonqualified Stock Option to
                  purchase 30,000 shares of Common Stock on the date he or she
                  first becomes a non-officer Director and upon each third
                  anniversary date thereafter, if he or she is then a
                  non-officer Director.

                  (3)      Each non-officer Director, who is a non-officer
                  Director on April 18, 1997 and who was not granted a
                  Nonqualified Stock Option in 1997 pursuant to Section
                  15.2(b)(1) or (2) above, shall be granted a Nonqualified Stock
                  Option to purchase 30,000 shares of Common Stock on April 18,
                  1997 and upon each third anniversary date thereafter, if he or
                  she is then a non-officer Director.

         (c)      For purposes of this Article 15, a "non-officer Director"
shall mean a Director of the Company who is not performing services as an
employee of the Company or a Subsidiary regardless of whether such Director may
hold an office in the Company or a Subsidiary such as Chairman of the Board or
Vice Chairman of the Board.

         (d)      Each Option granted under this Article 15 shall be evidenced
by an Award Agreement.


                                       15

<PAGE>

         15.3     OPTION PRICE. The Option Price for each Option granted under
this Article 15 shall be equal to the Fair Market Value of a Share on the date
the Option is granted.

         15.4     EXERCISE AND DURATION OF OPTION. Options granted under this
Article 15 prior to April 18, 1997 shall be immediately exercisable. Options
granted under this Article 15 on or after April 18, 1997 shall be vested and
immediately exercisable as to one-third of the shares; an additional one-third
of the shares shall become vested and exercisable on the first anniversary of
the date of grant and the balance shall become vested and exercisable on the
second anniversary of the date of grant. A non-officer Director shall forfeit
the portion of any Option granted under this Article 15 on or after April 18,
1997 that has not become vested and exercisable prior to the date such
non-officer Director's service on the Board terminates. Vested and exercisable
Options shall remain exercisable for 10 years from the date of grant, whether or
not the Director's service on the Board continues during such period.

         15.5     PAYMENTS. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full payment
for the Shares.

         The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered to satisfy the Option Price must have been held by the Director for at
least six months prior to their tender), or (c) by a combination of (a) and (b).

         As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Director, in the
Director's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).

         15.6     NONTRANSFERABILITY OF OPTIONS. No Options granted under this
Article 15 may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, Options granted to a Director under this Article 15 shall be
exercisable during his or her lifetime only by such Director.

         15.7     NO RIGHTS. A Director granted an Option under this Article 15
shall have no rights as a stockholder of the Company with respect to the Shares
covered by such Option except to the extent that shares are issued to the
Director upon the due exercise of the Option.

         15.8     LIMITATION ON AWARDS. Notwithstanding anything to the contrary
herein, (i) no Awards shall be made pursuant to this Article 15 to a Director
who is an employee of the Company or any Subsidiary; (ii) no awards shall be
made pursuant to this Article 15 following the suspension or termination of the
Plan pursuant to Article 16; and (iii) no awards shall be made pursuant to this
Article 15 unless shares of Common Stock are available therefor under Section
4.1.

ARTICLE 15A. RESTRICTED STOCK UNIT AWARDS TO NON-OFFICER DIRECTORS

         15A.1    RESTRICTED STOCK UNIT AWARDS.

         (a)      Each non-officer Director shall be granted Restricted Stock
Units (with each Unit to be equivalent to one Share of Common Stock) as follows:


                                       16

<PAGE>

                  (1)      Each non-officer Director who is a non-officer
                  Director on May 20, 2003 shall be granted Restricted Stock
                  Units, with the number of such Units to equal $3,450 divided
                  by the Fair Market Value of a Share of the Common Stock on the
                  first trading day in 2003.

                  (2)      In connection with each Annual Meeting of the
                  Stockholders of the Company, beginning with the 2003 Annual
                  Meeting, each non-officer Director whose term as a non-officer
                  Director begins on, or continues beyond, such Annual Meeting
                  shall be granted Restricted Stock Units, with the number of
                  such Units to equal $9,000 (or such greater dollar amount as
                  the Committee shall determine from time to time) divided by
                  the Fair Market Value of a Share of Common Stock on the last
                  trading day immediately preceding such Annual Meeting.

                  (3)      Each non-officer Director who first becomes a
                  non-officer Director after May 20, 2003, other than at an
                  Annual Meeting of the Stockholders of the Company (e.g., by
                  being elected to fill the unexpired term of another Director
                  or becoming a non-officer Director after having been an
                  officer Director) shall be granted Restricted Stock Units,
                  with the number of Units to equal the Pro Rata Amount divided
                  by the Fair Market Value of a Share of the Common Stock on the
                  last trading day immediately prior to the date such individual
                  becomes a non-officer Director. For this purpose, the "Pro
                  Rata Amount" shall be an amount equal to $9,000 (or the
                  greater dollar amount determined by the Committee pursuant to
                  Section 15A.1(a)(2)) multiplied by a fraction, the numerator
                  of which is the approximate number of days (as determined by
                  the Committee) from the date on which the individual becomes a
                  non-officer Director until the next Annual Meeting of the
                  Stockholders of the Company and the denominator of which is
                  365.

         In determining the number of Restricted Stock Units to be granted to a
Director under this Article 15A, all fractions shall be rounded up to the next
whole number.

         (b)      For purposes of this Article 15A, a "non-officer Director"
shall have the same meaning as set forth in Section 15.2(c).

         (c)      Each grant of Restricted Stock Units shall be evidenced by an
Award Agreement.

         15A.2    VESTING. Restricted Stock Units granted under this Article 15A
shall be vested as to one-third of the Units on the first anniversary of the
date of grant; an additional one-third of the Units shall become vested on the
second anniversary of the date of grant; and the balance shall become vested on
the third anniversary of the date of grant. For any of the Restricted Stock
Units granted under this Article 15A that have not become vested prior to the
date such non-officer Director's service on the Board terminates, (i) if such
termination is on account of such non-officer Director's voluntary resignation
or involuntary removal, then such non-vested Units shall be forfeited, provided
that any non-vested Units granted to such non-officer Director during a prior
term as a Director (rather than the term during which the termination of service
occurs) shall not be forfeited and will continue to vest according to the
vesting schedule provided in this Section 15A.2, or (ii) if such termination is
for any other reason (including death, disability or the expiration of such
non-officer Director's term as a Director), then such non-vested Units shall not
be forfeited and will continue to vest according to the vesting schedule
provided in this Section 15A.2.

         15A.3    ISSUANCE OF SHARES UPON VESTING. Each non-officer Director
shall be entitled to receive one Share of Common Stock for each Unit that has
become vested pursuant to Section


                                       17

<PAGE>

15A.2. Such Shares shall be issued to the non-officer Director as soon as
practicable after such vesting.

         15A.4    NONTRANSFERABILITY OF UNITS. Restricted Stock Units may not be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Any Shares of
Common Stock issued as payment of vested Restricted Stock Units are not subject
to such restrictions.

         15A.5    NO VOTING RIGHTS. Non-officer Directors holding Restricted
Stock Units granted under this Article 15A shall not be entitled to exercise any
voting rights with respect to such Units.

         15A.6    DIVIDEND EQUIVALENTS. Non-officer Directors holding Restricted
Stock Units granted under this Article 15A shall be credited with an amount
equal to the dividends that would have been paid if the Units were Shares.

         15A.7    LIMITATION ON AWARDS. Notwithstanding anything to the contrary
contained herein, (i) no Awards of Restricted Stock Units pursuant to this
Article 15A shall be made to a Director who is an employee of the Company or a
Subsidiary; (ii) no Awards of Restricted Stock Units shall be made pursuant to
this Article 15A following the suspension or termination of the Plan pursuant to
Article 16; and (iii) no Awards of Restricted Stock Units shall be made pursuant
to this Article 15A unless Shares of Common Stock are available therefor under
Section 4.1.

ARTICLE 16. AMENDMENT, MODIFICATION AND TERMINATION

         16.1     AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any
time and from time to time, alter, amend, suspend or terminate the Plan in whole
or in part; provided, however, that no amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3 under the
Exchange Act, including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of stockholders of the
Company entitled to vote thereon.

         The Committee shall not have the authority to cancel outstanding Awards
and issue substitute Awards in replacement thereof.

         In no event shall any issued and outstanding Option be repriced to a
lower Option Price at any time during the term of such Option, without the prior
affirmative vote of a majority of shares of stock of the Company present at a
stockholders meeting in person or by proxy and entitled to vote thereon. Any
amendment or repeal of this provision shall require the affirmative vote of a
majority of shares of stock of the Company present at a stockholders meeting in
person or by proxy and entitled to vote thereon.

         16.2     AWARDS PREVIOUSLY GRANTED. No termination, amendment or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.

         16.3     ACCELERATION OF AWARD VESTING; WAIVER OF RESTRICTIONS.
Notwithstanding any provision of the Plan or any Award Agreement provision to
the contrary, the Committee, in its sole and exclusive discretion, shall have
the power at any time to (i) accelerate the vesting of any Award granted under
the Plan, including without limitation, acceleration to such a date that would
result in


                                       18

<PAGE>

said Awards becoming immediately vested or (ii) waive any restrictions of any
Award granted under the Plan.

ARTICLE 17. WITHHOLDING

         17.1     TAX WITHHOLDING. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of the Plan.

         17.2     SHARE WITHHOLDING. With respect to withholding required upon
the exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date as of which the tax is to
be determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE 18. INDEMNIFICATION

         Each person who is or shall have been a member of the Committee or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

ARTICLE 19. SUCCESSORS

         All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.

ARTICLE 20. LEGAL CONSTRUCTION

         20.1     GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

         20.2     SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.


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<PAGE>

         20.3     REQUIREMENTS OF LAW. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

         20.4     SECURITIES LAW COMPLIANCE. With respect to Insiders,
transactions under the Plan are intended to comply with all applicable
conditions or Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.

         20.5     GOVERNING LAW. To the extent not preempted by Federal law, the
Plan, and all Award Agreements hereunder, shall be construed in accordance with
and governed by the laws of the State of North Carolina.

This document incorporates the Plan and subsequent amendments adopted on January
20, 1997, May 21, 1998, December 18, 1998 , May 25, 1999, May 11, 2000 and May
20, 2003.


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