GLENAYRE TECHNOLOGIES INC, DEF 14A, 1999-04-16

GLENAYRE TECHNOLOGIES INC
DEF 14A, 1999-04-16
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )

Check the appropriate box:

( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

Glenayre
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

(X) No fee required

( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

( ) Fee paid previously with preliminary materials.

( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule, or Registration Statement No.:

3) Filing Party:

4) Date Filed:

<PAGE>

[GRAPHIC LOGO GLENAYRE APPEARS HERE]

GLENAYRE TECHNOLOGIES, INC.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209

----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
----------------------------------------
The 1999 Annual Meeting of the Stockholders of Glenayre Technologies,
Inc., a Delaware corporation (the "Company"), will be held at the SouthPark
Suite Hotel at 6300 Morrison Boulevard, Charlotte, North Carolina 28211, on May
25, 1999 at 11:00 a.m., local time, for the following purposes:

1. To elect four Class III Directors.

2. To consider and vote upon a proposal to approve an amendment to the
Company's Employee Stock Purchase Plan to increase the number of shares
of Common Stock authorized thereunder from 506,250 to 2,006,250.

3. To consider and vote upon a proposal to approve an amendment to the
Company's 1996 Incentive Stock Plan to increase the number of shares of
Common Stock authorized from 4,400,000 to 5,150,000.

4. To ratify the selection of Ernst & Young LLP as independent auditors to
audit the financial statements of the Company.

5. To transact any other business that may properly come before the 1999
Annual Meeting and any adjournments thereof.

The close of business on March 31, 1999 has been fixed as the record date
for determination of stockholders entitled to notice of and to vote at the 1999
Annual Meeting and any adjournment(s) thereof.

A Proxy Statement, a form of proxy, an Annual Report to the stockholders
of the Company including a Form 10-K as filed with the Securities and Exchange
Commission for the year ended December 31, 1998 are enclosed with this Notice.

A list of stockholders entitled to vote at the 1999 Annual Meeting will be
open to the examination of any stockholder for any purpose germane to the 1999
Annual Meeting, during ordinary business hours, for a period of 10 days prior
to the 1999 Annual Meeting at the office of the Company at 5935 Carnegie
Boulevard, Charlotte, North Carolina 28209.

Stockholders are cordially invited to attend this meeting. Each
stockholder, whether or not he or she expects to be present in person at the
1999 Annual Meeting, is requested to SIGN, DATE and RETURN THE ENCLOSED PROXY
in the accompanying envelope as promptly as possible.

A stockholder may revoke his or her proxy at any time prior to voting.

BY ORDER OF THE BOARD OF DIRECTORS

/s/Billy C. Layton
Billy C. Layton
Secretary

April 16, 1999

<PAGE>

GLENAYRE TECHNOLOGIES, INC.

PROXY STATEMENT

THE 1999 ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Company of proxies for use at the 1999 Annual
Meeting of Stockholders of Glenayre Technologies, Inc. (the "Company" or
"Glenayre") to be held at the SouthPark Suite Hotel at 6300 Morrison Boulevard,
Charlotte, North Carolina 28211, on May 25, 1999 at 11:00 a.m., local time, and
at any adjournments thereof.

VOTING AND RECORD DATE

As of March 31, 1999, the record date for the determination of
stockholders of the Company entitled to notice of and to vote at the 1999
Annual Meeting, the Company had 62,159,403 shares of common stock, $.02 par
value ("Common Stock"), outstanding and entitled to vote. Each holder of Common
Stock at the close of business on March 31, 1999 will be entitled to one vote
for each share so held of record. All votes at the 1999 Annual Meeting
specified in this Proxy Statement will be by written ballot.

Under rules followed by the National Association of Securities Dealers,
Inc., brokers who hold shares in street name for customers have the authority
to vote on certain items when they have not received instructions from
beneficial owners. Brokers that do not receive instructions are entitled to
vote on the election of directors. With respect to the other proposals
presented to stockholders, no broker may vote shares held for customers without
specific instruction from such customers. One-third of the total outstanding
shares will constitute a quorum at the meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business.

SOLICITATION OF PROXIES

Any stockholder giving a proxy for the 1999 Annual Meeting may revoke it
at any time prior to the voting thereof by giving written notice to the
Chairman or the Secretary of the Company by filing a later-dated proxy with
either of them prior to the commencement of the 1999 Annual Meeting or by
voting in person at the 1999 Annual Meeting. Proxies and notices of revocation
should be mailed or delivered to American Stock Transfer & Trust Company, 40
Wall Street, 46th Floor, New York, New York 10005 for receipt by American Stock
Transfer & Trust Company no later than two business days prior to the 1999
Annual Meeting, or should be deposited with the Chairman or the Secretary of
the Company immediately prior to the commencement of the 1999 Annual Meeting.

All shares of Common Stock represented by proxies will be voted at the
1999 Annual Meeting, and at any adjournments thereof, as specified therein by
the persons giving the proxies. If no direction is given, the proxy will be
voted to elect the nominees listed under "ELECTION OF DIRECTORS," to approve an
amendment to the Company's Employee Stock Purchase Plan to increase the number
of shares of Common Stock authorized thereunder from 506,250 to 2,006,250, to
approve an amendment to the Company's 1996 Incentive Stock Plan to increase the
number of shares of Common Stock authorized from 4,400,000 to 5,150,000, to
ratify the selection of Ernst & Young LLP as independent auditors and in the
discretion of the holders of the proxies, vote on all other matters properly
brought before the 1999 Annual Meeting and any adjournment(s) thereof.

This Proxy Statement, the Notice of the 1999 Annual Meeting (the "Notice")
and the form of proxy were first mailed to stockholders on or about April 16,
1999. The Company's principal executive offices are located at 5935 Carnegie
Boulevard, Charlotte, North Carolina 28209, telephone number (704) 553-0038.

Solicitation of proxies is being made primarily by mail; however, there
may also be further solicitation in person and by telephone at nominal cost by
directors, officers, employees and agents of the Company, who will receive no
additional compensation therefor. The Company will bear all costs of soliciting
proxies including charges made by brokers and other persons holding stock in
their names or in the names of nominees for reasonable expenses incurred in
sending proxy material to beneficial owners and obtaining their proxies.

1
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Listed in the following table are the beneficial owners known to the
Company as of March 5, 1999, of more than 5% of the Company's outstanding
Common Stock. In addition, this table includes the outstanding voting
securities beneficially owned by each of the executive officers listed in the
Summary Compensation Table, and the number of shares owned by directors and
executive officers as a group. Percent Outstanding includes shares currently
owned and shares subject to stock options exercisable within 60 days of March
5, 1999.

<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
------------------------------------------------
Currently Acquirable Percent
Name of Beneficial Owner Owned(1) Within 60 days Outstanding
- -------------------------------------------------------------------- ------------------ ---------------- ------------
<S> <C> <C> <C>
Ramon D. Ardizzone 773 137,500 *
Gary B. Smith 30,461 276,000 *
Stanley Ciepcielinski 158 96,125 *
Clarke H. Bailey -0- 871,875 1.4%
Donald S. Bates 1,096(2) 30,000 *
Richard L. Bloch 507,500 -0- *
Peter W. Gilson -0- 30,000 *
John J. Hurley 159,898 67,500 *
Thomas C. Israel 1,297,512(3) 138,875 2.3%
Stephen P. Kelbley 300(4) 30,000 *
Anthony N. Pritzker 59,500 -0- *
Horace H. Sibley 1,000 20,000 *
Amir Zoufonoun 22,023 76,500 *
Lee M. Ellison 7,387 56,167 *
Dan H. Case 12,423 101,042 *
Eugene C. Pridgen -0- 115,000 *
All directors and executive officers as a group (20 Persons) 2,158,458 2,178,994 6.7%
State of Wisconsin Investment Board(5) 8,175,000 13.2%
Merrill Lynch & Co., Inc.(6) 4,466,954 7.2%
Cramer Rosenthal McGlynn, Inc.(7) 3,617,796 5.8%
</TABLE>

- ---------
* Does not exceed 1%.

(1) In each case the beneficial owner has sole voting and investment power
except as otherwise noted.

(2) Includes 539 shares held by Mr. Bates' spouse.

(3) Includes 1,173,875 shares owned by A.C. Israel Enterprises, Inc., a holding
company specializing in private investments ("A.C. Israel"). Mr. Israel is
Chairman and Chief Executive Officer of A.C. Israel. Mr. Israel has shared
voting power with respect to the shares owned by A.C. Israel and may be
deemed to have beneficial ownership of such shares. Also includes 82,600
shares owned by Barry W. Gray and 5,000 shares owned by the Gray
Foundation. Mr. Gray is President of A.C. Israel.

(4) Owned by Mr. Kelbley's spouse.

(5) The address of State of Wisconsin Investment Board ("Wisconsin Investment")
is P.O. Box 7842, Madison, WI 53707. This information is provided as of
December 31, 1998 and is based on a Schedule 13G as filed by Wisconsin
Investment.

(6) The address of Merrill Lynch & Co., Inc. ("Merrill Lynch") is World
Financial Center, North Tower, 250 Vesey Street, New York, NY 10381. This
information is provided as of December 31, 1998 and is based on a Schedule
13G as filed by Merrill Lynch on behalf of Merrill Lynch Asset Management
Group.

(7) The address of Cramer Rosenthal McGlynn, Inc., an investment management
firm ("CRM"), is 707 Westchester Avenue, White Plains, New York 10604. CRM
has shared voting and dispositive power with respect to all such shares.
This information is provided as of March 5, 1999 and is based on a
response to the Company by CRM.

2
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

Following are the persons who were the executive officers of Glenayre as
of March 31, 1999, their ages, their current titles and their positions held
during the last five years:

Ramon D. Ardizzone; age 61; Chairman of the Board of Directors of the
Company since June 1996; President and Chief Executive Officer of the Company
since December 1998; President of the Company from December 1994 to June 1996;
Chief Executive Officer of the Company from May 1995 through December 1996;
Acting Chief Executive Officer of the Company from December 1994 to May 1995;
Director of the Company since November 1992; Chief Operating Officer of the
Company from June 1994 to December 1994; Acting Chief Operating Officer of the
Company from May 1994 to June 1994; Executive Vice President of the Company
from November 1992 to December 1994; and Executive Vice President of the
Company in charge of Sales and Marketing from November 1992 to May 1994.

Stanley Ciepcielinski; age 43; Director of the Company since May 1997;
Chief Operating Officer of the Company since October 1998; Executive Vice
President, Finance and Administration Operations of the Company from February
1995 to June 1998; Executive Vice President and Chief Financial Officer of the
Company since January 1993; Treasurer of the Company since April 1993; and
Secretary of the Company from April 1993 to March 1997.

Beverley W. Cox; age 41; Senior Vice President, Human Resources and
Corporate Communications of the Company since June 1998; Senior Vice President,
Human Resources, of the Company from November 1996 to June 1998; Vice
President, Human Resources, of the Company from February 1995 to November 1996;
and Corporate Director-Human Resources with the Company from October 1993 to
February 1995.

Billy C. Layton; age 52; Vice President of the Company since December
1995; Controller and Chief Accounting Officer of the Company since November
1992; and Secretary of the Company since February 1999.

Gary P. Hermansen; age 42; President and General Manager, Wireless Access,
Inc., a wholly-owned subsidiary of the Company ("WAI") since September 1998.
Vice President -- Sales of WAI from October 1993 to September 1998.

James W. Marion; age 38; President and General Manager -- Wireless
Messaging Group of Glenayre Electronics, Inc, a wholly-owned subsidiary of the
Company ("GEI") since November 1996; and various management positions with the
Company from September 1993 to November 1996.

Warren K. Neuburger; age 45; President and General Manager -- Integrated
Network Group ("ING") of Glenayre Electronics, Inc., a wholly-owned subsidiary
of the Company since December 1998; Vice President and General Manager of the
MVP product group of ING from July 1998 to December 1998. Vice President of
Technology, Operations and Development of VoiceCom Systems from March 1995 to
December 1997; President of The Neuburger Group, a management consulting
company, from June 1994 to March 1995; and various management positions with
Digital Equipment Corporation from March 1983 through June 1994.

Amir Zoufonoun; age 39; President and General Manager of Western Multiplex
Group of GEI since October 1998; Vice President and General Manager of Glenayre
Western Multiplex Corporation, a wholly-owned subsidiary of the Company
("MUX"), from July 1998 to October 1998. Vice President of Engineering of MUX
from 1995 to May 1998; and various technical and management positions at MUX
from 1989 to 1995.

ELECTION OF DIRECTORS

The Company's Board of Directors presently consists of 11 members. The
Company's Certificate of Incorporation and By-laws provide that the Board of
Directors shall be divided into three classes, each consisting, as nearly as
may be possible, of one-third of the total number of directors, for terms of
three years. At the 1999 Annual Meeting, four Class III Directors are to be
elected. The Board of Directors has nominated Ramon D. Ardizzone, Richard L.
Bloch, Stanley Ciepcielinski and Stephen P. Kelbley for election as Directors
to serve for three-year terms expiring at the Annual Meeting of Stockholders in
2002, and until their respective successors shall have been elected and
qualified. All nominees are currently serving as directors of the Company.

The Board of Directors recommends a vote FOR all of the nominees. The
affirmative vote of a plurality of shares voted is required for the election of
the nominees by the holders of the shares entitled to vote at a meeting at
which a quorum is present. Provided a quorum is present, abstentions and shares
not voted are not taken into account in determining a plurality. The shares
represented by the proxies which the Board of Directors receives will be voted
for the election of the four nominees in the absence of contrary instructions.
Each of the nominees has indicated his willingness to serve if elected, and

3
<PAGE>

the Board of Directors has no reason to believe that any nominee will be
unavailable. In the event that a vacancy arises among such nominees by death or
any other reason prior to the 1999 Annual Meeting, the proxy may be voted for a
substitute nominee or nominees designated by the Board of Directors.

Biographical information follows for each person nominated and each person
whose term as a director will continue after the 1999 Annual Meeting. The
information concerning the directors and nominees has been furnished by them to
the Company.

Nominees for Election as Class III Directors at the 1999 Annual Meeting

<TABLE>
<CAPTION>
Name Age Positions with Company, Business Experience and Other Directorships
- ------------------------- ----- ------------------------------------------------------------------------------------
<S> <C> <C>
Ramon D. Ardizzone 61 Chairman of the Board of Directors of the Company since June 1996; President and
Chief Executive Officer of the Company since December 1998; President of the
Company from December 1994 to June 1996; Chief Executive Officer of the
Company from May 1995 through December 1996; Acting Chief Executive Officer of
the Company from December 1994 to May 1995; Director of the Company since
November 1992; Chief Operating Officer of the Company from June 1994 to
December 1994; Acting Chief Operating Officer of the Company from May 1994 to
June 1994; Executive Vice President of the Company from November 1992 to
December 1994; and Executive Vice President of the Company in charge of Sales and
Marketing from November 1992 to May 1994.
Richard L. Bloch 69 Director of the Company since April 1999 and from March 1988 to June 1992.
President, Pinon Farm Inc., a horse training operation since 1982. Director of City
National Bank.
Stanley Ciepcielinski 43 Director of the Company since May 1997; Chief Operating Officer of the Company
since October 1998; Executive Vice President, Finance and Administration Operations
of the Company from February 1995 to June 1998; Executive Vice President and
Chief Financial Officer of the Company since January 1993; Treasurer of the
Company since April 1993; and Secretary of the Company from April 1993 to March
1997.

Stephen P. Kelbley 56 Director of the Company since January 1997. Executive Vice President of Springs
Industries, Inc., a home furnishings company ("Springs") since 1991; President of
Springs' Home Furnishings Operating Group since February 1998; President of
Springs' Diversified Home Products Group since January 1997; President of Springs'
Diversified Group from May 1995 to January 1997; President of Springs' Specialty
Fabrics Group from March 1994 to May 1995; Chief Financial Officer of Springs
from 1991 to 1994. Director of Connectivity Technologies, Inc.
</TABLE>

4
<PAGE>

DIRECTORS CONTINUING IN OFFICE AS CLASS I DIRECTORS UNTIL THE 2000 ANNUAL
MEETING

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH COMPANY, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
- -------------------- ----- --------------------------------------------------------------------------------------
<S> <C> <C>
Clarke H. Bailey 44 Director of the Company since December 1990; Chairman of the Executive
Committee from March 1994 to September 1998; Vice Chairman of the Company
from November 1992 to June 1996; Chief Executive Officer of the Company from
December 1990 to March 1994; and Acting Chief Executive Officer of the Company
from May 1994 to December 1994. Chairman and Chief Executive Officer of
National Fulfillment, Inc. since January 1999. Chairman and Chief Executive Officer
of United Acquisition Company and its parent, United Gas Holding Corporation, from
February 1995 to January 1998; Chairman of Arcus, Inc. from July 1995 to January
1998; Co-Chairman of Hudson River Capital L.L.C. since February 1995. Director of
Connectivity Technologies, Inc., Swiss Army Brands, Inc., SWWT, Inc. and Iron
Mountain Incorporated.
Donald S. Bates 70 Director of the Company since January 1997. Private consultant in the electronics and
telecommunications industry since 1988. Employed by General Electric Company
from 1951 to 1981 where he held several managerial positions in electronics,
communications and computing services retiring as Senior Vice President and Group
Executive. Director of 3D Systems Corporation.
Peter W. Gilson 58 Director of the Company since March 1997. President, Chief Executive Officer and
Director of Physician Support Systems, Inc. from 1991 to December 1997; Chairman
of the Board of Directors of Swiss Army Brands, Inc. and non-executive Chairman of
the Board of Directors of SWWT, Inc.
Thomas C. Israel 55 Director of the Company since April 1999 and from 1986 to March 1997. Chairman
and Chief Executive Officer of A.C. Israel since 1991. Director of A.C. Israel and
General Cigar Holdings, Inc.
</TABLE>

DIRECTORS CONTINUING IN OFFICE AS CLASS II DIRECTORS UNTIL THE 2001 ANNUAL
MEETING

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE

The Board of Directors met eight times during the last fiscal year. The
Board of Directors has standing Executive, Audit, Compensation and Plan
Administration Committees. The functions and membership of each are set forth
below. The Board of Directors currently has no standing nominating committee.

The Executive Committee currently consists of Messrs. Ardizzone, Bates,
and Gilson. The Executive Committee met two times during the last fiscal year.
The Executive Committee exercises the full powers of the Board of Directors to
the extent permitted by law between Board of Directors meetings.

The Audit Committee currently consists of Messrs. Kelbley, Hurley and
Bates. The Audit Committee met four times during the last fiscal year. The
function of the Audit Committee is to review the internal accounting control
procedures of the Company, review the consolidated financial statements of the
Company and review with the independent public accountants the results of their
audit.

5
<PAGE>

The Compensation Committee currently consists of Messrs. Gilson and
Kelbley. The Compensation Committee met one time during the last fiscal year.
The Compensation Committee exercises all powers of the Board of Directors in
connection with compensation matters, other than those matters which are
subject to the administration of the Plan Administration Committee.

The Plan Administration Committee currently consists of Messrs. Bates and
Sibley. The Plan Administration Committee met one time during the last fiscal
year. The function of the Plan Administration Committee is to administer the
1996 Incentive Stock Plan and the Long-Term Incentive Plan.

Each member of the current Board of Directors attended 75% or more of the
aggregate number of meetings of the Board of Directors and the meetings of all
committees of the Board of Directors on which he served during the last fiscal
year.

COMPENSATION

COMPENSATION OF DIRECTORS

Mr. Ardizzone receives an annual fee of $150,000 payable quarterly in
arrears for serving as Chairman of the Board. The annual fee is subject to
adjustment at the discretion of the Board of Directors. The compensation plan
for non-employee directors, except for Mr. Ardizzone, is: (i) an annual fee of
$18,000 plus $2,000 for attendance at each Board of Directors' meeting; (ii) an
annual fee of $2,000 for each committee participation; and (iii) an annual fee
of $2,000 for each committee chair participation except the Executive Committee
chair position which receives $10,000. Additionally, non-employee directors
receive automatic formula-based awards of options to purchase 30,000 shares of
Common Stock upon initial appointment to the Board of Directors and on each
third anniversary thereafter. In April 1999, the Board of Directors suspended
the award of options to non-employee directors. No fees are paid to employee
directors in addition to their regular compensation. All directors are
reimbursed for their reasonable travel and accommodation expenses incurred with
respect to their duties as directors. Under the Company's By-laws, the Chairman
of the Board is considered an officer of the Company.

6
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to
compensation paid to the named Executive Officers during 1998:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------- -------------
NUMBER OF
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
SALARY BONUS COMPENSATION GRANTED COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)
- ------------------------------------- ------ ---------- ---------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ramon D. Ardizzone 1998 $ -- $ -- $ 150,000(2) -- $ --
Chairman of the Board, President 1997 201,191 79,568 37,500 30,000 23,398
and Chief Executive Officer 1996 350,000 133,104 -- 50,000 12,937
of the Company
Gary B. Smith (3) 1998 287,508 -- -- 100,000 6,400(4)
President and Chief Executive 1997 275,000 171,338 -- -- 6,400
Officer of the Company 1996 225,577 86,474 -- 95,000 6,000
Stanley Ciepcielinski 1998 241,250 50,702 -- 75,000 6,400(4)
Executive Vice President, Chief 1997 210,000 121,235 -- -- 6,400
Operating Officer and Chief 1996 180,000 62,037 -- 35,000 6,000
Financial Officer of the Company
Amir Zoufonoun (5) 1998 152,210 125,329(6) -- 45,000 6,400(4)
President and General
Manager, Western Multiplex
Group of GEI
Lee M. Ellison (7) 1998 193,000 35,753 -- 35,000 6,400(4)
Senior Vice President -- Sales and 1997 174,424 119,522 -- 10,000 41,400
Marketing, Worldwide Paging 1996 228,058 101,000 -- 30,000 5,686
Operations of GEI
Dan Case (8) 1998 189,827 23,940 -- 50,000 6,400(4)
President and General Manager 1997 164,423 99,665 -- -- 6,400
Integrated Network Group of GEI 1996 131,546 39,828 -- 22,500 6,000
Eugene C. Pridgen (9) 1998 215,000 40,365 -- 55,000 6,400(4)
Executive Vice President and 1997 205,000 105,031 -- 10,000 6,400
Secretary of the Company 1996 7,885 -- -- 50,000 --
</TABLE>

- ---------
(1) While officers enjoy certain perquisites, such perquisites do not exceed
the lesser of $50,000 or 10% of such officer's salary and bonus.

(2) Represents director fees paid to Mr. Ardizzone as Chairman of the Board.
See "COMPENSATION -- Compensation of Directors."

(3) Mr. Smith resigned effective December 21, 1998

(4) Represents a matching contribution to a defined contribution plan.

(5) Mr. Zoufonoun was first elected an executive officer in October 1998.

(6) Includes retention bonus amounting to $50,000.

(7) Due to a transition in responsibilities, Mr. Ellison is no longer deemed to
be an executive officer effective October 1, 1998.

(8) Mr. Case resigned effective December 31, 1998.

(9) Mr. Pridgen resigned effective February 26, 1999.

7
<PAGE>

The following table sets forth information with respect to grants of stock
options to the named Executive Officers during 1998:

Option Grants In 1998

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
FOR ORIGINAL OPTION TERM
OF
INDIVIDUAL GRANTS TEN YEARS
------------------------------------------------------------- -------------------------
NUMBER OF
SECURITIES % OF
UNDERLYING TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE OR ORIGINAL
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) 1998 ($/SHARE) DATE 5% 10%
- ----------------------- ------------ -------------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ramon D. Ardizzone -0- --% $ -- -- $ -- $ --
Gary B. Smith 100,000 4.2% 15.25 5/26/2008 959,225 2,430,850
Stanley Ciepcielinski 55,000 2.3% 15.25 5/26/2008 527,574 1,336,968
Stanley Ciepcielinski 20,000 0.8% 7.32 10/01/2008 92,086 233,362
Amir Zoufonoun 15,000 0.6% 15.25 5/26/2008 143,884 364,628
Amir Zoufonoun 15,000 0.6% 6.00 10/30/2008 56,610 143,460
Lee M. Ellison 35,000 1.5% 15.25 5/26/2008 335,729 850,798
Dan H. Case 50,000 2.1% 15.25 5/26/2008 479,613 1,215,425
Eugene C. Pridgen 55,000 2.3% 15.25 5/26/2008 527,574 1,336,968
</TABLE>

- ---------
(1) Options granted are subject to a three-year vesting schedule with one-third
vesting equally on each anniversary date of the grant. Vesting may be
accelerated in certain events relating to a Change in Control of the
Company, as defined. Additionally, vesting and expiration dates of options
held by Messrs. Smith, Case and Pridgen were adjusted upon termination of
employment.

The following table sets forth certain information with respect to the
number and value of options held by the named Executive Officers at the end of
1998:

Aggregated Option Exercises In 1998 And 1998 Year-End Option Values

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)(1)
----------------------------- ----------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------------- ------------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ramon D. Ardizzone 45,000 $276,875 137,500 10,000 $ -- $ --
Gary B. Smith -- -- 276,000 -- -- --
Stanley Ciepcielinski -- -- 96,125 75,000 -- --
Amir Zoufonoun -- -- 76,500 45,000 -- --
Lee M. Ellison 10,000 66,000 56,167 38,333 -- --
Dan H. Case -- -- 101,042 -- -- --
Eugene C. Pridgen -- -- 56,667 58,333 -- --
</TABLE>

- ---------
(1) Represents the difference between the closing market price of the Common
Stock on the Nasdaq National Market System on December 31, 1998 and the
exercise price of the options.

8
<PAGE>

EMPLOYMENT AGREEMENTS

Ardizzone Agreement. The Company is party to an agreement with Mr.
Ardizzone dated February 15, 1999 (the "Ardizzone Agreement"), which provides
for his service as President and Chief Executive Officer of the Company until
the earlier of (i) December 31, 1999 or (ii) such time as a new President and
Chief Executive of the Company ("Termination Date") shall begin employment. Mr.
Ardizzone is entitled to be paid at the rate of $150,000 per year, which is his
current pay for service as Chairman of the Board. At the Termination Date, the
Company will pay Mr. Ardizzone $150,000. Additionally, the Ardizzone Agreement
entitles Mr. Ardizzone and his spouse to participate in the Company's retiree
medical plan at no cost for the remainder of their lives.

Ciepcielinski Agreement. The Company is party to an employment agreement
with Mr. Ciepcielinski dated as of May 21, 1997 (the "CIEPCIELINSKI
AGREEMENT"), which provides for his employment as Executive Vice President of
the Company through May 21, 2001. Thereafter, the term of the Ciepcielinski
Agreement is automatically extended for successive two-year renewal terms
unless either party gives at least 180 days prior notice to the other party of
a decision not to extend the term. Mr. Ciepcielinski is entitled to an annual
salary ("BASE SALARY") of $280,000, which may be increased but not decreased
based upon an annual salary review. In 1999, pursuant to the Ciepcielinski
Agreement, Mr. Ciepcielinski shall participate in the Management by Objective
Plan -- Corporate Plan ("MBO PLAN") and, is eligible to receive an annual bonus
of 49% to 140% of Base Salary based on the achievement of the Company's
operating target earnings as established by the Board of Directors. If the
Company does not achieve at least the minimum MBO Plan target earnings
established by the Board of Directors, Mr. Ciepcielinski is eligible to receive
30% of Base Salary if he is actively employed by the Company at December
31,1999 and has had satisfactory performance. In 1998, Mr. Ciepcielinski was
entitled to and received a bonus as specified in the Ciepcielinski Agreement
(see "Executive Compensation-Summary Compensation" table).

If Mr. Ciepcielinski's employment is terminated by the Company before the
completion of the term of the Ciepcielinski Agreement without "Cause" as
defined, or if Mr. Ciepcielinski resigns his employment for "Good Reason" as
defined, the Company is required to pay Mr. Ciepcielinski a lump sum equal to
two times his annual rate of Base Salary at the time of such termination. In
addition, if Mr. Ciepcielinski's employment is terminated because of his
resignation for "Good Reason," by the Company without "Cause," Mr.
Ciepcielinski's death or his "Total and Permanent Disability" as defined, he
(or his estate) is entitled to a pro rata share of the MBO Plan bonus for the
fiscal year of the Company in which such termination occurs, calculated on the
assumption that the results of operations and financial condition of the
Company as of the termination date shall continue on the same basis through the
end of such fiscal year. If Mr. Ciepcielinski's employment had been terminated
without "Cause" or if Mr. Ciepcielinski resigned for "Good Reason," as of March
31, 1999, payments under the Ciepcielinski Agreement would have been $594,300.
If Mr. Ciepcielinski's employment terminates upon expiration of the term of the
Ciepcielinski Agreement, the Company must pay Mr. Ciepcielinski a lump sum
equal to the annual rate of Base Salary being paid to him at the time of such
termination unless he refuses to negotiate with the Company for a renewal
agreement substantially similar to the Ciepcielinski Agreement.

Mr. Ciepcielinski is entitled to terminate his employment upon a "Change
in Control" of the Company as defined in the Ciepcielinski Agreement. The
definition of "Change in Control" includes: (i) the acquisition by any person
of 25% or more of the Company's Common Stock; (ii) the consummation of a merger
or similar transaction of the Company with any other entity, as a result of
which the holders of the Company's Common Stock as a group would receive less
than 50% of the voting stock of the surviving entity; (iii) the consummation of
an agreement providing for the transfer of substantially all the assets of the
Company; or (iv) a material change in the composition or character of the Board
as follows: (a) the replacement of a majority of directors by directors opposed
by Mr. Ciepcielinski and a majority of the members of the Executive Committee
of the Board, or (b) at any meeting of the Company's stockholders, the election
of a majority of directors standing for election who are opposed by Mr.
Ciepcielinski and a majority of the members of the Executive Committee of the
Board. The Company is required to pay Mr. Ciepcielinski a lump sum equal to two
and one-half times his annual rate of Base Salary at the time of such
termination in addition to a pro rata share of the MBO Plan bonus calculated as
described above which, as of March 31, 1999 would have been $734,300.

Smith Agreement. The Company is party to an agreement with Mr. Smith dated
August 27, 1996 as amended (the "SMITH AGREEMENT") which provided for him to
serve as President and Chief Executive Officer of the Company. Mr. Smith
resigned from the Company as of December 21, 1998 and pursuant to the Smith
Agreement was paid a lump sum of $600,000 (equal to two times his annual salary
at the date of termination). Mr. Smith received no bonus under the Company's
incentive bonus program for 1998. Certain provisions in the Smith Agreement
relating to (i) confidential information, (ii) benefit of designs, (iii)
non-competition, (iv) indemnification, and (v) reimbursement of legal and
related expenses remain in effect.

9
<PAGE>

Executive Severance Benefit Agreements. The Company is party to an
agreement with Mr. Ellison dated May 21, 1997 (the "ELLISON AGREEMENT") which
entitles Mr. Ellison to certain benefits if a "Change in Control" occurs and if
Mr. Ellison's employment is terminated within three years after the "Change in
Control" for any reason other than for Mr. Ellison's (i) death; (ii)
disability; (iii) retirement; (iv) termination for "Cause" as defined in the
Ellison Agreement; or (v) voluntary termination other than for "Good Reason" as
defined in the Ellison Agreement.

The definition of "Change in Control" is similar to that under the
Ciepcielinski Agreement above. In the event of such termination, the Company
shall pay Mr. Ellison a lump sum equal to (i) 250% of the greater of the base
salary in effect on such termination date or in effect on the date immediately
preceding the "Change in Control" date and (ii) a pro rata share of any bonus
in which Mr. Ellison participates for the fiscal year in which such termination
occurs.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 1998, Messrs. Gilson and Kelbley served on the Compensation
Committee and Messrs. Bates and Sibley served on the Plan Administration
Committee. None of such persons has ever been an officer or employee of the
Company.

REPORT OF THE COMPENSATION AND PLAN ADMINISTRATION COMMITTEES ON EXECUTIVE
COMPENSATION

The Company's Board of Directors approves all compensation decisions
(other than with respect to stock options) with regard to executive officers,
including the Chief Executive Officer, based on recommendations from the
Compensation Committee. The Compensation Committee is responsible for the
establishment of all compensation and benefit programs, excluding the Company's
Long-Term Incentive Plan (the "1991 Plan") and the 1996 Incentive Stock Plan
(the "1996 Plan"), as well as the overall monitoring of those programs. The
Plan Administration Committee is responsible for administering the 1996 Plan
and the 1991 Plan. The Company's compensation philosophy and executive
compensation programs are discussed in this report.

Executive Compensation Philosophy. In general, executive officers who are
in a position to make a substantial contribution to the success and growth of
the Company should have interests similar to those of the stockholders.
Executive officers should be motivated by and benefit from increased
stockholder value. Therefore, the Company believes that executive officers
should hold a meaningful equity position in the Company through the purchase of
Common Stock and/or the award of options to purchase Common Stock.

The Company also believes that a significant percentage of an executive
officer's cash compensation, consisting of salary and bonus, should be based on
performance ranked in the following order for corporate executive officers: (i)
Company performance; (ii) individual performance and for operating executive
officers: (i) business segment operating performance; (ii) individual
performance; (iii) Company performance.

The Company's Board of Directors believes that the executive compensation
program must be competitive with those of other companies of comparable size
and complexity in order to attract, retain and motivate talented individuals.

Executive Compensation Program. The Company's compensation program
consists of base salary, annual incentive bonus (paid in cash) and long-term
incentives, generally in the form of options to purchase Common Stock.

Base Salary. The Compensation Committee generally reviews and determines
the relative levels of base salary for executive officers on an annual
basis. In determining the levels of base salary for an executive officer,
the Compensation Committee considers relative levels of responsibility,
individual and Company performance and cost of living increases.

Annual Incentive Compensation. During 1998, executive officers
participated in management by objective cash bonus programs. The goal of
these programs is to motivate and provide incentive to the key managers of
the Company to maximize profits. The cash bonus programs for 1998 provide
for a payment of cash awards (i) to corporate executive officers except Mr.
Ardizzone based 70% on the Company's target earnings and 30% on the
achievement of individual objectives and (ii) to operating executive
officers except Mr. Zoufonoun (see below) based 50% on the individual's
business segment target earnings, 20% on the Company's target earnings and
30% on the achievement of individual objectives. If 100% of the 1998
Company's target earnings is reached and all the individual objectives are
achieved, the potential bonuses would range from 30% to 70% of each
corporate executive officer's annual base salary. If 100% of the 1998
Company's target earnings and the individual's business segment target
earnings are reached and all the individual objectives are achieved the
potential bonuses would range from 60% to 65% of each operating executive
officer's annual base salary. The range of the bonus percentages for the
executive officers may be higher if more than 100% of such target earnings
are reached. The bonus payout percentage of each corporate executive
officer's annual

10
<PAGE>

base salary varies proportionately as a result of the Company achieving
various levels of target earnings established by the Board of Directors.
The bonus payout percentage of each operating executive officer's annual
base salary varies proportionately as a result of the Company achieving
various levels of target earnings and also varies proportionately as a
result of the individual's business segment achieving various levels of
business segment target earnings established by the Board of Directors. The
cash awards based on the individual objectives being achieved are not
subject to the Company's target earnings or business segment target
earnings, but may increase if the Company exceeds 100% of target earnings.

Mr. Zoufonoun participates in an incentive bonus program established for
the Western Multiplex Group of GEI (the "MUX Plan") which provides for
quarterly cash awards based on the quarterly target earnings of this
business segment. If 100% of the 1998 target earnings under the MUX Plan is
reached, the potential bonus for Mr. Zoufonoun would be 60% of his annual
base salary. The bonus percentages may be higher if more than 100% of such
target earnings are reached.

Chief Executive Officer Compensation. Messrs. Ardizzone and Smith served
as Chief Executive Officer in 1998. In accordance with the Smith Agreement,
Mr. Smith was eligible to participate in the Company's incentive bonus
program in 1998, however received no bonus based on the operating earnings,
as defined, of the Company in 1998.

Long-Term Incentives. On May 22, 1996, the Company established the 1996
Plan to provide for various types of equity-related awards to (i) 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 and
(ii) 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 is largely
dependent.

Under the 1996 Plan, the Plan Administration Committee has the discretion
to determine who will be given awards in any year, the types of awards to
be made (such as stock options, SARs, restricted stock or other awards) and
the number of shares of Common Stock to be covered by a particular award.
In determining whether to make an award to a particular executive officer
and the size of such award, the Plan Administration Committee considers the
executive officer's level of responsibility within the Company, prior
awards made to the executive officer, individual and Company performance
and the amount of the executive officer's other compensation components.

Section 162 (m). The Revenue Reconciliation Act of 1993 added Section
162(m) to the Internal Revenue Code of 1986 (the "Code"). Code Section 162(m)
provides that compensation paid to a company's chief executive officer and the
four other highest paid executive officers employed by the company at year-end
will not be deductible by the company for federal income tax purposes to the
extent such compensation exceeds $1.0 million. Code Section 162(m) excepts from
this limitation certain "performance-based compensation."

Although base salary and bonuses paid to the named Executive Officers have
traditionally been well under $1.0 million, compensation from the exercise of
stock options can cause a named Executive Officer to have compensation in
excess of $1.0 million. However, all options granted to the named Executive
Officers prior to October 1993 are exempt from Code Section 162(m) under a
"grandfather" provision. In May 1994, the Company's stockholders approved an
amendment to the terms of the 1991 Plan so that, among other things, awards
from that date under the 1991 Plan qualified as "performance-based
compensation." Under the terms of the 1996 Plan, awards may qualify as
"performance-based compensation."

This report is submitted by the Compensation Committee and the Plan
Administration Committee which currently consists of the following members:

<TABLE>
<CAPTION>
COMPENSATION COMMITTEE PLAN ADMINISTRATION COMMITTEE
- ----------------------------- ------------------------------
<S> <C>
Peter W. Gilson, Chairman Donald S. Bates, Chairman
Stephen P. Kelbley Horace H. Sibley
</TABLE>

11
<PAGE>

PERFORMANCE GRAPH

The following graph compares the cumulative total return on $100 invested
on December 31, 1993 in each of the Company's Common Stock, the Standard &
Poor's 500 Stock Index, the Standard & Poor's Communication Equipment
Manufacturers Index and the Nasdaq 100 Index at the end of each fiscal year
through 1998. The returns are calculated assuming the reinvestment of
dividends. The Company has not paid any cash dividends during the period
covered by the graph below. The stock price performance shown on the graph
below is not necessarily indicative of future stock price performance.

[GRAPH APPEARS HERE]
YEARS
1993 1994 1995 1996 1997 1998
(DOLLARS)

Nasdaq 100 100 102 145 206 249 454

S&P CEMI 100 114 171 200 260 459

Glenayre 100 133 322 167 77 34

S&P 500 100 101 139 171 229 294

Indexed/Cumulative Returns

<TABLE>
<CAPTION>
COMPANY/
INDEX NAME 1993 1994 1995 1996 1997 1998
- ------------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Glenayre $100 $133 $322 $167 $ 77 $ 34
S&P 500 100 101 139 171 229 294
S&P CEMI 100 114 171 200 260 459
Nasdaq 100 100 102 145 206 249 454
</TABLE>

12
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1998, the Company extended bridge loans to Mr. Zoufonoun, President and
General Manager of the Western Multiplex Group of GEI, with principal amounts
totaling $100,000 (the "Notes"). The principal sum of the Notes shall not bear
interest until due but if the principal sum is not paid when due, it shall
thereafter bear interest at an annual rate of interest equal to the prime rate
plus two percent per annum. The principal sum of the Notes are payable on the
first to occur of (i) the sale of MUX, (ii) in equal amounts on May 26, 1999
and July 1, 2000, or (iii) the date of the termination of Mr. Zoufonoun's
employment with the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors and officers of
the Company and persons who beneficially own more than 10% of the Common Stock
file with the SEC initial reports of beneficial ownership and reports of
changes in beneficial ownership of the Common Stock of the Company. Directors,
officers and greater than 10% beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of such
reports, and amendments thereto, furnished to the Company and written
representations that no other reports were required, during 1998 all reports
required by Section 16(a) to be filed by its directors, officers and greater
than 10% beneficial owners were filed on a timely basis.

AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
The Company maintains the Glenayre Employee Stock Purchase Plan (the "ESP
Plan"). The purpose of the ESP Plan is to give employees of the Company an
opportunity to purchase Common Stock through payroll deductions, thereby
encouraging employees to share in the economic growth and success of the
Company. Under the ESP Plan, as adopted in May 1993 by the Company's
stockholders, 506,250 shares of Common Stock were authorized for issuance. In
July 1998, the Board of Directors amended the ESP Plan and reduced the purchase
price to 85% of the market price of the Company's Common Stock effective July
1, 1998. In February 1999, the Board of Directors adopted an amendment to the
ESP Plan that would increase by 1,500,000 (approximately 2.4% of the current
outstanding Common Stock) the number of shares of Common Stock available for
issuance under the ESP Plan. The ESP Plan Amendment will be effective upon
approval by the stockholders. If the ESP Plan Amendment is not approved by
stockholders, the ESP Plan will continue in effect without the additional
number of available shares and under its current terms.

As of April 5, 1999, 403,065 shares of Common Stock had been issued under
the ESP Plan and 103,185 shares remain available for issuance. The Company
expects the currently available number of shares of Common Stock to be
exhausted in 1999.

The Board of Directors believes that the proposed increase in the number
of shares available for issuance under the ESP Plan is necessary in order for
the Company to continue to attract, motivate and retain employees, and to
enhance their identity of interest with the interest of the Company's
stockholders. The Board of Directors also believes the availability of issuable
shares under the ESP Plan is essential for the Company to compete with other
companies offering similar plans in attracting and retaining experienced and
qualified employees.

Administration. The ESP Plan is administered by a committee consisting of
from three to five individuals (the "ESP Committee") who are appointed by the
Compensation Committee of the Board of Directors of the Company. The Committee
has the authority to construe and interpret the ESP Plan, to make and enforce
rules for the operation of the ESP Plan and to take all other action necessary
or advisable for the administration of the ESP Plan.

Eligibility and Participation. Eligibility and participation in the ESP
Plan are determined with respect to each "six month period" under the ESP Plan
("Six-Month Period"). The Six-Month Periods begin on each succeeding January 1
and July 1 as long as the ESP Plan remains in effect.

Each person employed by the Company on a permanent, full-time basis as of
the first day of a Six-Month Period is eligible to participate in the ESP Plan
for that Six-Month Period.

Participation in the ESP Plan is voluntary. An eligible employee becomes a
participant in the ESP Plan by authorizing the Company to reduce the
participant's salary during the Six-Month Period by a specified amount and to
have that amount contributed to the ESP Plan for the purchase of Common Stock.
A participant may not elect to contribute less than $20 per month or more than
ten percent of the participant's salary. For purposes of the ESP Plan, "salary"
means a participant's base salary plus earned vacation pay. "Salary" does not
include bonuses, overtime pay, commissions, living or other allowances,
reimbursements or special payments, or contributions or benefits under a plan
of current or deferred compensation. A participant's election to participate
must be made prior to the beginning of the Six-Month Period to be valid, and
the election

13
<PAGE>

will continue for subsequent Six-Month Periods unless the participant changes
the election in accordance with ESP Plan rules. A participant may increase or
decrease the participant's level of contribution prior to any Six-Month Period.
A participant cannot change the participant's level of contribution during a
Six-Month Period.

Individual Accounts. An individual account is established on the books and
records of the Company for each participant. The amounts deducted from a
participant's salary will be credited to the participant's individual account.
No interest will accrue or be paid with respect to amounts credited to
individual accounts.

Common Stock Purchases. The price for Common Stock offered under the ESP
Plan for a Six-Month Period will be equal to 85% (or such other discount
percentage, not in excess of the maximum permitted discount under (a) Section
423 of the Code, (b) the NASDAQ Stock Market or (c) applicable state business
corporation law, as the Compensation Committee of the Company's Board of
Directors may select from time to time) of the market price of the Common Stock
(the "MARKET PRICE") as of the first day of the Six-Month Period. Generally,
the Market Price under the ESP Plan means the average of the closing sale
prices of the Common Stock as reported by the NASDAQ National Market System for
the five trading days before the Market Price is determined. The reported last
sale price of the Common Stock on the NASDAQ National Market System on April 5,
1999 was $3.563.

Whether Common Stock will be purchased under the ESP Plan at the end of a
Six-Month Period depends on the Market Price of the Common Stock as of the last
day of the Six-Month Period.

o If the Market Price is less than the purchase price established as of the
first day of the Six-Month Period, no purchases will be made. Instead,
each participant may choose to have the balance in the participant's
individual account returned to the participant or carried forward for
purchase of Common Stock at the end of the next Six-Month Period.

o If the Market Price is equal to or greater than the purchase price
established as of the first day of the Six- Month Period, the amount
credited to each participant's individual account will be used to purchase
the largest number of whole shares of Common Stock which can be purchased
at the purchase price described above. The balance (if any) in a
participant's individual account after the purchase of shares will be
carried forward for purchase of Common Stock at the end of the next
Six-Month Period.

The maximum number of shares that may be purchased for a participant
during a Six-Month Period will be reduced if the participant would become a 5%
shareholder of the Company as a result of the purchase or if the total fair
market value of Common Stock to be purchased for the participant during any
calendar year would exceed $25,000.

Withdrawal from Participation. A participant may withdraw from
participation in the ESP Plan at any time during a Six-Month Period by giving
ten days notice to the ESP Plan Committee; provided, however, no withdrawals
may be made during the final 31 days of a Six-Month Period.

A participant's participation in the ESP Plan will also cease if: (i) the
participant ceases to be employed on a permanent, full-time basis, or (ii) the
ESP Plan is terminated.

Upon withdrawal or termination, the participant's individual account will
be distributed to the participant as soon as practical, and no shares of Common
Stock will be purchased for the participant for the Six-Month Period in which
the withdrawal or termination occurs.

A participant who has withdrawn from participation during a Six-Month
Period but who otherwise remains eligible to participate may renew
participation in the ESP Plan by again enrolling for a succeeding Six-Month
Period.

Term of the ESP Plan. The ESP Plan will remain in effect until terminated
by the Board of Directors of the Company. The Board of Directors may amend,
suspend or terminate the ESP Plan at any time.

Changes in Capitalization and Similar Changes. In the event of any change
in the outstanding shares of Common Stock by reason of any stock dividend,
stock split, spin -- off, recapitalization, merger, consolidation, combination,
exchange of shares or otherwise, the aggregate number of shares of Common Stock
covered by the ESP Plan and the purchase price established for a Six-Month
Period will be appropriately adjusted by the Committee in its sole discretion
to preserve the benefits of the participants in the ESP Plan.

Federal Income Tax Treatment. Deductions from the salary of participants
to purchase Common Stock under the ESP Plan will be made on an "after-tax"
basis. Therefore, the deductions are neither excludable from taxable income in
the year of deduction nor deductible for income tax purposes. Except for the
current taxation of deductions from a participant's salary, a participant will
not realize any taxable income as a result of participation in the ESP Plan or
upon the purchase of Common Stock under the ESP Plan until the disposition of
such Common Stock. The Company will not be entitled to a tax

14
<PAGE>

deduction for the amount deducted from a participant's salary during each
Six-Month Period. The income tax consequences to a participant and the Company
upon the participant's disposition of Common Stock purchases under the ESP Plan
will depend on how long the participant held the Common Stock.

If a participant disposes of shares purchased under the ESP Plan more than
two years after the beginning of the Six-Month Period in which the shares were
purchased and the fair market value of the shares at the time of disposition
exceeds the purchase price of the shares, then the participant will realize
taxable income. An amount equal to the lesser of (i) the amount by which the
fair market value of the shares on the first day of the Six-Month Period in
which the shares were purchased exceeded the purchase price of the shares or
(ii) the amount by which the fair market value of the shares at the time of
disposition exceeded the purchase price of the shares will be taxed as ordinary
income. Any gain realized in excess of the amount taxed as ordinary income will
be taxed as long-term capital gain. If a participant disposes of shares
purchased under the ESP Plan more than two years after the beginning of the
Six-Month Period in which the shares were purchased for less than the purchase
price of the shares, then the entire loss will be treated as long -- term
capital loss. In either of these cases, the Company will not be entitled to a
deduction for income tax purposes as a result of the disposition of the shares
by the participant.

Except in the case of certain officers and directors as discussed below,
if a participant disposes of shares purchased under the ESP Plan within two
years after the beginning of the Six-Month Period in which the shares were
purchased (a "DISQUALIFYING DISPOSITION"), the amount by which the fair market
value of the shares at the time of purchase exceeded the purchase price of the
shares will be treated as compensation received by the participant in the year
of the disqualifying disposition. The Company will be entitled to a
corresponding income tax deduction equal to the amount treated as compensation
to the participant. Any amount realized from a disqualifying disposition in
excess of the sum of the purchase price of the shares and the amount treated as
compensation will be taxed as capital gain. If the amount realized from a
disqualifying disposition is less than the sum of the purchase price of the
shares and the amount treated as compensation, the difference will be treated
as a capital loss. Any capital gain or loss will be classified as long-term or
short-term, depending on the participant's holding period with respect to the
shares. Generally, the participant's holding period for the shares begins on
the date the shares are purchased.

Generally, the same rules apply to disqualifying dispositions by officers
and directors; however, in the case of a disqualifying disposition by an
officer or director subject to liability under Section 16 (b) of the Securities
Exchange Act of 1934, the amount treated as compensation will be determined by
reference to the fair market value of the shares on the termination of the
Section 16(b) liability period with respect to the disposition of the shares
rather than the fair market value of the shares at the time of purchase. Such
officer or director may elect under Code Section 83(b) to have the amount
treated as compensation as the result of a disqualifying disposition determined
by reference to the fair market value of the shares at the time of purchase
rather than the fair market value of the shares on the termination of the
Section 16(b) liability period. An election under Code Section 83(b) must be
made no later than 30 days after the date the shares are issued to the officer
or director. The holding period for shares purchased by an officer or director
subject to liability under Section 16(b) begins on the earlier of the
termination of the Section 16(b) liability period or the date of an election
under Code Section 83(b).

If a participant dies while owning shares purchased under the ESP Plan,
then an amount equal to the lesser of (a) the amount by which the fair market
value of the shares on the first day of the Six-Month Period in which the
shares were purchased exceeded the purchase price of the shares or (b) the
amount by which the fair market value of the shares at the time of the
Participant's death exceeded the purchase price of the shares must be reported
as compensation income on the participant's final income tax return. The
Company will not be entitled to a deduction for income tax purposes as a result
of the participant's death while owning shares purchased under the ESP Plan.

Stockholder Approval. Approval of a stock purchase plan amendment that
increases the number of shares available for issuance is no longer required by
Rule 16b-3 under the Securities Exchange Act of 1934, as amended. However,
approval of the ESP Plan Amendment is being sought in accordance with the
requirements of the Nasdaq Stock Market and Section 423 of the Code.

The Board recommends a vote FOR approval of the ESP Plan Amendment. The
affirmative vote of a majority of the shares present in person or represented
by proxy and entitled to vote at the Annual Meeting is required for approval of
the ESP Plan Amendment. Abstentions will have the same effect as a vote against
the proposal. Broker non-votes will not be counted for this purpose.

15
<PAGE>

AMENDMENT TO 1996 INCENTIVE STOCK PLAN

The Company maintains the Glenayre 1996 Incentive Stock Plan (the "1996
PLAN"). In February 1999, the Board of Directors adopted an amendment to the
1996 Plan that would increase by 750,000 (approximately 1.2% of the current
outstanding Common Stock) the number of shares of Common Stock available under
the 1996 Plan for the grant to specified key employees of stock options, stock
appreciation rights ("SARs"), restricted stock and performance shares (the
"1996 PLAN AMENDMENT"). Key employees who are eligible for grants of awards
from the 750,000 shares covered by the 1996 Plan Amendment would be limited to
the chief executive officer or chief financial officer of the Company hired
after March 1, 1999 or any other senior executive of the Company or a
subsidiary hired after March 1, 1999. The 1996 Plan Amendment will be effective
upon approval by the stockholders. If the 1996 Plan Amendment is not approved
by stockholders, the 1996 Plan will continue in effect without the additional
number of available shares and under its current terms.

As of April 5, 1999, awards outstanding or previously exercised under the
1996 Plan covered a total of 3,917,455 shares of Common Stock and 482,545
shares remain available for grant.

The Board of Directors believes that the proposed increase in the number
of shares available for issuance under the 1996 Plan is necessary in order for
the Company to attract, motivate and retain a new chief executive officer, a
new chief financial officer and other new senior executives with the desired
experience and ability and to further enhance their identity of interest with
the interest of the Company's stockholders. The Board of Directors also
believes the availability of awards under the 1996 Plan is essential for the
Company to compete with other companies offering similar plans in attracting
and retaining experienced and qualified key employees, other key persons and
non-employee directors.

Under the 1996 Plan, as adopted on May 22, 1996 and amended on May 21,
1998 by the Company's stockholders, 4,400,000 shares of Common Stock were
authorized for issuance in connection with the grant of stock options, SARs,
restricted stock and performance shares to eligible participants. Participation
under the 1996 Plan is limited to key employees, other key persons and
non-employee directors of the Company. As described above, the eligibility for
grants of awards covering the additional 750,000 shares under the 1996 Plan
Amendment is limited to specified key employees. In December 1998, the Board of
Directors of Glenayre also amended the 1996 Plan to provide that the exercise
price on outstanding options would not be reduced or repriced without the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Company present or represented at a meeting and entitled to
vote. An amendment to this provision will require the same stockholder vote.

The 1996 Plan is administered by the Plan Administration Committee of the
Board of Directors (the "COMMITTEE"). In addition to the general administration
of the 1996 Plan, the Committee selects the key employees and other key persons
to receive awards from time to time in such form and amounts as it determines
and with such limitations, restrictions or conditions as it deems appropriate.
Key employees and other key persons providing services to the Company or a
subsidiary eligible to participate in the 1996 Plan are those employees who
occupy managerial or other important positions who have or are expected to make
important contributions to the business of the Company or a subsidiary, as
determined by the Committee. Approximately 500 employees are expected to be
eligible to participate in the 1996 Plan in 1999. Non-employee directors, who
are only eligible to receive formula grants of nonqualified stock options, are
those directors who are not employees of the Company or any subsidiary on the
date of grant of an award. There are currently ten non-employee directors,
including Messrs. Ardizzone, Bailey, Bates, Hurley, Kelbley, Gilson, Sibley,
Bloch, Israel and Pritzker, that are eligible to participate in the 1996 Plan.

Awards of Stock Options and SARs. The 1996 Plan provides for the grant of
options to purchase shares of Common Stock at option prices determined by the
Committee as of the date of grant. For stock option awards intended to qualify
as "performance-based compensation" under Section 162(m) of the Code ("SECTION
162(m)") or as incentive stock options (described below), the option price will
not be less than the fair market value of shares of Common Stock at the close
of business on the date of grant. The fair market value of the Common Stock on
April 5, 1999, was $3.563 per share. The 1996 Plan also provides for the grant
of SARs (either in tandem with stock options or freestanding), which entitle
holders upon exercise to receive either cash or shares of Common Stock or a
combination thereof, as the Committee in its discretion shall determine, with a
value equal to the difference between (i) the fair market value on the exercise
date of the shares with respect to which an SAR is exercised and (ii) the fair
market value of such shares on the date of grant (or, if different, the
exercise price of the related option in the case of a tandem SAR).

Awards to key employees and key persons of options under the 1996 Plan,
which may be either incentive stock options (which qualify for special tax
treatment) or nonqualified stock options, are determined by the Committee. The
terms and conditions of each such option and of any SAR are to be determined by
the Committee at the time of grant. Options and SARs granted under the 1996
Plan will expire not more than 10 years from the date of grant, and the option
agreements

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<PAGE>

entered into with the optionees will specify the extent to which options and
SARs may be exercised during their respective terms, including in the event of
the optionee's death, disability or termination of employment.

Other Awards. The 1996 Plan also provides for the issuance of shares of
restricted stock and performance shares on such terms and conditions as are
determined from time to time by the Committee. The award agreement with the
participant will set forth the terms of any such award, including the
applicable restrictions, specified performance goals or any other conditions
deemed appropriate by the Committee. The value of a performance share will
equal the fair market value of a share of Common Stock. Earned performance
shares may be paid in cash, shares of Common Stock or a combination thereof
having an aggregate fair market value equal to the value of the earned
performance shares as of the payment date. Common Stock used to pay earned
performance shares may have additional restrictions as determined by the
Committee. In addition, the Committee may cancel any earned performance shares
and replace them with stock options determined by the Committee to be of
equivalent value based on a conversion formula specified in the participant's
performance share award agreement. Earned but unpaid performance shares may
have dividend equivalents rights as determined by the Committee and evidenced
in the award agreement but shall not have voting rights.

Award of Stock Options to Non-Employee Directors. The 1996 Plan provides
for the automatic grant of a nonqualified option to purchase 30,000 shares of
Common Stock to (i) each non-employee director who is first elected a director
after April 18, 1997; (ii) each non-employee director who first becomes a
non-employee director after April 18, 1997 and who was an employee director
immediately prior to becoming a non-employee director; and (iii) each
non-employee director who was a non-employee director on April 18, 1997 and who
had not been awarded an automatic grant under the 1996 Plan in 1997. Each
non-employee director shall be granted an additional nonqualified stock option
to purchase 30,000 shares of Common Stock on each third anniversary thereafter
if he or she is then a non-employee director. In April 1999, the Board of
Directors suspended the award of options to non-employee directors. The option
price shall be equal to the fair market value of the Common Stock on the date
of the grant. An option granted to a non-employee director is exercisable
immediately following the date of grant and expires ten years thereafter. Upon
the exercise of an option, or any portion thereof, the exercise price must be
paid either in cash or by tendering shares of Common Stock with a fair market
value at the date of the exercise equal to the portion of the exercise price
which is not paid in cash. Options granted to non-employee directors may not be
transferred, assigned or otherwise alienated other than by will or the laws of
descent and distribution.

Section 162(m). Because stock options and SARs granted under the 1996 Plan
that are intended to qualify as "performance-based compensation" under Section
162(m) must have an exercise price equal at least to fair market value at the
date of grant, compensation from the exercise of such stock options and SARs
should be treated as "performance-based compensation" for Section 162(m)
purposes.

Changes in Control. The 1996 Plan provides that in the event of a change
in control of the Company, all options and SARs will be fully exercisable as of
the date of the change in control and shall remain exercisable through their
full term. Outstanding awards of restricted stock and performance shares will
become immediately vested, and any applicable performance conditions shall be
deemed satisfied (at the target performance condition, if applicable) as of the
date of the change in control.

Amendment and Termination of the 1996 Plan. The Board of Directors has the
power to amend, modify or terminate the 1996 Plan on a prospective basis.
Stockholder approval will be required for any change to the material terms of
the 1996 Plan to the extent required by Section 162(m) or to the extent deemed
appropriate under Section 16(b) under the Securities Exchange Act of 1934.

Federal Income Tax Treatment, Incentive Stock Options. Incentive stock
options ("ISOs") granted under the 1996 Plan will be subject to the applicable
provisions of the Internal Revenue Code, including Code Section 422. If shares
of Common Stock of the Company are issued to an optionee upon the exercise an
ISO, and if no "disqualifying disposition" of such shares is made by such
optionee within one year after the exercise of the ISO or within two years
after the date the ISO was granted, then (i) no income will be recognized by
the optionee at the time of the grant of the ISO, (ii) no income, for regular
income tax purposes, will be realized by the optionee at the date of exercise,
(iii) upon sale of the shares acquired by exercise of the ISO, any amount
realized in excess of the option price will be taxed to the optionee, for
regular income tax purposes, as a long-term capital gain and any loss sustained
will be a long-term capital loss and (iv) no deduction will be allowed to the
Company for federal income tax purposes. If a "disqualifying disposition" of
such shares is made, the optionee will realize taxable ordinary income in an
amount equal to the excess of the fair market value of the shares purchased at
the time of exercise over the option price (the bargain purchase element) and
the Company will be entitled to a

17
<PAGE>

federal income tax deduction equal to such amount. The amount of any gain in
excess of the bargain purchase element realized upon a "disqualifying
disposition" will be taxable as capital gain to the holder (for which the
Company will not be entitled to a federal income tax deduction). Upon exercise
of an ISO, the optionee may be subject to alternative minimum tax.

Federal Income Tax Treatment, Nonqualified Stock Options. With respect to
nonqualified stock options ("NQSOs") granted to optionees under the 1996 Plan,
(i) no income is realized by the optionee at the time the NQSO is granted, (ii)
at exercise, ordinary income is realized by the optionee in an amount equal to
the difference between the option price and the fair market value of the shares
on the date of exercise, and the Company receives a tax deduction for the same
amount and (iii) on disposition, appreciation or depreciation after the date of
exercise is treated as either short-term or long-term capital gain or loss
depending on whether the shares have been held for more than one year.

Stockholder Approval. Approval of a stock option plan amendment that
increases the number of shares available for issuance pursuant to stock options
is no longer required by Rule 16b-3 under the Securities Exchange Act of 1934,
as amended. However, approval of the 1996 Plan Amendment is being sought in
accordance with the requirements of the Nasdaq Stock Market and Section 162(m)
of the Code.

The Board recommends a vote FOR approval of the 1996 Plan Amendment. The
affirmative vote of a majority of the shares present in person or represented
by proxy and entitled to vote at the Annual Meeting is required for approval of
the 1996 Plan Amendment. Abstentions will have the same effect as a vote
against the proposal. Broker non-votes will not be counted for this purpose.

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has selected Ernst & Young LLP as independent
auditors to audit the financial statements of the Company and its subsidiaries
for the year ending December 31, 1999. This selection is being presented to the
stockholders for their ratification or rejection at this Annual Meeting.

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with an opportunity to make a statement if they desire to do so,
and the representatives are expected to be available to respond to appropriate
questions.

The Board of Directors recommends a vote FOR the ratification of the
selection of Ernst & Young LLP as independent auditors to audit the financial
statements of the Company and its subsidiaries for the year ending December 31,
1999, and proxies solicited by the Board of Directors will be so voted unless
stockholders specify a different choice. If the stockholders do not ratify the
selection of Ernst & Young LLP, the selection of independent auditors will be
reconsidered by the Board of Directors.

PROPOSALS OF STOCKHOLDERS

Proposals of stockholders intended to be presented at the Annual Meeting
of Stockholders to be held in 2000 must be received in writing by the Secretary
of the Company no later than December 23, 1999 to be considered for inclusion
in the Company's proxy statement and form of proxy relating to that meeting.

OTHER MATTERS

The Board of Directors does not know of any matters to be presented at the
1999 Annual Meeting other than those set forth in the Notice. However, if any
other matters do come before the 1999 Annual Meeting, it is intended that the
holders of the proxies will vote thereon in their discretion.

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APPENDIX A

Glenayre Technologies, Inc.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
PROXY PROXY SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF GLENAYRE TECHNOLOGIES, INC.
The undersigned hereby appoints Ramon D. Ardizzone and Stanley Ciepcielinski
and each of them, as Proxies, each with full power of substitution, and hereby
authorizes them to represent and to vote, as designated on the reverse hereof,
all of the shares of Common Stock of Glenayre Technologies, Inc. held by the
undersigned on March 31, 1999 at the 1999 Annual Meeting of Stockholders to be
held at the SouthPark Suite Hotel at 6300 Morrison Boulevard, Charlotte, North
Carolina 28211 on May 25, 1999 at 11:00 a.m., local time, and at any
adjournments thereof.

1. ELECTION OF DIRECTORS.

<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below

To withhold authority for any individual nominee strike a line through the
nominee's name:

Ramon D. Ardizzone Richard L. Bloch Stanley Ciepcielinski Stephen P. Kelbley

2. AN AMENDMENT TO THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED THEREUNDER FROM 506,250 TO
2,006,250.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. AN AMENDMENT TO THE COMPANY'S 1996 INCENTIVE STOCK PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FROM 4,400,000 TO 5,150,000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.

[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>

5. In their discretion, the Proxies each are authorized to vote upon such other
business as may properly come before the 1999 Annual Meeting and at any
adjournment(s) thereof.
<PAGE>

This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE WITH RESPECT TO ANY PROPOSAL,
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES, "FOR" PROPOSAL 2,
"FOR" PROPOSAL 3, AND "FOR" PROPOSAL 4.

Receipt of the Notice of the 1999 Annual Meeting and accompanying Proxy
Statement is hereby acknowledged.

Dated: , 1999
----------------------

----------------------------------
(Signature of Stockholder)

----------------------------------
(Signature of Joint Stockholder, if
any)

Please check box if you intend to be
present at the meeting: [ ]

IMPORTANT: Please date this proxy and
sign exactly as your name appears
hereon. If stock is held jointly, both
holders should sign. Executors,
administrators, trustees, guardians and
others signing in a representative
capacity should give full title.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.