EXHIBIT B

                               COMDIAL CORPORATION
                    2002 EMPLOYEE AND NON-EMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN


I.       PURPOSE.

         The purpose of this Comdial Corporation 2002 Employee and Non-Employee
Director Stock Incentive Plan (the "2002 Plan") is to promote the growth and
profitability of Comdial Corporation, a Delaware corporation (the "Corporation")
by rewarding and incentivizing individuals who make valuable contributions to
the Corporation's success, including officers and employees of the Corporation
and its subsidiaries, and directors, consultants and advisors of the
Corporation.

         The 2002 Plan has been approved by the Board of Directors effective as
of July 2, 2002, and approved by the Company's stockholders on August 26, 2002.
The 2002 Plan was amended on December ___, 2002, and has been updated to reflect
the one-for-fifteen reverse stock split effectuated by the Corporation on
November 26, 2002. The 2002 Plan is intended to replace the two stock option
plans previously maintained by the corporation, the 1992 Stock Incentive Plan
(as amended by the First Amendment dated March 23, 1995, Second Amendment dated
August 7, 1995, Third Amendment dated February 6, 1996 and Fourth Amendment
dated February 6, 1998) and the 1992 Non-Employee Directors Stock Incentive Plan
(as amended by the First Amendment dated March 23, 1995, Second Amendment dated
August 7, 1995, Third Amendment dated November 6, 1997 and fourth Amendment
dated February 6, 1998), and previously approved by the stockholders.

II.      DEFINITIONS.

         The following terms shall have the meanings shown:

         2.1 "Board of Directors" or "Board" means the Board of Directors of the
Corporation.

         2.2 "Change of Control" means any event described in Section 8.1.

         2.3 "Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.

         2.4 "Committee" means the Committee appointed by the Board of Directors
to administer the Plan pursuant to Article X of the Plan. This Committee may,
but is not required to be, identical to the Compensation Committee.

         2.5 "Common Stock" means the common stock, par value $.01 per share, of
the Corporation, except as provided in Section 8.2 of the Plan.




         2.6 "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors. All persons appointed to be members of the Compensation
Committee shall be directors who qualify as "non-employee directors" within the
meaning of Rule 16b-3 and "outside directors" within the meaning of Treasury
Regulation Section 1.162-27.

         2.7 "Consultant" shall mean any person (including corporations,
partnerships and limited liability companies as well as individuals) engaged by
the Corporation to perform services for the Corporation or any Subsidiary on a
regular and on-going basis who is not a common law employee of the Corporation.

         2.8 "Date of Grant" means the date specified by the Plan Administrator
on which a grant of Options, or a grant or sale of Restricted Shares shall
become effective.

         2.9 "Director" means a person serving as a member of the Board of
Directors, whether or not he or she is also an Employee.

         2.10 "Disability" means a medically diagnosable mental or physical
condition which the Committee has determined, based on such medical evidence as
it may find satisfactory, will prevent a Participant from performing his or her
duties for the Corporation and is expected to be permanent.

         2.11 "Employee" means any person performing services for the
Corporation or any Subsidiary as a common law employee. The Committee may, in
its discretion, treat any individual as an Employee for purposes of this Plan
even if he or she is not employed by the Corporation, including individuals who
regularly perform services for the Corporation but are paid by another employer
pursuant to an employee leasing agreement or similar staffing arrangement, as
long as he or she could properly be classified as a common law employee of the
Corporation for payroll tax purposes.

         2.12 "Executive Officer" means any Named Executive Officer and any
other officer of the Corporation who is subject to the reporting requirements of
Section 16 of the Securities and Exchange Act of 1934.

         2.13 "Fair Market Value" means the fair market value of a share of
Common Stock as determined by the Committee by reference to the closing price
quotation, or, if none, the average of the bid and asked prices, reported on
Nasdaq as of the most recent available date with respect to the sale of Common
Stock.

         2.14 "Incentive Stock Options" or "ISOs" means Options intended to
qualify for favorable tax treatment as incentive stock options under Code
Section 422.

         2.15 "Named Executive Officer" shall mean the Company's Chief Executive
Officer and the four highest compensated officers (other than the Chief
Executive Officer), as determined pursuant to the executive compensation
disclosure rules under the Securities Exchange Act of 1934.


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         2.16 "Nonstatutory Options" shall mean Options which are not intended
to qualify as ISOs.

         2.17 "Option Agreement" means a written agreement between the
Corporation and a Participant who has been granted Options under this Plan. Each
Option Agreement shall be subject to the terms and conditions of the Plan.

         2.18 "Option Price" means, with respect to any Option, the amount
designated in a Participant's Option Agreement as the price per share he or she
will be required to pay to exercise the Option and purchase the shares subject
to such Option.

         2.19 "Option" or "Options" means any rights granted to a Participant to
purchase shares of Common Stock granted pursuant to Article IV of this Plan,
including Incentive Stock Options subject to the additional requirements
described in Article V.

         2.20 "Participant" shall mean any current or former Employee, or any
Consultant or Director, who has been granted Options or Restricted Stock under
the terms of this Plan.

         2.21 "Plan" means this Comdial Corporation 2002 Employee and
Non-Employee Director Stock Incentive Plan, as the same may be amended from time
to time.

         2.22 "Restricted Stock" means shares of Common Stock that are issued to
eligible Participants and made subject to restrictions in accordance with
Article VI of the Plan.

         2.23 "Restricted Stock Agreement" means a written agreement between the
Corporation and a Participant who has been granted or sold Restricted Stock
pursuant to Article VI of the Plan.

         2.24 "Subsidiary" shall mean any corporation which, on the date of
determination, qualifies as a subsidiary corporation of the Corporation under
Section 425(f) of the Code.

         2.25 "Ten Percent Shareholder" shall mean any qualified Participant
who, at the time an ISO is granted owns (within the meaning of Section 425(d) of
the Code) more than ten percent of the voting power of all classes of stock of
the Corporation.

III.     ELIGIBILITY.

         3.1 Participation. The Committee may grant Options and/or awards of
Restricted Stock under this Plan to any officer or other Employee of the
Corporation or any Subsidiary. The Committee may grant Options and/or awards of
Restricted Stock to any Director, subject to the restrictions in Section 3.3. In
granting such awards and determining their form and amount, the Committee shall
give consideration to the functions and responsibilities of the individual, his
or her potential contributions to profitability and sound growth of the
Corporation and such other factors as the Committee may, in its discretion, deem
relevant.

         The Committee may also grant Options or awards of Restricted Stock to
Consultants. In granting such awards and determining their form and amount, the
Committee shall


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consider the extent of the individual's relationship to the Corporation, his or
her potential contributions to its financial success, the potential adverse
accounting consequences to the Corporation of stock option grants to
Consultants, and such other factors as the Committee may, in its discretion,
deem to be relevant.

         3.2 Executive Officers. Notwithstanding Section 3.1 or any other
provisions of this Plan, any Named Executive Officer shall not be granted
Options, or awards of Restricted Stock unless the grant has been approved by the
Compensation Committee, and all grants to Executive Officers must be approved in
advance by either the Committee or the Compensation Committee.

        3.3 Directors. Members of the Board of Directors who are officers of the
Corporation or Consultants shall be eligible for Options or other awards under
this Plan on the same terms as other officers or Consultants. Other members of
the Board of Directors who are not Employees shall be eligible for Options or
Restricted Stock awards to the extent specified in such general policy on
compensation of nonemployee Directors as may be established by the Board of
Directors.

IV.      OPTIONS.

         4.1 Terms and Conditions. Subject to Section 3.2 and 3.3, the Committee
may, in its sole discretion, from time to time grant Options to any officer,
Employee, Director or Consultant of the Corporation or any Subsidiary selected
by the Committee pursuant to Section 3.1. The grant of an Option to a
Participant shall be evidenced by a written Option Agreement in substantially
the form approved by the Committee. Such Option shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the terms of this Plan, as the Committee may determine to
be appropriate.

                  (a) Shares Covered. The Committee shall, in its discretion,
determine the number of shares of Common Stock to be covered by the Options
granted to any Participant. The maximum number of shares of Common Stock with
respect to which Options may be granted to any Participant during any one
calendar year is 333,333 shares.

                  (b) Exercise Period. The term of each Option shall be for such
period as the Committee shall determine, but for not more than ten years from
the Date of Grant thereof. The Committee shall also have the discretion to
determine when each Option granted hereunder shall become exercisable, and to
prescribe any vesting schedule limiting the exercisability of such Options as it
may deem appropriate.

                  (c) Option Price. The Option Price payable for the shares of
Common Stock covered by any Option shall be determined by the Committee, but
shall in no event be less than the Fair Market Value of Common Stock on the Date
of Grant.

                  (d) Exercise of Options. A Participant may exercise his or her
Options from time to time by written notice to the Corporation of his or her
intent to exercise the Options with respect to a specified number of shares. The
specified number of shares will be issued and transferred to the Participant
upon receipt by the Corporation of (i) such notice and (ii) payment in


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full for such shares, and (iii) receipt of any payments required to satisfy the
Corporation's tax withholding obligations pursuant to Section 7.3.

                  (e) Payment of Option Price Upon Exercise. Each Option
Agreement shall provide that the Option Price for the shares with respect to
which an Option is exercised may be paid to the Corporation at the time of
exercise, in the form of (i) cash, (ii) delivery to the Corporation of whole
shares of Common Stock already owned by the Participant for at least six months,
valued at their Fair Market Value on the day immediately preceding the date of
exercise, (iii) at the discretion of the Committee, a recourse promissory note
secured by a pledge of the shares of Common Stock and a personal guarantee, or
(iv) a combination of any of the above equal to the Option Price for the shares.

                  (f) Cashless Exercises. Alternatively, the Corporation may
permit the Participant to exercise an Option by delivery of a signed,
irrevocable notice of exercise, accompanied by payment in full of the Option
Price by the Participant's stockbroker and an irrevocable instruction to the
Corporation to deliver the shares of Common Stock issuable upon exercise of the
Option promptly to the Participant's stockbroker for the Participant's account,
provided that at the time of such exercise, such exercise would not be illegal
under the federal securities laws, including laws governing margin loans.

         4.2      Effect of Termination.

                  (a) If a Participant's employment or other relationship with
the Corporation (or with the relevant Subsidiary) terminates for any reason
other than retirement, disability or death, his or her vested Options shall
terminate ninety (90) days from the date of termination of employment or other
relationship, and his or her unvested Options shall terminate immediately upon
the date of the termination of employment or other relationship; provided that,
the Committee may determine, in its sole discretion, at the time of the grant
that the Participant's Option Agreement should provide for an extended exercise
period after such termination of employment or other relationship.

                  (b) Any Option Agreement may, in the Committee's sole
discretion, include such provisions as the Committee deems advisable with
respect to the Participant's right to exercise the Option subsequent to
retirement, or subsequent to termination of such employment (or other
relationship) by reason of total and permanent disability (within the meaning of
Section 22(e)(3) of the Code); provided, that, in no event shall any Option be
exercisable after the fixed termination date set forth in the Participant's
Option Agreement pursuant to Section 4.1(b); and provided further that no ISO
shall be exercisable at any time subsequent to the expiration of the period of
three (3) months from the date of retirement, or twelve (12) months from the
date of termination.

                  (c) Any Option Agreement may, in the Committee's sole
discretion, provide that, in the event of the Participant's death while he or
she has the right to exercise his or her Options, the Options may be exercised
(to the extent they had become exercisable prior to the time of the
Participant's death), during such period of up to one year after date of the
Participant's death as the Committee deems to be appropriate, by the personal
representative of the Participant's estate, or by the person or persons to whom
the Options shall have been transferred by will or by the laws


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of descent and distribution; provided that, in no event shall any option be
exercisable after the fixed termination date set forth in the Participant's
Option Agreement.

                  (d) Any Option Agreement may, in the Committee's sole
discretion, provide that, in the event the Participant continues to actively
perform services for the Corporation as a Consultant or Non-Employee Director
after his or her employment terminates, his or her Options shall continue to be
exercisable during any period in which he or she is actively performing such
services as a Consultant, but in no event after the fixed termination date set
forth in the Option Agreement pursuant to Section 4.1(b).

                  (e) The Committee may, in its sole discretion, decide at the
time an Option is granted that the Participant's Option Agreement should include
such terms as the Committee determines are desirable providing for accelerated
vesting and exercisability of all or part of the Participant's Options if the
Participant's employment or consulting relationship with the Corporation is
terminated prematurely, including upon termination (i) without good cause, (ii)
in connection with a Change in Control as defined in Section 7.1 below, or (iii)
in violation of the terms of any agreement between the Corporation and the
Participant.

                  (f) For purposes of this Section 4.2, the Committee shall
determine the date of termination of any Participant, based on its judgment as
to when the Participant is no longer employed as a common law employee or
Consultant of the Corporation or any Subsidiary. Part-time or non-exclusive
employment by the Corporation may be considered employment by the Corporation as
long as the Participant is treated as an Employee for purposes of FICA and
payroll taxes, as shall employment by a Subsidiary. In addition, the Committee
shall have full discretion to determine whether a Participant's reduction in
hours, medical or disability leave, FMLA leave, absence on military or
government service, or other authorized leave of absence, shall constitute a
termination of employment for purposes of this Plan.

                  (g) If a Non-Employee Director shall cease to serve as a
member of the Board of Directors as a result of such Non-Employee Director
resignation from the Board (other than as a result of retirement or total
Disability) or such Non-Employee Director's decision not to stand for reelection
at the expiration of his or her term of office, or such Non-Employee Director is
not nominated by the Board to stand for election at the Special Stockholders'
Meeting at which his or her term of office expires, or, if nominated, such
person is not reelected, then all Options held by such Participant may be
exercised at any time within three (3) years after the date of such cessation of
service; provided, however, (i) only Options exercisable by the Participant at
the time of the cessation of service as a Non-Employee Director may be exercised
after such cessation, and (ii) no Option may be exercised after the expiration
date of such Option.

                  If a Participant is removed from the Board by the stockholders
of the Company for cause (for these purposes, cause shall include, but not be
limited to, dishonesty, incompetence, moral turpitude, other misconduct of any
kind and the refusal to perform his or her duties and responsibilities for any
reason other than illness or incapacity), then all unexercised Options held by
such Participant shall immediately be canceled and terminate.


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         4.3 Incentive Stock Options. The Options granted under this Plan may be
either Incentive Stock Options or options not intended to constitute incentive
stock options qualifying under Code Section 422; provided that, Incentive Stock
Options may only be granted to individuals who are Employees; and further
provided, any Incentive Stock Option shall be subject to the additional
requirements stated in Article V of this Plan.

         4.4 Non-Assignability. Options granted under this Plan shall generally
not be assignable or transferable by the Participant, except by will or by the
laws of descent and distribution, or as described in the next paragraph.
Notwithstanding the foregoing, the Committee may, in its discretion, permit an
individual Participant to transfer all or a portion of his or her Options to
members of his or her immediate family, to trusts for the benefit of members of
his immediate family, or to family partnerships in which immediate family
members are the only partners, provided that the Participant may receive no
consideration for such transfers, and that such Options shall still be subject
to termination in accordance with Section 4.2 above in the hands of the
transferee. The Committee may also, in its discretion, permit a Consultant to
transfer all or a portion of the Options granted by reason of services he or she
performs for the Corporation as an employee or partner of a consulting firm to
his or her consulting firm, provided that such Options shall still be subject to
termination in accordance with Section 4.2 above in the hands of the transferee,
or permit a Consultant which is organized as a partnership or limited liability
company to transfer the Options to its members, subject to termination in
accordance with Section 4.2 if the Consultant ends its relationship with the
Corporation.

         4.5 Covenants Not to Compete. The Committee may, in its discretion,
condition any Option granted to an Employee, Consultant or Director on such
Participant's agreement to enter into such covenant not to compete with the
Corporation as the Committee may deem to be desirable. Such covenant not to
compete shall be set forth in the Participant's Stock Option Agreement, and the
Stock Option Agreement shall provide that the Option shall be forfeited
immediately, whether otherwise vested or not, if the Board of Directors
determines that the Participant has violated his or her covenant not to compete.
In addition, in the Committee's discretion, the Participant's Stock Option
Agreement may also provide that if the Participant breaches his or her covenant
not to compete, the Corporation shall have the right to repurchase any shares of
Common Stock previously issues to the Participant pursuant to an exercise of the
Option, at a repurchase price equal to the Option Price paid by the Participant.

        4.6 Authority to Waive Restrictions on Exercisability. The Board of
Directors may, in its discretion, determine at any time that all or any portion
of the Options granted to one or more Participants under the Plan shall,
notwithstanding any restrictions on exercisability imposed or stated in the
Option Agreement pursuant to Section 4.1(b), become immediately exercisable in
full. The Board of Directors may make such further adjustments to the terms of
such Options as it may deem necessary or appropriate in connection therewith,
including amending the Option Agreement to recognize that all or a portion of
the Options no longer qualify as ISOs under Section 5.

V.       INCENTIVE STOCK OPTIONS.

         The Committee may, in its discretion, specify that any Options granted
to a Participant who is an individual employed by the Corporation or a
Subsidiary as an Employee shall be ISOs


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qualifying under Code Section 422 as may be amended from time to time with any
such amendment to be incorporated herein without further shareholder approval.

          5.1 Each Stock Option Agreement which provides for the grant of ISOs
shall expressly state that such Options are intended to qualify as ISOs. Each
provision of the Plan and of each Stock Option Agreement relating to an Option
designated as an ISO shall be construed so that such Option qualifies as an ISO,
and any provision that cannot be so construed shall be disregarded.

         5.2 Any Options granted under this Plan which are designated as ISOs
shall comply with the following additional requirements:

                  (a) The aggregate Fair Market Value (determined at the time an
ISO is granted) of the shares of Common Stock (together with all other stock of
the Corporation and all stock of any Parent or Subsidiary) with respect to which
the ISOs may first become exercisable by an individual Participant during any
calendar year, under all stock option plans of the Corporation (or any Parent or
Subsidiaries) shall not exceed $100,000. To the extent this limitation would
otherwise be exceeded, the Option shall be deemed to consist of an ISO for the
maximum number of shares which may be covered by ISOs pursuant to the preceding
sentence, and a nonstatutory option for the remaining shares subject to the
Option.

                  (b) The Option Price payable upon the exercise of an ISO shall
not be less than the Fair Market Value of a share of Common Stock on the Date of
Grant.

                  (c) In the case of an ISO granted to a Participant who is a
Ten Percent Shareholder of the Corporation, the period of the Option shall not
exceed five years from the Date of Grant, and the Option Price shall not be less
than 110 percent of the Fair Market Value of Common Stock on the Date of Grant.

                  (d) No ISO granted under this Plan shall be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution. During the life of the Participant, any ISO shall be exercisable
only by the Participant.

                  (e) Any ISO granted under the Plan shall terminate no more
than ninety (90) days after termination of the Participant's employment as an
Employee, except that pursuant to Section 4.2(b) and (c) above such exercise
period may be extended for up to one year after the date of any termination of
employment by reason of the Participant's death or disability.

VI.      RESTRICTED STOCK.

         6.1 Rights As A Shareholder. The Committee may, in its discretion,
grant a Participant an award consisting of shares of Restricted Stock. At the
time of the award, the Committee shall cause the Corporation to deliver to the
Participant, or to a custodian or an escrow agent designated by the Committee, a
certificate or certificates for such shares of Restricted Stock, registered in
the name of the Participant. The Participant shall have all the rights of a
stockholder with respect to such Restricted Stock, subject to the terms and
conditions, including forfeiture or resale to such Corporation, if any, as the
Committee may determine to be desirable pursuant to Section 6.3 of the


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Plan. The Committee may designate the Corporation or one or more of its
executive officers to act as custodian or escrow agent for the certificates.

         6.2      Awards and Certificates.

                  (a) A Participant granted an award of Restricted Stock shall
not be deemed to have become a stockholder of the Corporation, or to have any
rights with respect to such shares of Restricted Stock, until and unless such
Participant shall have executed a restricted stock agreement or other instrument
evidencing the award and delivered a fully executed copy thereof to the
Corporation and otherwise complied with the then applicable terms and conditions
of such award.

                  (b) When a Participant is granted shares of Restricted Stock,
the Corporation shall issue a stock certificate or certificates in respect of
shares of Restricted Stock. Such certificates shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award substantially in the
following form:

                            "The transferability of the shares of stock
                  represented by this Certificate are subject to the terms and
                  conditions (including forfeiture) of a Restricted Stock
                  Agreement entered into between the registered owner and
                  Comdial Corporation. A copy of such Agreement is on file in
                  the offices of the Secretary of the Corporation, 106 Cattlemen
                  Road, Sarasota, Florida, 34232.

                  (c) Except as may be otherwise determined by the Committee (or
as required in order to satisfy the tax withholding obligations imposed under
Section 10.3 of this Plan), Participants granted awards of Restricted Stock
under this Plan will not be required to make any payment or provide
consideration to the Corporation other than the rendering of services.

         6.3 Restrictions and Forfeitures. Restricted Stock awarded to a
Participant pursuant to this Article VI shall be subject to the following
restrictions and conditions:

                  (a) During a period set by the Committee of not less than six
(6) months, but not more than ten (10) years, commencing with the date of an
award (the "Restriction Period"), the Participant will not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock awarded to him or her.
Within these limits, the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate.

                  (b) Except as provided in Section 6.3(a), the Participant
shall have with respect to the Restricted Stock all of the rights of a
stockholder of the Corporation, including the right to vote the shares and
receive dividends and other distributions.

                  (c) Subject to the provisions of Section 6.3(d), upon any
termination of the Participant's employment or other relationship with the
Corporation during the Restriction Period for any reason, all shares of
Restricted Stock with respect to which the restrictions have not yet expired
shall be forfeited to the Corporation, or, in the case of shares of Restricted
Stock sold to the Participant, repurchased by the Corporation at the initial
purchase price.


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                  (d) In the event of a Participant's retirement from his or her
employment (or other relationship) with the Corporation, total Disability, or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interests of the
Corporation, waive in whole or in part any or all remaining restrictions with
respect to such Participant's Restricted Stock.

                  (e) Notwithstanding the other provisions of this Section 6.3,
the Committee may adopt rules which would permit a gift by a Participant of
shares of Restricted Stock to a spouse, child, stepchild, grandchild or to a
trust the beneficiary or beneficiaries of which shall be either such a person or
persons or the Participant, provided that the Restricted Stock so transferred
shall be similarly restricted. The Committee may also, in its discretion, permit
a Consultant to transfer all or a portion of the Restricted Stock granted by
reason of services he or she performs for the Corporation as an employee or
partner of a consulting firm to his or her consulting firm, provided that such
Restricted Stock shall still be subject to termination in accordance with
Subsection 7.3(c) above in the hands of the transferee, or permit a Consultant
which is organized as a partnership or limited liability company to transfer its
Restricted Stock to its members, subject to termination in accordance with
Section 6.3(c) if the Consultant ends its relationship with the Corporation.

                  (f) Any attempt to dispose of shares of Restricted Stock in a
manner contrary to the restrictions set forth herein shall be ineffective.

                  (g) Nothing in this Section 6.3 shall preclude a Participant
from exchanging any Restricted Stock for any other shares of the Common Stock
that are similarly restricted.

VII.     CHANGE IN CONTROL TRANSACTIONS.

         7.1 Change in Control. For purposes of this Plan, a "Change in Control"
shall include any of the events described below:

                  (a) The acquisition in one or more transactions of more than
fifty-one percent (51%) of the Corporation's outstanding Common Stock, or the
equivalent in voting power of any classes or classes of securities of the
Corporation entitled to vote in elections of directors by any corporation, or
other person or group (within the meaning of Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended);

                  (b) Any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving entity,
or any transfer or sale of substantially all of the assets of the Corporation or
any merger or consolidation of the Corporation into or with another corporation
in which the Corporation is the surviving entity and, in connection with such
merger or consolidation, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for other stock or securities of the
Corporation or any other person, or cash, or any other property.


                                       10



                  (c) Any person, or group of persons, commences a tender offer
for at least fifty-one percent (51%) of the Corporation's Common Stock.

         7.2 Effect of Change in Control. In the event of a pending or
threatened Change in Control, the Committee may, in its sole discretion, take
any one or more of the following actions with respect to any one or more
Participants (other than with respect to Named Executive Officers):

                       (i) Accelerate the exercise dates of any outstanding
                  Options and make outstanding Options fully vested and
                  exercisable;

                       (ii) Determine that all or any portion of conditions
                  associated with a Restricted Stock award have been met;

                       (iii) Grant a cash bonus award to any of the holders of
                  outstanding Options;

                       (iv) Pay cash to any or all Option holders in exchange
                  for the cancellation of their outstanding Nonstatutory
                  Options or Restricted Stock;

                       (v) Make any other adjustments or amendments to the
                  Plan and outstanding Options, or Restricted Stock awards
                  and/or substitute new Options or other awards.

         With respect to any Named Executive Officer, any such action shall be
effective only if it is approved by Compensation Committee comprised exclusively
of outside directors within the meaning of Code Section 2(m).

         In exercising its authority under this Section 7.2, the Committee shall
consider any adverse accounting or federal income tax consequences that may
result from any acceleration of vesting or repurchase of Options. The Committee
shall have no duty to apply any action taken under this Section uniformly to all
Participants, and may choose, in its sole discretion, whether or not the Options
or Restricted Stock held by any particular Participant will be affected (subject
to any pre-existing provisions in the Participant's Option Agreement or
employment agreement with the Corporation requiring accelerated vesting upon a
Change in Control).

         7.3 Involuntary Termination Following a Change in Control. If a
Participant's employment with the Corporation (or its successor) is
involuntarily terminated without cause during the period of twelve (12) months
following a Change in Control, and the Participant's Options and Restricted
Stock had not already become fully vested pursuant to Section 7.2 as a result of
the Change in Control, the Participant's Options shall become fully vested and
immediately exercisable in full for a period lasting for at least ninety (90)
days after the date of the Participant's termination, and any Restricted Stock
award held by the Participant shall become fully vested and nonforfeitable.


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VIII.    AGGREGATE LIMITATION ON SHARES OF COMMON STOCK.

         8.1 Number of Shares of Common Stock.

                  (a) Shares of Common Stock which may be issued to Participants
pursuant to Options, or Restricted Stock awards granted under the Plan may be
either authorized and unissued shares of Common Stock or of Common Stock held by
the Corporation as treasury stock.

                  (b) The number of shares of Common Stock reserved for issuance
under this Plan shall not exceed 1,000,000 shares of Common Stock available
under the Plan, subject to such adjustments as may be made pursuant to Section
8.2.

                  (c) For purposes of Section 8.1(b), upon the exercise of an
Option, the number of shares of Common Stock available for future issuance under
the Plan shall be reduced by the number of shares actually issued to the
Participant, exclusive of any shares surrendered to the Corporation as payment
of the Option price.

                  (d) Any shares of Common Stock subject to an Option which for
any reason is cancelled, terminates unexercised or expires, shall again be
available for issuance under the Plan.

                  (e) In the event that any award of Restricted Stock is
forfeited, cancelled or surrendered for any reason, the shares of Common Stock
constituting such Restricted Stock award shall again be available for issuance
under the Plan.

         8.2 Adjustments of Stock. In the event of any change or changes in the
outstanding Common Stock of the Corporation by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, combination
or any similar transaction, the Board of Directors shall adjust the number of
shares of Common Stock which may be issued under this Plan, the number of shares
of Common Stock subject to Options theretofore granted under this Plan, the
Option Price of such Options, the number of shares of Restricted Stock shall
each be adjusted and make any and all other adjustments deemed appropriate by
the Board of Directors in such manner as the Board of Directors deems
appropriate to prevent substantial dilution or enlargement of the rights granted
to any Participant.

         New option rights may be substituted for the Options granted under the
Plan, or the Corporation's duties as to Options outstanding under the Plan may
be assumed by a Subsidiary, by another corporation or by a parent or subsidiary
(within the meaning of Section 425 of the Code) of such other corporation, in
connection with any merger, consolidation, acquisition, separation,
reorganization, liquidation or like occurrence in which the Corporation is
involved. In the event of such substitution or assumption, the term Common Stock
shall thereafter include the stock of the corporation granting such new option
rights or assuming the Corporation's duties as to such Options.


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IX.      MISCELLANEOUS.

         9.1 General Restriction. Any Option or Restricted Stock award granted
under this Plan shall be subject to the requirement that, if at any time the
Committee shall determine that any registration of the shares of Common Stock,
or any consent or approval of any governmental body, or any other agreement or
consent, is necessary as a condition of the granting of an Option or other
award, or the issuance of Common Stock in satisfaction thereof, such Common
Stock will not be issued or delivered until such requirement is satisfied in a
manner acceptable to the Committee.

         9.2 Withholding Taxes.

                  (a) If the Corporation determines that the Corporation has any
tax withholding obligation with respect to a Participant, the Corporation shall
have the right to require that Participant to remit to the Corporation an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery of any shares of Common Stock under the Plan.

         If a Participant sells, transfers, assigns or otherwise disposes of
shares of Common Stock acquired upon the exercise of an ISO within two (2) years
after the date on which the ISO was granted or within one (1) year after the
receipt of the shares of Common Stock by the Participant, the Participant shall
promptly notify the Corporation of such disposition and the Corporation shall
have the right to require the Participant to remit to the Corporation the amount
necessary to satisfy any federal, state and local tax withholding requirements
imposed on the Corporation by reason of such disposition.

                  (b) The Corporation shall have the right to withhold from
payments made in cash to a Participant under the terms of the Plan, an amount
sufficient to satisfy any federal, state and local withholding tax requirements
imposed with respect to such cash payments.

                  (c) Amounts to which the Corporation is entitled pursuant to
Section 9.2(a) or (b), may be paid, at the election of the Participant and with
the approval of the Committee, either (i) paid in cash, (ii) withheld from any
salary or other compensation payable to the Participant by the Corporation,
including cash payments made under this Plan, or (iii) in shares of Common Stock
otherwise issuable to the Participant upon exercise of an Option, that have a
Fair Market Value on the date on which the amount of tax to be withheld is
determined (the "Tax Date") not less than the minimum amount of tax the
Corporation is required to withhold. A Participant's request to have shares of
Common Stock withheld that are otherwise issuable shall be in writing, shall be
irrevocable upon approval by the Committee, and shall be delivered to the
Corporation prior to the exercise of an Option.

                  (d) Tax Loans. In the discretion of the Board of Directors,
the Company may make a loan to a Participant in connection with the exercise of
an Option in an amount not to exceed the grossed up amount of any Federal and
state taxes payable in connection with such exercise, for the purpose of
assisting such Participant to exercise such Option. Any such loan may be secured
by the related shares of Common Stock or other collateral deemed adequate by the
Board of Directors and will comply in all respects with all applicable laws and
regulations. The Board of Directors may adopt policies regarding eligibility for
such loans, the maximum amounts


                                       13



thereof and any terms and conditions not specified in the Plan upon which such
loans will be made. In no event will the interest rate be lower than the minimum
rate at which the Internal Revenue Service would not impute additional taxable
income to the Participant.

         9.3 Investment Representation. If the Committee determines that a
written representation is necessary in order to secure an exemption from
registration under the Securities Act of 1933, the Committee may demand that the
Participant deliver to the Corporation at the time of any exercise of any
Option, or at time of the transfer of shares of Restricted Stock, any written
representation that Committee determines to be necessary or appropriate for such
purpose, including but not limited to a representation that the shares to be
issued are to be acquired for investment and not for resale or with a view to
the distribution thereof. If the Committee makes such a demand, delivery of a
written representation satisfactory to the Committee shall be a condition
precedent to the right of the Participant to acquire such shares of Common
Stock.

         9.4 Non-Uniform Determinations. The Committee's determinations under
this Plan (including without limitation its determinations of the persons to
receive Options or awards of Restricted Stock, the form, amount and timing of
such awards and the terms and provisions of such awards) need not be uniform and
may be made by it selectively among Participants who receive, or are eligible to
receive, awards under this Plan, whether or not such Participants are similarly
situated.

         9.5 No Rights as Shareholders. Participants granted Options under this
Plan shall have no rights as shareholders of the Corporation as applicable with
respect thereto unless and until certificates for shares of Common Stock are
issued to them.

         9.6 Transfer Restrictions. The Committee may determine that any Common
Stock to be issued by the Corporation upon the exercise of Options shall be
subject to such further restrictions upon transfer as the Committee determines
to be appropriate.

        9.7 No Right to Employment. Nothing in this Plan or in any Option
Agreement entered into pursuant to it shall confer upon any participating
employee the right to continue in the employment of the Corporation or affect
any right which the Corporation may have to terminate the employment of such
participating employee. Similarly, nothing in this Plan or in any Option
Agreement entered into pursuant to it shall confer upon any participating
Non-Employee Director, Advisor or Consultant the right to continue his or her
relationship with the Corporation or affect any right which the Corporation may
have to terminate such relationship.

         9.8 Fractional Shares. The Corporation shall not be required to issue
any fractional shares of Common Stock pursuant to this Plan. The Board of
Directors may provide for the elimination of fractions or for the settlement
thereof in cash.

        9.9 General Restriction. Any Option granted under this Plan shall be
subject to the requirement that, if at any time the Board of Directors shall
determine that any registration of the shares of Common Stock, or any consent or
approval of any governmental body, or any other agreement or consent, is
necessary as a condition of the granting of an Option, or the issuance of


                                       14


Common Stock in satisfaction thereof, such Common Stock will not be issued or
delivered until such requirement is satisfied in a manner acceptable to the
Board of Directors.

X.       ADMINISTRATION OF THE PLAN.

         10.1     Committee.

                  (a) The Plan shall be administered on a day to day basis by
the Board of Directors or, if the Board determines it is desirable to delegate
its authority to administer the Plan, by a Committee appointed by the Board of
Directors. The Plan Committee appointed by the Board may be the Compensation
Committee of the Board of Directors or one or more directors or executive or
officers of the Corporation serving under the supervision of such Compensation
Committee, and, except as expressly stated otherwise in this Plan with respect
to Executive Officers, need not be composed of directors or directors who
qualify as "disinterested" within the meaning of SEC Rule 16b-3. The Plan
Committee shall serve at the pleasure of the Board of Directors.

                  (b) If the Committee is not the Board of Directors, the
Committee shall be monitored and supervised by the Compensation Committee of the
Board of Directors with respect to any actions related to Named Executive
Officers. All grants of Options or Restricted Stock to Executive Officers shall
be approved in advance by the Compensation Committee.

                  (c) The Committee shall have the authority, in its discretion
but subject to Sections 3.2 and 3.3 of this Plan, and subject to the overall
supervision of the Compensation Committee or the Board, from time to time: (i)
to grant Options, or shares of Restricted Stock to eligible employees, Directors
and Consultants, as provided for in this Plan; (ii) to prescribe such
limitations, restrictions and conditions upon any such awards as the Committee
shall deem appropriate; or (iii) to determine the periods during which Options
may be exercised and to accelerate the exercisability of outstanding Options, or
the vesting of Restricted Stock, as it may deem appropriate;

                  (d) The Committee shall have the authority, in its discretion,
from time to time, to: (i) modify, cancel, or replace any prior Options or other
awards and to amend the relevant Option Agreements or Restricted Stock
Agreements with the consent of the affected Participants, including amending
such agreements to amend vesting schedules, extend exercise periods or increase
or decrease the Option Price for Options, as it may deem to be necessary; and
(ii) to interpret the Plan, to adopt, amend and rescind rules and regulations
relating to the Plan, and to make all other determinations and to take all other
action necessary or advisable for the implementation and administration of the
Plan. A majority of the Committee shall constitute a quorum, and the action of a
majority of members of the Committee present at any meeting at which a quorum is
present, or acts unanimously adopted in writing without the holding of a
meeting, shall be the acts of the Committee.

                  (e) All actions taken by the Committee shall be final,
conclusive and binding upon any eligible Participant. Neither the Committee nor
any members of the Committee shall be


                                       15



liable for any action taken or decision made in good faith relating to the Plan
or any award thereunder.

XI.      AMENDMENT AND TERMINATION.

         11.1 Amendment or Termination of the Plan. The Board of Directors may
at any time terminate this Plan or any part thereof and may from time to time
amend this Plan as it may deem advisable, provided however, the Board of
Directors shall obtain stockholder approval of any amendment for which
stockholder approval is required under Section 422 of the Code, or for which
stockholder approval requirements are imposed on the corporation by the listing
rules of any stock exchange on which the common stock is listed. The termination
or amendment of this Plan shall not, without the consent of the Participant,
affect any Participant's rights under an award previously granted, provided
however, the Board of Directors shall have the right without the consent of any
Participant to terminate the Plan and terminate any options previously granted
to Participants under the Plan if the Corporation makes adequate provision for
the payment to any such Participant, for any vested options, of the excess of
the Fair Value of the covered shares over the exercise price of such vested
options, with any unvested options and options with exercise prices in excess of
the Fair Value being terminated without any payment to or further action or
consent of any Participants. For purposes of this Section 11.1 Fair Value shall
be the Fair Market Value unless the Board of Directors approves a transaction
for the sale of the Corporation which equates to a higher per share value.

         11.2 Term of Plan. Unless previously terminated pursuant to Section
11.1, the Plan shall terminate on August 26, 2012, the tenth anniversary of the
date on which the Plan became effective, and no Options, or awards of Restricted
Stock may be granted on or after such date.


                                       16