<PAGE>

                                                                   EXHIBIT 10.28

                               COMDIAL CORPORATION

                           CERTIFICATE OF DESIGNATION

                                       OF

            SERIES B ALTERNATE RATE CUMULATIVE CONVERTIBLE REDEEMABLE

                                 PREFERRED STOCK

      Comdial Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
certifies that pursuant to the authority contained in Article THIRD of its
Certificate of Incorporation, as amended, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, its
Board of Directors, at a meeting duly convened and held on March 6, 2002,
adopted the following resolution creating a series of its Preferred Stock, par
value $10.00, designated as Series B Alternate Rate Cumulative Convertible
Redeemable Preferred Stock:

      RESOLVED, that a series of the class of authorized Preferred Stock, par
value $10.00, of the Company be hereby created, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations and restrictions thereof are as follows:

      Section 1. Designation and Amount. The shares of such series shall be
designated as the "Series B Alternate Rate Cumulative Convertible Redeemable
Preferred Stock" (hereinafter "Series B Preferred Stock") and the number of
shares constituting such series shall be 1,000,000 and no more.

      Section 2. Dividends and Distributions.

            (a) Subject to paragraph (b) of this Section 2, the holders of
shares of Series B Preferred Stock, in preference to the holders of shares of
the Company's Common Stock, par value $0.01 per share ("Common Stock"), shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds of the Company legally available for the payment of dividends, quarterly
dividends per share payable in cash in the following amounts: $0.125 on the last
day of March, $0.125 on the last day of June, $0.125 on the last day of
September, and $0.125 on the last day of December in each year (each such date
being referred to as a "Quarterly Dividend Payment Date") commencing on the
first Quarterly Dividend Payment Date which is after the date of issue of such
shares of Series B Preferred Stock; provided, however, that with respect to such
                                    -----------------
first Quarterly Dividend Payment Date, the holders of shares of Series B
Preferred Stock shall be entitled pursuant to this paragraph (a) to receive the
pro rata portion of such quarterly dividend on the basis of the number of days
elapsed between the date of issue and the first Quarterly Dividend Payment Date.
Such dividends shall be cumulative and shall accrue from the date of issue until
paid in cash.


                                       1
<PAGE>

            (b) Alternatively, in lieu of paying a dividend on the Series B
Preferred Stock in cash, the Company shall have the option of paying any such
dividend, when paid, in shares of the Company's Common Stock at a rate equal to
two times the cash dividend rate provided in Section 2(a) above, and in any such
case the value of shares of Common Stock paid as a dividend on the Series B
Preferred Stock shall be determined as provided for in the following paragraphs:

      If the Company elects to issue the dividend in shares of Common Stock
rather than cash, the Company shall issue the holder the number of shares of
Common Stock having an aggregate Current Market Value equal to two times the
amount of the dividend payable to the holder had the Company elected that the
dividend be paid in cash, provided, however, the Company may not elect to issue
                          -----------------
dividends in shares of Common Stock if such issuance would result in the holders
of Series B Preferred Stock owning an amount of the outstanding common stock of
the Company on an as-converted basis that would require the Company to obtain
stockholder approval under NASDAQ Rule 4350(i). The "Current Market Value" for a
share of the Common Stock shall be determined as follows:

                  (i) if the Common Stock shall be listed (or admitted to
unlisted trading privileges) on any single national securities exchange, then
the Current Market Value shall be computed on the basis of the last reported
sale price of the Common Stock on such exchange on the third Business Day prior
to the Quarterly Dividend Payment Date, or if no such sale shall have occurred
on such day, then on the next Business Day prior thereto on which day a sale
occurred; or

                  (ii) if the Common Stock shall not be so listed (or admitted
to unlisted trading privileges) and bid and asked prices therefor in the
over-the-counter market shall be reported by NASDAQ, including the Nasdaq
National Market and the Nasdaq SmallCap Market, then the Current Market Value
shall be the average of the closing bid and asked prices for the five trading
days ending on the third Business Day prior to the Quarterly Dividend Payment
Date; or

                  (iii) if the Common Stock shall be listed (or admitted to
unlisted trading privileges) on more than one national securities exchange or
one or more national securities exchanges and in the over-the-counter market,
then the Current Market Value shall, if different as a result of calculation
under the applicable method(s) described above in (i) and (ii) above, be deemed
to be the higher number calculated in connection therewith; or

                  (iv) if the shares of Common Stock are traded over the
counter, but not on any national securities exchange and not in the NASDAQ
National Market System or the Nasdaq SmallCap Market System, then the Current
Market Value shall be the average of the mean bid and asked prices per share for
the five trading days ending on the third Business Day prior to the Quarterly
Dividend Payment Date, as reported by Pink Sheets LLC, or an equivalent
generally accepted reporting service; or


                                       2
<PAGE>

                  (v) if the Common Stock shall not be so listed, admitted to
unlisted trading privileges, or traded over the counter, and such bid and asked
prices shall not be so reported, then the Current Market Value shall be the
average of the mean bid and asked prices per share for the last ten trading days
on which bid and asked prices were reported prior to the third Business Day
prior to the Quarterly Dividend Payment Date.

      The Company shall not be required to issue fractional shares of Common
Stock in connection with its election to pay the dividend in shares of Common
Stock. If any fraction of a share of Common Stock would be issuable upon the
payment of the dividend (or any specified portion thereof), the Company shall
pay an amount in cash equal to the product of (a) such fraction and (b) the
Current Market Value of a share of the Common Stock, determined as set forth
above.

            (c) Dividends paid on shares of Series B Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis to
all such shares of Series B Preferred Stock at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive payments of a dividend declared
thereon, which record date shall be no more than 60 days nor less than ten days
prior to the date fixed for the payment thereof.

            (d) The holders of shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided in
this Certificate of Designation of Series B Alternate Rate Cumulative
Convertible Redeemable Preferred Stock.

      Section 3. Required Approval. The shares of Series B Preferred Stock shall
not have any voting powers, either general or special, except as required by
applicable law and shall have approval rights as follows:

            (a) Without the approval of the holders of at least 67% of the
shares of Series B Preferred Stock at the time outstanding, the Company shall
not amend its Certificate of Incorporation to, adopt a certificate of
designation to, or otherwise (i) create any class of stock or issue any series
of Preferred Stock or any other equity security ranking prior to or in parity
with the Series B Preferred Stock as to dividends or upon liquidation; provided,
                                                                       --------
however, that such approval shall not be required if the creation or issuance of
-------
the class or series of equity securities ranking prior to or in parity with the
Series B Preferred Stock as to dividends or upon liquidation is created or
issued in an Approved Transaction, as defined in Section 8 herein; or (ii) alter
or change any of the preferences, privileges, rights or powers of the holders of
the Series B Preferred Stock so as to affect adversely such preferences,
privileges, rights or powers.

            (b) In the event that any four consecutive quarterly dividends upon
the Series B Preferred Stock which the holders of the Series B Preferred Stock
are entitled to receive hereunder shall be in arrears and unpaid either in cash
or in-kind, the holders of Series B Preferred Stock shall have the exclusive and
special right, voting separately as a class, to elect two (2) members of the
Board of Directors or such greater number of members as is necessary to


                                       3
<PAGE>

equal at least 20% of the total number of members of the Board of Directors at
all times thereafter.

      Section 4. Certain Restrictions. Whenever quarterly dividends payable on
shares of Series B Preferred Stock pursuant to the terms of Section 2 are in
arrears, then thereafter and until all accrued and unpaid dividends on shares of
Series B Preferred Stock outstanding shall have been paid in full or declared
and set apart for payment, the Company shall not declare or pay dividends on, or
make any other distributions on any shares of any series or class other than
Series B Preferred Stock or purchase, redeem or otherwise acquire any shares of
any series or class other than Series B Preferred Stock; provided, however, that
                                                         -----------------
such restrictions shall be deemed to be waived by the holders of the outstanding
shares of the Series B Preferred Stock if the declaration or payment of
dividends or distributions, or the repurchase, redemption or other acquisition,
is with regard to a series or class of capital stock issued in an Approved
Transaction.

      Section 5. Redemption.

            (a) The outstanding shares of Series B Preferred Stock may be
redeemed at the option of the Company, in whole or in part, at any time upon not
less than 30 days nor more than 90 days prior written notice to all holders of
record of shares of Series B Preferred Stock to be so redeemed, at a redemption
price equal to all accumulated but unpaid dividends to and including the date
fixed for redemption of such shares (the "Redemption Date") plus an amount (the
"Applicable Amount") equal to (i) during the four calendar years after the year
of issuance of the Series B Preferred Stock, $10.00 per share or (ii) during
each calendar year after the fourth year, an amount equal to the Applicable
Amount in the preceding year plus $0.50 per share; provided that the redemption
price per share for any transaction which results in the total number of shares
of Series B Preferred Stock that have been redeemed (including the shares
redeemed in such transaction) equaling at least ten percent (10%) of the total
number of shares of Series B Preferred Stock which were originally issued, and
for all subsequent transactions, shall be the same price as was in effect during
the year preceding the transaction which results in the redemption of at least
ten percent (10%) of the originally issued Series B Preferred Stock. Subject to
delivery of certificates for the shares to be redeemed, the Company shall pay
the Applicable Amount plus all accumulated but unpaid dividends on the
Redemption Date.

            (b) Unless default shall be made in the payment in full of the
redemption price and any accumulated and unpaid dividends, dividends on the
shares of Series B Preferred Stock called for redemption shall cease to
accumulate on the Redemption Date, and al1 rights of the holders of such shares
as stockholders of the Company by reason of the ownership of such shares shall
cease on the Redemption Date, except the right to receive the amount payable
upon redemption of such shares on presentation and surrender of the respective
certificates representing such shares. After the Redemption Date, such shares
shall not be deemed to be outstanding and shall not be transferable on the books
of the Company except to the Company.

            (c) At any time on or after the Redemption Date, the respective
holders of record of shares of Series B Preferred Stock to be redeemed shall be
entitled to receive the redemption price upon actual delivery to the Company of
certificates for the shares to be redeemed, such certificates, if required by
the Company, to be properly stamped for transfer and


                                       4
<PAGE>

duly endorsed in blank or accompanied by proper instruments of transfer thereof
duly executed in blank.

      Section 6. Liquidation, Dissolution or Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of shares of the Series B Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its stockholders, before any payment shall be made to the holders of any
other class or series of capital stock of the Company, an amount equal to $10.00
per share plus an amount equal to all dividends accrued thereon to and including
the date of payment; provided, however, the holders of the Series B Preferred
Stock shall be deemed to have waived such priority of payment with regard to
another class or series of capital stock issued in an Approved Transaction.

      Section 7. Conversion.

            (a) Conversion Ratio. Each share of Series B Preferred Stock shall
be convertible at any time at the option of the holder thereof, into shares of
Common Stock. Subject to the other terms of this Section 7, the number of shares
of Common Stock deliverable upon conversion of one share of Series B Preferred
Stock shall be one and one-half (1.5) shares of Common Stock, provided, however,
in the event that while shares of Series B Preferred Stock are held by Bank of
America, N.A. or a nominee thereof the Company issues new shares of equity
securities to investors for new funding and a portion of the proceeds is used to
make a reduction in the outstanding principal amount of the Company's Term Loan,
the conversion ratio shall be adjusted as follows:

 Term Loan             Conversion            Pre Conversion           No. Shares
  Paydown                 Ratio                  Equity                Of Common
  -------                 -----                  ------                ---------
     $0                   1.5:1                  16.30%                1,500,000

$1.0 million              1.4:1                  15.22%                1,400,000

$1.5 million              1.3:1                  14.13%                1,300,000

$2.0 million              1.2:1                  13.04%                1,200,000

$2.5 million              1.0:1                  10.87%                1,000,000

$3.0 million              0.5:1                   5.43%                  500,000

For the purposes of this Section 7(a), the "Term Loan" shall mean the term loan
payable to Bank of America, N.A. in the original principal amount of
$4,903,874.69, due March 31, 2003, evidenced by a Term Loan Note dated March 6,
2002, as such term loan note may be amended, modified, renewed or replaced.

            (b) Exercise of Conversion Privilege. Each holder of outstanding
shares of Series B Preferred Stock may exercise the conversion right provided in
paragraph (a) above as to all or any portion of the shares he holds by
delivering to the Company during regular business hours, at the principal office
of the Company or at such other place as may be designated in


                                       5
<PAGE>

writing by the Company, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to the
Company (if required by it), accompanied by written notice stating that the
holder elects to convert such shares and stating the name or names (with address
and applicable social security or other tax identification number) in which the
certificate or certificates for shares of Common Stock are to be issued.
Conversion shall be deemed to have been effected on the date (the "Conversion
Date") when such delivery is made. As promptly as practicable thereafter the
Company shall issue and deliver to or upon the written order of such holder, at
such office or other place designated by the Company, a certificate or
certificates for the number of shares of Common Stock to which he is entitled
and a check or other order for the payment of cash due with respect to any
fraction of a share, as provided in paragraph (c) below. The person in whose
name the certificate or certificates for shares of Common Stock are to be issued
shall be deemed to have become a shareholder of record on the Conversion Date,
unless the transfer books of the Company are closed on that date, in which event
he shall be deemed to have become a shareholder of record on the next succeeding
date on which the transfer books are open; but the Conversion Price shall be
that in effect on the Conversion Date.

            (c) No Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock upon conversion of shares of Series B
Preferred Stock. If more than one share of Series B Preferred Stock shall be
surrendered for conversion at any time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the total number of shares of Series B Preferred Stock so surrendered.
If any fractional interest in a share of Common Stock would be deliverable upon
conversion, the Company shall make an adjustment therefor in cash based on the
Current Market Value of one share of Common Stock on the Conversion Date. The
"Current Market Value" for purposes of this paragraph shall be determined as set
forth in Section 2(b), except that each reference to "Quarterly Dividend Payment
Date" in Section 2(b) shall mean "Conversion Date" for purposes of this
paragraph.

            (d) Taxes Payable on Conversion. The issuance of shares of Common
Stock on conversion of outstanding shares of Series B Preferred Stock shall be
made by the Company without charge for expenses or for any tax in respect of the
issuance of such shares of Common Stock, but the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than that of
the holder of record on the books of the Company of the outstanding shares of
Series B Preferred Stock converted, and the Company shall not be required to
issue or deliver any certificate for shares of Common Stock unless and until the
person requesting the issuance thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

            (e) Conversion Price Adjustments. The Conversion Price of the Series
B Preferred Stock shall be subject to adjustment from time to time as follows:

                  (i) (A) If the Company shall issue any Additional Stock (as
defined below) without consideration or for a consideration per share that is
less than the Market Price in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price


                                       6
<PAGE>

shall forthwith (except as otherwise provided in this clause (i)) be adjusted as
to equal the price determined by the following formula:

      NP =  OP x  (P x N) + C
                 -------------
                 (P x (N + n))
where

      NP =  new Conversion Price,

      OP =  old Conversion Price,

      P  =  Market Price in effect immediately prior to the issuance of
            Additional Stock,

      N =   the number of shares of Common Stock outstanding immediately prior
            to the issuance of Additional Stock (including for this purpose the
            number of shares of Common Stock issuable upon conversion of the
            Series B Preferred Stock at the Conversion Price in effect
            immediately prior to such issuance),

      C =   the aggregate consideration to be received by the Company for the
            Additional Stock, and

      n =   the number of shares of Additional Stock to be issued.

      The "Market Price" shall mean the Current Market Value as defined in
Section 2(b) hereof, with the date of measurement under sub-clauses (i) to and
including (v) of Section 2(b) being, for the purposes of this Section 7(e), the
third Business Day prior to the Issuance Date of such Additional Stock rather
than the third Business Day prior to the Quarterly Dividend Payment Date.

                        (B) No adjustment of the Conversion Price for the Series
B Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments that are thereby not required to be made shall be
carried forward and shall be taken into account in any subsequent adjustment.
Except to the limited extent provided for in Subsection 7(e)(i)(E)(3), no
adjustment of the Conversion Price pursuant to this Subsection 7(e)(i) shall
have the effect of increasing the Conversion Price above the Conversion Price in
effect immediately prior to such adjustment.

                        (C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts , commissions or other expenses
allowed, paid or incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.

                        (D) In the case of the issuance of the Common Stock for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.


                                       7
<PAGE>

                        (E) In the case of the issuance of options to purchase
or rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock or options to purchase or rights to
subscribe for such convertible or exchangeable securities (which are not
excluded from the definition of Additional Stock), the following provisions
shall apply:

                              (1) subject to subparagraph (4) below, the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
such options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
Subsections 7(e)(i)(C) and 7(e)(i)(D)), if any, received by the Company upon the
issuance of such options or rights plus the additional consideration, if any, to
be received by the Company upon the exercise of such options or rights for the
Common Stock covered thereby;

                              (2) subject to subparagraph (4) below, the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable securities or upon
the exercise of options to purchase or rights to subscribe for such convertible
or exchangeable securities and the subsequent conversion or exchange thereof
shall be deemed to have been issued at the time such convertible or exchangeable
securities were issued or such options or rights were issued and for a
consideration equal to the consideration, if any, received by the Company for
any such convertible or exchangeable securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
Company upon the conversion or exchange of such securities or the exercise of
any related options or rights (the consideration in each case to be determined
in the manner provided in Subsections 7(e)(i)(C) and 7(e)(i)(D));

                              (3) in the event of any increase in the number
shares of Common Stock deliverable upon exercise of such options or rights or
upon conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price then in effect shall
forthwith be readjusted to such Conversion Price as would have been obtained had
the adjustment that was made upon the issuance of such options, rights or
securities not converted prior to such change or the options or rights related
to such securities not converted prior to such change been made upon the basis
of such change, but no further adjustment shall be made for the actual issuance
of Common Stock upon the exercise of any such options or rights or the
conversion or exchange of such securities; and

                              (4) upon the expiration of any such options or
rights, the termination of any such right s to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have been obtained had the adjustment that was made
upon the issuance of such options, rights or securities or options or rights
related to such securities been made upon the basis of the issuance of only the
number of shares of Common


                                       8
<PAGE>

Stock actually issued upon the exercise of such options or rights, upon the
conversion or exchange of such securities or upon the exercise of the options or
rights related to such securities.

                  (ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to Subsection 7(e)(i)(E)) on any
date ("Issuance Date"), other than:

                        (A) Common Stock issued pursuant to a transaction
described in Subsection 7(e)(iii) hereof,

                        (B) Common Stock issuable or issued to directors,
employees or consultants of the Company directly or pursuant to a stock option
or other plan,

                        (C) Common Stock issued or issuable upon conversion of
any outstanding Series B Preferred Stock, and

                        (D) Common Stock issued in an Approved Transaction.

                  (iii) If the Company should at any time or from time to time
after the Issuance Date fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the applicable
Conversion Price of the Series B Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Series B Preferred Stock shall be increased in proportion to such
increase of outstanding shares.

                  (iv) If the number of shares of Common Stock outstanding at
any time after the Issuance Date is decreased by a combination or reverse stock
split of the outstanding shares of Common Stock, then, following the record date
of such combination or reverse stock split, the applicable Conversion Price of
the Series B Preferred Stock shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each share of Series B
Preferred Stock shall be decreased in proportion to such decrease in outstanding
shares.

                  (v) In case of any consolidation or merger of the Company with
or into another corporation or the conveyance of all or substantially all of the
assets of the Company to another corporation, adequate provision shall be made
by the Company or by the successor or purchasing business entity so that each
share of Series B Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock deliverable upon conversion of such Series
B Preferred Stock immediately before the effectiveness of such consolidation,
merger or conveyance, would


                                       9
<PAGE>

have been entitled upon such consolidation, merger or conveyance; and, in any
such case, appropriate adjustment (as determined by the Board of Directors of
the Company) shall be made in the application of the provisions herein set forth
with respect to changes in and other adjustment of the Conversion Price of the
Series B Preferred Stock) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series B Preferred Stock.

            (f) Other Distributions. If the Company shall declare a distribution
payable to holders of Common Stock in securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in Subsection 7(e) (iii), then,
in each such case for the purpose of this Subsection 7(f), the holders of the
Series B Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Company into which their shares of Series B Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Company entitled to receive such distribution.

            (g) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination, merger, sale of assets or other transaction provided for elsewhere
in this Section 7), provision shall be made so that the holders of the Series B
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series B Preferred Stock the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon conversion immediately before the effectiveness of such
recapitalization would have been entitled on such recapitalization. In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of the Series B
Preferred Stock after the recapitalization to the end that the provisions of
this Section 7 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Series B Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.

            (h) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 7 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock against impairment.

            (i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series B Preferred
Stock pursuant to this Section 7, the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series B Preferred Stock, by first class
mail, postage prepaid, a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is


                                       10
<PAGE>

based, including a statement setting forth (A) the consideration received or to
be received by the Company for any Additional Stock, (B) the Conversion Price
then in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of a share of the Series B Preferred Stock.

            (j) Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Series B Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.

            (k) Notices. Any notice required by the provisions of this Section 7
to be given to the holder of shares of Series B Preferred Stock shall be deemed
given when personally delivered to such holder or five business days after the
same has been deposited in the United States mail, certified or registered mail,
return receipt requested, postage prepaid, and addressed to each holder of
record at his address appearing on the books of the Company.

            (l) Effect of Conversion After Certain Record Dates. If any shares
of Series B Preferred Stock are converted into shares of Common Stock after the
record date for the happening of any of the events described in subparagraphs
(i), (ii) or (iii) of Section 7(e) but before the happening of such event the
Company may defer, until the happening of such event, (i) issuing to the holder
of shares of Series B Preferred Stock so converted the shares of Common Stock
which he is entitled to receive because of the adjustments required pursuant to
any such subparagraph and (ii) paying to such holder any cash in lieu of a
fractional share pursuant to this Section 7.

            (m) Reservation of Stock Issuable on Conversion. Shares of Common
Stock issued on conversion of shares of Series B Preferred Stock shall be issued
as fully paid shares and shall be nonassessable by the Company. The Company
shall, at all times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series B Preferred Stock such number of
its duly authorized shares of Common Stock as shall be sufficient to effect the
conversion of all of the outstanding shares of Series B Preferred Stock.

      Section 8. Approved Transactions. As used in Sections 3, 4, 6 and 7 of
this Certificate, the term "Approved Transaction" shall mean any transaction
entered into by the Company which results in the issuance of shares of the
Company's capital stock (or securities convertible into or exchangeable or
exercisable for shares of capital stock) to a third party so long as such
transaction shall have been approved or consented to, in either case in writing,
by a majority of the holders of the outstanding shares of Series B Preferred
Stock. The approval of or consent to such transaction shall be deemed to have
been given by such holders of a majority of the Series B Preferred Stock if such
holders shall have received a Third Party Opinion customary in form and
substance that the transaction is fair to the Company from a financial point of
view not less


                                       11
<PAGE>

than five business days prior to the closing of such transaction. The term
"Third Party Opinion" shall mean a fairness opinion addressed to the Company's
Board of Directors and the holders of a majority of the Series B Preferred Stock
from a nationally recognized investment banking firm selected by the Company
which selection shall be subject to the approval of the holders of a majority of
the Series B Preferred Stock.

      Section 9. Transfer Restrictions. The holder of any shares of Series B
Preferred Stock shall not transfer or purport to transfer any such shares unless
he shall have given to the Company, through its Secretary, at least fifteen (15)
business days' written notice of the proposed transfer, the number of shares
proposed to be transferred, the price at which the proposed transfer is to be
made, and the name of the prospective transferee. During such fifteen (15)
business days, the Company shall have the sole option to exercise its right of
redemption consistent with the terms of Section 5 of this Certificate.

      IN WITNESS WHEREOF, Comdial Corporation has caused this Certificate of
Designation to be duly executed by Nickolas A. Branica, its President, and
attested to by Paul K. Suijk, its Secretary, and has caused the corporate seal
to be affixed hereto, this 6th day of March, 2002.

                               COMDIAL CORPORATION


                               By: /s/ Nickolas A. Branica
                                   ------------------------------------
                                   President


ATTEST:


/s/ Paul K. Suijk
------------------------------------
Secretary

(Corporate Seal)


1037123v4


                                       12