Document:

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                                                                    EXHIBIT 10.1

                              VERILINK CORPORATION
                       2004 NEW HIRE STOCK INCENTIVE PLAN

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                              VERILINK CORPORATION
                       2004 NEW HIRE STOCK INCENTIVE PLAN

                                TABLE OF CONTENTS

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SECTION 1  DEFINITIONS.................................................................          1

   1.1      DEFINITIONS................................................................          1

SECTION 2  THE STOCK INCENTIVE PLAN....................................................          3

   2.1      PURPOSE OF THE PLAN........................................................          3
   2.2      STOCK SUBJECT TO THE PLAN..................................................          3
   2.3      ADMINISTRATION OF THE PLAN.................................................          4
   2.4      ELIGIBILITY AND LIMITS.....................................................          4

SECTION 3  TERMS OF STOCK INCENTIVES...................................................          4

   3.1      TERMS AND CONDITIONS OF ALL STOCK INCENTIVES...............................          4
   3.2      TERMS AND CONDITIONS OF OPTIONS............................................          5
         (a)  Option Price.............................................................          5
         (b)  Option Term..............................................................          5
         (c)  Payment..................................................................          5
         (d)  Conditions to the Exercise of an Option..................................          6
   3.3      TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS..........................          6
         (a)  Settlement...............................................................          6
         (b)  Conditions to Exercise...................................................          6
   3.4      TERMS AND CONDITIONS OF STOCK AWARDS.......................................          7
   3.5      TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS.........................          7
         (a)  Payment..................................................................          7
         (b)  Conditions to Payment....................................................          7
   3.6      TERMS AND CONDITIONS OF PERFORMANCE UNIT AWARDS............................          7
         (a)  Payment..................................................................          7
         (b)  Conditions to Payment....................................................          8
   3.7      TERMS AND CONDITIONS OF PHANTOM SHARES.....................................          8
         (a)  Payment..................................................................          8
         (b)  Conditions to Payment....................................................          8
   3.8      TREATMENT OF AWARDS UPON TERMINATION OF EMPLOYMENT.........................          8

SECTION 4  RESTRICTIONS ON STOCK.......................................................          8

   4.1      ESCROW OF SHARES...........................................................          8
   4.2      RESTRICTIONS ON TRANSFER...................................................          9

SECTION 5  GENERAL PROVISIONS..........................................................          9

   5.1      WITHHOLDING................................................................          9
   5.2      CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION.............................         10
   5.3      CASH AWARDS................................................................         11
   5.4      RIGHT TO TERMINATE EMPLOYMENT..............................................         11
   5.5      NON-ALIENATION OF BENEFITS.................................................         11
   5.6      RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS.......................         11
   5.7      LISTING AND LEGAL COMPLIANCE...............................................         11
   5.8      TERMINATION AND AMENDMENT OF THE PLAN......................................         12
   5.9      CHOICE OF LAW..............................................................         12
   5.10     EFFECTIVE DATE OF PLAN.....................................................         12
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                              VERILINK CORPORATION
                       2004 NEW HIRE STOCK INCENTIVE PLAN

                              SECTION 1 DEFINITIONS

      1.1 Definitions. Whenever used herein, the masculine pronoun will be
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:

            (a) "Affiliate" means:

                  (1) an entity that directly or through one or more
            intermediaries controls, is controlled by, or is under common
            control with the Company, as determined by the Company, or

                  (2) any entity in which the Company has such a significant
            interest that the Company determines it should be deemed an
            "Affiliate", as determined in the sole discretion of the Company.

            (b) "Board of Directors" means the board of directors of the
      Company.

            (c) "Code" means the Internal Revenue Code of 1986, as amended.

            (d) "Committee" means the committee appointed by the Board of
      Directors to administer the Plan.

            (e) "Company" means Verilink Corporation, a Delaware corporation.

            (f) "Disability" has the same meaning as provided in the long-term
      disability plan or policy maintained or, if applicable, most recently
      maintained, by the Company or, if applicable, any Affiliate of the Company
      for the Participant. If no long-term disability plan or policy was ever
      maintained on behalf of the Participant, Disability means that condition
      described in Code Section 22(e)(3), as amended from time to time. In the
      event of a dispute, the determination of Disability will be made by the
      Committee and will be supported by advice of a physician competent in the
      area to which such Disability relates.

            (g) "Dividend Equivalent Rights" means certain rights to receive
      cash payments as described in Section 3.5.

            (h) "Eligible Employee" means (1) a newly hired employee not
      previously an employee or director of the Company or an Affiliate; (2) an
      employee that, following a bona fide period of non-employment, is to be
      granted one or more Stock Incentives hereunder as an inducement material
      to the individual's entering into employment with

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      the Company or an Affiliate; or (3) any other employee (as such term is
      defined in General Instruction A. to Form S-8 under the Securities Act of
      1933) or service provider to whom Stock Incentives can be granted without
      shareholder approval under the rules of the principal trading market of
      the Company's stock, provided that, under any of the above circumstances,
      such grants are approved by the Committee.

            (i) "Exchange Act" means the Securities Exchange Act of 1934, as
      amended from time to time.

            (j) "Fair Market Value" with regard to a date means:

                  (1) the price at which Stock shall have been sold on that date
            or the last trading date prior to that date as reported by the
            national securities exchange selected by the Committee on which the
            shares of Stock are then actively traded or, if applicable, as
            reported by the NASDAQ Stock Market;

                  (2) if such market information is not published on a regular
            basis, the price of Stock in the over-the-counter market on that
            date or the last business day prior to that date as reported by the
            NASDAQ Stock Market or, if not so reported, by a generally accepted
            reporting service; or

                  (3) if Stock is not publicly traded, as determined in good
            faith by the Committee with due consideration being given to (i) the
            most recent independent appraisal of the Company, if such appraisal
            is not more than twelve months old and (ii) the valuation
            methodology used in any such appraisal.

            For purposes of Paragraphs (1), (2), or (3) above, the Committee may
      use the closing price as of the applicable date, the average of the high
      and low prices as of the applicable date or for a period certain ending on
      such date, the price determined at the time the transaction is processed,
      the tender offer price for shares of Stock, or any other method which the
      Committee determines is reasonably indicative of the fair market value.

            (k) "Option" means a stock option other than an incentive stock
      option within the meaning of Section 422 of the Internal Revenue Code.

            (l) "Participant" means an Eligible Employee who receives a Stock
      Incentive hereunder.

            (m) "Performance Unit Award" refers to a performance unit award as
      described in Section 3.6.

            (n) "Phantom Shares" refers to the rights described in Section 3.7.

            (o) "Plan" means the Verilink Corporation 2004 New Hire Stock
      Incentive Plan.

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            (p) "Stock" means the Company's common stock, $.01 par value per
      share.

            (q) "Stock Appreciation Right" means a stock appreciation right
      described in Section 3.3.

            (r) "Stock Award" means a stock award described in Section 3.4.

            (s) "Stock Incentive Agreement" means an agreement between the
      Company and a Participant or other documentation evidencing an award of a
      Stock Incentive.

            (t) "Stock Incentive Program" means a written program established by
      the Committee, pursuant to which Stock Incentives are awarded under the
      Plan under uniform terms, conditions and restrictions set forth in such
      written program.

            (u) "Stock Incentives" means, collectively, Dividend Equivalent
      Rights Options, Phantom Shares, Stock Appreciation Rights, Stock Awards
      and Performance Unit Awards.

            (v) "Termination of Employment" means the termination of the
      employee-employer relationship between a Participant and the Company and
      its Affiliates, regardless of whether severance or similar payments are
      made to the Participant for any reason, including, but not by way of
      limitation, a termination by resignation, discharge, death, Disability or
      retirement. The Committee will, in its absolute discretion, determine the
      effect of all matters and questions relating to a Termination of
      Employment, including, but not by way of limitation, the question of
      whether a leave of absence constitutes a Termination of Employment.

                       SECTION 2 THE STOCK INCENTIVE PLAN

      2.1 Purpose of the Plan. The Plan is intended to provide a means of
recruiting individuals to provide services to the Company or an Affiliate as an
Eligible Employee.

      2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, five hundred thousand (500,000) shares of Stock (the "Maximum Plan
Shares") are hereby reserved exclusively for issuance upon exercise or payment
pursuant to Stock Incentives. The shares of Stock attributable to the nonvested,
unpaid, unexercised, unconverted or otherwise unsettled portion of any Stock
Incentive that is forfeited or cancelled or expires or terminates for any reason
without becoming vested, paid, exercised, converted or otherwise settled in full
will again be available for purposes of the Plan. The number of shares of Stock
available for purposes of the Plan shall be reduced only by the actual number of
shares of Stock issued in the settlement of each Stock Incentive, without regard
to the number of shares of Stock associated with any award for the purpose of
determining the extent of the Participant's rights in the Stock Incentive.

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      2.3 Administration of the Plan. The Plan is administered by the Committee.
The Committee has full authority in its discretion to determine the employees of
the Company or its Affiliates to whom Stock Incentives will be granted and the
terms and provisions of Stock Incentives, subject to the Plan. Subject to the
provisions of the Plan, the Committee has full and conclusive authority to
interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
Stock Incentive Agreements; and to make all other determinations necessary or
advisable for the proper administration of the Plan. The Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan (whether or not such persons are similarly situated). The Committee's
decisions are final and binding on all Participants. Each member of the
Committee shall serve at the discretion of the Board of Directors and the Board
of Directors may from time to time remove members from or add members to the
Committee. Vacancies on the Committee shall be filled by the Board of Directors.

      2.4 Eligibility and Limits. Stock Incentives may be granted only to
Eligible Employees of the Company or an Affiliate.

                       SECTION 3 TERMS OF STOCK INCENTIVES

      3.1 Terms and Conditions of All Stock Incentives.

            (a) The number of shares of Stock as to which a Stock Incentive may
      be granted will be determined by the Committee in its sole discretion,
      subject to the provisions of Section 2.2 as to the total number of shares
      available for grants under the Plan.

            (b) Each Stock Incentive will either be evidenced by a Stock
      Incentive Agreement in such form and containing such terms, conditions and
      restrictions as the Committee may determine to be appropriate, including
      without limitation, performance goals that must be achieved as a condition
      to vesting or payment of the Stock Incentive, or be made subject to the
      terms of a Stock Incentive Program, containing such terms, conditions and
      restrictions as the Committee may determine to be appropriate, including
      without limitation, performance goals that must be achieved as a condition
      to vesting or payment of the Stock Incentive. Each Stock Incentive
      Agreement or Stock Incentive Program is subject to the terms of the Plan
      and any provisions contained in the Stock Incentive Agreement or Stock
      Incentive Program that are inconsistent with the Plan are null and void.

            (c) The date a Stock Incentive is granted will be the date on which
      the Committee has approved the terms and conditions of the Stock Incentive
      and has determined the recipient of the Stock Incentive and the number of
      shares covered by the Stock Incentive, and has taken all such other
      actions necessary to complete the grant of the Stock Incentive.

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            (d) Any Stock Incentive may be granted in connection with all or any
      portion of a previously or contemporaneously granted Stock Incentive.
      Exercise or vesting of a Stock Incentive granted in connection with
      another Stock Incentive may result in a pro rata surrender or cancellation
      of any related Stock Incentive, as specified in the applicable Stock
      Incentive Agreement or Stock Incentive Program.

            (e) Stock Incentives are not transferable or assignable except by
      will or by the laws of descent and distribution and are exercisable,
      during the Participant's lifetime, only by the Participant; or in the
      event of the Disability of the Participant, by the legal representative of
      the Participant; or in the event of death of the Participant, by the legal
      representative of the Participant's estate or if no legal representative
      has been appointed, by the successor in interest determined under the
      Participant's will; provided, however, that the Committee may waive any of
      the provisions of this Section or provide otherwise as to any Stock
      Incentives.

            (f) To the extent required by applicable law, promptly following an
      issuance of any Stock Incentive, the Company shall disclose in a press
      release the material terms of the grant, including the recipient of the
      grant and the number of shares of Stock involved.

      3.2 Terms and Conditions of Options. Each Option granted under the Plan
must be evidenced by a Stock Incentive Agreement.

            (a) Option Price. Subject to adjustment in accordance with Section
      5.2 and the other provisions of this Section 3.2, the exercise price (the
      "Exercise Price") per share of Stock purchasable under any Option must be
      as set forth in the applicable Stock Incentive Agreement.

            (b) Option Term. The term of any Option must be as specified in the
      applicable Stock Incentive Agreement.

            (c) Payment. Payment for all shares of Stock purchased pursuant to
      exercise of an Option will be made in any form or manner authorized by the
      Committee in the Stock Incentive Agreement or by amendment thereto,
      including, but not limited to, cash or, if the Stock Incentive Agreement
      provides:

                  (i) by delivery to the Company of a number of shares of Stock
            which have been owned by the holder for at least six (6) months
            prior to the date of exercise having an aggregate Fair Market Value
            of not less than the product of the Exercise Price multiplied by the
            number of shares the Participant intends to purchase upon exercise
            of the Option on the date of delivery;

                  (ii) in a cashless exercise through a broker provided,
            however, that any such cashless exercise is consistent with the
            restrictions of Section 13(k) of the Exchange Act (Section 402 of
            the Sarbanes-Oxley Act of 2002); or

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                  (iii) by having a number of shares of Stock withheld, the Fair
            Market Value of which as of the date of exercise is sufficient to
            satisfy the Exercise Price.

      In its discretion, the Committee also may authorize (at the time an Option
      is granted or thereafter) Company financing to assist the Participant as
      to payment of the Exercise Price on such terms as may be offered by the
      Committee in its discretion. Payment must be made at the time that the
      Option or any part thereof is exercised, and no shares may be issued or
      delivered upon exercise of an Option until full payment has been made by
      the Participant. The holder of an Option, as such, has none of the rights
      of a stockholder.

            (d) Conditions to the Exercise of an Option. Each Option granted
      under the Plan is exercisable by the Participant or any other designated
      person, at such time or times, or upon the occurrence of such event or
      events, and in such amounts, as the Committee specifies in the Stock
      Incentive Agreement; provided, however, that subsequent to the grant of an
      Option, the Committee, at any time before complete termination of such
      Option, may accelerate the time or times at which such Option may be
      exercised in whole or in part, including, without limitation, upon a
      change in control as defined in the Stock Incentive Agreement and may
      permit the Participant or any other designated person to exercise the
      Option, or any portion thereof, for all or part of the remaining Option
      term, notwithstanding any provision of the Stock Incentive Agreement to
      the contrary.

      3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan must be evidenced by a Stock Incentive
Agreement. A Stock Appreciation Right entitles the Participant to receive the
excess of (1) the Fair Market Value of a specified or determinable number of
shares of the Stock at the time of payment or exercise over (2) a specified or
determinable price which, in the case of a Stock Appreciation Right granted in
connection with an Option, may not be less than the Exercise Price for that
number of shares subject to that Option. A Stock Appreciation Right granted in
connection with a Stock Incentive may only be exercised to the extent that the
related Stock Incentive has not been exercised, paid or otherwise settled.

            (a) Settlement. Upon settlement of a Stock Appreciation Right, the
      Company must pay to the Participant the appreciation in cash or shares of
      Stock (valued at the aggregate Fair Market Value on the date of payment or
      exercise) as provided in the Stock Incentive Agreement or, in the absence
      of such provision, as the Committee may determine.

            (b) Conditions to Exercise. Each Stock Appreciation Right granted
      under the Plan is exercisable or payable at such time or times, or upon
      the occurrence of such event or events, and in such amounts, as the
      Committee specifies in the Stock Incentive Agreement; provided, however,
      that subsequent to the grant of a Stock Appreciation Right, the Committee,
      at any time before complete termination of such Stock Appreciation Right,
      may accelerate the time or times at which such Stock Appreciation Right
      may be exercised or paid in whole or in part.

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      3.4 Terms and Conditions of Stock Awards. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such shares, if any,
will be as the Committee determines, and the certificate for such shares will
bear evidence of any restrictions or conditions. Subsequent to the date of the
grant of the Stock Award, the Committee has the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.

      3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right entitles the Participant to receive payments from the Company
in an amount determined by reference to any cash dividends paid on a specified
number of shares of Stock to Company stockholders of record during the period
such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.

            (a) Payment. Payment in respect of a Dividend Equivalent Right may
      be made by the Company in cash or shares of Stock (valued at Fair Market
      Value as of the date payment is owed) as provided in the Stock Incentive
      Agreement or Stock Incentive Program, or, in the absence of such
      provision, as the Committee may determine.

            (b) Conditions to Payment. Each Dividend Equivalent Right granted
      under the Plan is payable at such time or times, or upon the occurrence of
      such event or events, and in such amounts, as the Committee specifies in
      the applicable Stock Incentive Agreement or Stock Incentive Program;
      provided, however, that subsequent to the grant of a Dividend Equivalent
      Right, the Committee, at any time before complete termination of such
      Dividend Equivalent Right, may accelerate the time or times at which such
      Dividend Equivalent Right may be paid in whole or in part.

      3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
Award shall entitle the Participant to receive, at a specified future date,
payment of an amount equal to all or a portion of the value of a specified or
determinable number of units (stated in terms of a designated or determinable
dollar amount per unit) granted by the Committee. At the time of the grant, the
Committee must determine the base value of each unit, the number of units
subject to a Performance Unit Award, and the Performance goals applicable to the
determination of the ultimate payment value of the Performance Unit Award. The
Committee may provide for an alternate base value for each unit under certain
specified conditions.

            (a) Payment. Payment in respect of Performance Unit Awards may be
      made by the Company in cash or shares of Stock (valued at Fair Market
      Value as of the date payment is owed) as provided in the applicable Stock
      Incentive Agreement or Stock Incentive Program or, in the absence of such
      provision, as the Committee may determine.

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            (b) Conditions to Payment. Each Performance Unit Award granted under
      the Plan shall be payable at such time or times, or upon the occurrence of
      such event or events, and in such amounts, as the Committee shall specify
      in the applicable Stock Incentive Agreement or Stock Incentive Program;
      provided, however, that subsequent to the grant of a Performance Unit
      Award, the Committee, at any time before complete termination of such
      Performance Unit Award, may accelerate the time or times at which such
      Performance Unit Award may be paid in whole or in part.

      3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall entitle
the Participant to receive, at a specified future date, payment of an amount
equal to all or a portion of the Fair Market Value of a specified number of
shares of Stock at the end of a specified period. At the time of the grant, the
Committee will determine the factors which will govern the portion of the
phantom shares so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment. Phantom
Share awards containing performance criteria may be designated as performance
share awards.

            (a) Payment. Payment in respect of Phantom Shares may be made by the
      Company in cash or shares of Stock (valued at Fair Market Value as of the
      date payment is owed) as provided in the applicable Stock Incentive
      Agreement or Stock Incentive Program, or, in the absence of such
      provision, as the Committee may determine.

            (b) Conditions to Payment. Each Phantom Share granted under the Plan
      is payable at such time or times, or upon the occurrence of such event or
      events, and in such amounts, as the Committee specify in the applicable
      Stock Incentive Agreement or Stock Incentive Program; provided, however,
      that subsequent to the grant of a Phantom Share, the Committee, at any
      time before complete termination of such Phantom Share, may accelerate the
      time or times at which such Phantom Share may be paid in whole or in part.

      3.8 Treatment of Awards Upon Termination of Employment. Any award under
this Plan to a Participant who has experienced a Termination of Employment may
be cancelled, accelerated, paid or continued, as provided in the applicable
Stock Incentive Agreement or Stock Incentive Program, or, in the absence of such
provision, as the Committee may determine. The portion of any award exercisable
in the event of continuation or the amount of any payment due under a continued
award may be adjusted by the Committee to reflect the Participant's period of
service from the date of grant through the date of the Participant's Termination
of Employment or such other factors as the Committee determines are relevant to
its decision to continue the award.

                         SECTION 4 RESTRICTIONS ON STOCK

      4.1 Escrow of Shares. Any certificates representing the shares of Stock
issued under the Plan will be issued in the Participant's name, but, if the
applicable Stock Incentive Agreement or Stock Incentive Program so provides, the
shares of Stock will be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive

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Agreement or Stock Incentive Program providing for transfer of shares of Stock
to the Custodian must appoint the Custodian as the attorney-in-fact for the
Participant for the term specified in the applicable Stock Incentive Agreement
or Stock Incentive Program, with full power and authority in the Participant's
name, place and stead to transfer, assign and convey to the Company any shares
of Stock held by the Custodian for such Participant, if the Participant forfeits
the shares under the terms of the applicable Stock Incentive Agreement or Stock
Incentive Program. During the period that the Custodian holds the shares subject
to this Section, the Participant is entitled to all rights, except as provided
in the applicable Stock Incentive Agreement or Stock Incentive Program,
applicable to shares of Stock not so held. Any dividends declared on shares of
Stock held by the Custodian shall, as the Committee may provide in the
applicable Stock Incentive Agreement or Stock Incentive Program, be paid
directly to the Participant or, in the alternative, be retained by the Custodian
or by the Company until the expiration of the term specified in the applicable
Stock Incentive Agreement or Stock Incentive Program and shall then be
delivered, together with any proceeds, with the shares of Stock to the
Participant or to the Company, as applicable.

      4.2 Restrictions on Transfer. The Participant does not have the right to
make or permit to exist any disposition of the shares of Stock issued pursuant
to the Plan except as provided in the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program. Any disposition of the shares of Stock
issued under the Plan by the Participant not made in accordance with the Plan or
the applicable Stock Incentive Agreement or Stock Incentive Program will be
void. The Company will not recognize, or have the duty to recognize, any
disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
will continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.

                          SECTION 5 GENERAL PROVISIONS

      5.1 Withholding. The Company must deduct from all cash distributions under
the Plan any taxes required to be withheld by federal, state, or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company has the right to require the recipient to remit to the Company an amount
sufficient to satisfy any federal, state, and local tax withholding requirements
prior to the delivery of any certificate or certificates for such shares or the
vesting of such Stock Award. A Participant may pay the withholding obligation in
cash, or, if the applicable Stock Incentive Agreement or Stock Incentive Program
provides, a Participant may elect to have the number of shares of Stock he is to
receive reduced by, or with respect to a Stock Award, tender back to the
Company, the smallest number of whole shares of Stock which, when multiplied by
the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state, and local, if any,
withholding obligation arising from exercise or payment of a Stock Incentive (a
"Withholding Election"). A Participant may make a Withholding Election only if
both of the following conditions are met:

            (a) The Withholding Election must be made on or prior to the date on
      which the amount of tax required to be withheld is determined (the "Tax
      Date") by executing

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      and delivering to the Company a properly completed notice of Withholding
      Election as prescribed by the Committee; and

            (b) Any Withholding Election made will be irrevocable except on six
      months advance written notice delivered to the Company; however, the
      Committee may in its sole discretion disapprove and give no effect to the
      Withholding Election.

      5.2 Changes in Capitalization; Merger; Liquidation.

            (a) The number of shares of Stock reserved for the grant of Options,
      Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares, Stock
      Appreciation Rights and Stock Awards; the number of shares of Stock
      reserved for issuance upon the exercise or payment, as applicable, of each
      outstanding Option, Dividend Equivalent Right, Phantom Share and Stock
      Appreciation Right and upon vesting or grant, as applicable, of each Stock
      Award; the Exercise Price of each outstanding Option and the specified
      number of shares of Stock to which each outstanding Dividend Equivalent
      Right, Phantom Share and Stock Appreciation Right pertains must be
      proportionately adjusted for any increase or decrease in the number of
      issued shares of Stock resulting from a subdivision or combination of
      shares or the payment of a stock dividend in shares of Stock to holders of
      outstanding shares of Stock or any other increase or decrease in the
      number of shares of Stock outstanding effected without receipt of
      consideration by the Company.

            (b) In the event of a merger, consolidation, reorganization,
      extraordinary dividend, spin-off, sale of substantially all of the
      Company's assets, other change in capital structure of the Company, tender
      offer for shares of Stock, or a change in control of the Company (as
      defined by the Committee in the applicable Stock Incentive Agreement) the
      Committee may make such adjustments with respect to awards and take such
      other action as it deems necessary or appropriate, including, without
      limitation, the assumption of other awards, the substitution of new
      awards, the adjustment of outstanding awards, the acceleration of awards,
      the removal of restrictions on outstanding awards, or the termination of
      outstanding awards in exchange for the cash value determined in good faith
      by the Committee of the vested and/or unvested portion of the award, all
      as may be provided in the applicable Stock Incentive Agreement or, if not
      expressly addressed therein, as the Committee subsequently may determine
      in its sole discretion. Any adjustment pursuant to this Section 5.2 may
      provide, in the Committee's discretion, for the elimination without
      payment therefor of any fractional shares that might otherwise become
      subject to any Stock Incentive, but except as set forth in this Section
      may not otherwise diminish the then value of the Stock Incentive.

            (c) The existence of the Plan and the Stock Incentives granted
      pursuant to the Plan must not affect in any way the right or power of the
      Company to make or authorize any adjustment, reclassification,
      reorganization or other change in its capital or business structure, any
      merger or consolidation of the Company, any issue of debt or equity
      securities having preferences or priorities as to the Stock or the rights
      thereof, the

                                       10

<PAGE>

      dissolution or liquidation of the Company, any sale or transfer of all or
      any part of its business or assets, or any other corporate act or
      proceeding.

      5.3 Cash Awards. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state, and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights thereunder.

      5.4 Right to Terminate Employment. Nothing in the Plan or in any Stock
Incentive confers upon any Participant the right to continue as an employee of
the Company or any of its Affiliates or affect the right of the Company or any
of its Affiliates to terminate the Participant's employment at any time.

      5.5 Non-Alienation of Benefits. Other than as provided herein, no benefit
under the Plan may be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge; and any attempt to do so
shall be void. No such benefit may, prior to receipt by the Participant, be in
any manner liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the Participant.

      5.6 Restrictions on Delivery and Sale of Shares; Legends. Each Stock
Incentive is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Stock Incentive upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Stock Incentive or the purchase or delivery
of shares thereunder, the delivery of any or all shares pursuant to such Stock
Incentive may be withheld unless and until such listing, registration or
qualification shall have been effected. If a registration statement is not in
effect under the Securities Act of 1933 or any applicable state securities laws
with respect to the shares of Stock purchasable or otherwise deliverable under
Stock Incentives then outstanding, the Committee may require, as a condition of
exercise of any Option or as a condition to any other delivery of Stock pursuant
to a Stock Incentive, that the Participant or other recipient of a Stock
Incentive represent, in writing, that the shares received pursuant to the Stock
Incentive are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities laws. The Company
may include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.

      5.7 Listing and Legal Compliance. The Committee may suspend the exercise
or payment of any Stock Incentive so long as it determines that securities
exchange listing or registration or qualification under any securities laws is
required in connection therewith and has not been completed on terms acceptable
to the Committee.

                                       11

<PAGE>

      5.8 Termination and Amendment of the Plan. The Board of Directors at any
time may amend or terminate the Plan without stockholder approval. No such
termination or amendment without the consent of the holder of a Stock Incentive
may adversely affect the rights of the Participant under such Stock Incentive.

      5.9 Choice of Law. The laws of the State of Delaware shall govern the
Plan, to the extent not preempted by federal law, without reference to the
principles of conflict of laws.

      5.10 Effective Date of Plan. This Plan was approved by the Board of
Directors on December 6, 2004.

                              VERILINK CORPORATION

                              By:_______________________________________

                              Title:  President and Chief Executive Officer

                                       12<PAGE>

                                                                    EXHIBIT 10.2

                                                             FORM FOR EXECUTIVES

                        NON-QUALIFIED STOCK OPTION AWARD
                      PURSUANT TO THE VERILINK CORPORATION
                       2004 NEW HIRE STOCK INCENTIVE PLAN

      THIS AWARD is made as of the Grant Date by VERILINK CORPORATION (the
"Company") to ____________________________________ (the "Optionee").

      Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to Optionee an option (the "Option"), as described below, to purchase the Option
Shares.

      A.    Grant Date: _______________________.

      B.    Type of Option: Non-Qualified Stock Option issued under the Verilink
            Corporation 2004 New Hire Stock Incentive Plan (the "Plan").

      C.    Plan under which granted: Verilink Corporation 2004 New Hire Stock
            Incentive Plan.

      D.    Option Shares: All or any part of __________ shares of the Company's
            common stock, $.01 par value per share (the "Stock"), subject to
            adjustment as provided in the attached Terms and Conditions.

      E.    Exercise Price: $_______ per share, subject to adjustment as
            provided in the attached Terms and Conditions.

      F.    Option Period: The Option may be exercised only during the Option
            Period which commences on the Grant Date and ends on the earlier of
            (a) the tenth (10th) anniversary of the Grant Date; (b) the later of
            the date (i) three (3) months following the date the Optionee ceases
            to be an employee of the Company or any Subsidiary for any reason
            other than due to death or Disability; or (ii) twelve (12) months
            following the date the Optionee ceases to be an employee of the
            Company or any Subsidiary due to death or Disability.

      G.    Vesting: The Option Shares shall be immediately vested and
            exercisable in their entirety as of the Grant Date, subject to the
            Company's Repurchase Rights (as defined in Section 9 below) in
            accordance with the attached Terms and Conditions and Repurchase
            Schedule.

      IN WITNESS WHEREOF, the Company and Optionee have executed and sealed this
Award as of the Grant Date set forth above.

OPTIONEE                               VERILINK CORPORATION

_____________________________          By:__________________________________
[Name]
                                       Title:_______________________________

<PAGE>

                              TERMS AND CONDITIONS
                                     TO THE
                        NON-QUALIFIED STOCK OPTION AWARD
                      PURSUANT TO THE VERILINK CORPORATION
                       2004 NEW HIRE STOCK INCENTIVE PLAN

      1. Exercise of Option. Subject to the provisions of the Plan and the Award
which is made pursuant to the Verilink Corporation 2004 New Hire Stock Incentive
Plan and subject also to these Terms and Conditions, which are incorporated in
and made a part of the attached Award:

            (a) the Option may be exercised with respect to all or any portion
      of the Option Shares at any time during the Option Period by the delivery
      to the Company, at its principal place of business, of a written notice of
      exercise in substantially the form attached hereto as Exhibit 1;

            (b) payment to the Company of the Exercise Price multiplied by the
      number of Option Shares being purchased (the "Purchase Price") as provided
      in Section 2; and

            (c) payment of any tax withholding liability pursuant to Section 3
      below.

Upon acceptance of such notice and receipt of payment in full of the Purchase
Price and any tax withholding liability, the Company shall cause to be issued a
certificate representing the Option Shares purchased.

      2. Purchase Price. Payment of the Purchase Price for all Option Shares
purchased pursuant to the exercise of an Option shall be made

            (a) in cash or certified check;

            (b) by delivery to the Company of a number of shares of Stock which
      have been owned by the Optionee for at least six (6) months prior to the
      date of the Option's exercise having a fair market value, as determined
      under the Plan, on the date of exercise either equal to the Purchase Price
      or in combination with cash or a certified check to equal the Purchase
      Price;

            (c) by receipt of the Purchase Price in cash from a broker, dealer
      or other "creditor" as defined by Regulation T issued by the Board of
      Governors of the Federal Reserve System following delivery by the Optionee
      to the Committee of instructions in a form acceptable to the Committee
      regarding delivery to such broker, dealer or other creditor of that number
      of Option Shares with respect to which the Option is exercised; provided,
      however, that any such cashless exercise must be effected in a manner
      consistent with the restrictions of Section 13(k) of the Securities
      Exchange Act of 1934 (Section 402 of the Sarbanes-Oxley Act of 2002); or

            (d) or any combination of the foregoing.

                                       1

<PAGE>

      3. Condition to Delivery of Option Shares.

            (a) The Optionee must deliver to the Company, on the earlier of: (i)
      the later of the date on which Option Shares are purchased by the Optionee
      or the date on which the Repurchase Rights applicable to such Option
      Shares expire or (ii) the date of the Optionee's timely election pursuant
      to Code Section 83(b) as to all or any portion of the Option Shares
      purchased by the Optionee, either cash or a certified check payable to the
      Company in the amount of all tax withholding obligations (whether federal,
      state or local), imposed on the Company by reason of the exercise of the
      Option Shares or, if later in time, the lapse of the corresponding
      Repurchase Rights, or the making of an election pursuant to Code Section
      83(b), as applicable, except as provided in Section 3(b).

            (b) If the Optionee does not make an election pursuant to Code
      Section 83(b), in lieu of paying the withholding tax obligation in cash or
      by certified check as described in Section 3(a), the Optionee may elect to
      have the actual number of shares of Stock issuable upon exercise reduced
      by the smallest number of whole shares of Stock which, when multiplied by
      the Fair Market Value of the Stock as of the Tax Date (as defined below),
      is sufficient to satisfy the amount of the tax withholding obligations
      imposed on the Company by reason of the exercise of the Options Shares or,
      if later in time, the lapse of the corresponding Repurchase Rights (the
      "Withholding Election"). The Optionee may make a Withholding Election only
      if all of the following conditions are met:

                  (i) the Withholding Election is made on or prior to the date
            on which the amount of tax required to be withheld is determined
            (the "Tax Date") by executing and delivering to the Company a
            properly completed Notice of Withholding Election, in substantially
            the form attached hereto as Exhibit 2; and

                  (ii) any Withholding Election made will be irrevocable;
            however, the Committee may, in its sole discretion, disapprove and
            give no effect to any Withholding Election.

      4. Rights as Shareholder. Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued,
the Optionee shall have no rights as a shareholder with respect to such Option
Shares. The Company shall make no adjustment for any dividends or distributions
or other rights on or with respect to Option Shares for which the record date is
prior to the issuance of that stock certificate, except as the Plan or the
attached Award otherwise provides.

      5. Restriction on Transfer of Option and of Option Shares. Except as
otherwise expressly permitted by the Committee in writing, the Option evidenced
hereby is nontransferable other than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionee only
by the Optionee (or in the event of his/her disability, by his/her personal
representative) and after his/her death, only by his/her legatee or the executor
of his/her estate.

      6. Changes in Capitalization.

            (a) Except as provided in Subsection (b) below, if the number of
      shares of Stock shall be increased or decreased by reason of a subdivision
      or combination of shares of Stock, the payment of an ordinary stock
      dividend in shares of Stock or any other increase or decrease in the
      number of shares of Stock outstanding effected without receipt of

                                       2

<PAGE>

      consideration by the Company, an appropriate adjustment shall be made by
      the Committee, in a manner determined in its sole discretion, in the
      number and kind of Option Shares and in the Exercise Price.

            (b) In the event of a merger, consolidation, reorganization,
      extraordinary dividend or other change in the corporate structure of the
      Company, including a Change in Control (as defined in Section 19 below),
      or tender offer for shares of Stock, the Company shall provide for an
      appropriate, proportionate adjustment to the Option or provide for the
      substitution of a new option which adjustment or substitution shall be
      consistent with the event requiring the adjustment or substitution;
      provided, however, in the event the Company will not be the surviving
      entity as a result of the event and the surviving entity does not agree to
      the adjustment or substitution, the Committee may elect to terminate the
      Option Period as of the date of the Change in Control in consideration of
      the payment to the Optionee of the sum of the difference between the then
      Fair Market Value of the Stock and the Exercise Price for each Option
      Share as to which the Company's Repurchase Rights have lapsed and as to
      which the Option has not been exercised as of the date of the Change in
      Control.

            (c) The existence of the Plan and the Option granted pursuant to
      this Agreement shall not affect in any way the right or power of the
      Company to make or authorize any adjustment, reclassification,
      reorganization or other change in its capital or business structure, any
      merger or consolidation of the Company, any issue of debt or equity
      securities having preferences or priorities as to the Stock or the rights
      thereof, the dissolution or liquidation of the Company, any sale or
      transfer of all or any part of its business or assets, or any other
      corporate act or proceeding. Any adjustment pursuant to this Section may
      provide, in the Committee's discretion, for the elimination without
      payment therefor of any fractional shares that might otherwise become
      subject to any Option.

      7. Special Limitation on Exercise. No purported exercise of the Option
shall be effective without the approval of the Committee, which may be withheld
to the extent that the exercise, either individually or in the aggregate
together with the exercise of other previously exercised stock options and/or
offers and sales pursuant to any prior or contemplated offering of securities,
would, in the sole and absolute judgment of the Committee, require the filing of
a registration statement with the United States Securities and Exchange
Commission or with the securities commission of any state. If a registration
statement is not in effect under the Securities Act of 1933, or any applicable
state securities law with respect to shares of Stock purchasable or otherwise
deliverable under the Option, the Optionee (a) shall deliver to the Company,
prior to the exercise of the Option or as a condition to the delivery of Stock
pursuant to the exercise of an Option exercise, such information,
representations and warranties as the Company may reasonably request in order
for the Company to be able to satisfy itself that the Option Shares are being
acquired in accordance with the terms of an applicable exemption from the
securities registration requirements of applicable federal and state securities
laws and (b) shall agree that the shares of Stock so acquired will not be
disposed of except pursuant to an effective registration statement, unless the
Company shall have received an opinion of counsel that such disposition is
exempt from such requirement under the Securities Act of 1933 and any applicable
state securities law.

      8. Legend on Stock Certificates. In addition to any legends required under
applicable securities laws at the time the Option Shares are issued, the
certificates evidencing Option Shares that are subject to Repurchase Rights at
the time of issuance shall be endorsed with the following legend and the
Optionee shall not make any transfer of the Option Shares without first
complying with the restrictions on transfer described in such legend:

                                       3

<PAGE>

                             TRANSFER IS RESTRICTED

            THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
            RESTRICTIONS ON TRANSFER AND FORFEITURE PROVISIONS WHICH ALSO APPLY
            TO THE TRANSFEREE AS SET FORTH IN A NON-QUALIFIED STOCK OPTION
            AWARD, DATED ___________, A COPY OF WHICH IS AVAILABLE FROM THE
            COMPANY.

      9. Repurchase Rights. In the event the Optionee ceases to be an employee
of the Company or any Affiliate for any reason, with or without cause, or if the
Optionee or the Optionee's legal representative attempts to sell, exchange,
transfer, pledge or otherwise dispose of any shares of Stock acquired upon
exercise of the Option, the Company shall have the right to repurchase such
shares ("Repurchase Rights") in the number provided in the Repurchase Schedule
attached hereto and subject to the Terms and Conditions set forth in this
Section 9.

            (a) Change in Control. In the event of a Change in Control, the
      Committee shall provide for the lapse of any and all of the Company's
      outstanding Repurchase Rights under the Option as of a date no later than
      immediately prior to the effective date of the Change in Control.

            (b) Option Shares Held by the Share Custodian. The Optionee hereby
      authorizes and directs the Company to deliver any certificate issued by
      the Company to evidence Option Shares acquired upon exercise of the Option
      to the Secretary of the Company or such other officer of the Company as
      may be designated by the Committee (the "Share Custodian") to be held by
      the Share Custodian until such Option Shares are no longer subject to the
      Company's Repurchase Rights in accordance with the Repurchase Schedule.
      When such Option Shares are no longer subject to the Company's Repurchase
      Rights in accordance with the Repurchase Schedule, the Share Custodian
      shall deliver such Option Shares to the Optionee. In the event that the
      number of such Option Shares that cease to be subject to the Company's
      Repurchase Rights include a fraction of a share, the Share Custodian shall
      not be required to deliver the fractional share, and the Company may pay
      the Optionee the amount determined by the Company to be the estimated fair
      market value therefor. The Optionee hereby irrevocably appoints the Share
      Custodian, and any successor thereto, as the true and lawful
      attorney-in-fact of Optionee with full power and authority to execute any
      stock transfer power or other instrument necessary to transfer such Option
      Shares to the Company in accordance with this Award, in the name, place,
      and stead of the Optionee. The term of such appointment shall commence on
      the Grant Date and shall continue until such Option Shares are delivered
      to the Optionee as provided above or are repurchased by the Company
      pursuant to Section 9(c) below. During the period that the Share Custodian
      holds the Option Shares subject to this Section 9, the Optionee shall be
      entitled to all rights applicable to shares of Stock not so held, except
      as provided in this Award. In the event the number of shares of Stock is
      increased or reduced by a change in the par value, split-up, stock split,
      reverse stock split, reclassification, merger, reorganization,
      consolidation, or otherwise, the Optionee agrees that any certificate
      representing shares of Stock or other securities of the Company issued as
      a result of any of the foregoing in respect of the Option Shares shall be
      delivered to the Share Custodian and shall be subject to all of the
      provisions of this Award as if initially granted thereunder.

            (c) Exercise of Repurchase Rights The Company may exercise the
      Repurchase Rights by written notice to the Share Custodian and to the
      Optionee or the Optionee's legal

                                       4

<PAGE>

      representative within sixty (60) days after such termination of employment
      (or exercise of the Option, if later) or after the Company has received
      notice of the attempted disposition. The Repurchase Rights must be
      exercised, if at all, for all of the Option Shares purchased to date by
      the Optionee to the extent the same remain subject to the Repurchase
      Rights. If the Company fails to give notice within such sixty (60) day
      period, the Repurchase Rights shall terminate unless the Company and
      Optionee have extended the time for the exercise of the Repurchase Rights.
      In the event that the Company fails to exercise its Repurchase Rights, the
      Share Custodian shall deliver a certificate representing such Option
      Shares to the Optionee or the Optionee's legal representative.

            (d) Payment for Shares and Return of Shares. Payment by the Company
      to the Share Custodian on behalf of Optionee or Optionee's legal
      representative shall be made in cash within sixty (60) days after the date
      of the mailing of the written notice of exercise of the Repurchase Rights.
      For purposes of the foregoing, cancellation of any indebtedness of
      Optionee to the Company shall be treated as payment to Optionee in cash to
      the extent of the unpaid principal and any accrued interest canceled. The
      purchase price per share of Stock being purchased by the Company shall be
      an amount equal to Optionee's original cost per share, as adjusted, if
      applicable, pursuant to Section 6 herein. Within thirty (30) days after
      payment by the Company, the Share Custodian shall deliver the Option
      Shares which the Company has purchased to the Company and shall deliver
      the payment received from the Company to the Optionee.

            (e) Transfers Not Subject to the Repurchase Rights. The Repurchase
      Rights shall not apply to a transfer to Optionee's ancestors, descendants
      or spouse or to a trustee solely for the benefit of Optionee or Optionee's
      ancestors, descendants or spouse, provided that such transferee shall
      agree in writing (in a form satisfactory to the Committee) to take the
      shares of Stock subject to all the terms and conditions of this Section 9
      providing for Repurchase Rights.

      10. Governing Laws. This Award and the Terms and Conditions shall be
construed, administered and enforced according to the laws of the State of
Delaware; provided, however, the Option may not be exercised except in
compliance with exemptions available under applicable state securities laws of
the state in which the Optionee resides and/or any other applicable securities
laws.

      11. Successors. This Award and the Terms and Conditions shall be binding
upon and inure to the benefit of the heirs, legal representatives, successors
and permitted assigns of the Optionee and the Company.

      12. Notice. Except as otherwise specified herein, all notices and other
communications under this Award shall be in writing and shall be deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.

      13. Severability. In the event that any one or more of the provisions or
portion thereof contained in the Award and these Terms and Conditions shall for
any reason be held to be invalid, illegal or unenforceable in any respect, the
same shall not invalidate or otherwise affect any other provisions of the Award
and these Terms and Conditions, and the Award and these Terms and

                                       5

<PAGE>

Conditions shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.

      14. Entire Agreement. Subject to the terms and conditions of the Plan, the
Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.

      15. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of the Award
or these Terms and Conditions and shall be void and without effect.

      16. Headings and Capitalized Terms. Section headings used herein are for
convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined, in
either the Award or the Terms and Conditions shall be given the meaning ascribed
to them in the Plan.

      17. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of the Award and
these Terms and Conditions, the party or parties who are thereby aggrieved shall
have the right to specific performance and injunction in addition to any and all
other rights and remedies at law or in equity, and all such rights and remedies
shall be cumulative.

      18. No Right to Continued Employment. Neither the establishment of the
Plan nor the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continued service as an employee of the Company or any
affiliate.

      19. Definition of Change in Control. As used in the Award and these Terms
and Conditions, the term "Change in Control" means any one of the following
events occurring after the Grant Date:

            (a) the acquisition by any individual, entity or group (within the
      meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
      1934, as amended (the "Exchange Act")) (a "Person") of beneficial
      ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
      Act) of voting securities of the Company where such acquisition causes
      such Person to own more than fifty percent (50%) of the combined voting
      power of the then outstanding voting securities of the Company entitled to
      vote generally in the election of directors (the "Outstanding Employer
      Voting Securities");

            (b) individuals who as of the Grant Date, constitute the Board of
      Directors (the "Incumbent Board") cease for any reason to constitute at
      least a majority of the Board of Directors; provided, however, that any
      individual becoming a director subsequent to the Grant Date hereof whose
      election, or nomination for election by the Company's shareholders, was
      approved by a vote of at least two-thirds of the directors then comprising
      the Incumbent Board shall be considered as though such individual were a
      member of the Incumbent Board, but excluding, for this purpose, any such
      individual whose initial assumption of office occurs as a result of an
      actual or threatened election contest with respect to the election or
      removal of directors or other actual or threatened solicitation of proxies
      or consents by or on behalf of a Person other than the Board of Directors;

                                       6

<PAGE>

            (c) the approval by the shareholders of the Company of a
      reorganization, merger or consolidation or sale or other disposition of
      all or substantially all of the assets of the Company ("Business
      Combination") or, if consummation of such Business Combination is subject,
      at the time of such approval by shareholders, to the consent of any
      government or governmental agency, the obtaining of such consent (either
      explicitly or implicitly by consummation); excluding, however, such a
      Business Combination pursuant to which all or substantially all of the
      Persons who were the beneficial owners of the Outstanding Employer Voting
      Securities immediately prior to such Business Combination beneficially
      own, directly or indirectly, more than fifty percent (50%) of,
      respectively, the then outstanding shares of common stock and the combined
      voting power of the then outstanding voting securities entitled to vote
      generally in the election of directors, as the case may be, of the
      corporation resulting from such Business Combination (including, without
      limitation, a corporation that as a result of such transaction owns the
      Company or all or substantially all of the Company's assets either
      directly or through one or more subsidiaries) in substantially the same
      proportions as their ownership, immediately prior to such Business
      Combination of the Outstanding Employer Voting Securities; or

            (d) approval by the shareholders of the Company of a complete
      liquidation or dissolution of the Company.

                                       7

<PAGE>

                                    EXHIBIT 1

                              NOTICE OF EXERCISE OF
                            STOCK OPTION TO PURCHASE
                                 COMMON STOCK OF
                              VERILINK CORPORATION

                                                   Name_______________________
                                                   Address____________________
                                                   ___________________________
                                                   Date_______________________

Verilink Corporation
127 Jetplex Circle
Madison, Alabama 35758-8989

Attn: Corporate Secretary

Re:   Exercise of Non-Qualified Stock Option

Gentlemen:

      Subject to acceptance hereof by Verilink Corporation (the "Company")
pursuant to the provisions of the Verilink Corporation 2004 New Hire Stock
Incentive Plan (the "Plan") I hereby give notice of my election to exercise
options granted to me to purchase ______________ shares of common stock $.01 par
value ("Common Stock"), of the Company under the Non-Qualified Stock Option
Award (the "Award") dated as of ____________. The purchase shall take place as
of __________, 200__ (the "Exercise Date").

      On or before the Exercise Date, I will pay the applicable purchase price
as follows:

      [ ] by delivery of cash or a certified check for $___________ for the full
      purchase price payable to the order of Verilink Corporation.

      [ ] by delivery of cash or a certified check for $___________ representing
      a portion of the purchase price with the balance to consist of shares of
      Common Stock that I have owned for at least six months and that are
      represented by a stock certificate I will surrender to the Company with my
      endorsement. If the number of shares of Common Stock represented by such
      stock certificate exceeds the number to be applied against the purchase
      price, I understand that a new stock certificate will be issued to me
      reflecting the excess number of shares.

      [ ] by delivery of a stock certificate representing shares of Common Stock
      that I have owned for at least six months which I will surrender to the
      Company with my endorsement as payment of the purchase price. If the
      number of shares of Common Stock represented by such certificate exceeds
      the number to be applied against the purchase price, I understand that a
      new certificate will be issued to me reflecting the excess number of
      shares.

                               Exhibit 1 - Page 1

<PAGE>

      [ ] by delivery of the purchase price by _________________________, a
      broker, dealer or other "creditor" as defined by Regulation T issued by
      the Board of Governors of the Federal Reserve System. I hereby authorize
      the Company to issue a stock certificate for the number of shares
      indicated above in the name of said broker, dealer or other creditor or
      its nominee pursuant to instructions received by the Company and to
      deliver said stock certificate directly to that broker, dealer or other
      creditor (or to such other party specified in the instructions received by
      the Company from the broker, dealer or other creditor) upon receipt of the
      purchase price.

      The required federal, state and local income tax withholding obligations,
if any, on the exercise of the Award shall also be satisfied in accordance with
Section 3 of the Terms and Conditions.

      As soon as the stock certificate is registered in my name, please deliver
it to me at the above address or to the Share Custodian, if required by Section
9 of the Terms and Conditions.

      If the Common Stock being acquired is not registered for issuance to the
Optionee pursuant to an effective registration statement on Form S-8 (or
successor form) filed under the Securities Act of 1933, as amended (the "1933
Act"), I understand and agree that I may be required to make such additional
representations, warranties, covenants, and agreements with the Company as the
Company may reasonably request.

      I understand that the certificates representing the shares being purchased
by me in accordance with this notice shall bear a legend referring to the
foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates being
acquired by me in accordance with this notice.

                                             Very truly yours,

                                             ______________________________

AGREED TO AND ACCEPTED:

VERILINK CORPORATION

By:_______________________________

Title:____________________________

Number of Shares
Exercised:________________________

Number of Shares
Remaining:________________________             Date:________________________

                               Exhibit 1 - Page 2

<PAGE>

                                    EXHIBIT 2

                         NOTICE OF WITHHOLDING ELECTION
             VERILINK CORPORATION 2004 NEW HIRE STOCK INCENTIVE PLAN

TO:       Verilink Corporation
          Attn: Corporate Secretary

FROM:     ____________________________

RE:       Withholding Election

      This election relates to the Option identified in Paragraph 3 below. I
hereby certify that:

      (1)   My correct name and social security number and my current address
            are set forth at the end of this document.

      (2)   I am (check one, whichever is applicable).

                  [ ]   the original recipient of the Option.

                  [ ]   the legal representative of the estate of the original
                        recipient of the Option.

                  [ ]   a legatee of the original recipient of the Option.

                  [ ]   the legal guardian of the original recipient of the
                        Option.

      (3)   The Option pursuant to which this election relates was issued under
            the Verilink Corporation 2004 New Hire Stock Incentive Plan in the
            name of _____________________ for the purchase of a total of
            __________ shares of Common Stock. This election relates to
            _____________ shares of Common Stock issuable upon exercise of the
            Option (the "Stock"), provided that the numbers set forth above
            shall be deemed changed as appropriate to reflect the applicable
            Plan provisions.

      (4)   In connection with any exercise of the Option with respect to Stock,
            I hereby elect:

                  [ ]   to have certain of the shares otherwise issuable
                        pursuant to the exercise withheld by the Company for the
                        purpose of having the value of the shares applied to pay
                        federal, state, and local, if any, taxes arising from
                        the exercise.

                  [ ]   to tender shares held by me for a period of at least six
                        (6) months prior to the exercise of the Option for the
                        purpose of having the value of the shares applied to pay
                        such taxes.

            The shares to be withheld or tendered, as the case may be, shall
            have, as of the Tax Date applicable to the exercise, a fair market
            value equal to the minimum statutory tax withholding requirement
            under federal, state and local law in connection with the exercise.

                               Exhibit 2 - Page 1

<PAGE>

      (5)   This Withholding Election is made no later than the Tax Date and is
            otherwise timely made pursuant to the Plan.

      (6)   I understand that this Withholding Election may not be revised,
            amended or revoked by me.

      (7)   The Plan has been made available to me by the Company, I have read
            and understand the Plan and I have no reason to believe that any of
            the conditions therein to the making of this Withholding Election
            have not been met. Capitalized terms used in this Notice of
            Withholding Election shall have the meanings given to them in the
            Plan.

      (8)   Capitalized terms used in this Notice of Withholding Election
            without definition shall have the meanings given to them in the
            Plan.

Dated: ____________________

                                       ____________________________________
                                       Signature

                                       ____________________________________
                                       Name (printed)

                                       ____________________________________
                                       Street Address

                                       ____________________________________
                                       City, State, Zip Code

                               Exhibit 2 - Page 2

<PAGE>

                                                              [NAME OF OPTIONEE]

                                   SCHEDULE 1

                              VERILINK CORPORATION
                        NON-QUALIFIED STOCK OPTION AWARD

                               Repurchase Schedule

A. Option Shares are subject to the Company's Repurchase Rights with respect to
the shares of Stock that have been exercised as indicated in the schedule below.

<TABLE>
<CAPTION>
   Percentage of Option Shares                          Months of Service after
Subject to the Repurchase Rights                       Vesting Commencement Date
--------------------------------                       -------------------------
<S>                                                    <C>
              100%                                            Less than 12
               75%                                        12 but less than 13
</TABLE>

For every full Month of Service following the completion of twelve (12) months
after the Vesting Commencement Date, the percentage of Option Shares subject to
the Repurchase Rights shall be reduced by an additional 2.083% until the fourth
anniversary of the Vesting Commencement Date at which point no Option Shares
shall be subject to the Repurchase Rights.

B. In determining which Option Shares are no longer subject to the Company's
Repurchase Rights, the following order of priority shall be applied: (i) Option
Shares purchased by the Optionee in the order of their date of purchase from the
earliest purchase date to the most recent purchase date; and then (ii) Option
Shares which have not been purchased by the Optionee.

C. For purposes of the Repurchase Schedule, the Optionee shall be granted a
Month of Service for each monthly period (i.e., from a date of one calendar
month to the date immediately preceding the same date of the immediately
succeeding calendar month) following the Vesting Commencement Date and during
which Optionee continues, at all times, as an employee of the Company or
Subsidiary.

For purposes of this Repurchase Schedule, the Vesting Commencement Date is
___________.

                               Schedule 1 - Page 1

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