8-K

FORM 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):     August 14, 2002 (July 29, 2002)

VERILINK CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-28562	94-2857548
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

127 Jetplex Circle, Madison, Alabama	35758
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code     (256) 327-2001

Not Applicable

Former name or former address, if changed since last report

TABLE OF CONTENTS

THIRD NOTE MODIFICATION AGREEMENT

SECOND NOTE MODIFICATION AGREEMENT

AMENDED AND RESTATED SECURITY AGREEMENT

Item 5. Other Events

On July 29, 2002 Verilink Corporation and Leigh S. Belden entered into a Third Modification of Loan Agreement providing for the amendment of certain terms of Verilink’s loans to Mr. Belden. Under the terms of the amendment, the maturity of his $1.8 million note has been extended to March 31, 2006, provided that the Company may accelerate the due date of the loan on 90 days notice if the Company’s aggregate amount of unrestricted cash, cash equivalents or short-term investments is less than $2,000,000 or if Mr. Belden’s employment is terminated. Mr. Belden agreed to a 25% reduction in base salary in connection with the loan modification.

An additional loan to Mr. Belden with a current principal and interest balance of $994,952 remains payable in full on March 31, 2003, with recourse limited to the pledged collateral.

The foregoing summary description is qualified in its entirety by reference to the definitive transaction documents, copies of which are attached as exhibits to this Current Report on Form 8-K.

Item 7. Exhibits

     (c)  Exhibits

Exhibit Number	Exhibit Description
10.1	Third Note Modification Agreement dated as of July 29, 2002 by and between Verilink Corporation and Leigh S. Belden.
10.1A	Second Note Modification Agreement dated as of February 5, 2002 by and between Verilink Corporation and Leigh S. Belden.
10.1B	Amended and Restated Security Agreement dated as of February 5, 2002 by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated 12/9/98 for the benefit of Verilink Corporation, Beltech, Inc., Leigh S. Belden and Deborah Tinker Belden.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 14, 2002		VERILINK CORPORATION
	By:	/s/ C. W. Smith C.W. Smith Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Exhibit Description
10.1	Third Note Modification Agreement dated as of July 29, 2002 by and between Verilink Corporation and Leigh S. Belden.
10.1A	Second Note Modification Agreement dated as of February 5, 2002 by and between Verilink Corporation and Leigh S. Belden.
10.1B	Amended and Restated Security Agreement dated as of February 5, 2002 by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated 12/9/98 for the benefit of Verilink Corporation, Beltech, Inc., Leigh S. Belden and Deborah Tinker Belden.

EX-10.1 3 g77806exv10w1.txt THIRD NOTE MODIFICATION AGREEMENT EXHIBIT 10.1 THIRD NOTE MODIFICATION AGREEMENT THIS THIRD NOTE MODIFICATION AGREEMENT (this "Modification") is made as of and effective as of the 29th day of July, 2002, by and among LEIGH S. BELDEN (the "Borrower"), and VERILINK CORPORATION, a Delaware corporation (the "Holder"). STATEMENT OF FACTS The Holder made an initial loan to the Borrower (with recourse only to the pledged security) in the original principal amount of $800,000 evidenced by the Borrower's Promissory Note payable to the order of the Holder dated February 10, 1998 (the "Original Note"). Subsequently, the Holder made a loan to the Borrower (on a full recourse basis) in the original principal amount of $3,000,000 evidenced by the Borrower's Promissory Note payable to the order of the Holder dated February 22, 1999 (the "Subsequent Note," the Original Note and the Subsequent Note being collectively referred to herein as the "Notes"). The Notes are secured by the pledge to the Holder of certain securities owned beneficially and of record by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated December 12, 1998 (the "Pledgor"). The Notes were previously modified by a note modification agreement dated September 22, 1999, which extended the maturity dates of the Notes through March 31, 2002 and provided for quarterly payments of principal and interest, and by a note modification agreement dated as of February 5, 2002, which extended the maturity dates of the Notes through March 31, 2003 and provided for a negative pledge of certain securities in favor of Holder. Borrower desires to further modify the Notes to extend the maturity date of the Subsequent Note to March 31, 2006, subject to acceleration in certain events, and to reduce the base salary to which he is entitled under his employment letter by 25%. Borrower has requested that the Holder consent to the modification of the Notes, and the Holder is willing to modify the Notes, subject to the terms and conditions of this Modification. NOW, THEREFORE, in consideration of the premises, the covenants and agreements contained herein, $10.00 and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties do hereby agree as follows: STATEMENT OF TERMS 1. DEFINITIONS. All capitalized terms used in this Modification but not otherwise defined or limited herein shall have the meanings set forth in the Notes, as amended hereby. 2. AMENDMENTS TO NOTES. Subject to the fulfillment of the conditions precedent to the effectiveness of this Modification which are set forth below, the parties hereby agree as follows: (a) The Subsequent Note is hereby further modified to provide that the outstanding principal balance of the Subsequent Note, together with all accrued and unpaid interest, shall be due and payable in full in a single installment on March 31, 2006. Notwithstanding the foregoing, at the election of Holder, the Subsequent Note may be accelerated and all accrued and unpaid interest shall be due and payable in full 90 days after notice of acceleration is given to Borrower following the occurrence of any of the following events: (i) the aggregate amount of the Company's unrestricted cash, cash equivalents and short-term investments is less than $2,000,000.00; or (ii) termination of Holder's employment relationship with the Company. (b) Each of the Notes is hereby modified to provide that upon the occurrence of any of the following events, Borrower shall be deemed to be in default (a "Default") under the Notes: (i) commencement of any bankruptcy, insolvency, arrangement, reorganization, or other debtor-relief proceedings by or against the Borrower; or (ii) failure of Borrower to pay principal and interest under the Notes when due. Upon a Default, Holder may, at its election and without demand or notice of any kind, which are hereby waived, declare the unpaid principal and accrued and unpaid interest due under the Notes immediately due and payable, proceed to collect the same and exercise all other rights and remedies given to it under the Notes or by law. 3. SALARY REDUCTION. Borrower hereby agrees to the reduction in his base salary pursuant to the employment letter dated as of January 8, 2002 to $9,519.23, paid biweekly in accordance with standard Verilink policy (annualized salary of $247,500.00), subject to adjustment after the date hereof by the Board of Directors of Holder. 4. NO OTHER AMENDMENTS. Except for the amendments expressly set forth and referred to herein, each of the Notes (as modified by the Second Modification) remains unchanged and in full force and effect. Without limiting the generality of the foregoing, the maturity of the Original Note remains March 31, 2003. Nothing in this Modification is intended, or shall be construed, to constitute a novation or an accord and satisfaction of any of the Borrower's indebtedness owed to the Holder, or to modify, affect or impair the Holder's rights under or the perfection or continuity of the security interests in, security titles to or other liens on any collateral securing the Notes. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. To induce the Holder to enter into this Modification, the Borrower does hereby warrant, represent and covenant to the Holder that: (a) the outstanding principal balance of the Original Note is $570,000.00 as of July 29, 2002 and that accrued and unpaid interest thereon totals $424,952.88 as of July 29, 2002; (b) the outstanding principal balance of the Subsequent Note is $1,784,509.95 as of July 29, 2002 and that accrued and unpaid interest thereon totals $464,788.97 as of July 29, 2002; (c) no Default or Event of Default has occurred and is or will be continuing as of this date under the Notes after giving effect to the amendments contained in this Modification; (d) Borrower has the legal capacity and power to execute, deliver and perform his obligations under this Modification, and this Modification is and the Notes, as amended hereby, remain the legal, valid and binding obligation of Borrower enforceable against him in accordance with their respective terms; and (e) if requested by the Holder at any time, the Borrower will cause to be delivered to the Holder a duly executed reaffirmation and confirmation of each of the obligations of Borrower, Pledgor and Beltech under the Pledge Agreement. 6. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS MODIFICATION. The effectiveness of this Modification and the amendments provided herein are subject to the fulfillment of the following conditions precedent: (a) the Holder shall have received one or more counterparts of this Modification duly executed by the Borrower; (b) each and every representation and warranty of the Borrower set forth in Section 4 above shall be true and correct in all material respects as of the date of, and after giving effect to, this Modification; and (c) there shall not exist as of the date of, and after giving effect to, this Modification any Default or Event of Default under the Notes as amended by this Modification. 7. COUNTERPARTS. This Modification may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. 8. GOVERNING LAW. THIS MODIFICATION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. 9. TIME OF ESSENCE. Time is of the essence of this Modification. [Balance of page intentionally blank.] IN WITNESS WHEREOF, the parties hereto have caused this Modification to be duly executed, sealed and delivered as of the day and year specified at the beginning hereof. BORROWER: /s/ Leigh S. Belden (SEAL) ------------------------------------------- Name Leigh S. Belden ------------------------------------------- HOLDER: VERILINK CORPORATION By: /s/ Howard Oringer ---------------------------------------------- Name Howard Oringer -------------------------------------- Title Chairman of the Board of Directors -------------------------------------- [CORPORATE SEAL] EX-10.1.A 4 g77806exv10w1wa.txt SECOND NOTE MODIFICATION AGREEMENT EXHIBIT 10.1A SECOND NOTE MODIFICATION AGREEMENT THIS SECOND NOTE MODIFICATION AGREEMENT (this "Modification") is made as of and effective as of the 5th day of February, 2002, by and among LEIGH S. BELDEN (the "Borrower"), and VERILINK CORPORATION, a Delaware corporation (the "Holder"). STATEMENT OF FACTS The Holder made an initial loan to the Borrower in the original principal amount of $800,000 evidenced by the Borrower's Promissory Note payable to the order of the Holder dated February 10, 1998 (the "Original Note"). Subsequently, the Holder made a loan to the Borrower in the original principal amount of $3,000,000 evidenced by the Borrower's Promissory Note payable to the order of the Holder dated February 22, 1999 (the "Subsequent Note," the Original Note and the Subsequent Note being collectively referred to herein as the "Notes"). The Notes are secured by the pledge to the Holder of certain securities owned beneficially and of record by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated December 12, 1998 (the "Pledgor"). The Notes were previously modified by note modification agreements dated September 22, 1999 which extended the maturity dates of the Notes through March 31, 2002 and provided for quarterly payments of principal and interest. The March 31, 2001 through December 31, 2001 quarterly payments have not been paid. Borrower desires to further modify the Notes to defer the quarterly payments due in March, June, September and December of 2001 and March of 2002 and to pay the Notes in a single installment of principal and accrued interest on March 31, 2003, subject to mandatory prepayments of the Notes upon disposition of certain securities which are subject to a negative pledge in favor of Holder. Borrower has requested that the Holder consent to the modification of the Notes, and the Holder is willing to modify the Notes, subject to the terms and conditions of this Modification. NOW, THEREFORE, in consideration of the premises, the covenants and agreements contained herein, $10.00 and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties do hereby agree as follows: STATEMENT OF TERMS 1. DEFINITIONS. All capitalized terms used in this Modification but not otherwise defined or limited herein shall have the meanings set forth in the Notes, as amended hereby. 2. AMENDMENTS TO NOTES. Subject to the fulfillment of the conditions precedent to the effectiveness of this Modification which are set forth below, the parties hereby agree as follows: (a) Each of the Notes as heretofore modified is hereby further modified by deleting the requirement for payment of quarterly installments of principal and interest for the quarters ended March through December 2001 and the final installment on March 31, 2002. (b) Each of the Notes is hereby further modified to provide that the outstanding principal balance of each of the Notes, together with all accrued and unpaid interest, shall be due and payable in full in a single installment on March 31, 2003. (c) Each of the Notes is hereby further modified to provide that Borrower shall make a mandatory prepayment of the Notes on the date of any sale or other disposition by Borrower, the Pledgor or Beltech, Inc., a California corporation ("Beltech") of any securities which are pledged as collateral or subject to the negative pledge in favor of Holder under the Amended and Restated Security Agreement ("Pledge Agreement") dated as of February 5, 2002 among Borrower, Pledgor, Beltech and Holder, the terms of which are incorporated by reference herein. Each mandatory prepayment shall be in an amount equal to the proceeds received by such party in connection with such sale or disposition, net of reasonable and customary third party expenses of sale. Mandatory prepayments resulting from any sale or other disposition of securities pledged as collateral under the Pledge Agreement shall be applied first against the Original Note's principal balance, then against accrued interest on the Original Note, and upon payment of the Original Note in full shall be applied against the outstanding principal balance of the Subsequent Note and accrued interest thereon until the Subsequent Note is paid in full. If the Collateral Market Value does not exceed the outstanding principal and interest balance of the Original Note at the time of a mandatory prepayment resulting from a sale or other disposition of securities subject to the negative pledge pursuant to the Pledge Agreement, then such mandatory prepayment shall also be applied first against the Original Note's principal balance, then against accrued interest on the Original Note, and upon payment of the Original Note in full shall be applied against the outstanding principal balance of the Subsequent Note and accrued interest thereon until the Subsequent Note is paid in full. If the Collateral Market Value exceeds the outstanding principal and interest balance of the Original Note at the time of a mandatory prepayment resulting from a sale or other disposition of securities subject to the negative pledge pursuant to the Pledge Agreement, then such mandatory prepayment be applied first against the principal balance then against accrued interest on either the Original Note or the Subsequent Note, or a combination thereof, at the election of Borrower. If Borrower notifies Holder that Borrower seeks to use the securities that are pledged as Collateral or subject to the negative pledge in favor of Holder under the Pledge Agreement to pay or fund the payment of the Notes, the parties shall cooperate in good faith to facilitate the Borrower's use of such securities to pay or fund the payment of the Notes subject to applicable law and regulations. (d) For purposes hereof, "Collateral Market Value" as of any date shall mean the product of (i) the number of shares of Common Stock of Verilink Corporation (the "Common Stock") then pledged as collateral pursuant to the Pledge Agreement, multiplied by (ii) the average of the daily closing prices per share of Common Stock for the 10 consecutive trading days immediately preceding such date as reported on the principal trading market for the Common Stock, as adjusted to reflect any stock dividends, sub-divisions, combinations or reclassifications of the Common Stock. The closing price shall be the last reported sale price, regular way, or if no such sales are reported on such day or closing sale prices are not reported for the Common Stock, then the average of the closing bid and asked price as reported in the principal consolidated transaction reporting system for the principal trading market on which the Common Stock is traded or listed, or such other system then in use. If the Common Stock is not listed or traded on an established trading market, or not the subject of available bid and asked prices or quotes, then the fair market value per share of Common Stock, as determined in good faith by the Board of Directors of Borrower, shall be deemed to be the average of the daily closing prices for purposes of clause (ii) above. (e) Each of the Notes is hereby further modified to provide that Borrower may at any time or times voluntarily prepay (from funds other than those described in (c) above) all or any portion of each of the Notes, without premium or penalty. A voluntary prepayment shall include accrued interest through the date of prepayment on the amount of principal being voluntarily prepaid. Borrower shall provide written notice to the Holder designating the Note or Notes against which the prepayment shall be applied. 3. NO OTHER AMENDMENTS. Except for the amendments expressly set forth and referred to herein, each of the Notes remains unchanged and in full force and effect. Nothing in this Modification is intended, or shall be construed, to constitute a novation or an accord and satisfaction of any of the Borrower's indebtedness owed to the Holder, or to modify, affect or impair the Holder's rights under or the perfection or continuity of the security interests in, security titles to or other liens on any collateral securing the Notes. 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. To induce the Holder to enter into this Modification, the Borrower does hereby warrant, represent and covenant to the Holder that: (a) the outstanding principal balance of the Original Note is $570,000.00 at January 31, 2002 and that accrued and unpaid interest thereon totals $400,901.34 at January 31, 2002; (b) the outstanding principal balance of the Subsequent Note is $1,793,173.00 at January 31, 2002 and that accrued and unpaid interest thereon totals $399,568.18 at January 31, 2002; (c) no Default or Event of Default has occurred and is or will be continuing as of this date under the Notes after giving effect to the amendments contained in this Modification; (d) Borrower has the legal capacity and power to execute, deliver and perform his obligations under this Modification, and this Modification is and the Notes, as amended hereby, remain the legal, valid and binding obligation of Borrower enforceable against him in accordance with their respective terms; and (e) if requested by the Holder at any time, the Borrower will cause to be delivered to the Holder a duly executed reaffirmation and confirmation of each of the obligations of Borrower, Pledgor and Beltech under the Pledge Agreement. 5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS MODIFICATION. The effectiveness of this Modification and the amendments provided herein are subject to the fulfillment of the following conditions precedent: (a) the Holder shall have received one or more counterparts of this Modification duly executed by the Borrower; (b) the Holder shall have received from the Pledgor the duly executed Pledge Agreement, as amended and restated this date, pursuant to which Pledgor shall have granted to the Holder a first priority security interest in and to the collateral pledged thereunder (the "Pledged Collateral"), and Borrower, Deborah Tinker Belden and Beltech shall have agreed to the negative pledge of securities of Holder; (c) the Holder shall have received from the Pledgor the original share certificates evidencing the Pledged Collateral, together with duly executed stock powers, in blank, or a control agreement in form and substance acceptable to the Holder in its reasonable judgment with respect to any account in which the shares may be placed; (d) each and every representation and warranty of the Borrower set forth in Section 4 above shall be true and correct in all material respects as of the date of, and after giving effect to, this Modification; and (e) there shall not exist as of the date of, and after giving effect to, this Modification any Default or Event of Default under the Notes as amended by this Modification. 6. COUNTERPARTS. This Modification may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. 7. GOVERNING LAW. THIS MODIFICATION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. 8. TIME OF ESSENCE. Time is of the essence of this Modification. IN WITNESS WHEREOF, the parties hereto have caused this Modification to be duly executed, sealed and delivered as of the day and year specified at the beginning hereof. BORROWER: /S/ Leigh S. Belden (SEAL) ---------------------------------------- Name: Leigh S. Belden --------------------------------------- HOLDER: VERILINK CORPORATION By: /s/ Howard Oringer ------------------------------------------- Name Howard Oringer ----------------------------------- Title Chairman of the Board of Directors ----------------------------------- [CORPORATE SEAL] EX-10.1.B 5 g77806exv10w1wb.txt AMENDED AND RESTATED SECURITY AGREEMENT EXHIBIT 10.1B AMENDED AND RESTATED SECURITY AGREEMENT THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement"), made as of February 22, 1999 and amended and restated in its entirety as of February 5, 2002, by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated 12/9/98 ("Debtor") for the benefit of Verilink Corporation, a Delaware corporation ("Secured Party"), Beltech, Inc., a California corporation ("Beltech"), Leigh S. Belden (the "Borrower") and Deborah Tinker Belden, each an individual resident of the State of California (together, the "Beldens") in consideration of certain credit extended by Secured Party to the Borrower. RECITALS: A. Debtor and Secured Party are parties to that certain Security Agreement dated February 22, 1999 (the "Original Pledge Agreement"); B. Debtor has pledged to Secured Party certain shares of common stock to secure certain obligations of Borrower to Secured Party; C. Debtor and Secured Party desire to amend the Original Pledge Agreement in certain respects and to restate the Original Pledge Agreement, as amended, in its entirety; D. Beltech and the Beldens desire to become parties to the Agreement and, in particular, to be bound by the negative pledge granted in Section 4 below. In consideration of the mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereby amend and restate the Original Pledge Agreement and agree as follows: 1. GRANT AND SECURITY INTEREST. Debtor hereby pledges, assigns and grants to Secured Party a perfected, first priority security interest in all of Debtor's right, title and interest, whether presently existing or hereafter created or acquired, wherever located, in the property (referred to collectively as the "Collateral") described in Exhibit A hereto. 2. OBLIGATIONS SECURED. The security interest granted hereby secures all indebtedness and obligations of Borrower to Secured Party now existing or hereafter arising pursuant to that certain promissory note dated February 10, 1998 in the original principal amount of $800,000, and that certain promissory note dated February 22, 1999 in the original principal amount of $3,000,000, both as modified by modification agreements dated as of September 22, 1999 and February 5, 2002 (the "Modification Agreement") as the same may be renewed, modified or extended from time to time; all costs and expenses of Secured Party, including reasonable attorneys fees, to obtain, preserve, perfect, enforce and defend this Agreement and maintain, preserve, collect, protect, perfect Secured Party's interest in and realize upon the Collateral and all covenants, agreements, representations and warranties of Debtor, Beltech and the Beldens contained herein (collectively, the "Obligations"). 3. PERFECTION AND SECURITY INTEREST. Debtor from time to time, at the request of Secured Party, shall execute such financing statements, control agreements, and other documents, each of which shall be in form and substance acceptable to Secured Party, and take such actions as may be necessary or appropriate to perfect or continue the perfection and priority of Secured Party's security interests in the Collateral. Debtor shall promptly notify Secured Party if Debtor changes Debtor's name or moves Debtor's principal residence or location or the place where Debtor keeps its records from the address set forth below. Debtor shall promptly furnish to Secured Party any information with respect to the Collateral or the Debtor as Secured Party reasonably may request. 4. NEGATIVE PLEDGE. Neither Debtor, Beltech, Borrower nor the Beldens will create, assume or suffer or permit to exist any security interest, lien, charge, encumbrance or claim on any securities issued by Verilink Corporation and now or hereafter owned of record or beneficially by Debtor (other than the security interest in favor of Holder granted by Debtor hereunder), Borrower, Beltech or the Beldens, nor will any of them permit or make any sale or other transfer or disposition of such securities unless such sale or disposition is made in good faith to an unaffiliated, third-party, bona fide purchaser in an arms-length transaction, and an amount equal to any net proceeds thereof is applied to prepay the Obligations as provided in the Notes as modified by the Modification Agreement of even date herewith. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. Debtor represents, warrants and covenants that: (a) TITLE. Apart from the security interest in the Collateral granted to Secured Party hereunder, Debtor has good and valid title to the Collateral, free and clear of any and all liens, charges, claims, security interests, set offs, restrictions and encumbrances of any kind whatsoever. To the extent the Collateral consists of securities, such securities are duly authorized, validly issued, fully paid and nonassessable. (b) TRANSFER OF COLLATERAL. Debtor shall not sell, assign, transfer, encumber or otherwise dispose of any of the Collateral or any interest therein without the prior written consent of Secured Party. If any such encumbrance is imposed, Debtor shall give Secured Party immediate written notice and take immediate action to discharge the same. (c) AUTHORITY; ENFORCEABILITY. Debtor has full legal capacity, power and authority to make, enter into and perform this Agreement and no consent or approval of or notice to any person or entity is required in connection with this Agreement. This Agreement is a valid, binding and enforceable obligation of Debtor. (d) NOTICE OF THIRD PARTY ACTIONS. Debtor shall promptly notify Secured Party of any Event of Default or any levy, execution or attachment against the Collateral or any other event or condition that affects the Collateral and shall promptly take all necessary action to preserve, perfect and protect Secured Party's first priority security interest in the Collateral. 6. POWER OF ATTORNEY. Debtor hereby appoints Secured Party and any officer thereof as Debtor's attorney-in-fact to execute and file any writings in connection with the Collateral, to take any other actions that are appropriate to collect any proceeds of the Collateral and, subject to the provisions of Section 8 below, to vote or exercise consensual rights with respect to the Stock. This appointment shall constitute a power coupled with an interest, shall survive the termination, death or incapacity of Debtor and shall be irrevocable until the Obligations are paid in full. 7. EVENTS OF DEFAULT. An "Event of Default" shall occur when Debtor or the Borrower (a) fails to pay or perform any of the Obligations (or Debtor, Beltech, Borrower or the Beldens fails to perform any of the covenants or agreements contained herein) when due; (b) becomes insolvent, a receiver is appointed for any part of Debtor's or Borrower's property, Debtor or Borrower makes an assignment for the benefit of creditors, or any proceeding is commenced either by Debtor or Borrower or against Debtor or Borrower under any bankruptcy or insolvency laws; or (c) sells or otherwise disposes of or encumbers all or a substantial part of Debtor's or Borrower's assets. At any time after an Event of Default, in addition to exercising any other rights and remedies, Secured Party may, after consultation with Borrower as provided below: (a) sell or dispose of the Collateral in a public or private sale as Secured Party deems appropriate for the purposes of paying or performing the Obligations; (b) declare immediately due and payable all of the Obligations owing to Secured Party; (c) apply any Collateral to the Obligations in such order as Secured Party may determine, any Stock so applied being valued at its market price on the date Secured Party gives notice to Debtor of such application of Stock to satisfy Obligations; (d) enter into any agreement relating to the Collateral and exercise all voting rights to the exclusion of Debtor; (e) make any settlement that Secured Party deems appropriate in respect of the Collateral; (f) collect any sums payable in connection with the Collateral; and (g) make, adjust and receive payment under insurance claims, claims for breach of warranty and the like in connection with the Collateral. Secured Party shall consult with Borrower regarding the exercise of Secured Party's rights against the Collateral prior to exercising its rights, so that Secured Party's exercise of those rights is accomplished in the best interests of Secured Party, its stockholders, Debtor and Borrower. Secured Party in all events shall have the rights, powers and remedies set forth above as well as all of the rights, powers and remedies otherwise afforded to a secured creditor under the Uniform Commercial Code of the State where the Debtor is located. Debtor specifically understands and agrees that any sale by Secured Party of all or part of the Collateral pursuant to the terms of this Agreement may be effected by Secured Party at a time or times and in a manner or manners which could result in the proceeds of such sale being significantly and materially less than might have been received if such sale had occurred at different times or in different manners, and Debtor, to the fullest extent permitted by law, hereby releases Secured Party and its officers and representatives from and against any and all obligations and liabilities arising out of or related to the timing or manner of any such sale. The Collateral consisting of Stock (as defined in Exhibit A) may be not registered or qualified under the various federal or state securities laws of the United States, or may consist of securities the disposition of which after default may be restricted to one or more private (instead of public) sales. Debtor understands that upon such disposition, Secured Party may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Stock than if the Stock were registered and qualified pursuant to federal and state securities laws or otherwise sold on the open market. Debtor, therefore, agrees that: (a) if Secured Party shall, pursuant to the terms of this Agreement, sell or cause the Stock or any portion thereof to be sold at a private sale, Secured Party shall have the right to rely upon the advice and opinion of any national brokerage or investment firm and/or counsel of its choosing (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to expose the Stock for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) that such reliance shall be conclusive evidence that Secured Party has handled such disposition in a commercially reasonable manner. 8. VOTING RIGHTS. Debtor shall have the right to exercise all voting and other consensual rights with respect to the Stock until such time as an Event of Default shall have occurred and Secured Party shall have given written notice to Debtor that Debtor's rights to vote the Stock are terminated, at which time Secured Party shall become entitled to vote the Stock. For so long as Debtor shall have the right to vote the Stock, Debtor shall not vote the Stock in a manner that would be adverse to Secured Party's security interest in the Stock or Secured Party's rights under this Agreement. 9. ADDITIONAL ACTIONS AND DOCUMENTS. At the request of Secured Party from time to time, Debtor, Borrower, Beltech and the Beldens shall execute and deliver such further writings, documents and instruments and shall take such further actions, including the filing of financing statements and amendments thereto, all at Debtor's expense, as may be required or appropriate to carry out the intent and purposes of this Agreement. 10. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 11. AMENDMENTS, WAIVERS AND CONSENTS; TIME. This Agreement shall not be changed or modified, in whole or in part, except by supplemental agreement signed by the parties. Any party may waive compliance by any other party of any of the covenants or conditions of this Agreement, but no waiver shall be binding unless executed in writing by the party making the waiver. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other portion, whether or not similar, nor shall any waiver constitute a continuing waiver. Any consent under this Agreement shall be in writing and shall be effective only to the extent specifically set forth in such writing. For the protection of all parties, amendments, waiver and consents that are not in writing may be enforced only if they are detrimentally relied upon and proved by clear and convincing evidence (other than any alleged reliance). Time is of the essence of this Agreement. 12. NOTICE. Any notice, instrument or communication required or permitted to be given under this Agreement to any party shall be in writing and shall be deemed given when actually received or, if earlier, five days after deposit in the United States Mail by certified or express mail, return receipt requested, postage prepaid, addressed to the principal office of such party or to such other address as such party may request by written notice. The parties' principal offices are present located at the addresses set forth below their signatures. 13. ATTORNEYS' FEES. The prevailing party shall be entitled to recover a reasonable allowance for attorneys' fees and litigation expenses in addition to court costs in any suit, action, counterclaim or arbitration brought to enforce the Obligations or this Agreement. "Prevailing Party" within the meaning of this paragraph includes, without limitation, a party who agrees to dismiss an action or proceeding upon the other's payment of the sums allegedly due or performance of the covenants allegedly breached, or who obtains substantially the relief sought by it. 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. 15. WAIVER. (a) No delay of Secured Party in exercising any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right. No waiver by Secured Party of any right hereunder or of any default by Debtor shall be binding upon Secured Party unless in writing, and no failure by Secured Party to exercise any power or right hereunder or waiver of any default by Debtor shall operate as a waiver of any other or further exercise of such right or power or of any further default. Each right, power and remedy of Secured Party as provided for herein, or which shall now or hereafter exist at law or in equity or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by Secured Party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Secured Party of any or all other such rights, powers or remedies. (b) Debtor further waives notice of the creation, advance, increase, existence, extension or renewal of, and of any indulgence with respect to, the Obligations; waives presentment, demand, notice of dishonor, and protest; waives notice of the amount of the Obligations outstanding at any time, notice of any change in financial condition of any person liable for the Obligations or any part thereof, notice of any Event of Default, and all other notices respecting the Obligations; and agrees that maturity of the Obligations and any part thereof may be accelerated, extended or renewed one or more times by Secured Party in its discretion, without notice to Debtor. Debtor waives any right to require that any action be brought against any other person or to require that resort be had to any other security for the Obligations. Debtor further waives any right of subrogation or to enforce any right of action against Borrower, Beltech or the Beldens until the Obligations are paid in full. 16. COUNTERPARTS. This Agreement may be executed in counterparts, including facsimiles thereof, each of which shall constitute an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be duly executed and delivered as of the date first written above. SECURED PARTY: Verilink Corporation By: /s/ Howard Oringer ----------------------------------- Title: Chairman of the Board of Directors ----------------------------------- Address: 127 Jetplex Circle Madison, Alabama 35758 DEBTOR: Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated 12/9/98 /s/ Leigh S. Belden, Trustee ------------------------------------------- Leigh S. Belden, Trustee /s/ Deborah Tinker Belden, Trustee ------------------------------------------- Deborah Tinker Belden, Trustee Address: 136 Tidewater Drive Madison, Alabama 35758 BELTECH Beltech, Inc. By: /s/ Leigh S. Belden --------------------------------------- Name: Leigh S. Belden -------------------------------- Title: President -------------------------------- Address: P.O. Box 780 --------------------------------------- 937 Tahoe Blvd. --------------------------------------- Suite 200 --------------------------------------- Incline Village, NV 89451 --------------------------------------- Signature Page 1 of 2 BORROWER: /s/ Leigh S. Belden ------------------------------------------- Leigh S. Belden Address: 136 Tidewater Drive Madison, Alabama 35758 BELDENS: /s/ Leigh S. Belden ------------------------------------------- Leigh S. Belden /s/ Deborah Tinker Belden ------------------------------------------- Deborah Tinker Belden Address: 136 Tidewater Drive Madison, Alabama 35758 Signature Page 2 of 2 EXHIBIT A COLLATERAL. The security interest is granted in the following collateral (the "Collateral"): A. DESCRIPTION OF COLLATERAL. The shares of common stock of Verilink Corporation listed on Exhibit A-1 attached hereto and incorporated by reference herein, as amended from time to time, now or hereafter held in the possession of Secured Party or its bailee, together with any and all security entitlements, investment property, certificated or uncertificated securities, documents, instruments, general intangibles, deposit accounts, supporting obligations, payment intangibles, and cash hereafter delivered to Secured Party or held in any securities account or deposit account over which Secured Party has control in substitution therefor or in addition thereto (collectively, the "Stock"). B. PROCEEDS. All additions, substitutions and replacements for and proceeds of the above Stock (including all income and benefits resulting from any of the above, such as dividends or other distributions payable or distributable in cash, property or stock; interest, premium and principal payments; redemption proceeds and subscription rights; and shares or other proceeds of conversions or splits of any securities in the Collateral). Any security entitlements, investment property, certificated or uncertificated securities, documents, instruments, general intangibles, supporting obligations, payment intangibles, and cash received by Debtor or held in any deposit account, which shall comprise such additions, substitutions and replacements for, or proceeds of, the Collateral, shall be held in trust for Secured Party shall be delivered immediately to Secured Party, its bailee, or deposited in a deposit account or a securities account over which Secured Party has control. Any cash proceeds shall be held in trust for Secured Party and shall be delivered immediately to Secured Party, its bailee, or deposited in a deposit account over which Secured Party has control or a securities account over which Secured Party has control. EXHIBIT A-1

Certificate No. No. of Shares --------------- -------------- 469 500,000 FBU 0297 100,000 FBU 1158 109,240 FBU 1220 85,000 FBU 0772 47,500 FBU 0305 49,540 -------- Total No. of Shares 891,280

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                    EXHIBIT 10.1

                        THIRD NOTE MODIFICATION AGREEMENT

         THIS THIRD NOTE MODIFICATION AGREEMENT (this "Modification") is made as
of and effective as of the 29th day of July, 2002, by and among LEIGH S. BELDEN
(the "Borrower"), and VERILINK CORPORATION, a Delaware corporation (the
"Holder").

                               STATEMENT OF FACTS

         The Holder made an initial loan to the Borrower (with recourse only to
the pledged security) in the original principal amount of $800,000 evidenced by
the Borrower's Promissory Note payable to the order of the Holder dated February
10, 1998 (the "Original Note"). Subsequently, the Holder made a loan to the
Borrower (on a full recourse basis) in the original principal amount of
$3,000,000 evidenced by the Borrower's Promissory Note payable to the order of
the Holder dated February 22, 1999 (the "Subsequent Note," the Original Note and
the Subsequent Note being collectively referred to herein as the "Notes"). The
Notes are secured by the pledge to the Holder of certain securities owned
beneficially and of record by Leigh S. Belden and Deborah Tinker Belden,
Trustees U/A Dated December 12, 1998 (the "Pledgor").

         The Notes were previously modified by a note modification agreement
dated September 22, 1999, which extended the maturity dates of the Notes through
March 31, 2002 and provided for quarterly payments of principal and interest,
and by a note modification agreement dated as of February 5, 2002, which
extended the maturity dates of the Notes through March 31, 2003 and provided for
a negative pledge of certain securities in favor of Holder.

         Borrower desires to further modify the Notes to extend the maturity
date of the Subsequent Note to March 31, 2006, subject to acceleration in
certain events, and to reduce the base salary to which he is entitled under his
employment letter by 25%.

         Borrower has requested that the Holder consent to the modification of
the Notes, and the Holder is willing to modify the Notes, subject to the terms
and conditions of this Modification.

         NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, $10.00 and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties do hereby
agree as follows:

                               STATEMENT OF TERMS

         1. DEFINITIONS. All capitalized terms used in this Modification but not
otherwise defined or limited herein shall have the meanings set forth in the
Notes, as amended hereby.

         2. AMENDMENTS TO NOTES. Subject to the fulfillment of the conditions
precedent to the effectiveness of this Modification which are set forth below,
the parties hereby agree as follows:

                  (a) The Subsequent Note is hereby further modified to provide
that the outstanding principal balance of the Subsequent Note, together with all
accrued and unpaid interest, shall be due and payable in full in a single
installment on March 31, 2006. Notwithstanding the foregoing, at the election of




Holder, the Subsequent Note may be accelerated and all accrued and unpaid
interest shall be due and payable in full 90 days after notice of acceleration
is given to Borrower following the occurrence of any of the following events:

                           (i)      the aggregate amount of the Company's
                                    unrestricted cash, cash equivalents and
                                    short-term investments is less than
                                    $2,000,000.00; or

                           (ii)     termination of Holder's employment
                                    relationship with the Company.

                  (b) Each of the Notes is hereby modified to provide that upon
the occurrence of any of the following events, Borrower shall be deemed to be in
default (a "Default") under the Notes:

                           (i)      commencement of any bankruptcy, insolvency,
                                    arrangement, reorganization, or other
                                    debtor-relief proceedings by or against the
                                    Borrower; or

                           (ii)     failure of Borrower to pay principal and
                                    interest under the Notes when due.

Upon a Default, Holder may, at its election and without demand or notice of any
kind, which are hereby waived, declare the unpaid principal and accrued and
unpaid interest due under the Notes immediately due and payable, proceed to
collect the same and exercise all other rights and remedies given to it under
the Notes or by law.

         3. SALARY REDUCTION. Borrower hereby agrees to the reduction in his
base salary pursuant to the employment letter dated as of January 8, 2002 to
$9,519.23, paid biweekly in accordance with standard Verilink policy (annualized
salary of $247,500.00), subject to adjustment after the date hereof by the Board
of Directors of Holder.

         4. NO OTHER AMENDMENTS. Except for the amendments expressly set forth
and referred to herein, each of the Notes (as modified by the Second
Modification) remains unchanged and in full force and effect. Without limiting
the generality of the foregoing, the maturity of the Original Note remains March
31, 2003. Nothing in this Modification is intended, or shall be construed, to
constitute a novation or an accord and satisfaction of any of the Borrower's
indebtedness owed to the Holder, or to modify, affect or impair the Holder's
rights under or the perfection or continuity of the security interests in,
security titles to or other liens on any collateral securing the Notes.

         5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. To induce the
Holder to enter into this Modification, the Borrower does hereby warrant,
represent and covenant to the Holder that: (a) the outstanding principal balance
of the Original Note is $570,000.00 as of July 29, 2002 and that accrued and
unpaid interest thereon totals $424,952.88 as of July 29, 2002; (b) the
outstanding principal balance of the Subsequent Note is $1,784,509.95 as of July
29, 2002 and that accrued and unpaid interest thereon totals $464,788.97 as of
July 29, 2002; (c) no Default or Event of Default has occurred and is or will be
continuing as of this date under the Notes after giving effect to the amendments
contained in this Modification; (d) Borrower has the legal capacity and power to
execute, deliver and perform his obligations under this Modification, and this
Modification is and the Notes, as amended hereby, remain the legal, valid and
binding obligation of Borrower enforceable against him in accordance with their
respective terms; and (e) if requested by the Holder at any time, the Borrower
will cause to be delivered to the Holder a duly executed reaffirmation and
confirmation of each of the obligations of Borrower, Pledgor and Beltech under
the Pledge Agreement.




         6. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS MODIFICATION. The
effectiveness of this Modification and the amendments provided herein are
subject to the fulfillment of the following conditions precedent:

                  (a) the Holder shall have received one or more counterparts of
this Modification duly executed by the Borrower;

                  (b) each and every representation and warranty of the Borrower
set forth in Section 4 above shall be true and correct in all material respects
as of the date of, and after giving effect to, this Modification; and

                  (c) there shall not exist as of the date of, and after giving
effect to, this Modification any Default or Event of Default under the Notes as
amended by this Modification.

         7. COUNTERPARTS. This Modification may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.

         8. GOVERNING LAW. THIS MODIFICATION SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR
CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR
INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.

         9. TIME OF ESSENCE. Time is of the essence of this Modification.




                     [Balance of page intentionally blank.]






         IN WITNESS WHEREOF, the parties hereto have caused this Modification to
be duly executed, sealed and delivered as of the day and year specified at the
beginning hereof.


                               BORROWER:


                                   /s/ Leigh S. Belden                    (SEAL)
                               -------------------------------------------
                               Name  Leigh S. Belden
                                     -------------------------------------------




                               HOLDER:

                               VERILINK CORPORATION


                               By:           /s/ Howard Oringer
                                  ----------------------------------------------
                                   Name   Howard Oringer
                                          --------------------------------------
                                   Title  Chairman of the Board of Directors
                                          --------------------------------------





                                        [CORPORATE SEAL]

EX-10.1.A

                                                                   EXHIBIT 10.1A


                       SECOND NOTE MODIFICATION AGREEMENT

         THIS SECOND NOTE MODIFICATION AGREEMENT (this "Modification") is made
as of and effective as of the 5th day of February, 2002, by and among LEIGH S.
BELDEN (the "Borrower"), and VERILINK CORPORATION, a Delaware corporation (the
"Holder").

                               STATEMENT OF FACTS

         The Holder made an initial loan to the Borrower in the original
principal amount of $800,000 evidenced by the Borrower's Promissory Note payable
to the order of the Holder dated February 10, 1998 (the "Original Note").
Subsequently, the Holder made a loan to the Borrower in the original principal
amount of $3,000,000 evidenced by the Borrower's Promissory Note payable to the
order of the Holder dated February 22, 1999 (the "Subsequent Note," the Original
Note and the Subsequent Note being collectively referred to herein as the
"Notes"). The Notes are secured by the pledge to the Holder of certain
securities owned beneficially and of record by Leigh S. Belden and Deborah
Tinker Belden, Trustees U/A Dated December 12, 1998 (the "Pledgor").

         The Notes were previously modified by note modification agreements
dated September 22, 1999 which extended the maturity dates of the Notes through
March 31, 2002 and provided for quarterly payments of principal and interest.
The March 31, 2001 through December 31, 2001 quarterly payments have not been
paid.

         Borrower desires to further modify the Notes to defer the quarterly
payments due in March, June, September and December of 2001 and March of 2002
and to pay the Notes in a single installment of principal and accrued interest
on March 31, 2003, subject to mandatory prepayments of the Notes upon
disposition of certain securities which are subject to a negative pledge in
favor of Holder.

         Borrower has requested that the Holder consent to the modification of
the Notes, and the Holder is willing to modify the Notes, subject to the terms
and conditions of this Modification.

         NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, $10.00 and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties do hereby
agree as follows:

                               STATEMENT OF TERMS

         1. DEFINITIONS. All capitalized terms used in this Modification but not
otherwise defined or limited herein shall have the meanings set forth in the
Notes, as amended hereby.

         2. AMENDMENTS TO NOTES. Subject to the fulfillment of the conditions
precedent to the effectiveness of this Modification which are set forth below,
the parties hereby agree as follows:

                  (a) Each of the Notes as heretofore modified is hereby further
modified by deleting the requirement for payment of quarterly installments of
principal and interest for the quarters ended March through December 2001 and
the final installment on March 31, 2002.




                  (b) Each of the Notes is hereby further modified to provide
that the outstanding principal balance of each of the Notes, together with all
accrued and unpaid interest, shall be due and payable in full in a single
installment on March 31, 2003.

                  (c) Each of the Notes is hereby further modified to provide
that Borrower shall make a mandatory prepayment of the Notes on the date of any
sale or other disposition by Borrower, the Pledgor or Beltech, Inc., a
California corporation ("Beltech") of any securities which are pledged as
collateral or subject to the negative pledge in favor of Holder under the
Amended and Restated Security Agreement ("Pledge Agreement") dated as of
February 5, 2002 among Borrower, Pledgor, Beltech and Holder, the terms of which
are incorporated by reference herein. Each mandatory prepayment shall be in an
amount equal to the proceeds received by such party in connection with such sale
or disposition, net of reasonable and customary third party expenses of sale.
Mandatory prepayments resulting from any sale or other disposition of securities
pledged as collateral under the Pledge Agreement shall be applied first against
the Original Note's principal balance, then against accrued interest on the
Original Note, and upon payment of the Original Note in full shall be applied
against the outstanding principal balance of the Subsequent Note and accrued
interest thereon until the Subsequent Note is paid in full. If the Collateral
Market Value does not exceed the outstanding principal and interest balance of
the Original Note at the time of a mandatory prepayment resulting from a sale or
other disposition of securities subject to the negative pledge pursuant to the
Pledge Agreement, then such mandatory prepayment shall also be applied first
against the Original Note's principal balance, then against accrued interest on
the Original Note, and upon payment of the Original Note in full shall be
applied against the outstanding principal balance of the Subsequent Note and
accrued interest thereon until the Subsequent Note is paid in full. If the
Collateral Market Value exceeds the outstanding principal and interest balance
of the Original Note at the time of a mandatory prepayment resulting from a sale
or other disposition of securities subject to the negative pledge pursuant to
the Pledge Agreement, then such mandatory prepayment be applied first against
the principal balance then against accrued interest on either the Original Note
or the Subsequent Note, or a combination thereof, at the election of Borrower.
If Borrower notifies Holder that Borrower seeks to use the securities that are
pledged as Collateral or subject to the negative pledge in favor of Holder under
the Pledge Agreement to pay or fund the payment of the Notes, the parties shall
cooperate in good faith to facilitate the Borrower's use of such securities to
pay or fund the payment of the Notes subject to applicable law and regulations.

                  (d) For purposes hereof, "Collateral Market Value" as of any
date shall mean the product of (i) the number of shares of Common Stock of
Verilink Corporation (the "Common Stock") then pledged as collateral pursuant to
the Pledge Agreement, multiplied by (ii) the average of the daily closing prices
per share of Common Stock for the 10 consecutive trading days immediately
preceding such date as reported on the principal trading market for the Common
Stock, as adjusted to reflect any stock dividends, sub-divisions, combinations
or reclassifications of the Common Stock. The closing price shall be the last
reported sale price, regular way, or if no such sales are reported on such day
or closing sale prices are not reported for the Common Stock, then the average
of the closing bid and asked price as reported in the principal consolidated
transaction reporting system for the principal trading market on which the
Common Stock is traded or listed, or such other system then in use. If the
Common Stock is not listed or traded on an established trading market, or not
the subject of available bid and asked prices or quotes, then the fair market
value per share of Common Stock, as determined in good faith by the Board of
Directors of Borrower, shall be deemed to be the average of the daily closing
prices for purposes of clause (ii) above.

                  (e) Each of the Notes is hereby further modified to provide
that Borrower may at any time or times voluntarily prepay (from funds other than
those described in (c) above) all or any portion of each of the Notes, without
premium or penalty. A voluntary prepayment shall include accrued interest





through the date of prepayment on the amount of principal being voluntarily
prepaid. Borrower shall provide written notice to the Holder designating the
Note or Notes against which the prepayment shall be applied.

         3. NO OTHER AMENDMENTS. Except for the amendments expressly set forth
and referred to herein, each of the Notes remains unchanged and in full force
and effect. Nothing in this Modification is intended, or shall be construed, to
constitute a novation or an accord and satisfaction of any of the Borrower's
indebtedness owed to the Holder, or to modify, affect or impair the Holder's
rights under or the perfection or continuity of the security interests in,
security titles to or other liens on any collateral securing the Notes.

         4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. To induce the
Holder to enter into this Modification, the Borrower does hereby warrant,
represent and covenant to the Holder that: (a) the outstanding principal balance
of the Original Note is $570,000.00 at January 31, 2002 and that accrued and
unpaid interest thereon totals $400,901.34 at January 31, 2002; (b) the
outstanding principal balance of the Subsequent Note is $1,793,173.00 at January
31, 2002 and that accrued and unpaid interest thereon totals $399,568.18 at
January 31, 2002; (c) no Default or Event of Default has occurred and is or will
be continuing as of this date under the Notes after giving effect to the
amendments contained in this Modification; (d) Borrower has the legal capacity
and power to execute, deliver and perform his obligations under this
Modification, and this Modification is and the Notes, as amended hereby, remain
the legal, valid and binding obligation of Borrower enforceable against him in
accordance with their respective terms; and (e) if requested by the Holder at
any time, the Borrower will cause to be delivered to the Holder a duly executed
reaffirmation and confirmation of each of the obligations of Borrower, Pledgor
and Beltech under the Pledge Agreement.

         5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS MODIFICATION. The
effectiveness of this Modification and the amendments provided herein are
subject to the fulfillment of the following conditions precedent:

                  (a) the Holder shall have received one or more counterparts of
this Modification duly executed by the Borrower;

                  (b) the Holder shall have received from the Pledgor the duly
executed Pledge Agreement, as amended and restated this date, pursuant to which
Pledgor shall have granted to the Holder a first priority security interest in
and to the collateral pledged thereunder (the "Pledged Collateral"), and
Borrower, Deborah Tinker Belden and Beltech shall have agreed to the negative
pledge of securities of Holder;

                  (c) the Holder shall have received from the Pledgor the
original share certificates evidencing the Pledged Collateral, together with
duly executed stock powers, in blank, or a control agreement in form and
substance acceptable to the Holder in its reasonable judgment with respect to
any account in which the shares may be placed;

                  (d) each and every representation and warranty of the Borrower
set forth in Section 4 above shall be true and correct in all material respects
as of the date of, and after giving effect to, this Modification; and






                  (e) there shall not exist as of the date of, and after giving
effect to, this Modification any Default or Event of Default under the Notes as
amended by this Modification.

         6. COUNTERPARTS. This Modification may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.

         7. GOVERNING LAW. THIS MODIFICATION SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR
CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR
INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.

         8. TIME OF ESSENCE. Time is of the essence of this Modification.






         IN WITNESS WHEREOF, the parties hereto have caused this Modification to
be duly executed, sealed and delivered as of the day and year specified at the
beginning hereof.

                                  BORROWER:


                                      /S/ Leigh S. Belden                 (SEAL)
                                  ----------------------------------------
                                  Name:  Leigh S. Belden
                                         ---------------------------------------




                                  HOLDER:

                                  VERILINK CORPORATION


                                  By:        /s/ Howard Oringer
                                     -------------------------------------------
                                      Name   Howard Oringer
                                             -----------------------------------
                                      Title  Chairman of the Board of Directors
                                             -----------------------------------



                                                     [CORPORATE SEAL]

EX-10.1.B

                                                                   EXHIBIT 10.1B


                     AMENDED AND RESTATED SECURITY AGREEMENT

         THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement"), made as
of February 22, 1999 and amended and restated in its entirety as of February 5,
2002, by Leigh S. Belden and Deborah Tinker Belden, Trustees U/A Dated 12/9/98
("Debtor") for the benefit of Verilink Corporation, a Delaware corporation
("Secured Party"), Beltech, Inc., a California corporation ("Beltech"), Leigh S.
Belden (the "Borrower") and Deborah Tinker Belden, each an individual resident
of the State of California (together, the "Beldens") in consideration of certain
credit extended by Secured Party to the Borrower.

                                    RECITALS:

A.       Debtor and Secured Party are parties to that certain Security Agreement
         dated February 22, 1999 (the "Original Pledge Agreement");

B.       Debtor has pledged to Secured Party certain shares of common stock to
         secure certain obligations of Borrower to Secured Party;

C.       Debtor and Secured Party desire to amend the Original Pledge Agreement
         in certain respects and to restate the Original Pledge Agreement, as
         amended, in its entirety;

D.       Beltech and the Beldens desire to become parties to the Agreement and,
         in particular, to be bound by the negative pledge granted in Section 4
         below.

         In consideration of the mutual covenants contained herein and for other
good and valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the parties hereby amend and restate the Original Pledge Agreement
and agree as follows:

         1. GRANT AND SECURITY INTEREST. Debtor hereby pledges, assigns and
grants to Secured Party a perfected, first priority security interest in all of
Debtor's right, title and interest, whether presently existing or hereafter
created or acquired, wherever located, in the property (referred to collectively
as the "Collateral") described in Exhibit A hereto.

         2. OBLIGATIONS SECURED. The security interest granted hereby secures
all indebtedness and obligations of Borrower to Secured Party now existing or
hereafter arising pursuant to that certain promissory note dated February 10,
1998 in the original principal amount of $800,000, and that certain promissory
note dated February 22, 1999 in the original principal amount of $3,000,000,
both as modified by modification agreements dated as of September 22, 1999 and
February 5, 2002 (the "Modification Agreement") as the same may be renewed,
modified or extended from time to time; all costs and expenses of Secured Party,
including reasonable attorneys fees, to obtain, preserve, perfect, enforce and
defend this Agreement and maintain, preserve, collect, protect, perfect Secured
Party's interest in and realize upon the Collateral and all covenants,
agreements, representations and warranties of Debtor, Beltech and the Beldens
contained herein (collectively, the "Obligations").




         3. PERFECTION AND SECURITY INTEREST. Debtor from time to time, at the
request of Secured Party, shall execute such financing statements, control
agreements, and other documents, each of which shall be in form and substance
acceptable to Secured Party, and take such actions as may be necessary or
appropriate to perfect or continue the perfection and priority of Secured
Party's security interests in the Collateral. Debtor shall promptly notify
Secured Party if Debtor changes Debtor's name or moves Debtor's principal
residence or location or the place where Debtor keeps its records from the
address set forth below. Debtor shall promptly furnish to Secured Party any
information with respect to the Collateral or the Debtor as Secured Party
reasonably may request.

         4. NEGATIVE PLEDGE. Neither Debtor, Beltech, Borrower nor the Beldens
will create, assume or suffer or permit to exist any security interest, lien,
charge, encumbrance or claim on any securities issued by Verilink Corporation
and now or hereafter owned of record or beneficially by Debtor (other than the
security interest in favor of Holder granted by Debtor hereunder), Borrower,
Beltech or the Beldens, nor will any of them permit or make any sale or other
transfer or disposition of such securities unless such sale or disposition is
made in good faith to an unaffiliated, third-party, bona fide purchaser in an
arms-length transaction, and an amount equal to any net proceeds thereof is
applied to prepay the Obligations as provided in the Notes as modified by the
Modification Agreement of even date herewith.

         5. REPRESENTATIONS, WARRANTIES AND COVENANTS. Debtor represents,
warrants and covenants that:

                  (a) TITLE. Apart from the security interest in the Collateral
granted to Secured Party hereunder, Debtor has good and valid title to the
Collateral, free and clear of any and all liens, charges, claims, security
interests, set offs, restrictions and encumbrances of any kind whatsoever. To
the extent the Collateral consists of securities, such securities are duly
authorized, validly issued, fully paid and nonassessable.

                  (b) TRANSFER OF COLLATERAL. Debtor shall not sell, assign,
transfer, encumber or otherwise dispose of any of the Collateral or any interest
therein without the prior written consent of Secured Party. If any such
encumbrance is imposed, Debtor shall give Secured Party immediate written notice
and take immediate action to discharge the same.

                  (c) AUTHORITY; ENFORCEABILITY. Debtor has full legal capacity,
power and authority to make, enter into and perform this Agreement and no
consent or approval of or notice to any person or entity is required in
connection with this Agreement. This Agreement is a valid, binding and
enforceable obligation of Debtor.

                  (d) NOTICE OF THIRD PARTY ACTIONS. Debtor shall promptly
notify Secured Party of any Event of Default or any levy, execution or
attachment against the Collateral or any other event or condition that affects
the Collateral and shall promptly take all necessary action to preserve, perfect
and protect Secured Party's first priority security interest in the Collateral.

         6. POWER OF ATTORNEY. Debtor hereby appoints Secured Party and any
officer thereof as Debtor's attorney-in-fact to execute and file any writings in
connection with the Collateral, to take any other actions that are appropriate
to collect any proceeds of the Collateral and, subject to the provisions of
Section 8 below, to vote or exercise consensual rights with respect to the
Stock. This appointment shall constitute a power coupled with an interest, shall
survive the termination, death or incapacity of Debtor and shall be irrevocable
until the Obligations are paid in full.




         7. EVENTS OF DEFAULT. An "Event of Default" shall occur when Debtor or
the Borrower (a) fails to pay or perform any of the Obligations (or Debtor,
Beltech, Borrower or the Beldens fails to perform any of the covenants or
agreements contained herein) when due; (b) becomes insolvent, a receiver is
appointed for any part of Debtor's or Borrower's property, Debtor or Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Debtor or Borrower or against Debtor or Borrower under any bankruptcy
or insolvency laws; or (c) sells or otherwise disposes of or encumbers all or a
substantial part of Debtor's or Borrower's assets. At any time after an Event of
Default, in addition to exercising any other rights and remedies, Secured Party
may, after consultation with Borrower as provided below: (a) sell or dispose of
the Collateral in a public or private sale as Secured Party deems appropriate
for the purposes of paying or performing the Obligations; (b) declare
immediately due and payable all of the Obligations owing to Secured Party; (c)
apply any Collateral to the Obligations in such order as Secured Party may
determine, any Stock so applied being valued at its market price on the date
Secured Party gives notice to Debtor of such application of Stock to satisfy
Obligations; (d) enter into any agreement relating to the Collateral and
exercise all voting rights to the exclusion of Debtor; (e) make any settlement
that Secured Party deems appropriate in respect of the Collateral; (f) collect
any sums payable in connection with the Collateral; and (g) make, adjust and
receive payment under insurance claims, claims for breach of warranty and the
like in connection with the Collateral.

         Secured Party shall consult with Borrower regarding the exercise of
Secured Party's rights against the Collateral prior to exercising its rights, so
that Secured Party's exercise of those rights is accomplished in the best
interests of Secured Party, its stockholders, Debtor and Borrower. Secured Party
in all events shall have the rights, powers and remedies set forth above as well
as all of the rights, powers and remedies otherwise afforded to a secured
creditor under the Uniform Commercial Code of the State where the Debtor is
located.

         Debtor specifically understands and agrees that any sale by Secured
Party of all or part of the Collateral pursuant to the terms of this Agreement
may be effected by Secured Party at a time or times and in a manner or manners
which could result in the proceeds of such sale being significantly and
materially less than might have been received if such sale had occurred at
different times or in different manners, and Debtor, to the fullest extent
permitted by law, hereby releases Secured Party and its officers and
representatives from and against any and all obligations and liabilities arising
out of or related to the timing or manner of any such sale.

         The Collateral consisting of Stock (as defined in Exhibit A) may be not
registered or qualified under the various federal or state securities laws of
the United States, or may consist of securities the disposition of which after
default may be restricted to one or more private (instead of public) sales.
Debtor understands that upon such disposition, Secured Party may approach only a
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Stock than if the Stock
were registered and qualified pursuant to federal and state securities laws or
otherwise sold on the open market. Debtor, therefore, agrees that:

                  (a) if Secured Party shall, pursuant to the terms of this
         Agreement, sell or cause the Stock or any portion thereof to be sold at
         a private sale, Secured Party shall have the right to rely upon the
         advice and opinion of any national brokerage or investment firm and/or
         counsel of its choosing (but shall not be obligated to seek such advice
         and the failure to do so shall not be considered in determining the
         commercial reasonableness of such action) as to the best manner in
         which to expose the Stock for sale and as to the best price reasonably
         obtainable at the private sale thereof; and




                  (b) that such reliance shall be conclusive evidence that
         Secured Party has handled such disposition in a commercially reasonable
         manner.

         8. VOTING RIGHTS. Debtor shall have the right to exercise all voting
and other consensual rights with respect to the Stock until such time as an
Event of Default shall have occurred and Secured Party shall have given written
notice to Debtor that Debtor's rights to vote the Stock are terminated, at which
time Secured Party shall become entitled to vote the Stock. For so long as
Debtor shall have the right to vote the Stock, Debtor shall not vote the Stock
in a manner that would be adverse to Secured Party's security interest in the
Stock or Secured Party's rights under this Agreement.

         9. ADDITIONAL ACTIONS AND DOCUMENTS. At the request of Secured Party
from time to time, Debtor, Borrower, Beltech and the Beldens shall execute and
deliver such further writings, documents and instruments and shall take such
further actions, including the filing of financing statements and amendments
thereto, all at Debtor's expense, as may be required or appropriate to carry out
the intent and purposes of this Agreement.

         10. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.

         11. AMENDMENTS, WAIVERS AND CONSENTS; TIME. This Agreement shall not be
changed or modified, in whole or in part, except by supplemental agreement
signed by the parties. Any party may waive compliance by any other party of any
of the covenants or conditions of this Agreement, but no waiver shall be binding
unless executed in writing by the party making the waiver. No waiver of any of
the provisions of this Agreement shall be deemed, or shall constitute, a waiver
of any other portion, whether or not similar, nor shall any waiver constitute a
continuing waiver. Any consent under this Agreement shall be in writing and
shall be effective only to the extent specifically set forth in such writing.
For the protection of all parties, amendments, waiver and consents that are not
in writing may be enforced only if they are detrimentally relied upon and proved
by clear and convincing evidence (other than any alleged reliance). Time is of
the essence of this Agreement.

         12. NOTICE. Any notice, instrument or communication required or
permitted to be given under this Agreement to any party shall be in writing and
shall be deemed given when actually received or, if earlier, five days after
deposit in the United States Mail by certified or express mail, return receipt
requested, postage prepaid, addressed to the principal office of such party or
to such other address as such party may request by written notice. The parties'
principal offices are present located at the addresses set forth below their
signatures.

         13. ATTORNEYS' FEES. The prevailing party shall be entitled to recover
a reasonable allowance for attorneys' fees and litigation expenses in addition
to court costs in any suit, action, counterclaim or arbitration brought to
enforce the Obligations or this Agreement. "Prevailing Party" within the meaning
of this paragraph includes, without limitation, a party who agrees to dismiss an
action or proceeding upon the other's payment of the sums allegedly due or
performance of the covenants allegedly breached, or who obtains substantially
the relief sought by it.

         14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO ANY CONFLICTS OR
CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTION OR
INTERPRETATION OF THIS MODIFICATION TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.




         15. WAIVER. (a) No delay of Secured Party in exercising any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof or the
exercise of any other power or right. No waiver by Secured Party of any right
hereunder or of any default by Debtor shall be binding upon Secured Party unless
in writing, and no failure by Secured Party to exercise any power or right
hereunder or waiver of any default by Debtor shall operate as a waiver of any
other or further exercise of such right or power or of any further default. Each
right, power and remedy of Secured Party as provided for herein, or which shall
now or hereafter exist at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by Secured Party of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by Secured Party of any or all other such rights,
powers or remedies.

                  (b) Debtor further waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with respect
to, the Obligations; waives presentment, demand, notice of dishonor, and
protest; waives notice of the amount of the Obligations outstanding at any time,
notice of any change in financial condition of any person liable for the
Obligations or any part thereof, notice of any Event of Default, and all other
notices respecting the Obligations; and agrees that maturity of the Obligations
and any part thereof may be accelerated, extended or renewed one or more times
by Secured Party in its discretion, without notice to Debtor. Debtor waives any
right to require that any action be brought against any other person or to
require that resort be had to any other security for the Obligations. Debtor
further waives any right of subrogation or to enforce any right of action
against Borrower, Beltech or the Beldens until the Obligations are paid in full.

         16. COUNTERPARTS. This Agreement may be executed in counterparts,
including facsimiles thereof, each of which shall constitute an original and all
of which together shall constitute one and the same instrument.







         IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be
duly executed and delivered as of the date first written above.


                                     SECURED PARTY:

                                     Verilink Corporation

                                     By:     /s/ Howard Oringer
                                             -----------------------------------
                                     Title:  Chairman of the Board of Directors
                                             -----------------------------------
                                     Address:    127 Jetplex Circle
                                                 Madison, Alabama  35758



                                     DEBTOR:

                                     Leigh S. Belden and Deborah Tinker Belden,
                                     Trustees U/A Dated 12/9/98

                                         /s/ Leigh S. Belden, Trustee
                                     -------------------------------------------
                                     Leigh S. Belden, Trustee

                                         /s/ Deborah Tinker Belden, Trustee
                                     -------------------------------------------
                                     Deborah Tinker Belden, Trustee

                                     Address:    136 Tidewater Drive
                                                 Madison, Alabama  35758



                                     BELTECH

                                     Beltech, Inc.

                                     By:       /s/ Leigh S. Belden
                                         ---------------------------------------
                                         Name:    Leigh S. Belden
                                                --------------------------------
                                         Title:   President
                                                --------------------------------

                                     Address:
                                              P.O. Box 780
                                         ---------------------------------------
                                              937 Tahoe Blvd.
                                         ---------------------------------------
                                              Suite 200
                                         ---------------------------------------
                                              Incline Village, NV 89451
                                         ---------------------------------------


Signature Page 1 of 2



                                     BORROWER:

                                         /s/ Leigh S. Belden
                                     -------------------------------------------
                                     Leigh S. Belden

                                     Address:    136 Tidewater Drive
                                                 Madison, Alabama  35758



                                     BELDENS:

                                         /s/ Leigh S. Belden
                                     -------------------------------------------
                                     Leigh S. Belden

                                         /s/ Deborah Tinker Belden
                                     -------------------------------------------
                                     Deborah Tinker Belden

                                     Address:    136 Tidewater Drive
                                                 Madison, Alabama  35758







Signature Page 2 of 2





                                    EXHIBIT A

COLLATERAL. The security interest is granted in the following collateral (the
"Collateral"):

         A. DESCRIPTION OF COLLATERAL. The shares of common stock of Verilink
Corporation listed on Exhibit A-1 attached hereto and incorporated by reference
herein, as amended from time to time, now or hereafter held in the possession of
Secured Party or its bailee, together with any and all security entitlements,
investment property, certificated or uncertificated securities, documents,
instruments, general intangibles, deposit accounts, supporting obligations,
payment intangibles, and cash hereafter delivered to Secured Party or held in
any securities account or deposit account over which Secured Party has control
in substitution therefor or in addition thereto (collectively, the "Stock").

         B. PROCEEDS. All additions, substitutions and replacements for and
proceeds of the above Stock (including all income and benefits resulting from
any of the above, such as dividends or other distributions payable or
distributable in cash, property or stock; interest, premium and principal
payments; redemption proceeds and subscription rights; and shares or other
proceeds of conversions or splits of any securities in the Collateral). Any
security entitlements, investment property, certificated or uncertificated
securities, documents, instruments, general intangibles, supporting obligations,
payment intangibles, and cash received by Debtor or held in any deposit account,
which shall comprise such additions, substitutions and replacements for, or
proceeds of, the Collateral, shall be held in trust for Secured Party shall be
delivered immediately to Secured Party, its bailee, or deposited in a deposit
account or a securities account over which Secured Party has control. Any cash
proceeds shall be held in trust for Secured Party and shall be delivered
immediately to Secured Party, its bailee, or deposited in a deposit account over
which Secured Party has control or a securities account over which Secured Party
has control.





                                   EXHIBIT A-1



                    Certificate No.                            No. of Shares
                    ---------------                            --------------
                                                            
                          469                                      500,000
                        FBU 0297                                   100,000
                        FBU 1158                                   109,240
                        FBU 1220                                    85,000
                        FBU 0772                                    47,500
                        FBU 0305                                    49,540
                                                                  --------

                  Total No. of Shares                              891,280