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                           CERTIFICATE OF DESIGNATION
                                       OF
                             AM COMMUNICATIONS, INC.


TO: THE SECRETARY OF STATE
    STATE OF DELAWARE


         It is hereby certified that:

         1. The name of the corporation is AM COMMUNICATIONS, INC. (the
"Corporation").

         2. The Certificate of Incorporation, as restated and then further
amended prior to the date hereof, authorizes the issuance of (a) 1,000,000
shares of Preferred Stock, with a par value of $0.10 per share each, and
expressly vests in the Board of Directors of the Corporation the authority
provided therein to issue any or all of such shares in one or more series and,
by resolution, to establish the designation, number, full or limited voting
powers, or the denial of voting powers, preferences and relative, participating,
optional and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics of each series to be
issued, and (b) the issuance of 100,000,000 shares of Common Stock, with a par
value of $0.10 each.

         3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a series of the Preferred Stock to be known as the "Series A Preferred
Stock" and authorizing the issuance of 74,074 shares of such Series A Preferred
Stock:

         WHEREAS, the Corporation seeks immediately to obtain up to $2 Million
         in capital (the "Investment") to be used to finance working capital
         needs, business development activities, the pursuit of strategic growth
         objectives, including merger and acquisition



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         activities, and other purposes arising in the ordinary course of the
         Corporation's business.

         WHEREAS, Investec PMG, as the Corporation's retained investment banker,
         has prepared a proposed structure for the Investment based on its
         analysis of valuations for comparable companies to the Corporation, a
         summary of the substantive terms of such proposed Investment is
         attached hereto as Exhibit A.

         WHEREAS, given the time constraints and market conditions for obtaining
         the proposed Investment, it is believed that the only viable source of
         such Investment is a member of the Board or other insider of the
         Corporation.

         NOW, THEREFORE, BE IT HEREBY:

         RESOLVED: That the Corporation shall be authorized and directed to
         obtain the Investment from a member of the Board or other insider of
         the Corporation consistent with the terms as set forth in the Investec
         PMG proposal and summarized in Exhibit A.

         FURTHER RESOLVED: That the Corporation's Certificate of Incorporation
         shall be amended to set forth the following description of the
         Preferred Stock (herein designated to be the Corporation's Series A
         Preferred Stock) to be issued by the Corporation in conjunction with
         such proposed Investment:

         "10. Description and Designation of Series A Preferred Stock.

              (a) Designation. A total of 74,074 shares of the corporation's
                  Preferred Stock shall be designated the Series A Preferred
                  Stock, having a par value of $0.10 per share..

              (b) Computation of Cumulative Dividends. The holders of the
                  outstanding shares of Series A Preferred Stock shall be
                  entitled to receive, out of any funds legally available
                  therefor, cumulative dividends at the annual rate of ten
                  percent (10%) of the original issue price per share of Series
                  A Preferred Stock. Dividends on the Series A Preferred Stock
                  shall accrue from day to day on each share of Series A
                  Preferred Stock from the date of original issuance of such
                  share, whether or not earned or declared, and shall accrue
                  until paid. All numbers relating to the calculation of
                  cumulative dividends shall be subject to equitable adjustment
                  in the event of any stock dividend, stock split, combination,
                  reorganization, reclassification, recapitalization, or other
                  similar event involving a change in the corporation's capital
                  structure.


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              (c) Payment of Dividends. Subject to the following, cumulative
                  dividends on the Series A Preferred Stock shall be payable if,
                  as and when declared by the Board of Directors of the
                  corporation. If any accrued cumulative dividends on the Series
                  A Preferred Stock in respect of any previous or current annual
                  dividend period shall not have been paid or declared and a sum
                  sufficient for the payment thereof set apart, the deficiency
                  shall first be fully paid before any dividend or other
                  distribution shall be paid or declared and set apart for the
                  Common Stock, or any subsequently designated series of
                  Preferred Stock which is junior in right of dividends to the
                  Series A Preferred Stock. Upon any conversion of the Series A
                  Preferred Stock pursuant to Section 10(f) hereof, all such
                  accrued and unpaid cumulative dividends on the Series A
                  Preferred Stock to and until the date of such conversion shall
                  be immediately due and payable in either cash or Common Stock
                  at the election of the corporation. For the purposes of the
                  previous sentence, the Common Stock shall be valued at the
                  market price in effect on the day immediately preceding the
                  effective date of the conversion, as determined by the Board
                  of Directors of the corporation in its reasonable discretion.

              (d) Treatment at Liquidation, Dissolution or Winding Up.

                  (i) In the event of any liquidation, dissolution or winding up
                  of the corporation, whether voluntary or involuntary, or in
                  the event of its insolvency, before any distribution or
                  payment is made to any holders of Common Stock or any other
                  class or series of capital stock of the corporation designated
                  to be junior to the Series A Preferred Stock in liquidation
                  preference, and subject to the liquidation rights and
                  preferences of any other class or series of Preferred Stock
                  designated in the future to be senior to, or on a parity with,
                  the Series A Preferred Stock with respect to liquidation
                  rights and preferences, the holders of each share of Series A
                  Preferred Stock shall be entitled to be paid first out of the
                  assets of the corporation available for distribution to
                  holders of the corporation's capital stock of all classes,
                  whether such assets are capital, surplus or earnings
                  ("Available Assets"), the greater of (A) an amount equal to
                  the original issue price per share of the Series A Preferred
                  Stock (subject to equitable adjustment for any stock dividend,
                  stock split, combination, reorganization, recapitalization,
                  reclassification, or other similar event involving a change in
                  the capital structure of the Preferred Stock) plus all
                  declared but unpaid dividends on each such share, or (B) such
                  amount per share of Series A Preferred Stock as would have
                  been payable had each share of Preferred Stock which is
                  convertible into shares of the Common Stock been so converted
                  immediately prior to such liquidation, dissolution or winding
                  up.

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                  (ii) If, upon liquidation, dissolution or winding up of the
                  corporation, the Available Assets shall be insufficient to pay
                  to the holders of the Series A Preferred Stock and any other
                  series of Preferred Stock on parity with the Series A
                  Preferred Stock with respect to liquidation rights and
                  preferences, the full amounts to which they otherwise would be
                  entitled, the holders of the Series A Preferred Stock and such
                  other series of Preferred Stock shall share ratably in any
                  distribution of Available Assets pro rata in proportion to the
                  respective liquidation preference amounts which would
                  otherwise be payable upon liquidation with respect to the
                  outstanding shares of Series A Preferred Stock and such other
                  series of Preferred Stock if all liquidation preference dollar
                  amounts with respect to such shares were paid in full.

                  (iii) After payment of all liquidation preferences to all
                  holders of Preferred Stock, the entire remaining Available
                  Assets, if any, shall be distributed among the holders of the
                  Common Stock and any other class or series of Preferred Stock
                  entitled to participate with the Common Stock in a liquidating
                  distribution, in proportion to the shares of the Common Stock
                  then held by them and the shares of Common Stock which they
                  then have the right to acquire upon conversion of such shares
                  of Preferred Stock held by them.

                  (iv) Whenever any distribution provided for in this Section
                  10(d) shall be payable in whole or in part in property other
                  than cash, the value of any property distributed shall be the
                  fair market value of such property as reasonably determined in
                  good faith by the Board of Directors of the corporation. All
                  distributions of property other than cash made hereunder shall
                  be made, to the extent possible, pro rata with respect to each
                  series and class of Preferred Stock and Common Stock in
                  accordance with the liquidation amounts payable with respect
                  to each such series and class.

              (e) Treatment of Reorganization, Consolidation, Merger or Sale of
                  Assets. Any merger, consolidation or other corporate
                  reorganization or combination to which the corporation is a
                  non-surviving party, and any sale of all or substantially all
                  of the assets of the corporation, shall be regarded as a
                  liquidation, dissolution or winding up of the affairs of the
                  corporation for purposes of Section 10(d) hereof. The
                  provisions of this Section 10(e) shall not apply to (i) any
                  reorganization, merger, or consolidation involving only a
                  change in the state of incorporation of the corporation, (ii)
                  a merger of the corporation with or into a wholly-owned
                  subsidiary of the corporation, or (iii) a merger,
                  reorganization, consolidation or other combination of which
                  the corporation is

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                  substantively the surviving corporation and operates as a
                  going concern, with another corporation incorporated in the
                  United States of America and which does not involve a
                  recapitalization, reorganization, reclassification or other
                  similar change in the capital structure of the corporation.

              (f) Conversion. The holders of the Series A Preferred Stock shall
                  have the following rights and be subject to the following
                  obligations with respect to the conversion of such shares into
                  shares of the Common Stock.

                  (i) Voluntary Conversion. Each holder of Series A Preferred
                  Stock shall have the right to convert, at any time prior to
                  redemption pursuant to Section 10(k) hereof, any share of the
                  Series A Preferred Stock owned by it into shares of the Common
                  Stock. For purposes of this Agreement, each share of Series A
                  Preferred Stock shall be deemed to be worth $27.00, and the
                  conversion price of the Common Stock shall be $0.27 per share,
                  or, in case an adjustment to such price has taken place
                  pursuant to the provisions of Section 10(g) hereof, then at
                  the price as last adjusted and in effect on the date of
                  conversion (such price, as last adjusted, being referred to
                  herein as the "Exercise Price"). For example, if no adjustment
                  to the Exercise Price has occurred, each outstanding share of
                  Series A Preferred Stock would be convertible into one hundred
                  (100) shares of the Common Stock. If the Exercise Price had
                  been adjusted and reduced to $0.18, each outstanding share of
                  Series A Preferred Stock would be convertible into one hundred
                  fifty (150) shares of the Common Stock

                  (ii) Automatic Conversion. Immediately prior to the closing of
                  a public offering basis pursuant to an effective registration
                  statement filed pursuant to the Securities Act of 1933, as
                  amended (other than on Form S-4 or S-8 or any successor forms
                  thereto), covering the offer and sale of Common Stock for the
                  account of the corporation, but subject to the closing of such
                  public offering, all outstanding shares of the Series A
                  Preferred Stock shall be converted automatically into the
                  number of fully paid, non-assessable shares of Common Stock
                  into which such shares of Series A Preferred Stock are
                  convertible pursuant to this Section 10(f) as of the closing
                  and consummation of such underwritten public offering without
                  any further action by the holders of such shares and whether
                  or not the certificates representing such shares are
                  surrendered to the corporation or its transfer agent. Upon the
                  occurrence of the conversion event specified in this section
                  10(f)(ii), the holders of the Series A Preferred Stock shall,
                  upon notice from the corporation, surrender the certificates
                  representing such shares at the office of the corporation or
                  its

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                  transfer agent for the Common Stock. Thereupon, there shall be
                  issued and delivered to such holder a certificate or
                  certificates for the number of shares of Common Stock into
                  which the shares of Series A Preferred Stock so surrendered
                  were convertible on the date on which the conversion occurred.
                  The corporation shall not be obligated to issue such
                  certificates unless certificates evidencing such shares of
                  Series A Preferred Stock being converted are either delivered
                  to the corporation or any such transfer agent, or the holder
                  notifies the corporation that such certificates have been
                  lost, stolen or destroyed and executes an agreement
                  satisfactory to the corporation to indemnify the corporation
                  from any loss incurred by it in connection therewith.

                  (iii) Exercise of Conversion Privilege. To exercise its
                  conversion privilege, a holder of Series A Preferred Stock
                  shall surrender the certificate or certificates representing
                  the shares being converted to the corporation at its principal
                  office, and shall give written notice to the corporation at
                  that office that such holder elects to convert such shares.
                  Such notice shall also state the name or names (with address
                  or addresses) in which the certificate or certificates for
                  shares of Common Stock issuable upon such conversion shall be
                  issued. The certificate or certificates for shares of Series A
                  Preferred Stock surrendered for conversion shall be
                  accompanied by proper assignment thereof to the corporation or
                  in blank. The date when such written notice is received by the
                  corporation, together with the certificate or certificates
                  representing the shares of Series A Preferred Stock being
                  converted, shall be the "Conversion Date." As promptly as
                  practicable after the Conversion Date, the Corporation shall
                  issue and deliver to the holder of the shares of Series A
                  Preferred Stock being converted, or on its written order, such
                  certificate or certificates as it may request for the number
                  of whole shares of Common Stock issuable upon the conversion
                  of such shares of Series A Preferred Stock in accordance with
                  the provisions of this Section 10(f), and cash, as provided in
                  Section 10(h), in respect of any fraction of a share of Common
                  Stock issuable upon such conversion. Such conversion shall be
                  deemed to have been effected immediately prior to the close of
                  business on the Conversion Date, and at such time the rights
                  of the holder as holder of the converted shares of Series A
                  Preferred Stock shall cease and the person(s) in whose name(s)
                  any certificate(s) for shares of Common Stock shall be
                  issuable upon such conversion shall be deemed to have become
                  the holder or holders of record of the shares of Common Stock
                  represented thereby.



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<PAGE>



              (g) Anti-Dilution Adjustments.

                  (i) If the corporation shall, while there are any shares of
                  Series A Preferred Stock outstanding, issue or sell shares of
                  its Common Stock or "Common Stock Equivalents" (as defined in
                  Section 10(g)(iii) below) without consideration or at a price
                  per share or "Net Consideration Per Share" (as defined in
                  Section 10(g)(v) below) less than the Exercise Price in effect
                  immediately prior to such issuance or sale, then in each such
                  case the Exercise Price, except as hereinafter provided, shall
                  be lowered so as to be equal to an amount determined by
                  multiplying such Exercise Price by the following fraction:

                                        N(O) + N(1)
                                        -----------
                                        N(O) + N(2)

                  Where:

                  N(0) = the number of shares of Common Stock outstanding
                  immediately prior to the issuance of such additional shares of
                  Common Stock or Common Stock Equivalents (calculated on a
                  fully-diluted basis assuming the exercise or conversion of all
                  then exercisable or convertible options, warrants, purchase
                  rights and convertible securities).

                  N(1) = the number of shares of Common Stock which the
                  aggregate consideration, if any (including the Net
                  Consideration Per Share with respect to the issuance of Common
                  Stock Equivalents) received or receivable by the Corporation
                  for the total number of such additional shares of Common Stock
                  so issued or deemed to be issued would purchase at the
                  Exercise Price in effect immediately prior to such issuance.

                  N(2) = the number of such additional shares of Common Stock so
                  issued or deemed to be issued.

                  The provisions of this Section 10(g) may be waived as to all
                  shares of Series A Preferred Stock in any instance (without
                  the necessity of convening any meeting of stockholders of the
                  Corporation) upon written agreement of the holders of more
                  than fifty percent (50%) of the then outstanding shares of
                  Series A Preferred Stock.

                  (ii) For the purposes of this Section 10(g) only, "additional
                  shares of Common Stock" shall not include the following: (A)
                  any shares of the Common Stock issuable under any stock option
                  plan approved by the corporation's shareholders; and (ii) any
                  shares of the Common Stock

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                  issuable pursuant to any warrants or other convertible
                  securities issued by the corporation prior to January 17,
                  2002.

                  (iii) For the purposes of this Section 10(g), the issuance of
                  any warrants, options, subscription or purchase rights with
                  respect to shares of Common Stock, any securities convertible
                  into or exchangeable for shares of Common Stock and any
                  warrants, options, subscriptions or purchase rights with
                  respect to such convertible or exchangeable securities
                  (collectively, "Common Stock Equivalents"), shall be deemed an
                  issuance of Common Stock. Any obligation, agreement or
                  undertaking to issue Common Stock Equivalents at any time in
                  the future shall be deemed to be an issuance at the time such
                  obligation, agreement or undertaking is made or arises. No
                  adjustment of the Exercise Price shall be made under this
                  Section 10(g) upon the issuance of any shares of Common Stock
                  which are issued pursuant to the exercise, conversion or
                  exchange of any Common Stock Equivalents.

                  (iv) Should the Net Consideration Per Share of any such Common
                  Stock Equivalents be decreased from time to time other than as
                  a result of the application of anti-dilution provisions
                  substantially similar to the provisions of this Section 10(g),
                  then upon the effectiveness of each such change, the Exercise
                  Price will be that which would have been obtained (A) had the
                  adjustments made pursuant to this Section 10(g) upon the
                  issuance of such Common Stock Equivalents been made upon the
                  basis of the new Net Consideration Per Share of such
                  securities, and (B) had the adjustments made to the Exercise
                  Price since the date of issuance of such Common Stock
                  Equivalents been made to the Exercise Price as adjusted
                  pursuant to clause (A) above. Any adjustment of the Exercise
                  Price, which relates to any Common Stock Equivalent shall be
                  disregarded if, as and when such Common Stock Equivalent
                  expires or is canceled without being exercised, or is
                  repurchased by the corporation at a price per share at or less
                  than the original purchase price, so that the Exercise Price
                  effective immediately upon such cancellation or expiration
                  shall be equal to the Exercise Price that would have been in
                  effect (1) had the expired or canceled Common Stock Equivalent
                  not been issued, and (2) had the adjustments made to the
                  Exercise Price since the date of issuance of such Common Stock
                  Equivalents been made to the Exercise Price which would have
                  been in effect had the expired or canceled Common Stock
                  Equivalent not been issued.

                  (v) For purposes of this Section 10(g), the "Net Consideration
                  Per Share" which shall be receivable by the Corporation for
                  any Common Stock issued upon the exercise or conversion of any
                  Common Stock Equivalents shall be determined as follows:


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                        (A) The "Net Consideration Per Share" shall mean the
                        amount equal to the total amount of consideration, if
                        any, received by the corporation for the issuance of
                        such Common Stock Equivalents, plus the minimum amount
                        of consideration, if any, payable to the corporation
                        upon exercise, or conversion or exchange thereof,
                        divided by the aggregate number of shares of Common
                        Stock that would be issued if such Common Stock
                        Equivalents were exercised, exchanged or converted.

                        (B) The "Net Consideration Per Share" which shall be
                        receivable by the corporation shall be determined in
                        each instance as of the date of issuance of Common Stock
                        Equivalents without giving effect to any possible future
                        upward price adjustments or rate adjustments which may
                        be applicable with respect to such Common Stock
                        Equivalents.

                  (vi) For purposes of this Section 10(g), if a part or all of
                  the consideration received by the corporation in connection
                  with the issuance of shares of Common Stock or the issuance of
                  any of the securities described in this Section 10(g) consists
                  of property other than cash, such consideration shall be
                  deemed to have a fair market value as is reasonably determined
                  in good faith by the Board of Directors of the corporation.

                  (vii) Upon the happening of an Extraordinary Common Stock
                  Event (as hereinafter defined), the Exercise Price shall,
                  simultaneously with the happening of such Extraordinary Common
                  Stock Event, be adjusted by multiplying the Exercise Price by
                  a fraction, the numerator of which shall be the number of
                  shares of Common Stock outstanding immediately prior to such
                  Extraordinary Common Stock Event and the denominator of which
                  shall be the number of shares of Common Stock outstanding
                  immediately after such Extraordinary Common Stock Event, and
                  the product so obtained shall thereafter be the Exercise
                  Price, which so adjusted, shall be readjusted in the same
                  manner upon the happening of any successive Extraordinary
                  Common Stock Event or Events.

                  An "Extraordinary Common Stock Event" shall mean (A) the
                  issuance of additional shares of Common Stock as a dividend or
                  other distribution on outstanding shares of Common Stock, (B)
                  a subdivision of outstanding shares of Common Stock into a
                  greater number of shares of Common Stock, or (C) a combination
                  or reverse stock split or outstanding shares of Common Stock
                  into a smaller number of shares of Common Stock.

                  (viii) In the event the corporation shall make or issue, or
                  shall fix a record date for the determination of holders of
                  Common Stock entitled to

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                  receive, a dividend or other distribution (other than a
                  distribution in liquidation or other distribution otherwise
                  provided for herein) with respect to the Common Stock payable
                  in (A) securities of the Corporation other than shares of
                  Common Stock, or (B) other assets (excluding cash dividends or
                  distributions), then and in each such event provision shall be
                  made so that the holders of the Series A Preferred Stock shall
                  receive upon conversion thereof in addition to the number of
                  shares of Common Stock receivable thereupon, the number of
                  securities or such other assets of the corporation which they
                  would have received had their Series A Preferred Stock been
                  converted into Common Stock on the date of such event and had
                  they thereafter, during the period from the date of such event
                  to and including the Conversion Date, retained such securities
                  or such other assets receivable by them, giving application to
                  all other adjustments called for during such period under this
                  Section 10(g).

                  (ix) If the Common Stock shall be changed into the same or
                  different number of shares of any other class or classes of
                  capital stock, whether by capital reorganization,
                  recapitalization or otherwise, then and in each such event the
                  holder of each share of Series A Preferred Stock shall have
                  the right thereafter to convert such share into, in lieu of
                  the number of shares of Common Stock which the holder would
                  otherwise have been entitled to receive, the kind and amount
                  of shares of capital stock and other securities and property
                  receivable upon such reorganization, recapitalization,
                  reclassification or other changes by the holders of the number
                  of shares of Common Stock into which such shares of Series A
                  Preferred Stock could have been converted immediately prior to
                  such reorganization, recapitalization, reclassification or
                  change, all subject to further adjustment as provided herein.
                  The provision for such conversion right shall be a condition
                  precedent to the consummation by the corporation of any such
                  transaction.

                  (x) In each case of an adjustment or readjustment of the
                  Exercise Price, the Corporation at its expense will furnish
                  each holder of Series A Preferred Stock so affected, upon such
                  holder's written request therefor, with a certificate prepared
                  by the Treasurer or Chief Financial Officer of the
                  corporation, showing such adjustment or readjustment, and
                  stating in detail the facts upon which such adjustment or
                  readjustment is based.

              (h) Cash in Lieu of Fractional Shares. No fractional shares of
                  Common Stock or scrip representing fractional shares shall be
                  issued upon the conversion of shares of Series A Preferred
                  Stock. Instead of any fractional shares of Common Stock which
                  would otherwise be issuable upon conversion of Series A
                  Preferred Stock, the corporation shall pay to the holder of
                  the shares of Series A Preferred Stock which were

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                  converted a cash adjustment in respect of such fractional
                  shares in an amount equal to the same fraction of the market
                  price per share of the Common Stock (as determined in a
                  reasonable manner prescribed by the Board of Directors) at the
                  close of business on the Conversion Date. The determination as
                  to whether or not any fractional shares are issuable shall be
                  based upon the aggregate number of shares of Series A
                  Preferred Stock being converted at any one time by any holder
                  thereof, not upon each share of Series A Preferred Stock being
                  converted.

              (i) Partial Conversion. In the event that some, but not all, of
                  the shares of Series A Preferred Stock represented by a
                  certificate(s) surrendered by a holder are converted, the
                  corporation shall execute and deliver to or on the order of
                  the holder, at the expense of the corporation, a new
                  certificate representing the number of shares of Series A
                  Preferred Stock which were not converted.

              (j) Reservation of Common Stock. The corporation shall at all
                  times reserve and keep available out of its authorized but
                  unissued shares of Common Stock, solely for the purpose of
                  effecting the conversion of the shares of the Series A
                  Preferred Stock, such number of its shares of Common Stock as
                  shall from time to time be sufficient to effect the conversion
                  of all outstanding shares of the Series A Preferred Stock and,
                  if at any time the number of authorized but unissued shares of
                  Common Stock shall not be sufficient to effect the conversion
                  of all of the then outstanding shares of the Series A
                  Preferred Stock, the corporation shall take such action as may
                  be necessary to increase its authorized but unissued shares of
                  Common Stock to such number of shares as shall be sufficient
                  for such purpose.

              (k) Redemption.

                  (i) Commencing at anytime on or after the sixth (6th)
                  anniversary of the first date of issuance of any share of
                  Series A Preferred Stock, at the option and written election
                  of the corporation, the corporation may redeem all or a part
                  of the outstanding shares of Series A Preferred Stock, at the
                  price and terms stated in this Section 10(k).

                  (ii) The redemption price for each share of Series A Preferred
                  Stock redeemed pursuant to this Section 10(k) shall be equal
                  to the original issue price per share of the Series A
                  Preferred Stock, plus all accrued and unpaid dividends
                  thereon, if any, whether or not earned or declared, up to and
                  including the date fixed for redemption (the "Series A
                  Redemption Price"). Each redemption of shares of the Series A
                  Preferred Stock shall be made so that the number of shares of
                  Series A Preferred Stock held by each registered holder shall
                  be reduced in an

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<PAGE>



                  amount which shall bear the same ratio to the total number of
                  shares of Series A Preferred Stock being so redeemed as the
                  number of shares of Series A Preferred Stock then held by such
                  registered holder bears to the aggregate number of shares of
                  Series A Preferred Stock then outstanding.

                  (iii) The Series A Redemption Price set forth in this Section
                  10(k) shall be subject to equitable adjustment whenever there
                  shall occur a stock split, stock dividend, combination,
                  reorganization, recapitalization, reclassification or other
                  similar event involving a change in the Series A Preferred
                  Stock.

                  (iv) If the corporation elects to redeem all or any part of
                  the outstanding shares of the Series A Preferred Stock as
                  aforesaid, written notice to that effect (the "Redemption
                  Notice") shall be given by the corporation to each holder at
                  least forty-five (45) days prior to the date fixed for
                  redemption pursuant to this Section 10(k) (the "Redemption
                  Date"). The Redemption Notice shall contain the following
                  information:

                        (A) The number of shares of Series A Preferred Stock
                        held by the holder which shall be redeemed by the
                        corporation and the total number of shares of Series A
                        Preferred Stock held by all holders to be so redeemed;

                        (B) The Redemption Date and the applicable Series A
                        Redemption Price; and

                        (C) That the holder is to surrender to the corporation,
                        at the place designated therein, its certificate(s)
                        representing shares of the Series A Preferred Stock to
                        be redeemed.

                  (v) The rights of the holders of the Series A Preferred Stock
                  to convert the Series A Preferred Stock into Common Stock
                  pursuant to Section 10(f) hereof shall continue in full force
                  and effect until the Redemption Date, notwithstanding the
                  giving of the Redemption Notice.

                  (vi) Each holder of shares of Series A Preferred Stock to be
                  redeemed shall surrender the certificate(s) representing such
                  shares to the corporation at the place designated in the
                  Redemption Notice, and thereupon shall the Series A Redemption
                  Price for such shares as set forth in the Redemption Notice
                  shall be paid to the order of the person whose name appears on
                  such certificate(s) and each such surrendered certificate
                  shall be canceled and retired. In the event some but not all
                  of the shares of Series A Preferred Stock represented by a
                  certificate(s)

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<PAGE>



                  surrendered by a holder are being redeemed, the corporation
                  shall execute and deliver to or on the order of the holder, at
                  the expense of the corporation, a new certificate representing
                  the number of shares of Series A Preferred Stock which were
                  not redeemed.

                  (vii) From and after the later of the Redemption Date or
                  forty-five days from the date the corporation shall have given
                  the Redemption Notice, no shares of Series A Preferred Stock
                  subject to such Redemption Notice shall be entitled to any
                  further dividends hereunder.

              (l) Status of Converted or Redeemed Series A Preferred Stock. Any
                  share or shares of Series A Preferred Stock acquired by the
                  Corporation by reason of redemption, purchase, conversion or
                  otherwise shall be returned to the status of authorized but
                  unissued shares of undesignated Preferred Stock. Upon the
                  cancellation of all outstanding shares of Series A Preferred
                  Stock, the provisions of this Section 10 regarding the
                  description and designation of Series A Preferred Stock shall
                  terminate and have no further force and effect."

         FURTHER RESOLVED: That each officer or director of the Corporation, or
         any of them, is authorized, directed and empowered on behalf of the
         Corporation and in its name to execute any agreement, certificate,
         instrument or document, or amendments or supplements thereto, or to do
         and to cause to be done any and all other acts and things as such
         officer may, in his or her discretion, deem necessary or appropriate to
         carry out the purposes of the foregoing resolution.

         4. The effective time and date of the series herein certified shall be
         the date and time of filing of this Certificate of Designation with the
         Secretary of State of the Sate of Delaware.

         Signed and Attested to on this 23rd day of January, 2002.

                                              AM COMMUNICATIONS, INC.

ATTEST:

/s/ Patricia A. Eynon                         By: /s/Javad K. Hassan
--------------------------------------            ------------------------------
Patricia A. Eynon, Corporate Secretary           Javad K. Hassan, President




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<PAGE>



                                    Exhibit A



                Proposal to the Board of AM Communications, Inc.

                                 January 3, 2002

Proposed Investment Terms

Security:                  Convertible Preferred Stock

Amount:                    $2,000,000

Term:                      Six Years from date of funding

Dividend:                  10% Annual Dividend  - payable annually (in cash or
                           in kind at option of company)

Warrants:                  Warrants for 1,851,852 shares of AM common stock
                           exercisable at $0.27 per share

Conversion:                Convertible into 7,407,407 shares of AM Common at
                           $0.27 per share at the option of the holder

Funding to occur:          $1MM immediately and
                           $1MM on or before April 1, 2002.

Investors: Board of Directors of AM as individuals or as a group or other
qualified third party investors



1012520-1




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