FIRST AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT (this "Amendment"),  to LOAN AND SECURITY AGREEMENT,  dated
as of  October  22,  1997,  among  GENERAL  DATACOMM  INDUSTRIES,  INC.  GENERAL
DATACOMM,  INC., GDC FEDERAL SYSTEMS,  INC., GDC NAUGATUCK,  INC., VITAL NETWORK
SERVICES, INC. (collectively,  the "Borrowers"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), THE CIT GROUP/ BUSINESS
CREDIT,  INC., as co-agent (in such capacity,  the "Co-Agent") and  TRANSAMERICA
BUSINESS CREDIT  CORPORATION,  as agent (in such capacity,  the "Agent") for the
Lenders, is made as of February 13, 1998 among the Borrowers and the Lenders.

                                   WITNESSETH:

WHEREAS,  the Borrowers,  the Lenders, the Co-Agent and the Agent are parties to
the Loan and Security  Agreement,  dated as of October 22, 1997 (as the same may
be amended,  supplemented  or otherwise  modified  from time to time,  the "Loan
Agreement";  capitalized  terms used herein shall have the meanings  assigned to
such terms in the Loan Agreement unless otherwise defined herein); and

WHEREAS,  the Borrowers  have requested that the Lenders agree to amend the Loan
Agreement in the manner set forth herein,  and the Lenders are agreeable to such
amendment, but only on the terms and subject to the conditions set forth herein.

NOW,  THEREFORE,  in  consideration  of the  foregoing  and for  other  good and
valuable consideration, the parties hereto hereby agree as follows:

1. Amendment to Loan Agreement.  Effective as of the date hereof, and subject to
the  satisfaction  of the  conditions  to  effectiveness  set forth in Section 2
hereof,  the  definition  of  "Stockholders  Equity" in Section  1.1 of the Loan
Agreement is amended by adding the following sentence at the end thereof:

"The  following  items shall be excluded from the  calculation  of  Stockholders
Equity  of a Person:  (a)  foreign  currency  exchange  adjustments  made in the
stockholders  equity section of the balance sheet of such Person occurring after
the Closing Date and (b) up to $3,000,000 of the restructuring costs incurred by
such  Person  in its 1998  fiscal  year in  connection  with the cost  reduction
initiatives described in the letter dated January 15, 1998 from Dennis J. Nesler
to Ian  Schnider  and Cyril A.  Prince." 2.  Condition  to  Effectiveness.  This
Amendment  shall become  effective upon the Agent's  receipt of  counterparts of
this Amendment, duly executed by the Borrowers and the Required Lenders and duly
consented to by the Guarantors.

3.  Representations  and  Warranties  of the  Borrowers.  Each of the  Borrowers
represents  and warrants as follows:  (a) Since  September  30, 1997,  there has
occurred no  development,  event or change that has had or could  reasonably  be
expected to have a Material  Adverse  Effect,  except as  disclosed  in the 1998
Fiscal Year Transamerica Plan dated January 14, 1998.

(b) No Default or Event of Default has occurred and is continuing.

(c) The representations and warranties of such Borrower contained in Section 6.1
of the Loan Agreement are true and correct in all material  respects on the date
hereof as though  made on and as of the date  hereof,  except to the extent that
such  representations and warranties  expressly relate solely to an earlier date
(in which case such  representations and warranties were true and correct on and
as of such earlier date).

4. Expenses.  The Borrowers  shall,  jointly and  severally,  pay for all of the
reasonable costs and expenses  incurred by the Agent and the Collateral Agent in
connection with the  transactions  contemplated  by this  Amendment,  including,
without limitation, the reasonable fees and expenses of counsel to the Agent.

5.  Miscellaneous.

(a) Except as expressly  amended herein,  all of the terms and provisions of the
Loan  Agreement  and the other Loan  Documents are ratified and confirmed in all
respects and shall remain in full force and effect.

(b)  Upon  the  effectiveness  of this  Amendment,  all  references  in the Loan
Documents to the Loan Agreement shall mean the Loan Agreement as amended by this
Amendment  and  all  references  in the  Loan  Agreement  to  "this  Agreement,"
"hereof,"  "herein," or similar terms shall mean and refer to the Loan Agreement
as amended by this Amendment.

(c) The  execution,  delivery and  effectiveness  of this  Amendment  shall not,
except as expressly provided herein, operate as an amendment to or waiver of any
right,  power or  remedy  of the  Agent  or the  Lenders  under  any of the Loan
Documents,  or  constitute an amendment or waiver of any provision of any of the
Loan Documents.

(d) This  Amendment  may be executed by the parties  hereto  individually  or in
combination, in one or more counterparts, each of which shall be an original and
all of which shall constitute one and the same agreement.  This Amendment may be
executed and  delivered by  telecopier  with the same force and effect as if the
same were a fully executed and delivered original manual counterpart.

(e)  This Amendment shall constitute a Loan Document.

6. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS  WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be duly
executed and delivered by their  respective duly  authorized  officers as of the
date first above written.

BORROWERS

GENERAL DATACOMM INDUSTRIES, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GENERAL DATACOMM, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GDC FEDERAL SYSTEMS, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GDC NAUGATUCK, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

VITAL NETWORK SERVICES, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer


LENDERS

TRANSAMERICA BUSINESS CREDIT CORPORATION

By:  /S/ GERALD A. MICHAUD
Name:  Gerald A. Michaud
Title:  Senior Vice President

THE CIT GROUP/BUSINESS CREDIT, INC.

By:  /S/ CYRIL A. PRINCE
Name:  Cyril A. Prince
Title:  Vice President

Each of the undersigned  Guarantors hereby consents to this Amendment and agrees
that the execution,  delivery and  performance of this Amendment does not in any
way affect the obligations of such Guarantor under any Loan Document to which it
is a party, all of which obligations are ratified and confirmed, remain absolute
and unconditional and are not subject to any defense, setoff or counterclaim.

GENERAL DATACOMM LTD.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GENERAL DATACOMM LIMITED

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GENERAL DATACOMM INTERNATIONAL CORP

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GENERAL DATACOMM CHINA, LTD.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

DATACOMM RENTAL CORPORATION

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer

GDC REALTY, INC.

By:  /S/ DENNIS J. NESLER
Name:  Dennis J. Nesler
Title:  Vice President & Treasurer