<PAGE>

                         CERTIFICATE OF DESIGNATION, PREFERENCES
                                      AND RIGHTS OF
                                 SERIES B PREFERRED STOCK
                                           OF
                           APPLIED DATA COMMUNICATIONS, INC.,
                                 a Delaware corporation


                   (Pursuant to Section 151 of the General Corporation
                               Law of the State of Delaware)



     Applied Data Communications, Inc., a corporation organized and existing 
under the General Corporation Law of the State of Delaware (the 
"Corporation"), hereby certifies that, pursuant to the authority contained in 
Article 4 of its Certificate of Incorporation, and in accordance with the 
provisions of Section 151 of the General Corporation Law of the State of 
Delaware, its Board of Directors has adopted the following resolution 
creating a series of its Preferred Stock designated as Series B Preferred 
Stock:

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

     BE IT RESOLVED, that pursuant to the authority vested in the Board of 
Directors of the Corporation by the Certificate of Incorporation, the Board 
of Directors does hereby provide for the issue of a series of Preferred 
Stock, $.01 par value per share, of the Corporation, to be designated 
"Series B Preferred Stock" (hereinafter referred to as the "Series B Preferred 
Stock"), consisting of 200,000 shares, and to the extent that the voting 
powers, designations, preferences, limitations, restrictions and relative 
rights of the Series B Preferred Stock are not stated and expressed in the 
Certificate of Incorporation, does hereby fix and herein state and express 
such voting powers, designations, preferences, limitations, restrictions and 
relative rights as follows (all terms used herein which are defined in the 
Certificate of Incorporation shall be deemed to have the meanings provided 
therein):

     1.   Designation and Amount.  The shares of such series shall be 
designated as "Series B Preferred Stock" and the number of shares constituting 
such series shall be 200,000.  Such number of shares may be decreased by 
resolution of the Board of Directors; provided, that no decrease shall

<PAGE>

reduce the number of shares of Series B Preferred Stock to a number less than 
the number of shares of Series B Preferred Stock then outstanding or reserved 
for issuance.

     2.   Dividends.  The holders of Series B Preferred Stock shall be 
entitled to receive, out of the assets of the Corporation legally available 
for distribution to holders of the Corporation's Series B Preferred Stock, 
whether such assets are capital, surplus, or earnings (hereinafter called the 
"Available Funds"), after the payment of any dividends payable on Series A 
Preferred Stock, and as and when received by holders of the Common Stock of 
the Corporation or any other class of stock of the Corporation ranking junior 
to the Series B Preferred Stock, dividends in an amount equal to the amount of 
any dividends payable to holders of the Common Stock of the Corporation or 
any other class of the Corporation ranking junior to Series B Preferred Stock, 
based on the largest number of full shares of Common Stock into which a 
holder's shares of Series B Preferred Stock could be converted immediately 
prior to the record date for the payment of such dividend.  No dividend may 
be declared and paid upon shares of Common Stock or any other class of stock 
of the Corporation ranking junior to the Series B Preferred Stock unless the 
Series B Preferred Stock was converted into Common Stock before the record 
date of such dividend or the date the amount of such dividend is 
simultaneously paid or deposited into trust for the payment or retirement 
thereof.  Dividends, if any, on Series B Preferred Stock shall not be 
cumulative, and no declared and unpaid dividend on Series B Preferred Stock 
shall bear interest.

     3.   Liquidation, Dissolution or Winding Up.

          (a)  Liquidation Preference.  In the event of any liquidation, 
dissolution or winding up of the Corporation, whether voluntary or 
involuntary ("Liquidation"), the holders of each share of Series B Preferred 
Stock shall be entitled to receive out of the Available Funds, as and when 
any sums shall be paid or any assets distributed among the holders of shares 
of Common Stock, an amount or value (such amount or value as described 
immediately below is hereinafter called the "Series B Preference Price") equal 
to the sums payable to holders of Common Stock of the Corporation, based on 
the largest number of full shares of Common Stock into which a holder's 
shares of Series B Preferred Stock could be converted immediately prior to the 
record date for such distribution (subject to adjustment if the Series B 
Preferred Stock of the Corporation shall be changed into a different number 
of shares, whether by recapitalization, reclassification or otherwise, and 
then and in each such event the holder of shares of Series B Preferred Stock 
shall have the right thereafter to receive upon Liquidation such same amount 
aggregately receivable immediately prior to reorganization, reclassification 
or other change of the number of shares of Series B Preferred Stock 
apportioned among the number of shares into which such shares of Series B 
Preferred Stock are changed) plus in each case, any and all declared but 
unpaid dividends on such shares.  If the Available Funds shall be 
insufficient to permit the payment in full to all holders of the Series B 
Preferred Stock the full amounts (including all dividends accrued and unpaid) 
to which they shall be entitled by reason of such Liquidation of the 
Corporation, then there shall be paid to the holders of the Series B Preferred 
Stock in connection with such Liquidation of the Corporation, an amount equal 
to product derived by multiplying the amount of Available Funds times a 
fraction, the numerator of which shall be the full amount to which the 
holders of the Series B Preferred Stock shall be entitled by reason of such 
Liquidation of the Corporation and the denominator of which shall be the 
total amount which would have been distributed by reason of such Liquidation 
of the Corporation with respect to all Preferred Stock of any series and 
Common Stock then outstanding had the Corporation possessed sufficient assets 
to pay the maximum amount which the holders of all such stock would be 
entitled to receive in connection with such Liquidation of the Corporation.


                                     2

<PAGE>

     The voluntary sale, conveyance, lease, exchange or transfer of all or 
substantially all the property or assets of the Corporation, or the merger or 
consolidation of the Corporation into or with any other corporation, or the 
merger of any other corporation into the Corporation, or any purchase of all 
or substantially all of the shares of any class or series of stock of the 
Corporation, shall not be deemed to be a Liquidation of the Corporation for 
the purposes of this Section, provided that so long as such transaction does 
not result in the issuance or creation of any shares of Preferred Stock of 
the Corporation, or of any successor, except any shares of Preferred Stock 
that rank junior (as defined elsewhere in these resolutions) to the shares of 
Series B Preferred Stock as to dividends and as to the distribution of assets 
upon dissolution, liquidation or winding up.  Provided, however, if more than 
50% (by value as determined in good faith by the Board of Directors) of the 
consideration received in such a transaction by holders of the Corporation's 
Common Stock consists of cash, notes payable in cash or Marketable Stock (as 
defined below), the transaction will be deemed to be a Liquidation for 
purposes of this Section.  The phrase "all or substantially all" as used in 
this definition in reference to a class of the Corporation's capital stock 
means 66% or more of the aggregate outstanding amount.  The phrase "all or 
substantially all" as used in this definition in reference to the property, 
business or assets of the Corporation shall mean assets of a corporation as 
are quantitatively vital to the operations of the Corporation and 
substantially affects the existence and purpose of the Corporation.  As used 
herein, the term "Marketable Stock" means the Corporation's Common Stock or 
common stock of any corporation that is the successor to all or substantially 
all of the business or assets of the Corporation or of the ultimate parent of 
such successor, which is (or will, upon distribution thereof, be) listed or 
quoted on the New York Stock Exchange, the American Stock Exchange, or the 
Nasdaq National Market or the Nasdaq Small Cap Market.

     The holder of any shares of Series B Preferred Stock shall not be 
entitled to receive any payment of the full balance owed for such shares 
under this Section until such holder shall cause to be delivered to the 
Corporation (i) the certificate(s) representing such shares of Series B 
Preferred Stock and (ii) transfer instrument(s) satisfactory to the 
Corporation and sufficient to transfer such shares of Series B Preferred Stock 
to the Corporation free of any adverse interest.  No interest shall accrue on 
any payment upon Liquidation after the due date thereof.

     After the Series B Preference Price shall have been paid in full to the 
holders of the Series B Preferred Stock, or funds necessary for such payment 
shall have been set aside by the Corporation in trust for the account of 
holders of the Series B Preferred Stock and available for such payment, the 
remaining assets of the Corporation available for distribution to 
stockholders shall be distributed among the holders of Common Stock and any 
other class of stock of the Corporation ranking junior to the Series B 
Preferred Stock, and the holders of shares of the Series B Preferred Stock 
will not be entitled to any further participation in any distribution of 
assets by the Corporation.

          (b)  Property.  Whenever the distribution provided for herein shall 
be paid in property other than cash, the value of such distribution shall be 
the fair market value of such property as determined in good faith by the 
Board of Directors of the Corporation.

     4.   Series B Preferred Stock Voting Rights.  The holders of Series B 
Preferred Stock shall not have any voting rights if, whether at or prior to 
the effective time of the act with respect to which such vote would otherwise 
be required, all outstanding shares of Series B Preferred Stock shall have 


                                    3

<PAGE>

been converted into Common Stock.  Subject to the foregoing sentence, the 
Series B Preferred Stock shall have voting rights as follows:

          (a)  Voting in General.  Except to the extent that requirements of 
law supersede the limitations on voting rights in the Certificate of 
Incorporation or these resolutions and as otherwise set forth herein, the 
shares of Series B Preferred Stock shall be entitled to voted equally with the 
shares of Common Stock and all other voting shares of any class or series 
(based on the number of votes that may be granted thereto by their governing 
documents).  Each holder of Series B Preferred Stock shall be entitled, 
notwithstanding any provision hereof, to notice of any stockholders' meeting 
in accordance with the bylaws of this Corporation, and shall be entitled to 
vote, together with holders of Common Stock and all other shares of stock 
with general voting rights, as a single class, with respect to any questions 
upon which holders of Common Stock have the right to vote.  Each holder of 
Series B Preferred Stock shall be entitled to that number of votes equal to 
the largest number of whole shares of Common Stock into which such holder's 
shares of Series B Preferred Stock could be converted, pursuant to the 
provisions of Section hereof, at the record date for the determination of 
stockholders entitled to vote on such matter or, if no such record date is 
established, at the date such vote is taken or any written consent of 
stockholders is solicited.

          (b)  Series B Class Voting Rights.  From the date on which any 
shares of Series B Preferred Stock are first issued and so long as any shares 
of Series B Preferred Stock remain outstanding, the vote or consent of the 
holders of at least a majority of the shares of Series B Preferred Stock 
outstanding at the time (voting separately as a class) given in person or by 
proxy, either in writing or at any special or annual meeting called for the 
purpose, shall be necessary to permit, effect or validate any amendment, 
alteration or repeal, whether by merger, consolidation or otherwise, of any 
of the provisions of the Certificate of Incorporation or of these resolutions 
which would alter or change the powers, preferences, or special rights of the 
shares of the Series B Preferred Stock so as to affect them adversely, in any 
material respect; provided, however, that the creation and issuance of any 
other series of Preferred Stock, whether ranking prior to, junior to or on a 
parity with the Series B Preferred Stock with respect to the payment of 
dividends and the distribution of assets upon liquidation, dissolution or 
winding up, or with respect to any other privilege, preference, right or 
restriction whatsoever, shall not be deemed to adversely affect such powers, 
preferences, or special rights, and provided, further, that the unanimous 
vote or consent of the shares of the Series B Preferred Stock outstanding 
shall be necessary to effect any amendment to these resolutions that would 
(A) except as otherwise permitted by Section, increase the Conversion Price; 
or (B) reduce or eliminate the entitlement to cash dividends, if any, payable 
on the shares of the Series B Preferred Stock.

     For purposes of these resolutions, any class or classes of stock of the 
Corporation shall be deemed to rank:

               (A)  prior to the Series B Preferred Stock as to dividends or 
as to distribution of assets upon liquidation, dissolution or winding up if 
the holders of such class shall be entitled to the receipt of dividends or 
amounts distributable upon liquidation, dissolution or winding up, as the 
case may be, in preference or priority to the holders of Series B Preferred 
Stock;

               (B)  on a parity with the Series B Preferred Stock as to 
dividends or as to distribution of assets upon liquidation, dissolution or 
winding up, whether or not the dividend rates, dividend payment dates, or 
liquidation prices per shares thereof be different from those of the


                                    4

<PAGE>

Series B Preferred Stock, if such stock or series shall be the Series B 
Preferred Stock or if the holders of such class of stock and the Series B 
Preferred Stock shall be entitled to the receipt of dividends or of amounts 
distributable upon liquidation, dissolution or winding up, as the case may 
be, in proportion to their respective dividend rates or liquidation prices, 
without preference or priority one over the other; and

               (C)  junior to the Series B Preferred Stock as to dividends or 
as to the distribution of assets upon liquidation, dissolution or winding up, 
if such class shall be Common Stock or if holders of the Series B Preferred 
Stock shall be entitled to receipt of dividends or of amounts distributable 
upon liquidation, dissolution or winding up, as the case may be, in 
preference or priority to holders of stock of such class.

     5.   Conversion Rights.  The holders of the Series B Preferred Stock 
shall not have voluntary conversion rights.    Each share of Series B 
Preferred Stock shall automatically be converted into shares of Common Stock 
based on the then effective Conversion Rate for the Series B Preferred Stock 
immediately upon the filing with the Delaware Secretary of State (after  the 
approval by the Board and by the requisite vote of holders of voting stock), 
of an amendment of the Corporation's Certificate of Incorporation that 
provides for additional shares of authorized and unissued Common Stock 
sufficient for conversion of the Series B Preferred Stock then outstanding, 
and all other then outstanding convertible securities and any other 
outstanding rights, options and warrants to acquire Common Stock and payment, 
or declaration and setting aside of a sum sufficient for payment, by the 
Corporation of all declared but unpaid dividends, if any, on the outstanding 
Series B Preferred Stock payable in cash or Common Stock (valued at the Common 
Stock's fair market value), or both.

          (a)  General.  Subject to and in compliance with the provisions of 
this Section, all shares of the Series B Preferred Stock shall automatically, 
be converted at any time or from time to time into fully-paid and 
nonassessable shares (calculated as to each conversion to the largest whole 
share) of Common Stock, provided, however, that such conversion shall be 
conditioned upon and subject to the prior approval by the board and the 
requisite vote of holders of voting stock of an amendment of the 
Corporation's Certificate of Incorporation that provides for additional 
shares of authorized and unissued Common Stock at least sufficient for 
conversion of the Preferred Stock then outstanding or reserved for issuance.  
The number of shares of Common Stock to which a holder of Series B Preferred 
Stock shall be entitled upon conversion, subject to the payment of cash in 
lieu of fractional shares as provided in Section, shall be as provided in 
Section.

          (b)  Conversion Rate.  Subject to adjustments as provided elsewhere 
in this Section 5, the conversion rate per share of Series B Preferred Stock 
in effect at any time (the "Conversion Rate") shall be the quotient obtained 
by dividing (a) $25 x (1 + (N/3650)) by (b) the Conversion Price, as provided 
in Section, where N equals the number of days between (i) the date on which 
the shares of Series B Preferred Stock were purchased and (ii) the applicable 
date of conversion for the shares of Series B Preferred Stock for which 
conversion is being elected.

          (c)  Conversion Price.  The Conversion Price shall be initially 
Twenty-Five Cents ($0.25), subject to adjustments as provided elsewhere in 
this Section 5.

          (d)  Mechanics of Conversion.  Upon the occurrence of an event 
specified in Section 5. above, the outstanding shares of Series B Preferred 
Stock shall be converted automatically


                                    5

<PAGE>

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; provided, however, that the Corporation shall not be 
obligated to issue certificates evidencing the shares of Common Stock 
issuable upon such conversion unless the certificates evidencing such shares 
of Series B Preferred Stock are either delivered to the Corporation or its 
transfer agent as provided below, or the holder notifies the Corporation or 
its transfer agent 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 with the certificates. 
Upon the occurrence of such automatic conversion of Series B Preferred Stock, 
the holders of Series B Preferred Stock shall surrender the certificates 
representing such shares at the office of the Corporation or any transfer 
agent for the Common Stock.  Thereupon, there shall be issued and delivered 
to such holder promptly at such office and in its name as shown on such 
surrendered certificate or certificates, a certificate or certificates for 
the number of whole shares of Common Stock into which the shares surrendered 
were convertible on the date on which such automatic conversion occurred, and 
the Corporation shall promptly pay the holder in cash in lieu of any 
fractional share of Common Stock.  Upon conversion of any holder after the 
record date but before the payment date for any dividend, the Corporation 
shall pay the holder on account of such dividend payment on the payment date 
notwithstanding prior conversion.

          (e)  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 B Preferred Stock.  Instead of any fractional 
shares of Common Stock which would otherwise be issuable upon conversion of 
the Series B Preferred Stock, the Corporation shall pay to the holder of the 
shares of Series B Preferred Stock which were converted a cash adjustment in 
respect and in lieu of such fractional shares in an amount equal to the same 
fraction of the fair market value per share of the Common Stock (as 
determined in a reasonable good faith manner by the Board of Directors) at 
the close of business on the Conversion Date.  The determination as to 
whether or not any fractional shares which are issuable shall be based upon 
the total number of shares of Series B Preferred Stock being converted at any 
one time by any holder thereof, not upon each share of Series B Preferred 
Stock being converted.

          (f)  Adjustments in Certain Customary Events.

               (i)  Dividends.  In the event the Corporation shall make or 
issue, or fix a record date for the determination of holders of Common Stock 
entitled to receive, a dividend or other distribution payable in securities 
of the Corporation other than shares of Common Stock or in assets (excluding 
cash dividends or distributions), then and in each such event provision shall 
be made so that the holders of the Series B 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 B 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 (as that term is defined in Section), retained such 
securities or such other assets receivable by them as aforesaid during such 
period, giving application to all adjustments called for during such period 
under this Section with respect to the rights of the holders of the Series B 
Preferred Stock.

               (ii) Recapitalization or Reclassification.  If the Common 
Stock of the Corporation shall be changed into the same or different number 
of shares of any class or classes of


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stock of the Corporation, whether by recapitalization, reclassification or 
otherwise (other than a subdivision or combination of shares or stock 
dividend provided for elsewhere in the Certificate of Incorporation or these 
resolutions, or a reorganization, merger, consolidation or sale of assets 
provided for elsewhere in the Certificate of Incorporation or these 
resolutions), then and in each such event the holder of shares of Series B 
Preferred Stock shall have the right thereafter to convert such shares into 
the kind and amount of shares of stock and other securities and property 
receivable upon such reorganization, reclassification or other change by 
holders of the number of shares of Common Stock into which such shares of 
Series B Preferred Stock would have been converted (taking into account all 
accrued and unpaid dividends and interest with respect to such Series B 
Preferred Stock) immediately prior to such reorganization, reclassification 
or change, all subject to further adjustment as provided herein.

               (iii)  Merger or Sale of Assets.  If at any time or from 
time to time there shall be a merger or consolidation of the Corporation with 
or into another corporation (other than a merger which does not result in any 
reclassification, conversion, exchange or cancellation of outstanding shares 
or Common Stock of the Corporation), or the sale of all or substantially all 
of the Corporation's properties and assets to any other person followed by a 
liquidation of the Corporation, then, as a part of such transaction, 
provision shall be made so that each holder of a share of Series B Preferred 
Stock then outstanding shall have the right thereafter to convert such share 
only into the kind and amount of securities, cash and other property of the 
Corporation, or of the successor corporation resulting from such merger or 
consolidation, receivable upon such consolidation, merger, sale or transfer 
by a holder of the number of shares of Common Stock of the Corporation into 
which such share of Series B Preferred Stock might have been converted 
immediately prior to such consolidation, merger, sale or transfer, assuming 
such holder of Common Stock of the Corporation is not an entity with which 
the Corporation consolidated or into which the Corporation merged or which 
merged into the Corporation or to which such sale or transfer was made, as 
the case may be (a "constituent entity"), or an affiliate of a constituent 
entity.  If necessary in any such case, appropriate adjustment shall be made 
in the application of the provisions of this Section with respect to the 
rights of the holders of the Series B Preferred Stock after such transaction 
to the end that the provisions of this Section (including adjustment of the 
Conversion Price then in effect and the number of shares purchasable upon 
conversion of the Series B Preferred Stock) shall be applicable after that 
event in a manner corresponding as nearly as may be practicable in relation 
to any shares of stock or other securities or property thereafter deliverable 
on the conversion of the shares.  The above provisions shall similarly apply 
to successive consolidations, mergers, sales or transfers.

               (iv) Certificate as to Adjustments.  In each case of an 
adjustment or readjustment of the Conversion Rate or Conversion Price, the 
Corporation will furnish each holder of Series B Preferred Stock with a 
certificate, executed by its chief executive officer and its chief financial 
officer showing such adjustment or readjustment, and stating in detail the 
facts upon which such adjustment or readjustment is based.  The Corporation 
in any such instance may, and in every instance upon the request of the 
holders of a majority of the Series B Preferred Stock the Corporation will, 
cause its independent public accountants to confirm the accuracy of such 
adjustment or readjustment.  Any adjustment so confirmed shall be for all 
purposes hereof conclusively be deemed to be an appropriate adjustment.

          (g)  Transfer Taxes.  The Corporation will pay any and all 
documentary stamp or similar issue or transfer taxes payable in respect of 
the issue or delivery of shares of Common Stock on


                                    7


<PAGE>

conversions of shares of Series B Preferred Stock pursuant hereto; provided, 
however, that the Corporation shall not be required to pay any tax which may 
be payable in respect of any transfer involved in the issue or delivery of 
shares of Common Stock in a name other than that of the holder of the shares 
of Series B Preferred Stock to be converted and no such issue or delivery 
shall be made unless and until the person requesting such issue or delivery 
has paid to the Corporation the amount of any such tax or has established, to 
the satisfaction of the Corporation, that such tax has been paid.

          (h)  Shares To Be Validly Issued, etc.  The Corporation covenants 
that all shares of Common Stock which may be issued upon conversions of 
shares of Series B Preferred Stock will upon issue be duly and validly issued, 
fully paid and non-assessable, free of all liens and charges and not subject 
to any preemptive rights.

          (i)  Partial Conversion.  In the event some but not all of the 
shares of Series B Preferred Stock represented by a certificate or 
certificates 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 B 
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 B 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 B 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 then outstanding shares of the 
Series B Preferred Stock, the Corporation shall take such corporate 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.

     6.   Redemption.  The shares of Series B Preferred Stock are not 
redeemable as a matter of right of the Corporation or the holder.

     7.   No Reissuance of the Series B Preferred Stock.  No share or shares 
of the Series B Preferred Stock acquired by the Corporation by reason of  
purchase, conversion or otherwise shall be reissued.  The Corporation may 
from time to time take such appropriate corporate action as may be necessary 
to reduce the authorized number of shares of the Series B Preferred Stock 
accordingly.

     8.   Notices of Record Dates.  In the event of any taking by the 
Corporation of a record of the holders of any class of securities for the 
purpose of determining the holders thereof who are entitled to receive any 
dividend or other distribution, or to receive any other right, or any capital 
reorganization of the Corporation, any reclassification or recapitalization 
of the capital stock of the Corporation, any merger or consolidation of the 
Corporation, or any transfer of all or substantially all of the assets of the 
Corporation to any other corporation, or any other entity or person, or any 
voluntary or involuntary dissolution, liquidation or winding up of the 
Corporation, then and in each such event the Corporation shall mail or cause 
to be mailed to each holder of Series B Preferred Stock a notice specifying 
(i) the date on which any such record is to be taken for the purpose of such 
dividend, distribution or right and a description of such dividend, 
distribution or right, (ii) the date on which any such reorganization, 
reclassification, recapitalization, transfer, consolidation, merger, 
dissolution, liquidation or winding up


                                    8

<PAGE>

is expected to become effective, (iii) the time, if any, that is to be fixed, 
as to when the holders of record of Common Stock (or other securities) shall 
be entitled to exchange their shares of Common Stock (or other securities) 
for securities or other property deliverable upon such reorganization, 
reclassification, recapitalization, transfer, consolidation, merger, 
dissolution, liquidation or winding up.  Such notice shall be mailed at least 
30 days prior to the date specified in such notice on which such action is to 
be taken.

     9.   Common Stock.  All rights accruing to the outstanding shares of the 
Corporation not expressly provided for to the contrary herein shall be vested 
in the Common Stock.

     IN WITNESS WHEREOF, the undersigned has caused this Certificate of 
Designation, Preferences and Rights of Series B Preferred Stock to be duly 
executed by its Chairman of the Board, President, Chief Executive Officer and 
Secretary and who has duly attested and has caused its corporate seal to be 
affixed hereto this 11th day of September, 1996.

                                       APPLIED DATA COMMUNICATIONS, INC.


                                       By:  /s/ Walter J. ("Pat") Kane
                                          ------------------------------------
                                          Walter J. ("Pat") Kane, Chairman of 
                                          the Board, President, Chief Executive
                                          Officer and Secretary


(Corporate Seal)

                                       9