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                    CERTIFICATE OF DESIGNATION, PREFERENCES
                                AND RIGHTS OF
                           SERIES C 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 C 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 C Preferred Stock" (hereinafter referred to as the 
     "Series C Preferred Stock"), consisting of 150,000 shares, and to the 
     extent that the voting powers, designations, preferences, limitations, 
     restrictions and relative rights of the Series C 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 C Preferred Stock" and the number of shares 
     constituting such series shall be 150,000.  Such number of shares may be 
     decreased by resolution of the Board of Directors; provided, that no 
     decrease shall reduce the number of shares of Series C
                                       
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     Preferred Stock to a number less than the number of shares of Series C 
     Preferred Stock then outstanding or reserved for issuance.
     
          2.   DIVIDENDS.  The holders of Series C Preferred Stock shall not 
     be entitled to receive any dividends.
     
          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 C 
     Preferred Stock shall be entitled to receive out of funds legally 
     available therefor (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 C 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 could be converted immediately prior to the record date for such 
     distribution (subject to adjustment if the Series C 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 C Preferred Stock 
     shall have the right thereafter to receive upon redemption such same 
     amount aggregately receivable immediately prior to reorganization, 
     reclassification or other change of the number of shares of Series C 
     Preferred Stock apportioned among the number of shares into which such 
     shares of Series C Preferred Stock are changed).  If the Available Funds 
     shall be insufficient to permit the payment in full to all holders of 
     the Series C 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 C 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 C 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.
     
          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 C Preferred Stock as to dividends and as to the 
     distribution of assets upon

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     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 66y% 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 C 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 C 
     Preferred Stock and (ii) transfer instrument(s) satisfactory to the 
     Corporation and sufficient to transfer such shares of Series C 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 C Preference Price shall have been paid in full to 
     the holders of the Series C 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 C 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 C Preferred Stock, and the holders of shares of the 
     Series C 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 C PREFERRED STOCK VOTING RIGHTS.  The holders of Series 
     C 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 C 
     Preferred Stock shall have been converted into Common Stock.  Subject to 
     the foregoing sentence, the Series C 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

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     these resolutions and as otherwise set forth herein, the shares of 
     Series C Preferred Stock shall be entitled to voted equally with the 
     shares of Common Stock and all other voting shares of any class or 
     series.  Each holder of Series C 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 C Preferred Stock shall be 
     entitled to one hundred (100) votes per share of Series C Preferred 
     Stock.
     
               (b)  SERIES C CLASS VOTING RIGHTS.  From the date on which any 
     shares of Series C Preferred Stock are first issued and so long as any 
     shares of Series C Preferred Stock remain outstanding, the vote or 
     consent of the holders of at least a majority of the shares of Series C 
     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 C 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 C Preferred Stock with respect to the 
     payment of dividends and the distribution of assets upon liquidation, 
     dissolution or winding up, 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 C Preferred Stock 
     outstanding shall be necessary to effect any amendment to these 
     resolutions that would reduce the Series C Redemption Price.
     
          For purposes of these resolutions, any class or classes of stock of 
     the Corporation shall be deemed to rank:
     
                         (A)  prior to the Series C 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 C Preferred Stock;
     
                         (B)  on a parity with the Series C 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 redemption or liquidation prices per shares thereof be 
     different from those of the Series C Preferred Stock, if such stock or 
     series shall be the Series C Preferred Stock or if the holders of such 
     class of stock and the Series C 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
     
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<PAGE>

                         (C)  junior to the Series C 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 C 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 C Preferred 
     Stock shall have the following conversion rights:
     
               (a)  GENERAL.  Subject to and in compliance with the 
     provisions of this Section , any shares of the Series C Preferred Stock 
     may, at the option of the holder, 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 C 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.  The conversion rate per share of Series 
     C Preferred Stock in effect at any time (the "Conversion Rate") shall be 
     the quotient obtained by dividing (a) $100 x (1 + (N/3650)) by (b) the 
     Conversion Price, calculated as provided in Section , where  N equals 
     the number of days between (i) the date on which the shares of Series C 
     Preferred Stock were purchased and (ii) the applicable date of 
     conversion for the shares of Series C Preferred Stock for which 
     conversion is being elected.
     
               (c)  CONVERSION PRICE.  The Conversion Price shall be 
     initially One Dollar and 00 Cents ($1.00).
     
               (d)  MECHANICS OF CONVERSION.  Each holder of Series C 
     Preferred Stock, who desires to convert the same into shares of Common 
     Stock, subject to the provisions of this Section , shall surrender the 
     certificate or certificates therefor, duly endorsed, at the office of 
     the Corporation or of any transfer agent for the Common Stock, and shall 
     give written notice to the Corporation at its principal office that such 
     holder elects to convert the same and shall state therein the number of 
     shares of Series C Preferred Stock being converted.  Thereupon the 
     Corporation shall promptly issue and deliver at such office to such 
     holder a certificate or certificates for the number of shares of Common 
     Stock to which such holder is entitled and shall promptly pay in cash 
     all declared but unpaid dividends on the shares of Series C Preferred 
     Stock being converted or, if the Corporation is legally or financially 
     unable to pay such dividends in cash, pay in Common Stock (valued at the 
     Common Stock's fair market value at the time of surrender as determined 
     in good faith by the Board) all declared but unpaid dividends on the 
     shares being converted.  Such conversion shall be deemed to have been 
     made immediately prior to the close of business on the date of such 

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     surrender of the certificate representing the shares to be converted, 
     and the person entitled to receive the shares of Common Stock issuable 
     upon such conversion shall be treated for all purposes as the record 
     holder of such shares of Common Stock on such date (the "Conversion 
     Date").  The Series C Preferred Stock may be converted in any whole 
     number multiple of one (1) share.
     
               (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 C Preferred Stock.  Instead of 
     any fractional shares of Common Stock which would otherwise be issuable 
     upon conversion of the Series C Preferred Stock, the Corporation shall 
     pay to the holder of the shares of Series C 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 C Preferred Stock being converted at any one time by any 
     holder thereof, not upon each share of Series C 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 C 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 C 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 C 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 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 C 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 C Preferred Stock would have been converted (taking into 
     account all accrued and unpaid

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     dividends and interest with respect to such Series C 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 C 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 C 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 C 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 C 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.
     
          6.   REDEMPTION.  The shares of Series C Preferred Stock are not 
     redeemable as a matter of right of the Corporation or the holder.
     
          7.   NO REISSUANCE OF THE SERIES C PREFERRED STOCK.  No share or 
     shares of the Series C Preferred Stock acquired by the Corporation by 
     reason of redemption, 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 C 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

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     be mailed to each holder of Series C 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 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 C 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)



















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