CERTIFICATE OF THE POWERS, DESIGNATION,
                     PREFERENCES, RIGHTS AND LIMITATIONS OF

                    5% Cumulative Convertible Preferred Stock

                                       of

                        GENERAL DATACOMM INDUSTRIES, INC.


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

         GENERAL DATACOMM INDUSTRIES, INC., a corporation organized and existing
under the laws of the State of Delaware (the  "Corporation"),  hereby  certifies
that,  pursuant to the  authority  contained  in Article  Fourth of its Restated
Certificate of Incorporation,  as amended, and in accordance with the provisions
of Section  151 of the General  Corporation  Law of the State of  Delaware,  the
Board of Directors  of the  Corporation  at its meeting on July 10,  2000,  duly
adopted a resolution providing for the issuance of 200,000 shares of a series of
5% Cumulative Convertible Preferred Stock, which resolution is as follows:

                  RESOLVED,  that pursuant to authority conferred upon the Board
         of Directors by the Restated Certificate of Incorporation,  as amended,
         of  the   Corporation   (hereinafter   called   the   "Certificate   of
         Incorporation"),  the Board of  Directors  does  hereby  authorize  the
         issuance of a series of Preferred  Stock, par value $1.00 per share, to
         be known as the 5% Cumulative  Convertible  Preferred Stock, and to the
         extent that the voting powers, designations,  preferences and relative,
         participating,    optional   or   other   special   rights,   and   the
         qualifications, limitations and restrictions thereof, are not set forth
         in the Certificate of  Incorporation,  does hereby fix and herein state
         and express such voting powers, designations, preferences and relative,
         participating,  optional and other special rights, and  qualifications,
         limitations and restrictions thereof, as follows (all terms used herein
         which are defined in the  Corporation's  Certificate  of  Incorporation
         shall have herein the meanings provided therein):

<PAGE>

         (A)      DESIGNATION AND SIZE OF ISSUE


         The  distinctive  designation  of the  series  shall be "5%  Cumulative
Convertible  Preferred Stock"  (hereinafter  referred to as this "Series").  The
number of shares which shall  constitute  this Series  shall be 200,000  shares.
Each share of this Series shall have a par value of $1.00 per share.

         (B)      DIVIDENDS

(1)      The annual rate of dividends payable on each share of this Series shall
be 5% or $1.25 per share.

(2) Dividends  shall be payable out of funds or Common Stock  legally  available
therefor,  quarterly in arrears on January 31, April 30, July 31 and October 31,
of each year, commencing October 31, 2000, except that if any such date is not a
Business Day in New York City,  then such dividend  shall be payable on the next
such succeeding Business Day (each such date on which a dividend is payable is a
"Dividend  Payment  Date").  The amount of  dividends  payable on shares of this
Series for each full quarterly  dividend period shall be computed by dividing by
four the annual rate per share set forth in Section (B)(1). Dividends payable on
shares of this Series for the initial dividend period and dividends  payable for
any period less than a full quarterly period shall be computed on the basis of a
360-day year of twelve 30-day months.  Dividends  shall be payable to holders of
record  of the  shares  of the  Series  as  they  appear  on  the  books  of the
Corporation on such  respective  dates as may be fixed by the Board of Directors
of the  Corporation  in advance  of the  payment  of each  particular  dividend,
provided  that  holders  of shares of the  Series  called  for  redemption  on a
redemption date falling between a dividend  payment record date and the Dividend
Payment Date shall,  in lieu of receiving such dividend  payment on the Dividend
Payment Date fixed  therefore,  receive such dividend  payment together with all
other accumulated and unpaid dividends, if any, on the date fixed for redemption
(unless such holders convert such shares in accordance with this resolution,  in
which case such holders will receive such payment on the corresponding  Dividend
Payment Date; see "Conversion Rights" below).

(3)  Dividends  payable on shares of this  Series will be  cumulative  and shall
accumulate from date of original issue and shall be deemed to so accumulate from
such date until paid, whether or not earned or declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. Accumulations of dividends shall not bear interest.

(4) So long as any shares of this Series are  outstanding,  no  dividend  (other
than a  dividend  payable  in  Common  Stock or other  stock of the  Corporation
ranking   junior  to  this  Series  as  to   dividends   and  upon   liquidation
[collectively,  the

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<PAGE>

"Junior  Stock"]) shall be declared or paid or set aside for
payment,  and no other  distribution  shall be declared or made, upon the Junior
Stock or upon any other stock of the  Corporation  ranking on a parity with this
Series as to dividends or upon  liquidation,  nor shall any Junior Stock nor any
other  stock of the  Corporation  ranking  on a parity  with  this  Series as to
dividends or upon liquidation be redeemed,  purchased or otherwise  acquired for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the  Corporation  (except
by conversion into or exchange for Junior Stock of the Corporation),  unless, in
each case,  the full  cumulative  dividends  on all  outstanding  shares of this
Series shall have been paid or  contemporaneously  are declared and paid through
the last Dividend  Payment Date.  Should  dividends not be paid in full upon the
shares of this Series and any other  preferred  stock  ranking on a parity as to
dividends  with this Series,  all dividends  declared upon shares of this Series
and any other stock of the Corporation  ranking on a parity as to dividends with
this Series shall be declared pro rata, so that the amount of dividends declared
per share on this Series and such other  preferred stock shall in all cases bear
to each other the same ratio that accumulated  dividends per share on the shares
of this  Series and such other  stock bear to each  other.  Holders of shares of
this Series  shall not be entitled to any  dividends,  whether  payable in cash,
property or stock, in excess of full cumulative  dividends,  as herein provided,
on this  Series.  No  interest,  or sum of money in lieu of  interest,  shall be
payable in respect of any dividend  payment or payments on this Series which may
be in arrears.

                  (5)  Unless  otherwise  declared  to be paid in  cash,  at the
option of the Board of Directors dividends shall be paid in shares of the Common
Stock,   provided  such  shares  of  Common  Stock  are  registered   under  the
Registration  Statement as  hereinafter  defined,  based on the average  closing
price for the 10 Trading Days  preceding  the  Dividend  Payment  Date.  If such
shares of Common Stock are not  registered,  then the dividends shall be paid in
cash. For each dividend  which is declared,  the  Corporation  shall provide the
holder  written  notice of its  intention  to pay  dividends in shares of Common
Stock or cash not more  than ten days  prior to the  Dividend  Payment  Date for
which such  payment is to be made,  and may  indicate  in such  notice  that the
election  contained in such notice shall  continue  for later  Dividend  Payment
Dates until  revised by a  subsequent  notice.  Failure to timely  provide  such
written  notice or to timely pay cash  dividends  shall be deemed an election by
the Corporation to pay dividends in shares of Common Stock.

                  (6) The term  "Business  Day" shall mean any weekday  which is
not a day on which banking  institutions  in the City of New York are authorized
by law, or required by executive order, to close.

                  (7) For purposes of this  resolution,  the term  "Trading Day"
means,  as long as the Common  Stock is listed or admitted to trading on the New
York Stock Exchange,  Inc. (or any successor to such  Exchange),  a day on which
the  New  York
                                       3
<PAGE>

Stock  Exchange,  Inc.  (or  such  successor)  is  open  for the
transaction  of  business,  or, if the Common Stock is not listed or admitted to
trading  on such  Exchange,  a day on which the  principal  national  securities
exchange  on which the  Common  Stock is listed is open for the  transaction  of
business,  or if the Common  Stock is not listed or  admitted  to trading on any
national securities  exchange, a day on which any New York Stock Exchange member
firm is open for the transaction of business.

         (C)      REDEMPTION AND  AUTOMATIC CONVERSION

                         (a)      If an Early Redemption Event occurs, the
shares of this  Series may be redeemed  at the option of the  Corporation,  as a
whole or from time to time in part,  at any time and prior to two (2) years from
the  initial  issuance of shares of this  Series,  upon no less than 30 nor more
than 60 days'  notice  by mail to the  holders  of  shares  of this  Series at a
redemption  price  equal to  $25.00  per  share  together,  in each  case,  with
accumulated and unpaid dividends to the date fixed for redemption. The notice of
redemption  (which if in part, shall specify the number of shares of this Series
to be redeemed)  shall be given by mailing a notice of such redemption not later
than on the  thirtieth  day, and not earlier than the sixtieth  day,  before the
date fixed for redemption to such holder.  "Early  Redemption  Event" shall mean
the  closing  of a  transaction  pursuant  to  which  (i) the  Corporation  or a
subsidiary sells a business unit or units or assets in one or more  transactions
for net proceeds of Fifty Million Dollars  ($50,000,000) or more and/or (ii) the
Corporation  sells securities  pursuant to an underwritten  public offering (not
including  equity  lines of credit  or  similar  financings)  in excess of Fifty
Million  Dollars   ($50,000,000).   In  the  event  the  Closing  Price  of  the
Corporation's  Common Stock has equaled or exceeded l25% of the Conversion Price
(as  hereinafter  defined) per share then in effect for at least 20 Trading Days
in a 30  consecutive  Trading  Day  period the  Corporation  shall also have the
option  as a whole or from  time to time in part,  at any time and  prior to the
automatic  conversion date under Section  (C)(b),  upon no less than 30 nor more
than 60 days written notice to the holders of shares of this Series given at any
time such foregoing condition is satisfied,  to require such holder of shares of
this Series to convert such shares into Common Stock of the  Corporation  at the
price  and on the terms  provided  in  Section D as of the date of such  notice,
which date may not be prior to the 30th day from the  receipt of such  notice by
the holder,  and upon the failure of such  holders to so convert  such shares by
the date set forth in the Corporation's  notice, the shares of this Series which
are subject to such conversion notice,  shall be automatically so converted into
shares of Common Stock of the Corporation as of the date of such notice, without
further action by any party,  and the shares of this Series shall  thereafter be
retired and canceled.  No such notice of  redemption  or  conversion  under this
Section (C)(a) shall be effective unless (i) a registration statement filed with
the Securities and Exchange Commission  ("Registration  Statement") covering the
shares of Common Stock issuable upon  conversion  of, and dividends  payable on,
the shares of this Series,  is effective  and available to the holders to resell
all of the
                                       4
<PAGE>

registrable  securities  during the entire 30 Trading Day Period used to measure
the 125% Closing Price threshold through the redemption date, or (ii) the holder
is permitted to resell  Underlying  Shares  pursuant to Rule 144(k)  promulgated
under the Securities Act of 1933, as amended,  without volume  limitations.  The
shares of Common Stock issuable upon  conversion  of, and dividends  payable on,
the shares of this Series, are referred to as "Underlying Shares".

                  (b)  Subject to the  provisions  of this  Section  and Section
(D)(10),  all outstanding shares of the Series for which conversion notices have
not previously been received or for which redemption has not been made, shall be
automatically  converted on the second (2nd)  anniversary  of the initial  issue
date of shares of this Series, at the then applicable  Conversion Price, and the
shares of this Series shall  thereafter  be canceled and retired  subject to the
remainder of this Section  (C)(b).  The conversion  contemplated by this Section
shall  not occur at such time as  (a)(1) a  Registration  Statement  is not then
effective  or (2) the  holder  is not  permitted  to  resell  Underlying  Shares
pursuant  to Rule  144(k)  promulgated  under  the  Securities  Act of 1933,  as
amended,  without  volume  restrictions,  as evidenced  by an opinion  letter of
counsel  reasonably  acceptable  to the  holder and the  transfer  agent for the
Common Stock, or (b) there are not sufficient  shares of Common Stock authorized
and reserved for issuance upon such conversion.  Notwithstanding  the foregoing,
the two-year  anniversary under this Section shall be extended (on a day-for-day
basis)  for any  Trading  Days  after  the  effective  date of the  Registration
Statement  that a holder  is  unable  to  resell  Underlying  Shares  under  the
Registration  Statement  due to: (a) the Common Stock not being listed or quoted
for trading on the New York Stock Exchange,  Inc. or any similar trading market,
(b) the failure of such Registration  Statement to be declared  effective within
90 days after the initial issuance of shares of this Series,  or if so declared,
to remain  effective  during the time period covered by this Section C(b), as to
all  Underlying  Shares,  or (c) the  suspension of the holder's right to resell
Underlying  Shares  thereunder.  The provisions of Section (D) (10)(b) shall not
apply to any automatic conversion pursuant to this subsection (b).

                         (c)      For purposes of this resolution, the Closing
Price of the Corporation's  Common Stock on any day shall be the last sale price
as shown on the Composite Tape of The New York Stock Exchange, Inc., or, in case
no such sales take place on such day,  the  average of the closing bid and asked
prices on the New York Stock  Exchange on such day,  or, if the Common  Stock is
not listed or admitted to trading on such  Exchange,  on the principal  national
securities  exchange on which the Common Stock is listed or admitted to trading,
or, if it is not  listed or  admitted  to  trading  on any  national  securities
exchange,  the average of the closing bid and asked  prices as  furnished by any
New York Stock  Exchange  member firm selected from time to time by the Board of
Directors of the  Corporation  for such purpose (other than the Corporation or a
subsidiary thereof).

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<PAGE>

                  (d) In the event that fewer than all the outstanding shares of
this Series are to be  redeemed,  the number of shares to be  redeemed  shall be
redeemed pro rata.

         (D)      CONVERSION RIGHTS

(1) Each holder of a share of this Series shall have the right,  at any time and
from time to time following the listing of the Underlying Shares on the New York
Stock  Exchange,  Inc. or 30 days from the original issue date of shares of this
Series,  whichever first occurs,  to convert each such share into fully paid and
nonassessable  shares  of  Common  Stock of the  Corporation  at $5.00 per share
("Conversion  Price"),  or a rate of 5 shares of Common  Stock for each share of
this  Series  ("Conversion  Rate"),  subject to  adjustment  as provided in this
Section (D).

(2) The  Corporation  shall make no payment or allowance  for unpaid  dividends,
whether or not in arrears,  on converted shares of this Series, or for dividends
on the shares of Common Stock issued upon such conversion.

(3) The Corporation shall not be required,  in connection with any conversion of
shares of this Series,  to issue a fraction of a share of its Common Stock,  but
in lieu thereof the  Corporation  shall make a cash payment  (calculated  to the
nearest  cent) equal to such  fraction  multiplied  by the Closing  Price of the
Common Stock on the last Trading Day prior to the date of conversion.

(4) Any holder of shares of this  Series  electing  to convert  such shares into
Common Stock shall surrender the certificate or certificates  for such shares at
the office of the  Corporation  (or at such other place as the  Corporation  may
designate  in New York City by notice to the  holders of shares of this  Series)
during regular business hours,  duly endorsed to the Corporation or in blank, or
accompanied by instruments of transfer to the  Corporation or in blank,  in form
satisfactory  to the  Corporation,  and shall give written notice  ("Election to
Convert") to the  Corporation  at such office that such holder elects to convert
such shares of this Series. The Corporation shall,  within five (5) Trading Days
after  receipt  of such  deposit  of  certificates  for  shares of this  Series,
accompanied  by the Election to Convert above  prescribed,  issue and deliver at
such office to the holder for whose account such shares were surrendered,  or to
his nominee,  certificates representing the number of shares of Common Stock and
the cash, if any, to which such holder is entitled upon such conversion.  If the
Corporation fails to deliver the certificates  within the above time period, the
holder may rescind in writing such Election to Convert prior to delivery of such
shares in which case the  Corporation  shall  promptly  return the  certificates
delivered with the Election to Convert.

                (5) Subject to Section (D)(4) above,  conversion shall be deemed
to have been made as of the date of surrender of certificates  for the shares of
this  Series to be  converted,  and the  giving  of  written  notice,  except as
otherwise  provided in Section

                                       6
<PAGE>

(C)(a),  and the person  entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such Common
Stock on such date.

                  (6) The Conversion  Price and number of shares of Common Stock
issuable upon conversion of shares of this Series are subject to adjustment from
time to time as set forth in this  Section.  Upon each  such  adjustment  of the
Conversion Price pursuant to this Section,  the holder shall thereafter prior to
maturity or redemption be entitled to obtain upon conversion,  at the Conversion
Price  resulting  from such  adjustment,  the  number of shares of Common  Stock
obtained by multiplying the Conversion Price in effect immediately prior to such
adjustment by the number of shares  issuable  upon  conversion of shares of this
Series  immediately prior to such adjustment and dividing the product thereof by
the  Conversion  Price  resulting  from such  adjustment.  Any adjustment to the
number of shares of Common  Stock shall apply only to the shares of Common Stock
for which shares of this Series have not been converted.

                            (a) If the Corporation,  at any time while shares of
          this  Series are  outstanding,  shall (i) pay a stock  dividend to all
          holders  of its  Common  Stock or  otherwise  make a  distribution  or
          distributions  of Common  Stock on shares of stock  ranking  junior to
          this  Series or pari  passu  securities,  payable  in shares of Common
          Stock , (ii)  subdivide  outstanding  shares  of Common  Stock  into a
          larger number of shares, or (iii) combine outstanding shares of Common
          Stock into a smaller number of shares,  the Conversion  Price shall be
          multiplied by a fraction of which the numerator shall be the number of
          shares of Common Stock (excluding treasury shares, if any) outstanding
          before such event and of which the denominator  shall be the number of
          shares of Common Stock (excluding treasury shares, if any) outstanding
          after such event.  Any adjustment  made pursuant to this Section shall
          become   effective   immediately   after  the  record   date  for  the
          determination  of  stockholders  entitled to receive such  dividend or
          distribution  and  shall  become  effective   immediately   after  the
          effective date in the case of a subdivision or combination,  and shall
          apply to successive subdivisions and combinations.

                              (b)  In case of any reclassification of the Common
Stock or any  compulsory  share  exchange  pursuant to which the Common Stock is
converted into other securities,  cash or property, then the holder of shares of
this Series  shall have the right  thereafter  to convert  shares of this Series
only into the shares of stock and other securities, cash and property receivable
upon  or  deemed  to  be  held  by  holders  of  Common  Stock   following  such
reclassification or share exchange, and the holder, upon conversion of shares of
this Series, shall be entitled by reason of such event to receive such amount of
securities,  cash or property equal to the amount of shares of Common Stock such
holder  would have been  entitled  to had such holder  converted  shares of this
Series  immediately

                                       7
<PAGE>

prior to such reclassification or share exchange.  This provision shall apply to
successive reclassifications or share exchanges.

                           (c)  In case of any merger or consolidation of the
Corporation with or into another person or sale of all or  substantially  all of
the assets of the  Corporation,  then the holder shall have the right thereafter
in the case of such merger or consolidation or sale of all or substantially  all
of the assets of the  Corporation  to receive upon the  conversion  of shares of
this  Series,  the same number and kind of shares of stock or the same amount of
property,  cash or securities as it would have been entitled to receive upon the
occurrence of any such event as if it had been immediately  prior to such event,
the holder of the number of shares of Common Stock then exercisable under shares
of this Series.

                           (d)  For the purposes of this Section (D), the
following clauses shall also be applicable:

                                    (i)  Record Date.  In case the Corporation
shall  take a record of the  holders  of its  Common  Stock for the  purpose  of
entitling them to receive a stock  dividend,  then such record date shall be the
date of the issue of the  shares of Common  Stock to have been  issued  upon the
declaration of such dividend.

                                    (ii)  Treasury Shares.  The number of shares
of Common Stock  outstanding at any given time shall not include shares owned or
held by or for the account of the  Corporation,  and the disposition of any such
shares shall be considered an issue or sale of Common Stock.

                           (e)      All calculations under this Section (D)
shall be made to the nearest cent or the nearest 1/100th of a share, as the case
may be.

                           (f) If (i) the  Corporation  shall declare a dividend
         (or  any  other   distribution)  on  its  Common  Stock;  or  (ii)  the
         Corporation shall declare a special  nonrecurring cash dividend on or a
         redemption  of  its  Common  Stock;  or  (iii)  the  Corporation  shall
         authorize  the  granting to all holders of the Common  Stock  rights or
         warrants to subscribe  for or purchase  any shares of capital  stock of
         any class or of any rights; or (iv) the approval of any stockholders of
         the   Corporation   shall   be   required   in   connection   with  any
         reclassification  of the Common Stock,  any  consolidation or merger to
         which  the  Corporation  is a  party,  any sale or  transfer  of all or
         substantially  all of the assets of the Corporation,  or any compulsory
         share  exchange  whereby  the  Common  Stock is  converted  into  other
         securities,  cash or property;  or (v) the Corporation  shall authorize
         the voluntary dissolution,  liquidation or winding up of the affairs of
         the Corporation,  then the Corporation  shall cause to be mailed to the
         holders of shares of this  Series at their

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<PAGE>

     last address as they shall  appear upon the stock books of the Corporation,
     at least 15 calendar  days prior to the applicable record or effective date
     hereinafter  specified, a notice ("Notice") stating (x) the date on which a
     record  is to be taken  for the  purpose  of such  dividend,  distribution,
     redemption, rights or warrants, or if a record is not to be taken, the date
     as of which the  holders of Common  Stock of record to be  entitled to such
     dividend,   distributions,   redemption,  rights  or  warrants  are  to  be
     determined or (y) the date on which such  reclassification,  consolidation,
     merger, sale, transfer or share exchange is expected to become effective or
     close, and the date as of which it is expected that holders of Common Stock
     of record  shall be entitled to exchange  their  shares of Common Stock for
     securities,  cash or other property deliverable upon such reclassification,
     consolidation,   merger,  sale,  transfer,  share  exchange,   dissolution,
     liquidation or winding up; provided, however, that the failure to mail such
     notice or any defect therein or in the mailing thereof shall not affect the
     validity of the corporate  action  required to be specified in such notice.
     The holder of shares of this Series shall be entitled to convert  shares of
     this Series during the 15-day period commencing on the date of such Notice.

                            (g) Whenever an adjustment in the  Conversion  Price
         is required,  the Corporation shall forthwith place on file a statement
         signed by its Chief Executive Officer,  Chief Financial Officer,  Chief
         Operating  Officer or a Senior  Vice  President  and by its  Secretary,
         Assistant Secretary or Treasurer, stating the adjusted Conversion Price
         determined  as  provided  herein.  Such  statements  shall set forth in
         reasonable  detail such facts as shall be  necessary to show the reason
         and the  manner  of  computing  such  adjustment.  Promptly  after  the
         adjustment of the Conversion Price, the Corporation shall mail a notice
         thereof  to each  holder  of shares of this  Series  setting  forth the
         Conversion  Price after such  adjustment and briefly  stating the facts
         requiring the adjustment and the manner of computing it.

                           (h)      The term "Common Stock" as used in this
          resolution means the  Corporation's  Common Stock,  $.10 par value, as
          the same  exists  as of the  date of the  Certificate  of  Designation
          relating  to this Series or any other  class of stock  resulting  from
          successive   changes  or   reclassifications   of  such  Common  Stock
          consisting solely of changes in par value, or from par value to no par
          value,  or from no par value to par  value.  In the event  that at any
          time as a result of an adjustment made pursuant to Section  (D)(6)(b),
          the  holder of any share of this  Series  thereafter  surrendered  for
          conversion  shall  become  entitled  to  receive  any  shares  of  the
          Corporation other than shares of its Common Stock, the Conversion Rate
          of such other shares so receivable  upon conversion of any share shall
          be subject to adjustment from time to time in a manner and on terms as
          nearly  equivalent as practicable  to

                                       9
<PAGE>

          the provisions with respect to Common Stock contained in subparagraphs
         (a)through (g) of this Section(D)(6), and the provisions of Section (D)
         (1) through (5) and (7) through (9) with  respect to the Common  Stock
          shall apply on like or similar terms to any such other shares.

                  (i) If the  Corporation  during the six month period after the
          initial issuance of shares of this Series at any time while any shares
          of this Series are outstanding,  shall issue shares of Common Stock or
          rights, warrants, options (other than employee stock options) or other
          securities  or debt  that are  convertible  into or  exchangeable  for
          shares of Common Stock  ("Common  Stock  Equivalents"),  entitling any
          person to  acquire in excess of  100,000  shares of Common  Stock at a
          price per share  less  than the  Conversion  Price at the time of such
          issuance   (if  the  holder  of  the  Common  Stock  or  Common  Stock
          Equivalents  so  issued  shall  at any  time  thereafter,  whether  by
          operation of purchase price  adjustments,  reset provisions,  floating
          conversion,  exercise  or  exchange  prices  or  otherwise,  or due to
          warrants,  options or rights issued in connection  with such issuance,
          be entitled to receive shares of Common Stock at a price less than the
          Conversion Price as of the date of such issuance,  such issuance shall
          be deemed to have occurred for less than the Conversion  Price),  then
          the  Conversion  Price  shall,  at the option of the holder  exercised
          within 15 days after receipt of the notice from the Corporation of the
          issuance of such Common  Stock or Common Stock  Equivalents,  together
          with a reasonably  detailed statement of the applicable terms thereof,
          be adjusted to mirror the  conversion,  exchange or purchase  price of
          such Common Stock or Common  Stock  Equivalents  (including  any reset
          provisions  thereof).  Such  adjustment  shall be made  whenever  such
          Common Stock or Common Stock Equivalents are issued. This Section does
          not apply to the  issuance of shares of Common  Stock or Common  Stock
          Equivalents to strategic investors,  existing lenders,  parties listed
          in Schedule 6(b) of the  Registration  Rights  Agreement  covering the
          Underlying Shares, or employees.

                  (j) In the event that  during the six month  period  after the
initial  issuance  of the shares of this  Series (i) the  Corporation  effects a
spin-off of the stock of a Subsidiary of the  Corporation  to the holders of the
Corporation's  Common  Stock,  and (ii)  the  Corporation  has sent a notice  of
redemption of the shares of this Series prior to the first Reset Date,  then the
Conversion  Price for the shares of this Series  shall be adjusted  (provided no
adjustment in the  Conversion  Price by reason of such  spin-off had  previously
occurred) as of the date of such notice of  redemption or the date such spin-off
was effected,  whichever is later, so that on the conversion thereafter prior to
the first Reset Date only,  of shares of this Series,  the holder of such shares
of this Series  shall  receive  such  number of shares of Common  Stock that the
shares of this
                                       10
<PAGE>

Series are convertible  into at the then Conversion Price plus so
many shares of stock of such Subsidiary so spun off by the Corporation as such
holder would have received had such holder  converted such shares of this Series
into shares of Common  Stock and been a holder of such shares of Common Stock of
the Corporation immediately prior to the record date of such spin-off.

                  (7) Any  shares of this  Series  which  shall at any time have
been converted  shall,  after such conversion be canceled and have the status of
authorized  but unissued  shares of Preferred  Stock without  designation  as to
series until such shares are once more designated as part of a particular series
(other than this Series) by the Board of Directors. The Corporation shall at all
times reserve and keep available out of its authorized but unissued  stock,  for
the purpose of  effecting  the  conversion  of the shares of this  Series,  such
number of its duly authorized  shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of this Series;
provided,  however, that nothing contained herein shall preclude the Corporation
from  satisfying  its  obligations in respect of the conversion of the shares by
delivery of  purchased  shares of Common Stock which are held in the treasury of
the Corporation.

                           (8)      If any shares of Common Stock required to be
reserved for purposes of conversion of shares of this Series  hereunder  require
registration  with or approval of any governmental  authority before such shares
may be issued upon  conversion,  the  Corporation  shall cause such shares to be
duly registered or approved,  as the case may be. The  Corporation  will use its
reasonable  best  efforts  to list the  shares of Common  Stock  required  to be
delivered  upon  conversion of shares of this Series prior to such delivery upon
each national  securities  exchange upon which the  outstanding  Common Stock is
listed at the time of such delivery.

                  (9) The Corporation shall pay any and all issue or other taxes
that may be  payable in  respect  of any issue or  delivery  of shares of Common
Stock on conversion of shares of this Series  pursuant  hereto.  The Corporation
shall not,  however,  be  required to pay any tax which is payable in respect of
any  transfer  involved in the issue or delivery of Common Stock in a name other
than that in which the shares of this Series so converted were  registered,  and
no such issue or delivery  shall be made unless and until the person  requesting
such  issue  has  paid  to the  Corporation  the  amount  of  such  tax,  or has
established,  to the  satisfaction  of the  Corporation,  that such tax has been
paid.

                  (10) (a) The Conversion Price shall be adjusted on the six (6)
month  anniversary of the initial issue date of shares of this Series,  and each
three (3) month  anniversary  thereafter  (each a "Reset Date"),  to the average
Closing  Price of the Common Stock of the  Corporation  for the ten (10) Trading
Days preceding a Reset Date, if such adjusted  Conversion Price is less than the
Conversion  Price  then in  effect,  provided,  however,  in no event  shall the
Conversion  Price be reset for (i) shares of this

                                       11
<PAGE>

Series  previously  converted  (and such  conversion  has not been  rescinded as
provided in Section (D) (4) or ignored by failure of the  Corporation to deliver
shares  of  Common  Stock  issuable  on such  conversion)  or (ii)  for  which a
redemption  notice has previously been given and for which the redemption  price
therefor is thereafter  timely paid.  Prior to any such adjustment  reducing the
Conversion Price, the Corporation,  in lieu of adjusting the Conversion Price as
described above,  shall have the option to redeem any outstanding shares of this
Series for cash at 105% of the redemption  price,  plus  accumulated  and unpaid
dividends  which had  accumulated  through such Reset Date, by written notice to
each holder on or before at least 15 days prior to any such Reset Date,  and any
such adjustment in the Conversion Price on any Reset Date shall not take effect.
Any  such  notice  by the  Corporation  may  contain  a price  below  which  the
Corporation is willing to redeem such shares and above which the  Corporation is
not willing to redeem such shares.  In the event such price stated in the notice
is less than the  average  Closing  Price of the  Common  Stock for the ten (10)
Trading  Days  immediately  preceding  the Reset Date with respect to which such
notice is given, the Corporation  shall have no obligation to redeem such shares
on such Reset Date and an  adjustment  will be made to the  Conversion  Price in
accordance  with the first sentence of this Section.  In no event shall any such
cash  redemption  payment for a Reset Date be due until the fifth (5th)  Trading
Day  following a Reset  Date.  If the  Corporation  defaults in making such cash
redemption  payment on the applicable Fifth Trading Day, then an adjustment will
be made to the  Conversion  Price in accordance  with the first sentence of this
Section and the  Corporation  shall no longer have such option on any  remaining
Reset Date.  If  stockholders  equity at September 30, 2000  (excluding  foreign
exchange  adjustments),  less the loss for such quarter ended September 30, 2000
is less than  $10,000,000,  then there will be an  additional  Reset Date on the
tenth Trading Day  following  the public  release of the results for such fourth
fiscal quarter ending September 30, 2000 and the other Reset Dates will occur on
the three month anniversary of such additional Reset Date.

                           (b)      A holder may not convert shares of this
Series to the extent such conversion  would result in the holder,  together with
any affiliate  thereof,  beneficially  owning (as determined in accordance  with
Section 13(d) of the Securities  Exchange Act of 1934 and the rules  promulgated
thereunder)  in excess of 9.999% of the then  issued and  outstanding  shares of
Common Stock,  including shares of Common Stock issuable upon such conversion of
the shares of this  Series and held by such  holder  after  application  of this
Section. Since the holder will not be obligated to report to the Corporation the
number  of  shares  of  Common  Stock it may  hold at the  time of a  conversion
hereunder,  unless the  conversion  at issue by itself alone would result in the
issuance of shares of Common Stock in excess of 9.999% of the then outstanding

                                       12
<PAGE>

shares of Common Stock without  regard to any other shares of Common Stock which
may be  beneficially  owned by the holder or an  affiliate  thereof,  the holder
shall have the authority and  obligation  to determine  whether the  restriction
contained in this Section will limit any particular  conversion hereunder and to
the extent that the holder  determines  that the  limitation  contained  in this
Section applies,  the  determination of which portion of conversion shall be the
responsibility  and obligation of the holder. If the holder has delivered a Form
of  Election  to Convert  for a number of shares of Common  Stock that by itself
alone  would  result  in the  issuance  in  excess  of the  9.999%  of the  then
outstanding  shares of Common Stock without regard to any other shares of Common
Stock which may be beneficially owned by the holder or an affiliate thereof, the
Corporation  shall notify the holder of this fact and shall honor the conversion
for the maximum  number of shares of this Series  permitted  to be  converted on
such date of  conversion  in accordance  with the periods  described  herein and
disregard  the  balance  of such  Form  of  Election  to  Convert,  as if  never
delivered. The provisions of this Section may be waived by a holder (but only as
to itself and not to any other  holder) upon not less than 61 days' prior notice
to the  Corporation.  Other holders shall be unaffected by any such waiver.  The
Corporation shall not be liable for any failure to so notify the holders.

                           (c)     Notwithstanding Section (D) (10) above to the
contrary, the maximum number of shares of Common Stock which the Corporation may
be  required  to issue  under  this  Series in the  aggregate  shall not  exceed
19.9999%  of the  number of  outstanding  shares of Common  Stock as of July 20,
2000, or 4,886,703 shares of Common Stock,  less the aggregate of (i) the number
of shares of Common  Stock  issuable  by the  Corporation  upon  exercise of the
Warrant (as defined in the Securities  Purchase Agreement pursuant to which this
Series was issued) and (ii) dividends which may be paid or are payable in Common
Stock on shares of this  Series (the  "Issuable  Maximum")  To the  extent,  the
Corporation  would otherwise be liable to issue shares of Common Stock in excess
of the  Issuable  Maximum  pursuant  to this  Section  but  for  the  limitation
contained in this Section,  on or after July 31, 2002 the Corporation  shall, if
permitted by applicable  law, rule or  regulation,  including but not limited to
the ability to list additional shares on the New York Stock Exchange, Inc. or if
not listed on such  Exchange  and listed on another  stock  exchange  or market,
pursuant to the rules of such other subsequent  exchange or market,  if approval
is obtained from stockholders or otherwise,  either issue all such shares or, at
the  Corporation's  option,  pay the  holder in cash the value of shares  not so
issued including accumulated and unpaid dividends.

         (E)      VOTING

(1) Except as indicated below or as required by Delaware General Corporation Law
the  shares of this  Series  shall not have  voting  rights.  The shares of this
Series shall nonetheless have the following voting rights:

                                       13
<PAGE>

                       (a)  So  long  as  any  shares  of  this  Series   remain
         outstanding,  the Corporation shall not, either directly or indirectly,
         without the affirmative vote at a meeting,  or the written consent with
         or without a meeting,  of the  holders of at least a majority in number
         of shares of this Series then outstanding,  (i) amend,  alter or repeal
         any of the provisions of the  Certificate  of  Designation  relating to
         this Series or the  Certificate  of  Incorporation,  or  authorize  any
         reclassification  of the shares of this Series,  so as in any such case
         affect  adversely  the  preferences,  special  rights or  privileges or
         voting power of the shares of this Series,  or (ii) authorize or create
         any class of stock  ranking  prior to the  shares of this  Series as to
         dividends or distribution of assets on liquidation, or (iii) create, or
         issue or increase the authorized  number of shares of any series of the
         Corporation's authorized preferred stock ranking prior to the shares of
         this Series as to dividends or  distributions  on liquidation,  or (iv)
         increase the number of shares of this Series.

                       (b) In  exercising  the  voting  rights set forth in this
         Section (E)(1), each share of this Series entitled to such voting right
         shall have equal voting  power,  notwithstanding  any greater or lesser
         general voting powers of one or more series of preferred stock.

(2) No consent of holders of shares of this Series shall be required for (i) the
creation  of  any  indebtedness  of  any  kind  of  the  Corporation,  (ii)  the
authorization or issuance of any class of stock of the Corporation  junior to or
on a parity to the shares of this Series as to dividends  and upon  liquidation,
dissolution  or  winding  up of the  Corporation  or (iii)  subject  to  Section
(E)(1)(a), the issuance of any shares of preferred stock.

         (F)      LIQUIDATION RIGHTS

(1) Upon the dissolution,  liquidation or winding up of the Corporation, whether
voluntary  or  involuntary,  the holders of the shares of this  Series  shall be
entitled  to  receive  out  of  the  assets  of the  Corporation  available  for
distribution to stockholders,  before any payment or distribution  shall be made
on the Common Stock or on any other class or series of stock  ranking  junior to
this Series upon liquidation, a liquidating distribution in the amount of $25.00
for each  outstanding  share of this  Series,  plus all  accumulated  and unpaid
dividends on such shares to the date of final liquidation.

(2) Neither the sale, lease or exchange (for cash,  shares of stock,  securities
or other  consideration)  of all or substantially all the property and assets of
the Corporation nor the merger or  consolidation of the Corporation into or with
any other  corporation or the merger or consolidation  of any other  corporation
into or with the Corporation,  shall be deemed to be a dissolution,  liquidation
or winding up, voluntary or involuntary, for the purposes of this Section (F).

                                       14
<PAGE>


(3) After the  payment to the  holders of the shares of this  Series of the full
preferential  amounts  provided  for in this  Section  (F),  the holders of this
Series as such  shall have no right or claim to any of the  remaining  assets of
the Corporation.

(4) In the event the assets of the Corporation  available for distribution  upon
any dissolution, liquidation or winding up of the Corporation, whether voluntary
or involuntary,  shall be insufficient to pay the full  preferential  amounts to
which such holders are entitled pursuant to Section (F)(1), no such distribution
shall be made on account of any shares of any other class or series of preferred
stock ranking on a parity with the shares of this Series upon such  dissolution,
liquidation  or winding up unless  proportionate  distributive  amounts shall be
paid on account of the shares of this Series, ratably, in proportion to the full
distributable   amounts  for  which  holders  of  all  such  parity  shares  are
respectively entitled upon such dissolution, liquidation or winding up.

         (G)      PRIORITY

(1)      For purposes of this resolution, any stock of any class or series of
the Corporation shall be deemed to rank:

(i)      Prior to the  shares of this  Series,  either as to  dividends  or upon
         liquidation,  if the holders of such class or classes shall be entitled
         to  the  receipt  of  dividends  or  of  amounts   distributable   upon
         dissolution,  liquidation  or  winding up of the  Corporation,  whether
         voluntary or involuntary, as the case may be, in preference or priority
         to the holders of shares of this Series;

(ii)     On a parity with shares of this Series,  either as to dividends or upon
         liquidation, whether or not the dividend rates, Dividend Payment Dates,
         or  redemption  or  liquidation   prices  per  share  or  sinking  fund
         provisions,  if any, are  different  from those of this Series,  if the
         holders of such stock are  entitled to the receipt of  dividends  or of
         amounts  distributable  upon dissolution,  liquidation or winding up of
         the  Corporation,  whether  voluntary or involuntary,  in proportion to
         their  respective  dividend  rates  or  liquidation   prices,   without
         preference or priority,  one over the other,  as between the holders of
         such stock and the holders of shares of this Series; and

              (iii) Junior to shares of this  Series,  either as to dividends or
         upon  liquidation,  if such class or series shall be Common Stock or if
         the  holders of shares of this  Series  shall be entitled to receipt of
         dividends or of amounts distributable upon dissolution,  liquidation or
         winding up of the Corporation, whether voluntary or involuntary, as the
         case may be, in preference or priority to the holders of shares of such
         class or series.

              (H)  NOTICES
                                       15
<PAGE>

              Any  and  all  notices  or  other   communications  or  deliveries
hereunder  shall be in writing and shall be deemed  given and  effective  on the
earliest of (i) the date of  transmission,  if such notice or  communication  is
delivered  via  facsimile at the facsimile  telephone  number  specified in this
Section  prior to 5:30 p.m.  (New York City  time) on a Business  Day,  (ii) the
Business Day after the date of transmission,  if such notice or communication is
delivered  via  facsimile at the facsimile  telephone  number  specified in this
Section at or later than 5:30 p.m.  (New York City time) on any date and earlier
than  11:59  p.m.  (New York City time) on such  date,  (iii) the  Business  Day
following  the  date of  mailing,  if sent by  nationally  recognized  overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications  shall be: (i) if to
the Corporation,  to Park Road Extension,  Middlebury,  Connecticut  06762-1299;
facsimile number (203) 577-6244,  attention Chief Financial Officer,  or (ii) if
to a holder of shares of this Series, to such holder at the address or facsimile
number  appearing  on the  register  of the shares of this  Series or such other
address or  facsimile  number as such holder may provide to the  Corporation  in
accordance with this Section.

                                       16
<PAGE>

              IN WITNESS WHEREOF,  General DataComm Industries,  Inc. has caused
this certificate to be signed and attested this 31st day of July, 2000.

                                     GENERAL DATACOMM INDUSTRIES, INC.


                                     By     /S/ WILLIAM G. HENRY
                                     Title: Vice President, Finance



Attest:  /S/ HOWARD S. MODLIN
             Secretary