Document:

Callable Warrant

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION  FROM  THE  REGISTRATION  REQUIREMENTS  THEREUNDER  AND  IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

                                          GENERAL DATACOMM INDUSTRIES, INC.

                                     WARRANT

Warrant No.                                              Dated  July 31, 2000

         General  DataComm   Industries,   Inc.,  a  Delaware  corporation  (the
"Company"), hereby certifies that, for value received, or its registered assigns
("Holder"), is entitled,  subject to the terms set forth below, to purchase from
the  Company a total of shares of common  stock,  $.10 par value per share  (the
"Common Stock"), of the Company (each such share, a "Warrant Share" and all such
shares,  the "Warrant Shares") at an exercise price equal to $5.75 per share (as
adjusted from time to time as provided in Section 9, the "Exercise  Price"),  at
any time and from time to time from and after the date  hereof and  through  and
including July 31, 2005 (the  "Expiration  Date"),  and subject to the following
terms and conditions:

                  1.  Registration  of Warrant.  The Company shall register this
Warrant,  upon  records to be  maintained  by the Company for that  purpose (the
"Warrant Register"),  in the name of the record Holder hereof from time to time.
The  Company  may deem and treat the  registered  Holder of this  Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary except in compliance with Section 2 hereof.

<PAGE>

                  2.       Registration of Transfers and Exchanges.

                           (a)      The Company  shall  register the  transfer
of any portion of this Warrant in the Warrant  Register,  upon surrender of this
Warrant,  with the Form of Assignment attached hereto duly completed and signed,
to the  Company at the office  specified  in or pursuant to Section 13. Upon any
such  registration  or  transfer,  a new warrant to purchase  Common  Stock,  in
substantially the form of this Warrant (any such new warrant,  a "New Warrant"),
evidencing  the portion of this  Warrant so  transferred  shall be issued to the
transferee and a New Warrant  evidencing  the remaining  portion of this Warrant
not so  transferred,  if any, shall be issued to the  transferring  Holder.  The
acceptance  of the New  Warrant by the  transferee  thereof  shall be deemed the
acceptance by such  transferee of all of the rights and  obligations of a holder
of a Warrant.

                           (b)      This Warrant is exchangeable  upon the
surrender  hereof by the Holder to the  office of the  Company  specified  in or
pursuant to Section 13 for one or more New Warrants, evidencing in the aggregate
the right to purchase  the number of Warrant  Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.

                  3.       Duration, Exercise and Redemption of Warrants.

                           (a)      This Warrant shall be exercisable  by the
registered  Holder on any business day before 5:30 P.M.,  New York City time, at
any time and from time to time on or after the date hereof to and  including the
Expiration  Date. At 5:30 P.M., New York City time on the  Expiration  Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value.

                           (b)      Subject to  Sections  2(b) and 10, upon
surrender of this Warrant, with the Form of Election to Purchase attached hereto
duly completed and signed, to the Company at its address for notice set forth in
Section 13, and upon payment of the Exercise  Price  multiplied by the number of
Warrant  Shares  that the Holder  intends to purchase  hereunder,  in the manner
provided  hereunder,  all as  specified by the Holder in the Form of Election to
Purchase,  the Company shall promptly (but in no event later than 5 Trading Days
(as defined in the Securities  Purchase  Agreement dated July 31, 2000 after the
Date of Exercise (as defined herein) issue or cause to be issued and cause to be
delivered  to or upon the written  order of the Holder and in such name or names
as the Holder may designate,  a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration  statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder  thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions  pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"),  or (ii) if this  Warrant  shall have been  issued  pursuant to a written
agreement  between  the  original  Holder and the  Company,  as required by such
agreement.  Any person so  designated  by the Holder to receive  Warrant  Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.

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<PAGE>

                           A "Date of  Exercise"  means  the  date on which  the
Company shall have received (i) this Warrant (or any New

Warrant,  as applicable),  with the Form of Election to Purchase attached hereto
(or attached to such New Warrant)  appropriately  completed and duly signed, and
(ii) payment of the Exercise Price for the number of Warrant Shares so indicated
by the holder hereof to be purchased.

                           (c)      This Warrant shall be  exercisable,  either
in its  entirety  or, from time to time,  for a portion of the number of Warrant
Shares. If less than all of the Warrant Shares which may be purchased under this
Warrant  are  exercised  at any time,  the  Company  shall  issue or cause to be
issued,  at its  expense,  a New Warrant  evidencing  the right to purchase  the
remaining  number of Warrant  Shares for which no exercise has been evidenced by
this Warrant.

                           (d)      Commencing at any time after the date the
Securities and Exchange Commission declares effective the registration statement
covering  the  resale of the  Warrant  Shares  and  naming the Holder as selling
stockholder  thereunder,  but no earlier  than July 31,  2002 if (i) the average
closing bid price of the Common  Stock on the New York Stock  Exchange  (or such
other national  securities  exchange on which the Common Stock is then listed or
quoted for trading) for any 20 trading days during a 30 consecutive  Trading Day
period exceeds 200% of the Exercise Price (a "Trigger Period"),  and (ii) during
the  Trigger  Period and up to and  including  the  Redemption  Date (as defined
herein),  the Warrant  Shares are either  registered  for resale  pursuant to an
effective  registration  statement  naming the  Holder as a selling  stockholder
thereunder or freely transferable  without volume restrictions  pursuant to Rule
144(k)  promulgated  under the  Securities  Act, as determined by counsel to the
Company pursuant to a written opinion letter addressed and in form and substance
acceptable to the Holder and the transfer  agent for the Common Stock,  then the
Company shall have the right, upon ten (10) days' notice to the Holder given not
later than five (5) Trading Days after the conclusion of any such Trigger Period
(the "Redemption  Notice"),  to redeem 100% of the total Warrant Shares issuable
under  this  Warrant  as such  number  may be  adjusted,  at a price of $.01 per
Warrant Share (the "Redemption  Price"), on the date set forth in the Redemption
Notice,  but in no event  earlier than ten (10) days  following  the date of the
receipt by the Holder of the  Redemption  Notice (the  "Redemption  Date").  The
Holder may exercise this Warrant at any time prior to the  Redemption  Date. Any
portion of this Warrant not  exercised by 5:30 p.m.  (New York City time) on the
Redemption  Date shall no longer be  exercisable  and shall be  returned  to the
Company,  and the Company,  upon its receipt of the unexercised  portion of this
Warrant,  shall  issue  therefor  in  full  and  complete  satisfaction  of  its
obligations under such remaining portion of this Warrant to the Holder an amount
equal to the number of shares of Common Stock then issuable hereunder multiplied
by the Redemption  Price. The Redemption Price shall be mailed to such Holder at
its address of record, and the Warrant shall be canceled.

                  4. Registration  Rights.  The Warrant Shares issuable pursuant
to the exercise of this Warrant shall be entitled to the registration rights set
forth in the  Registration

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<PAGE>

Rights  Agreement  dated July 31,  2000 to which the  Company  and the  original
Holder are parties (the "Registration Rights Agreement").

                  5.       [Intentionally left blank]

                  6.  Payment of Taxes.  The  Company  will pay all  documentary
stamp taxes  attributable to the issuance of Warrant Shares upon the exercise of
this Warrant;  provided,  however, that the Company shall not be required to pay
any tax  which  may be  payable  in  respect  of any  transfer  involved  in the
registration of any  certificates for Warrant Shares or Warrants in a name other
than that of the  Holder.  The  Holder  shall be  responsible  for all other tax
liability that may arise as a result of holding or transferring  this Warrant or
receiving Warrant Shares upon exercise hereof.

                  7. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or  destroyed,  the Company shall issue or cause to be issued in exchange
and  substitution  for  and  upon  cancellation   hereof,  or  in  lieu  of  and
substitution for this Warrant, a New Warrant,  but only upon receipt of evidence
reasonably  satisfactory  to the Company of such loss,  theft or destruction and
indemnity, if requested,  satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable  regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

                  8. Reservation of Warrant Shares.  The Company  covenants that
it will at all times  reserve and keep  available  out of the  aggregate  of its
authorized but unissued  Common Stock,  solely for the purpose of enabling it to
issue  Warrant  Shares upon  exercise of this  Warrant as herein  provided,  the
number of  Warrant  Shares  which are then  issuable  and  deliverable  upon the
exercise of this entire Warrant, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and  restrictions of Section 9). The Company  covenants that all
Warrant Shares that shall be so issuable and  deliverable  shall,  upon issuance
and the payment of the applicable  Exercise  Price in accordance  with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.

                  9.  Certain  Adjustments.  The  Exercise  Price and  number of
Warrant Shares  issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section. Upon each such adjustment of the
Exercise Price pursuant to this Section,  the Holder shall  thereafter  prior to
the Expiration  Date be entitled to purchase,  at the Exercise  Price  resulting
from such  adjustment,  the number of Warrant Shares obtained by multiplying the
Exercise Price in effect  immediately  prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant  immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. Any adjustment to the number of Warrant Shares shall apply only
to the Warrant Shares for which this Warrant has not been exercised.

                            (a)     If the Company,  at any time while this
Warrant is  outstanding  shall,  (i) pay a stock  dividend to all holders of its
Common Stock or otherwise make a

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<PAGE>

distribution  or  distributions  of Common Stock to holders of its 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 Exercise 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 shall have
the right  thereafter to exercise this Warrant 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 exercise of this Warrant,  shall be entitled by reason of such
event to receive such amount of securities, cash or property equal to the amount
of Warrant  Shares  such  Holder  would have been  entitled  to had such  Holder
exercised  this  Warrant  immediately  prior to such  reclassification  or share
exchange.  This provision shall apply to successive  reclassifications  or share
exchanges.

                            (c)     [Intentionally left blank]

                           (d)      In case of any merger or consolidation of
the Company with or into another Person (as defined in the  Securities  Purchase
Agreement dated July 31, 2000) or sale of all or substantially all of the assets
of the Company,  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 Company to receive upon the exercise of this Warrant, 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 Warrant
Shares then exercisable under this Warrant.

                           (e)      For the purposes of this Section 9, the
following clauses shall also be applicable:

                                    (i) Record  Date.  In case the Company
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

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<PAGE>

the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.

                           (f)     All  calculations  under this Section 9 shall
be made to the nearest cent or the nearest  1/100th of a share,  as the case may
be.

                            (g) If (i) the Company shall declare a dividend
(or any other  distribution)  on its Common  Stock;  or (ii) the  Company  shall
declare a special  nonrecurring  cash  dividend on or a redemption of its Common
Stock;  or (iii) the Company 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  Company  shall  be  required  in  connection   with  any
reclassification  of the Common Stock, any  consolidation or merger to which the
Company is a party,  any sale or  transfer  of all or  substantially  all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities,  cash or property;  or (v) the Company shall
authorize the voluntary dissolution, liquidation or winding up of the affairs of
the Company,  then the Company  shall cause to be mailed to each Holder at their
last  addresses  as they shall  appear  upon the Warrant  Register,  at least 10
calendar  days prior to the  applicable  record or  effective  date  hereinafter
specified,  a 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.

                  10.      Payment of Exercise Price.  The Holder shall pay the
Exercise Price in one of the following manners:

                           (a)      Cash Exercise.  The Holder may deliver
immediately available funds; or
                           (b)      Cashless  Exercise.  At any time after the
earlier  to occur of the  Effectiveness  Date (as  defined  in the  Registration
Rights Agreement) and the date the initial registration statement filed pursuant
to the Registration  Rights  Agreement is declared  effective by the Commission,
when a  registration  statement  covering  the resale of the Warrant  Shares and
naming the Holder as a selling stockholder thereunder is not then effective, and
the Holder is unable to sell the  Warrant  Shares  without  volume  restrictions
under Rule 144(k), the Holder may surrender this Warrant to the Company together
with a notice of cashless exercise, in

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<PAGE>

which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

                  X = Y (A-B)/A

         where:
                  X = the number of Warrant Shares to be issued to the Holder.

                  Y = the number of Warrant Shares with respect to which this
                      Warrant is being exercised.

                  A = the average of the  closing  sale prices of the  Common
                      Stock for the  fifteen (15) consecutive Trading Days
                      immediately  prior to (but not including) the Date of
                      Exercise.

                  B = the Exercise Price.

For purposes of Rule 144  promulgated  under the Securities Act, it is intended,
understood  and  acknowledged  that the  Warrant  Shares  issued  in a  cashless
exercise  transaction  shall be deemed to have been acquired by the Holder,  and
the  holding  period  for the  Warrant  Shares  shall  be  deemed  to have  been
commenced, on the issue date.

                  11. Certain Exercise  Restrictions.  A Holder may not exercise
this Warrant to the extent such  exercise  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,  as  amended,
("Exchange  Act") 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  exercise  and  held  by such  Holder  after
application of this Section. Since the Holder will not be obligated to report to
the Company  the number of shares of Common  Stock it may hold at the time of an
exercise hereunder, unless the exercise at issue by itself alone would result in
the  issuance  of  shares  of  Common  Stock in  excess  of  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
Holder  shall  have the  authority  and  obligation  to  determine  whether  the
restriction  contained  in this  Section  will  limit  any  particular  exercise
hereunder  and to the extent  that the  Holder  determines  that the  limitation
contained in this Section  applies,  the  determination of which portion of this
Warrant is exercisable shall be the responsibility and obligation of the Holder.
If the Holder has  delivered  a Form of  Election  to  Purchase  for a number of
Warrant  Shares that by itself  alone would  result in the issuance in excess of
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 Company  shall notify the Holder of this fact and shall
honor the  exercise  for the maximum  portion of this  Warrant  permitted  to be
exercised  on such Date of Exercise  in  accordance  with the periods  described
herein and  disregard  the balance of such Form of Election to  Purchase,  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 Company. Other Holders shall be

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<PAGE>

unaffected  by any such  waiver.  The Company  shall not be liable in damages or
otherwise for any failure to so notify the Holder.

                  12.  Fractional  Shares.  The Company shall not be required to
issue or cause to be issued  fractional  Warrant  Shares on the exercise of this
Warrant.  The number of full  Warrant  Shares  which shall be issuable  upon the
exercise of this Warrant shall be computed on the basis of the aggregate  number
of Warrant Shares  purchasable on exercise of this Warrant so presented.  If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable on the  exercise of this  Warrant,  the Company  shall pay an amount in
cash equal to the Exercise Price multiplied by such fraction.

                  13. Notices.  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  Company,  to  Park  Road  Extension,  Middlebury,  Connecticut  06762-1299;
facsimile number (203) 577-6244,  attention Chief Financial Officer,  or (ii) if
to the Holder, to the Holder at the address or facsimile number appearing on the
Warrant  Register or such other  address or  facsimile  number as the Holder may
provide to the Company in accordance with this Section.

                  14.  Warrant  Agent.  The Company shall serve as warrant agent
under this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent.  Any corporation  into which the Company or any new
warrant agent may be merged or any corporation  resulting from any consolidation
to  which  the  Company  or any  new  warrant  agent  shall  be a  party  or any
corporation   to  which  the  Company  or  any  new  warrant   agent   transfers
substantially all of its corporate trust or shareholders services business shall
be a successor  warrant  agent under this  Warrant  without any further act. Any
such  successor  warrant agent shall  promptly cause notice of its succession as
warrant agent to be mailed (by first class mail,  postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.

                  15.      Miscellaneous.

                           (a)      This  Warrant  shall be  binding  on and
inure to the benefit of the parties hereto and their  respective  successors and
assigns.  This Warrant may be amended only in writing  signed by the Company and
the Holder and their successors and assigns.

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<PAGE>

                           (b)      Subject to Section 15(a),  above,  nothing
in this Warrant  shall be construed to give to any person or  corporation  other
than the Company and the Holder any legal or  equitable  right,  remedy or cause
under this Warrant.  This Warrant shall inure to the sole and exclusive  benefit
of the Company and the Holder.

                           (c)      The corporate laws of the State of Delaware
shall govern all issues  concerning  the relative  rights of the Company and its
stockholders.  All  other  questions  concerning  the  construction,   validity,
enforcement  and  interpretation  of  this  Warrant  shall  be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.  The Company
and the Holder hereby  irrevocably  submit to the exclusive  jurisdiction of the
state and federal courts sitting in the City of New York,  borough of Manhattan,
for the adjudication of any dispute hereunder or in connection  herewith or with
any transaction  contemplated hereby or discussed herein, and hereby irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally subject to the jurisdiction of any such court, or that
such suit, action or proceeding is improper.  Each of the Company and the Holder
hereby  irrevocably  waives personal  service of process and consents to process
being served in any such suit,  action or proceeding by receiving a copy thereof
sent to the  Company  at the  address  in effect  for  notices  to it under this
instrument  and agrees that such service shall  constitute  good and  sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.

                           (d)      The headings  herein are for  convenience
only, do not  constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.

                           (e)      In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable  in any respect,  the validity
and  enforceability  of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired  thereby and the parties  will attempt in
good  faith to agree upon a valid and  enforceable  provision  which  shall be a
commercially  reasonable  substitute  therefor,  and  upon  so  agreeing,  shall
incorporate such substitute provision in this Warrant.

                           (f)      The Holder of this  Warrant  shall  have no
rights as a stockholder  of the Company in respect of Warrant Shares as to which
this Warrant shall not have been exercised and payment made as herein provided.

                           (g)  The Holder of this Warrant is subject to certain
trading and other limitations  contained in of the Securities Purchase Agreement
of the Company dated as of July 31, 2000.

                  16. A Holder may not exercise  this Warrant to the extent such
exercise  would  result in the  Holder,  together  with any  affiliate  thereof,
beneficially  owning (as  determined  in  accordance  with Section  13(d) of the
Exchange Act and the rules  promulgated  thereunder)  in excess of 4.999% of the
then issued and outstanding  shares of Common Stock,  including shares of Common
Stock  issuable upon such exercise and held by such Holder after

                                       9
<PAGE>

application of this Section. Since the Holder will not be obligated to report to
the Company  the number of shares of Common  Stock it may hold at the time of an
exercise hereunder, unless the exercise at issue would result in the issuance of
shares of Common  Stock in  excess of 4.999% 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 Holder shall have
the authority and obligation to determine  whether the restriction  contained in
this Section will limit any particular exercise hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies, the
determination  of which  portion  of this  Warrant is  exercisable  shall be the
responsibility  and obligation of the Holder. If the Holder has delivered a Form
of Election to Purchase for a number of Warrant  Shares that would result in the
issuance  in excess of the  permitted  amount  hereunder,  and the Company is so
aware of such result, the Company shall notify the Holder of this fact and shall
honor the  exercise  for the maximum  portion of this  Warrant  permitted  to be
exercised  on such Date of Exercise  in  accordance  with the periods  described
herein and  disregard  the balance of such Form of Election to  purchase,  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 Company. Other Holders shall be unaffected by any such waiver. The
Company shall not be liable in damages or otherwise for any failure to so notify
the Holder.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                       10
<PAGE>

                  IN WITNESS WHEREOF,  the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.

                                    GENERAL DATACOMM INDUSTRIES, INC.

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

                                       11

<PAGE>

                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To General DataComm Industries, Inc.:

         In accordance  with the Warrant  enclosed with this Form of Election to
Purchase,  the undersigned hereby  irrevocably elects to purchase  _____________
shares  of  common  stock,  $.10  par  value  per  share,  of  General  DataComm
Industries,  Inc. (the "Common Stock") and , if such Holder is not utilizing the
cashless  exercise  provisions  set  forth in this  Warrant,  encloses  herewith
$________  in cash,  certified  or  official  bank  check or  checks,  which sum
represents  the  aggregate  Exercise  Price (as defined in the  Warrant) for the
number of shares of Common  Stock to which  this Form of  Election  to  Purchase
relates,  together with any applicable taxes payable by the undersigned pursuant
to the Warrant.

         The  undersigned  requests that  certificates  for the shares of Common
Stock issuable upon this exercise be issued in the name of

                        PLEASE INSERT SOCIAL SECURITY OR
                            TAX IDENTIFICATION NUMBER

                         (Please print name and address)

         If the number of shares of Common  Stock  issuable  upon this  exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed  Warrant,  the undersigned  requests
that a New Warrant (as defined in the Warrant)  evidencing the right to purchase
the shares of Common  Stock not  issuable  pursuant  to the  exercise  evidenced
hereby be issued in the name of and delivered to:

                                           (Please print name and address)

Dated:            ,                 Name of Holder:

                                   (Print)
                                   (By:)
                                   (Name:)
                                   (Title:)
                                   (Signature  must  conform in all  respects
                                    to name of holder as specified
                                    on the face of the Warrant)

                                       12
<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto  ________________________________  the  right  represented  by  the  within
Warrant to  purchase  ____________  shares of Common  Stock of General  DataComm
Industries,   Inc.   to  which  the  within   Warrant   relates   and   appoints
________________  attorney  to  transfer  said  right on the  books  of  General
DataComm Industries, Inc. with full power of substitution in the premises.

Dated:

---------------, ----

                             ---------------------------------------
                            (Signature  must  conform in all respects to name of
                             holder as specified on the face of the Warrant)

                             ---------------------------------------
                                  Address of Transferee
                             ---------------------------------------

                              ---------------------------------------

In the presence of:

--------------------------

                                       13SECURITIES PURCHASE AGREEMENT

                                     Between

                        GENERAL DATACOMM INDUSTRIES, INC.

                                       and

                         THE INVESTORS SIGNATORY HERETO

                            Dated as of July 31, 2000

<PAGE>

         SECURITIES PURCHASE AGREEMENT (this "Agreement"),  dated as of July 31,
2000 among  General  DataComm  Industries,  Inc.,  a Delaware  corporation  (the
"Company"),  and  the  investors  signatory  hereto  (each  such  investor  is a
"Purchaser" and all such investors are, collectively, the "Purchasers").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement,  the  Company  desires  to issue and sell to the  Purchasers  and the
Purchasers,  severally and not jointly, desire to purchase from the Company, the
Company's 5% Cumulative  Convertible  Preferred  Stock (the  "Preferred  Stock")
which Preferred Stock is convertible  into shares of the Company's common stock,
$.10 par value per share (the "Common  Stock"),  and certain other securities of
the Company as more fully described in this Agreement.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged,  the Company and the Purchasers agree
as follows:

                                    ARTICLE I

                                PURCHASE AND SALE

         1.1      The Closing

                  (a) The Closing. Subject to the terms and conditions set forth
in this  Agreement,  the Company shall issue and sell to the  Purchasers and the
Purchasers  shall,  severally  and  not  jointly,  purchase  200,000  shares  of
Preferred  Stock (the  "Shares") for an aggregate  purchase price of $5,000,000.
The closing of the  purchase  and sale of the  Preferred  Stock (the  "Closing")
shall take place at the offices of Robinson  Silverman  Pearce Aronsohn & Berman
LLP  ("Robinson  Silverman"),  1290 Avenue of the Americas,  New York,  New York
10104, or other agreed  location on the date hereof.  The date of the Closing is
hereinafter referred to as the "Closing Date."

                  (b) At the Closing,  the parties  shall deliver or shall cause
to be delivered the  following:  (A) the Company shall deliver to each Purchaser
(1)  stock  certificates  for the  Shares  representing  the  number  of  shares
indicated below such  Purchaser's  name on the signature page of this Agreement,
registered in the name of such Purchaser,  (2) a Common Stock purchase  warrant,
in the form of Exhibit A, registered in the name of such Purchaser,  pursuant to
which such  Purchaser  shall  have the right to acquire  the number of shares of
Common Stock indicated below such Purchaser's name on the signature page of this
Agreement (each, a " Warrant" and  collectively  the "Warrants"),  (3) the legal
opinion  of  Weisman  Celler  Spett &

                                       2
<PAGE>

Modlin,  P.C.,  counsel to the Company,  substantially in the form of Exhibit B,
and (4) all other documents,  instruments and writings  required to be delivered
at or prior to the Closing by the Company pursuant to this Agreement, including,
without limitation,  an executed  Registration Rights Agreement,  dated the date
hereof,  among the  Company  and the  Purchasers,  in the form of Exhibit C (the
"Registration  Rights Agreement"),  and the Transfer Agent Instructions,  in the
form of Exhibit D,  delivered to the  Company's  transfer  agent (the  "Transfer
Agent Instructions") and (B) each Purchaser shall deliver to the Company (1) the
purchase price  indicated below such  Purchaser's  name on the signature page to
this Agreement in United States dollars in immediately  available  funds by wire
transfer to an account  designated  for such  purpose in writing by the Company,
and (2) all documents,  instruments and writings required to have been delivered
at or  prior  to the  Closing  by such  Purchaser  pursuant  to this  Agreement,
including, without limitation, an executed Registration Rights Agreement.

                  1.2 Terms of Preferred  Stock.  The Preferred Stock shall have
the  rights,  preferences  and  privileges  set forth in Exhibit E, and shall be
incorporated into a Certificate of The Powers, Designation,  Preferences, Rights
And Limitations (the  "Certificate of  Designation")  which shall be filed on or
prior to the Closing Date with the  Secretary of State of Delaware,  in form and
substance mutually agreed to by the parties.

                  1.3 Certain  Defined  Terms.  For purposes of this  Agreement,
"Trading Day" shall have the meaning set forth in Exhibit E and  "Business  Day"
shall mean any day except Saturday,  Sunday and any day which shall be a federal
legal holiday or a day on which banking institutions in the State of New York or
the State of  Connecticut  generally are  authorized or required by law or other
governmental  action to close.  A "Person"  means an individual or  corporation,
partnership,  trust, incorporated or unincorporated association,  joint venture,
limited  liability  company,  joint stock  company,  government (or an agency or
subdivision thereof) or other entity of any kind.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

                  2.1      Representations  and  Warranties  of the Company
The Company  hereby makes the following representations and warranties to the
Purchasers:

                   (a)  Organization  and   Qualification.   The  Company  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Delaware,  with the requisite corporate power and authority
to own and use its  properties  and  assets  and to  carry  on its  business  as
currently conducted.  The Company has no subsidiaries other than as set forth in
Schedule 2.1(a) (collectively, the "Subsidiaries").  Each of the Subsidiaries is
an entity,  duly  incorporated or otherwise  organized,  validly existing and in
good  standing  under  the  laws of the  jurisdiction  of its  incorporation  or
organization (as applicable),  with the requisite power and authority to own and
use its  properties  and  assets  and to  carry  on its  business  as  currently
conducted.  Each of the Company and the  Subsidiaries  is duly  qualified

                                       3
<PAGE>

to do  business  and is in  good  standing  as a  foreign  corporation  in  each
jurisdiction in which the nature of the business  conducted or property owned by
it makes  such  qualification  necessary,  except  where  the  failure  to be so
qualified  or in good  standing,  as the case may be,  would not  reasonably  be
expected  to,  individually  or in  the  aggregate,  (x)  adversely  affect  the
legality, validity or enforceability of the Securities (as defined below) or any
of this  Agreement,  the  Registration  Rights  Agreement,  the  Certificate  of
Designation, the Transfer Agent Instructions or the Warrants (collectively,  the
"Transaction Documents"), (y) have or result in a material adverse effect on the
results of  operations,  assets,  or financial  condition of the Company and the
Subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to
perform  fully on a timely basis its  obligations  under any of the  Transaction
Documents (any of (x), (y) or (z), a "Material  Adverse  Effect").  Wherever the
term Material  Adverse  Effect is used it shall mean a Material  Adverse  Effect
affecting the Company and its Subsidiaries, taken as a whole.

                  (b) Authorization;  Enforcement. The Company has the requisite
corporate  power and authority to enter into and to consummate the  transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations  thereunder.  The execution and delivery of each of the  Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby have been duly  authorized by all necessary  action on the
part of the Company and no further  action is required by the  Company.  Each of
the  Transaction  Documents  has been duly  executed  by the Company  and,  when
delivered or filed,  as the case may be, in  accordance  with the terms  hereof,
will  constitute  the valid and binding  obligation  of the Company  enforceable
against the Company in  accordance  with its terms.  Neither the Company nor any
Subsidiary  is  in  violation  of  any  of  the  provisions  of  its  respective
certificate  of  incorporation,  by-laws  or  other  charter  or  organizational
documents.

                  (c)  Capitalization  The  number  of  authorized,  issued  and
outstanding  capital  stock of the  Company as of July 20,  2000 is set forth in
Schedule  2.1(c).  Except as  disclosed  in Schedule  2.1(c),  the Company  owns
directly or  indirectly  all of the capital stock and  membership  units of each
Subsidiary.  No  securities of the Company are entitled to preemptive or similar
rights, nor is any holder of securities of the Company entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company by
virtue of any of the Transaction  Documents.  Except as a result of the purchase
and sale of the  Securities,  and except as disclosed in Schedule 2.1(c) and the
SEC  Reports,  there are no  outstanding  options,  warrants,  script  rights to
subscribe to, calls or commitments of any character  whatsoever  relating to the
Common Stock, or rights or obligations  convertible into or exchangeable for, or
giving any Person any right to  subscribe  for or acquire,  any shares of Common
Stock, or contracts,  commitments,  understandings, or arrangements by which the
Company is or may become bound to issue  additional  shares of Common Stock,  or
securities or rights convertible or exchangeable into shares of Common Stock. To
the  knowledge  of the  Company,  except as  specifically  disclosed  in the SEC
Reports  (as  defined  below)  or  Schedule  2.1(c)  or as  contemplated  by the
Transaction  Documents,  no Person or group of related Persons beneficially owns
(as determined  pursuant to Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")),  or has the right to

                                       4
<PAGE>

acquire, by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the Common Stock.

                   (d)  Issuance  of the  Securities  The  Securities  are  duly
authorized and, when issued and paid for in accordance with the terms hereof and
thereof, will be duly and validly issued, fully paid and nonassessable, free and
clear of all liens,  encumbrances  (other than as set forth in Article  III) and
rights of first  refusal of any kind  (collectively,  "Liens").  The Company has
reserved  a number  of duly  authorized  shares of  Common  Stock  for  issuance
hereunder  upon  conversion of the Preferred  Stock and exercise of the Warrants
that equals the sum of the Maximum Issuable Shares as defined in Section 3.5, to
be issued (i) on conversion of the Preferred  Stock;  (ii) the 200,000 shares of
Common Stock issuable upon exercise in full of the Warrants and (iii) payment of
Common Stock and not cash  dividends on all  quarterly  dividends on the Shares.
The shares of Common  Stock  issuable  upon  conversion  of and upon  payment of
dividends on the Shares and exercise of the Warrants are  collectively  referred
to  herein  as the  "Underlying  Shares."  The  Shares,  the  Warrants  and  the
Underlying Shares are collectively referred to herein as, the "Securities."

                  (e) No Conflicts The  execution,  delivery and  performance of
the Transaction  Documents by the Company and the consummation by the Company of
the  transactions  contemplated  hereby  and  thereby  do  not  and  subject  to
applicable  Delaware Law will not (i) conflict  with or violate any provision of
the Company's or any  Subsidiary's  articles or  certificate  of  incorporation,
bylaws or other charter documents (each as amended through the date hereof),  or
(ii) subject to obtaining the Required  Approvals (as defined  below),  conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment,  acceleration or cancellation (with or without notice,  lapse of time
or  both)  of,  any  agreement,   credit  facility,  debt  or  other  instrument
(evidencing a Company or Subsidiary  debt) or other  understanding  to which the
Company or any  Subsidiary  is a party or by which any  property or asset of the
Company or any  Subsidiary is bound or affected,  or (iii) result in a violation
of any law,  rule,  regulation,  order,  judgment,  injunction,  decree or other
restriction of any court or  governmental  authority to which the Company or any
Subsidiary  is  subject   (including  federal  and  state  securities  laws  and
regulations),  or by which  any  property  or asset of the  Company  is bound or
affected;  except in the case of each of clauses  (ii) and  (iii),  as would not
reasonably be expected to, individually or in the aggregate, have or result in a
Material  Adverse Effect.  The business of the Company is not being conducted in
violation of any law,  ordinance or  regulation of any  governmental  authority,
except  for  violations  which,  individually  or in the  aggregate,  would  not
reasonably be expected to have or result in a Material Adverse Effect.

                  (f) Filings,  Consents and Approvals.  Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or  registration  with,  any court or
other federal,  state, local or other governmental  authority or other Person in
connection  with the execution,  delivery and  performance by the Company of the
Transaction Documents,  other than (i) the filings required pursuant to Sections
1.2 and 3.7, (ii) the filing with the  Securities and Exchange  Commission

                                       5
<PAGE>

(the  "Commission")  of a registration  statement  meeting the  requirements set
forth in the Registration Rights Agreement and covering the resale of the Shares
and the Underlying Shares by the Purchasers (the "Underlying Shares Registration
Statement"),  (iii) the  application(s)  to the New York Stock Exchange ("NYSE")
for the maximum  permitted  listing of the Underlying  Shares for trading on the
NYSE in the time and manner required thereby,  (iv) applicable Blue Sky filings,
(v) the consent of  Foothill  Capital  Corporation  lending  group or  successor
thereto if shares of Preferred  Stock are redeemed or dividends are paid thereon
in cash,  and (vi) in all other cases where the failure to obtain such  consent,
waiver,  authorization  or order,  or to give such notice or make such filing or
registration  would  not,   reasonably  be  expected  to,  have  or  result  in,
individually or in the aggregate, a Material Adverse Effect (the items described
in clauses (i)-(v) are collectively, the "Required Approvals").

                   (g) Litigation;  Proceedings.  Except as specified in the SEC
Reports, there is no action, suit, inquiry,  notice of violation,  proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting  the  Company or any of its  Subsidiaries  or any of their  respective
properties  before or by any court,  arbitrator,  governmental or administrative
agency or  regulatory  authority  (federal,  state,  county,  local or  foreign)
(collectively,  an  "Action")  which (i)  adversely  affects or  challenges  the
legality,  validity or enforceability of any of the Transaction Documents or the
Securities  or (ii) would,  reasonably  be expected to,  individually  or in the
aggregate, have or result in a Material Adverse Effect.

                  (h) No Default  or  Violation.  Neither  the  Company  nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived  except as set forth in Schedule  2.1(h)  which,  with
notice or lapse of time or both, would result in a default by the Company or any
Subsidiary  under), nor has the Company received notice of a claim that it is in
default  under or that it is in  violation  of,  any  indenture,  loan or credit
agreement or any other agreement or instrument for borrowed money to which it is
a party or by which it or any of its  properties  is bound  (whether or not such
default or violation has been waived),  (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, except as would not reasonably
be expected to,  individually or in the aggregate,  have or result in a Material
Adverse Effect.

                  (i)   Private   Offering   Assuming   the   accuracy   of  the
representations   and  warranties  of  the  Purchasers  set  forth  in  Sections
2.2(b)-(g),  the offer, issuance and sale of the Securities to the Purchasers as
contemplated  hereby,  are  exempt  from the  registration  requirements  of the
Securities Act of 1933, as amended (the "Securities  Act").  Neither the Company
nor any Person  acting on its behalf  has taken or is, to the  knowledge  of the
Company,  contemplating  taking any action  which could  subject  the  offering,
issuance  or sale of the  Securities  to the  registration  requirements  of the
Securities  Act including  soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.

                  (j) SEC Reports;  Financial  Statements  The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act for the two years

                                       6
<PAGE>

preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively  referred
to  herein  as the  "SEC  Reports"  and,  together  with the  Schedules  to this
Agreement the "Disclosure  Materials") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material  respects with the  requirements  of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder,  and none of the SEC  Reports,  when  filed,  contained  any  untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under which they were made,  not  misleading.  All  material
agreements to which the Company is a party or to which the property or assets of
the  Company are subject  which were  required  under the  Securities  Act,  the
Exchange Act or the rules or  regulations  promulgated  thereunder  to have been
filed with the  Commission  have been filed as exhibits to the SEC Reports.  The
financial  statements of the Company  included in the SEC Reports  comply in all
material  respects with  applicable  accounting  requirements  and the rules and
regulations of the Commission  with respect  thereto as in effect at the time of
filing.  Such  financial  statements  have  been  prepared  in  accordance  with
generally accepted accounting principles applied on a consistent basis ("GAAP"),
during  the  periods  involved  except  as may be  otherwise  specified  in such
financial  statements or the notes  thereto,  and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
year-end  audit  adjustments.  Since  March 31,  2000,  except  as  specifically
disclosed  in the SEC  Reports  (a)  there  has  been no  event,  occurrence  or
development  that has or that  would  reasonably  be  expected  to,  result in a
Material  Adverse  Effect,  (b) the Company  has not  incurred  any  liabilities
(contingent or otherwise)  other than (w) ongoing  discussions from time to time
with its secured lenders for additional  financing,  (x) liabilities incurred in
the  ordinary  course  of  business   consistent  with  past  practice  and  (y)
liabilities not required to be reflected in the Company's  financial  statements
pursuant  to  GAAP  or  required  to be  disclosed  in  filings  made  with  the
Commission,  (c) the Company has not  altered  its method of  accounting  or the
identity  of its  auditors,  and (d) the  Company  has not  declared or made any
payment  or  distribution  of cash or  other  property  to its  stockholders  or
officers  or  directors  (other than grant of stock  purchase  options and stock
options or dividends  payable  pursuant to currently  outstanding  shares of the
Company's  preferred  stock) with respect to its capital  stock,  or  purchased,
redeemed  (or made any  agreements  to  purchase  or  redeem)  any shares of its
capital stock.

                  (k)      Investment  Company.  The  Company is not and is not
an  Affiliate  (as  defined  in Rule  405  under  the  Securities  Act)  of,  an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended.

                                       7

<PAGE>

                  (l) Certain Fees No fees or commissions will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment  banker,  bank or other  Person,  with  respect  to the  transactions
contemplated by this Agreement  except  reimbursement of expenses to RAM Capital
Resources  L.L.C. . The Purchasers  shall have no obligation with respect to any
fees or with  respect  to any claims  made by or on behalf of any other  Persons
claiming to act on the Company's behalf, for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by this
Agreement  except RAM Capital  Resources  L.L.C. The Company shall indemnify and
hold harmless the Purchasers, their employees,  officers, directors, agents, and
partners, and their respective Affiliates,  from and against all claims, losses,
damages,  costs  (including  the costs of preparation  and attorney's  fees) and
expenses  suffered in respect of any claimed or  existing  fees of such  Persons
claiming to act on the Company's behalf, as such fees and expenses are incurred.

                  (m)      Solicitation  Materials.  Neither  the Company  nor
any Person acting on the Company's behalf has solicited any offer to buy or sell
the Securities by means of any form of general solicitation or advertising.

                  (n) Form S-3 Eligibility.  The Company is eligible to register
its Common Stock for resale under Form S-3  registration  statement  promulgated
under the Securities Act.

                  (o) Listing and Maintenance Requirements. The Company has not,
in the two years  preceding the date hereof,  received  notice (written or oral)
from the NYSE or any other stock exchange,  market or trading  facility on which
the Common  Stock is or has been listed (or on which it has been  quoted) to the
effect that the  Company is not in  compliance  with the listing or  maintenance
requirements of such exchange,  market or trading facility.  The Company is, and
has no reason to believe that it will not in the foreseeable  future continue to
be, in compliance with all such listing and maintenance requirements.

                    (p) Registration Rights; Rights of Participation.  Except as
set forth on Schedule 6(b) to the Registration Rights Agreement, the Company has
not granted or agreed to grant to any Person any rights (including  "piggy-back"
registration  rights) to have any securities of the Company  registered with the
Commission or any other governmental authority which has not been satisfied.  No
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to  participate  in the  transactions  contemplated  by the
Transaction Documents.

                  (q)  Regulatory  Permits.  The  Company  and its  Subsidiaries
possess all certificates,  authorizations  and permits issued by the appropriate
Federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses as described in the SEC Reports,  except where failure to
possess such permits would not reasonably be expected to, individually or in the
aggregate,  have or result in a Material Adverse Effect (the "Material Permits")
and  neither  the Company nor any such  Subsidiary  has  received  any notice of
proceedings relating to the revocation or modification of any Material Permit.

                                       8
<PAGE>

                                    (r)      Absence  of  Certain  Proceedings.
Except  as  described  in the SEC  Reports,  (i)  neither  the  Company  nor any
Subsidiary,  nor any director or officer thereof,  is or has been the subject of
any Action  involving (A) a claim of violation of or liability  under federal or
state  securities  laws or (B) a claim of breach  of  fiduciary  duty;  (ii) the
Company does not have pending before the Commission any request for confidential
treatment of  information  and the Company has no knowledge of any expected such
request  that would be made prior to the  Effectiveness  Date (as defined in the
Registration Rights Agreement); and (iii) there has not been, and to the best of
the Company's knowledge there is not pending or contemplated,  any investigation
by the  Commission  involving  the Company or any current or former  director or
officer of the Company.

                  (s) Disclosure.  The Company  confirms that neither it nor any
Person  acting on its behalf has provided any of the  Purchasers or their agents
or counsel with any information that  constitutes or might  constitute  material
non-public information except for the offering of the Securities hereunder.  The
Company  understands  and confirms that the  Purchasers  shall be relying on the
foregoing  representations  in  effecting  transactions  in  securities  of  the
Company.  All disclosure provided to the Purchasers  regarding the Company,  its
business and the transactions  contemplated  hereby,  including the Schedules to
this Agreement, furnished by or on behalf of the Company are true and correct in
all material respects and do not contain any untrue statement of a material fact
or omit to state any material  fact  necessary  in order to make the  statements
made  therein,  in light of the  circumstances  under which they were made,  not
misleading.

         The Purchasers  acknowledge and agree that the Company has not made any
other   representations   and  warranties  with  respect  to  the   transactions
contemplated hereby other than those specifically set forth in this Section 2.1.

         2.2      Representations  and Warranties of the Purchasers.
Each Purchaser  hereby,  for itself and for no other  Purchaser,  represents and
warrants to the Company as follows:

                  (a) Organization;  Authority. Such Purchaser is an entity duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization with the requisite  corporate or partnership or
other  power and  authority  to enter into and to  consummate  the  transactions
contemplated  by the  Transaction  Documents  and  otherwise  to  carry  out its
obligations  thereunder.  The  purchase  by  such  Purchaser  of the  Securities
hereunder has been duly  authorized by all necessary  action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly  executed  by such  Purchaser,  and when  delivered  by such  Purchaser  in
accordance with the terms hereof,  will constitute the valid and legally binding
obligation of such  Purchaser,  enforceable  against it in  accordance  with its
terms.

                  (b)      Investment Intent.  Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for  distributing  or reselling  such  Securities  or any part
thereof,  without prejudice,  however,  to

                                       9
<PAGE>

such  Purchaser's  right,  subject to the  provisions of this  Agreement and the
Registration Rights Agreement,  at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective  registration  statement
under the Securities Act and in compliance with applicable federal,  foreign and
state  securities  laws or under an exemption  from such  registration.  Nothing
contained herein shall be deemed a representation  or warranty by such Purchaser
to hold  Securities  for any set  amount  of time  except as above  provided  if
registered or sold pursuant to applicable exemption from registration.

                  (c) Purchaser  Status.  At the time such Purchaser was offered
the Securities,  it was, and at the date hereof it is, and at each exercise date
under the Warrants and/or  conversion of the Shares,  it will be, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.

                  (d) Experience of Such Purchaser. Such Purchaser, either alone
or together with its  representatives,  has such knowledge,  sophistication  and
experience in business and  financial  matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

                   (e)     Ability of  Purchaser  to Bear Risk of  Investment.
Such  Purchaser  is able to  bear  the  economic  risk of an  investment  in the
Securities  and, at the present  time, is able to afford a complete loss of such
investment.

                  (f) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure  Materials and has been afforded (i) the opportunity
to ask such  questions  as it has deemed  necessary  of, and to receive  answers
from,  representatives of the Company concerning the terms and conditions of the
offering  of the  Securities  and the  merits  and  risks  of  investing  in the
Securities;  (ii) access to  information  about the  Company  and the  Company's
financial condition, results of operations, business, properties, management and
prospects  sufficient  to enable it to evaluate  its  investment;  and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without  unreasonable effort or expense that is necessary to make an
informed  investment  decision  with  respect to the  investment.  Neither  such
inquiries  nor  any  other  investigation  conducted  by or on  behalf  of  such
Purchaser or its  representatives or counsel shall modify,  amend or affect such
Purchaser's  right  to rely  on the  truth,  accuracy  and  completeness  of the
Disclosure Materials and the Company's  representations and warranties contained
in the Transaction Documents.

                  (g) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other  communication  regarding  the  Securities  published  in  any  newspaper,
magazine or similar media or broadcast over  television or radio or presented at
any seminar or any other general solicitation or general advertisement.

                  (h) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without  registration  under
the Securities Act in a private  placement that is exempt from the  registration
provisions of the Securities Act and (ii)

                                       10
<PAGE>

the  availability  of such  exemption,  depends in part on, and the Company will
rely upon the accuracy and  truthfulness of, the foregoing  representations  and
such Purchaser hereby consents to such reliance.

                  (i)  Certain   Fees.   Except  for  certain  fees  payable  by
Purchasers  to RAM Capital  Resources  L.L.C.,  no fees or  commissions  will be
payable by such  Purchaser  to any  broker,  financial  advisor  or  consultant,
finder,  placement agent,  investment banker, bank or other Person, with respect
to the  transactions  contemplated by this Agreement.  The Company shall have no
obligation  with respect to any fees or with respect to any claims made by or on
behalf of other Persons claiming to act on the Purchasers' behalf, for fees of a
type  contemplated  in this  Section  that  may be due in  connection  with  the
transactions  contemplated by this Agreement. Such Purchaser shall indemnify and
hold harmless the Company,  its  employees,  officers,  directors,  agents,  and
partners, and their respective Affiliates,  from and against all claims, losses,
damages,  costs  (including  the costs of preparation  and attorney's  fees) and
expenses  suffered  in respect  of any such  claimed  or  existing  fees of such
Persons  claiming to act on such Purchaser's  behalf,  as such fees and expenses
are incurred.

The  Company  acknowledges  and agrees that no  Purchaser  makes or has made any
other   representations   and  warranties  with  respect  to  the   transactions
contemplated hereby other than those specifically set forth in this Section 2.2.

                                   ARTICLE III

                         OTHER AGREEMENTS OF THE PARTIES

         3.1 Transfer  Restrictions.  (a) Purchasers  acknowledge and agree that
the  Securities  may only be disposed of pursuant to an  effective  registration
statement  under the Securities  Act, to the Company or pursuant to an available
exemption from or in a transaction not subject to the registration  requirements
of the Securities Act, and in compliance  with any applicable  federal and state
securities  laws.  In  connection  with any  transfer of  Securities  other than
pursuant to an effective  registration  statement  or to the Company,  except as
otherwise set forth herein,  the Company may require the  transferor  thereof to
provide to the  Company an opinion of counsel  selected by the  transferor,  the
form and  substance of which opinion  shall be  reasonably  satisfactory  to the
Company,  to the effect that such transfer does not require  registration  under
the Securities  Act or applicable  foreign and state laws.  Notwithstanding  the
foregoing,  the Company,  hereby consents to and agrees to register on the books
of the Company and with any transfer  agent for the  securities  of the Company,
any transfer of Securities  by a Purchaser to an Affiliate of such  Purchaser or
to one or more funds or  managed  accounts  under  common  management  with such
Purchaser,  and any transfer  among any such  Affiliates or one or more funds or
managed accounts,  provided that the transferee certifies to the Company that it
is an  "accredited  investor" as defined in Rule 501(a) under the Securities Act
and that it is acquiring the Securities solely for investment  purposes (subject
to the qualifications  hereof). As a condition of transfer, the Purchasers shall
deliver  a  certificate   of  compliance   and,  if  requested,   legal  opinion
satisfactory to Company to such transfer and any such transferee  shall agree in
writing to be bound by the terms of this  Agreement and shall

                                       11
<PAGE>

have the rights of a Purchaser under this Agreement and the Registration  Rights
Agreement.

                  (b)      The Purchasers  agree to the imprinting,  so long as
is required by this Section 3.1(b), of the following legend on the Securities:

                  NEITHER THESE  SECURITIES NOR THE SECURITIES  INTO WHICH THESE
         SECURITIES (ARE EXERCISABLE) (OR CONVERTIBLE) HAVE BEEN REGISTERED WITH
         THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES  COMMISSION OF
         ANY STATE IN RELIANCE  UPON AN EXEMPTION  FROM  REGISTRATION  UNDER THE
         SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  AND,
         ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR  PURSUANT  TO AN
         AVAILABLE  EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT  SUBJECT TO, THE
         REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         APPLICABLE STATE SECURITIES LAWS.

                    The Underlying Shares shall not contain the legend set forth
above nor any other legend, if the conversion of Shares and exercise of Warrants
or  other  issuance  of  Underlying  Shares  as  contemplated   hereby,  by  the
Certificate  of  Designation  or the  Warrants  occurs  at  any  time  while  an
Underlying  Shares  Registration  Statement  with respect to such  Securities is
effective  under the  Securities  Act,  (and the  Company has not  notified  the
Purchasers that the Underlying Shares Registration  Statement is not accurate in
all material respects,  which notification has not been subsequently rescinded),
or, in the event there is not such an effective  Underlying Shares  Registration
Statement,  at such  time,  if such  legend  is not  required  under  applicable
requirements  of the  Securities  Act (including  judicial  interpretations  and
pronouncements  issued by the staff of the Commission).  The Company shall cause
its  counsel  to  issue  the  legal  opinion  included  in  the  Transfer  Agent
Instructions  to the  Company's  transfer  agent on the day that the  Underlying
Shares  Registration  Statement  is declared  effective by the  Commission  (the
"Effective  Date").  The Company agrees that if any Underlying Shares are issued
with a legend in accordance with this Section 3.1(b),  it will,  within five (5)
Business  Days after  request  therefor by a Purchaser and the surrender by such
Purchaser of the  certificate  representing  the applicable  Underlying  Shares,
cause its  transfer  agent to  provide  such  Purchaser  with a  certificate  or
certificates  representing  such Underlying  Shares or issuance  thereof in book
entry  form,  free  from such  legend  at such time as such  legend is no longer
required under this Section 3.1(b). The Company may not make any notation on its
records or give  instructions to any transfer agent of the Company which enlarge
the restrictions of transfer set forth in this Section.

         3.2  Acknowledgment  of  Dilution.  The Company  acknowledges  that the
issuance of Underlying  Shares upon  conversion of the Preferred  Stock and upon
exercise of the Warrants  will result in dilution of the  outstanding  shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further  acknowledges that its obligation to issue Underlying Shares
upon  conversion  of the  Preferred  Stock  and upon

                                       12
<PAGE>

exercise of the  Warrants  pursuant to the terms  thereof is  unconditional  and
absolute  regardless  of the  effect of any such  dilution  except as  otherwise
limited by law or the NYSE.

         3.3  Furnishing  of   Information.   As  long  as  the  Purchasers  own
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange Act. So long as the  Purchasers own  Securities,  if the Company is not
required to file reports  pursuant to such laws,  it will prepare and furnish to
the  Purchasers  and make  publicly  available  in  accordance  with Rule 144(c)
promulgated  under the Securities  Act, such  information as is required for the
Purchasers  to  sell  the  Securities  under  Rule  144  promulgated  under  the
Securities  Act. The Company  further  covenants  that it will take such further
action as any holder of Securities  may  reasonably  request,  all to the extent
required  from time to time to enable  such  holder  to sell  Underlying  Shares
without  registration  under the  Securities  Act within the  limitation  of the
exemptions  provided by Rule 144 promulgated under the Securities Act, including
the legal opinion  referenced above in Section 3.1. Upon the request of any such
Person,  the Company  shall  deliver to such Person a written copy of its recent
SEC filing  disclosing  such  compliance or  certification  of a duly authorized
officer as to whether it has complied with such requirements.

         3.4 Integration.  The Company shall not, and shall use its best efforts
to ensure  that,  no  Affiliate of the Company  shall,  sell,  offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in Section 2 of the  Securities  Act) that would be integrated  with the
offer or sale of the Securities in a manner that would require the  registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of the NYSE.

         3.5 Reservation and Listing of Underlying Shares. (a) The Company shall
(i) within  three (3)  Business  Days  following  the Closing Date in the manner
required  by the  NYSE,  prepare  and file  with the NYSE an  additional  shares
listing application covering 19.9999% of its outstanding Common Stock as of July
20, 2000 for Underlying Shares of Common Stock (the "Maximum Issuable  Shares"),
(ii) take all  steps  necessary  to cause  such  shares  of  Common  Stock to be
approved  for  listing  on the NYSE as soon as  possible  thereafter,  and (iii)
provide to the  Purchasers  evidence  of such  listing,  and the  Company  shall
maintain  the listing of its Common  Stock  thereon.  If the Company  shall have
obtained   stockholder  approval  referred  to  in  Section  (D)(10)(c)  of  the
Certificate  of  Designation,  it  will,  within  two (2)  Business  Days  after
obtaining such stockholder  approval,  file with the NYSE a listing  application
covering such additional approved Underlying Shares.

                  (b) The Company  shall  maintain a reserve of shares of Common
Stock for issuance upon  conversion of and payment of dividends  upon the Shares
and upon exercise in full of the Warrants in accordance with the Preferred Stock
and Warrants,  in such amount as may be required to fulfill its  obligations  in
full under the  Certificate  of  Designation  and  Warrants,  subject to Section
(D)(10)(c) of the  Certificate of Designation  which reserve shall equal no less
than the Maximum Issuable Shares.

                                       13
<PAGE>

         3.6 Conversion and Exercise Procedures. The Transfer Agent Instructions
and Form of Election to Purchase  under the Warrants and  conversion  procedures
set forth in the  Certificate  of  Designation  set forth  the  totality  of the
procedures  with respect to the exercise of the Warrants and  conversion  of the
Shares,  including  the form of  legal  opinion,  if  necessary,  that  shall be
rendered  to the  Company's  transfer  agent  and  such  other  information  and
instructions as may be reasonably necessary to enable the Purchasers to exercise
the Warrants and convert the Shares.

         3.7 Certain Securities Laws Disclosures;  Publicity. The Company shall:
(i) as soon as  practicable  on or after the Closing Date, but no later than one
(1) week  unless the  Company  chooses to combine  such press  release  with its
earnings release on August 3, 2000, issue a press release reasonably  acceptable
to the Purchasers  disclosing the transactions  contemplated  hereby,  (ii) file
with the Commission a Report on Form 8-K or Form 10-Q (as applicable) disclosing
the  transactions  contemplated  hereby  within ten (10) Business Days after the
Closing  Date,  and (iii) timely file with the  Commission a Form D  promulgated
under the Securities Act as required  under  Regulation D promulgated  under the
Securities Act and provide a copy thereof to the  Purchasers  promptly after the
filing thereof and use good faith efforts to provide the Purchasers  with a copy
thereof no less than one (1)  Business  Day prior to filing any such Form D. The
Company and the  Purchasers  shall  consult with each other in issuing any press
releases with respect to the transactions  contemplated hereby and neither party
shall issue any such press release  pertaining to the transactions  contemplated
hereby without the prior written  consent of the other,  which consent shall not
be  unreasonably  withheld or delayed,  except  that no prior  consent  shall be
required  if such  disclosure  is  required  by law  and  such  consent  can not
reasonably  be expected to be  received  prior to the time  required to complete
such filing or make such statement in accordance  with such  applicable  law, in
which such case the  disclosing  party shall  provide the other party with prior
notice of such public statement, filing or other communication.  Notwithstanding
the foregoing,  the Company shall not publicly disclose the name of a Purchaser,
or include the name of a Purchaser  in any filing  with the  Commission,  or any
regulatory  agency,  trading  facility or stock market without the prior written
consent of such  Purchaser,  except to the extent such disclosure is required by
law, in which case the Company shall provide such Purchaser with prior notice of
such disclosure.

         3.8 Use of Proceeds  The Company  shall use the net  proceeds  from the
sale of the  Securities  hereunder  for working  capital  and general  corporate
purposes.

         3. 9     Indemnification

                  (a)  Indemnification  by  the  Company.   The  Company  shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Purchaser and its officers,  directors,  partners,  controlling persons (if
any), employees and agents from and against any and all losses, claims, damages,
liabilities,  costs  (including,  without  limitation,  costs of preparation and
reasonable attorneys' fees) and expenses (collectively,  "Losses"), as

                                       14
<PAGE>

incurred,  arising out of or relating to any breach by the Company of any of the
representations  and  warranties  made by the Company in this  Agreement  or any
other  Transaction  Document,  or the failure of the Company to fully and timely
perform all  covenants to be  performed by it under this  Agreement or any other
Transaction  Document,  other than by reason of the Purchaser's gross negligence
or willful misconduct.

                  (b)  Indemnification by the Purchasers.  Each Purchaser shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
the Company and its officers, directors, partners, controlling persons (if any),
employees and agents from and against any and all Losses,  as incurred,  arising
out of or relating to any breach by such Purchaser of any of the representations
and warranties made by such Purchaser in this Agreement or any other Transaction
Document,  or the  failure of such  Purchaser  to fully and timely  perform  all
covenants to be performed  by it under this  Agreement or any other  Transaction
Document,  other than by reason of the  Company's  gross  negligence  or willful
misconduct.

         3.10 Certain Trading Limitations.  Each Purchaser agrees that until the
expiration of the Closing Warrants by redemption, exercise in full or otherwise,
it will not enter into Short  Sales (as  hereinafter  defined)  in excess of the
amount  permitted by this  Section.  For purposes of this Section 3.10, a "Short
Sale" by a  Purchaser  shall mean a sale of shares of Common  Stock  marked as a
"short sale" at a time when there is no equivalent  offsetting  long position in
the Common Stock then held by such  Purchaser.  For purposes  hereof,  shares of
Common Stock  acquired by a Purchaser  after the Closing Date in the open market
and Shares of Common  Stock  issuable to such  Purchaser  pursuant to  delivered
Elections  to  Convert,  as  defined  in the  Certificate  of  Designation,  and
delivered  Elections to Purchase under the Warrants,  shall be deemed to be held
long by such Purchaser.  The aggregate number of shares of Common Stock that may
be sold by Purchasers in all outstanding  such Short Sales may not exceed in the
aggregate the lesser of (i) such number of shares of Common Stock having a value
equal to 50% of the liquidation  value of the outstanding  Shares,  or (ii) such
number of shares of Common Stock having a value of $2,000,000,  provided however
that  such  number  of  shares  of  Common  Stock  may  have a value of at least
$500,000.  For  purposes of this  Section  3.10,  the value of a share of Common
Stock shall be based on the then Conversion Price of the Shares unless there are
no Shares  outstanding in which event the value of a share of Common Stock shall
be based on the then Exercise Price of the Warrants.

         3.11 9% Cumulative Convertible Exchangeable Preferred Stock. So long as
any of the Shares are  outstanding,  without  the prior  written  consent of the
holders of at least a majority of the Shares  outstanding,  which consent may be
withheld or conditioned in their sole  discretion,  the Company may not exercise
any right  that it may have  under its  Certificate  of  Designation  for its 9%
Cumulative Convertible Exchangeable Preferred Stock to exchange the Company's 9%
Convertible  Subordinated Debentures due 2006 for such 9% Cumulative Convertible
Exchangeable Preferred Stock of the Company.

         3.12 Option on Merger. In the event of a merger of the Company in which
the

                                       15
<PAGE>

Company is not the surviving corporation, then the Purchasers shall have the
option by written  notice to the  Company  within 15 days after  notice from the
Company of a stockholder  meeting  called to approve such merger:  (i) to either
convert its outstanding  Shares, if any, into shares of Common Stock at the then
Conversion  Price therefor (as defined in the  Certificate of  Designation),  or
require  the  surviving  corporation  to redeem  the  Shares at 125% of the then
liquidation  value thereof as provided in Section  (F)(1)of the  Certificate  of
Designation,  on the completion of such merger,  and (ii)to either  exercise the
outstanding  Warrants at the then Exercise Price  thereof,  or the Warrants will
expire at the end of such 15 day period.  Failure to exercise  the above  option
with  respect  to the  Shares  within  such 15 day  period  shall  result in the
automatic  conversion of the outstanding Shares at the then (as of the day after
the last day of such 15 day  period)  Conversion  Price,  and the  Shares  shall
thereafter  be null and void and of no  further  force  and  effect.  Except  as
otherwise  provided  in this  Section  3.12,  the  terms of the  Certificate  of
Designation or Warrants, as the case may be, shall apply to any such conversion,
redemption or exercise.

                                       16

<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS

                  4.1. Except as otherwise set forth in the Registration  Rights
Agreement and except for the payment by the Company of $25,000 at the Closing to
Robinson  Silverman  for  reimbursement  of their  legal  fees and  expenses  in
representing the Purchasers in connection with preparation and/or negotiation of
the  Transaction  Documents,  each party shall pay the fees and  expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party  incident  to the  negotiation,  preparation,  execution,
delivery and  performance  of this  Agreement.  The amount  contemplated  by the
immediately  preceding sentence shall be retained by the Purchasers and wired to
Robinson  Silverman  at the Closing and shall not be delivered to the Company at
the Closing.  The Company  shall pay all stamp and other taxes and duties levied
in connection with the issuance of the Securities.

                  4.2 Entire Agreement;  Amendments.  The Transaction Documents,
together   with  the  Exhibits  and  Schedules   thereto,   contain  the  entire
understanding  of the  parties  with  respect to the subject  matter  hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such  matters,  which the  parties  acknowledge  have been  merged  into such
documents, exhibits and schedules.

                  4.3 Notices.  Any and all notices or other  communications  or
deliveries  required or permitted to be provided  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  Agreement 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 of receipt of  delivery 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  address for such
notices and communications shall be as follows:

         If to the Company:           General DataComm Industries, Inc.
                                      Park Road Extension
                                      Middlebury, Connecticut 06762-1299
                                      Facsimile No.: 203-577-6244
                                      Attn:  Chief Financial Officer

         With copies to:              Weisman Celler Spett & Modlin P.C.
                                      445 Park Avenue
                                      New York, NY 10022
                                      Facsimile No.: (212) 371-5407
                                      Attn: Howard S. Modlin, Esq.

                                       17
<PAGE>

         If to a Purchaser:           To the address set forth under such
                                      Purchaser's    name   on   the
                                      signature pages hereto.

or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.

                  4.7 Amendments; Waivers. No provision of this Agreement may be
waived  or  amended  except in a written  instrument  signed,  in the case of an
amendment,  by both the Company and the  Purchasers or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any  provision,  condition  or  requirement  of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other  provision,  condition or requirement  hereof,  nor shall any delay or
omission of either  party to exercise any right  hereunder in any manner  impair
the exercise of any such right accruing to it thereafter.

                  4.8 Headings. The headings herein are for convenience only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof.

                  4.9  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their  successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder  without the prior written  consent of the  Purchasers.  Except as set
forth in Section 3.1(a),  the Purchasers may not assign this Agreement or any of
the rights or  obligations  hereunder  without the consent of the Company.  This
provision  shall not limit  any  Purchaser's  right to  transfer  securities  or
transfer or assign rights under the Registration Rights Agreement.

                  4.10 No Third-Party Beneficiaries.  This Agreement is intended
for the  benefit of the  parties  hereto  and their  respective  successors  and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.

                  4.11  Governing  Law.  The  corporate  laws  of the  State  of
Delaware shall govern all issues  concerning the relative  rights of the Company
and its stockholders. All other questions concerning the construction, validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York,  without regard to the principles of conflicts of law thereof.  Each party
hereby  irrevocably  submits  to the  exclusive  jurisdiction  of the  state and
federal  courts sitting in the City of New York,  borough of Manhattan,  for the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed herein (including with respect to
the enforcement of any of the  Transaction  Documents),  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit,  action or  proceeding  is improper.  Each party  hereby  irrevocably
waives  personal

                                       18
<PAGE>

service of process and consents to process being served in any such suit, action
or  proceeding  by mailing a copy thereof to such party at the address in effect
for  notices  to it under this  Agreement  and agrees  that such  service  shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

                  4.12 Survival. The representations, warranties, agreements and
covenants  contained  herein  shall  survive the Closing  and the  delivery  and
conversion or exercise of the Shares and the Warrants, as the case may be.

                  4.13 Execution in Counterparts. This Agreement may be executed
in two  or  more  counterparts,  all of  which  when  taken  together  shall  be
considered  one  and  the  same  agreement  and  shall  become   effective  when
counterparts have been signed by each party and delivered to the other party, it
being  understood that both parties need not sign the same  counterpart.  In the
event that any signature is delivered by facsimile transmission,  such signature
shall create a valid and binding  obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.

                  4.14  Severability.  In case any one or more of the provisions
of this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired  thereby and the parties  will attempt to
agree  upon a valid  and  enforceable  provision  which  shall  be a  reasonable
substitute  therefor,  and upon so agreeing,  shall  incorporate such substitute
provision in this Agreement.

                  4.15  Remedies.  In addition to being entitled to exercise all
rights provided  herein or granted by law,  including  recovery of damages,  the
parties  will be entitled to specific  performance  of the  obligations  of each
other under the  Transaction  Documents.  Each of the Company and the Purchasers
agree  that  monetary  damages  may not be  adequate  compensation  for any loss
incurred by reason of any breach of its  obligations  described in the foregoing
sentence and hereby  agrees to waive in any action for specific  performance  of
any such  obligation the defense that a remedy at law would be adequate.  In the
event that the Registration  Statement,  as defined in the  Registration  Rights
Agreement, is not declared effective by the Commission within 180 days following
the  Closing  Date,  and the  Company  has not been  notified  in writing by the
Commission that such failure to declare the Registration  Statement effective is
due to comments  specifically  addressing  violations of the Federal  securities
laws by any  Purchaser  or selling  stockholder  included  in such  Registration
Statement  (including  the  identity  thereof but not of the  structure  of this
transaction  generally),  or in the event the Company's Common Stock is delisted
from  trading on the NYSE and is not listed or traded on any other  exchange  or
market  (including a market made by one or more  brokers),  then so long as such
failure  continues the Purchasers shall have the right to rescind this Agreement
and the  transactions  hereunder ab initio by written  notice under Section 4.3,
and on the  fifth  Business  Day  thereafter,  at a  Closing  held  at  Robinson
Silverman,  the Company shall pay to Purchasers  $5,000,000  and the  Purchasers
shall  deliver to the  Company

                                       19
<PAGE>

the (i) Shares, (ii) any shares of Common Stock issued on conversion thereof and
dividends  thereon and (iii) the  Warrants and any shares of Common Stock issued
upon the exercise of the Warrants,  and the  Registration  Rights  Agreement and
other  Transaction  Documents shall be null and void and shall be  automatically
terminated and the Company shall withdraw such  Registration  Statement.  If the
Purchasers  have  disposed of any Shares or shares of Common  Stock  received on
conversion  or payment of dividends  on the Shares or exercise of the  Warrants,
then  the  $5,000,000  repayment  shall  be  adjusted  pro  rata  for  any  such
disposition based on a $25.00 purchase price per Share of Preferred Stock.

                    If the  Company  fails  to  deliver  to the  Purchaser  such
certificate  or  certificates  for shares of Common  Stock  pursuant  to Section
D(4)(a) of the  Certificate of  Designation,  by the fifth Trading Day after the
date  of the  conversion  of the  Shares  as  provided  in  the  Certificate  of
Designation,  and if after such fifth Trading Day the Purchaser purchases (in an
open  market  transaction  or  otherwise)  shares of Common  Stock to deliver in
satisfaction  of a sale by such  Purchaser  of shares of Common  Stock which the
Purchaser was entitled to receive upon such  conversion  (a "Buy-In"),  then the
Company  shall,  within  seven (7) days after notice  (which  notice shall be no
later than ten (10) days from such Buy-In) from Purchaser (A) pay in cash to the
Purchaser  the  amount  by  which  (x)  the  Purchaser's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased  exceeds  (y) the  product  of (1) the  aggregate  number of shares of
Common Stock that such  Purchaser was entitled to receive from the conversion at
issue  multiplied by (2) the market price of the Common Stock at the time of the
sale  giving  rise to such  purchase  obligation  and (B) at the  option  of the
Purchaser  to be  exercised  prior to  delivery  of the  shares of Common  Stock
issuable  upon  such  conversion,  either  return  the  Shares  for  which  such
conversion  was not honored or deliver to such Purchaser the number of shares of
Common Stock that would have been issued had the Company  timely  complied  with
its conversion and delivery obligations under such Section D(4). For example, if
the Purchaser purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of Shares with respect to
which the market price of the shares of Common  Stock on the date of  conversion
totaled  $10,000,  under clause (A) of the  immediately  preceding  sentence the
Company  shall be required to pay the  Purchaser  $1,000.  The  Purchaser  shall
provide  the  Company  written  notice  indicating  the  amounts  payable to the
Purchaser in respect of the Buy-In and all documentation  evidencing such Buy-In
transaction.  Nothing herein shall limit a Purchaser's right to pursue any other
remedies  available to it  hereunder  at law  (provided  the  Purchaser  did not
exercise his above Buy-In remedy for such transaction) or in equity,  including,
without  limitation,  a decree of specific  performance and/or injunctive relief
with respect to the Company's failure to thereafter timely deliver  certificates
representing  shares of Common Stock upon  conversion  of the Shares as required
pursuant to the terms hereof.

                  4.16 Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser under any Transaction  Document is several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible  in any way for

                                       20
<PAGE>

the  performance of the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any Transaction Document, and no action
taken by any  Purchaser  pursuant  thereto,  shall be deemed to  constitute  the
Purchasers as a partnership,  an association,  a joint venture or any other kind
of entity,  or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights,  including without  limitation the rights arising out of
this  Agreement  or out of  the  Transaction  Documents,  and  it  shall  not be
necessary  for any other  Purchaser to be joined as an  additional  party in any
proceeding for such purpose.

                  4.17  Force  Majeure.  Neither  party  shall be liable for any
failure to perform or delay in performance of its obligations  hereunder  (other
than  payment)  caused  by fire,  storm,  flood,  earthquake,  explosion,  major
accident,  acts of a public enemy,  war,  rebellion,  insurrection,  riot, civil
commotion,  strikes or other  labor  disputes,  sabotage,  epidemic,  quarantine
restrictions, transportation embargoes and other acts of God.

                   In  the  event  of  such  a  delay,  time  periods  shall  be
appropriately adjusted.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

                                       21
<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                           GENERAL DATACOMM INDUSTRIES, INC.

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

<PAGE>

                                    STRONG RIVER INVESTMENTS, INC.

                                    By: KENNETH L. HENDERSON
                                       Name:  Kenneth L. Henderson
                                       Title: Attorney-in-Fact

                                    Purchase Price for Preferred Stock
                                    to be acquired at Closing:   $2,500,000

                                    Number of shares  of  Preferred  Stock to be
                                    acquired at Closing: 100,000

                                    Warrant Shares to be acquired
                                    at Closing: 100,000

                                    Address for Notice:

                                    Strong River Investments, Inc.
                                    c/o Gonzalez-Ruiz & Aleman (BVI) Limited
                                    Wickhams Cay I, Vanterpool Plaza
                                    P.O. Box 873
                                    Road Town, Tortolla, BVI
                                    Facsimile No.: (212) 541-4630

                                    With copies to:

                                    Robinson Silverman Pearce Aronsohn &
                                     Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630
                                    Attn:   Kenneth L. Henderson, Esq. and
                                            Eric L. Cohen. Esq.

<PAGE>

                                    BAY HARBOR INVESTMENTS, INC.

                                    By: KENNETH L. HENDERSON
                                       Name:  Kenneth L. Henderson
                                       Title: Attorney-in-Fact

                                    Purchase Price for Preferred Stock
                                    to be acquired at Closing:   $2,500,000

                                    Number of shares  of  Preferred  Stock to be
                                    acquired at Closing: 100,000

                                    Warrant Shares to be acquired
                                    at Closing: 100,000

                                    Address for Notice:

                                    With copies to:

                                    Robinson Silverman Pearce Aronsohn &
                                     Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630
                                    Attn:   Kenneth L. Henderson, Esq. and
                                            Eric L. Cohen. Esq.
<PAGE>

                                 SCHEDULE 2.1(h)

                                      NONE

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