GENERAL DATACOMM INDUSTRIES INC, DEF 14A, 1994-12-19

GENERAL DATACOMM INDUSTRIES INC
DEF 14A, 1994-12-19
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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

General DataComm Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

General DataComm Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------
(3) Filing party:

- --------------------------------------------------------------------------------
(4) Date filed:

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

- ---------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2

GENERAL DATACOMM INDUSTRIES, INC.
MIDDLEBURY, CONNECTICUT 06762-1299
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 2, 1995
------------------------------------------------------------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
GENERAL DATACOMM INDUSTRIES, INC. (the "Corporation") will be held at the
offices of Chemical Bank, 3rd Floor, 270 Park Avenue, New York, New York, on
Thursday, February 2, 1995 at 4:00 P.M. for the following purposes:

1. To elect two directors to serve for a term of three years and one
director for a term of two years and until their respective successors
are elected.

2. To consider and take action upon a proposal to adopt an amendment to the
1991 Stock Option Plan by which an additional 500,000 shares of the
Corporation's Common Stock, $.10 par value, will be reserved for
issuance thereunder.

3. To transact such other business as may properly come before the meeting
or any adjournment thereof.

The close of business on December 5, 1994 has been fixed as the record date
for the determination of the stockholders entitled to receive notice of and to
vote at the Meeting.

By Order of the Board of Directors

HOWARD S. MODLIN,
Secretary

Dated: December 5, 1994

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

IMPORTANT: THE MANAGEMENT INVITES YOU TO ATTEND THE MEETING IN PERSON, BUT
IF YOU ARE UNABLE TO BE PRESENT, PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED IF THE PROXY IS RETURNED IN THE
ENCLOSED ENVELOPE AND IS MAILED WITHIN THE UNITED STATES.

- --------------------------------------------------------------------------------
<PAGE> 3

GENERAL DATACOMM INDUSTRIES, INC.
MIDDLEBURY, CONNECTICUT 06762-1299

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

PROXY STATEMENT

This statement is furnished in connection with the solicitation by the
Board of Directors of General DataComm Industries, Inc. (the "Corporation") of
proxies in the accompanying form to be used at the Annual Meeting of the
Stockholders of the Corporation to be held on Thursday, February 2, 1995 and at
all adjournments thereof, for the purposes set forth in the accompanying notice
of the meeting. It is intended that this statement and the proxies solicited
hereby be mailed to stockholders on December 19, 1994. A stockholder who shall
sign and return a proxy in the form enclosed with this statement has the power
to revoke it any time before it is exercised by giving written notice to the
Corporation, Attention: Secretary, to such effect. A stockholder attending the
meeting in person may make his or her own nomination from the floor when the
election of directors is considered. Proxies properly executed and received in
time for the meeting will be voted.

The close of business on December 5, 1994 has been fixed as the record date
for the determination of the stockholders entitled to receive notice of and to
vote at the meeting. There were outstanding as of the close of business on
December 5, 1994 and entitled to be voted at the meeting, 15,783,205 shares of
Common Stock and 2,226,250 shares of Class B Stock. All of said shares are
entitled to one (l) vote on all matters voted on at the Annual Meeting, voting
as a single class. The holders of Class B Stock are entitled to ten (10) votes
per share in any election of directors if more than 15% of the shares of Common
Stock outstanding on the record date are owned beneficially by a person or a
group of persons acting in concert, or if a nomination for the Board of
Directors is made by a person or group of persons acting in concert (other than
the Board) provided such nomination is not made by one (l) or more holders of
Class B Stock, acting in concert with each other, who beneficially own more than
15% of the shares of Class B Stock outstanding on such record date. The Board of
Directors is not presently aware of any circumstance that would give holders of
Class B Stock the right to ten (10) votes per share for the election of
directors at the Annual Meeting.

The affirmative vote, in person on by proxy, of a majority of the shares of
Common Stock and Class B Stock voted, together as a single class, is required to
elect three (3) directors. The affirmative vote, in person or by proxy, of the
holders of a majority of the outstanding shares of Common Stock and Class B
Stock, together as a single class, is required to authorize the amendment to the
199l Stock Option Plan authorizing an additional 500,000 shares.

The proxies in the accompanying form will be voted in favor of all of the
proposals set forth in the Notice of Annual Meeting. If any other specification
is made by a stockholder in the proxy, it will be voted as specified. In the
discretion of the proxy-holders, the proxies will also be voted for or against
such other matters as may properly come before the meeting. The Board of
Directors is not aware that any other matters are to be presented for action at
the meeting.
<PAGE> 4

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of November 25, 1994 with
respect to the beneficial ownership of the Corporation's Class B Stock and
Common Stock by all persons known by the Corporation to own more than 5% of the
Corporation's outstanding Class B Stock or Common Stock who are deemed to be
such beneficial owners of the Corporation's Class B Stock or Common Stock under
Rule 13d-3. Class B Stock is convertible into Common Stock at any time on a
share-for-share basis.

<TABLE>
<CAPTION>
PERCENT
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF ALL
OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS CLASSES
-------- ------------------- ----------------------- -------- --------
<S> <C> <C> <C> <C>
Class B Stock $.10 Charles P. Johnson 1,387,089* 62.3%* 9.2%*
par value General DataComm Industries, Inc.
Middlebury, CT 06762-1299
James R. Arcara 471,943** 21.2%** 3.1%**
General DataComm Industries, Inc.
Middlebury, CT 06762-1299
Common Stock $.10 par FMR Corp. 856,900*** 5.4%*** 4.8%***
value Devonshire Street
Boston, MA 02109
</TABLE>

- ---------------
* The amount and percent of Class B Stock does not include 19,500 shares of
Class B Stock owned by trusts or in custody for the benefit of Mr. Johnson's
daughter, or 1,250 shares of Class B Stock owned by his wife, the beneficial
ownership of which he disclaims. The percent of all classes includes 266
shares of Common Stock and 299,907 shares of Common Stock which Mr. Johnson
could acquire by the exercise of stock options within sixty (60) days
following November 25, 1994, but excludes 23,984 shares of Common Stock held
in the Corporation's 40l(k) Stock Fund.

** The amount and percent of Class B Stock includes 98,299 shares owned
directly by Mr. Arcara and 373,644 shares, or 16.8% of the outstanding Class
B shares, held by Mr. Arcara as trustee under various trusts for the benefit
of the children of Mr. Charles P. Johnson (361,444 shares) and as trustee
under an insurance trust for Mr. Johnson (12,200 shares). Mr. Arcara has the
sole power to vote and/or dispose of the shares held as trustee. He
disclaims beneficial ownership of these 373,644 shares. The percent of all
classes includes 14,847 shares of Common Stock owned directly by Mr. Arcara,
14,500 shares of Common Stock held by Mr. Arcara as trustee under various
trusts for the benefit of Mr. Johnson's children for which he disclaims
beneficial ownership and 66,459 shares of Common Stock which Mr. Arcara
could acquire by the exercise of stock options within sixty (60) days
following November 25, 1994, but excludes 19,588 shares of Common Stock held
in the Corporation's 40l(k) Stock Fund as of such date.

*** Based upon Schedule 13G dated February 11, 1994, FMR Corp. is a parent
holding company as defined in Rule 13d-1(b)(ii)(G).

2
<PAGE> 5

ITEM 1. ELECTION OF DIRECTORS

Two of the nominees, Messrs. Charles P. Johnson and Howard S. Modlin, were
elected directors of the Corporation at the 1992 meeting of stockholders for a
three (3) year term while Mr. John L. Segall was elected a director of the
Corporation by the Board of Directors on March 1, 1994. Set forth opposite the
name of each nominee and each director whose term continues past the meeting is
his principal occupation for the past five (5) years, the name and principal
business of any corporation or other organization in which such employment is
carried on, other business directorships held, age and the year in which the
term of office for which he is a nominee or the term of such office will expire.

Management has no reason to believe that the nominee is not available or
will not serve if elected, but if he should become unavailable to serve as a
director, full discretion is reserved to the persons named as proxies to vote
for such other person as may be nominated.

<TABLE>
<CAPTION>
POSITION WITH THE CORPORATION, BECAME A TERM
NAME PRINCIPAL OCCUPATION AND AGE DIRECTOR EXPIRES
---- ------------------------------ -------- -------
<S> <C> <C> <C>
Charles P. Johnson.................. Chairman of the Board of Directors 1969 1998
and Chief Executive Officer; 67

Howard S. Modlin.................... Secretary of the Corporation and 1969 1998
partner in the law firm of Weisman,
Celler, Spett & Modlin; Director of
Fedders Corporation and Trans-Lux
Corporation; 63

Frederick R. Cronin................. Vice President, Technology; 63 1981 1996

Lee M. Paschall..................... Consultant; former Chairman, 1981 1997
President of American Satellite
Company, 1981 to 1985;
Telecommunications Consultant
between August 1978 and August
1981. Previous thereto, he was a
Lieutenant General, United States
Air Force; Director of Radiation
Systems, Inc.; 72

John L. Segall...................... Consultant; Vice Chairman of GTE 1994 1997
1991-1994; Vice Chairman of Contel
Corp. 1989-1991; Director of Perot
Systems and Norwalk Savings
Society; 68
</TABLE>

3
<PAGE> 6

SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS

Each nominee, each director whose term continues past the meeting and each
executive officer listed in the Summary Compensation Table have advised the
Corporation that, as of November 25, 1994, he owned beneficially, directly or
indirectly, securities of the Corporation in the amounts set forth opposite his
name.

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON PERCENT CLASS B PERCENT PERCENT OF
NAME STOCK OWNED OF CLASS STOCK OWNED(1) OF CLASS ALL CLASSES
---- ----------- -------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Charles P. Johnson.................. 300,173(2) 1.9% 1,387,089(2) 62.3% 9.2%
Howard S. Modlin.................... --(3) -- 6,750(3) 0.3% --
Frederick R. Cronin................. 66,336(4) 0.4% 35,000(4) l.6% 0.6%
Lee M. Paschall..................... 6,000 -- 5,770 0.3% 0.1%
John L. Segall...................... 1,000 -- -- -- --
Ross A. Belson...................... 99,917(5) 0.6% -- -- 0.6%
William S. Lawrence................. 68,176(6) 0.4% 36,558 l.6% 0.6%
Rick L. Mantz....................... 29,864(7) 0.2% -- -- 0.2%
Directors and Officers as a group
(16 individuals including the
above)............................ 846,959(8) 5.2% 1,965,110(8) 88.3% 15.1%
</TABLE>

- ---------------
(1) The Class B Stock is convertible into Common Stock at any time on a
share-for-share basis.

(2) Includes 299,907 shares of Common Stock which Mr. Johnson could acquire by
the exercise of stock options within sixty (60) days following November 25,
1994. Does not include 19,500 shares of Class B Stock owned by trusts or in
custody for the benefit of his daughter, nor 1,250 shares of Class B Stock
owned by his wife, the beneficial ownership of which he disclaims, nor
23,984 shares of Common Stock held in the Corporation's 401(k) Stock Fund as
of November 25, 1994.

(3) Does not include 31,400 shares of Class B Stock nor 112,000 shares of Common
Stock owned directly by members of his immediate family, the beneficial
ownership of which Mr. Modlin disclaims.

(4) Includes 45,254 shares of Common Stock which Mr. Cronin could acquire by the
exercise of stock options within sixty (60) days following November 25,
1994. Does not include 15,900 shares of Class B Stock owned directly by
members of his immediate family, the beneficial ownership of which he
disclaims nor 2,363 shares of Common Stock held in the Corporation's 401(k)
Stock Fund as of November 25, 1994.

(5) Includes 77,977 shares of Common Stock which Mr. Belson could acquire by the
exercise of stock options within sixty (60) days following November 25,
1994.

(6) Includes 66,776 shares of Common Stock which Mr. Lawrence could acquire by
the exercise of stock options within sixty (60) days following November 25,
1994. Does not include 860 shares of Common Stock owned by his wife, the
beneficial ownership of which he disclaims, nor 15,719 shares of Common
Stock held in the Corporation's 401(k) Stock Fund as of November 25, 1994.

(7) Includes 19,809 shares of Common Stock which Mr. Mantz could acquire by the
exercise of stock options within sixty (60) days following November 25,
1994.

(8) Includes 665,596 shares of Common Stock which persons in the group have the
right to acquire within sixty (60) days following November 25, 1994 through
the exercise of stock options and 36l,444 shares of Class B Stock and 14,500
shares of Common Stock held by Mr. James R. Arcara, Vice President,
Corporate Operations, as trustee under various trusts for the benefit of Mr.
Johnson's family and 12,200 shares of Class B Stock held by Mr. Arcara as
trustee under an insurance trust for the benefit of Mr. Johnson. Does not
include 72,774 shares of Class B Stock and 112,860 shares of Common Stock
owned directly by members of the directors' and officers' immediate
families, the beneficial ownership of which they disclaim; nor 63,980 shares
of the Corporation's Common Stock in the Corporation's 401(k) Stock Fund
held in accounts for nine (9) executive officers as of November 25, 1994.

4
<PAGE> 7

EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS WITH MANAGEMENT

The following Summary Compensation Table sets forth the compensation paid
or awarded for the fiscal years ended September 30, 1994, 1993 and 1992 to the
Corporation's five (5) most highly compensated executive officers whose
compensation for the fiscal year ended September 30, 1994 exceeded $100,000:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
-------------------------- ALL OTHER
NAME AND SALARY BONUS OPTIONS (#) OTHER COMPENSATION
PRINCIPAL POSITION YEAR ($)(4) ($) GRANTED ($)(2) ($)(3)
------------------ ---- ------ ----- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles P. Johnson................ 1994 476,410 100,000 66,450 13,189 61,076
Chairman of the Board of 1993 449,674 100,000 -- 18,371 60,230
Directors and Chief 1992 428,846 90,000 222,675 14,961 34,430
Executive Officer

Ross A. Belson.................... 1994 248,562 75,000 30,000 6,885 4,806
President and Chief 1993 230,265 75,000 20,000 6,730 3,960
Operating Officer 1992 209,436 65,000 20,500 6,837 3,751

William S. Lawrence............... 1994 178,136 34,000 15,000 7,879 4,121
Vice President, Finance and 1993 168,508 34,000 -- 7,067 2,812
Chief Financial Officer 1992 161,565 31,000 33,000 6,851 3,546

Frederick R. Cronin............... 1994 176,064 30,000(5) 10,000 11,285 3,844
Vice President, Technology 1993 166,816 20,000 10,000 11,202 2,573
1992 160,568 19,375 39,000 11,014 109

Rick L. Mantz..................... 1994 170,886 18,125 18,000 24,426 3,347
Vice President, Engineering 1993 161,527 18,125 -- 24,237 3,169
1992 154,584 15,400 24,000 22,904 2,818
</TABLE>

- ---------------
(1) There are no restricted stock awards, stock appreciation rights or deferred
long-term incentive payouts.

(2) These amounts include $18,750 annual forgiveness of indebtedness for Mr.
Mantz as discussed under Loans.

(3) The Corporation's Board of Directors has approved the continued employment
of Mr. Charles P. Johnson to at least age 70. The Corporation is paying the
annual premium on a $1,000,000 life insurance policy on Mr. Johnson's life
at an approximate annual cost of $56,300, included in all other
compensation, so long as Mr. Johnson is an employee of the Corporation. Mr.
Johnson's designee is the owner of said policy. The balance of Mr. Johnson's
all other compensation and amounts reported for the other executives
reflects the Corporation's contributions under its 401(k) plan.

(4) The above officers have not received a salary adjustment since January 1,
1993. In fiscal 1994 versus 1993 there was one additional pay period.

(5) Includes $5,000 for 1993 not included in the 1993 amount.

During the fiscal year ended September 30, 1994, $700,000 in fees, an
amount which the Corporation believes is fair, were paid to the law firm of
which Howard S. Modlin is a partner.

BOARD COMPENSATION COMMITTEE REPORT

All matters concerning executive compensation for the Chief Executive
Officer and other executive officers are considered by the Corporation's entire
Board of Directors since there is no separate Compensation Committee. The salary
levels are intended to be consistent with competitive practice and level of
performance. In determining the total compensation to be paid to the Chief
Executive Officer and all other executive officers, the Board considers
management's recommendation based upon past salary levels, industry surveys,
experience, capability, normal salary increase levels in past years, and the
Corporation's and respective individual's performances during the last fiscal
year. The Chief Executive Officer's compensation and bonus are based upon the
above factors and include three-quarters ( 3/4) of one-percent (1%) of the
Corporation's

5
<PAGE> 8

pretax earnings but in no event less than $100,000. It should also be noted that
as part of the Corporation's cost containment efforts, most salaried employees
previously had their salary increases deferred from the normal twelve (12) month
cycle to thirty (30) months. Such deferral ended in 1993.

LOANS

During the period October 1, 1987 through September 30, 1991, the
Corporation granted unsecured loans to Messrs. Charles P. Johnson (Chairman of
the Board), Frederick R. Cronin (Vice President, Technology) and Robert S. Smith
(Vice President, Business Development) in the amounts of $453,045, $100,000 and
$200,000 respectively, which were due January 31, 1995, April 14, 1994 and April
14, 1994 respectively. These loans bore annual interest at 5.81% as to Messrs.
Johnson and Cronin and at 7.65% as to Mr. Smith. During fiscal 1994, Messrs.
Johnson, Cronin and Smith repaid their respective balances in full and were not
indebted to the Corporation at September 30, 1994. All loans were made for the
personal needs of the respective executive officers.

During fiscal 1989, Mr. Rick L. Mantz (Vice President, Engineering) was
granted a secured loan by the Corporation in the maximum amount of $75,000. Mr.
Mantz's loan was secured by a third mortgage on a property located in Southbury,
Connecticut and bore interest at the rate of 9% per annum, payable bi-weekly.
During fiscal 1994, Mr. Mantz's final principal balance of $18,750 was forgiven
in accordance with the loan terms. The loan was made for the personal needs of
Mr. Mantz pursuant to employment negotiations at the time he was hired by the
Corporation. The Corporation believes the terms of such loans are fair to the
Corporation.

STOCK OPTION PLANS

Under the terms of the Corporation's Stock Option Plans, the Corporation
has reserved a total of 2,882,387 shares of Common Stock as of November 25,
1994. Officers and key employees selected by the Chairman of the Board or the
Stock Option Committee, as the case may be, may be granted incentive stock
options at an exercise price equal to or greater than the market price per share
on the date of grant and non-incentive stock options at an exercise price equal
to, greater than or less than the market price per share on the date of grant.
Once granted, options become exercisable in whole or in part after the first
year and expire within ten (10) years. The Chairman or the Stock Option
Committee, as the case may be, determines the number of stock options to be
granted to any person, subject to the limitations on incentive stock options in
Section 422A of the Internal Revenue Code.

STOCK OPTIONS

The following table is a summary of all stock options granted pursuant to
the Corporation's Stock Option Plans during the period October 1, 1993 through
September 30, 1994. There are no stock appreciation rights under the Plans. In
addition, the table shows the potential gain that could be realized if the fair
market value of the Corporation's Common Stock were to appreciate at a 5% or 10%
annual rate over the ten (10) year period of the option term.

6
<PAGE> 9

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
--------------------------------------------- VALUE AT
% OF TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED TO EXERCISE APPRECIATION
# EMPLOYEES OR BASE FOR OPTION TERM
OPTIONS IN LAST PRICE PER EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% ($) 10% ($)
---- ------- ----------- --------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Charles P. Johnson................. 66,450 10.1% $ 15.50 7/24/04 $ 647,746 $ 1,641,515
Ross A. Belson..................... 30,000 4.5% $ 15.50 7/24/04 $ 292,436 $ 741,090
William S. Lawrence................ 15,000 2.3% $ 15.50 7/24/04 $ 146,218 $ 370,545
Frederick R. Cronin................ 10,000 1.5% $ 15.50 7/24/04 $ 97,479 $ 247,030
Rick L. Mantz...................... 18,000 2.7% $ 15.50 7/24/04 $ 175,462 $ 444,654
</TABLE>

AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION TABLES

The following table sets forth the number of shares acquired on exercise
during the fiscal year ended September 30, 1994 ("FY"), the value realized on
exercise, the number of unexercised options at September 30, 1994 and the value
of unexercised in-the-money options at September 30, 1994.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
SHARES FY-END (#) AT FY-END
ACQUIRED ON --------------- ------------
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Charles P. Johnson.................. 166,468 $3,411,408 269,907/186,450 $6,577,713/
$3,810,038
Ross A. Belson...................... 58,000 $ 641,125 57,977/113,500 $1,408,458/
$2,449,255
William S. Lawrence................. -- -- 58,776/ 44,000 $1,437,288/
$ 912,840
Frederick R. Cronin................. -- -- 56,254/ 45,000 $1,369,867/
$ 988,950
Rick L. Mantz....................... -- -- 46,809/ 32,000 $1,161,481/
$ 574,800
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

The Corporation's 1979 Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors in May 1979 and approved by the
stockholders in February 1980. A total of 265,704 shares of Common Stock, after
giving effect to stock splits in February and November, 1980 and May, 1984, were
originally reserved for issuance under the Purchase Plan. The following
amendments were authorized by the Board and approved by the stockholders at
previous meetings: an additional 2,360,000 shares, after adjustment for the 1984
stock split, were added to the Purchase Plan; the termination date of the
Purchase Plan was extended to 200l; the minimum term of employment for employees
eligible for participation in the Purchase Plan was reduced from six (6) months
to 9l days; and participating employees were required to end their participation
at least two (2) business days instead of one (1) prior to the end of any six
(6) month period in which payroll amounts are deducted for participants
("Payment Period"). On November l, 1990, the Board amended the Purchase Plan to
provide that: (i) if 85% of the average market price per share of the Common

7
<PAGE> 10

Stock is less than the book value per share at the beginning of a Payment
Period, the Purchase Plan is suspended; (ii) if 85% of the average market price
per share at the end of a Payment Period is less than the book value per share,
the payroll deductions are refunded; and (iii) if 85% of the average market
price per share at the beginning of a Payment Period is less than the book value
per share at the end thereof, the purchase price is the book value per share.
Accordingly, the Purchase Plan was suspended in November 1990 as 85% of the
average market price per share was less than the book value per share. The Board
can reinstate the Purchase Plan at any time that 85% of the average market price
per share exceeds the book value per share and the Payment Period's starting and
ending dates would be adjusted accordingly. The Plan was reinstated March 1,
1992 and again suspended when market price per share fell below book value per
share. The Purchase Plan was again reinstated on March 1, 1993 and is currently
in effect.

The following table sets forth certain information as to certain executive
officers and current executive officers of the Corporation as a group and all
other employees who participated in the Purchase Plan during the period October
1, 1993 through September 30, 1994:

<TABLE>
<CAPTION>
NUMBER AGGREGATE AVERAGE
NAME OF INDIVIDUAL OF SHARES PURCHASE PRICE PER
OR IDENTITY OF GROUP PURCHASED PRICE SHARE
-------------------- --------- --------- ---------
<S> <C> <C> <C>
All executive officers (5 persons in the Purchase
Plan)............................................ 6,181 $ 68,794 $ 11.13
All other employees (276 persons).................. 92,439 $1,048,911 $ 11.35
</TABLE>

EMPLOYEE RETIREMENT SAVINGS AND DEFERRED PROFIT SHARING PLAN

Under the retirement savings provisions of the Corporation's Employee
Retirement Savings and Deferred Profit Sharing Plan (the "Plan"), established
under Section 401(k) of the Internal Revenue Code in fiscal 1987, U.S. employees
are generally eligible to contribute to the Plan after six (6) months of
continuous service, in amounts determined by the Plan. The Corporation
contributes an additional 50% of the employee contribution up to certain limits
(not to exceed 1 1/2% of total eligible compensation). Employees become fully
vested in the Corporation's contributions after five (5) years of continuous
service, death, disability or upon reaching age 65. The Plan year for the 401(k)
portion coincides with the calendar year, and the Corporation's contribution is
paid in the following calendar year if the participant was employed at December
31 of the Plan year.

The deferred profit sharing provisions of the Plan include retirement and
other related benefits for substantially all of the Corporation's full-time U.S.
employees. Contributions under the Plan are funded annually and are based, at a
minimum, upon a formula measuring profitability in relation to revenues.
Additional amounts may be contributed at the discretion of the Corporation.
Contributions to the Plan are allocated to each participant based upon
individual earnings in proportion to the earnings of all participants.

The Corporation's contributions to the Plan for 1993, paid in 1994,
amounted to $1,128,112 for all participants, including $4,806, $4,806, $4,121,
$3,844 and $3,347 on behalf of the named officers in the Summary Compensation
Table, respectively.

8
<PAGE> 11

FIVE YEAR CORPORATE PERFORMANCE GRAPH

The following graph compares the Corporation's total stockholder return
over the five (5) fiscal years ended September 30, 1994 with the total return on
the Standard & Poors 500 Stock Index ("S&P 500") and an industry peer group
("Peer Group") based upon the Value Line Computers & Peripherals Industry in
which the Corporation is included. The stockholder return shown on the graph is
not intended to be indicative of future performance of the Corporation's Common
Stock.

COMPARATIVE FIVE-YEAR TOTAL RETURNS*

GENERAL DATACOMM INDUSTRIES, INC., S&P 500, PEER GROUP**
(PERFORMANCE RESULTS THROUGH 9/30/94)

[GRAPH]

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) GDC S&P 500 PEER GROUP
--------------------- --- ------- ----------
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 37.50 90.70 87.26
1991 43.75 119.05 101.01
1992 58.33 132.49 92.57
1993 181.25 149.73 82.06
1994 470.83 155.21 111.25
</TABLE>

Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in GDC common stock, S&P 500,
and Peer Group.

* Cumulative total return assumes reinvestment of dividends.
** Peer Group consists of the Value Line Computer & Peripherals Industry.

9
<PAGE> 12

ITEM 2. PROPOSED AMENDMENT TO THE 1991 STOCK OPTION PLAN

The 1991 Stock Option Plan (the "1991 Plan") was adopted by the Board of
Directors on December 5, 1991 and approved by the stockholders at the April 2,
1992 annual meeting. It is intended to provide an incentive to key employees,
including officers and directors, who are employees of the Corporation and its
subsidiaries, and to offer an inducement in obtaining the services of key
personnel. The 1991 Plan is in addition to the Corporation's existing 198l and
1984 Incentive Stock Option Plans, the 1979 Stock Option Plan, the 1979 Employee
Stock Purchase Plan and the 1983 and 1985 Stock Option Plans. No further options
may be granted under the 1981 and 1984 Incentive Stock Option Plans and under
the 1979, 1983 and 1985 Stock Option Plans. The Board of Directors has
previously authorized amendments to all such stock option plans to permit
payment to be made by delivery of shares of the Corporation's Common Stock
valued at the market price for such shares at the time of exercise, to conform
such plans to changes in the Tax Reform Act of 1986 and to conform such plans to
comply with new Rule 16b-3 under the Securities Exchange Act of 1934.

Options granted under the 1991 Plan may be either "incentive stock options"
within the meaning of Section 422A of the Internal Revenue Code of 1986
("Code"), as amended, or nonstatutory options. The 1991 Plan is not qualified
under Section 40l(a) of the Code and is not subject to the Employee Retirement
Income Security Act of 1974.

SUMMARY OF THE PLAN

The basic provisions of the 1991 Plan are as follows:

l. Six hundred twenty-five thousand (625,000) shares of the Common
Stock, $.10 par value, of the Corporation were originally authorized for
issuance under the Plan, and an additional six hundred twenty-five thousand
(625,000) and six hundred fifty thousand (650,000) shares were approved by
the stockholders at the 1993 and 1994 Annual Meetings. An additional
500,000 shares are to be approved at the 1995 Annual Meeting. Of such
2,400,000 total, as of November 25, 1994, 1,343,572 options have been
granted and are outstanding, 107,600 options have been exercised, and
948,828 options remain available for grant, including the additional
500,000 subject to stockholder approval.

2. The 1991 Plan is administered by the Chairman of the Board of
Directors of the Corporation, as to all employees other than employees
subject to Section 16 of the Securities Exchange Act of 1934 (generally
executive officers), who reports to the Board of Directors the names of
those granted stock options, the number of shares covered by each option,
the applicable option prices and the type of option. The Stock Option
Committee of the Board of Directors reports to the Board of Directors with
respect to the names of employees subject to Section 16 of the Securities
Exchange Act of 1934 granted stock options, the number of shares covered by
each option, the applicable option prices and the type of option.

3. The granting of an option under the 1991 Plan takes place whenever
the Chairman of the Board or Stock Option Committee, as the case may be,
makes such grant and designates the person for the receipt of the option.
Each option is evidenced by an appropriate Stock Option Contract.

4. The 1991 Plan terminates on December 4, 2001, and no option shall
be granted under the 1991 Plan after that date.

5. The option price at which non-incentive stock options may be
granted shall be the fair market value of the Common Stock on the date the
option is granted or such greater or lesser price as determined by the
Chairman of the Board or Stock Option Committee, as the case may be. The
option price at which incentive stock options may be granted shall not be
less than the fair market value of the Common Stock on the date the option
is granted, except that if the optionee would own more than 10% of the
total outstanding shares of Common and Class B Stock of the Corporation if
the option were to be exercised on the date of grant, the exercise price of
such option shall be not less than 110% of the market price for said shares
on the date of grant.

6. The maximum term of each non-incentive stock option shall be for a
period not exceeding ten (10) years from the date of grant thereof and the
term of each incentive stock option shall likewise be for

10
<PAGE> 13

a period not exceeding ten (10) years from the date of grant thereof (but
only five (5) years if the optionee owns more than 10% of the voting
power).

7. Except in limited situations as expressly provided in the 1991
Plan, no option granted under the 1991 Plan may be exercised during the
life of the optionee, unless the optionee remains in the continuous employ
of the Corporation or one of its subsidiaries from the date of grant to the
date of exercise. The option shall be exercisable in whole or in part, from
time to time, during the term thereof, as may be determined by the Chairman
of the Board or Stock Option Committee, as the case may be, and stated in
the option, provided, however, that unless otherwise permitted by the Board
of Directors as to all outstanding options, no option may be exercised
prior to the first anniversary of the date of grant of such option.

8. Payment for shares purchased will be made in full in cash or by the
surrender of shares of Common Stock of the Corporation valued at the market
price for such shares at the time of exercise of the option under the 1991
Plan.

9. If an optionee holds more than one (1) non-incentive stock option
under the 1991 Plan or more than one (1) incentive stock option granted on
or after January 1, 1987, the options may be exercised by the optionee in
any order. Incentive stock options granted prior to January 1, 1987 may not
be exercised while there is "outstanding" any previously granted incentive
stock options. Such options are deemed outstanding until exercised in full
or until expiration by lapse of time.

FEDERAL INCOME TAX CONSEQUENCES

Tax Aspects -- Non-Incentive Stock Options

Messrs. Weisman, Celler, Spett & Modlin, the Corporation's legal counsel,
have advised that under existing Treasury regulations, with respect to
non-incentive stock options, (i) an optionee will not realize taxable income
upon the grant of an option; (ii) the difference between the option price and
the fair market value of the shares on the date of exercise is taxable as
ordinary income to the optionee at the time of exercise and is allowable to the
Corporation, as an income tax deduction; (iii) the ordinary income to the
optionee will be treated as compensation to the optionee which is subject to
income tax withholding by the Corporation; (iv) the optionee will take a basis
in the shares for tax purposes equal to the sum of the option price plus the
amount of his or her ordinary income; and (v) any gain or loss on a subsequent
sale of the shares, which will equal the difference between the sales proceeds
and the optionee's tax basis in the shares, will be capital gain or loss at the
time of sale.

Tax Aspects -- Incentive Stock Options

The Corporation has been advised by such legal counsel that the federal
income tax consequences of incentive stock options under present law are
generally as follows: if an option is an incentive stock option, the optionee
will recognize no income upon grant or exercise (except for purposes of
computing alternative minimum tax described below) of the incentive stock option
and as such, the Corporation will not be allowed a deduction for federal tax
purposes as it would in the case of the exercise of a non-statutory stock
option. Upon the sale of the shares by the optionee (assuming that the sale
occurs no sooner than two (2) years after grant of the option and one (1) year
after exercise of the option), any gain will be capital gain to the optionee. If
the optionee fails to hold the shares for the foregoing period, the disposal is
treated as a disqualifying disposition. The gain on such disposition is ordinary
income to the optionee to the extent of the difference between the option price
and the fair market value of the shares on the date of exercise and any excess
is long-term or short-term capital gain depending upon the holding period. In
such event, the Corporation will be entitled to an income tax deduction equal to
the ordinary income amount to the optionee.

In order for an option to qualify as an incentive stock option, (i) the
option must be granted pursuant to a plan which includes the aggregate number of
shares which may be issued under options and the employees (or class of
employees) eligible to receive options; (ii) such option is granted within ten
(10) years from the date such plan is adopted, or the date such plan is approved
by the stockholders, whichever is earlier; (iii) the option must be exercised
while the optionee is an employee of the Corporation or a subsidiary of the

11
<PAGE> 14

Corporation, or no more than three months after the optionee's employment ceases
(twelve (12) months in the case of termination following the optionee's total
disability); (iv) the option may not by its terms be exercisable after the
expiration of ten (10) years from the date it is granted; (v) the option price
must not be less than the fair market value of the stock at the time such option
is granted; (vi) the option plan must be approved by the stockholders within
twelve (12) months after the date such plan is adopted; (vii) the option by its
terms is non-transferable other than upon death of the optionee and is
exercisable only by the optionee during his or her lifetime; (viii) if the
optionee owns more than 10% of the voting power of all classes of the
Corporation's stock at the time the option is granted, the option price must be
at least 110% of the fair market value on the date of grant and the option may
not be exercised after five (5) years from the date of grant; (ix) for options
granted prior to January 1, 1987, the option by its terms is not exercisable
while there is outstanding any previously granted incentive stock options; and
(x) under the terms of the plan, no optionee may, within a given calendar year
prior to January 1, 1987, be granted incentive stock options for shares having
an aggregate fair market value (determined at the time of the grant) in excess
of $100,000 plus an "unused limit carryover" from the three (3) preceding
calendar years. The "unused limit carryover" is equal to one-half of the amount
by which $100,000 exceeds the fair market value of the shares for which the
optionee was granted incentive stock under all incentive stock option plans of
the Corporation or any of its subsidiaries in the calendar year. Commencing
January 1, 1987, the aggregate fair market value, determined at time of grant,
of stock for which an employee may exercise incentive stock options for the
first time in any calendar year under all plans cannot exceed $100,000.

For purposes of computing alternative minimum tax, the spread between the
fair market value of the stock on the exercise date and the option price is no
longer an item of tax preference. Rather, the spread is added to taxable income
as an adjustment in computing alternative minimum tax, and the basis of the
acquired stock is fair market value on the date of exercise.

The selection of officers, executives and employees who will be granted
options, and the number of shares to be offered shall be made by the Chairman of
the Board and Stock Option Committee, as the case may be. However, it is
presently expected that approximately 1,350 such persons of whom 13 are
executive officers or directors, will be eligible for consideration by the
Chairman of the Board and Stock Option Committee, as the case may be. The
Corporation intends to register the additional shares covered by the 1991 Plan
under the Securities Act of 1933 before the options may be exercised.

The preceding summary of certain provisions of the 1991 Stock Option Plan
is qualified in its entirety by reference to the complete text of the 1991 Plan
which is set forth as Exhibit A of this Proxy Statement.

The affirmative vote of a majority of the shares entitled to vote is
required to approve the proposed amendment to the 1991 Plan authorizing 500,000
additional shares. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE PROPOSED AMENDMENT TO THE 1991 PLAN AUTHORIZING
ADDITIONAL SHARES. IT IS INTENDED THAT PROXIES SOLICITED HEREBY WILL BE VOTED
FOR SUCH AMENDMENT TO THE PLAN UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.

SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

Coopers & Lybrand was selected by the Board of Directors as auditors for
the Corporation's fiscal year ended September 30, 1994, the nineteenth year such
firm has been the auditors of the Corporation.

Representatives of such auditors are expected to be at the meeting of
stockholders and will be permitted to make a statement to stockholders if they
desire and to respond to any appropriate questions addressed by stockholders to
such auditors. No decision has yet been made as to the selection of the
Corporation's auditors for the 1995 fiscal year.

12
<PAGE> 15

MEETINGS OF THE BOARD OF DIRECTORS

During fiscal 1994, the Board of Directors had eight (8) meetings. All of
the Directors attended at least 75% of such meetings. Non-employee directors
currently receive a fee of $1,200 for each meeting which they attend and an
annual fee of $8,000. Under a plan adopted by the Board of Directors in 1982,
non-employee directors have the opportunity to elect to defer receipt of all or
a portion of their fees plus interest thereon.

The Corporation has an Audit Committee consisting of Messrs. Lee Paschall,
Howard S. Modlin and John L. Segall. Members of the Audit Committee receive an
annual fee of $3,000. As part of its responsibilities, the Audit Committee
reviews the audit function with the Corporation's independent auditors. During
fiscal 1994 the Audit Committee had three (3) meetings. The Corporation does not
have a nominating or compensation committee.

The Corporation has a Stock Option Committee consisting of Messrs. Lee
Paschall and Howard S. Modlin. Such Committee, which had two (2) meeting during
fiscal 1994, determines which executive officers of the Corporation shall be
granted stock options under its stock option plans.

STOCKHOLDER PROPOSALS -- 1996 ANNUAL MEETING

If any stockholder desires to submit a proposal for action at next year's
annual meeting, it must be received by the Corporation, Middlebury, Connecticut
06762-1299, on or before August 7, 1995.

COST OF SOLICITATION

The cost of preparing and mailing material in connection with the
solicitation of proxies is to be borne by the Corporation. To the extent
necessary in order to assure sufficient representation at the meeting, such
solicitation will be made by the Corporation's regular employees in the total
approximate number of three (3). Solicitation will be made by mail, telegram,
telephone and in person.

By Order of the Board of Directors

HOWARD S. MODLIN
Secretary

Dated: Middlebury, Connecticut
December 5, 1994

13
<PAGE> 16

EXHIBIT A

1991 STOCK OPTION PLAN
OF
GENERAL DATACOMM INDUSTRIES, INC.
(AS PROPOSED TO BE AMENDED)

1. Purpose of the Plan. This Plan (herein called the "Plan") is designed
to provide an incentive to key employees, including officers and directors who
are employees, of GENERAL DATACOMM INDUSTRIES, INC. (herein called the
"Corporation") and its subsidiaries, as defined in Section 425(f) of the
Internal Revenue Code of 1986 and to offer an additional inducement in obtaining
the services of key personnel.

2. Stock Subject to the Plan. "Incentive Stock Options" and
"Non-Incentive Stock Options" may be granted under the Plan to purchase in the
aggregate not more than 2,400,000* shares of Common Stock, $.10 par value, of
the Corporation (herein called "Common Stock"), which shares may, in the
discretion of the Board of Directors, consist either in whole or in part of
authorized but unissued shares of Common Stock or shares of Common Stock held in
the treasury of the Corporation. Any shares subject to an option which for any
reason expires or is terminated unexercised as to such shares shall again become
available for options under the Plan.

3. Administration of the Plan. The Plan shall be administered by the
Chairman of the Board and a Stock Option Committee, who shall report to the
Board of Directors the names of those granted options, the number of shares
covered by each option and the applicable option prices. The Stock Option
Committee shall consist of two (2) or more members of the Board of Directors
appointed by the Board of Directors who are not employees of the Corporation nor
entitled to receive options under the Plan. The Stock Option Committee shall
have the exclusive right to grant stock options to employees who are subject to
Section 16(a) of the Securities Exchange Act of 1934 ("1934 Act"), and the
Chairman of the Board shall have the exclusive right to make all other grants.
Except with respect to grants by the Stock Option Committee, the Chairman of the
Board shall have the full power to construe and interpret the Plan and to
establish and amend rules, regulations and forms for its administration. The
Plan may not be amended, however, without the approval of the Board of Directors
which shall also determine which employees are subject to Section 16(a) of the
1934 Act.

4. Eligibility. The Chairman of the Board and Stock Option Committee may,
consistent with the purposes of the Plan and Paragraph 3, grant options from
time to time, within ten (10) years from the date of adoption of the Plan by the
Board of Directors of the Corporation, to key employees, including officers and
directors who are employees of the Corporation or of any of its present
subsidiaries or future subsidiary corporations (herein called "Subsidiaries"),
and covering such number of shares of Common Stock as may be determined,
provided that no employee whose basic salary before bonuses or incentive
payments is less than $20,000 per year shall be eligible to receive an option.
Employees may receive more than one (1) option under the Plan, but the aggregate
fair market value (determined as of the time the option is granted) of the stock
for which any employee may exercise incentive stock options for the first time
in any calendar year (under all such plans of the Corporation and its
subsidiaries) shall not exceed $100,000.

5. Option Price. The purchase price of the Common Stock under each option
shall be determined by the Chairman of the Board and the Stock Option Committee,
as the case may be, but shall not be less than the fair market value of the
stock at the time of granting of the option except that in the case of
Non-Incentive Stock Options, the price may be such lesser price as determined by
the Chairman of the Board or Stock Option Committee, as the case may be. Such
fair market value shall be taken by the Chairman of the Board and Stock Option
Committee as the average between the high and low sale price on the date the
option is granted, or, if there is no such sale on that date, then on the last
previous day on which such a sale was

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

* As proposed to be amended by Item 2.

A-1
<PAGE> 17

reported. If the option holder owns more than 10% of the total combined voting
power of the Corporation, the purchase price of Incentive Stock Options shall
not be less than 110% of the fair market value on the date of grant.

6. Term of Option. The term of each option granted pursuant to the Plan
shall be for a period not exceeding ten (10) years from the date of granting
thereof, except that if the option holder owns more than 10% of the total
combined voting power of the Corporation and the option is an Incentive Stock
Option, such period shall not exceed five (5) years from the date of grant.
Options shall be subject to earlier termination as hereinafter provided.

7. Exercise of Option. The option shall be exercisable in whole or in
part from time to time during the term thereof as may be determined by the
Chairman of the Board or Stock Option Committee, as the case may be, and stated
in the option, provided, however, that unless otherwise authorized by the Board
of Directors as to all options outstanding under the Plan, no option may be
exercised prior to the first anniversary of the date of granting of such option.
The option shall be exercised by giving written notice to the Corporation at its
principal office, Middlebury, Connecticut, specifying the number of shares
purchased and accompanied by payment in full in cash of the aggregate purchase
price therefor, or in the alternative, payment may be made by delivery of Common
Stock of the Corporation valued at the closing price of such Common Stock on the
New York Stock Exchange on the date of exercise. Certificates representing the
shares of stock purchased shall be issued as promptly as practicable thereafter.
The holder of an option shall not have any rights of a stockholder with respect
to the shares covered by his or her option until the date of issuance of a stock
certificate for such shares. In no case may a fraction of a share be purchased
or issued under the Plan. If fractions of a share would result from any
adjustment, the adjustment shall be revised to the next higher whole number of
shares.

8. Termination of Employment. Any option holder whose employment has
terminated for any reason other than death or disability may exercise his or her
option, to the extent exercisable upon the effective date of such termination,
at any time within three (3) months after the date of termination, but in no
event after the expiration of the term of the option, provided, however, that if
employment be terminated either (i) for cause, or (ii) without the employee
giving reasonable notice (not less than 30 days unless waived in writing by the
Chairman of the Board) said option shall (to the extent not previously
exercised) terminate immediately. Options granted under the Plan shall not be
affected by any change of employment so long as the holder continues to be an
employee of the Corporation, of any of the Subsidiaries or of a corporation or
its parent or subsidiary issuing or assuming a stock option in a transaction to
which Section 425(a) of the Code applies.

9. Death or Disability of Employee. (a) If an option holder dies while he
or she is employed by the Corporation or any of the Subsidiaries or within three
(3) months after termination of the option holder's employment [unless such
termination was either (i) for cause, or (ii) without the option holder giving
reasonable notice (not less than 30 days unless waived in writing by the
Chairman of the Board)] the option may be exercised by his or her executor,
administrator or other person at the time entitled by law to the option holder's
rights under the option, at any time within one (1) year after death, but in no
event after the expiration of the term of the option, to the extent of the
following schedule:

<TABLE>
<CAPTION>
TIME FROM GRANT OF OPTION
-------------------------------------------------------------------- PERCENTAGE
FROM TO THE END OF EXERCISABLE
---- ------------- -----------
<S> <C> <C>
1 Day................................................ 12 Months 33%
12 Months............................................ 24 Months 67%
Over 24 Months....................................... 100%
</TABLE>

(b) In the event that an option holder becomes permanently and totally
disabled while in the employ of the Corporation or any of the Subsidiaries, the
option holder may, but only within one (1) year next succeeding the day of the
commencement of such disability, exercise an option to the extent of the above
schedule, but in no event after the expiration of the option. For this purpose,
an option holder shall be considered permanently and totally disabled if unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to last for a
continuous

A-2
<PAGE> 18

period of not less than twelve (12) months. An option holder shall not be
considered to be permanently and totally disabled unless he or she furnishes
proof of the existence thereof in such form and manner, and at such times as a
committee appointed by the Chairman of the Board may require. The committee
shall consist of three (3) employees who may be officers of the Corporation.
Said committee's determination of whether the option holder is permanently and
totally disabled shall be final and absolute, and shall not be subject to
question by the option holder, a representative of the option holder or the
Corporation.

10. Stock Option Contract. Each option shall be evidenced by an
appropriate Stock Option Contract which shall provide, among other things, (a)
that the employee agrees that he or she will remain in the employ of the
Corporation or its Subsidiaries, at the election of the Corporation, for a
period of at least one (1) year from the later of (i) the date the option is
granted or (ii) the date to which he or she is then otherwise obligated to
remain in the employ of the Corporation, and (b) that in the event of exercise
of such option, unless the shares have been registered under the Securities Act
of 1933, as amended, the shares subject to option will be acquired for
investment and not with a view to distribution thereof. Nothing in the Plan or
in any option contract entered into pursuant hereto shall confer upon any
employee any right to continue in the employ of the Corporation or the
Subsidiaries or interfere in any way with the right of the Corporation or the
Subsidiaries to terminate his or her employment at any time without liability to
the Corporation or the Subsidiaries.

11. Adjustments Upon Changes in Common Stock. If additional shares of
Common Stock are issued by the Corporation pursuant to a stock split or stock
dividend in excess of 5% in any one (1) year, the number of shares of Common
Stock then covered by each outstanding option granted hereunder shall be
increased proportionately with no increase in the total purchase price of the
shares then so covered, and the number of shares of Common Stock of the
Corporation reserved for the purposes of this Plan shall be increased by the
same proportion. In the event that the shares of Common Stock of the Corporation
are reduced at any time by a combination of shares, the number of shares of
Common Stock then covered by each outstanding option granted under the Plan
shall be reduced proportionately with no reduction in the total price of the
shares then so covered, and the number of shares of Common Stock reserved for
the purposes of this Plan shall be reduced proportionately with no reduction in
the total price of the shares then so covered, and the number of shares of
Common Stock reserved for the purposes of this Plan shall be reduced by the same
proportion. If the Corporation shall be reorganized, consolidated or merged with
another corporation, or if all or substantially all of the assets of the
Corporation shall be sold or exchanged, each employee to whom an option has been
granted under this Plan shall, at the time of issuance of the stock under such a
corporate event, be entitled to receive upon the exercise of the option, the
same number and kind of shares of stock or the same amount of property, cash or
securities as the employee would have been entitled to receive upon the
happening of any such corporate event as if the employee had been, immediately
prior to such event, the holder of the number of shares covered by the option.
No option adjustment shall be made for stock dividends which are not in excess
of 5% (even though the cumulative total of such stock dividends over the life of
an option may be in excess of 5%), cash dividends or the issuance to
stockholders of the Corporation of rights to subscribe for additional Common
Stock or other securities.

12. Amendments and Termination of the Plan. The Plan shall terminate on
December 4, 2001, and an option shall not be granted under the Plan after that
date. The Board of Directors without further approval of the shareholders, may
at any time suspend or terminate the Plan or amend it from time to time in such
respects as it may deem advisable in order that options granted hereunder as
Incentive Stock Options shall be "Incentive Stock Options" as defined in Section
422A of the Internal Revenue Code of 1986, or to conform to any change in
applicable law or to regulations or rulings of administrative agencies, or may
so amend it in any other respect not involving a substantial departure from the
principles herein set forth; provided, however, that no amendment shall be
effective without prior approval of a majority of the holders of the issued and
outstanding shares of Common Stock of the Corporation, which would: (a) except
as specified in Paragraph 11, increase the number of shares for which options
may be granted under the Plan; or (b) change the eligibility requirements for
individuals entitled to receive options hereunder. No termination, suspension or
amendment of the Plan shall, without the consent of the holder of an existing
option, adversely affect the holder's rights under such option.

A-3
<PAGE> 19

13. Non-Transferability of Option. No option granted under the Plan shall
be transferable otherwise than by Will or the laws of descent and distribution;
and options may be exercised, during the lifetime of the holder thereof, only by
such holder.

14. Restriction on Issuance of Shares. The Corporation shall not be
obligated to sell or issue any shares pursuant to any stock option agreement
unless:

(a) the shares with respect to which the option is being exercised
have been registered under the Securities Act of 1933, as amended, or are
exempt from such registration;

(b) the prior approval of such sale or issuance has been obtained from
any State regulatory body having jurisdiction; and

(c) in the event the stock has been listed on any stock exchange, the
shares with respect to which the option is being exercised have been duly
listed on such exchange in accordance with the procedure specified
therefor.

15. Stockholders' Approval. The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the outstanding shares of stock
of the Corporation at a meeting of its stockholders held within twelve (12)
months after the date the Plan is adopted by the Board of Directors and any
options granted hereunder prior to such approval shall be conditioned thereon.

A-4
<PAGE> 20

GENERAL DATACOMM INDUSTRIES, INC.

PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 2, 1995
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)

KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of General
DataComm Industries, Inc., hereby constitutes and appoints CHARLES P. JOHNSON,
HOWARD S. MODLIN and GERALD GORDON, and each and any of them, the attorneys and
proxies of the undersigned with full power of substitution to vote for and in
the name, place and stead of the undersigned, at the Annual Meeting of the
Stockholders of said Corporation, to be held at Chemical Bank, 3rd Floor, 270
Park Avenue, New York, New York, on February 2, 1995 at 4:00 P.M., and at any
adjournments thereof, the number of votes the undersigned would be entitled to
cast if present:

(1) FOR / / NOT FOR / / the election of Charles P. Johnson and Howard S.
Modlin to the Board of Directors for a term of three (3) years and John
L. Segall for a term of two (2) years and until their respective
successors are elected. Authority is withheld with respect to the
following nominee(s):

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

(2) FOR / / AGAINST / / ABSTAIN / / the proposal to authorize an
additional 500,000 shares available for grant under the 1991 Stock
Option Plan.

(3) In their discretion, upon such other matters as may properly come before
the meeting or any adjournments thereof.

Unless you specify otherwise, this Proxy will be voted "FOR" the election of
the nominees as directors and "FOR" Item 2.

(Continued and to be signed on the reverse side)

(Continued from reverse side)

A majority of said attorneys and proxies, or their substitute at said
meeting, or any adjournments thereof (or if only one (l), that one (l)) may
exercise all of the powers hereby given. Any proxy to vote any of the shares,
with respect to which the undersigned is or would be entitled to vote,
heretofore given to any person or persons other than the persons named above is
hereby revoked.

IN WITNESS WHEREOF, the undersigned has signed and sealed this proxy and
hereby acknowledges receipt of a copy of the notice of said meeting and proxy
statement in reference thereto both dated December 5, 1994.

Dated: , 199
--------------------------

(L.S.)
--------------------------
(Stockholder(s) Signature)

(L.S.)
--------------------------

NOTE: This Proxy, properly completed, dated and signed, should be returned
immediately in the enclosed postage-paid envelope to GENERAL DATACOMM
INDUSTRIES, INC.

<PAGE> 21

GENERAL DATACOMM INDUSTRIES, INC.

PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 2, 1995
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)

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

(2) FOR / / AGAINST / / ABSTAIN / / the proposal to authorize an
additional 500,000 shares available for grant under the 1991 Stock
Option Plan.

(3) In their discretion, upon such other matters as may properly come before
the meeting or any adjournments thereof.

Unless you specify otherwise, this Proxy will be voted "FOR" the election of
the nominees as directors and "FOR" Item 2.

(Continued and to be signed on the reverse side)

_________________
PLAN SHARES

(Continued from reverse side)

Dated: , 199
--------------------------

(L.S.)
--------------------------
(Stockholder(s) Signature)

(L.S.)
--------------------------

NOTE: This Proxy, properly completed, dated and signed, should be returned
immediately in the enclosed postage-paid envelope to GENERAL DATACOMM
INDUSTRIES, INC.

<PAGE> 22

GENERAL DATACOMM INDUSTRIES, INC.

PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 2, 1995
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)

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

(2) FOR / / AGAINST / / ABSTAIN / / the proposal to authorize an
additional 500,000 shares available for grant under the 1991 Stock
Option Plan.

(3) In their discretion, upon such other matters as may properly come before
the meeting or any adjournments thereof.

Unless you specify otherwise, this Proxy will be voted "FOR" the election of
the nominees as directors and "FOR" Item 2.

(Continued and to be signed on the reverse side)

____________ ____________
COMMON CLASS B

(Continued from reverse side)

Dated: , 199
--------------------------

(L.S.)
--------------------------
(Stockholder(s) Signature)

(L.S.)
--------------------------

NOTE: This Proxy, properly completed, dated and signed, should be returned
immediately in the enclosed postage-paid envelope to GENERAL DATACOMM
INDUSTRIES, INC.