<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GENERAL DATACOMM INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
06-0853856
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
------------------------
1579 STRAITS TURNPIKE
MIDDLEBURY, CONNECTICUT 06762-1299
(203) 574-1118
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
HOWARD S. MODLIN
WEISMAN, CELLER, SPETT & MODLIN
445 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 371-5400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
JOHN W. WHITE
CRAVATH, SWAINE & MOORE
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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- ------------------------------------------------------------------------------------------------
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
Common Stock, par value $.10
per share................. 2,070,000 $30.125 $62,358,750 $21,503.02
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
GENERAL DATACOMM INDUSTRIES, INC.
Cross-reference sheet furnished pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus of information required by Items in Part I of
Form S-3.
<TABLE>
<CAPTION>
ITEM IN FORM S-3 PROSPECTUS LOCATION/CAPTION
------------------------------------------ ---------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front Cover Page; Outside Back Cover
Page of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........ Prospectus Summary; Investment
Considerations; Not Applicable
4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........... Underwriting
6. Dilution.................................. Not Applicable
7. Selling Security Holders.................. Not Applicable
8. Plan of Distribution...................... Underwriting
9. Description of Securities to be
Registered................................ Description of Capital Stock
10. Interests of Named Experts and Counsel.... Legal Matters
11. Material Changes.......................... Management's Discussion and Analysis of
Results of Operations and Financial Condition
12. Incorporation of Certain Information by
Reference................................. Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION
OCTOBER 28, 1994
PROSPECTUS
[LOGO]
1,800,000 SHARES
GENERAL DATACOMM INDUSTRIES, INC.
COMMON STOCK
($.10 PAR VALUE)
All the shares of Common Stock, par value $.10 per share (the "Common Stock"),
offered hereby are being sold by General DataComm Industries, Inc. ("GDC" or the
"Company"). The Common Stock is listed on the New York Stock Exchange under the
symbol "GDC". On October 27, 1994, the last reported sale price for the Common
Stock, as reported on the New York Stock Exchange Composite Transactions Tape,
was $33.125 per share. See "Price Range of Common Stock and Dividend Policy".
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS DISCUSSED UNDER THE
CAPTION "INVESTMENT CONSIDERATIONS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT COMPANY(1)
<S> <C> <C> <C>
Per Share............................ $ $ $
Total(2)............................. $ $ $
</TABLE>
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(1) Before deducting expenses payable by the Company, estimated to be $ .
(2) The Company has granted the Underwriters a 30-day option to purchase up to
270,000 additional shares of Common Stock at the Price to Public, less the
Underwriting Discount, solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting".
The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of certificates for the shares of Common Stock will
be made at the office of Salomon Brothers Inc, Seven World Trade Center, New
York, New York, or through the facilities of The Depository Trust Company, on or
about , 1994.
SALOMON BROTHERS INC SOUNDVIEW FINANCIAL GROUP, INC.
The date of this Prospectus is , 1994.
<PAGE> 4
[Diagram on this page, titled "ATM MARKET SEGMENTS",illustrates the four ATM
market segments described in "Business--ATM Market".]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS IN THE COMMON STOCK MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's regional offices located at Northwestern Atrium Center, Suite 1400,
500 West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained at
prescribed rates by writing the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Common
Stock is listed on the New York Stock Exchange and reports, proxy statements and
other information concerning the Company can be inspected at such Exchange's
office located at 20 Broad Street, New York, New York 10005.
This Prospectus forms a part of a registration statement on Form S-3
(herein, together with all exhibits thereto, referred to as the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933 (the "Securities Act") with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional offices referred to above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-8086), are hereby
incorporated by reference in and made a part of this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, as amended by Form 10-K/A filed January 7, 1994.
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1993, March 31, 1994 and June 30, 1994.
(3) The Company's Current Report on Form 8-K filed June 14, 1994.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for the purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is, or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, upon the written or oral request of any such person, a copy of any
of or all the documents referred to above which have been or may be incorporated
in this Prospectus by reference, other than exhibits to such documents which are
not specifically incorporated by reference into such documents. Requests for
such copies should be directed to Tom Shea, Director of Strategic Planning,
General DataComm Industries, Inc., 1579 Straits Turnpike, Middlebury,
Connecticut 06762-1299, telephone number (203) 574-1118.
3
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere in this Prospectus or
incorporated herein by reference. Except as otherwise noted, all information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
THE COMPANY
GDC is a leading worldwide provider of wide area networking and
telecommunications products. The Company designs, assembles, markets, installs
and maintains products and services that enable telecommunications common
carriers, corporations and governments to build, upgrade and better manage their
global telecommunications networks. Products include multiplexers and
internetworking equipment, digital data sets, analog modems, Asynchronous
Transfer Mode ("ATM") cell switches, network management systems and
comprehensive support services.
GDC's customer base includes: Local Exchange Carriers including all seven
Regional Bell Operating Companies, Bell Canada and GTE; Competitive Access
Providers including MFS Datanet; Interexchange Carriers including AT&T, MCI and
Sprint; corporate end users such as American Airlines, Citicorp, EDS, Harris,
Hitachi and Hongkong & Shanghai Bank; and government entities including the
British Ministry of Defence, the French Ministry of State, NASA, the U.S. State
Department and many state and local governments.
To meet the growing market demand for higher speed communications services,
the Company has added ATM solutions to its more traditional product offerings.
In doing so, the Company believes it has enhanced its position as a leading
supplier of integrated wide area networking and telecommunications products. The
Company's strategy is based upon:
CAPITALIZING ON ATM TECHNOLOGY. The Company believes it has a leading
position in the ATM switch market. The following entities have deployed, or
announced their intention to deploy, GDC's ATM cell switches in their proposed
ATM networks: Ameritech, Bell Canada, MCI, MFS Datanet, Telecom Finland and
Australia's Defence, Science and Technology Organisation. As of September 30,
1994, GDC, along with Netcomm Limited, had shipped 238 ATM switches to a variety
of customers in 15 countries (76 for customer trial and 162 sold). The Company
also believes that growing market awareness of its ATM technology has increased
customer exposure to GDC's other products.
PROVIDING COST-EFFECTIVE FLEXIBLE PRODUCT SOLUTIONS. The Company's product
families are designed with architectures that scale to most network sizes and
cost requirements. Customers can select the products that are most appropriate
for their needs and migrate to higher capacity products over time.
IMPROVING PERFORMANCE OF CUSTOMER NETWORKS. The Company's products are
designed to improve network efficiency by increasing transmission speed,
compressing and consolidating voice and data communication and providing dynamic
bandwidth allocation.
LEVERAGING GLOBAL CUSTOMER BASE, DISTRIBUTION AND SUPPORT. The Company has
a worldwide customer base of corporate and government users and
telecommunications carriers. With a sales and marketing organization of 471
employees, the Company has global distribution capabilities in nearly 60
countries around the world. GDC's ability to provide international customer
service and support is critical to customers that run mission-critical
applications over their networks.
4
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered(1)........................ 1,800,000 shares
Common Stock Outstanding(2):
Before the Offering....................... 17,965,659 shares
After the Offering........................ 19,765,659 shares
Use of Proceeds................................ For reduction of indebtedness, working
capital and general corporate purposes,
including potential acquisitions. See "Use
of Proceeds".
NYSE Symbol.................................... GDC
</TABLE>
- ---------------
(1) Excluding 270,000 shares subject to the Underwriters' over-allotment option.
(2) As of October 25, 1994. Including 2,255,080 shares of Class B Stock
convertible into Common Stock on a share-for-share basis at any time (see
"Description of Capital Stock"), but excluding 2,493,642 shares of Common
Stock issuable upon the exercise of options or warrants. See
"Capitalization".
INVESTMENT CONSIDERATIONS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS DISCUSSED UNDER
THE CAPTION "INVESTMENT CONSIDERATIONS".
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30,
--------------------------------------
1992 1993 1994(1)
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues....................................... $197,858 $211,847 $ 210,990
Gross profit................................... 90,248 101,442 100,658
Operating income............................... 5,549 8,997 661
Income (loss) before cumulative effect of
accounting changes........................... 2,643 6,116 (1,895)(2)
Net income (loss).............................. $ 2,643 $ 6,116 $ (2,328)(3)
Earnings (loss) per share:
Before cumulative effect of accounting
changes................................... 0.17 0.36 (0.11)(2)
Net.......................................... $ 0.17 $ 0.36 $ (0.14)(3)
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1994(1)
-------------------------------
AS
ACTUAL ADJUSTED(4)
----------- ---------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 2,939
Working capital......................................... 56,413
Total assets............................................ 180,264
Long-term debt, including current portion............... 47,356
Stockholders' equity.................................... 84,487
</TABLE>
- ---------------
(1) In November 1993, the Company acquired Netcomm Limited ("Netcomm") and,
accordingly, Netcomm's results of operations were included in the Company's
consolidated financial data beginning at that time.
(2) Loss before cumulative effect of accounting changes and net loss for the
year ended September 30, 1994, include an income tax benefit of $1,700, or
$0.10 per share, resulting from the resolution of a foreign tax issue.
(3) Net loss for the year ended September 30, 1994, includes after tax charges
of $(433), or $(0.03) per share, as a result of the adoption of Statements
of Financial Accounting Standards Nos. 106 and 112 relating to
post-retirement and post-employment benefits, respectively.
(4) As adjusted for the issuance and sale of the Common Stock offered hereby.
See "Capitalization".
5
<PAGE> 8
INVESTMENT CONSIDERATIONS
FUTURE SALES DEPENDENT ON SHIFT IN PRODUCT MIX
The Company's product mix is shifting from its traditional analog product
line to high-speed digital data sets, multiplexer and internetworking products
and ATM cell switches. The ability of the Company to maintain or increase
revenues during the next several years may be dependent upon sales of its ATM
cell switches. For fiscal 1994, analog product sales accounted for approximately
20% of net product sales, while revenues from ATM switches accounted for less
than 7% of net product sales. ATM cell switches were first shipped in fiscal
1994 and a substantial portion of those were for testing and evaluation by
customers in their developing ATM-based networks.
Sales of the Company's analog products decreased from approximately $44
million in fiscal 1993 to approximately $34 million in fiscal 1994. The markets
for the Company's traditional analog products are mature and generally declining
and have correspondingly decreasing prices. Although GDC believes that its new
V.F 28.8 modem family introduced in fiscal 1994 will help to offset anticipated
future decreases in the sales of the Company's other analog products, the
overall market for analog products is expected to continue to decline. There can
be no assurance that the V.F 28.8 modem family will achieve broad market
acceptance.
In addition, the Company believes that the availability of its ATM switches
could provide the Company with better access to customers in selling its other
products and that the market penetration of these other products could increase
as its ATM products are sold. However, since the ATM market is in its infancy
and the Company may not be successful in developing, marketing and deploying its
ATM cell switches, there can be no assurance that sales of its other products
will benefit from any ATM-related business. In fiscal 1994, revenues from these
other products (excluding analog and ATM products) were approximately 73% of net
product sales. See "-- Infancy of ATM Market and ATM Products".
INFANCY OF ATM MARKET AND ATM PRODUCTS
There can be no assurance that markets for ATM-based products, including
ATM cell switches, will develop or, that if they do, that they will develop in
the near future or that the Company's ATM products will be acceptable to these
markets.
Although many network equipment suppliers have introduced or announced
plans to introduce ATM-based products, the ATM market is still in its infancy.
Only a very limited number of ATM-based networks currently are deployed and
there can be no guarantees that ATM networks will be broadly deployed. Moreover,
even if ATM technology is deployed, the timing and extent of any such deployment
cannot be predicted. Certain other large-scale telecommunications technology
"breakthroughs", such as Frame Relay or ISDN, have often taken longer to be
deployed than originally anticipated and have not always been deployed as
broadly as originally anticipated.
Even if there is general market acceptance of ATM technology, the Company's
ATM cell switches may not be accepted. Although a number of telecommunications
carriers and corporations are testing and implementing the Company's ATM
switches, these entities are not obligated to continue to purchase any of GDC's
switches. Moreover, there already is intense competition among ATM switch
manufacturers and the ATM market will be subject to both rapid advances in
technology and greater demand for more flexible, cost-effective solutions. In
addition, the success of the Company's ATM switching technology is dependent on
the adequacy of the Company's manufacturing and support services capability. See
"-- Competition", "-- Rapid Technology Changes" and "-- Manufacturing and
Support Services Capability".
6
<PAGE> 9
COMPETITION
Each of the segments of the telecommunications and networking industries is
intensely competitive. Many of GDC's current and prospective competitors have
greater name recognition, a larger installed base of networking products, more
extensive engineering, manufacturing, marketing, distribution and support
capabilities and greater financial, technological and personnel resources.
Many of the participants in the networking industry, including, among
others, ADC Telecommunications, Bay Networks, Cascade Communications, Cisco, ECI
Telecom, FORE Systems, Lightstream, Newbridge Networks and StrataCom, and
certain participants in the computer industry, including, among others, DEC and
IBM, have introduced, or have announced their intention to develop, ATM
networking products. Other companies are expected to follow. In addition,
traditional suppliers of central office switching equipment, such as Alcatel,
AT&T Network Systems, Fujitsu, Hitachi, LM Ericsson, Northern Telecom and
Siemens, are expected to offer ATM-based switches for central offices. Companies
may also develop alternative network solutions to ATM. Even though certain of
these ATM competitors currently offer or plan to offer ATM products in markets
in which the Company does not plan to compete, it is possible that such
competitors will develop ATM technology that does compete with the Company's
products. This competition could result in the same intense price competition
that is present in the broader networking market.
RAPID TECHNOLOGY CHANGES
The markets for the Company's products are characterized by rapid
technological development, evolving industry standards, emerging network
architectures and frequent new product introductions. Rapid technological
development substantially shortens product life cycles and may lead to
technological obsolescence. The Company's success will depend, in part, upon its
ability to influence the development of industry standards, to enhance and
expand existing products and to select, develop, manufacture and market, in a
timely, cost-effective manner, new products that achieve market acceptance.
However, announcements of product enhancements or new product offerings may
cause customers to defer purchasing existing GDC products.
In the ATM market, the development of comprehensive industry standards is
evolving. The Company believes that its ability to compete successfully in the
ATM market also is dependent upon the compatibility and interoperability of its
products with products and architectures of other vendors. Alternative
networking solutions developed by others could render ATM networking technology
and the Company's products noncompetitive or obsolete. The Company currently
anticipates adding various features to its ATM cell switches during the 1995
calendar year, but there can be no assurances that GDC will be able to effect
such product enhancements or that it will be able to do so on a timely and cost-
effective basis. In the past, the Company has on occasion experienced delays in
its introductions of product enhancements and new products.
MANUFACTURING AND SUPPORT SERVICES CAPABILITY
Any delay or interruption in the manufacturing or customer service and
support of GDC products could adversely affect market acceptance of the
Company's products. As only a limited number of the Company's ATM switches have
been delivered to customers, software errors, functional limitations and
manufacturing problems may arise, especially as the Company's customers expand
or redefine their proposed networks. If such issues are not resolved in a timely
and adequate manner upon occurrence, customer acceptance of GDC's ATM switches
may be adversely affected.
7
<PAGE> 10
RELIANCE ON KEY COMPONENTS
The Company's products use certain components, such as microprocessors,
memory chips and pre-formed enclosures, that are acquired or available from one
or a limited number of sources. The Company has generally been able to procure
adequate supplies of these components in a timely manner from existing sources.
The Company's inability to obtain a sufficient quantity of these components as
required, or to develop alternative sources at acceptable prices and within a
reasonable time, could result in delays or reductions in product shipment which
could materially affect the Company's operating results in any given period.
QUARTERLY EARNINGS FLUCTUATIONS
The Company's quarterly operating results may vary significantly depending
on various factors, some of which are not within the control of the Company.
Additionally, as is the case with many high technology companies, a significant
portion of the Company's shipments typically occurs in the last few weeks of a
quarter. As a result, the Company's revenues may shift from one quarter to the
next, having a significant effect on reported results. See "-- Volatility of
Stock Price".
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon the retention
and attraction of executive officers and key management employees and technical
personnel.
EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation contains certain
provisions that could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock, thus making it less likely that a shareholder will receive a
premium in any sale of shares. Certain of such provisions allow the Company to
issue preferred stock with rights senior to those of the Common Stock and impose
various procedural and other requirements which could make it more difficult for
stockholders to effect certain corporate actions. Moreover, the Company's Board
of Directors is divided into three classes, each of which serves for a staggered
three-year term, making it more difficult for a third party to gain control of
GDC's Board. In addition, the holders of the Company's Class B Stock have, under
certain circumstances, greater voting power in the election of directors. See
"Description of Capital Stock".
VOLATILITY OF STOCK PRICE
The trading price of the Common Stock has fluctuated widely in response to
quarter-to-quarter operating results, industry conditions, awards of orders to
the Company or its competitors, new product or product development announcements
by the Company or its competitors and changes in earnings estimates by analysts.
Any shortfall in revenue or earnings from expected levels could have an
immediate and significant adverse effect on the trading price of the Company's
Common Stock in any given period. In addition, the volatility of the stock
markets in recent years has caused wide fluctuations in trading prices of stocks
of high technology companies independent of their individual operating results.
See "Price Range of Common Stock and Dividend Policy".
8
<PAGE> 11
USE OF PROCEEDS
The net proceeds from the issuance and sale of the 1,800,000 shares of
Common Stock offered hereby will be approximately $ million (approximately
$ million if the Underwriters' over-allotment option is exercised in full).
A minimum of $11.2 million of the net proceeds will be applied to the reduction
of the Company's outstanding revolving credit facility which bears interest at
0.75% over the prime rate (although alternative rates based on LIBOR are
available) and matures on November 30, 1996. The remaining net proceeds may be
used to further reduce the Company's outstanding indebtedness or for working
capital or other general corporate purposes, including expenditures related to
the development and expansion of the Company's ATM products and potential
acquisitions. The Company at this time has no understandings or commitments to
make any acquisitions and there can be no assurances that any acquisitions will
be made. See "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Business -- Acquisition Strategy".
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the New York Stock Exchange under the symbol
"GDC". The following table sets forth the high and low closing sales prices of
the Common Stock for the periods indicated, as reported on the New York Stock
Exchange Composite Transactions Tape.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
FISCAL YEAR 1993:
First Quarter.......................................... $6 3/8 $3 3/8
Second Quarter......................................... 11 1/4 6 1/2
Third Quarter.......................................... 15 3/4 8 1/2
Fourth Quarter......................................... 14 1/2 8 5/8
FISCAL YEAR 1994:
First Quarter.......................................... $11 3/4 $8 3/4
Second Quarter......................................... 17 5/8 8 1/2
Third Quarter.......................................... 16 3/8 10 7/8
Fourth Quarter......................................... 29 5/8 15 3/8
</TABLE>
On October 27, 1994, the last reported sales price for the Common Stock on
the New York Stock Exchange Composite Transactions Tape was $33.125 per share.
As of October 25, 1994, there were 17,965,659 shares of Common Stock and Class B
Stock outstanding.
The Company has never declared or paid any cash dividends on its capital
stock. The Company's present policy is to retain earnings to finance operations,
and no change in that policy is expected. In addition, the terms of the
Company's revolving credit and term loan agreement prohibit the Company from
paying cash dividends on its capital stock. As a result, it is not anticipated
that cash dividends will be paid in the foreseeable future.
9
<PAGE> 12
CAPITALIZATION
(Dollars in thousands)
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1994, and as adjusted to give effect to the sale by
the Company of the 1,800,000 shares of Common Stock offered hereby (assuming no
exercise of the over-allotment option granted to the Underwriters). This
information should be read in conjunction with Selected Consolidated Financial
Data.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1994
-------------------------
AS
ACTUAL ADJUSTED
----------- ---------
(UNAUDITED)
<S> <C> <C>
Long-term debt(1):
Revolving credit loan -- prime plus 3/4%(2).................. $ 16,200
Note payable -- prime plus 1 1/4%(2).......................... 6,625
Other notes payable(3)........................................ 7,250
Mortgage payable -- LIBOR plus 2%............................. 11,025
Other......................................................... 1,018
----------- ---------
Total long-term debt..................................... 42,118
----------- ---------
Stockholders' equity:
Preferred Stock, $1.00 par value; 3,000,000 shares authorized;
no shares issued and outstanding............................. --
Common Stock, $.10 par value; 35,000,000 shares authorized;
16,461,959 shares issued and outstanding; and 18,261,959
shares as adjusted(4)........................................ 1,646
Class B Stock, $.10 par value; 35,000,000 shares authorized;
2,271,780 shares issued and outstanding(5).................. 227
Capital in excess of par value................................ 68,027
Earnings reinvested........................................... 21,477
Cumulative foreign currency translation adjustment............ (901)
Less: 841,773 treasury shares at cost....................... (5,989)
----------- ---------
Total stockholders' equity............................... 84,487
----------- ---------
Total capitalization................................... $126,605
========== ==========
</TABLE>
- ---------------
(1) Excluding current portion ($5,238) of long-term debt.
(2) Alternate interest rates based on LIBOR are available.
(3) Various fixed and variable interest rates.
(4) Excluding 2,567,335 shares of Common Stock issuable upon exercise of stock
options and warrants granted or outstanding at September 30, 1994, at option
prices ranging from $2.00 to $19.94 per share.
(5) Class B Stock has, under certain circumstances, greater voting power in the
election of directors. See "Description of Capital Stock".
10
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
The following table should be read in conjunction with Management's
Discussion and Analysis of Results of Operations and Financial Condition and the
consolidated financial statements (and notes thereto) and other financial
information incorporated by reference in this Prospectus. The selected
consolidated statements of operations data for the years ended September 30,
1992 and 1993, and the selected consolidated balance sheet data at September 30,
1993, are derived from, qualified by reference to and should be read in
conjunction with, the related consolidated financial statements (and notes
thereto), audited by Coopers & Lybrand, a copy of which is included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1993. The
selected consolidated statements of operations data for the year ended September
30, 1994, and the selected consolidated balance sheet data at September 30,
1994, have been derived from the unaudited consolidated financial statements of
the Company, which, in the opinion of the Company, have been prepared on the
same basis as the audited financial statements and reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the operating results and financial condition for such period.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30,
---------------------------------------
1992 1993 1994(1)
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
Net product sales.................................................... $158,768 $171,468 $ 169,958
Service revenue...................................................... 31,679 32,855 34,245
Lease revenue........................................................ 7,411 7,524 6,787
-------- -------- -----------
197,858 211,847 210,990
Costs and expenses:
Cost of product sales................................................ 77,051 78,622 76,854
Amortization of capitalized software development costs............... 7,166 8,300 9,735
Cost of services..................................................... 22,441 22,493 22,861
Cost of lease revenue................................................ 952 990 882
Selling, general and administrative.................................. 68,789 73,166 79,921
Research and product development..................................... 15,910 19,279 20,076
-------- -------- -----------
192,309 202,850 210,329
Operating income....................................................... 5,549 8,997 661
Other income (expense):
Interest............................................................. (2,692) (1,982) (3,780)
Other, net........................................................... 340 126 249
-------- -------- -----------
(2,352) (1,856) (3,531)
Income (loss) before income taxes and cumulative effect of accounting
changes.............................................................. 3,197 7,141 (2,870)
Income tax provision (benefit)......................................... 554 1,025 (975)(2)
-------- -------- -----------
Income (loss) before cumulative effect of accounting changes........... 2,643 6,116 (1,895)
Cumulative effect of accounting changes................................ -- -- (433)(3)
-------- -------- -----------
Net income (loss)...................................................... $ 2,643 $ 6,116 $ (2,328)
========= ========= ===========
Earnings (loss) per share:
Income (loss) before cumulative effect of accounting change.......... $ 0.17 $ 0.36 $ (0.11)(2)
Cumulative effect of accounting changes.............................. -- -- (0.03)(3)
-------- -------- -----------
$ 0.17 $ 0.36 $ (0.14)
========= ========= ===========
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-------------------------
1993 1994(1)
-------- -----------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................................................... $ 2,594 $ 2,939
Receivables........................................................................ 35,654 49,581
Inventories........................................................................ 34,522 42,162
Total assets....................................................................... 141,676 180,264
Long-term debt, including current portion.......................................... 31,891 47,356
Stockholders' equity............................................................... 67,028 84,487
</TABLE>
- ---------------
(1) In November 1993, the Company acquired Netcomm and, accordingly, Netcomm's
results of operations were included in the Company's consolidated financial
data beginning at that time.
(2) Includes an income tax benefit of $1,700, or $0.10 per share, resulting from
the resolution of a foreign tax issue.
(3) Represents after-tax charges of $(433), or $(0.03) per share, as a result of
the adoption of Statements of Financial Accounting Standards Nos. 106 and
112 relating to post-retirement and post-employment benefits, respectively.
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
Although revenues were essentially unchanged in fiscal 1994 when compared
to fiscal 1993, there were significant differences in both the revenue trends
within the years and in the types of products sold in each year. Revenues
declined 4.9% in the fiscal 1993 second half compared to the first half, whereas
fiscal 1994 second half revenues exceeded the first half by 19.6%. The Company's
fiscal 1994 fourth quarter revenues were the highest in its history. The upward
trend in the second half was driven by demand for the Company's ATM and digital
transmission products, offset in part by a continuing decline in demand for the
Company's traditional analog products.
The Company has made incremental investments in research and development,
marketing, production engineering and inventories (including ATM trial units) in
preparation for the roll-out of its ATM products. The Company also continues to
expand its international sales operations. As a result, operating expenses grew
by $7.6 million to 47.4% of fiscal 1994 revenues compared to 43.6% of fiscal
1993 revenues and contributed to the losses in the first three quarters of
fiscal 1994.
Net income in the fiscal 1994 fourth quarter of $1.3 million, or $0.07 per
share, reduced the net loss for the fiscal 1994 year to $(2.3 million), or
$(0.14) per share, compared to net income of $6.1 million, or $0.36 per share,
in fiscal 1993. The fiscal 1994 net loss included: (i) after tax charges of
$(433,000), or $(0.03) per share, as a result of adopting Statements of
Financial Accounting Standards Nos. 106 and 112 relating to post-retirement and
post-employment benefits, respectively, and (ii) an income tax benefit of $1.7
million, or $0.10 per share, resulting from the resolution of a foreign tax
issue.
In November 1993, the Company acquired Netcomm Limited ("Netcomm"), a
developer of ATM technology, and, accordingly, Netcomm's results of operations
were included in the Company's financial data beginning at that time. Netcomm
has been renamed General DataComm Advanced Research Centre and its charter is to
develop next-generation ATM products.
In the third quarter of fiscal 1994 the Company raised $14.6 million, after
expenses, through a private offering of 1,250,000 shares of Common Stock.
RESULTS OF OPERATIONS
The following table sets forth unaudited consolidated quarterly financial
data (dollars in thousands, except per share data):
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, 1993 FISCAL YEAR ENDED SEPTEMBER 30, 1994
------------------------------------- -------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $54,272 $54,295 $51,267 $52,013 $48,050 $48,032 $54,903 $60,005
Gross profit............... 25,216 25,606 25,076 25,544 22,806 22,802 25,563 29,487
Operating income (loss).... 2,313 2,724 1,953 2,007 (851) (1,602) 575 2,539
Net income (loss).......... $ 1,551 $ 1,918 $ 1,283 $ 1,364 $(2,309) $ (810) $ (502) $ 1,293
======= ======= ======= ======= ======= ======= ======= =======
Earnings (loss) per
share.................... $ 0.10 $ 0.11 $ 0.07 $ 0.08 $ (0.14) $ (0.05) $ (0.03) $ 0.07
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
12
<PAGE> 15
The following table sets forth unaudited consolidated financial data stated
as a percentage of total revenues:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
SEPTEMBER 30,
----------------------------
1992 1993 1994
------ ------ ------
<S> <C> <C> <C>
Revenues:
Net product sales.......................................................... 80.2% 80.9% 80.6%
Service revenue............................................................ 16.0 15.5 16.2
Leasing revenue............................................................ 3.8 3.6 3.2
------ ------ ------
100.0 100.0 100.0
Costs and expenses:
Cost of revenues........................................................... 50.8 48.2 47.7
Amortization of capitalized software development costs..................... 3.6 3.9 4.6
Selling, general and administrative........................................ 34.8 34.6 37.9
Research and product development........................................... 8.0 9.1 9.5
------ ------ ------
Operating income............................................................. 2.8 4.2 0.3
------ ------ ------
Net income (loss)............................................................ 1.3% 2.9% (1.1)%
===== ===== =====
</TABLE>
1994 Compared with 1993
Revenues for fiscal 1994 were slightly lower (0.4%) than in fiscal 1993.
However, fiscal 1994 fourth quarter revenues rose $8.0 million, or 15.4%, over
the fourth quarter of fiscal 1993. Growth markets in the fiscal 1994 fourth
quarter included both the domestic carriers and many international areas. New
products, such as ATM cell switches, V.F 28.8 modems and additions to digital
data set and multiplexer product lines, sold higher volumes compared to the
prior quarters of fiscal 1994, offset in part by a reduction in traditional
analog modem shipments. For the 1994 fiscal year, net product sales were down
$1.5 million, or 0.1%, service revenue was up $1.4 million, or 4.2%, and leasing
revenue was down $737,000, or 9.8%.
Gross margin (which includes amortization of capitalized software
development costs) declined slightly (0.2%) to 47.7% in fiscal 1994 from 47.9%
in fiscal 1993. Amortization of capitalized software development costs charged
to cost of product sales increased to $9.7 million in fiscal 1994 from $8.3
million in fiscal 1993 and had the effect of reducing gross margin by 0.5%. High
technology products in particular are subject to sales price pressures as
competition grows. The Company works to offset these effects by negotiating
lower material component prices, improving manufacturing cost and efficiencies
and introducing new generation products.
Selling, general and administrative expenses increased $6.8 million, or
9.2%, in fiscal 1994 principally due to strategic investments made in ATM
marketing operations and in international selling organizations. Since there was
no corresponding growth in revenues until the second half of the 1994 fiscal
year, selling, general and administrative expenses rose to 37.9% of revenues
from 34.6% in fiscal 1993.
Research and product development spending, before consideration of
capitalized software development costs, increased to $33.2 million, or 15.7% of
revenues, from $29.8 million, or 14.1% of revenues, in fiscal 1993. This
increase, 11.3% year-over-year, reflects the acquisition of Netcomm and its
subsequent conversion to a dedicated ATM research facility, the start-up of a
new ATM product development facility in Quebec, Canada and the strategic
repositioning of the domestic product development organization. The increase in
capitalized software development costs to $13.1 million, or 39.5% of total
spending, in fiscal 1994, from $10.6 million, or 35.4% of total spending, in
fiscal 1993, is directly related to the increasing software content within the
Company's products.
Interest expense in fiscal 1994 increased $1.8 million, nearly double the
fiscal 1993 level. The Company purchased and concurrently mortgaged two of its
principal facilities in September 1993, adding
13
<PAGE> 16
$630,000 to interest expense, which was offset by lower rent expense. Also, the
higher interest levels reflected, among other things, an increase in borrowing
levels attributable to the acquisition cost of Netcomm in November 1993, the
related investments made to support the ATM product line and investments in
international sales organizations.
The fiscal 1994 income tax benefit of $975,000 is comprised of a $1.7
million favorable resolution of a foreign tax issue offset by $725,000 in
provisions for state and foreign income taxes. The Company has significant net
operating loss carryforwards (approximately $35 million at September 30, 1994)
available to offset future federal income taxes. These net operating losses
begin to expire in the year 2002.
1993 Compared with 1992
Revenues for fiscal 1993 rose $14.0 million, or 7.1%, over fiscal 1992. The
increase in net product sales of $12.7 million was principally due to
improvements in sales into domestic markets while foreign sales results were
mixed. Service revenue increased 3.7%, or $1.2 million, while leasing revenue
remained constant on a year-to-year basis.
Gross margin rose to 47.9% in fiscal 1993 from 45.6% in fiscal 1992.
Product margins increased 2.3% from 47.0% to 49.3%, mainly attributable to
higher volumes and improvements in manufacturing productivity. Amortization of
capitalized software development costs charged to cost of product sales
increased to $8.3 million in fiscal 1993 from $7.2 million in fiscal 1992.
Excluding the impact of this amortization, product margins rose to 54.1% in
fiscal 1993 from 51.5% in fiscal 1992.
Selling, general and administrative expenses increased $4.4 million, or
6.4%, in fiscal 1993 from fiscal 1992. The higher spending levels reflected the
impact of headcount additions in the international and domestic sales forces,
regular salary increases, higher commissions and increased costs associated with
the launch of new products.
Research and product development expenditures increased $4.6 million to
14.1% of revenue in fiscal 1993 due to increased investments in new product
development and enhancements. As a result, the capitalization of software
development costs rose from $9.3 million in fiscal 1992 to $10.6 million in
fiscal 1993. On a net basis, research and development expense increased $3.4
million, or 21.2%, in fiscal 1993 from the prior fiscal year.
Interest expense declined 26.4% from $2.7 million in fiscal 1992 to $2.0
million in fiscal 1993 mostly due to the lower levels of borrowings during the
fiscal year. Foreign currency exchange gains of $54,000 and $122,000 were
reported in other income in fiscal 1993 and 1992, respectively.
The Company provided $1.0 million and $554,000 in fiscal 1993 and 1992,
respectively, for federal, state and foreign income taxes, with the increase
principally attributable to higher taxable income in foreign operations.
FINANCIAL CONDITION AND LIQUIDITY
The Company's cash and cash equivalents were $2.9 million at September 30,
1994, compared to $2.6 million at September 30, 1993.
Non-debt working capital, excluding cash and cash equivalents, increased
$19.6 million in fiscal 1994 to $58.7 million at September 30, 1994. This
increase resulted primarily from increases in current receivables and
inventories, which were partially offset by increases in accounts payable and
accrued liabilities and deferred income on maintenance contracts. Current
receivables increased $13.9 million in fiscal 1994 to $49.6 million at September
30, 1994, due in part to the revenue growth in the fourth quarter. Inventory
grew $7.6 million to $42.2 million in anticipation of increasing shipments of
ATM and other new products.
Investing activities during fiscal year 1994 included net additions to
property, plant and equipment of $11.3 million, additions to capitalized
software development costs of $13.1 million and costs of $5.9 million associated
with the Netcomm acquisition. Any future product growth will increase capital
14
<PAGE> 17
requirements for manufacturing and development equipment. As a result, the
Company anticipates that fiscal 1995 capital requirements should equal or exceed
1994 capital expenditures.
Financing activities during the year ended September 30, 1994, added $34.2
million in cash, representing $16.5 million from long-term borrowings, $3.1
million from the issuance of Common Stock pursuant to employee stock programs
and net proceeds of $14.6 million in conjunction with a private placement of
1,250,000 shares of Common Stock in the fiscal 1994 third quarter.
In November 1993, the Company entered into an amended revolving credit
agreement expiring on November 30, 1996, that provides for borrowings of up to
$25.0 million, reduced by the value of outstanding letters of credit issued by
the lenders on behalf of the Company up to $2.5 million. Interest is charged at
0.75% over the prime rate or, at the Company's option, at 2.625% over selected
LIBOR terms. The agreement imposes various financial covenants, requires that
most assets of GDC be pledged as collateral and limits the permitted amount of
borrowing through an asset-based formula. The loan balance outstanding at
September 30, 1994, was $16.2 million. In June 1994, this agreement was further
amended to provide an $8.0 million term loan ($7.5 million outstanding at
September 30, 1994), the proceeds of which the Company used to reduce in full
other maturing indebtedness.
In September 1993, the Company purchased its corporate headquarters and
manufacturing facilities and concurrently entered into mortgages to partially
finance these purchases. The mortgage balances outstanding at September 30,
1994, totaled $11.4 million. Interest is charged at LIBOR (90-day) plus 2%,
principal payments are $100,000 per quarter and the mortgages mature in the year
2003.
Notes payable and capitalized lease obligations, both used to finance
capital equipment purchases, totaled $11.8 million at September 30, 1994, and
have five-year maturities.
The Company believes that its existing cash balances and future cash flow
from operations, combined with available funds under its revolving credit
facility and the proceeds from the offering contemplated hereby, will be
adequate to support the Company's growth for the foreseeable future.
15
<PAGE> 18
BUSINESS
OVERVIEW
GDC is a leading worldwide provider of wide area networking and
telecommunications products. The Company designs, assembles, markets, installs
and maintains products and services that enable telecommunications common
carriers, corporations and governments to build, upgrade and better manage their
global telecommunications networks. Products include multiplexers,
internetworking equipment, digital data sets, analog modems, Asynchronous
Transfer Mode ("ATM") cell switches, network management systems and
comprehensive support services. The Company sells and leases its products
through its own worldwide sales and service organizations, as well as through
local distributors and value-added resellers.
GDC's customer base includes: Local Exchange Carriers including all seven
Regional Bell Operating Companies, Bell Canada and GTE; Competitive Access
Providers including MFS Datanet; Interexchange Carriers including AT&T, MCI and
Sprint; corporate end users such as American Airlines, Citicorp, EDS, Harris,
Hitachi and Hongkong & Shanghai Bank; and government entities including the
British Ministry of Defence, the French Ministry of State, NASA, the U.S. State
Department and many state and local governments.
The Company's executive offices are located at 1579 Straits Turnpike,
Middlebury, Connecticut 06762-1299 and its telephone number is (203) 574-1118.
STRATEGY
The Company's broad product line provides integrated networking solutions
used to construct global data, voice and video communications networks. The
Company's core product line of multiplexers and internetworking equipment,
digital data sets and analog modems has historically combined advanced wide area
networking technology with analog and digital transmission capabilities. During
the last several years the Company has emphasized its digital product offerings
over its analog products as telephone companies upgrade their transmission
facilities and offer new digital services at substantially lower rates.
In the early 1990s, the Company identified ATM technology as the preferred
solution for addressing problems caused by the increasing limitations of
conventional Local Area Network ("LAN") and Wide Area Network ("WAN")
technologies. ATM provides a dramatic increase in capacity throughout networks,
carrying both LAN and WAN traffic faster than conventional networking
technologies. ATM also enables the transmission of voice, video and high-speed
data traffic on a single communications line. After reviewing various strategic
alternatives for entering the ATM market, the Company entered into a
distribution and technology transfer agreement with Netcomm in December 1992.
The Company subsequently acquired Netcomm in 1993.
By offering ATM solutions to its customers, the Company believes it has
enhanced its position as a leading supplier of wide area networking and
telecommunications products. The Company's strategy of providing integrated
networking solutions to its customers is based upon the following:
Capitalizing on ATM Technology. The Company believes it has a leading
position in the ATM switch market. The following entities have deployed, or
announced their intention to deploy, GDC's ATM cell switches in their proposed
ATM networks: Ameritech, Bell Canada, MCI, MFS Datanet, Telecom Finland and
Australia's Defence, Science and Technology Organisation. As of September 30,
1994, GDC, including NetComm, had shipped 238 ATM switches to a variety of
customers in 15 countries (76 for customer trial and 162 sold). The Company also
believes that growing market awareness of its ATM switch technology has
increased customer exposure to GDC's other products.
Providing Cost-Effective Flexible Product Solutions. The Company's product
families are designed with architectures that scale to most network sizes and
cost requirements. Customers can select the products that are most appropriate
for their needs and migrate to higher capacity products over time. GDC's common
software modules across product families allow the end user to utilize a single
network
16
<PAGE> 19
management system, which provides value-added capabilities such as extensive
alarm reporting, diagnostics and advanced service restoral options for each
circuit in the network.
Improving Performance of Customer Networks. The Company's products are
designed to improve network efficiency by increasing transmission speed,
compressing and consolidating voice and data communication and providing dynamic
bandwidth allocation.
Leveraging Global Customer Base, Distribution and Support. The Company has
a worldwide customer base of corporate and government users and
telecommunications carriers. The Company has global distribution capabilities
and products installed in nearly 60 countries around the world. GDC's ability to
provide international customer service and support is critical to customers that
run mission-critical applications over their networks.
ATM MARKET
Background. Improvements in microprocessor technology over the past
several years have significantly changed the way users design and build
communications networks. Corporations are migrating away from mainframe centric
computer networks and moving to client/server architectures in which increasing
processing power is located on the desktop. Personal computers ("PCs") and
workstations are connected together to form LANs, and large corporations today
may have up to several hundred LANs within their enterprise. LANs typically use
shared medium technologies like Ethernet, Token Ring and Fiber Distributed Data
Interface. These LAN technologies require that all users contend for the
available bandwidth and consequently, as the number of users increases,
throughput decreases. In addition, users find that shared medium LANs cannot
provide the bandwidth necessary to support today's powerful PCs running
communication-intensive applications.
WANs present an additional bottleneck constraining greater deployment of
enterprise-wide networks. The underlying WAN architecture is optimized for low
speed, constant bit-rate voice communications. It does not scale well to
accommodate high-speed, burst-oriented data communications typical of a LAN. To
address this problem, telecommunications carriers have deployed fiber optic
transmission facilities in their networks over the past decade and are beginning
to, or have announced their intention to, test and deploy ATM switches as the
platform of choice for offering new, value-added services to their customers.
The need for more bandwidth in both the LAN and WAN environments to support
current data processing and networking applications is a key factor driving
demand for ATM products. Increasing numbers of applications combining voice,
video and data will demand even more bandwidth than current applications.
ATM Segments. Although currently in the early stages of development, ATM
is expected to become a leading transmission switch technology for
communications networks. In April 1994, the Gartner Group, an independent market
research and consulting firm, projected the market for all ATM products to grow
from approximately $275 million in 1993 to approximately $3.1 billion in 1997,
representing a compounded annual growth rate of over 80%. Within the broader ATM
market, the Company has identified the four distinct segments described below
and has chosen to pursue the enterprise and edge switch segments.
Workgroup Hub. ATM workgroup hubs are devices used to connect high
speed workstations and servers to form a high performance, local computing
environment. The Company expects switched Ethernet and virtual LAN
architectures to be the dominant approaches to creating this local
computing environment and anticipates a gradual migration to ATM desktop
connectivity. GDC intends to address this market segment through
partnerships or potential acquisitions in order to provide a timely
entrance into this market.
Enterprise Switch. Enterprise switches are used to interconnect a
broad range of customer premise equipment, including LAN hubs, routers,
multiplexers, PBXs and video codecs, across a campus or a more
geographically dispersed area to create high-speed backbone networks
linking
17
<PAGE> 20
major corporate locations. Key market requirements include a fault tolerant
architecture and the ability to support a broad range of interfaces and
adaptation capabilities for new, as well as legacy, technologies.
Edge Switch. The telecommunications carrier edge switch is typically
located in the central office of a Local Exchange Carrier, an Interexchange
Carrier, a Competitive Access Provider or a Cable TV Operator. Switches are
used as platforms to provide services to a number of end user locations.
Common carriers also utilize these switches in the basements of buildings
to offer new services to multiple customers. As with the enterprise switch
market, fault tolerance and the ability to support a broad range of
interfaces and adaptation capabilities are key requirements because
carriers need maximum flexibility. In addition, the unique packaging and
environmental requirements of telecommunications carriers must be met.
Central Office Switch. At large central offices, all traffic in the
network hierarchy has been converted into ATM cells and the required
switches must provide up to hundreds of gigabits of throughput. GDC does
not intend to address this market directly as the Company views the
development costs of these switches to be high and believes this market is
currently served by established central office switching providers. Rather,
the Company intends to develop strategic partnerships with participants in
this market as a vehicle for enhancing its position in the edge and
enterprise switch markets.
GDC's Target ATM Segments. The enterprise and edge switch markets, which
the Company is pursuing, address the points in a network where LAN, voice, video
and other data applications converge with WANs and the greatest bandwidth
bottlenecks exist. The Company also believes that, at present, these two
segments are not adequately served by any established vendors.
PRODUCTS
In fiscal 1994, sales and leases of products represented approximately 84%
of revenues while service revenues represented about 16% of revenues. GDC's line
of products includes:
Multiplexers/Internetworking Products. GDC's multiplexer and
internetworking products family includes systems for both branch office and
corporate backbone locations which integrate voice, traditional data, video and
LAN traffic over narrowband (56/64 Kbps) or wideband (fractional T1/E1 and
T1/E1) digital services. By consolidating multiple forms of traffic over a
single transmission line, these products dramatically decrease an end user's
network costs. The Company's products integrate both time division multiplexing
and packet switching (LAN routing and frame relay switching), thereby providing
a flexible networking platform.
For the corporate backbone locations, the Company offers the TMS 3000 which
supports a wide range of voice, facsimile, LAN, traditional data and video
applications. In April 1993, GDC introduced the Office Communications Manager
("OCM"), a cost-effective networking solution for the branch office location.
The Company believes the OCM is the only branch office product which offers the
integration of voice, LAN routing, frame relay and traditional data at speeds
ranging from 56/64 Kbps to T1/E1.
18
<PAGE> 21
In corporate backbone environments requiring broadband speeds and services,
the Company's APEX ATM switches can be used. The TMS 3000 and OCM can feed into
the APEX switch enabling the Company to offer an integrated networking solution
that scales from small remote or branch locations into regional wideband
backbones and ultimately into ATM-based broadband backbones.
[Diagram on this page, titled "INTEGRATED NETWORKING SOLUTION", illustrates
certain integrated products offered by GDC.]
Digital Data Sets. Digital data sets are used to convert and interpret
signals from computers and communications equipment into a form that is
acceptable for transmission over telecommunications facilities. The Company
offers a broad set of narrowband digital data sets that run at various speeds up
to 64 Kbps and wideband digital data sets operating at fractional T1 and T1
speeds. GDC recently introduced broadband data sets running at T3 rates. GDC
supplies its digital data sets to the major North American telephone companies
and various end users. GDC continues to enhance its digital transmission product
line by combining higher transmission speeds with value-added capabilities
including data compression, concentration, protocol adaptation/conversion and
network management. This enables the Company to offer differentiated, and, in
some cases, unique transmission solutions and sustain better than average gross
margins.
The Company is leveraging its digital transmission expertise by pursuing
international markets. In China and in developing countries in Latin America and
the Pacific Rim, there is insufficient copper wire installed to support the
growing demand for communications services. The Company believes it is
responding to these needs by offering new products utilizing transmission
technologies like 2B1Q (Two Binary One Quarternary) and HDSL (High Speed Digital
Subscriber Line). These products offer much higher transmission speeds while
using half of the copper wire pairs normally needed to provision private line
services.
19
<PAGE> 22
Analog Modems. Analog modems convert digital computer signals to a format
that can be transmitted over telephone lines. As described above, the market for
these modems has been shrinking as telephone networks move from an analog to a
digital format. The Company offers a broad range of private line and dial-up
analog modems operating at all standard speeds up to 19.2 Kbps.
GDC recently developed a new modem family, known as the V.F 28.8 family,
offering transmission speeds twice as fast as modems conforming to any pre-V.34
standards and throughputs of up to 115 Kbs over basic analog dial-up facilities
or two-wire analog private line circuits. The V.F 28.8 products enable faster
transmission speeds on a single pair of wires versus traditional analog
provisioning requiring two pairs. The Company is seeking to expand sales of its
V.F 28.8 products through direct and indirect selling activities throughout the
world and through licensing arrangements. GDC began shipping V.F 28.8 units in
the first quarter of fiscal 1994 and expects sales of these products to
partially offset expected declines in its traditional analog products, although
at the present time sales of the V.F 28.8 modems are not a significant part of
the Company's aggregate product sales.
ATM Switches and Network Management Systems. The Company currently offers
a family of ATM switches and access products for both public and private
networks under the GDC APEXTM name. The APEX product line consists of the
APEX-DV2, the APEX-NPX and the APEX-MAC.
<TABLE>
<CAPTION>
SWITCH SPECIFICATIONS TARGETED SEGMENT
---------------- ------------------------------- -------------------------------
<S> <C> <C>
APEX-DV2 Provides up to 6.4 Gbps of Enterprise switch for corporate
capacity and support for up to and government users.
64 ports within a single shelf,
utilizing AC power supplies.
APEX-NPX Provides up to 6.4 Gbps of Edge switch for common
capacity and support for up to carriers, including telephone
64 ports within a single shelf, and cable television companies.
utilizing DC power supplies.
APEX-MAC Provides up to 1.4 Gbps of Lower capacity enterprise
capacity and support for 14 to switch for corporate and
28 ports within a single shelf. government users and common
carriers.
</TABLE>
GDC's APEX-NMS 3000 Network Management System supports the Company's
APEX-ATM switches. The network management platform offers a powerful UNIX-based,
object-oriented system employing a graphical user interface for ATM network
management via the industry-standard Simple Network Management Protocol. The
APEX-NMS 3000 enables a network manager to configure APEX switches and monitor
the ATM switch network, the capacity and utilization of each ATM node and the
status of each other component of the network.
Several major carriers have announced that they propose to use GDC-APEX ATM
switches as their platform for new data communications services. A number of
corporate customers also have purchased APEX switches. The Company believes its
family of APEX switches have the following competitive features:
- Scalability, allowing a customer to construct a multitiered switch
network that scales in price and performance.
- Flexibility, providing the customer with comprehensive interfaces and
adaptation capabilities.
- Traffic management architecture, providing networks with traffic
policing, traffic prioritization and buffer management capabilities.
- Switched virtual circuits, dynamically establishing connections on an
end-to-end basis.
ACQUISITION STRATEGY
As part of its business strategy, the Company actively reviews acquisition
opportunities, including those which may complement its product lines, provide
access to emerging technologies or enhance market penetration. In November 1993,
the Company acquired Netcomm for $5.5 million in cash and $1.8
20
<PAGE> 23
million in Common Stock. Future acquisitions could be for stock or cash or a
combination thereof and could be substantially larger than past acquisitions.
The Company at this time has no understandings or commitments to make any
acquisitions and there can be no assurances that any acquisitions will be made.
MARKETING, SALES AND CUSTOMERS
The Company's products and networks are marketed throughout the world.
GDC's sales and marketing organization, which, at September 30, 1994, consisted
of approximately 471 employees, is organized on a worldwide basis to address
three market segments: (1) corporate and government end users; (2) common
carriers; and (3) indirect sales through value-added resellers and distributors.
In the United States, the Company sells, leases and services its equipment
primarily through its own sales and service groups, which include separate
geographic sales and technical support organizations for corporate and
government end users and common carrier markets.
Internationally, GDC maintains full subsidiary operations in Canada (sales
and service), the United Kingdom (sales and service), Mexico (sales and
service), France (sales and service), Australia (sales), Singapore (sales) and
Russia (sales), and sales and technical support offices in Japan, Hong Kong,
Germany, China, Brazil and Spain. These sales offices manage a worldwide
distribution network with representatives in more than 48 countries.
International operations represented 37% of the Company's revenues in fiscal
1994. GDC's foreign operations are subject to all the various risks inherent in
operating outside the U.S.
Selected users of the Company's products include:
TELECOMMUNICATIONS
Alascom
Ameritech
AT&T
Bell Atlantic
Bell Canada
BellSouth
British Telecom
CPT (Peru)
GTE
Guangdong PTA (China)
Impsat (Argentina, Columbia)
MCI
MFS Datanet
NYNEX
Pacific Bell
SNET
Southwestern Bell
Sprint
Telecom Finland
Telefonos de Mexico
US West
WilTel
COMMERCIAL
American Airlines
EDS
Harris
Hitachi
Lockheed
Loral
TRW
GOVERNMENT
British Ministry of Defence
French Ministry of State
Los Angeles, City and County
NASA
New York City Transit Authority
U.S. State Department
Various state governments,
including California, Florida,
Michigan, Ohio and Texas
FINANCIAL SERVICES
Boatmen's Bancshares
Cecoban (Mexico)
Citicorp
Flserv
Hongkong & Shanghai Bank
Key Services
Quotron Systems
Shawmut Bank
Telerate Systems
Wheat First Butcher & Singer
Securities
CUSTOMER SERVICE AND SUPPORT
GDC provides comprehensive technical support crucial for its
telecommunications carrier, corporate and government customers that run
mission-critical applications over their networks. Each of the Company's sales
subsidiaries directly provides its own support capabilities, augmented by third
party service providers when necessary. Authorized distributors provide their
own support services and
21
<PAGE> 24
participate in service certification programs administered by DataComm Service
Corporation, a U.S. subsidiary of GDC.
The Company's service and support programs include product repair,
logistics support, installation, maintenance, educational services and on-line
network management services. Services are supported by field service engineers,
technical support staff and Technical Operations and Assistance Centers ("TOAC")
located in the U.S. and the United Kingdom. TOACs are staffed 24 hours a day,
365 days a year. The Company offers various value added services, including
First ResponseTM, an outsourcing service by which TOAC Technicians monitor and
manage customer networks on a remote basis. Customers of GDC's service and
support programs include Bell South Mobility, New York City Transit Authority,
the State of Michigan and Volvo. At September 30, 1994, GDC had 307 people
engaged in services and support activities.
RESEARCH AND PRODUCT DEVELOPMENT
In order to develop and implement new technologies in the data, voice and
video communications industry and to broaden the applications for its products,
GDC has significant ongoing engineering programs for product improvement and new
product development. At September 30, 1994, 331 people were engaged in research
and development activities. The Company conducts research and development
activities in three locations. Development for all transmission products,
multiplexer and internetworking products, enhancements to the APEX-ATM switch
products and continuation engineering activities occur in the Technology
Research Center in Middlebury, Connecticut. The Multimedia Research Center in
Montreal, Quebec focuses on ATM-based applications and solutions, and the
Advanced Research Centre in Basildon, England focuses on next generation ATM
hardware and software.
MANUFACTURING
GDC's principal assembly plant is a Company-owned, 360,000 square foot
facility located in Naugatuck, Connecticut, of which approximately 200,000
square feet are currently being utilized. The Company also outsources the
manufacturing and assembly of certain subassemblies, generally high volume
items. Outsourced products represented approximately 15% of the manufacturing
assembly during the 1994 fiscal year.
GDC's Connecticut facilities recently received ISO 9001 certification. ISO
9001 is a comprehensive model for quality assurance in design/development,
production, installation and servicing. It was developed by a technical
committee comprised of representatives from over 90 countries under the
direction of the Geneva-based International Organization for Standardizations.
GDC's United Kingdom facilities recently received BS 5750 certification. Awarded
by the British Standards Institute, BS 5750 also is a comprehensive quality
assurance model.
22
<PAGE> 25
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The holders of shares of Common Stock of GDC are entitled to one vote per
share on all matters submitted to stockholders. They are also entitled to vote
separately as a class (as are the holders of shares of the Class B Stock
described below) on all matters requiring an amendment to the Company's Restated
Certificate of Incorporation, as well as on mergers, consolidations and certain
other significant transactions for which stockholder approval is required under
Delaware law. Holders of the Common Stock do not have preemptive rights or
cumulative voting rights.
Dividends on the Common Stock will be paid if, and when, declared. The
Common Stock is entitled to cash dividends which are 11.11% higher per share
than the cash dividends which may be paid on the Class B Stock, but otherwise
the Common Stock and the Class B Stock rank equally as to dividends. The Company
has never paid cash dividends and dividends are not permitted by the Company's
revolving credit and term loan agreement. Stock dividends on and stock splits of
Common Stock will only be payable or made in shares of Common Stock.
The Common Stock is entitled upon liquidation to receive the entire net
assets of the Company remaining after payment of all debts and other claims of
creditors and after the holders of each series of Preferred Stock, if any, have
been paid the preferred liquidating distribution on their shares, if any, as
fixed by the Board of Directors of GDC. The Common Stock is not convertible into
shares of any other equity security of the Company.
The Common Stock is freely transferable.
CLASS B STOCK
The holders of shares of Class B Stock of GDC are entitled to one vote per
share on all matters submitted to stockholders, except that they are entitled to
ten votes per share in the election of directors under certain circumstances.
They are also entitled to vote separately as a class (as are the holders of
shares of Common Stock) on all matters requiring an amendment to the Company's
Restated Certificate of Incorporation, as well as on mergers, consolidations and
certain other significant transactions for which stockholder approval is
required under Delaware law. Holders of the Class B Stock do not have preemptive
rights or cumulative voting rights.
Dividends on the Class B Stock will be paid only as and when dividends on
the Common Stock are declared and paid. The Common Stock is entitled to cash
dividends which are 11.11% higher per share than the cash dividends which may be
paid on the Class B Stock, but otherwise the Common Stock and the Class B Stock
rank equally as to dividends. Stock dividends on and stock splits of Class B
Stock will only be payable or made in shares of Class B Stock.
In the event of liquidation or insolvency, each share of Class B Stock will
be entitled, through conversion into Common Stock, to share ratably with the
Common Stock in the assets remaining after payment of all debts and other claims
of creditors, subject to the rights of any Preferred Stock which may be issued
in the future.
Holders of Class B Stock may elect at any time to convert any of or all
such shares to shares of the Common Stock on a share-for-share basis. In the
event that the number of outstanding shares of Class B Stock falls below 5% of
the aggregate number of issued and outstanding shares of Common Stock and Class
B Stock, or the Board of Directors and holders of a majority of the outstanding
shares of Class B Stock approve the conversion of all the Class B Stock into
Common Stock, then the shares of the Class B Stock will automatically be
converted into shares of Common Stock. In the event of such conversion,
certificates formerly representing outstanding shares of Class B Stock will
thereafter be deemed to represent a like number of shares of Common Stock.
23
<PAGE> 26
The Class B Stock is not transferable except to certain family members and
related entities of the holder thereof.
SPECIAL VOTING REQUIREMENTS
The Company's Restated Certificate of Incorporation contains a provision
requiring a two-thirds vote on any merger, consolidation or sale of all or
substantially all the Company's assets. It also contains a "fair price"
provision requiring all stockholders to receive equal treatment in the event of
a takeover which may be coercive. This "fair price" provision may not be amended
except by a four-fifths vote of the stockholders and may be considered to have
the effect of discouraging tender offers, takeover attempts, acquisitions or
business combinations involving the Company. That provision also requires that
business combinations involving the Company and certain "Acquiring Persons"
(defined to include any person or entity which directly or indirectly owns or
controls at least 5% of the voting stock of the Company) be approved by the
holders of four-fifths of the Company's outstanding shares entitled to vote
(other than shares held by an Acquiring Person with which or by or on whose
behalf a business combination is proposed) unless such business combination
either:
(1) has been authorized by the Board of Directors of GDC prior to the
time that the Acquiring Person involved in such business combination became
an Acquiring Person; or
(2) will result in the receipt by the other stockholders of the
Company of a specified minimum amount and form of payment for their shares.
PREFERRED STOCK
Preferred Stock may be issued in one or more series from time to time by
action of the Board of Directors of GDC. The shares of any series of Preferred
Stock may be convertible into Common Stock, may have priority over the Common
Stock and Class B Stock in the payment of dividends and as to the distribution
of assets in the event of liquidation, dissolution or winding up of the Company
and may have preferential or other voting rights, in each case, to the extent,
if any, determined by the Board of Directors of the Company at the time it
creates the series of Preferred Stock. There currently are no shares of
Preferred Stock outstanding.
24
<PAGE> 27
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to the Underwriters, and each of the
Underwriters, for whom Salomon Brothers Inc and SoundView Financial Group, Inc.
are acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company, the number of shares of Common Stock set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Salomon Brothers Inc.............................................
SoundView Financial Group, Inc. .................................
---------
Total....................................................... 1,800,000
=========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase the 1,800,000
shares of Common Stock offered hereby (other than the shares of Common Stock
covered by the over-allotment option described below) if any such shares of
Common Stock are purchased. In the event of a default by any Underwriter, the
Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated. The Company has been advised by the
Representatives that the several Underwriters propose initially to offer such
shares of Common Stock at the public offering price set forth on the cover page
of this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to other dealers.
After the initial offering, the public offering price and such concessions may
be changed.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 270,000
additional shares at the public offering price less the underwriting discount
set forth on the cover page of this Prospectus. The Underwriters may exercise
such option only to cover over-allotments in the sale of the shares of Common
Stock that the Underwriters have agreed to purchase. To the extent that the
Underwriters exercise such option, each Underwriter will have a firm commitment,
subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.
The Company has agreed not to offer, sell or contract to sell, or otherwise
dispose of, or announce the offering of, any shares of Common Stock, or any
securities convertible into, or exchangeable for, shares of Common Stock, except
the shares of Common Stock offered hereby, for a period of 90 days from the date
of this Prospectus without the prior written consent of the Representatives;
provided, however, that the Company may issue and sell Common Stock pursuant to
any employee stock option plan, stock ownership plan or dividend reinvestment
plan in effect on the date of this Prospectus and the Company may issue Common
Stock issuable upon the conversion of securities or the exercise of warrants
outstanding on the date of this Prospectus. Furthermore, certain directors and
executive officers (including the chairman and chief executive officer,
president and chief operating officer and vice president - finance and chief
financial officer) of the Company have agreed that they will not offer, sell or
contract to sell, or otherwise dispose of, or announce the offering of, any
shares of Common Stock for a period of 90 days from the date of this Prospectus
without the prior written consent of the Representatives (other than shares
disposed of as bona fide gifts).
25
<PAGE> 28
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments the Underwriters may be required
to make in respect thereof.
Salomon Brothers Inc was the financial advisor to the Company in connection
with the Company's November 1993 acquisition of Netcomm and was the private
placement agent for the Company in connection with the Company's sale of
1,250,000 shares of Common Stock on May 27, 1994.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby and certain other
legal matters will be passed upon for the Company by Weisman, Celler, Spett &
Modlin, New York, New York. Certain legal matters in connection with the
offering contemplated hereby will be passed upon for the Underwriters by
Cravath, Swaine & Moore, New York, New York. As of September 30, 1994, members
of the firm of Weisman, Celler, Spett & Modlin beneficially owned 6,750 shares
of the Class B Stock of the Company. Howard S. Modlin, a member of such firm, is
Secretary and a director of the Company.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company at September 30, 1993 and 1992 and for the three years ended
September 30, 1993, 1992 and 1991, incorporated by reference in this Prospectus,
have been incorporated herein by reference in reliance upon the audit report of
Coopers & Lybrand, independent accountants, given upon the authority of that
firm as experts in accounting and auditing.
26
<PAGE> 29
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 3
Incorporation of Certain Documents
by Reference........................ 3
Prospectus Summary.................... 4
Investment Considerations............. 6
Use of Proceeds....................... 9
Price Range of Common Stock and
Dividend Policy..................... 9
Capitalization........................ 10
Selected Consolidated
Financial Data...................... 11
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................. 12
Business.............................. 16
Description of Capital Stock.......... 23
Underwriting.......................... 25
Legal Matters......................... 26
Experts............................... 26
</TABLE>
1,800,000 SHARES
GENERAL
DATACOMM
INDUSTRIES, INC.
COMMON STOCK
($.10 PAR VALUE)
[LOGO]
SALOMON BROTHERS INC
SOUNDVIEW FINANCIAL
GROUP, INC.
PROSPECTUS
DATED , 1994
<PAGE> 30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (other than underwriting
discounts and commissions) payable by the registrant in connection with the
issuance and distribution of the shares registered hereby. Other than the SEC
registration fee and the NASD filing fee, such expenses are estimates.
<TABLE>
<S> <C>
SEC registration fee........................................ $21,503.02
NASD filing fee............................................. 6,735.88
Printing costs (excluding stock certificates)............... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses.................................. *
Legal fees and expenses..................................... *
Miscellaneous expenses...................................... *
----------
Total............................................. $ *
==========
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Article Tenth of the registrant's Restated Certificate
of Incorporation filed as Exhibit 3.1 to the registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988, which is incorporated by
reference herein, for information concerning indemnification of directors and
officers. Section 145 of the General Corporation Law of Delaware permits or
requires indemnification of officers and directors in the event that certain
statutory standards of conduct are met. However, reference is made to Item 17
with respect to indemnification for liabilities arising under the Securities Act
of 1933.
Under an insurance policy with The Chubb Group of Companies, the directors
and certain officers of the undersigned registrant and its subsidiaries are
indemnified against certain losses arising from certain claims which may be made
against such persons, by reason of their being such directors or officers.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1. Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Company (incorporated by reference from
Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 1988; amendments thereto are
filed as Exhibit 3.1 to Form 10-Q for the quarter ended March 31, 1990).
3.2 Amended and Restated By-laws of the Company (incorporated by reference from Exhibit
3.2 to Form 10-K for the year ended September 30, 1987).
4. Specimen Common Stock Certificate.
5. Opinion of Weisman, Celler, Spett & Modlin.
23.1 Consent of Coopers & Lybrand.
23.2 Consent of Weisman, Celler, Spett & Modlin (contained in Exhibit 5).
24. Powers of Attorney.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities
II-1
<PAGE> 31
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15, the registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
For purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 28th day of
October, 1994.
GENERAL DATACOMM INDUSTRIES, INC.,
By *
--------------------------------------
Charles P. Johnson
Chairman of the Board
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and October 28, 1994
- ------------------------------------------ Chief Executive Officer
Charles P. Johnson (Principal Executive
Officer)
/s/ WILLIAM S. LAWRENCE Vice President-Finance and October 28, 1994
- ------------------------------------------ (Principal Financial
William S. Lawrence Officer)
* Corporate Controller October 28, 1994
- ------------------------------------------ (Principal Accounting
William G. Henry Officer)
/s/ HOWARD S. MODLIN Director October 28, 1994
- ------------------------------------------
Howard S. Modlin
* Director October 28, 1994
- ------------------------------------------
Frederick R. Cronin
* Director October 28, 1994
- ------------------------------------------
Lee M. Paschall
* Director October 28, 1994
- ------------------------------------------
John L. Segall
</TABLE>
- ---------------
* The undersigned by signing his name hereto does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and filed with the
Securities and Exchange Commission on behalf of such officers and directors.
/s/ WILLIAM S. LAWRENCE
- -----------------------------------
WILLIAM S. LAWRENCE
II-3
<PAGE> 33
GENERAL DATACOMM INDUSTRIES, INC.
EXHIBIT INDEX
Certain of the exhibits to this registration statement are hereby
incorporated by reference, as specified below, to other documents filed with the
Commission. Exhibit designations below correspond to the numbers assigned to
exhibit classifications in Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTIONS PAGE NOS.
- ------- ------------ ----------
<S> <C> <C>
1 Form of Underwriting Agreement. ..........................................
3.1 Restated Certificate of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to Form 10-Q for the quarter ended June 30,
1988; amendments thereto are filed as Exhibit 3.1 to Form 10-Q for the
quarter ended March 31, 1990). ...........................................
3.2 Amended and Restated By-laws of the Company (incorporated by reference
from Exhibit 3.2 to Form 10-K for the year ended September 30, 1987). ....
4 Specimen Common Stock Certificate. .......................................
5 Opinion of Weisman, Celler, Spett & Modlin. ..............................
23.1 Consent of Coopers & Lybrand. ............................................
23.2 Consent of Weisman, Celler, Spett & Modlin (contained in Exhibit 5). .....
24 Powers of Attorney. ......................................................
</TABLE>
E-1
<PAGE> 1
(Draft--10/28/94)
GENERAL DATACOMM INDUSTRIES, INC.
1,800,000 Shares */
Common Stock
($0.10 par value)
Underwriting Agreement
New York, New York
, 1994
Salomon Brothers Inc
SoundView Financial Group, Inc.
As Representatives of the several Underwriters
In Care of Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
General DataComm Industries, Inc., a Delaware corporation
(the "Company"), proposes to sell to the underwriters named in Schedule I
hereto (the "Underwriters"), for whom you (the "Representatives") are acting as
representative, 1,800,000 shares of Common Stock, $0.10 par value ("Common
Stock") of the Company (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes
to grant to the Underwriters an option to purchase up to 270,000 additional
shares of Common Stock (the "Option Securities"; the Option Securities,
together with the Underwritten Securities, being hereinafter called the
"Securities").
1. Representations and Warranties. The Company represents
and warrants to, and agrees with, each Underwriter as set forth below in this
Section 1. Certain terms used in this Section 1 are defined in paragraph (c)
hereof.
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number ) on such Form, including a related
__________________________________
*/ Plus an option to purchase from General DataComm Industries, Inc., up
to 270,000 additional shares to cover over-allotments.
<PAGE> 2
2
preliminary prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one
or more amendments thereto, including the related preliminary
prospectus, each of which has previously been furnished to you. The
Company will next file with the Commission one of the following: (i)
prior to effectiveness of such registration statement, a further
amendment to such registration statement, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b)(1) or (4), or (iii) a final prospectus in accordance with Rules
415 and 424(b)(2) or (5). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the Prospectus with
respect to the Securities and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such
required information, with respect to the Securities and the offering
thereof and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein. If the
Registration Statement contains the undertaking specified by
Regulation S-K Item 512(a), the Registration Statement, at the
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act and the Securities
Exchange Act of 1934 (the "Exchange Act") and the respective rules
thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements
<PAGE> 3
3
therein not misleading; and, on the Effective Date, the Prospectus, if
not filed pursuant to Rule 424(b), did not or will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date,
the Prospectus (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement
thereto).
(c) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in
paragraph (a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph (a) above, including incorporated documents,
exhibits and financial statements, as amended at the Execution Time
(or, if not effective at the Execution Time, in the form in which it
shall become effective) and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date (as hereinafter
defined), shall also mean such registration statement as so
<PAGE> 4
4
amended. Such term shall include any Rule 430A Information deemed to
be included therein at the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such
rules or regulation under the Act. "Rule 430A Information" means
information with respect to the Securities and the offering thereof
permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. Any reference herein to the
Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $ per share, the amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly,
up to 270,000 shares of Option Securities at the same purchase price per share
as the Underwriters shall pay for the Underwritten Securities. Said option may
be exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the Prospectus upon written or telegraphic notice by the Representatives
to the Company setting forth the number of
<PAGE> 5
5
shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. Delivery of certificates for
the shares of Option Securities, and payment therefor, shall be made as
provided in Section 3 hereof. The number of shares of the Option Securities to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for
in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at 10:00 AM, New York
City time, on , 1994, or such later date (not later than
, 1994) as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for
the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by certified or official bank check or checks drawn on or by a New York
Clearing House bank and payable in next day funds. Delivery of the
Underwritten Securities and the Option Securities shall be made at such
location as the Representatives shall reasonably designate at least one business
day in advance of the Closing Date and payment for such Securities shall be
made at the office of , New York, New York.
Certificates for the Securities shall be registered in such names and in such
denominations as the Representatives may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the Representatives in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.
<PAGE> 6
6
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at Seven World
Trade Center, New York, New York, on the date specified by the Representatives
(which shall be within three business days after exercise of said option),
certificates for the Option Securities in such names and denominations as the
Representatives shall have requested against payment of the purchase price
thereof to or upon the order of the Company by certified or official bank check
or checks drawn on or by a New York Clearing House bank and payable in next day
funds. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective as promptly as possible.
Prior to the termination of the offering of the Securities, the
Company will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph
of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (i) when the
Registration Statement,
<PAGE> 7
7
if not effective at the Execution Time, and any amendment thereto,
shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b), (iii) when, prior to termination
of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (iv) of any
request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (i) prepare and
file with the Commission, subject to the second sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct
such statement or omission or effect such compliance and (ii) supply
any supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
<PAGE> 8
8
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Representatives may reasonably designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process in any state or
subject itself to general taxation in connection with such
qualification, and will pay the fee of the National Association of
Securities Dealers, Inc., in connection with its review of the
offering.
(f) The Company will not, for a period of 90 days following
the Execution Time, without the prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any other
shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the
Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock purchase plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time and
the Company may issue Common Stock issuable upon the conversion of
securities outstanding at the Execution Time or the exercise of
warrants outstanding at the Execution Time or which the Company is
contractually obligated to issue at the Execution Time.
(g) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198,An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Securities and Exchange Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the
<PAGE> 9
9
information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located
in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as
of the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the date
of determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or
(ii) 12:00 Noon on the business day following the day on which the
public offering price was determined, if such determination occurred
after 3:00 PM New York City time on such date; if filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule
424(b), the Prospectus, and any such supplement, will be filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of Weisman, Celler, Spett & Modlin, counsel for the
Company, dated the Closing Date, to the effect that:
(i) each of the Company and General DataComm, Inc.,
DataComm Leasing Corporation and DataComm Service Corporation
(individually a "Subsidiary" and collectively the
"Subsidiaries" ) has been duly incorporated and is validly
existing as a
<PAGE> 10
10
corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation and is in
good standing under the laws of the jurisdiction where it
maintains its principal place of business;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable;
(iii) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the
Company conforms to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities have been duly
authorized for listing, subject to official notice of
issuance, on the New York Stock Exchange; the specimen
certificate for the Securities delivered on the Closing Date
is in valid and sufficient form; and the holders of
outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the
Securities;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the
<PAGE> 11
11
Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other
document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and
the Prospectus (other than the financial statements and other
financial and statistical information contained therein as to
which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules
thereunder; and such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed
and delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except
such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Securities by the Underwriters;
<PAGE> 12
12
(viii) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws
of the Company or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company, any of its Subsidiaries, General DataComm Ltd. or
General DataComm Limited is a party or bound or any
judgment, order or decree known to such counsel to be
applicable to the Company, any of its Subsidiaries, General
DataComm Ltd. or General DataComm Limited of any
court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company, any
of its Subsidiaries, General DataComm Ltd. or General DataComm
Limited; and
(ix) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the laws of the
State of New York or the laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the
Prospectus in this paragraph (b) include any supplements thereto at
the Closing Date.
(c) The Company shall have furnished to the Representatives
the opinion of ( ), special Canadian counsel to the
Company, dated the Closing Date, to the effect that General DataComm
Ltd. has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Canada, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of Canada.
(d) The Company shall have furnished to the Representatives
the opinion of ( ), special United Kingdom counsel to the
Company, dated the Closing Date, to the effect that General DataComm
Limited has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the United Kingdom, with
full corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and is duly qualified to
do business as a foreign corporation and is in good standing under
the laws of the United Kingdom.
(e) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinions and
letters, dated the Closing Date, with respect to the issuance and sale
of the Securities, the Registration Statement, the Prospectus
(together with any supplement thereto) and other related matters as
the Representatives may reasonably require, and the Company shall have
furnished to such counsel such
<PAGE> 13
13
documents as they request for the purpose of enabling them to pass
upon such matters.
(f) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement,
the Prospectus, any supplement to the Prospectus and this Agreement
and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries on a
consolidated basis, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement
thereto).
(g) At the Execution Time and at the Closing Date, Coopers &
Lybrand shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the
<PAGE> 14
14
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated in
the Registration Statement and the Prospectus and reported on
by them comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but
not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and audit and stock option committees
of the Company and the Subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as
to transactions and events subsequent to September 30, 1994,
nothing came to their attention which caused them to believe
that:
(1) with respect to the period subsequent to
September 30, 1994, there were any changes, at a
specified date not more than five business days prior
to the date of the letter, in the long-term debt,
receivables or inventories of the Company and its
subsidiaries or capital stock of the Company
or decreases in the stockholders' equity of
the Company or decreases in cash and cash
equivilants, working capital or total assets of the
Company and its subsidiaries as compared with the
amounts shown on the September 30, 1994, consolidated
balance sheet included or incorporated in the
Registration Statement and the Prospectus, or for the
period from October 1, 1994, to such specified date
there were any decreases, as compared with the
corresponding period in the preceding
<PAGE> 15
15
quarter, in revenues, amortization of capitalized
software costs, gross profit, operating income or in
total or per share amounts of net income of the
Company and its subsidiaries, except in all instances
for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives; or
(2) the information included or incorporated
by reference in the Registration Statement and the
Prospectus in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary
Financial Information) and Item 402 (Executive
Compensation) is not in conformity with the
applicable disclosure requirements of Regulation S-K;
and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information set
forth under the captions "Prospectus Summary--The Company",
"Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Prospectus, and the information included or
incorporated in Items 1, 2, 6, 7, 8, 11 and 13 of the
Company's Annual Report on Form 10-K, incorporated in the
Registration Statement and the Prospectus, agrees with the
accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment
<PAGE> 16
16
thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (g) of this Section 6 or
(ii) any change, or any development involving a prospective change, in
or affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
(i) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each executive officer and director of the Company
addressed to the Representatives, in which each such person agrees
not to offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce an offering of, any shares of
Common Stock beneficially owned by such person or any securities
convertible into, or exchangeable for, shares of Common Stock for a
period of 90 days following the Execution Time without the prior
written consent of the Representatives, other than shares of Common
Stock disposed of as bona fide gifts; provided that, subsequent to the
Closing Date, the foregoing shall not apply to the following persons
to the extent of the number of such shares set forth parenthetically
next to such person's name: Frederick R. Cronin (12,000 shares);
James R. Arcara (10,000 shares); William G. Henry (4,000 shares); Rick
L. Mantz (one-half of the number of shares received upon the exercise
of options exercisable for up to 50,000 shares); and Eric A. Amster
(2,000 shares).
(j) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
<PAGE> 17
17
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cravath, Swaine & Moore, counsel for the
Underwriters, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, on the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or
<PAGE> 18
18
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein and (ii) such indemnity
with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter (or any person controlling any Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Securities
which are the subject thereof if such person did not receive a copy of the
Prospectus (or the Prospectus as supplemented), excluding documents
incorporated therein by reference, at or prior to the confirmation of the sale
of such Securities to such person in any case where such delivery is required
by the Act and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as supplemented) prior to the confirmation of the sale of such Securities to
such person. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the last paragraph of the cover page and under the
heading "Underwriting" in any Preliminary Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus, and you, as the Representatives, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified
<PAGE> 19
19
party or parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and by the Underwriters from the
offering of the Securities; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement
<PAGE> 20
20
among underwriters relating to the offering of the Securities) be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Underwriters in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed to
be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Underwriters shall be deemed to be
equal to the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the Underwriters. The Company and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange
Act and each director, officer, employee and agent of an Underwriter shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set
<PAGE> 21
21
forth opposite their names in Schedule I hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or the New York Stock Exchange or trading in securities
generally on such Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and
<PAGE> 22
22
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them care of Salomon Brothers
Inc, Seven World Trade Center, New York, New York, 10048; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at 1579
Straits Turnpike, Middlebury, Connecticut 06762-1299, attention of Vice
President-Finance, with a copy to Howard S. Modlin, Weisman, Celler, Spett &
Modlin, 445 Park Avenue, New York, New York 10022.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the
<PAGE> 23
23
enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company and the several Underwriters.
Very truly yours,
General DataComm Industries,
Inc.
By: ..........................
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
SoundView Financial Group, Inc.
By: Salomon Brothers Inc
By:
............................
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE> 24
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares of
Underwritten Securi-
Underwriters ties to be Purchased
------------ --------------------
<S> <C>
Salomon Brothers Inc ...................
SoundView Financial Group, Inc. ........
(Names of other underwriters) ..........
----------
Total ........................ 1,800,000
==========
</TABLE>
<PAGE> 25
EXHIBIT A
(Letterhead of executive officer or director of
General DataComm Industries, Inc. )
General DataComm Industries, Inc.
Public Offering of Common Stock
, 1994
Salomon Brothers Inc
SoundView Financial Group, Inc.
As Representatives of the several Underwriters
In Care of Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement dated , 1994 (the "Underwriting
Agreement"), between General DataComm Industries, Inc., a Delaware corporation
(the "Company"), and you as representatives of a group of Underwriters named
therein, relating to an underwritten public offering of 1,800,000 shares of
Common Stock, $0.10 par value (the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
an offering of, any shares of Common Stock beneficially owned by the
undersigned or any securities convertible into, or exchangeable for, shares of
Common Stock for a period of 90 days following the day on which the
Underwriting Agreement is executed without your prior written consent, other
than shares of Common Stock disposed of as bona fide gifts.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting
Agreement), the agreement set forth above shall likewise be terminated.
Yours very truly,
(Signature of executive officer or
director)
(Name and address of executive officer
or director)
<PAGE> 1
NUMBER [LOGO] SHARES
COMMON STOCK COMMON STOCK
GENERAL DATACOMM INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 369487 10 3
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULL-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
GENERAL DATACOMM INDUSTRIES, INC. TRANSFERABLE ON THE BOOKS OF THE CORPORATION
BY THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON THE
SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE AND THE
SHARES REPRESENTED HEREBY ARE ISSUED AND SHALL BE HELD SUBJECT TO ALL OF THE
PROVISIONS OF THE CERTIFICATE OF INCORPORATION OF THE CORPORATION, TO ALL OF
WHICH THE HOLDER BY ACCEPTANCE HEREOF ASSENTS. THIS CERTIFICATE IS NOT VALID
UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND REGISTERED BY THE REGISTRAR.
WITNESS THE SEAL OF SAID CORPORATION AND THE SIGNATURES OF ITS DULY AUTHORIZED
OFFICERS.
DATED:
SECRETARY [SEAL] PRESIDENT
COUNTERSIGNED AND REGISTERED:
CHEMICAL BANK, TRANSFER AGENT AND REGISTRAR,
BY
AUTHORIZED OFFICER.
<PAGE> 2
GENERAL DATACOMM INDUSTRIES, INC.
GENERAL DATACOMM INDUSTRIES, INC. WILL FURNISH WITHOUT CHARGE TO EACH
STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE DESIGNATIONS AND THE POWERS,
PREFERENCES AND RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF, OF EACH CLASS OF STOCK OR SERIES THEREOF SET FORTH IN THE CERTIFICATE
OF INCORPORATION, WHICH THE CORPORATION IS AUTHORIZED TO ISSUE.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:
TEN COM -- AS TENANTS IN COMMON UNIF GIFT MIN ACT -- _______CUSTODIAN_______
TEN ENT -- AS TENANTS BY THE (CUST) (MINOR)
ENTIRETIES UNDER UNIFORM GIFTS TO
JT TEN -- AS JOINT TENANTS WITH MINORS ACT_____________
RIGHT OF SURVIVORSHIP (STATE)
AND NOT AS TENANTS
IN COMMON
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
FOR VALUE RECEIVED, ________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
_____________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT_____________________________________________
_______________________________________________________________________________
ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED
CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED, ______________________________
__________________________________________
NOTICE -- THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5
October 28, 1994
Board of Directors
General DataComm Industries, Inc.
1579 Straits Turnpike
Middlebury, CT 06762-1299
Re: Registration Statement on Form S-3
Gentlemen:
Reference is made to the registration statement, (the "Registration
Statement"), which General DataComm Industries, Inc. (the "Corporation") is
filing on this date with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, for the registration of 2,070,000 shares of
the Common Stock of the Corporation.
Pursuant to your request, we have examined those of the Corporation's
records deemed relevant by us for the purpose of furnishing you with our opinion
concerning the legality and validity of issue of the shares of Common Stock of
the Corporation covered by the Registration Statement.
Based upon the foregoing, we are of the opinion that:
1. The Corporation is duly incorporated and validly existing as a
corporation under the laws of the State of Delaware.
2. All of the shares of Common Stock proposed to be registered by the
Registration Statement when issued and paid for in accordance with the
Underwriting Agreement, will be validly issued, fully paid and
non-assessable by the Corporation with no personal liability attaching
to the ownership thereof.
We herewith give our consent to the use of this opinion as an exhibit to
the herein referred to Registration Statement and to the use of our name
therein.
Very truly yours,
WEISMAN, CELLER, SPETT & MODLIN
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of General DataComm Industries, Inc. and Subsidiaries on Form S-3 (No. )
of our reports dated October 21, 1993, except as to the information presented in
Notes 2 and 5 of the "Notes to Consolidated Financial Statements", for which the
dates are November 24, 1993, and November 30, 1993, respectively, on our audits
of the consolidated financial statements and financial statement schedules of
General DataComm Industries, Inc. and Subsidiaries as of September 30, 1993 and
1992 and for the years ended September 30, 1993, 1992 and 1991, which reports
are incorporated by reference or included in the 1993 Annual Report on Form
10-K. We also consent to the reference to our firm under the caption "Experts".
COOPERS & LYBRAND
Stamford, Connecticut
October 28, 1994
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ JOHN L. SEGALL
------------------------------
John L. Segall
Date: 10/17/94
------------------------
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ LEE M. PASCHALL
------------------------------
Lee M. Paschall
Date: 24 Oct. 94
------------------------
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ FREDERICK R. CRONIN
------------------------------
Frederick R. Cronin
Date: October 21, 1994
------------------------
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ HOWARD S. MODLIN
------------------------------
Howard S. Modlin
Date: 10/19/94
------------------------
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ CHARLES P. JOHNSON
------------------------------
Charles P. Johnson,
Chairman of the Board
and Chief Executive Officer
Date: 10/21/94
------------------------
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints William S. Lawrence, Howard S. Modlin
and Gerald Gordon and each of them his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, to sign on his
behalf individually and in each capacity stated below for him a registration
statement on Form S-3 for General DataComm Industries, Inc. and any and all
amendments (including post-effective amendments) and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitutes, may lawfully do or cause to
be done by virtue hereof.
/s/ WILLIAM G. HENRY
------------------------------
Corporate Controller
(Principal Accounting Officer)
William G. Henry
Date: 28 Oct. 94
------------------------
