SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 27, 1996
General DataComm Industries, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8086 06-0853856
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Middlebury, CT 06762-1299
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 574-1118
N /A
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On September 30, 1996 the Corporation sold 800,000 shares of a new 9%
Cumulative Convertible Exchangeable Preferred Stock ("9% Preferred Stock") at
$25.00 a share to a group of qualified institutional buyers who purchased
780,000 shares and its Chairman, Mr. Charles P. Johnson, an accredited investor,
who purchased 20,000 shares. The proceeds will be used to fund the development
and expansion of the Corporation's Asynchronous Transfer Mode (ATM) business and
for working capital purposes.
The new 9% Preferred Stock can be converted on and after November 30, 1996
into Common Stock at $13.65 a share, or the equivalent of 1.8315 shares of
Common Stock for each share of Preferred Stock. After two years the Corporation
has the option to exchange the 9% Preferred Stock for 9% Convertible
Subordinated Debentures due 2006 at the rate of $25.00 principal amount of
Debentures for each share of 9% Preferred Stock outstanding at the time of
exchange. The 9% Preferred Stock cannot be redeemed before September 30, 1999.
Reference is made to Exhibit 4 to this Report for all of the terms and
conditions of the 9% Preferred Stock.
The shares of 9% Preferred Stock were not registered under the Securities
Act of 1933 and may not be offered or sold in the United States without
registration unless pursuant to an applicable exemption from the registration
requirements, such as Rule 144A on a sale to a qualified institutional buyer.
The Corporation has agreed to file a registration statement (under the
Securities Act of 1933, as amended, within one hundred twenty (120) days) for
the shares of Preferred Stock, Debentures and Common Stock into which the
Preferred Stock and Debentures are convertible. The Corporation was represented
by Utendahl Capital Partners, L.P. as Placement Agent.
Mr. Johnson also paid the Corporation $33,966.00 under Section 16(b) of the
Securities Exchange Act of 1934 because his purchase of 9% Preferred Stock is
deemed to be a purchase of underlying Common Stock matched against his sale of
10,700 shares of Common Stock in June 1996.
Item 7. Financial Statements, Proforma Financial Information and Exhibits
(c) Exhibits.
4. Certificate of the Powers, Designation, Preferences, Rights and
Limitations of 9% Cumulative Convertible Exchangeable Preferred
Stock.
10.17 Amendment No. 3 to Third Amended and Restated Revolving Credit and
Security Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
General DataComm Industries, Inc.
(Registrant)
By:/s/________________________
William S. Lawrence
Senior Vice President and
Principal Financial Officer
Dated: October 8, 1996
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CERTIFICATE OF THE POWERS, DESIGNATION,
PREFERENCES, RIGHTS AND LIMITATIONS OF
9% Cumulative Convertible Exchangeable Preferred Stock
of
GENERAL DATACOMM INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
GENERAL DATACOMM INDUSTRIES, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
that, pursuant to the authority contained in Article Fourth of its Restated
Certificate of Incorporation, as amended, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation at its meeting on September 5, 1996 and
the Pricing Committee of such board at its meeting on September 27, 1996 duly
adopted a resolution providing for the issuance of a series of 800,000 shares of
9% Cumulative Convertible Exchangeable Preferred Stock, which resolution is as
follows:
RESOLVED, that pursuant to authority conferred upon the Board
of Directors by the Restated Certificate of Incorporation, as amended,
of the Corporation (hereinafter called the "Certificate of
Incorporation"), the Board of Directors does hereby authorize the
issuance of a series of 9% Preferred Stock, par value $1.00 per share,
to be known as the 9% Cumulative Convertible Exchangeable Preferred
Stock and to the extent that the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and the qualifications, limitations and restrictions thereof,
are not set forth in the Certificate of Incorporation, does hereby fix
and herein state and express such voting powers, designations,
preferences and relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof, as
follows (all terms used herein which are defined in the Corporation's
Certificate of Incorporation shall have herein the meanings provided
therein):
(A) DESIGNATION AND SIZE OF ISSUE
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The distinctive designation of the series shall be "9% Cumulative
Convertible Exchangeable Preferred Stock" (hereinafter referred to as this
"Series"). The number of shares which shall constitute this Series shall be
800,000 shares. Each share of this Series shall have a par value of $1.00.
(B) DIVIDENDS
(1) The annual rate of dividends payable on each share of this Series
shall be 9% or $2.25 per share.
(2) Dividends shall be payable in cash, quarterly on the last day of March,
June, September and December of each year, commencing December 31, 1996 (each
such date hereinafter referred to as a "Dividend Payment Date"), except that if
such date is not a Business Day (as hereinafter defined), then such dividend
shall be payable on the next succeeding calendar day which is a Business Day.
The amount of dividends payable on shares of this Series for each full quarterly
dividend period shall be computed by dividing by four the annual rate per share
forth in Section (B)(1). Dividends payable on shares of this Series for the
initial dividend period and dividends payable for any period less than a full
quarterly period shall be computed on the basis of a 360-day year of twelve
30-day months. Dividends shall be payable quarterly in arrears on March 31, June
30, September 30, and December 31 of each year, commencing December 31, 1996,
except that if any such date is not a business day in New York City then such
dividend shall be payable on the next such succeeding business day (each such
date on which a dividend is payable is a "Dividend Payment Date"). Dividends
shall be payable to holders of record of the 9% Preferred Stock as they appear
on the books of the transfer agent of the Corporation on such respective dates
as may be fixed by the Board of Directors of the Corporation in advance of the
payment of each particular dividend, provided that holders of shares of 9%
Preferred Stock called for redemption on a redemption date falling between a
dividend payment record date and the Dividend Payment Date shall, in lieu of
receiving such dividend payment on the Dividend Payment Date fixed therefore,
receive such dividend payment together with all other accumulated and unpaid
dividends, if any, on the date fixed for redemption (unless such holders convert
such shares in accordance with this resolution, in which case such holders will
receive such payment on the corresponding dividend payment date; see "Conversion
Rights" below.)
(3) Dividends payable on shares of this Series will be cumulative and shall
accumulate from date of original issue. Accumulations of dividends shall not
bear interest.
(4) So long as any shares of this Series are outstanding, no dividend
(other than a dividend payable in Common Stock or other stock of the Corporation
ranking junior to this Series as to dividends and upon liquidation
(collectively, the "Junior Stock")) shall be declared or paid or set aside for
payment, and no other distribution shall be declared or made, upon the Junior
Stock or upon any other stock
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of the Corporation ranking on a parity with this Series as to dividends or upon
liquidation, nor shall any Junior Stock nor any other stock or the Corporation
ranking on a parity with this Series as to dividends or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation (except by conversion into or exchange for
Junior Stock of the Corporation), unless, in each case, the full cumulative
dividends on all outstanding shares of this Series shall have been paid or
contemporaneously are declared and paid through the last Dividend Payment Date.
Should dividends not be paid in full upon the shares of this Series and any
other preferred stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other stock of the
Corporation ranking on a parity as to dividends with this Series shall be
declared pro rata, so that the amount of dividends declared per share on this
Series and such other preferred stock shall in all cases bear to each other the
same ratio that accumulated dividends per share on the shares of this Series and
such other stock bear to each other. Holders of shares of this Series shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on this Series. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on this Series which may be in arrears.
(C) REDEMPTION
(1) The Corporation, at the option of the Board of Directors, may, subject
to the provisions of Sections (C)(2) and (C)(8) hereof, redeem at any time or
from time to time on or after September 30, 1999, all or any part of the
outstanding shares of this Series. The redemption price of each share of this
Series called for redemption shall be $25.00, together with accumulated and
unpaid dividends to the date fixed for redemption.
(2) Notwithstanding the provisions of Section (C)(1) above, the Corporation
may not redeem any shares of this Series on and after September 30, 1999 and
prior to September 30, 2000 unless the Closing Price (as determined in Section
(C)(3)) of the Corporation's Common Stock shall have equaled or exceeded 150% of
the then applicable conversion price per share (as fixed or determined in
accordance with Section (D)) for at least twenty (20) Trading Days (as
hereinafter defined) within thirty (30) consecutive Trading Days ending within
five Trading Days prior to the date notice of redemption is mailed. For purposes
of this resolution, Trading Day means, so long as the Common Stock is listed or
admitted to trading on the New York Stock Exchange, Inc. (or any successor to
such Exchange), a day on which The New York Stock Exchange, Inc. (or such
successor) is open for the transaction of business, or, if the Common Stock is
not listed or admitted to trading on such Exchange, a day on which the principal
national securities exchange on which the Common Stock is listed is open for the
transaction of business, or, if the Common Stock is not listed or
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admitted to trading on any national securities exchange, a day on which any New
York Stock Exchange member firm is open for the transaction of business.
(3) For purposes of this resolution, the Closing Price of the Corporation's
Common Stock shall be the last sale price as shown on the Composite Tape of The
New York Stock Exchange, Inc., or, in case no such sales take place on such day,
the average of the closing bid and asked prices on the New York Stock Exchange,
or, if the Common Stock is not listed or admitted to trading on such Exchange,
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or, if it is not listed or admitted to trading on
any national securities exchange, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of the Corporation for such purpose
(other than the Corporation or a subsidiary thereof).
(4) In the event that fewer than all the outstanding shares of this Series
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors, and the shares to be redeemed shall be determined by lot
or by any other method as may be determined by the Board of Directors in its
sole discretion to be equitable.
(5) In the event the Corporation shall redeem shares of this Series, notice
of such redemption shall be given by first class mail, postage prepaid, mailed
not less than thirty (30) nor more than sixty (60) days prior to the redemption
date, to each record holder of the shares to be redeemed, at such holder's
address as the same appears on the books of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the total number of shares of this
Series to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price and any
requirements as to endorsement of assignment for transfer; (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date; and (vi)
the conversion rights of the shares to be redeemed, the period within which
conversion rights may be exercised, and the conversion rate at the time
applicable.
(6) If notice shall have been given as provided in Section (C)(5)
and the Corporation shall have provided monies at the time and place specified
for the payment of the redemption price pursuant to such notice, including any
accrued and unpaid dividends to and including the date fixed for redemption,
then from and after the redemption date, dividends on the shares of this Series
so called for redemption shall cease to accrue, such shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation the
redemption price without interest thereon) shall cease. Upon surrender (in
accordance with the notice) of the certificates for any shares so redeemed
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(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price set forth in Section
(C)(1). In case fewer than all the shares represented by any such certificate
are to be redeemed, a new certificate shall be issued representing the
unredeemed shares, without cost to the holder thereof.
(7) Any shares of this Series which have been redeemed shall, after such
redemption, have the status of authorized but unissued shares of 9% Preferred
Stock, without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.
(8) Notwithstanding the foregoing provisions of this Section (C), unless
the full cumulative dividends on all outstanding shares of this Series and any
other preferred stock ranking on a parity with this Series shall have been paid
or contemporaneously are declared and paid for all past dividend periods through
the last Dividend Payment Date, no shares of this Series shall be redeemed, and
the Corporation shall not purchase or otherwise acquire any shares of this
Series.
(D) CONVERSION RIGHTS
(1) Each holder of a share of this Series shall have the right, at any
time on or after 60 days following September 30, 1996, or, as to any share of
this Series called for redemption or exchange, at any time on or after 60 days
following September 30, 1996 and prior to the close of business on the date
fixed for such redemption or exchange, to convert such share into fully paid and
nonassessable shares of Common Stock of the Corporation at a rate of 1.8315
shares of Common Stock for each share of this Series, subject to adjustment as
provided in this Section (D). For purposes of this resolution, except as the
context may otherwise require, the relationship between the "conversion rate"
and the "conversion price" shall be established by formula such that the
conversion price shall equal $25.00 divided by the conversion rate.
(2) If any shares of this Series are surrendered for conversion subsequent
to the record date preceding a Dividend Payment Date but on or prior to such
Dividend Payment Date (except shares called for redemption on a redemption date
between such record date or Dividend Payment Date), the registered holder of
such shares at the close of business on such record date shall be entitled to
receive the dividend payable on such shares on such Dividend Payment Date
notwithstanding the conversion thereof. However, the shares of this Series so
surrendered for conversion subsequent to the record date and prior to the
Dividend Payment Date (other than shares called for redemption or exchange on a
redemption date or exchange date in such period) must be accompanied by payment
of an amount equal to the dividend payment to be received on such Dividend
Payment Date with respect to such shares
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surrendered for conversion, provided, however, no such payment need be made if,
at the time for conversion, dividends payable in the shares of this Series are
in arrears for more than 30 days beyond the previous Dividend Payment Date.
Except as provided above, the Corporation shall make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted shares or for
dividends on the shares of Common Stock issued upon such conversion.
(3) The Corporation shall not be required, in connection with any
conversion of shares of this Series, to issue a fraction of a share of its
Common Stock, but in lieu thereof the Corporation shall, subject to Section
(D)(6)(f), make a cash payment (calculated to the nearest cent) equal to such
fraction multiplied by the Closing Price of the Common Stock on the last Trading
Day prior to the date of conversion.
(4) Any holder of shares of this Series electing to convert such shares
into Common Stock shall surrender the certificate or certificates for such
shares at the office of the Transfer Agent therefor (or at such other place as
the Corporation may designate by notice to the holders of shares of this Series)
during regular business hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of transfer to the Corporation or in blank, in form
satisfactory to the Corporation, and shall give written notice to the
Corporation at such office that such holder elects to convert such shares of
this Series. The Corporation shall, as soon as practicable (subject to Section
(D)(6)(f) hereof) after such deposit of certificates for shares of this Series,
accompanied by the written notice above prescribed and the payment of cash in
the amount required by Section (D)(2), issue and deliver at such office to the
holder for whose account such shares were surrendered, or to his nominee,
certificates representing the number of shares of Common Stock and the cash, if
any, to which such holder is entitled upon such conversion.
(5) Conversion shall be deemed to have been made as of the date of
surrender of certificates for the shares of this Series to be converted, and the
giving of written notice and payment, as prescribed in Section (D)(2) and
(D)(4); and the person entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such Common
Stock on such date. The Corporation shall not be required to deliver
certificates for shares of its Common Stock while the stock transfer books for
such stock or for this Series are duly closed for any purpose, but certificates
for shares of Common Stock shall be issued and delivered as soon as practicable
after the opening of such books.
(6) The conversion rate shall be adjusted from time to time as follows:
(a) In case the Corporation shall, at any time or from time to time while
any of the shares of this Series are outstanding, (i) issue shares of its Common
Stock as a dividend or distribution on the Common Stock, (ii) subdivide its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller
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number of shares, the conversion price and the conversion rate in effect
immediately prior to such action shall be adjusted so that the holder of any
shares of this Series thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Corporation which such
holder would have owned or have been entitled to receive immediately following
such action had such shares of this Series been converted immediately prior
thereto. An adjustment made pursuant to this Section (D)(6)(a) shall become
effective retroactively to immediately after the opening of business on the day
following the record date in the case of a dividend and shall become effective
immediately after the opening of business on the day following the effective
date in the case of a subdivision or combination. If, as a result of an
adjustment made pursuant to this Section (D)(6)(a), the holder of any shares of
this Series thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock of the Corporation, the
Board of Directors (whose determination shall be conclusive) shall determine the
allocation of the adjusted conversion price and/or conversion rate between or
among shares of such classes of capital stock.
(b) In case the Corporation shall, at any time or from time to time while
any of the shares of this Series are outstanding, issue rights, options or
warrants to all holders of shares of its Common Stock entitling them to
subscribe for or acquire shares of Common Stock (or securities convertible into
or exchangeable for Common Stock) at a price per share less than the current
Market Price per share of Common Stock (as defined in Section (D)(6)(d)), at
such record date, the conversion rate shall be adjusted so that it shall equal
the rate determined by multiplying the conversion rate in effect immediately
prior to the date of issuance of such rights or warrants by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to the date of issuance of such rights,
options or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered would purchase at such current Market
Price. For the purposes of this Section (D)(6)(b), the issuance of rights,
options or warrants to subscribe for or purchase securities convertible into
Common Stock shall be deemed to be the issuance of rights, options or warrants
to purchase the shares of Common Stock into which such securities are
convertible at an aggregate offering price equal to the aggregate offering price
of such securities plus the minimum aggregate amount (if any) payable upon
conversion of such securities into shares of Common Stock; provided, however,
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that if all of the shares of Common Stock subject to such rights, options or
warrants have not been issued when such rights, options or warrants expire, then
the conversion price shall promptly be readjusted to the conversion price which
would then be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Common Stock
issued upon the exercise of such rights, options or warrants. An adjustment made
pursuant to this Section (D)(6)(b) shall become effective retroactively
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants.
(c) In case the Corporation shall, at any time or from time to time while any of
the shares of this Series are outstanding, distribute to all holders of shares
of its Common Stock evidences of its indebtedness or securities or assets
(excluding cash dividends payable out of consolidated earnings or retained
earnings or dividends payable in shares of Common Stock) or rights, options or
warrants to subscribe for securities of the Corporation or any of its
subsidiaries (excluding those referred to in Section (D)(6)(b)), then in each
such case the conversion rate shall be adjusted so that it shall equal the rate
determined by multiplying the conversion rate in effect immediately prior to the
date of such distribution by a fraction, the numerator of which shall be the
current Market Price per share (determined as provided in Section (D)(6)(d)) of
the Common Stock on the record date referred to below, and the denominator of
which shall be such current Market Price per share of the Common Stock less the
then fair market value (as determined by the Board of Directors of the
Corporation, whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness or securities or assets so distributed or of
such subscription rights, options or warrants applicable to one share of Common
Stock. Such adjustment shall become effective retroactively immediately after
the record date for the determination of stockholders entitled to receive such
distribution.
(d) For the purpose of any computation under Section (D)(6)(b) and
(D)(6)(c), the current Market Price of a share of Common Stock (the "Market
Price") on any date shall be the average of the daily Closing Prices for ten
(10) consecutive Trading Days before the day in question.
(e) The Corporation shall be entitled to make such additional adjustments
in the conversion price, in addition to those required by subsections D(6)(a),
D(6)(b) and D(6)(c), as shall be necessary in order that any dividend or
distribution in shares of stock, subdivision or combination of shares of Common
Stock, issuance of rights, options
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or warrants, evidences of indebtedness or assets (other than cash dividends
payable out of consolidated earnings or retained earnings) referred to above,
shall not be taxable to the Stockholders.
(f) In any case in which this Section (D)(6) shall require that an
adjustment be made retroactively immediately following a record date, the
Corporation may elect to defer (but only for five (5) Business Days following
the filing of the statement referred to in Section (D)(6)(h)) issuing to the
holder of any shares of this Series converted after such record date (i) the
shares of Common Stock and other capital stock of the Corporation issuable upon
such conversion over and above (ii) the shares of Common Stock and other capital
stock of the Corporation issuable upon such conversion on the basis of the
conversion rate prior to adjustment.
(g) Notwithstanding any other provisions of this Section (D)(6), the
Corporation shall not be required to make any adjustment of the conversion rate
unless such adjustment would require an increase or decrease of at least 1% in
such rate. However, an adjustment not made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall amount to
an increase or decrease of at least 1% in such rate.
(h) Whenever an adjustment in the conversion rate is required, the
Corporation shall forthwith place on file with its Transfer Agent a statement
signed by its Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or a Senior Vice President and by its Secretary, Assistant Secretary or
Treasurer, stating the adjusted conversion rate determined as provided herein.
Such statements shall set forth in reasonable detail such facts as shall be
necessary to show the reason and the manner of computing such adjustment.
Promptly after the adjustment of the conversion rate, the Corporation shall mail
a notice thereof to each holder of shares of this Series briefly stating the
facts requiring the adjustment and the manner of computing it.
(i) The term "Common Stock" as used in this resolution means the
Corporation's Common Stock, $.10 par value, as the same exists as of the date of
the Certificate of Designation relating to this Series or any other class of
stock resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time as a
result of an adjustment made pursuant to Section (D)(6)(a), the holder of any
share or this Series thereafter surrendered for conversion shall become entitled
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to receive any shares of the Corporation other than shares of its Common Stock,
the conversion rate of such other shares so receivable upon conversion of any
share shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to Common
Stock contained in subparagraphs (a) through (h) of this Section (D)(6), and the
provisions of Section (D)(1) through (5) and (7) through (11) with respect to
the Common Stock shall apply on like or similar terms to any such other shares.
(7) In case of (a) any reclassification or change of outstanding shares
of Common Stock issuable upon conversion of shares of this Series (other than a
change in par value or from par value to no par value or from no par value to
par value, or as a result of a subdivision or combination), or (b) any
consolidation or merger of the Corporation with or into one or more other
corporations (other than a consolidation or merger in which the Corporation is
the continuing corporation and which does not result in any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of shares
of this Series), or (c) any sale or conveyance to another corporation or other
entity of all or substantially all of the assets of the Corporation, then,
subject to the applicable rights of the holders upon a Change in Control (as
hereinafter defined), the Corporation, or such successor corporation or other
entity, as the case may be, shall make appropriate provision so that the holder
of each share of this Series then outstanding shall have the right to receive on
conversion the consideration that the holder would have received had he
converted immediately prior to such event. The provisions of this Section (D)(7)
shall apply similarly to successive consolidations, mergers, sales or
conveyances.
(8) Any shares of this Series which shall at any time have been converted
shall, after such conversion, have the status of authorized but unissued shares
of 9% Preferred Stock, without designation as to series until such shares are
once more designated as part of a particular series by the Board of Directors.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the shares of this Series, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of this Series; provided, however, that nothing contained
herein shall preclude the Corporation from satisfying its obligations in respect
of the conversion of the shares by delivery of purchased shares of Common Stock
which are held in the treasury of the Corporation.
(9) If any shares of Common Stock required to be reserved for purposes of
conversion of shares of this Series hereunder require registration with or
approval of any governmental authority before such shares may be issued upon
conversion, the Corporation shall cause such shares to be duly registered or
approved, as the case may be. The Corporation will use its reasonable best
efforts to list the shares of Common Stock
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required to be delivered upon conversion of shares of this Series prior to such
delivery upon each national securities exchange upon which the outstanding
Common Stock is listed at the time of such delivery.
(10) The Corporation shall pay any and all issue or other taxes that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of this Series pursuant hereto. The Corporation shall not,
however, be required to pay any tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other than that in
which the shares of this Series so converted were registered, and no such issue
or delivery shall be made unless and until the person requesting such issue has
paid to the Corporation the amount of such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(11) Before taking any action that would result in the conversion price
being less than the then par value of the Common Stock, the Corporation shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at the conversion price.
(E) EXCHANGE FOR DEBENTURES
(1) The shares of this Series are exchangeable in whole, but not in
part, at the sole option of the Corporation, at any time on and after September
30, 1998, on any Dividend Payment Date, into the Corporation's 9% Convertible
Subordinated Debentures Due 2006 (the "Debentures") described in the
Corporation's Private Placement Memorandum dated September 27, 1996; provided,
that on or prior to the date fixed for exchange (the "Exchange Date") the
Corporation shall have paid or set aside for payment to the holders of
outstanding shares of this Series and of preferred stock ranking as to dividends
on a parity with this Series all accumulated and unpaid dividends to the
Exchange Date. Holders of outstanding shares of this Series shall be entitled to
receive $25.00 principal amount of Debentures in exchange for each share of this
Series held on the Exchange Date.
(2) In the event the Corporation shall exchange shares of this Series,
written notice of such exchange shall be given by first class mail, postage
prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to
the Exchange Date, to each record holder of shares of this Series, at such
holder's address as the same appears on the books of the Corporation. Each such
notice shall state: (a) the Exchange Date; (b) the place or places where
certificates for such shares are to be surrendered for exchange into Debentures,
and any requirements as to endorsement or assignment for transfer; (c) that
dividends on the shares to be exchanged will cease to accumulate on the Exchange
Date; and (d) the period within which conversion rights
11
<PAGE>
may be exercised and the conversion rate at the time applicable. Prior to giving
notice of intention to exchange, the Corporation shall have executed and
delivered with The Chase Manhattan Bank, N.A. or other qualified institution
("Trustee") , as trustee and shall have qualified under the Trust Indenture Act
of 1939, an Indenture (the "Indenture") in substantially the form made available
to the initial holders of this Series with such changes therein as may be
required by law or usage and shall have caused to be delivered to the Trustee an
opinion of counsel acceptable to the Trustee to the effect that (i) the
Debentures have been duly authorized by the Corporation; the Debentures
(assuming that they bear the facsimile signature of the Chief Executive Officer,
the Chief Financial Officer, the Chief Operating Officer or a Senior Vice
President of the Corporation under its corporate seal reproduced thereon and
have been attested by the facsimile signature of its Secretary, Assistant
Secretary or Treasurer and have been authenticated by the Trustee in accordance
with the provisions of the Indenture) have been duly issued and delivered by the
Corporation and constitute valid and binding obligations of the Corporation
entitled to the benefits of the Indenture, except as the enforceability thereof
may be limited by bankruptcy, insolvency, or other similar laws relating to or
affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law; (ii) the Indenture has been duly authorized,
executed and delivered by the Corporation and (assuming due authorization,
execution and delivery by the Trustee) constitutes a legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; (iii) the Common Stock initially issuable upon conversion of
the Debentures has been duly authorized and such Common Stock has been duly
reserved for issuance upon such conversion; and (iv) the issuance of the
Debentures and the Common Stock initially issuable upon conversion of the
Debentures and the compliance by the Corporation with all of the provisions of
the Debentures and the Indenture will not conflict with or result in any breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Corporation is a party or by which
the Corporation is bound or to which any of the property or assets of the
Corporation is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the Corporation
or of any applicable order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the Corporation;
and, to the best of such counsel's knowledge, no consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body will be required
for the issuance on the part of the Corporation of the Debentures or the shares
of Common Stock issuable upon conversion of the Debentures or the consummation
by the Corporation of the other transactions contemplated by the Indenture,
except such as have been obtained and such consents, approvals, authorizations
registrations or qualifications as may be required
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under state securities or Blue Sky laws. The Corporation shall cause the
Debentures to be authenticated on the Dividend Payment Date on which the
exchange is effective, and the Corporation shall pay interest on the Debentures
at the rate and on the dates specified in the Indenture from the Exchange Date.
(3) Notice having been mailed as aforesaid, from and after the Exchange
Date (unless the Corporation shall default in issuing Debentures in exchange for
shares of this Series or in making the final dividend payment on the Exchange
Date), dividends on the shares of this Series shall cease to accumulate, such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the Debentures and accrued and unpaid dividends, if any, to
such Exchange Date) shall cease. Upon surrender (in accordance with the notice
provided for above in Section (E)(2)) of the certificates for any shares of this
Series so exchanged (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
exchanged by the Corporation into Debentures as aforesaid.
(4) All shares of this Series which have been exchanged shall, after such
exchange, have the status of authorized but unissued shares of preferred stock,
without designation as to series until such shares are once more designated as
part of a particular series by the Board of Directors.
(F) VOTING
(1) Except as indicated below or as required by Delaware General
Corporation Law the shares of this Series shall not have voting rights. The
shares of this Series shall nonetheless have the following voting rights:
(a) If and whenever at any time or times dividends payable on shares of
this Series shall have been in arrears and unpaid in an aggregate amount equal
to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, then the holders of shares of this Series shall have the
right, voting separately as a class with any other series of preferred stock so
entitled as provided in the certificate of designation of such series, to elect
two (2) directors of the Corporation, such directors to be in addition to the
number of directors constituting the Board of Directors immediately prior to the
accrual of such right, the remaining directors to be elected by the other class
or classes of stock entitled to vote therefor at each meeting of stockholders
held for the purpose of electing directors. So long as the Corporation's Board
of Directors is divided into classes as provided in Article Eighth of the
Certificate of Incorporation, the two directors of the Corporation so elected by
the holders of shares of this Series and of such other series of preferred stock
so entitled shall be elected to the two classes with the longest remaining
terms.
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(b) Such voting right may be exercised initially either at a special
meeting of the holders of the 9% Preferred Stock having such voting right,
called as hereinafter provided, or at any annual meeting of stockholders held
for the purpose of electing directors, and thereafter at each such annual
meeting. The right of the holders of this Series to vote for the election of
such members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on the shares of this
Series shall have been paid in full, at which time such voting right of the
holders of this Series shall terminate and, if such voting right of the holders
of this Series and all other series of preferred stock so entitled shall have
terminated, subject to the requirements of the General Corporation Law of
Delaware, the term of the directors elected pursuant to Section (F)(1)(a) shall
terminate, subject to revesting on the basis set forth in Section (F)(1)(a).
(c) At any time when such voting right shall have vested in holders of this
Series, and if such right shall not already have been initially exercised, a
proper officer of the Corporation shall, upon the written request of the record
holders of 10% in number of shares of this Series then outstanding, addressed to
the Secretary of the Corporation, call a special meeting of the holders of this
Series and of any other class or classes of stock having voting power with
respect to the election of such directors. Such meeting shall be held at the
earliest practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of the
Corporation or, if none, at a place designated by the Board of Directors. If
such meeting is not called by the proper officers of the Corporation within 30
days after the personal service of such written request upon the Secretary of
the Corporation, or within 35 days after mailing the same within the United
States of America, by registered mail, addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the record holders of
10% in number of shares of this Series then outstanding may designate in writing
one of their number to call such meeting at the expense of the Corporation, and
such meeting may be called by such person so designated upon the notice required
for annual meetings of stockholders and shall be held at the same place as is
elsewhere provided for in this Section (F)(1)(c) or such other place as is
selected by such designated stockholder. Any holder of the 9% Preferred Stock
who would be entitled to vote at such meeting shall have access to the stock
books of the Corporation for the purpose of causing a meeting of stockholders to
be called pursuant to the provisions of this Section (F)(1). Notwithstanding the
provisions of this Section (F)(1), no such special meeting shall be called
during a period within 90 days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) At any meeting held for the purpose of electing directors at which the
holders of the 9% Preferred Stock shall have the right to elect two directors as
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provided herein, the presence in person or by proxy of the holders of a majority
of the then outstanding shares of 9% Preferred Stock having such right shall be
required and shall be sufficient to constitute a quorum of such class for the
election of directors by such class. At any such meeting or adjournment thereof
(i) the absence of a quorum of the holders of the 9% Preferred Stock having such
right shall not prevent the election of directors other than those to be elected
by the holders of the 9% Preferred Stock, and the absence of a quorum or quorums
of the holders of capital stock entitled to elect such other directors shall not
prevent the election of directors to be elected by the holders of the 9%
Preferred Stock entitled to elect such directors and (ii) except as otherwise
required by law, in the absence of a quorum of the holders of any class of stock
entitled to vote for the election of directors, a majority of the holders of a
class present in person or by proxy of such class shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum is present.
(e) Any vacancy in the Board of Directors in respect of a director elected
by holders of 9% Preferred Stock pursuant to the voting right created under this
Section (F)(1) shall be filled by vote of the remaining director so elected, or
if there be no such remaining director, by the holders of 9% Preferred Stock
entitled to elect such director or directors at a special meeting called in
accordance with the procedures set forth in Section (F)(1)(c), or, if no such
special meeting is called, at the next annual meeting of stockholders.
(f) So long as any shares of this Series remain outstanding, the
Corporation shall not, either directly or indirectly, without the affirmative
vote at a meeting or the written consent with or without a meeting of the
holders of at least a majority in number of shares of this Series then
outstanding, (i) amend, alter or repeal any of the provisions of the Certificate
of Designation relating to this Series or the Certificate of Incorporation, or
authorize any reclassification of the shares of this Series, so as in any such
case to affect adversely the preferences, special rights or privileges or voting
power of the shares of this Series, or (ii) authorize or create any class of
stock ranking prior to the shares of this Series as to dividends or distribution
of assets on liquidation, or create, or issue or increase the authorized number
of shares of any series of the Corporation's authorized preferred stock ranking
prior to the shares of this Series as to dividends or distributions on
liquidation.
(g) In exercising the voting rights set forth in this Section (F)(1), each
share of 9% Preferred Stock entitled to such voting right shall have equal
voting power, notwithstanding any greater or lesser general voting powers of one
or more series of preferred stock.
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<PAGE>
(2) No consent of holders of shares of this Series shall be required
for (i) the creation of any indebtedness of any kind of the Corporation, (ii)
the authorization or issuance of any class of stock of the Corporation junior to
or on a parity to the shares of this Series as to dividends and upon
liquidation, dissolution or winding up of the Corporation or (iii) subject to
Section (F)(1)(f), the issuance of any shares of preferred stock.
(G) LIQUIDATION RIGHTS
(1) Upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, the holders of the shares of this Series shall
be entitled to receive out of the assets of the Corporation available for
distribution to stockholders, before any payment or distribution shall be made
on the Common Stock or on any other class of stock ranking junior to this Series
upon liquidation, liquidating distribution in the amount of $25.00 per share,
plus all accumulated and unpaid dividends to the date of final liquidation.
(2) Neither the sale, lease or exchange (for cash, shares of stock,
securities or other consideration) of all or substantially all the property and
assets of the Corporation nor the merger or consolidation of the Corporation
into or with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section (G).
(3) After the payment to the holders of the shares of this Series of the
full preferential amounts provided for in this Section (G), the holders of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.
(4) In the event the assets of the Corporation available for distribution
upon any dissolution, liquidation or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay the full preferential
amounts to which such holders are entitled pursuant to Section (G)(1), no such
distribution shall be made on account of any shares of any other class or series
of preferred stock ranking on a parity with the shares of this Series upon such
dissolution, liquidation or winding up unless proportionate distributive amounts
shall be paid on account of the shares of this Series, ratably, in proportion to
the full distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(H) PRIORITY
(1) For purposes of this resolution, any stock of any class or series of
the Corporation shall be deemed to rank:
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<PAGE>
(i) Prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, whether voluntary or involuntary, as the case
may be, in preference or priority to the holders of shares of this Series;
(ii) On a parity with shares of this Series, either as to dividends or upon
liquidation, whether or not the dividend rates, Dividend Payment Dates, or
redemption or liquidation prices per share or sinking fund provisions, if any,
are different from those of this Series, if the holders of such stock are
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as between the
holders of such stock and the holders of shares of this Series; and
(iii) Junior to shares of this Series, either as to dividends or upon
liquidation, if such class or series shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, as the case may be, in preference or priority
to the holders of shares of such class or series.
(I) CHANGE IN CONTROL
(1) Each holder of a share of this Series shall have the right, as provided
below, upon a Change in Control (as defined herein), subject to certain
conditions and restrictions, to require the Corporation to repurchase all or any
part of their shares of this Series at a purchase price of $25.00 per share,
plus accrued and unpaid dividends, if any, to the Repurchase Date (as defined
herein). The Corporation may satisfy such repurchase obligation by delivery of
shares of its Common Stock valued at the Market Price (as defined in section
(D)(6)(d)) in exchange for certificates evidencing the shares of this Series.
(2) The term "Change in Control" as used in this resolution means the
occurrence of any of the following events after the date of original issuance of
the shares of this Series: (i) any person (including any entity or group deemed
to be a "person" under Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
becomes the direct or indirect beneficial owner (as determined in accordance
with Rule 13d-3 under the Exchange Act) of shares of the Corporation's capital
stock representing greater than 50% of the total voting power of all shares of
capital stock of the Corporation entitled to vote in the election of Directors
under ordinary circumstances or to elect a majority of the Board of Directors of
the Corporation, (ii) the Corporation sells, transfers or otherwise disposes of
all or substantially all of the assets of the Corporation, (iii) when, during
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any period of 12 consecutive months after the date of original issuance of the
shares of this Series, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Corporation (together with any
new directors whose election by such Board or whose nomination for election by
the stockholders of the Corporation was approved by a vote of a majority of the
directors still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so approved),
cease for any reason to constitute a majority of the Board of Directors of the
Corporation then in office (excluding from such calculation any election of
directors by holders of 9% Preferred Stock), or (iv) the date of the
consummation of the merger or consolidation of the Corporation with another
corporation where the stockholders of the Corporation immediately prior to the
merger or consolidation, would not beneficially own immediately after the merger
or consolidation, shares entitling such stockholders to 50% or more of all votes
(without consideration of the rights of any class of stock to elect directors by
a separate class vote) to which all stockholders of the corporation issuing cash
or securities in the merger or consolidation would be entitled in the election
of directors, or where members of the Board of Directors of the Corporation
immediately prior to the merger or consolidation would not immediately after the
merger or consolidation constitute a majority of the board of directors of the
corporation issuing cash or securities in the merger or consolidation.
(3) Each holder of shares of the Series shall have the right effective
for thirty (30) days following the date of mailing of a notice disclosing such
Change in Control (the "Repurchase Right Notice") to require the Company to
repurchase all or any part of such holder's shares of this Series, on the date
(the "Repurchase Date") that is no later than 45 days after the date of the
Repurchase Right Notice, at a repurchase price equal to $25.00 per share, plus
accrued and unpaid dividends to the Repurchase Date with respect to such shares.
On or before the 30th day following any Change in Control, the Corporation,
or at the request of the Corporation, the transfer agent, shall mail the
Repurchase Right Notice to each holder of record of the shares of this Series
stating (i) that a Change in Control has occurred and that such holder has the
right to require the Company to repurchase such holder's shares of this Series;
(ii) the Repurchase Date, (iii) the date by which the right to cause repurchase
must be exercised, (iv) the price at which such repurchase is to be made, if the
right to cause repurchase is exercised and (v) a description of the procedure
which such holder must follow to exercise a right to cause repurchase and
whether or not the Corporation presently intends to deliver shares of its Common
Stock in payment therefor. No failure of the Corporation to give the foregoing
notice shall limit any such holder's right to exercise a repurchase right.
To exercise the repurchase right, on or before the 30th day after the
mailing of the Repurchase Right Notice, holders of shares of this Series must
deliver written notice to the Corporation(or an agent designated by the
Corporation for such purposes) of the holder's exercise of such right, together
with the certificate for such
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<PAGE>
shares with respect to which the right is being exercised, duly endorsed for
transfer. Such written notice shall be irrevocable except with respect to
conversions permitted prior to the Repurchase Date.
If the Repurchase Date is between a regular record date for the payment of
dividends and the next succeeding Dividend Payment Date, any shares to be
repurchased must be accompanied by payment of an amount equal to the dividends,
payable on such succeeding Dividend Payment Date on the amount to be
repurchased, and dividends will be paid on such next succeeding Dividend Payment
Date to the registered holder of such stock on the immediately preceding record
date. Shares of this Series repurchased on a Dividend Payment Date need not be
accompanied by any payment, and the dividends on shares being repurchased will
be paid on such Dividend Payment Date to the registered holder of such Shares on
the corresponding record date.
The Corporation shall have ten (10) days from receipt of such exercise to
notify the holder whether the Company will redeem the shares and/or deliver
shares of Common Stock in satisfaction of its obligations hereunder.
IN WITNESS WHEREOF, General DataComm Industries, Inc. has caused this
certificate to be signed and attested this 27th day of September, 1996.
GENERAL DATACOMM INDUSTRIES, INC.
By: /s/_________________________
Charles P. Johnson
Chairman
Attest:/s/ _____________________________
Howard S. Modlin, Secretary
19
AMENDMENT NO. 3
TO
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 TO ("Amendment")is entered into as of September 27, 1996,
among GENERAL DATACOMM INDUSTRIES, INC., a corporation organized under the laws
of the State of Delaware ("GDC"), GENERAL DATACOMM, INC., a corporation
organized under the laws of the State of Delaware, GDC REALTY, INC., a
corporation organized under the laws of the State of Texas, GDC NAUGATUCK, INC.,
a corporation organized under the laws of the State of Delaware, GENERAL
DATACOMM INTERNATIONAL CORP., a corporation organized under the laws of the
State of Delaware, GDC FEDERAL SYSTEMS, INC. (formerly known as GENERAL DATACOMM
SYSTEMS, INC.), a corporation organized under the laws of the State of Delaware
(each a "Borrower" and jointly and severally, the "Borrowers"), the undersigned
financial institutions (each a "Lender" and collectively, "Lenders") and THE
BANK OF NEW YORK COMMERCIAL CORPORATION ("BNYCC"), a New York corporation, as
agent for Lenders (BNYCC in such capacity, "Agent").
BACKGROUND
Borrowers, Lenders and Agent are parties to a Third Amended and Restated
Revolving Credit and Security Agreement dated as of November 30, 1995 (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lenders provide Borrowers with certain financial
accommodations.
Borrowers have requested that Agent and Lenders consent to the issuance of
certain preferred stock of GDC and Agent and Lenders are willing to do so on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of credit
heretofore or hereafter made to or for the account of Borrowers by Lenders or
Agent, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, the Loan Agreement is hereby
amended as follows:
(a) Section 1.2 of the Loan Agreement is amended by adding the
following definition in the appropriate alphabetical order:
"Preferred Stock" means the 9% $20,000,000 Cumulative Convertible
Exchangeable Preferred Stock of GDC to be issued on or about September 30, 1996.
<PAGE>
(b) The following language is added to the end of Section 7.7 of the
Loan Agreement:
"provided, however, GDC may pay dividends on the Preferred Stock in
accordance with the terms thereof so long as (i) no notice of termination with
regard to this Agreement shall be outstanding and (ii) no Default or Event of
Default shall have occurred and be continuing prior to or after giving effect to
such payment."
(c) Section 7.8 of the Loan Agreement is amended by deleting the period
at the end thereof and replacing it with the following language:
"; and (vii) Indebtedness evidenced by the Preferred Stock provided
that in the event the Preferred Stock is converted into subordinated debt in
accordance with the terms thereof such debt is subordinated to the Obligations
on terms and conditions satisfactory to Agent, Lenders and their counsel."
3. Conditions of Effectiveness. This Amendment shall become effective
upon receipt by Agent of (i) four (4) copies of this Amendment executed by
Borrowers and consented and agreed to by Guarantors, (ii) the Certificate of the
Powers, Designation, Preferences, Rights and Limitations of the Preferred Stock
and (iii) such other certificates, instruments, documents, agreements and
opinions of counsel as may be required by Agent, Lenders or their counsel, each
of which shall be in form and substance satisfactory to Agent, Lenders and their
counsel.
4. Representations and Warranties. Each Borrower hereby represents
and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrowers and are enforceable
against Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset with respect
to the Loan Agreement.
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<PAGE>
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Agent or Lenders, nor
constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of
the State of New York.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
GENERAL DATACOMM INDUSTRIES, INC.
GENERAL DATACOMM, INC.
GDC REALTY, INC.
GDC NAUGATUCK, INC.
GENERAL DATACOMM INTERNATIONAL CORP.
GDC FEDERAL SYSTEMS, INC.
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
3
<PAGE>
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as Agent and Lender
By: /s/
Name: Michael Lustbader
Its: Vice President
CONSENTED AND AGREED TO:
DATACOMM RENTAL CORPORATION
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
GENERAL DATACOMM LTD.
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
GENERAL DATACOMM FRANCE S.A.R.L
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
GENERAL DATACOMM DE MEXICO S.A. DE C.V.
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
GENERAL DATACOMM PTY LIMITED
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
GENERAL DATACOMM S.A.R.L.
By: /s/
Name: Dennis J. Nesler
Its: V.P. and Treasurer
4
