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) July 31, 2000
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, Connecticut 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 July 31, 2000, the Company sold 200,000 shares of 5% Cumulative Convertible
Preferred Stock ("Preferred Stock") for $5,000,000 to two accredited investors
in a negotiated private transaction exempt from registration under Section 4(2)
of the Securities Act of 1933, as amended. The Preferred Stock is convertible
into one million shares of Common Stock at $5.00 per share, or five shares of
Common Stock for each share of Preferred Stock.
The Corporation has the option to cause the Preferred Stock to convert into
Common Stock if the market price of the Company's Common Stock exceeds 125% of
the conversion price, or $6.25 per share, for a specified period, and has the
right to redeem the Preferred Stock at original issue price (par) in the event
certain transactions of $50,000,000 or more are effected by the Company and a
registration statement is in effect covering the Common Stock. Separately, the
Preferred Stock will automatically be converted into Common Stock on July 31,
2002 unless extended if a registration statement is not timely filed or kept
effective. Dividends are payable quarterly, at the option of the Corporation, in
Common Stock or cash.
The conversion price could potentially be adjusted downward at six predetermined
reset dates commencing on January 31, 2001, and each three months thereafter, if
the average closing price of the Company's Common Stock during the ten trading
days preceding such predetermined dates falls below the conversion price then in
effect. An additional reset date is possible if the Company's net worth falls
below a certain formula as of September 30, 2000. However, in no event can the
conversion price drop below a point where the Preferred Stock would be
convertible into more than 19.999% of the Common Stock shares outstanding,
excluding Class B stock and treasury shares.
The Company also issued warrants for the investors to purchase an additional
200,000 shares of Common Stock at $5.75 per share. Such warrants expire in five
years. The Company has the right to redeem such warrant shares two years after
issuance for $.01 per share if the Common Stock market price exceeds 200% of the
exercise price then in effect for 20 trading days out of 30 consecutive trading
days and the holder does not exercise the warrant by the date fixed for
redemption. The Company has agreed to register the underlying shares of the
Common Stock.
For more detailed provisions relating to this transaction, refer to exhibits
filed with this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
4.1 Certificate of the Powers, Designation, Preferences, Rights and
Limitations of 5% Cumulative Convertible Preferred Stock
4.2 Form of Warrant
10.1 Securities Purchase Agreement
10.2 Registration Rights 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 G. HENRY
William G. Henry
Vice President and
Principal Financial Officer
Dated: August 9, 2000
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