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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) June 1, 1998
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Code-Alarm, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Michigan
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(State of Other Jurisdiction of Incorporation)
016441 38-2334695
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(Commission File Number) (IRS Employer Identification No.)
950 E. Whitcomb, Madison Heights, Michigan 48071
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(Address of Principal Executive Offices) (Zip Code)
(248) 583-9620
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
Code-Alarm, Inc. and Directed Electronics, Inc. ("Directed") entered
into a comprehensive worldwide settlement agreement and mutual release dated
June 1, 1998, whereby each party released any and all pending claims,
counterclaims, third-party claims, appeals and cross-appeals against the other
in exchange for payment of $10,000,000 to Directed by Code-Alarm. On June 16,
1998, a Stipulated Order was entered in one of the seven cases disposed of by
the settlement, namely the United States District Court, Eastern District of
Michigan case of Code-Alarm, Inc. v. Directed Electronics, Inc., Case No.
87-CV-74022-DT, authorizing dismissal of the case upon payment to Directed
Electronics, Inc. of a bond posted by Code-Alarm on March 5, 1998, in the
amount of $9,341,030 and the additional sum of $658,970 from Code-Alarm. The
bond and the additional sum were paid on June 19, 1998. To fund the
settlement, Code-Alarm authorized a draw against the outstanding letter of
credit that supported the bond, thereby converting the letter of credit into a
term loan under Code-Alarm's credit facility with
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General Electric Capital Corporation, and also borrowed the additional sum
under that term loan. As Pegasus Partners, L.P. and Pegasus Related Partners,
L.P. are guaranteeing that term loan, Code-Alarm has issued to them litigation
warrants to purchase 796,574 shares of Common Stock at an exercise price of
approximately $.27.
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 hereto duly authorized.
CODE-ALARM, INC.
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Date: July 7, 1998 By: /s/ Craig S. Camalo
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CRAIG S. CAMALO
Secretary
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