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) - November 12, 1997
DATA RACE, INC.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation)
0-20706 74-2272363
(Commission File Number) (I.R.S. Employer
Identification No.)
12400 NETWORK BLVD.
SAN ANTONIO, TEXAS 78249
(210) 263-2000
(Address of Principal Executive Offices and Telephone Number,
Including Area Code)
ITEM 5. OTHER EVENTS.
On November 12, 1997, DATA RACE, Inc. (the "Company") closed a $5,000,000
private placement of 8% convertible participating preferred stock and warrants
with four institutional investment firms. The investment firms have committed to
purchase an additional $3,000,000 of 8% convertible participating preferred
stock and warrants on similar terms by January 29, 1998, subject to certain
conditions. The proceeds from the sale of the preferred stock and warrants is
expected to be used primarily for the continuing roll-out of the Company's Be
There! personal multiplexer product line and for general corporate working
capital.
The convertible preferred stock is generally convertible into common stock
at a price equal to the lesser of a premium over the market price on the closing
date or a price computed at the time of conversion based on market prices prior
to the conversion date. The warrants become exercisable in two equal
installments, five months from the issuance date and nine months from the
issuance date, in proportion to the remaining number of shares of convertible
preferred stock then held by the investors. Under certain circumstances, the
Company may be required to redeem the convertible preferred stock and warrants.
The common stock underlying the convertible preferred stock and warrants carry
certain registration rights. Subject to certain exceptions, the investors are
prohibited from effecting short sales of the Company's common stock during the
six-month period following the initial closing of the private placement.
The additional $3,000,000 investment is subject to certain conditions,
including effective registration of the shares of common stock underlying the
convertible preferred stock and warrants, shareholder approval of the private
placement, the absence of certain changes in control of the Company, and the
absence of any material adverse change in the Company's business or prospects.
Loewenbaum & Company Incorporated acted as financial advisor and placement
agent in connection with the transaction.
A MORE COMPLETE DESCRIPTION OF THE PRIVATE PLACEMENT AND THE RIGHTS AND
RESTRICTIONS PERTAINING TO THE SECURITIES ISSUED IN THE PRIVATE PLACEMENT IS
CONTAINED IN THE DOCUMENTS FILED AS EXHIBITS TO THIS FORM 8-K.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Description
- ------- -----------
3.1 Statement of Designations, Preferences and Rights of
Series C Convertible Participating Preferred Stock
10.1 Securities Purchase Agreement dated effective November
7, 1997 with Buyers listed therein
10.2 Registration Rights Agreement dated effective November
7, 1997 with Buyers listed therein
10.3 Form of Warrant issued to each Buyer party to the
Securities Purchase Agreement dated effective November
7, 1997
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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.
DATA RACE, Inc.
Date: November 20, 1997 By: /s/ GREGORY T. SKALLA
-----------------------------------------
Gregory T. Skalla,
Vice President-Finance, Chief Financial
Officer, Treasurer and Secretary
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EXHIBIT INDEX
Exhibit Description
------- -----------
3.1 Statement of Designations, Preferences and Rights of Series
C Convertible Participating Preferred Stock
10.1 Securities Purchase Agreement dated effective November 7,
1997 with Buyers listed therein
10.2 Registration Rights Agreement dated effective November 7,
1997 with Buyers listed therein
10.3 Form of Warrant issued to each Buyer party to the Securities
Purchase Agreement dated effective November 7, 1997
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