-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ffizqWFgHM7eELqNGI6Lyt02IzHPqRBHGRHUlICS3RGO87AAltR2GyNfMIkWYozB vY9iJewIxBG6TKhRuBSW7Q== 0000950134-95-000290.txt : 19950608 0000950134-95-000290.hdr.sgml : 19950608 ACCESSION NUMBER: 0000950134-95-000290 CONFORMED SUBMISSION TYPE: SC 13E4/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19950302 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DELL COMPUTER CORP CENTRAL INDEX KEY: 0000826083 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 742487834 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13E4/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42053 FILM NUMBER: 95517885 BUSINESS ADDRESS: STREET 1: 2112 KRAMER LN - BLDG 1 CITY: AUSTIN STATE: TX ZIP: 78758 BUSINESS PHONE: 5123384400 MAIL ADDRESS: STREET 1: 9505 ARBORETUM BLVD CITY: AUSTIN STATE: TX ZIP: 78759-7299 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DELL COMPUTER CORP CENTRAL INDEX KEY: 0000826083 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 742487834 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13E4/A BUSINESS ADDRESS: STREET 1: 2112 KRAMER LN - BLDG 1 CITY: AUSTIN STATE: TX ZIP: 78758 BUSINESS PHONE: 5123384400 MAIL ADDRESS: STREET 1: 9505 ARBORETUM BLVD CITY: AUSTIN STATE: TX ZIP: 78759-7299 SC 13E4/A 1 AMENDMENT #2 TO SCHEDULE 13E4 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13E-4/A (AMENDMENT NO. 2) ISSUER TENDER OFFER STATEMENT (Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934) DELL COMPUTER CORPORATION (Name of Issuer) DELL COMPUTER CORPORATION (Name of Person(s) Filing Statement) SERIES A CONVERTIBLE PREFERRED STOCK (Title of Class of Securities) 247025-50-5 247025-40-6 U24702-10-9 (CUSIP Number of Class of Securities) MICHAEL S. DELL CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER DELL COMPUTER CORPORATION 2112 KRAMER LANE, BUILDING 1 AUSTIN, TEXAS 78758-4012 (512) 338-4400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) Copies to: LARRY W. SONSINI THOMAS B. GREEN WILSON, SONSINI, GENERAL COUNSEL GOODRICH & ROSATI DELL COMPUTER CORPORATION 650 PAGE MILL ROAD 2112 KRAMER LANE, BUILDING 1 PALO ALTO, CALIFORNIA 94304 AUSTIN, TEXAS 78758-4012 (415) 493-9300 (512) 338-4400
FEBRUARY 21, 1995 (Date Tender Offer First Published, Sent or Given to Security Holders) CALCULATION OF FILING FEE
TRANSACTION AMOUNT OF VALUATION(1) FILING FEE(1) -------------------------------- -------------- $125,000,000 $25,000
- --------------- (1) The filing fee was paid upon filing by Dell Computer Corporation of the Schedule 13E-4 on February 21, 1995. The fee was calculated as one-fiftieth of one percent of the market value of 1,250,000 shares of Series A Convertible Preferred Stock of Dell Computer Corporation. In accordance with Rule 0-11(a)(4) under the Securities Exchange Act of 1934, as amended, the value of Series A Convertible Preferred Stock is based on the book value of the securities computed as of October 30, 1994, which is the latest practicable date. /X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $25,000. Form or Registration No.: Schedule 13E-4 (File No. 005-42053) Filing Party: Dell Computer Corporation Date Filed: February 21, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 This Amendment No. 2 to the Issuer Tender Offer Statement on Schedule 13E-4 (this "Amendment No. 2") amends the Issuer Tender Offer Statement on Schedule 13E-4 (the "Statement") filed with the Securities and Exchange Commission on February 21, 1995 by Dell Computer Corporation, a Delaware corporation (the "Issuer"), and amended by Amendment No. 1 thereto on February 24, 1995, and relates to the offer by the Issuer to pay a cash premium of $8.25 for each share of its Series A Convertible Preferred Stock (the "Series A Preferred Stock") that is converted to common stock, par value $.01 per share, of the Issuer on the terms and subject to the conditions set forth in the Offer of Premium Upon Conversion and the related Special Conversion Notice and Registration Agreement. An amended copy of the Offer of Premium Upon Conversion is attached to this Amendment No. 2 as Exhibit (a)(1) and copies of the related Special Conversion Notice and Registration Agreement were attached to the Statement as Exhibits (a)(2) and (a)(3), respectively. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Statement. The purpose of this Amendment No. 2 is to amend the Offer of Premium Upon Conversion. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) -- Offer of Premium Upon Conversion dated February 21, 1995, as amended (a)(2)* -- Special Conversion Notice (a)(3)* -- Registration Agreement (a)(4)* -- Notice of Guaranteed Delivery (a)(5)* -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(6)* -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(7)* -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(8)* -- Form of Press Release dated February 21, 1995 (a)(9)* -- Annual Report on Form 10-K for the Fiscal Year Ended January 30, 1994, of Dell Computer Corporation (a)(10)* -- Quarterly Report on Form 10-Q for the Quarterly Period Ended October 30, 1994, of Dell Computer Corporation (a)(11)* -- Current Report on Form 8-K, dated February 21, 1995 (a)(12)* -- Notice to Holders of Series A Convertible Preferred Stock, dated February 22, 1995 (b) -- Not applicable (c) -- See Exhibit (a)(3) (d)* -- Opinion of Baker & McKenzie dated February 21, 1995 (e) -- Not applicable (f)* -- Question and Answer -- For Use by Dell Computer Corporation Employees Only
- --------------- * Previously Filed 2 3 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 2 is true, complete and correct. DELL COMPUTER CORPORATION By: /s/ THOMAS J. MEREDITH Name: Thomas J. Meredith Title: Chief Financial Officer Dated: March 2, 1995 4 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER - ----------- -------------------------------------------------------------------- ----------- (a)(1) -- Offer of Premium Upon Conversion dated February 21, 1995, as amended (a)(2)* -- Special Conversion Notice (a)(3)* -- Registration Agreement (a)(4)* -- Notice of Guaranteed Delivery (a)(5)* -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(6)* -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(7)* -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(8)* -- Form of Press Release dated February 21, 1995 (a)(9)* -- Annual Report on Form 10-K for the Fiscal Year Ended January 30, 1994, of Dell Computer Corporation (a)(10)* -- Quarterly Report on Form 10-Q for the Quarterly Period Ended October 30, 1994, of Dell Computer Corporation (a)(11)* -- Current Report on Form 8-K, dated February 21, 1995 (a)(12)* -- Notice to Holders of Series A Convertible Preferred Stock, dated February 22, 1995 (b) -- Not applicable (c) -- See Exhibit (a)(3) (d)* -- Opinion of Baker & McKenzie dated February 21, 1995 (e) -- Not applicable (f)* -- Question and Answer -- For Use by Dell Computer Corporation Employees Only
- --------------- * Previously Filed EX-99.(A)(1) 2 OFFER OF PREMIUM UPON CONVERSION AS AMENDED 1 OFFER OF PREMIUM UPON CONVERSION OF ANY AND ALL OF THE OUTSTANDING SERIES A CONVERTIBLE PREFERRED STOCK OF DELL COMPUTER CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 22, 1995, UNLESS EXTENDED BY THE COMPANY. Dell Computer Corporation, a Delaware corporation (the "Company" or "Dell"), hereby offers to pay a cash premium of $8.25 (the "Conversion Premium") for each share of its Series A Convertible Preferred Stock (the "Series A Preferred Stock") that is converted to common stock, par value $.01 per share ("Common Stock"), of the Company from the date of this Offer of Premium through 12:00 midnight, New York City time, on Wednesday, March 22, 1995, unless extended (the "Special Conversion Period"). A holder of Series A Preferred Stock who elects to convert during the Special Conversion Period will receive 4.2105 shares of Common Stock (equivalent to a conversion price of $23.75 per share of Common Stock) and the Conversion Premium of $8.25 in cash for each share of Series A Preferred Stock converted. At the conclusion of the Special Conversion Period, a holder of shares of Series A Preferred Stock who did not convert those shares to Common Stock during the Special Conversion Period will not be entitled to the Conversion Premium upon conversion. The Company will register under the Securities Act of 1933, as amended (the "Securities Act"), and applicable U.S. state securities laws, the resale of the shares of Common Stock to be issued upon conversion of Series A Preferred Stock pursuant to this offer by the holders thereof (the "Resale Registration") if and to the extent those holders enter into a Registration Agreement with the Company and subject to the terms and conditions of the Registration Agreement. Under the Resale Registration, resales of such Common Stock may be made for 30 calendar days (the "Resale Window") only in ordinary brokerage transactions and transactions in which brokers solicit purchasers. The Company currently intends to use its reasonable commercial efforts to have the Resale Registration declared effective as soon as reasonably practicable following completion of the Conversion Offer. However, the Company may delay the effectiveness of the Resale Registration in its discretion until a later date as the Company determines may be required or advisable. There can be no assurance about when the Resale Registration will become effective. Shares of Common Stock issued upon conversion of Series A Preferred Stock and not sold pursuant to the Resale Registration will remain restricted securities under the Securities Act. See "Special Considerations -- Restrictions on Resale." Holders of Series A Preferred Stock who elect to convert Series A Preferred Stock pursuant to the Conversion Offer will not receive future, regular dividend payments with respect to Series A Preferred Stock, including any amount in respect of periods since January 27, 1995. The offer is made on the terms and subject to the conditions set forth in this Offer of Premium and any supplements or amendments thereto (the "Offer of Premium"), in the related Special Conversion Notice, and in the related Registration Agreement (which together constitute the "Conversion Offer"). The Conversion Offer is not conditioned on any minimum number of shares of Series A Preferred Stock being tendered for conversion. BEFORE MAKING A DECISION WHETHER TO ACCEPT THE CONVERSION OFFER, EACH HOLDER OF SERIES A PREFERRED STOCK SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED IN "SPECIAL CONSIDERATIONS." --------------------- NEITHER THIS TRANSACTION NOR THE SECURITIES TO BE ISSUED UPON CONVERSION OF THE SERIES A PREFERRED STOCK HAVE 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 FAIRNESS OR MERITS OF THIS TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- The date of this Offer of Premium is February 21, 1995. 2 THE SERIES A PREFERRED STOCK AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, EXCEPT THAT SUCH COMMON STOCK MAY BE REGISTERED FOR RESALE DURING THE RESALE WINDOW ON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE REGISTRATION AGREEMENT. OTHER THAN PURSUANT TO THE RESALE REGISTRATION, THE SHARES OF SERIES A PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR IN THE SERIES A PREFERRED STOCK (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR TO THE COMPANY, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. --------------------- TABLE OF CONTENTS The Conversion Offer.................... 1 Special Considerations.................. 5 Capitalization.......................... 9 Summary Consolidated Financial Data..... 10 Beneficial Ownership and Market Prices.. 11 Dividend Policy......................... 12 Procedures for Conversion and Registration.......................... 12 Certain Federal Income Tax Considerations........................ 17 Description of Capital Stock............ 20 Available Information................... 24 Incorporation of Certain Documents by Reference.......................... 25 Conversion Agent........................ 26
--------------------- The Conversion Offer is being made by the Company in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. The Company will not pay any commission or other remuneration to any broker, dealer, salesman or other person for soliciting conversion of the Series A Preferred Stock. Regular employees of the Company may solicit holders concerning the Conversion Offer to holders of the Series A Preferred Stock, but they will not receive additional compensation for doing so. THE COMPANY HAS MADE NO ARRANGEMENTS FOR AND HAS NO UNDERSTANDING WITH ANY DEALER, SALESMAN OR OTHER PERSON REGARDING THE SOLICITATION OF HOLDERS OF SERIES A PREFERRED STOCK TO TENDER SERIES A PREFERRED STOCK FOR CONVERSION, AND NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE CONVERSION OFFER AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THE DELIVERY OF THIS OFFER OF PREMIUM SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THE CONVERSION OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY OR THE CONVERSION AGENT ACCEPT SERIES A PREFERRED STOCK TENDERED FOR CONVERSION FROM, HOLDERS OF SERIES A PREFERRED STOCK IN ANY JURISDICTION IN WHICH THE CONVERSION OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. THE COMPANY WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH APPLICABLE SECURITIES AND BLUE SKY LAWS IN ORDER TO PREVENT THE EXCLUSION OF HOLDERS OF SERIES A PREFERRED STOCK FROM THE CONVERSION OFFER. ii 3 THE CONVERSION OFFER PURPOSE The purpose of the Conversion Offer is to induce conversion of the Series A Preferred Stock into Common Stock. The Company believes the effects of conversion will be to strengthen the Company's balance sheet, to eliminate or reduce the future dividend payments on the Series A Preferred Stock, and to eliminate or reduce the uncertainty and potential effects on the market price of the Common Stock associated with the possible future conversion of the Series A Preferred Stock. NO RECOMMENDATION OR FAIRNESS OPINION THE BOARD OF DIRECTORS OF THE COMPANY HAS NOT EXPRESSED A VIEW WITH RESPECT TO THE FAIRNESS OF THE CONVERSION OFFER TO HOLDERS OF SERIES A PREFERRED STOCK. NEITHER THE COMPANY NOR THE BOARD OF DIRECTORS OF THE COMPANY HAS SOUGHT OR RECEIVED A FAIRNESS OPINION ABOUT THE TERMS OF THE CONVERSION OFFER TO HOLDERS OF SERIES A PREFERRED STOCK. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS RECOMMENDED THAT HOLDERS OF SERIES A PREFERRED STOCK TENDER THEIR SERIES A PREFERRED STOCK FOR CONVERSION PURSUANT TO THE CONVERSION OFFER OR REFRAIN FROM TENDERING SERIES A PREFERRED STOCK FOR CONVERSION PURSUANT TO THE CONVERSION OFFER. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS RECOMMENDED THAT HOLDERS OF SERIES A PREFERRED STOCK ACCEPT OR REFUSE TO INCLUDE SHARES IN THE RESALE REGISTRATION OR TO RESELL THEIR COMMON STOCK PURSUANT TO THE RESALE REGISTRATION. EACH HOLDER OF SERIES A PREFERRED STOCK SHOULD CAREFULLY REVIEW THIS OFFER OF PREMIUM AND DETERMINE FOR ITSELF WHETHER TO TENDER SERIES A PREFERRED STOCK PURSUANT TO THE CONVERSION OFFER, WHETHER TO SIGN THE REGISTRATION AGREEMENT, AND WHETHER TO RESELL SHARES OF COMMON STOCK PURSUANT TO THE RESALE REGISTRATION. CONVERSION The Company hereby offers to pay a cash Conversion Premium of $8.25 for each share of its Series A Preferred Stock that is converted to Common Stock during the Special Conversion Period. A holder of Series A Preferred Stock who elects to convert during the Special Conversion Period will receive 4.2105 shares of Common Stock (equivalent to a conversion price of $23.75 per share of Common Stock) and the Conversion Premium of $8.25 in cash for each share of Series A Preferred Stock converted. The Conversion Premium will be funded from the working capital of the Company. As of January 29, 1995, the Company had approximately $719 million in working capital, including approximately $527 million in cash and short-term investments. Assuming all of the outstanding shares of Series A Preferred Stock are converted during the Special Conversion Period, the holders of Series A Preferred Stock will receive an aggregate of 5,263,125 shares of Common Stock and $10,312,500 in cash (subject to applicable income taxes and back-up withholding obligations). At the conclusion of the Special Conversion Period, a holder of shares of Series A Preferred Stock who did not convert those shares to Common Stock in the Conversion Offer will not be entitled to the Conversion Premium upon conversion. Holders may elect to convert some or all of their shares of Series A Preferred Stock pursuant to the Conversion Offer. In establishing the Conversion Premium being offered to the holders of Series A Preferred Stock as an inducement to tender their Series A Preferred Stock for conversion, the Company considered (i) an estimated present value of dividend payments (using a discount rate based on the Company's estimated weighted average cost of capital) that are expected to be declared after February 15, 1995, through August 25, 1996, which is the first date the Company may call the Series A Preferred Stock for redemption; (ii) the prices at which Series A Preferred Stock has been 1 4 sold in private transactions, to the extent the Company could obtain that information, and the increase in those prices since the date the Series A Preferred Stock was issued; (iii) recent trading prices for Common Stock on the Nasdaq National Market; (iv) the potential benefits of increased liquidity in a public market that the Resale Registration could afford holders of Series A Preferred Stock who convert Series A Preferred Stock pursuant to the Conversion Offer; and (v) potential transaction costs that may be incurred by holders in connection with the sale of shares of Common Stock under the Resale Registration. The number of shares of Common Stock to be issued for each share of Series A Preferred Stock converted in the Conversion Offer is the number originally provided in the Certificate of Designation with respect to the Series A Preferred Stock. No adjustment of the conversion ratio of the Series A Preferred Stock has been made. No adjustment in the conversion ratio of the Series A Preferred Stock or in the number of shares of Common Stock issuable upon conversion thereof will be necessary as a result of the Conversion Offer. Shares of Series A Preferred Stock that the Company receives on conversion will be restored to the status of authorized but unissued shares of preferred stock, without designation as to class, and may thereafter be issued (but not as Series A Preferred Stock). Shares of Series A Preferred Stock that are not converted pursuant to the Conversion Offer or otherwise will continue to retain their original rights, preferences and limitations as provided in the Certificate of Designation relating to those shares. RESALE REGISTRATION The Company will register under the Securities Act and applicable U.S. state securities laws the resale of the shares of Common Stock to be issued upon conversion of Series A Preferred Stock pursuant to the Conversion Offer by the holders thereof, if the holders enter into a Registration Agreement with the Company and subject to the terms and conditions of the Registration Agreement. The Resale Registration will be made through a Registration Statement to be filed with the Securities and Exchange Commission (the "Commission"). After the Commission declares the Registration Statement effective, holders of Common Stock that are identified in the Registration Statement may resell their Common Stock during the 30-day Resale Window only in ordinary brokerage transactions and transactions in which the broker solicits purchasers. The Company currently intends to use its reasonable commercial efforts to have the Commission declare the Registration Statement effective as soon as reasonably practicable following completion of the Conversion Offer. However, the Company may delay the effectiveness of the Registration Statement in its discretion until a later date as the Company determines may be required or advisable. The Registration Statement will not be available for resales until the Commission has declared the Registration Statement to be, or allowed it to become, effective. There can be no assurance about when the Registration Statement will become effective. The Resale Registration will be governed by the terms and conditions of the Registration Agreement, which holders should read and consider carefully. The Company will register only those shares of Common Stock that have been issued in this Conversion Offer and only if the Conversion Agent has received a properly completed and manually signed Registration Agreement with respect to those shares. Holders of Series A Preferred Stock desiring to have such Common Stock registered in the Resale Registration must deliver to the Conversion Agent, on or before the Expiration Date (hereafter defined), a duly completed and signed Registration Agreement. In the Registration Agreement, the Company will agree to indemnify holders signing the Registration Agreement for certain liabilities under the Securities Act relating to the Resale Registration, and the holders will agree to indemnify the Company for certain liabilities under the Securities Act arising from information provided by such holders for use in the Resale Registration. In the Registration Agreement, holders will also agree to comply with applicable securities laws, including prospectus delivery requirements, prohibitions against using Common Stock issued upon conversion of 2 5 Series A Preferred Stock to cover any short position in the Common Stock established by that holder, and the provisions of Rule 10b-6 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, holders who sell shares of Common Stock pursuant to the Resale Registration may be deemed to be statutory "underwriters" under the Securities Act, subject to the liability provisions thereof. See "Special Considerations -- Registration Agreement Provisions." Holders may elect to have some or all of their Common Stock issued upon conversion of Series A Preferred Stock in the Conversion Offer registered for resale pursuant to the Resale Registration. The purpose of the Resale Registration is to encourage conversion of the Series A Preferred Stock by providing holders with increased liquidity during a 30-day period for the shares of Common Stock issued upon conversion of the Series A Preferred Stock. Shares of Common Stock issued upon conversion of Series A Preferred Stock will be restricted securities within the meaning of Rule 144 of the Securities Act and will be subject to restrictions on transferability. See "Special Considerations -- Restrictions on Resale." Accordingly, the Resale Registration is expected to be the only opportunity for holders to sell the Common Stock issued on conversion in a public market until the holding period for restricted securities specified in Rule 144 under the Securities Act has expired. See "Special Considerations -- Market for Restricted Common Stock." REGULAR DIVIDEND PAYMENTS Holders of Series A Preferred Stock who elect to convert Series A Preferred Stock pursuant to the Conversion Offer will not receive future, regular dividend payments with respect to Series A Preferred Stock, including any amount in respect of periods since January 27, 1995, the last record date for payment of regularly scheduled dividends. EXPIRATION AND EXTENSION The Company will pay the Conversion Premium with respect to any and all shares of Series A Preferred Stock tendered for conversion and not withdrawn before 12:00 midnight, New York City time, on Wednesday, March 22, 1995, unless extended by the Company in its sole discretion (such date, as may be extended, the "Expiration Date"). In order to extend the Conversion Offer, the Company will notify the Conversion Agent and make a public announcement of the extension before 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Tenders of Series A Preferred Stock for conversion may be withdrawn at any time before the Expiration Date. If the Company accepts Series A Preferred Stock for conversion pursuant to the Conversion Offer, the Company will proceed with the Resale Registration with respect to shares of Common Stock for which a properly completed and duly signed Registration Agreement has been received by the Conversion Agent and not withdrawn before the Expiration Date. Registration Agreements may be withdrawn at any time before the Expiration Date. CONDITIONS The Conversion Offer is not conditioned upon any minimum number of shares of Series A Preferred Stock being tendered for conversion pursuant to the Conversion Offer. The Conversion Offer is subject to certain customary conditions. See "Procedures for Conversion and Registration." The Resale Registration is subject to the Company's acceptance of Series A Preferred Stock for conversion pursuant to the Conversion Offer, the Conversion Agent's receipt of a properly completed and duly signed Registration Agreement with respect to the shares to be included in the Registration Statement, and other customary terms and conditions specified in the Registration Agreement. A holder's ability to resell Common Stock pursuant to the Resale Registration is subject to the Commission's declaring the Registration Statement effective and to compliance with state securities laws. See "Procedures for Conversion and Registration." There can be no assurance about when the Registration Statement will become effective. 3 6 The Conversion Offer is made on the terms and subject to the conditions set forth in this Offer of Premium, in the related Special Conversion Notice, and in the related Registration Agreement. The Company intends to conduct the Conversion Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. MODIFICATION AND TERMINATION The Company expressly reserves the right, at its sole discretion, in each case subject to applicable law, to (i) delay payment of the Conversion Premium, or terminate the Conversion Offer and not pay the Conversion Premium and promptly return all Series A Preferred Stock to the holders of Series A Preferred Stock who elected to convert pursuant to the Conversion Offer by giving oral or written notice of the delay or termination to the Conversion Agent prior to the Expiration Date, (ii) waive any condition to the Conversion Offer and pay the Conversion Premium on all Series A Preferred Stock tendered for conversion pursuant thereto, (iii) waive any condition to the Resale Registration, (iv) extend the Expiration Date and retain all Series A Preferred Stock tendered pursuant to the Conversion Offer, and not withdrawn, until the expiration thereof, (v) amend the terms of the Conversion Offer, (vi) modify the form or amount of the consideration to be paid pursuant to the Conversion Offer, or (vi) delay the effectiveness of the Registration Statement for the Resale Registration as the Company determines may be required or advisable. Any amendment to the Conversion Offer will apply to all Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer, and any amendment to the Registration Agreement will apply to all Common Stock subject to a Registration Agreement. FEES AND EXPENSES The holders of Series A Preferred Stock who elect to convert pursuant to the Conversion Offer will not be obligated to pay brokerage commissions, fees or transfer taxes upon conversion of Series A Preferred Stock pursuant to the Conversion Offer. The Company will pay all its charges and expenses in connection with the Conversion Offer. Holders will be responsible for their own income taxes, administrative expenses, and the fees and expenses of their own advisors. The holders of Series A Preferred Stock who elect to have the Common Stock issuable upon conversion registered in the Resale Registration will not be obligated to pay fees and expenses of the Resale Registration. However, such holders will be obligated to pay any transfer taxes, income taxes, and brokerage fees upon resale of that Common Stock. The Company estimates that the aggregate amount of fees and expenses it will incur in connection with the Conversion Offer is approximately $300,000. ACCEPTANCE PROCEDURES TO RECEIVE THE CONVERSION PREMIUM OFFERED HEREBY, YOU MUST COMPLETE THE SPECIAL CONVERSION NOTICE PROVIDED WITH THIS OFFER OF PREMIUM AND RETURN IT TO THE CONVERSION AGENT OR, IF YOUR SHARES ARE HELD IN BOOK-ENTRY FORM THROUGH THE DEPOSITORY TRUST COMPANY ("DTC"), YOU MUST COMPLY WITH THE BOOK-ENTRY TENDER PROCEDURES, IN EACH CASE BY THE EXPIRATION DATE OF 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 22, 1995, UNLESS EXTENDED BY THE COMPANY. See "Procedures for Conversion and Registration" and the Special Conversion Notice. To have shares of Common Stock issued upon conversion of shares of Series A Preferred Stock in the Conversion Offer registered for resale in the Resale Registration, you must complete the Registration Agreement provided with this Offer of Premium and deliver a manually signed copy to the Conversion Agent before the Expiration Date. EVEN IF YOUR SHARES ARE HELD IN BOOK-ENTRY FORM, YOU MUST COMPLETE AND TIMELY DELIVER A MANUALLY SIGNED REGISTRATION AGREEMENT TO THE CONVERSION AGENT BEFORE THE EXPIRATION DATE IN ORDER TO HAVE SHARES OF COMMON STOCK INCLUDED IN THE REGISTRATION STATEMENT. See "Procedures for Conversion and Registration" and the Registration Agreement. 4 7 The Company will be deemed to have accepted valid Special Conversion Notices and Registration Agreements when, as and if the Company has given oral or written notice thereof to the Conversion Agent. The acceptance for conversion of Series A Preferred Stock validly tendered for conversion pursuant to the Conversion Offer and not properly withdrawn will be made as promptly as practicable after the Expiration Date. If any tendered Series A Preferred Stock is not accepted for conversion because of an invalid or late Special Conversion Notice or otherwise, certificates for the unaccepted Series A Preferred Stock will be returned, without expense, to the tendering holders thereof as soon as practicable after the Expiration Date. SPECIAL CONSIDERATIONS In addition to the other information contained in this Offer of Premium, holders of Series A Preferred Stock should consider carefully the following factors before tendering Series A Preferred Stock pursuant to the Conversion Offer. RESTRICTIONS ON RESALE The shares of Series A Preferred Stock were originally issued on August 26, 1993, in a private placement exempt from the registration requirements of the Securities Act pursuant to Section 4(2) and Regulation D under the Securities Act. The shares were resold by the purchaser in transactions exempt from the registration requirements of the Securities Act in reliance on Rule 144A and Regulation S under the Securities Act. The Series A Preferred Stock and shares of Common Stock issuable upon conversion thereof have not been and will not be registered under the Securities Act or any state securities laws, except that Common Stock issued upon conversion in the Conversion Offer may be registered for resale during the 30-day Resale Window pursuant to the Resale Registration. Other than pursuant to the Resale Registration, the shares of Series A Preferred Stock and the Common Stock issuable upon conversion may not be offered, resold, pledged or otherwise transferred except (a) by the initial investor in the Series A Preferred Stock (1) to a person who the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A or to the Company, (2) in an offshore transaction in accordance with Rule 903 or 904 of Regulation S under the Securities Act, or (3) pursuant to an exemption from registration provided by Rule 144 under the Securities Act (if available), or (b) by subsequent investors, as set forth in (a) above and, in addition, to an institutional accredited investor within the meaning of Rule 501 under the Securities Act in a transaction exempt from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. MARKET FOR THE SERIES A PREFERRED STOCK Although the Series A Preferred Stock is subject to various restrictions on transfer, trades occur from time to time through the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") system of the National Association of Securities Dealers, Inc. in which only qualified institutional buyers (as defined in Rule 144A under the Securities Act) may participate and in other private transactions. Private trading in the Series A Preferred Stock is limited, and there is currently no established trading market for the Series A Preferred Stock. To the extent that shares of Series A Preferred Stock are converted as a result of the Conversion Offer, the number of outstanding shares of Series A Preferred Stock will be reduced. Accordingly, the Company anticipates that the private market could be substantially reduced for shares of Series A Preferred Stock remaining outstanding after the Conversion Offer. Shares of Series A Preferred Stock that are not converted may not continue to be eligible for trading on the PORTAL system or be eligible for book-entry transfer. The shares of Series A Preferred Stock are not "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), meaning that, among other things, brokers may not extend credit on the collateral of the Series A Preferred Stock. Following the Conversion Offer, the shares of Series A Preferred Stock would continue not to 5 8 constitute "margin securities" for the purposes of the Federal Reserve Board and, therefore, could not be used as collateral for loans made by brokers. MARKET FOR THE RESTRICTED COMMON STOCK Shares of Common Stock issued upon conversion of Series A Preferred Stock will be restricted securities within the meaning of Rule 144 under the Securities Act and will be subject to limitations on transferability as described in "Special Considerations -- Restrictions on Resale." Based on current law and assuming that the holding period of the Common Stock may tack back to the date of original issuance of the Series A Preferred Stock, the Company believes that shares of Common Stock issued upon conversion of Series A Preferred Stock may be resold publicly after August 26, 1995, pursuant to Rule 144. In general, under Rule 144 as currently in effect, if two years have elapsed since the later of the date of acquisition of restricted shares from the Company or any "affiliate" (as defined below) of the Company, the acquiror or subsequent holder (including an affiliate) is entitled to sell, within any three-month period, that number of shares that does not exceed the greater of 1% of the then outstanding shares of Common Stock or the average weekly trading volume of the shares of Common Stock on all exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the date on which notice of the sale is filed with the Commission. Sales under Rule 144 are also subject to certain restrictions relating to manner of sale, notice requirements and the availability of current public information about the Company. If three years have elapsed since the later of the date of acquisition of restricted shares from the Company or from any affiliate of the Company, and the acquiror or subsequent holder thereof is deemed not to have been an affiliate of the Company at any time during the 90 days preceding a sale, such person would be entitled to sell such shares in the public market under Rule 144(k) without regard to the volume limitations, manner of sale provisions, public information requirements or notice requirements. As defined in Rule 144, an "affiliate" of an issuer is a person that directly, or indirectly through the use of one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer. REGISTRATION AGREEMENT PROVISIONS The holders of Series A Preferred Stock do not currently have registration rights with respect to their shares or the Common Stock issuable upon conversion of Series A Preferred Stock. Certain provisions of the Registration Agreement are intended to provide the Company and the holders of Common Stock issued upon conversion of Series A Preferred Stock pursuant to the Conversion Offer with certain rights and obligations comparable to those typically found in registration rights agreements. In the Registration Agreement, the Company will agree to indemnify such holders who sign the Registration Agreement for certain liabilities under the Securities Act relating to the Resale Registration, and those holders will agree to indemnify the Company for certain liabilities under the Securities arising from information provided by those holders for use in the Resale Registration. In the Registration Agreement, those holders will also agree to comply with applicable securities laws, including prospectus delivery requirements. The Registration Agreement also contains covenants intended to assure that holders comply with certain other securities laws applicable to a secondary distribution of securities. See "Special Considerations -- Short Sales" and "Special Considerations -- Cooling Off Period." The Company currently intends to use its reasonable commercial efforts to have the Resale Registration declared effective as soon as reasonably practicable following completion of the Conversion Offer. However, the Company may delay the effectiveness of the Resale Registration in its discretion until a later date as the Company determines may be required or advisable. There can be no assurance about when the Resale Registration will become effective. 6 9 SHORT SALES In order to avoid violation of the registration requirements of the Securities Act, holders of Series A Preferred Stock may not use Common Stock issuable upon conversion to cover short positions in the Company's Common Stock. Sales of Common Stock issuable upon conversion may be made only after the conversion has occurred and only in accordance with the applicable legal and contractual transfer restrictions. See "Special Considerations -- Restrictions on Resale." Sales of Common Stock covered by the Resale Registration may be made only after the holder has received notice from the Company that the Commission has declared the Registration Statement for such resales effective under the Securities Act, and then during the Resale Window for so long as the Registration Statement is effective. HOLDERS ARE URGED TO CONSULT THEIR LEGAL COUNSEL FOR ADVICE ABOUT COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. COOLING OFF PERIOD Rule 10b-6 under the Exchange Act prohibits persons (subject to some exceptions) who are engaged in a distribution of Common Stock from bidding for or purchasing, or inducing other persons to bid for or purchase, Common Stock or any right to purchase the Common Stock until they have completed their participation in the distribution. Under Rule 10b-6 and Commission interpretations of that rule, a selling shareholder in the Resale Registration and affiliates of that selling shareholder must cease bidding for and purchasing Common Stock and Series A Preferred Stock at least two business days before the selling shareholder offers or sells Common Stock pursuant to the Registration Statement in the Resale Registration. Such bids and purchases may not be made for so long as the shares of Common Stock registered in the Resale Registration and held by that selling shareholder (or persons acting in concert or affiliated with that selling shareholder) remain unsold. Broker-dealers may also be subject to this cooling-off period if their activities are deemed to be participation in the distribution, such as if the broker-dealer purchases securities as principal from a selling shareholder or sells securities as agent for a selling shareholder. Consequently, the Registration Agreement provides that the Resale Registration will be available only in ordinary brokerage transactions, including ordinary transactions in which brokers solicit purchasers. HOLDERS ARE URGED TO CONSULT THEIR LEGAL COUNSEL FOR ADVICE ABOUT COMPLIANCE WITH RULE 10B-6 IF THEY DETERMINE TO INCLUDE SHARES IN THE RESALE REGISTRATION. NO DETERMINATION ABOUT THE FAIRNESS OF THE CONVERSION OFFER The Board of Directors of the Company has not expressed a view with respect to the fairness of the Conversion Offer to holders of Series A Preferred Stock. Neither the Company nor the Board of Directors of the Company has sought or received a fairness opinion about the terms of the Conversion Offer to holders of Series A Preferred Stock. Neither the Company nor its Board of Directors has recommended that holders of Series A Preferred Stock tender their Series A Preferred Stock for conversion pursuant to the Conversion Offer or refrain from tendering Series A Preferred Stock for conversion pursuant to the Conversion Offer. Neither the Company nor its Board of Directors has recommended that holders of Series A Preferred Stock accept or refuse to include shares in the Resale Registration or to resell their Common Stock pursuant to the Resale Registration. Each holder of Series A Preferred Stock should carefully review this Offer of Premium and determine for itself whether to tender Series A Preferred Stock pursuant to the Conversion Offer, whether to sign the Registration Agreement, and whether to resell shares of Common Stock pursuant to the Resale Registration. FEDERAL INCOME TAX CONSIDERATIONS It is more likely than not that the payment of the cash Conversion Premium will be treated for tax purposes as ordinary dividend income to a recipient, provided that the recipient makes no dispositions of Common Stock or Series A Preferred Stock that are considered to be part of the same integrated plan as the conversion of the Series A Preferred Stock. The Conversion Premium may be taxable as ordinary dividend income or capital gain to recipients who dispose of Common 7 10 Stock or Series A Preferred Stock as part of the same integrated plan as the conversion of the Series A Preferred Stock, depending on their individual circumstances. See "Certain Federal Income Tax Considerations." NO APPRAISAL RIGHTS Holders of Series A Preferred Stock are not entitled to appraisal under applicable law in connection with the Conversion Offer. SUBORDINATED STATUS OF COMMON STOCK The Common Stock received upon conversion of any Series A Preferred Stock will rank junior in right of payment of dividends and liquidating distributions to all existing and future indebtedness of the Company, including the Company's 11% Senior Notes Due August 15, 2000, and will also rank junior in right of payment to other debentures, notes or preferred stock of the Company, whether now or hereafter issued (including the shares of Series A Preferred Stock that are not converted). VOLATILITY OF STOCK PRICE The Common Stock is currently quoted on the Nasdaq National Market. The Company believes that factors including but not limited to new product or other announcements by the Company, its competitors or suppliers and quarterly fluctuations in the Company's and competitors' results of operations have caused significant fluctuations in the market price of the Common Stock and could continue to do so in the future. In addition, substantial sales of the Company's Common Stock in excess of historical trading volumes, as may be occasioned by the sale of shares of Common Stock in the Resale Registration, are likely to have an adverse effect on the trading price of the Company's Common Stock. Further, the Company competes in a highly dynamic industry which may result in increased volatility of the Company's Common Stock price. 8 11 CAPITALIZATION The following table sets forth the actual capitalization of the Company at October 30, 1994, and the pro forma capitalization adjusted to reflect the assumed conversion of all of the outstanding shares of Series A Preferred Stock to Common Stock and the payment of the aggregate Conversion Premium and the estimated expenses of the Conversion Offer. This table should be read in conjunction with the Company's Annual Report on Form 10-K for the Fiscal Year Ended January 30, 1994, and Quarterly Report on Form 10-Q for the Quarterly Period Ended October 30, 1994, incorporated herein by reference.
OCTOBER 30, 1994 ---------------------- ACTUAL PRO FORMA --------- --------- (IN THOUSANDS) Long-term debt(1)..................................................... $ 100,000 $ 100,000 Stockholders' equity: Preferred Stock, $.01 par value (liquidation preference $100.00 per share); shares authorized: 5,000,000; shares issued and outstanding: 1,250,000 actual and no shares outstanding pro forma............................................................ 13 -- Common Stock, $.01 par value; shares authorized: 100,000,000; shares issued and outstanding: 39,086,664 actual and 44,349,789 pro forma (2)........................................................ 391 444 Additional paid-in capital.......................................... 342,909 342,869 Unrealized loss on short-term investments........................... (2,451) (2,451) Retained earnings................................................... 253,114 242,501 Translation adjustment.............................................. (12,155) (12,155) --------- --------- Total stockholders' equity....................................... 581,821 571,208 --------- --------- Total capitalization........................................ $ 681,821 $ 671,208 ========= =========
- --------------- (1) Consists of the Company's 11% Senior Notes Due August 15, 2000. (2) Excludes 10,262,391 shares of Common Stock reserved for issuance under the Company's employee benefit plans. Options for 6,203,033 shares under such plans were outstanding at October 30, 1994. 9 12 SUMMARY CONSOLIDATED FINANCIAL DATA The following table sets forth summary consolidated financial data of the Company. The table also sets forth summary pro forma financial information that gives effect to the conversion of the Series A Preferred Stock (assuming all shares are converted) and the payment of the aggregate Conversion Premium and the estimated expenses of the Conversion Offer. The payment of the Conversion Premium and the expenses of the Conversion Offer will be treated as an additional dividend on the Series A Preferred Stock for financial reporting purposes. Accordingly, the aggregate amount of the Conversion Premium and expenses paid will be deducted from net income to determine the net income applicable to common stockholders in the period in which the Conversion Offer is completed, which will be the first quarter of fiscal 1996 unless the Conversion Offer is extended or withdrawn. In addition, the weighted average shares outstanding used to calculate primary earnings per common share will include the shares of Common Stock issued upon conversion from the Expiration Date to the end of the period. The summary historical information in this table should be read in conjunction with the Company's Annual Report on Form 10-K for the Fiscal Year Ended January 30, 1994, and Quarterly Report on Form 10-Q for the Quarterly Period Ended October 30, 1994, incorporated herein by reference.
PRO FORMA ------------------------- YEAR ENDED NINE MONTHS ENDED NINE MONTHS ------------------------- ------------------------- YEAR ENDED ENDED JANUARY 31, JANUARY 30, OCTOBER 31, OCTOBER 30, JANUARY 30, OCTOBER 30, 1993 1994 1993 1994 1994 1994 ----------- ----------- ----------- ----------- ----------- ----------- (IN THOUSANDS, EXCEPT RATIO AND PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Net sales.............................. $ 2,013,924 $ 2,873,165 $ 2,130,217 $ 2,442,680 $ 2,873,165 $2,442,680 Gross profit........................... 449,452 432,816 294,466 520,892 432,816 520,892 Operating income (loss)................ 139,112 (39,024) (66,180) 170,592 (39,024) 170,592 Net income (loss)...................... 101,642 (35,833) (53,541) 88,886 (35,833) 88,886 Preferred stock dividends.............. -- (3,743) (1,556) (6,562) -- -- ----------- ----------- ----------- ----------- ----------- ---------- Net income (loss) applicable to common stockholders......................... $ 101,642 $ (39,576) $ (55,097) $ 82,324 $ (35,833) $ 88,886 =========== =========== =========== =========== =========== ========== Earnings (loss) per common share(1): Primary.............................. $ 2.59 $ (1.06) $ (1.48) $ 2.01 $ (0.84) $ 1.92 Fully diluted........................ -- -- -- $ 1.89 -- -- Weighted average shares used to compute earnings per share(1): Primary.............................. 39,235 37,333 37,227 41,009 42,596 46,272 Fully diluted........................ -- -- -- 46,944 -- -- Ratio of earnings to combined fixed charges and preferred stock dividends(2)......................... 10.11 --(3) --(3) 5.5 --(3) 8.5
PRO FORMA ------------------------- JANUARY 31, JANUARY 30, OCTOBER 31, OCTOBER 30, JANUARY 30, OCTOBER 30, 1993 1994 1993 1994 1994 1994 ----------- ----------- ----------- ----------- ----------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF FINANCIAL POSITION DATA(4): Working capital........................ $ 358,948 $ 510,397 $ 487,533 $ 624,589 $ 499,784 $ 613,976 Total assets........................... 927,005 1,140,480 1,119,610 1,389,795 1,129,867 1,379,182 Long-term debt......................... 48,373 100,000 100,000 100,000 100,000 100,000 Total stockholders' equity............. 369,200 471,108 448,545 581,821 460,495 571,208 Book value per share................... 10.02 12.42 11.96 14.89 10.66 12.88
- --------------- (1) Pro forma primary earnings per share have been computed assuming the issuance of 5,263,125 shares of Common Stock pursuant to the Conversion Offer and net income (loss) before the Conversion Premium and the estimated expenses of the Conversion Offer. The effect of the payment of the Conversion Premium and the expenses of the Conversion Offer will be treated as an additional dividend on the Series A Preferred Stock for financial reporting purposes in the period in which the Conversion Offer is completed. (2) For purposes of computing the ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of income before income taxes plus fixed charges excluding capitalized interest. Fixed charges consist of interest incurred, an appropriate portion of rent expense representative of the interest factor, and preferred stock dividend requirements equal to the pre-tax earnings that would be required to cover such dividend requirements based on the Company's effective income tax rates for the respective periods. (3) Earnings were inadequate to cover combined fixed charges and preferred dividend requirements by $43 million for the year ended January 30, 1994, $70 million for the nine months ended October 31, 1993, and $39 million for the pro forma year ended January 30, 1994. (4) Pro Forma Statement of Financial Position Data is adjusted to reflect the payment of the aggregate Conversion Premium (assuming all shares are converted) and the estimated expenses of the Conversion Offer. 10 13 BENEFICIAL OWNERSHIP AND MARKET PRICES PREFERRED STOCK As of February 14, 1995, there were 1,250,000 shares of Series A Preferred Stock outstanding held by 4 record holders. This Offer of Premium, together with the Special Notice of Conversion and Registration Agreement, is being sent to those registered holders and to others believed to have beneficial interests in the Series A Preferred Stock. No officer, director or affiliate of the Company holds any shares of Series A Preferred Stock. The Series A Preferred Stock is traded in the PORTAL system of the National Association of Securities Dealers, Inc. and in other private transactions. Trading on the PORTAL system is limited, and transaction prices are not readily available. Accordingly, there is currently no established trading market for the Series A Preferred Stock. Based on information received from broker-dealers that purchase or sell the Series A Preferred stock from time to time, the Company believes that the Series A Preferred Stock currently trades at prices approximating the market value of the number of shares of Common Stock into which Series A Preferred Stock is convertible. Holders of Series A Preferred Stock are urged to obtain current market quotations. To the extent that shares of Series A Preferred Stock are converted, it is anticipated that the limited private trading market for unconverted Series A Preferred Stock will become more limited. There can be no assurance that the Series A Preferred Stock will continue to be traded in the PORTAL system following the Conversion Offer. See "Special Considerations -- Market for the Series A Preferred Stock." COMMON STOCK If all the shares of Series A Preferred Stock are converted, the Company will have 44,958,736 shares of Common Stock issued and outstanding (assuming no additional issuance of shares of Common Stock after February 14, 1995, other than upon conversion of the Series A Preferred Stock). The Common Stock is traded in the over-the-counter market and quoted on the Nasdaq National Market under the symbol DELL. On February 14, 1995, the last reported sale price of the Common Stock was $45 3/8 per share. The Common Stock issuable upon conversion of the Series A Preferred Stock will not be eligible for trading in the Nasdaq National Market and will be subject to the transfer restrictions described in "Special Considerations -- Restrictions on Resale," except as provided in the Resale Registration. The following table sets forth, for the fiscal quarters indicated, the high and low bid prices for the Common Stock as reported on the Nasdaq National Market.
HIGH LOW ----- ----- Fiscal Year Ending January 28, 1996 First Quarter (January 30, 1995, through February 14, 1995................ $45 5/8 $39 1/2 Fiscal Year Ended January 29, 1995 Fourth Quarter................................................. $47 3/4 $36 3/4 Third Quarter.................................................. $44 $27 1/2 Second Quarter................................................. $30 3/4 $21 1/2 First Quarter.................................................. $30 1/8 $19 1/8 Fiscal Year Ended January 30, 1994 Fourth Quarter................................................. $28 1/8 $20 1/8 Third Quarter.................................................. $21 5/8 $15 1/8 Second Quarter................................................. $34 3/4 $13 7/8 First Quarter.................................................. $49 1/4 $27 5/8
11 14 DIVIDEND POLICY PREFERRED STOCK Holders of shares of Series A Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefore, cash dividends at an annual rate of $7.00 per share, payable quarterly in arrears. Dividends are cumulative and are payable to the holders of record as they appear on the stock transfer books on such record dates as are fixed by the Board of Directors. The Series A Preferred Stock has priority as to dividends over the Common Stock. COMMON STOCK Dividends on the Common Stock are payable when, as and if declared by the Board of Directors of the Company. The Company has never paid cash dividends on its Common Stock. The Company intends to retain earnings for use in its business and, therefore, does not anticipate paying any cash dividends on the Common Stock for at least the next twelve months. In addition, the Company's current credit facility generally prohibits the payment of cash dividends by the Company on the Common Stock except in certain circumstances. PROCEDURES FOR CONVERSION AND REGISTRATION The acceptance of the Conversion Offer by a holder of Series A Preferred Stock pursuant to the procedure set forth below will constitute an agreement between the holder of Series A Preferred Stock and the Company in accordance with the terms and subject to the conditions set forth in this Offer of Premium. CONVERSION OFFER Except as set forth under "Procedures for Conversion and Registration -- Book-Entry Transfer," to tender Series A Preferred Stock validly for conversion pursuant to the Conversion Offer, the Special Conversion Notice provided herewith, properly completed and duly executed, and any required signature guarantees and any other required documents must be received on or before the Expiration Date by the Conversion Agent at its address set forth in this Offer of Premium. In addition, either (i) the certificates for Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer must be received by the Conversion Agent along with such executed Special Conversion Notice (or facsimile thereof) on or prior to the Expiration Date, or (ii) the tendering holder must comply with the guaranteed delivery procedures described below. NO SPECIAL CONVERSION NOTICES AND NO CERTIFICATES FOR SERIES A PREFERRED STOCK SHOULD BE SENT TO THE COMPANY. All signatures on a Special Conversion Notice or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as hereinafter defined), unless the Series A Preferred Stock delivered or withdrawn, as the case may be, pursuant thereto are delivered (i) by a registered holder (which term, for the purposes described above, shall include any participant in The Depository Trust Company (the "Book-Entry Transfer Facility") whose name appears on a security position listing as the owner of Series A Preferred Stock) or (ii) for the account of an Eligible Institution. If shares of Series A Preferred Stock are registered in the name of a person other than the signer of a Special Conversion Notice or a notice of withdrawal, as the case may be, or if certificates for shares of Common Stock or certificates for unconverted shares of Series A Preferred Stock are to be issued or returned to a person other than the registered holder, then the Series A Preferred Stock must be endorsed by the registered holder, or be accompanied by a written instrument or instruments of transfer or conversion in form satisfactory to the Company duly executed by the registered holder, with such signatures guaranteed by an Eligible Institution. If signatures on a Special Conversion Notice are required to be guaranteed, such guarantees must be 12 15 by a bank, a trust company or a member firm of the New York Stock Exchange (each of the foregoing being referred to as an "Eligible Institution"). Issuance of Common Stock and payment of the Conversion Premium upon conversion of the Series A Preferred Stock pursuant to the Conversion Offer will be made only against delivery of Series A Preferred Stock actually tendered for conversion. If fewer than all of the shares of Series A Preferred Stock evidenced by a submitted certificate are converted, the holder of such shares should fill in the number of shares tendered for conversion in the appropriate boxes on the Special Conversion Notice with respect to the tender being made. The Conversion Agent will then reissue and return to the holder of such shares (unless otherwise requested by the holder of such shares pursuant to the Special Conversion Notice), as promptly as practicable following the Expiration Date, a certificate evidencing the number of shares of Series A Preferred Stock not tendered for conversion. The entire number of shares of Series A Preferred Stock deposited with the Conversion Agent will be deemed to have been tendered for conversion unless otherwise indicated. Holders of Series A Preferred Stock who are not registered holders of, and seek to convert, Series A Preferred Stock should (i) obtain a properly completed Special Conversion Notice for such Series A Preferred Stock from the registered holder with signatures guaranteed by an Eligible Institution, or (ii) obtain and include with the Special Conversion Notice certificates representing shares of Series A Preferred Stock properly endorsed for transfer by the registered holder or accompanied by a written instrument or instruments of transfer or conversion from the registered holder with signatures on the endorsement or written instrument or instruments of transfer or conversion guaranteed by an Eligible Institution, or (iii) effect a record transfer of such Series A Preferred Stock and comply with the requirements applicable to registered holders for Series A Preferred Stock being converted prior to the Expiration Date. The Company has no obligation to transfer any Series A Preferred Stock from the name of the registered holder thereof if the Company does not accept for conversion pursuant to the Conversion Offer any of the shares of such Series A Preferred Stock. If a registered holder desires to deliver Series A Preferred Stock pursuant to the Conversion Offer but is unable to locate the certificates representing shares of Series A Preferred Stock to be delivered, the holder should write to or telephone the transfer agent for the Series A Preferred Stock, American Stock Transfer Company, Attention: Carolyn O'Neil, 40 Wall Street, New York, New York 10005, telephone (212) 936-5100, about procedures for obtaining replacement certificates representing shares of Series A Preferred Stock or arranging for indemnification. To prevent back-up U.S. federal income tax withholding of 31% on certain payments, each converting holder of Series A Preferred Stock must properly complete a Form W-9 as set forth in the Special Conversion Notice. Holders who do not properly complete Form W-9 may be subject to a $50 penalty imposed by the Internal Revenue Service and may be subject to backup withholding. Exempt holders (including among others, corporations and certain foreign individuals) are not subject to these requirements if they satisfactorily establish their status as such. See "Certain Federal Income Tax Considerations." Holders of Series A Preferred Stock desiring to convert their Series A Preferred Stock pursuant to the terms thereof, and not pursuant to the terms and conditions of the Conversion Offer, may do so by preparing a conversion notice and endorsing for transfer to the Company the certificates representing the Series A Preferred Stock, all in accordance with the Certificate of Designation related to the Series A Preferred Stock. Series A Preferred Stock delivered to the Conversion Agent and endorsed for transfer on the reverse side of the certificate without the Special Conversion Notice provided herewith will not be deemed to have been delivered pursuant to the Conversion Offer, and no Conversion Premium will be paid with respect thereto. 13 16 RESALE REGISTRATION Holders of Series A Preferred Stock desiring to have shares of Common Stock issued pursuant to the Conversion Offer included in the Resale Registration must deliver to the Conversion Agent, on or before the Expiration Date, a duly completed and signed Registration Agreement. Pursuant to the Registration Agreement, the Company will agree to indemnify holders signing the Registration Agreement from certain liabilities under the Securities Act relating to the Resale Registration, and the holders will agree to indemnify the Company from certain liabilities under the Securities arising from information provided by such holders for use in the Resale Registration. Holders of Series A Preferred Stock should carefully consider the terms of the Registration Agreement before determining whether to include shares in the Resale Registration. Holders may elect to have some or all of their Common Stock issued upon conversion of Series A Preferred Stock registered for resale pursuant to the Resale Registration. VALIDITY AND FORM All questions as to the form of all documents and the validity (including the time of receipt), eligibility, acceptance and withdrawal of Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer will be determined by the Company, in its sole discretion, which determination shall be final and binding. The Company expressly reserves the absolute right to reject any and all Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer not in proper form and to determine whether the acceptance of or payment by it for such conversions would be unlawful. The Company expressly reserves the absolute right to reject any and all Registration Agreements not in proper form and to determine whether the acceptance of or performance thereunder by it for such shares sought to be registered would be unlawful. The Company also reserves the absolute right, subject to applicable law, to waive or amend any of the conditions of the Conversion Offer or to waive any defect or irregularity in the conversion of any particular Series A Preferred Stock. None of the Company, the Conversion Agent, or any other person will be under any duty to give notification of any defects or irregularities in Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer or in the Registration Agreement or any other document or will incur any liability for failure to give any such notification. No conversion of Series A Preferred Stock will be deemed to have been validly made until all defects and irregularities with respect to such Series A Preferred Stock have been cured or waived. Any Series A Preferred Stock received by the Conversion Agent that are not properly converted and as to which irregularities have not been cured or waived will be returned by the Conversion Agent to the holder submitting such Series A Preferred Stock as soon as practicable following the Expiration Date. The Company's interpretation of the terms and conditions of the Conversion Offer will be final and binding on all parties. THE METHOD OF DELIVERY OF SERIES A PREFERRED STOCK AND ALL OTHER REQUIRED DOCUMENTS TO THE CONVERSION AGENT IS AT THE ELECTION AND RISK OF HOLDERS OF SERIES A PREFERRED STOCK. IF SENT BY MAIL, IT IS RECOMMENDED THAT HOLDERS OF SERIES A PREFERRED STOCK USE PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE CONVERSION AGENT ON OR BEFORE THE EXPIRATION DATE. BOOK-ENTRY TRANSFER The Conversion Agent will make a request to establish an account with respect to the Series A Preferred Stock at the Book-Entry Transfer Facility for purposes of the Conversion Offer within two business days after the date of this Offer of Premium, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Series A Preferred Stock being tendered by causing the Book-Entry Transfer Facility to transfer such Series A Preferred Stock into the Conversion Agent's account at the Book-Entry Transfer 14 17 Facility in accordance with the Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Series A Preferred Stock may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Special Conversion Notice and the Registration Agreement or copy thereof, with any required signatures, signature guarantees and any other required documents, must, in any case other than as set forth in the following paragraph, be transmitted to and received by the Conversion Agent at the address set forth herein on or before the Expiration Date. Otherwise, the guaranteed delivery procedures described hereafter must be complied with. DTC's Automated Tender Offer Program ("ATOP") is the only method of processing conversion offers through the DTC. To accept the Conversion Offer through ATOP, participants in DTC must send electronic instructions to DTC through DTC's communication system in place of sending a signed, hard copy Special Conversion Notice. DTC is obligated to communicate those electronic instructions to the Conversion Agent. To submit Series A Preferred Stock for conversion through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Conversion Agent must contain the character by which the participant acknowledges its receipt of and agrees to be bound by the Special Conversion Notice. WHETHER OR NOT A HOLDER ACCEPTS THE CONVERSION OFFER THROUGH ATOP, A HOLDER DESIRING TO HAVE SHARES OF COMMON STOCK INCLUDED IN THE RESALE REGISTRATION MUST DELIVER A COMPLETED, MANUALLY SIGNED COPY OF THE REGISTRATION AGREEMENT TO THE CONVERSION AGENT. GUARANTEED DELIVERY PROCEDURES If a holder of Series A Preferred Stock desires to tender Series A Preferred Stock for conversion pursuant to the Conversion Offer and the holder's Series A Preferred Stock are not immediately available or time will not permit the holder's Series A Preferred Stock or other required documents to reach the Conversion Agent on or prior to the Expiration Date, the tender of Series A Preferred Stock for conversion pursuant to the Conversion Offer may be effected if all of the following conditions are satisfied: (a) delivery is made by or through an Eligible Institution; and (b) on or prior to the Expiration Date, the Conversion Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by telegram, facsimile transmission, mail or hand delivery), substantially in the form provided by the Company with this Offer of Premium, which contains a signature guaranteed by an Eligible Institution in the form set forth in such in such Notice of Guaranteed Delivery (unless such tender for conversion is for the account of an Eligible Institution), which sets forth the name and address of the holder of the Series A Preferred Stock and the amount of Series A Preferred Stock tendered, which states that the tender is being made thereby, and which guarantees that within five New York Stock Exchange ("NYSE") trading days after the Expiration Date, the Special Conversion Notice (or facsimile thereof), properly completed and duly executed, together with the Series A Preferred Stock and any required signature guarantees and any other documents required by the Special Conversion Notice, will be deposited by the Eligible Institution with the Conversion Agent; and (c) all Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer as well as the Special Conversion Notice (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by the Special Conversion Notice, are received by the Conversion Agent within five NYSE trading days after the Expiration Date. A Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Conversion Agent and must include a signature guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. 15 18 Notwithstanding any other provision hereof, except as provided with respect to ATOP the conversion of Series A Preferred Stock accepted pursuant to the Conversion Offer will in all cases be made only after timely receipt by the Conversion Agent of certificates for such Series A Preferred Stock, the Special Conversion Notice (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents. ACCEPTANCES OF SERIES A PREFERRED STOCK; DELIVERY OF COMMON STOCK AND CONVERSION PREMIUM The acceptance for conversion of Series A Preferred Stock validly tendered for conversion pursuant to the Conversion Offer and not properly withdrawn will be made as promptly as practicable after the Expiration Date. Subject to rules promulgated pursuant to the Exchange Act, however, the Company reserves the right to delay payment of the Conversion Premium or terminate the Conversion Offer and not pay the Conversion Premium for any reason, subject to any applicable law. For purposes of the Conversion Offer, the Company will be deemed to have accepted for conversion Series A Preferred Stock tendered and not properly withdrawn if, as and when the Company gives oral or written notice to the Conversion Agent of its acceptance of such shares for conversion. Subject to the terms and conditions of the Conversion Offer, delivery of Common Stock and the payment of the Conversion Premium for Series A Preferred Stock converted pursuant to the Conversion Offer will be made by the Conversion Agent as soon as practicable after receipt of such notice. Under no circumstances will interest be paid by the Company by reason of any delay in making payment of the Conversion Premium. The Conversion Agent will act as agent for the converting holder of Series A Preferred Stock for the purpose of receiving Common Stock and cash from the Company and transmitting the Common Stock and cash to the converting holders. Series A Preferred Stock not accepted for conversion and payment of the Conversion Premium, will be returned without expense to the converting holder of such Series A Preferred Stock as promptly as practicable following the Expiration Date. No alternative, conditional or contingent deliveries of Special Conversion Notices will be accepted. All converting holders, by execution of a Special Conversion Notice, or facsimile thereof, waive any right to receive notice of acceptance of their Series A Preferred Stock for conversion and payment pursuant to the Conversion Offer. WITHDRAWAL RIGHTS Conversion of Series A Preferred Stock pursuant to the Conversion Offer is irrevocable except that Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written, telegraphic or facsimile transmitted notice of withdrawal must be timely received by the Conversion Agent at its address set forth herein. Any notice of withdrawal must specify the name of the person who tendered the Series A Preferred Stock to be withdrawn, the principal amount of Series A Preferred Stock to be withdrawn and the name of the registered holder(s) of the Series A Preferred Stock as set forth in the certificates, if different from that of the person who tendered such Series A Preferred Stock. If certificates for Series A Preferred Stock have been tendered to the Conversion Agent, then, prior to the physical release of such certificates, the withdrawing holder must also submit to the Conversion Agent the serial numbers of the particular certificates evidencing the Series A Preferred Stock to be withdrawn and a signed notice of withdrawal with signature(s) guaranteed by an Eligible Institution, except in the case of Series A Preferred Stock tendered by an Eligible Institution. If shares of Series A Preferred Stock have been tendered pursuant to the procedure for book-entry transfer, the notice of withdrawal must specify the name and number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn shares and otherwise comply with the Book-Entry Transfer Facility's procedures. 16 19 If the Company extends the Conversion Offer or is delayed in its payment of the Conversion Premium pursuant to the Conversion Offer for any reason, then, without prejudice to the Company's rights under the Conversion Offer, the Conversion Agent may, subject to applicable law, retain Series A Preferred Stock tendered for conversion pursuant to the Conversion Offer on behalf of the Company and such Series A Preferred Stock may not be withdrawn except to the extent converting holders are entitled to withdrawal rights as described in this section. Any permitted withdrawal of Series A Preferred Stock tendered for conversion may not be rescinded, and any Series A Preferred Stock withdrawn will thereafter be deemed not validly tendered for purposes of the Conversion Offer; however, withdrawn Series A Preferred Stock may be redelivered by following one of the procedures described herein at any time on or prior to the Expiration Date. All questions as to validity, form and eligibility (including time of receipt) of notices of withdrawal will be determined by the Company in its sole discretion, which determination will be final and binding on all parties. None of the Company, the Conversion Agent, or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal, nor will they incur any liability for failure to give any such notification. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS Baker & McKenzie has served as tax counsel to the Company in connection with the Conversion Offer. The following expresses Baker & McKenzie's opinion to the Company as to the material Federal income tax consequences that, under currently applicable law, should arise from the Conversion Offer. The following discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations, Internal Revenue Service rulings and judicial decisions now in effect, all of which are subject to change at any time by legislative, judicial or administrative action, and any such changes may be retroactively applied in a manner that could adversely affect a stockholder. Except as otherwise discussed below, this discussion is applicable only to stockholders who are citizens or residents of the United States for U.S. tax purposes and to domestic corporations. The discussion may not be applicable with respect to Series A Preferred Stock held as other than a capital asset. Moreover, the discussion is not applicable to stockholders who hold, or who are related within the meaning of Section 318 of the Internal Revenue Code to stockholders who hold, employee stock options of the Company. Furthermore, state, local and foreign tax consequences of the Conversion Offer are not addressed in this discussion. Stockholders should note that the opinions of counsel are not binding on the Internal Revenue Service or any court, and the Company has not sought, and does not intend to seek, a ruling from the Internal Revenue Service as to the Federal income tax consequences of the Conversion Offer. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION, AS WELL AS TO THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS TO WHICH THEY MAY BE SUBJECT. CONVERSION AND RECEIPT OF CONVERSION PREMIUM Recognition of Gain or Loss on Conversion The conversion of Series A Preferred Stock into Common Stock and the Conversion Premium (the "Conversion") will constitute a "recapitalization" of the Company within the meaning of Section 368(a)(1)(E) of the Code. Accordingly, the Conversion will not be a taxable transaction to the Company, but may be a taxable transaction to the stockholders to the extent of the cash received, with the consequences described below. A stockholder whose shares of Series A Preferred Stock are converted into Common Stock and the Conversion Premium will be taxable to the extent of the lesser of (i) the excess of the fair market value of the total amount received in the Conversion (i.e., the sum of the value of the 17 20 Common Stock and the Conversion Premium) over such stockholder's tax basis in the Series A Preferred Stock converted, or (ii) the amount of the Conversion Premium. To the extent the Conversion Premium exceeds the amount specified in clause (i) of the preceding sentence, such amount will not be currently taxable but will reduce a stockholder's basis in the Common Stock received in the Conversion as discussed below. A stockholder is not allowed to recognize (i.e., take into account for tax purposes) loss on the Conversion. Character of Gain The character of any gain recognized by a stockholder in the Conversion will depend upon whether the receipt of the Conversion Premium by the stockholder has the effect of a dividend distribution as to such stockholder or is treated as a sale or exchange. If the conversion of Series A Preferred Stock and receipt of the Conversion Premium is treated as a sale or exchange, any gain recognized will be capital gain that, in general, will be long-term capital gain if the shares of Series A Preferred Stock have been held for more than one year at the Expiration Date and short-term capital gain, if the shares of Series A Preferred Stock have been held for one year or less at that time. If the conversion has the effect of a dividend distribution to a stockholder, the gain recognized by that stockholder will be treated as ordinary dividend income to the extent of the stockholder's ratable share of the Company's accumulated earnings and profits, and the remainder, if any, of the recognized gain will be taxed as gain from the exchange of the Series A Preferred Stock. The Company believes that its accumulated earnings and profit are sufficient to treat all recognized gain as ordinary dividend income. Whether the conversion of Series A Preferred Stock in the Conversion has the effect of a dividend distribution as to a stockholder or is treated as a sale or exchange will be determined by applying the principles described in Section 302 of the Code. Under Section 302, a distribution will not have the effect of the distribution of a dividend, and any gain recognized will be capital gain rather than a dividend, if the distribution is not "essentially equivalent to a dividend" or one of several other safe harbor tests is satisfied. The conversion of Series A Preferred Stock in the Conversion will not be "essentially equivalent to a dividend" if it results in a "meaningful reduction" of the stockholder's proportionate stock interest in the Company. The determination of whether a stockholder's proportionate interest in a corporation has been meaningfully reduced ordinarily is based on an evaluation of the reduction in the stockholder's right to vote, participate in earnings and participate in proceeds of liquidation. For this purpose, under Section 318 of the Code, a stockholder is deemed to constructively own Series A Preferred Stock and Common Stock that are actually owned, and in some cases, constructively owned, by certain related individuals and entities or that may be acquired by such stockholder or such related individuals or entities by option or conversion, including through employee stock options. Furthermore, the Section 302 tests are applied after taking into account any related transactions that are part of a single integrated plan. Thus, it is possible that dispositions or acquisitions by a stockholder of shares of Series A Preferred Stock, Common Stock acquired upon conversion, or other Common Stock contemporaneous with the Conversion may be considered to be part of the same integrated plan. The Conversion itself will not cause an immediate decrease in a stockholder's voting power, but rather will cause an increase in voting rights. Tax counsel to the Company has opined that the conversion of Series A Preferred Stock more likely than not has the effect of a dividend distribution with respect to stockholders who do not dispose of Series A Preferred Stock, Common Stock acquired upon conversion, or other Common Stock in related transactions that are considered to be part of a single integrated plan (including shares constructively owned under Section 318), other than pursuant to the Conversion Offer. Tax counsel has not opined as to the character of any gain that other stockholders may realize in the Conversion because of the inherently factual nature of the determination that each such stockholder must make. Accordingly, such stockholders should consult 18 21 their tax advisors concerning the application of the "meaningful reduction" and other safe harbor tests to their particular facts and circumstances. If the conversion of Series A Preferred Stock is treated to any extent as a dividend distribution as to a corporate stockholder, the amount of the distribution which is taxable as a dividend should generally be eligible for the 70 percent dividends received deduction, subject to the limitations of sections 1059, 246A and 246 of the Code. Basis and Holding Period of Common Stock Received A stockholder's tax basis in the Common Stock received in the Conversion will be equal to the stockholder's tax basis in the Series A Preferred Stock converted in the Conversion, increased by the amount of any gain recognized by the stockholder and decreased by the amount of the Conversion Premium received. The holding period of the Common Stock will include the holding period of the Series A Preferred Stock converted in the Conversion, provided that the Series A Preferred Stock is held as a capital asset. Gain, loss and tax basis, determined as described above, must be calculated separately for each block of Series A Preferred Stock (i.e., Series A Preferred Stock acquired at the same time in a single transaction) held by a stockholder. Cash in Lieu of Fractional Shares Stockholders who receive cash in lieu of fractional shares of Common Stock should be treated as having received the cash in redemption of the fractional share interest. The character of the cash received by a stockholder will depend upon whether the redemption is essentially equivalent to a dividend to such stockholder or is treated as a sale or exchange, determined under Section 302 of the Code. Stockholders should consult their tax advisors regarding the appropriate treatment of any cash that is received in exchange for fractional share interests. Special Tax Considerations for Non-United States Stockholders For purposes of the following discussion, a non-United States stockholder includes a non-resident alien individual (other than certain former United States citizens or residents), a foreign corporation, a foreign partnership and a foreign trust or estate. Each non-United States stockholder is urged to consult a tax advisor with respect to the tax consequences of the Conversion as applied to such stockholder's specific facts and circumstances. In general, a non-United States stockholder is not subject to United States federal income tax with respect to gain realized on a sale or other disposition of shares of the Company. The Code generally requires withholding at a 30% rate on dividends paid by the Company to non-United States stockholders, unless a treaty applies which reduces or eliminates such withholding. In certain circumstances, backup withholding, as discussed below, at a rate of 31% may apply to payments to non-United States stockholders. If a non-United States stockholder has not provided a properly completed IRS Form W-8, the Company will withhold 31% of the Conversion Premium and of the cash paid in lieu of fractional shares. Because the Company will not know whether the payment of the Conversion Premium or the payment of cash in lieu of fractional shares to a particular non-United States stockholder will be treated as a dividend or an exchange, the Company will, where a non-United States stockholder has provided a properly completed IRS Form W-8, treat the payment of the Conversion Premium and the cash paid in lieu of fractional shares as a dividend and will withhold 30%, or lower treaty rate, if applicable, of such payment. Non-United States stockholders should consult their tax advisors regarding these withholding rules and the procedures for obtaining a refund if the amount withheld exceeds the non-United States stockholder's final tax liability. BACKUP WITHHOLDING A holder of Series A Preferred Stock participating in the Conversion may be subject, under certain circumstances, to "backup withholding" at a 31% rate on certain payments. This withholding 19 22 generally applies only if the holder (i) fails to furnish its social security or other taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) fails to properly report interest or dividends and the Internal Revenue Service has notified the Company that the holder is subject to withholding, or (iv) fails, under certain circumstances, to provide a certified statement, signed under penalty of perjury, that the TIN provided is its correct number and that it is not subject to backup withholding. The backup withholding rules may apply to the payment of the Conversion Premium and cash paid in lieu of fractional shares. Any amount withheld from a payment to a holder under the backup withholding rules is allowable as a credit against such holder's federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. Certain holders of Series A Preferred Stock (including, among others, corporations and certain foreign individuals) are not subject to backup withholding. Holders of Series A Preferred Stock should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining such an exemption. THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER SHOULD CONSULT A TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE CONVERSION THAT MAY BE APPLICABLE TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF STATE, LOCAL, AND FOREIGN TAX LAWS. DESCRIPTION OF CAPITAL STOCK The following summary description is qualified in its entirety by reference to the Company's Certificate of Incorporation, as amended. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"). COMMON STOCK The Company is authorized to issue up to 100,000,000 shares of Common Stock. As of February 14, 1995, there were 39,695,611 shares of Common Stock outstanding. The holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Because holders of Common Stock do not have cumulative voting rights, the holders of a majority of the shares of Common Stock represented at a meeting have the power to elect all of the directors to be elected at that meeting. Subject to the prior rights of holders of Preferred Stock, the holders of Common Stock are entitled to dividends, when and as declared by the Board of Directors out of funds legally available therefor. The terms of the Company's line of credit restrict payment of cash dividends except in certain circumstances. See "Dividend Policy." If the Company dissolves or is liquidated, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of Preferred Stock. Holders of Common Stock have no preemptive rights and have no right to convert their Common Stock into any other securities. All of the outstanding shares of Common Stock are, and all shares of Common Stock offered hereby are or will be, upon conversion of Series A Preferred Stock, fully paid and nonassessable. The Certificate of Incorporation of the Company divides the Board of Directors of the Company into three classes, each class to be as nearly equal in number of directors as possible. At each annual meeting of stockholders, directors in each class are elected for three year terms to succeed the directors of that class whose terms are expiring. Paul O. Hirschbiel, Donald J. Carty and Thomas W. Luce, III, are Class I directors with their terms of office expiring in 1995. Michael S. Dell and Michael H. Jordan are Class II directors with their terms of office expiring in 1996. George Kozmetsky and Claudine B. Malone are Class III directors with their terms of office expiring in 1997. The Certificate of Incorporation and Bylaws of the Company also provide that directors may be removed from office only for cause (as defined in the Certificate of Incorporation), that stockholder 20 23 action must be taken at a duly called annual or special meeting (and not by written consent), and that stockholders follow an advance notification procedure for certain stockholder nominations of candidates for the Board of Directors and for certain other stockholder business to be conducted at an annual meeting. The existence of these provisions of the Company's Certificate of Incorporation and Bylaws may be disadvantageous to the extent they discourage takeovers in which stockholders might receive a substantial premium for some or all of their shares. Therefore, stockholders not affiliated with management who desire to participate in such a takeover may not be afforded the opportunity to do so, even when such stockholders believe participation to be in their best interest. Also, such provisions may reduce temporary fluctuations in the market price of the Common Stock that may accompany the accumulation of large blocks of Common Stock and thereby deprive stockholders of an opportunity to sell their stock at a temporarily higher price. In addition to reducing temporary market fluctuations, such provisions could potentially depress the market price of shares of Common Stock and may have the effect of discouraging changes in control, particularly those that are opposed by the Company's incumbent management, even if a majority of stockholders desire the change in control. Such provisions thereby could also prevent the removal of management. In addition, the ability of the Board of Directors to issue shares of Preferred Stock and to fix the voting, redemption, conversion and other rights thereof without stockholder approval could hinder any proposed tender offer, merger or other attempt to gain control of the Company. See "Description of Capital Stock -- Blank Check Preferred Stock." TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock is American Stock Transfer & Trust Company. BLANK CHECK PREFERRED STOCK Pursuant to the Certificate of Incorporation of the Company, the Board of Directors has the authority, without further stockholder approval, to provide for the issuance of up to 5,000,000 shares of Preferred Stock in one or more series and to determine the dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preferences, the number of shares constituting any such series, and the designation of such series. Because the Board of Directors has the power to establish the preferences and rights of each series, it may afford the holders of any Preferred Stock preferences, powers and rights (including voting rights) senior to the rights of the holders of Common Stock. Other than the shares of Series A Preferred Stock described below, no shares of Preferred Stock have been issued and remain outstanding before the date of this Offer of Premium. The issuance of shares of Preferred Stock or the issuance of rights to purchase shares of stock may have the effect of delaying, deferring or preventing a change in control of the Company. SERIES A PREFERRED STOCK The Series A Preferred Stock has been authorized as a series of preferred stock, consisting of 1,250,000 shares. As of February 14, 1995, 1,250,000 shares of Series A Convertible Preferred Stock were issued and outstanding. The terms and provisions of the Series A Preferred Stock are set forth in the Certificate of Designation creating the Series A Preferred Stock. A copy of the Certificate of Designation may be obtained from Dell Computer Corporation, 2112 Kramer Lane, Building 1, Austin, Texas 78758-4012, Attention: Investor Relations. Dividends. Holders of shares of Series A Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefore, cash dividends at an annual rate of $7.00 per share, payable quarterly in arrears. Dividends are cumulative and are payable to the holders of record as they appear on the stock transfer books on such record dates as are fixed by the Board of Directors. 21 24 The Series A Preferred Stock has priority as to dividends over the Common Stock and any other series or class of the Company's stock thereafter issued that ranks junior as to dividends to the Series A Preferred Stock, when and if issued (collectively, "Junior Dividend Stock"), and no dividend (other than dividends payable solely in stock that is Junior Dividend Stock and that ranks junior to the Series A Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (such stock that is junior as to liquidation rights, "Junior Liquidation Stock") (the Common Stock and any other capital stock of the Company that is both Junior Dividend Stock and Junior Liquidation Stock, "Junior Stock") may be paid on any Junior Dividend Stock, and no payment may be made on account of the purchase redemption, retirement, or other acquisition of Junior Dividend Stock or Junior Liquidation Stock (other than such acquisitions pursuant to employee or director incentive or benefit plans or arrangements, or acquisitions or exchanges solely for Junior Stock), unless all accrued and unpaid dividends on the Series A Preferred Stock for all dividend payment periods ending on or before the date of payment of such dividends on Junior Dividend Stock, or such payment for such Junior Dividend Stock or Junior Liquidation Stock, as the case may be, have been paid or declared and set apart for payment. The Company may not pay dividends on any other series or class of Company's stock hereafter issued that ranks on a parity with the Series A Preferred Stock as to dividends ("Parity Dividend Stock"), and may not make any payment on account of the purchase, redemption, retirement or other acquisition of shares of Parity Dividend Stock or any other series or class of the Company's stock hereafter issued that ranks on a parity with the Series A Preferred Stock as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (such stock that has parity with the Series A Preferred Stock as to liquidation rights, "Parity Liquidation Stock") (other than such acquisitions pursuant to employee or director incentive or benefit plans or arrangements, or acquisitions or exchanges solely for Junior Stock), unless all accrued and unpaid dividends on the Series A Preferred Stock for all dividend payment periods ending on or before the date of payment of such dividends on Parity Dividend Stock, or such payment for such Parity Dividend Stock or Parity Liquidation Stock, as the case may be, have been paid or declared and set apart for payment. Liquidation Rights. In the case of the voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of shares of Series A Preferred Stock are entitled to receive the liquidation preference of $100.00 per share, plus an amount equal to any accrued and unpaid dividends to the payment date, before any payment or distribution is made to the holders of Common Stock or any other series or class of the Company's stock hereafter issued that ranks junior to the Series A Preferred Stock as to distributions of assets upon such liquidation, dissolution or winding up, but the holders of the shares of the Series A Preferred Stock will not be entitled to receive the liquidation preference of such shares until the liquidation preference of any other series or class of the Company's stock hereafter issued that ranks senior to the Series A Preferred Stock as to distributions of assets upon such dissolution, liquidation or winding up ("Senior Liquidation Stock") has been paid in full. The holders of Series A Preferred Stock and all series or classes of the Company's stock hereafter issued that rank on a parity with the Series A Preferred Stock as to distributions of assets upon such liquidation, dissolution or winding up of the Company are entitled to share ratably, in accordance with the respective preferential amounts payable on such stock, in any distribution (after payment of the liquidation preference of the Senior Liquidation Stock) which is not sufficient to pay in full the aggregate of the preferential amounts payable thereon. After payment in full of the liquidation preference of the shares of the Series A Preferred Stock, the holders of such shares will not be entitled to any further participation in any distribution of assets by the Company. Neither a consolidation or merger of the Company with another corporation nor a sale or transfer of all or part of the Company's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Company. Voting Rights. The holders of the Series A Preferred Stock have no voting rights except as described below or as required by law. In exercising any such vote, each outstanding share of 22 25 Series A Preferred Stock will be entitled to one vote, excluding shares held by the Company or any affiliate of the Company, which shares have no voting rights. Whenever dividends on the Series A Preferred Stock or on any outstanding shares of Parity Dividend Stock have not been paid in an aggregate amount equal to at least six quarterly dividends on such shares (whether or not consecutive), the number of members of the Company's Board of Directors will be increased by two, and the holders of the Series A Preferred Stock, voting separately as a class with the holders of Parity Dividend Stock on which like voting rights have been conferred and are exercisable, will be entitled to elect such two additional directors at any meeting of stockholders at which directors are to be elected held during the period such dividends remain in arrears. Such voting rights will terminate when all such accrued and unpaid dividends have been declared and paid or set apart for payment. The term of office of all directors so elected will terminate immediately upon the termination of such voting rights. In addition, so long as any Series A Preferred Stock is outstanding, the Company may not, without the affirmative vote or consent of the holders of at least 66 2/3% (unless a higher percentage shall then be required by applicable law) of all outstanding shares of Series A Preferred Stock, voting separately as a class, (i) amend, alter or repeal any provision of the Company's Certificate of Incorporation or Bylaws so as to affect adversely the relative rights, preferences, qualifications, limitations, or restrictions of the Series A Preferred Stock, (ii) create, authorize or issue, or reclassify any authorized stock of the Company into, or increase the authorized amount of, any series or class of stock that ranks senior to the Series A Preferred Stock as to dividends or distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or any security convertible into any such class or series of such stock, or (iii) enter into a share exchange that affects the Series A Preferred Stock, consolidate with or merge into another entity, or permit another entity to consolidate with or merge into the Company, unless in each such case each share of Series A Preferred Stock remains outstanding and unaffected or is converted into or exchanged for convertible preferred stock of the surviving entity having powers, preferences and relative participating optional or other rights and qualification limitations and restrictions thereof identical to that of a share of Series A Preferred Stock (except for changes that do not affect the holders of the Series A Preferred Stock adversely). Redemption at Option of the Company. The Series A Preferred Stock may not be redeemed before August 25, 1996. On and after that date, the Series A Preferred Stock may be redeemed by the Company, at its option, in whole or in part at any time, subject to the limitations, if any, imposed by applicable law, at a redemption price per share of $104.67 if redeemed at any time during the period from August 25, 1996, through August 15, 1997, and at the following redemption prices per share, if redeemed during the 12-month period ending August 15:
PRICE PER YEAR SHARE ---- --------- 1998.............................................................. $103.89 1999.............................................................. 103.11 2000.............................................................. 102.33 2001.............................................................. 101.56 2002.............................................................. 100.78
and thereafter at $100 per share, plus, in each case, accrued and unpaid dividends to but excluding the redemption date. Conversion Rights. The holder of any shares of Series A Preferred Stock has the right, at the holder's option, to convert any or all shares into Common Stock at any time at the rate of 4.2105 shares of Common Stock for each share of Series A Preferred Stock (equivalent to a conversion price of $23.75 for each share of Common Stock), subject to adjustment in certain circumstances except that if the Series A Preferred Stock is called for redemption, the conversion right will terminate at the close of business on the fifth business day prior to the date fixed for such redemption. 23 26 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the Exchange Act, the Company files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). The reports, proxy statements and other information can be inspected and copied at the public reference facilities that the Commission maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of these materials can be obtained at prescribed rates from the Public Reference Section of the Commission at the principal offices of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company has filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") under the Exchange Act, with respect to the Conversion Offer. This Offer of Premium does not contain all of the information set forth in the Schedule 13E-4, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the Conversion Offer, reference is made to the Schedule 13E-4, including the exhibits filed as part thereof or incorporated by reference therein. Statements made in this Offer of Premium about the contents of any contract, agreement, or other document are not necessarily complete; with respect to each such contract, agreement or other document filed as an exhibit to the Schedule 13E-4, reference is made to that exhibit for a more complete description of the matter involved, and each such statement is qualified in its entirety by that reference. Copies of the Schedule 13E-4 and its exhibits may be inspected, without charge, at the offices of the Commission, or obtained at prescribed rates from the Public Reference Section of the Commission, at the address previously set forth. The address of the Company's principal executive offices is Dell Computer Corporation, 2112 Kramer Lane, Austin, Texas 78758-4012, and its telephone number at that address is (512) 338-4400. 24 27 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission (File No. 0-17017) pursuant to the Exchange Act are incorporated in this Offer of Premium by reference: 1. The Company's Annual Report on Form 10-K for the Fiscal Year Ended January 30, 1994; 2. The Company's Quarterly Report on Form 10-Q for the Quarterly Period Ended October 30, 1994; 3. The Company's Current Report on Form 8-K, dated February 21, 1995; 4. All other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Offer of Premium and before the termination of the Conversion Offer. The Company will provide without charge to each person to whom a copy of this Offer of Premium is delivered, upon the written or oral request of any such person, a copy of any or all of the documents that are incorporated by reference, other than exhibits to such documents not specifically incorporated by reference. Requests for such copies should be directed to Dell Computer Corporation, 2112 Kramer Lane, Austin, Texas 78758-4012, Attention: Investor Relations, telephone (512) 728-8315. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Offer of Premium to the extent that a statement contained herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offer of Premium. 25 28 CONVERSION AGENT Citibank, N.A., will act as Conversion Agent for the Conversion Offer. The Conversion Agent will act as agent for the holders of Series A Preferred Stock accepting the Conversion Offer for the purpose of receiving Common Stock and the Conversion Premium from the Company. If you require assistance, please contact the Conversion Agent at (800) 422-2066 or the address below. All correspondence in connection with the Conversion Offer should be addressed to the Conversion Agent as follows: The Conversion Agent: CITIBANK, N.A. By Mail: By Overnight Courier: By Hand: Citibank, N.A. Citibank, N.A. Citibank, N.A. c/o Citicorp Data Distribution, c/o Citicorp Data Distribution, Corporate Trust Window Inc. Inc. 111 Wall Street, 5th Floor P.O. Box 7072 404 Sette Drive New York, New York Paramus, New Jersey 07653 Paramus, New Jersey 07652 Confirm by Telephone: (800) 422-2066
The Company will pay the Conversion Agent reasonable and customary compensation, which the Company estimates will total approximately $5,000, for services in connection with the Conversion Offer. In addition, the Company will reimburse the Conversion Agent for its out-of-pocket expenses, and will indemnify the Conversion Agent against certain liabilities and expenses in connection with its services, including liabilities under the federal securities laws. The Company also will pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this Offer of Premium and related documents to beneficial holders of Series A Preferred Stock, and in handling or forwarding tenders of Series A Preferred Stock for their customers. --------------------- NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS OFFER OF PREMIUM AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS OFFER OF PREMIUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, SECURITIES TO ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER. NEITHER THE DELIVERY OF THIS OFFER OF PREMIUM NOR ANY ISSUANCE OF SECURITIES PURSUANT TO THE CONVERSION OFFER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED HEREIN BY REFERENCE OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS OFFER OF PREMIUM. HOWEVER, IF ANY MATERIAL CHANGE OCCURS DURING THE PERIOD THAT THIS OFFER OF PREMIUM IS REQUIRED TO BE DELIVERED, THIS OFFER OF PREMIUM WILL BE AMENDED AND SUPPLEMENTED ACCORDINGLY. 26 -----END PRIVACY-ENHANCED MESSAGE-----