0000950134-95-002259.txt : 19950914
0000950134-95-002259.hdr.sgml : 19950914
ACCESSION NUMBER: 0000950134-95-002259
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 16
CONFORMED PERIOD OF REPORT: 19950730
FILED AS OF DATE: 19950912
SROS: NASD
FILER:
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: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-17017
FILM NUMBER: 95573333
BUSINESS ADDRESS:
STREET 1: 2112 KRAMER LN - BLDG 1
CITY: AUSTIN
STATE: TX
ZIP: 78758
BUSINESS PHONE: 5123384400
MAIL ADDRESS:
STREET 1: 2112 KRAMER LN - BLDG 1
CITY: AUSTIN
STATE: TX
ZIP: 78758
10-Q
1
FORM 10-Q FOR QUARTER ENDED JULY 30, 1995
1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 30, 1995
COMMISSION FILE NUMBER:0-17017
DELL COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-2487834
(State of incorporation) (I.R.S. Employer ID No.)
2214 WEST BRAKER LANE, SUITE D
AUSTIN, TEXAS 78758-4053
(Address of principal executive offices)
(512) 338-4400
(Telephone number)
2112 KRAMER LANE, BUILDING 1
AUSTIN, TEXAS 78758-4012
(Former address)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING TWELVE MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /
AS OF SEPTEMBER 8, 1995, 45,882,212 SHARES OF THE REGISTRANT'S COMMON
STOCK, PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.
================================================================================
2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
JULY 30, JANUARY 29,
1995 1995
----------------- -----------------
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,563 $ 42,953
Short-term investments . . . . . . . . . . . . . . . . . . . . . 503,271 484,294
Accounts receivable, net . . . . . . . . . . . . . . . . . . . 671,767 537,974
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 381,962 292,925
Other current assets . . . . . . . . . . . . . . . . . . . . . . 104,800 112,215
----------------- -----------------
Total current assets . . . . . . . . . . . . . . . . . . . 1,728,363 1,470,361
Property, plant and equipment, net . . . . . . . . . . . . . . . . 145,185 116,981
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,738 6,658
----------------- -----------------
$ 1,885,286 $ 1,594,000
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 454,874 $ 402,682
Accrued and other liabilities . . . . . . . . . . . . . . . . . 410,687 323,791
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 11,969 24,937
----------------- -----------------
Total current liabilities . . . . . . . . . . . . . . . . . 877,530 751,410
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 113,359 113,429
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 91,542 77,425
Commitments and contingencies
Stockholders' equity:
Preferred stock: $.01 par value; shares authorized: 5,000,000;
shares issued and outstanding: 60,000 and 1,250,000,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . 1 13
Common stock: $.01 par value; shares authorized:
100,000,000; shares issued and outstanding: 45,760,831 and
39,679,638, respectively . . . . . . . . . . . . . . . . . . . 458 397
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 403,092 361,181
Unrealized loss on short-term investments . . . . . . . . . . . (1,179) (2,628)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 425,351 311,217
Unearned compensation . . . . . . . . . . . . . . . . . . . . . . (15,159) (4,413)
Cumulative translation adjustment . . . . . . . . . . . . . . . (9,709) (14,031)
----------------- -----------------
Total stockholders' equity . . . . . . . . . . . . . . . . 802,855 651,736
----------------- -----------------
$ 1,885,286 $ 1,594,000
================= =================
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
3
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- ----------------------------
JULY 30, JULY 31, JULY 30, JULY 31,
1995 1994 1995 1994
------------- ------------- ------------- -------------
Net sales . . . . . . . . . . . . . . . . . . $ 1,205,593 $ 791,496 $ 2,341,526 $ 1,558,128
Cost of sales . . . . . . . . . . . . . . . . 942,952 621,859 1,842,732 1,218,659
------------- ------------- ------------- -------------
Gross margin . . . . . . . . . . . . . . . 262,641 169,637 498,794 339,469
Operating expenses:
Selling, general and administrative . . . . 147,327 102,646 274,938 197,523
Research, development and engineering . . . 24,647 15,930 45,526 30,900
------------- ------------- ------------- -------------
Total operating expenses . . . . . . . . 171,974 118,576 320,464 228,423
------------- ------------- ------------- -------------
Operating income . . . . . . . . . . . . 90,667 51,061 178,330 111,046
Financing and other income (expense), net . . 988 (9,671) 219 (42,202)
------------- ------------- ------------- -------------
Income before income taxes . . . . . . . . 91,655 41,390 178,549 68,844
Provision for income taxes . . . . . . . . . 26,580 12,831 51,776 21,312
------------- ------------- ------------- -------------
Net income . . . . . . . . . . . . . . . . 65,075 28,559 126,773 47,532
Preferred stock dividends . . . . . . . . . . 105 2,188 11,743 4,375
------------- ------------- ------------- -------------
Net income available to common
stockholders . . . . . . . . . . . . . . . $ 64,970 $ 26,371 $ 115,030 $ 43,157
============= ============= ============= =============
Earnings per common share:
Primary . . . . . . . . . . . . . . . . . . $ 1.32 $ 0.65 $ 2.43 $ 1.06
============= ============= ============= =============
Fully diluted . . . . . . . . . . . . . . . $ 1.31 $ 0.62 $ 2.36 $ 1.03
============= ============= ============= =============
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
4
DELL COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
---------------------------------
JULY 30, JULY 31,
1995 1994
------------- --------------
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,773 $ 47,532
Charges to income not requiring cash outlays:
Depreciation and amortization . . . . . . . . . . . . . . . . 18,545 15,354
Net (gain) loss on short-term investments . . . . . . . . . . (299) 21,218
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,354 996
Changes in:
Operating working capital . . . . . . . . . . . . . . . . . . (75,345) (44,929)
Non-current assets and liabilities . . . . . . . . . . . . . 4,617 10,198
------------- --------------
Net cash provided by operating activities . . . . . . . . . 75,645 50,369
Cash flows from investing activities:
Short-term investments:
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . (2,106,198) (1,925,730)
Maturities and other redemptions . . . . . . . . . . . . . . . 2,070,520 1,824,635
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,951 106,406
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (45,787) (32,535)
------------- --------------
Net cash used in investing activities . . . . . . . . . . . (61,514) (27,224)
Cash flows from financing activities:
Preferred stock dividends paid . . . . . . . . . . . . . . . . . (12,638) (4,375)
Issuance of common stock under employee plans . . . . . . . . . . 28,948 12,006
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (389) (503)
------------- --------------
Net cash provided by financing activities . . . . . . . . . 15,921 7,128
Effect of exchange rate changes on cash . . . . . . . . . . . . . . (6,442) 1,773
------------- --------------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . 23,610 32,046
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . 42,953 3,355
------------- --------------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . $ 66,563 $ 35,401
============= ==============
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
5
DELL COMPUTER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto filed with the Securities and Exchange Commission (the
"Commission") in the Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 1995, as amended. In the opinion of management, the
accompanying condensed consolidated financial statements reflect all
adjustments (consisting only of normal recurring accruals) considered necessary
to present fairly the financial position of Dell Computer Corporation and its
consolidated subsidiaries at July 30, 1995 and January 29, 1995 and the results
of their operations for the three-month and six-month periods ended July 30,
1995 and July 31, 1994. Reclassification of certain prior period amounts has
been made for comparative purposes.
Unless otherwise indicated, all references to years or quarters in
connection with financial information are references to the Company's fiscal
years and fiscal quarters, respectively.
NOTE 2 -- PREFERRED STOCK CONVERSION
On February 21, 1995, the Company offered to pay a cash premium of $8.25
for each outstanding share of its Series A Convertible Preferred Stock (the
"Preferred Stock") that was converted to common stock. The offer of premium
upon conversion was available to holders of the Preferred Stock through the
closing of the special conversion period on March 22, 1995. The Company also
offered to register the resale of the shares of common stock issued upon
conversion of the Preferred Stock with the Commission for a 50-day period,
which ended June 15, 1995. Holders of 1,190,000 shares of Preferred Stock
elected to convert and, as a result, received an aggregate of approximately 5.0
million shares of common stock and $9.8 million in cash during the first
quarter of 1996. The $9.8 million conversion premium and $0.5 million of
expenses of the conversion offer were treated as an additional dividend on the
Preferred Stock for financial reporting purposes. Accordingly, $11.7 million,
comprised of the conversion premium, conversion offer expenses and dividends,
were deducted from net income for the first six months of 1996 to determine the
net income available to common stockholders. In addition, the weighted average
shares outstanding used to compute primary earnings per common share for the
first six months of 1996 includes the shares of common stock issued upon
conversion from the closing of the conversion period until the end of the
six-month period.
NOTE 3 -- INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On July 21, 1995, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to increase the number of shares of
common stock, par value $.01 per share, that the Company is authorized to issue
from 100 million to 300 million. The amendment was filed in the office of the
Secretary of State of the State of Delaware on August 3, 1995. In accordance
with the provisions of the Delaware General Corporation Law, such amendment
became effective upon filing.
NOTE 4 -- RESTRICTED STOCK
As discussed in the Company's Annual Report on Form 10-K for the fiscal
year ended January 29, 1995, as amended, the Company granted certain restricted
stock during 1995 that typically vests over a seven-year period. During the
first half of 1996, the Company granted approximately 260,000 additional
shares of restricted stock to employees pursuant to its long-term incentive
plan. The unearned compensation associated with restricted stock at July 30,
1995 has been presented separately in the Condensed Consolidated Statement of
Financial Position. In prior periods, the unearned compensation was combined
with additional paid-in capital, but the amount at January 29, 1995 has been
reclassified in the accompanying Condensed Consolidated Statement of Financial
Position to conform with the current period presentation.
4
6
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
The Company has been named as a defendant in 30 repetitive stress injury
lawsuits, most of which are in New York state courts or United States District
Courts for the New York City area. Several are in state courts in New Jersey.
One is in the Federal District Court for the Eastern District of Pennsylvania,
and one is in Federal District Court in Kansas. The allegations in all of
these lawsuits are similar. Each plaintiff alleges that he or she suffers from
symptoms generally known as "repetitive stress injury," which allegedly were
caused by the design or manufacture of the keyboard supplied with the computer
the plaintiff used. The Company has denied or is in the process of denying the
claims and intends to vigorously defend the suits. The suits naming the
Company are just a few of many lawsuits of this type that have been filed,
often naming Apple, Atex, Compaq, IBM, Keytronic and other major suppliers of
keyboard products. The Company currently is not able to predict the outcome of
these suits. It is possible that the Company may be named in additional suits.
Ultimate resolution of the litigation against the Company may depend on
progress in resolving this type of litigation overall. However, the Company
does not believe that the outcome of these matters will have a material adverse
effect on the Company's financial condition or results of operations.
In March 1995, the Company was named along with twelve other personal
computer or computer monitor manufacturers in a complaint filed by the District
Attorney for Merced County, California. The complaint alleges that each of the
defendants has engaged in false or misleading advertising with regard to the
size of computer monitor screens and seeks unspecified damages and injunctive
relief. In May 1995, several other district attorneys in other California
counties joined this lawsuit as co-plaintiffs. The Company is vigorously
contesting the allegations of the complaint and does not believe that the
litigation of the complaint or its outcome will have a material adverse effect
on the Company's financial condition or results of operations.
In May 1995, the Company was named, along with two other personal computer
manufacturers and one computer monitor vendor, in a class action complaint
filed in the California Superior Court for Marin County. This case has been
transferred to Orange County, California. A second class action complaint,
naming the Company and 47 other manufacturers or vendors of personal computer
monitors, was filed in Santa Clara County, California and was served on the
Company in August 1995. The complaints allege that each of the defendants has
engaged in false or misleading advertising with regard to the size of computer
monitor screens. The plaintiffs seek restitution in the form of refunds or
product exchange, damages, punitive damages and attorneys' fees. The Company
plans to vigorously contest the allegations of the complaints. This litigation
is currently at a preliminary stage, and no discovery has occurred to date. As
such, it is too early for the Company to adequately evaluate the likelihood of
the plaintiffs prevailing on their claims. There can be no assurance that an
adverse determination in this litigation would not have a material adverse
effect on the Company's financial condition or results of operations. Two
other similar class action complaints naming the Company and others as
defendants have been filed in Orange County, California; but as of September
11, 1995, the Company has not been served with summons or any other notice of
these additional actions.
On June 9, 1995, the Company was served with a class action complaint filed
in State District Court in Travis County, Texas. The complaint alleges that
the Company has included "used parts" in its "new" computer systems and has
failed to adequately inform its customers and prospective customers of that
practice. According to the complaint, these facts constitute fraud, negligent
misrepresentation, breach of contract and breach of warranty. The plaintiffs
seek refund of the purchase price for computer systems purchased from the
Company, damages in an unspecified amount, injunctive relief, interest and
attorneys' fees. The Company plans to vigorously contest the allegations of
the complaint. This litigation is currently at a preliminary stage, and no
discovery has occurred to date. As such, it is too early for the Company to
adequately evaluate the likelihood of the plaintiffs prevailing on their
claims. There can be no assurance that an adverse determination in this
litigation would not have a material adverse effect on the Company's financial
condition or results of operations.
NOTE 6 -- EARNINGS PER COMMON SHARE
Primary earnings per common share are computed by dividing net income
available to common stockholders by the weighted average number of common
shares and common stock equivalents (if dilutive) outstanding during each
period. Common stock equivalents include stock options. The Preferred Stock
is not a common stock equivalent for purposes of computing earnings per common
share. The number of common stock equivalents outstanding is computed using
the treasury stock method. The weighted average shares outstanding
5
7
used to compute primary earnings per common share for the first six months of
1996 includes the shares of common stock issued upon conversion of the
Preferred Stock from the closing of the conversion period until the end of the
six-month period. Shares used in the calculation of fully diluted earnings per
common share have been adjusted for the assumed conversion of all of the
Company's outstanding Preferred Stock for all periods presented.
NOTE 7 -- SUPPLEMENTAL FINANCIAL INFORMATION (IN THOUSANDS)
Supplemental Condensed Consolidated Statement of Financial Position
Information:
JULY 30, JANUARY 29,
1995 1995
------------- -------------
Inventories:
Production materials . . . . . . . . . . . . . . . . . . . . . . $ 341,094 $ 262,150
Work-in-process and finished goods . . . . . . . . . . . . . . . 40,868 30,775
------------- -------------
$ 381,962 $ 292,925
============= =============
Accrued and other liabilities:
Book overdraft . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,114 $ 44,389
Accrued warranty costs . . . . . . . . . . . . . . . . . . . . . 72,505 65,468
Royalties and licensing . . . . . . . . . . . . . . . . . . . . . 45,392 34,815
Taxes other than income taxes . . . . . . . . . . . . . . . . . . 49,976 39,873
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 162,700 139,246
------------- -------------
$ 410,687 $ 323,791
============= =============
Supplemental Condensed Consolidated Statement of Income Information:
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -----------------------
JULY 30, JULY 31, JULY 30, JULY 31,
1995 1994 1995 1994
---------- --------- -------- ----------
Financing and other income (expense), net:
Investment income (loss), net:
Short-term investments . . . . . . . . . $ 5,538 $ (5,323) $ 11,150 $ (16,073)
Investment derivatives . . . . . . . . . -- (1,341) -- (23,948)
Interest expense . . . . . . . . . . . . . (3,819) (2,388) (7,838) (4,558)
Foreign currency transactions . . . . . . . (756) 64 (2,087) 2,604
Other . . . . . . . . . . . . . . . . . . . 25 (683) (1,006) (227)
---------- --------- -------- ----------
$ 988 $ (9,671) $ 219 $ (42,202)
========== ========= ======== ==========
Weighted average shares used to compute
earnings per common share:
Primary . . . . . . . . . . . . . . . . . 49,121 40,620 47,309 40,533
========== ========= ======== ==========
Fully diluted . . . . . . . . . . . . . 49,610 46,047 49,430 46,056
========== ========= ======== ==========
6
8
Supplemental Condensed Consolidated Statement of Cash Flows Information:
SIX MONTHS ENDED
--------------------------------------
JULY 30, JULY 31,
1995 1994
----------------- -----------------
Changes in operating working capital accounts:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . $ (111,013) $ (17,356)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (87,435) (18,199)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 26,653 5,559
Accrued and other liabilities . . . . . . . . . . . . . . . . . 101,283 17,967
Other current assets . . . . . . . . . . . . . . . . . . . . . . 6,983 (39,961)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . (12,931) 3,911
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,115 3,150
----------------- -----------------
$ (75,345) $ (44,929)
================= =================
Changes in non-current assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,439) $ 231
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 9,056 9,967
----------------- -----------------
$ 4,617 $ 10,198
================= =================
7
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Unless otherwise indicated, all references to years and quarters in connection
with financial information are references to the Company's fiscal years and
fiscal quarters, respectively. All percentage amounts used in describing
operating results are based on the related dollar amounts rounded to the
nearest thousand which are set forth in the Condensed Consolidated Financial
Statements and related notes thereto. Operating results for the three-month and
six-month periods ended July 30, 1995 are not necessarily indicative of the
results that may be expected for the full fiscal year.
RESULTS OF OPERATIONS
For the second quarter of 1996, the Company reported net income of $65.1
million and primary earnings per common share of $1.32, compared with net
income of $28.6 million and primary earnings per common share of $0.65 for the
second quarter of 1995. For the first six months of 1996, net income was
$126.8 million and primary earnings per common share were $2.43, compared with
net income of $47.5 million and primary earnings per common share of $1.06 for
the first six months of 1995. The conversion of the Company's Series A
Convertible Preferred Stock (the "Preferred Stock") in the first quarter of
1996 had the effect of reducing primary earnings per common share in the second
quarter and the first six months of 1996 by $0.10 and $0.37, respectively. Net
income was reduced by $6.2 million, or $0.15 primary earnings per common share,
in the second quarter of 1995 and by $32.5 million, or $0.80 primary earnings
per common share, in the first half of 1995 due to after-tax losses on certain
investment derivatives and short-term investments. The Company discontinued
its investment derivative program in the second quarter of fiscal 1995.
The following table sets forth for the periods indicated the percentage of
consolidated net sales represented by certain items in the Company's condensed
consolidated statement of income.
PERCENTAGE OF CONSOLIDATED NET SALES
--------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -----------------------
JULY 30, JULY 31, JULY 30, JULY 31,
1995 1994 1995 1994
-------- -------- -------- --------
Net sales:
Americas . . . . . . . . . . . . . . 64.8% 70.1% 63.4% 68.6%
Europe . . . . . . . . . . . . . . . 27.0 27.0 28.8 28.7
Other international . . . . . . . . . 8.2 2.9 7.8 2.7
------- ------- ------- -------
Consolidated net sales . . . . . . 100.0 100.0 100.0 100.0
Cost of sales . . . . . . . . . . . . . 78.2 78.6 78.7 78.2
------- ------- ------- -------
Gross margin . . . . . . . . . . . 21.8 21.4 21.3 21.8
Operating expenses:
Selling, general and administrative . 12.2 13.0 11.7 12.7
Research, development and engineering 2.1 2.0 2.0 2.0
------- ------- ------- -------
Total operating expenses . . . . . 14.3 15.0 13.7 14.7
------- ------- ------- -------
Operating income . . . . . . . . . 7.5 6.4 7.6 7.1
Financing and other income (expense),
net . . . . . . . . . . . . . . . . . . 0.1 (1.2) 0.0 (2.7)
------- ------- ------- -------
Income before income taxes . . . . . 7.6 5.2 7.6 4.4
Provision for income taxes . . . . . . 2.2 1.6 2.2 1.4
------- ------- ------- -------
Net income . . . . . . . . . . . . . 5.4 3.6 5.4 3.0
Preferred stock dividends . . . . . . . 0.0 0.3 0.5 0.3
------- ------- ------- -------
Net income available to common
stockholders . . . . . . . . . . . . . 5.4% 3.3% 4.9% 2.7%
======= ======= ======= =======
Net Sales
The second quarter of 1996 marked the Company's sixth consecutive quarter
of sequential growth in consolidated net sales. Consolidated net sales
increased 52% to $1.2 billion for the second quarter of 1996, compared with
$791.5 million in the second quarter of 1995. Consolidated net sales for the
first half of 1996
8
10
increased 50% to $2.34 billion from $1.56 billion in the comparable period of
the prior year. Unit volumes increased 45% and 41% in the second quarter and
the first six months, respectively, of 1996 over the comparable periods in the
prior year due primarily to strong demand for the Company's Pentium(R)
processor-based products and notebook computers. Additionally, because these
systems are generally higher priced than the rest of the Company's product
portfolio (excluding servers), average total revenue per unit increased 5% and
7% in the second quarter and the first six months, respectively, of 1996,
compared to the corresponding periods of the prior year. After taking into
account the results of the Company's foreign currency hedging activities,
consolidated net sales (expressed in United States dollars) were not
significantly affected in the second quarter or in the first six months of 1996
as a result of fluctuations in foreign currency exchange rates.
Consolidated net sales includes sales of computer systems (including
hardware, certain software and accessories); computer peripherals; other
hardware, software and accessories sold separately from computer systems; and
extended service contracts. Sales of computer systems ("system revenue")
amounted to 88% of consolidated net sales in the second quarter of 1996 and in
the first six months of both 1996 and 1995. System revenue amounted to 89% of
consolidated net sales in the second quarter of 1995. The Company's rapid
introduction of Pentium processor-based systems relative to its competitors and
increased customer acceptance of these systems resulted in a substantial
increase in sales of such systems. Sales of the Company's Pentium
processor-based products increased to 67% of system revenue in the second
quarter of 1996 from 55% of system revenue in the first quarter of 1996 and
from 24% of system revenue in the second quarter of 1995. Sales of Pentium
processor-based products in the second quarter of 1996 increased by $169.2
million or 31% from the first quarter of 1996 and by $538.2 million or 317%
from the second quarter of 1995. Sales of such systems represented 61% of
system revenue in the first half of 1996, compared with 17% in the first half
of 1995, an increase of $1.0 billion or 434%. Sales of the Company's 486-based
products comprised the remainder of system revenue and declined as a percentage
of system revenue directly in relation to the increases in revenue from the
sale of Pentium processor-based products.
Net sales of notebook computers as a percentage of system revenue decreased
from 17% in the first quarter of 1996 to 15% in the second quarter of 1996.
This decrease was primarily due to the mid-quarter transition of products
within the Company's Latitude(TM) family of notebook computers, during which
the Company sold through its existing supply of component parts for the old
products before it had achieved optimal production of its new products. In
conjunction with the introduction in May 1995 of its Latitude XPi notebook
computer line, which contains the Company's first Pentium processor-based
notebook computers, the Company also introduced its new Latitude LX notebook
computer line, which replaced the original Latitude notebook computer line, and
introduced several new models in its Latitude XP notebook computer line. The
Company began shipping its new Latitude XPi and LX products in the latter half
of June. Revenue from the Company's Latitude family of notebook computers
increased substantially in the second quarter and first half of 1996 over the
same periods in 1995, due primarily to strong customer demand for the Company's
Latitude XP line (introduced in August 1994) and the new Latitude XPi line.
Sales of notebook computers represented 15% of system revenue in the second
quarter of 1996, up from 5% in the second quarter of 1995. Sales of notebook
computers comprised 16% of system revenue in the first six months of 1996, up
from 4% in the same period of the prior year.
During the second quarter of 1996, the Company completed the transition of
its Dell Dimension(TM) family of desktop computers to Intel's Pentium
processor. Net sales from the Company's desktop product lines represented 82%
of system revenue (or $870.6 million) in the second quarter of 1996 versus 80%
of system revenue (or $789.4 million) in the first quarter of 1996 and 90% of
system revenue (or $628.8 million) in the second quarter of the prior year.
Sales of desktop products were 81% of system revenue (or $1.66 billion) in the
first six months of 1996, compared with 91% of system revenue (or $1.25
billion) in the first six months of 1995. Sales from the server product line
represented 3% of system revenue (or $30.1 million) in the second quarter of
1996, 3% of system revenue (or $25.6 million) in the first quarter of 1996 and
5% of system revenue (or $38.1 million) in the second quarter of 1995. Sales
of servers were 3% of system revenue (or $55.7 million) and 5% of system
revenue (or $66.8 million) in the first half of 1996 and 1995, respectively.
The Company believes that its future success is largely dependent upon
continued growth of its notebook product line, its ability to expand its
presence in the network server market and its ability to continue to
efficiently
9
11
manage the transition to Pentium processor-based computers and other
technological advancements as they become commercially available. There can be
no assurance that the Company's development activities will be successful, that
product technologies will be available to the Company, that the Company will be
able to deliver commercial quantities of computer products in a timely manner
or that such products will achieve market acceptance. Some new products
introduced by the Company are intended to replace existing products. Although
the Company monitors the products that are intended to be replaced and attempts
to phase out the manufacture of those products in a timely manner, there can be
no assurance that such transitions will be executed without adversely affecting
the Company's results of operations or financial condition.
Net sales from the Americas (United States, Canada and Latin America)
increased 41% to $780.4 million for the second quarter of 1996 from $554.7
million in the second quarter of 1995 and increased 11% from $706.2 million in
the first quarter of 1996. Americas' net sales increased 39% to $1.5 billion
in the first half of 1996 from the comparable period of the prior year. Net
sales from the Company's European operations increased 52% to $325.6 million in
the second quarter of 1996 from $214.2 million in the second quarter of 1995,
but decreased 7% from $348.4 million in the first quarter of 1996 primarily due
to a seasonal decline in European government sales. European net sales were
$674.0 million in the first six months of 1996, up 51% from the first six
months of 1995. Other international sales increased 341% to $99.6 million for
the second quarter of 1996 from $22.6 million in the second quarter of 1995 and
increased 330% to $180.9 million in the first half of 1996 from the comparable
period of the prior year, primarily due to sales growth in Japan, where revenue
has more than tripled compared to the second quarter and first half of 1995.
Other international sales increased 22% in the second quarter of 1996 from
$81.3 million in the first quarter of 1996. The Company believes that a
significant opportunity exists for continued growth in international
operations, and during the first quarter of 1996, the Company began
construction of a 238,000 square foot combination office and manufacturing
facility on a nine-acre site in Penang, Malaysia to meet the needs of its
expanding Asia-Pacific business. The Company anticipates completion of the
facility during the fourth quarter of 1996. Dell intends to continue to expand
its international activities by increasing its market presence in existing
markets through ongoing revisions and improvement of its marketing and sales
compensation programs to more effectively reach its customers, by improving its
support systems, by pursuing additional distribution opportunities and by
entering new markets. There can be no assurance that the Company's Malaysian
facility will meet the needs of the Company's expanding Asia-Pacific business
or that the Company will be successful in its efforts to expand its
international activities.
Consolidated net sales to national accounts, consisting of sales to major
corporate, government and education accounts and value-added resellers,
continue to comprise roughly two-thirds of consolidated net sales in 1996,
consistent with 1995. Sales to national accounts increased 44% to $787.8
million in the second quarter of 1996 from $545.6 million in the second quarter
of 1995 and increased 9% from $720.4 million in the first quarter of 1996.
Such sales were $1.5 billion in the first six months of 1996, an increase of
46% over the comparable period in the prior year. Sales to medium- to
small-sized businesses and individuals increased 70% to $417.8 million in the
second quarter of 1996 from $245.9 million in the second quarter of 1995 and
increased 60% to $833.2 million in the first half of 1996 from the first half
of 1995, despite the decline in sales to mass merchant and other consumer
retailers as a result of the discontinuation of traditional consumer retailer
sales in the United States and Canada in July 1994. Sales to medium- to
small-sized businesses and individuals increased 1% in the second quarter of
1996 from $415.5 million in the first quarter of 1996. Revenue from consumer
retailers in the United States and Canada represented 2% and 5% of consolidated
net sales in the second quarter and the first six months of 1995, respectively.
The Company was affected by certain industry-wide component shortages
during the second quarter, primarily component shortages on some high speed
semiconductors used in the Company's OptiPlex(TM) desktop line, which
contributed to the backlog of $186.5 million at quarter-end. Backlog was
$135.6 million at the end of the first quarter of 1996 and was $29.4 million at
the end of the second quarter of 1995. There can be no assurance that the
backlog at the end of a quarter will translate into sales in any subsequent
quarter, particularly in light of the Company's policy of allowing customers
to cancel or reschedule orders without penalty prior to commencement of
manufacturing. The Company anticipates that industry-wide shortages of certain
component parts will continue to be a factor affecting its business operations.
10
12
Gross Margin
Gross margin increased $93.0 million in the second quarter of 1996 and
$159.3 million in the first six months of 1996 from the comparable periods in
the prior year primarily as a result of the increase in unit volumes. The
Company's gross margin as a percentage of consolidated net sales increased to
21.8% for the second quarter of 1996 from 21.4% for the second quarter of 1995
and 20.8% in the first quarter of 1996. The Company's gross margin percentage
for the first six months of 1996 was 21.3%, down from 21.8% for the comparable
period of the prior year. The improvement in gross margin percentage in the
second quarter of 1996 from the first quarter of 1996 was due primarily to a
relatively moderate pricing environment as well as certain cost improvements.
Gross margin percentage in the second quarter of 1996 improved slightly versus
the second quarter of 1995 due to improved warranty and inventory obsolescence
costs and certain economies of scale, partially offset by the Company's more
aggressive pricing strategy relative to the prior year. The slight decrease in
gross margin percentage in the first half of 1996 from the comparable period of
the prior year was due to the Company's more aggressive pricing strategy in
comparison to the prior year, partially offset by cost improvements and
economies of scale.
Several of the Company's competitors have recently announced price
reductions on some of their products. The Company believes that its product
offerings are competitively priced, even taking into account those competitor
pricing actions. Nevertheless, the Company may take pricing actions as it
attempts to maintain a competitive mix of price, performance and customer
services while managing its liquidity, profitability and growth. The Company
attempts to mitigate the effects of price reductions by improving product mix,
further reducing component costs and lowering operating costs. There can be no
assurance that pricing actions, if taken, will be effective in stimulating
higher levels of sales or that cost reduction efforts will offset the effects
of pricing actions on the Company's gross margins.
The Company's manufacturing process requires a high volume of quality
components that are procured from third party suppliers. Reliance on
suppliers, as well as industry supply conditions, generally involves several
risks, including the possibility of defective parts, a shortage of components,
increases in component costs and reduced control over delivery schedules, any
or all of which could have a material adverse effect on the Company's financial
results. The Company has several single supplier relationships, and the lack
of availability of timely and reliable supply of components from any of these
sources could have a material adverse effect on the Company's business.
Alternative sources of supply are not available for some of the Company's
single sourced components. Even when multiple suppliers are available, the
Company may establish a working relationship with a single source when the
Company believes it is advantageous due to performance, quality, support,
delivery, capacity or price considerations. While the Company has supply
agreements with certain suppliers, such agreements typically only specify
general terms and conditions, subject to release of purchase orders by the
Company and acceptance thereof by the component supplier. Where alternative
sources are available, qualification of the alternative suppliers and
establishment of reliable supplies of components from such sources may result
in delays and could have a material adverse effect on the Company's
manufacturing processes and results of operations. The Company occasionally
experiences delays in receiving certain components, which can cause delays in
the shipment of some products to customers, thereby increasing backlog.
Additionally, the Company has occasionally experienced certain defective
components, which can affect the reliability and reputation of its products.
There can be no assurance that the Company will be able to continue to obtain
supplies of reliable components in a timely or cost-effective manner. In
particular, the Company obtains its supply of microprocessors from Intel
Corporation, although certain comparable microprocessors are available from
other sources.
In November 1994, an inaccuracy in Intel's Pentium microprocessor was
publicized that, under certain circumstances, will cause errors in division.
Based on information from Intel Corporation, the Company believes only a
limited number of its Pentium microprocessor customers perform calculations
affected by the inaccuracy. Nonetheless, Intel has offered replacement
microprocessors to end-users for any Pentium microprocessor having the flawed
chip. By early February 1995, all of the Company's new shipments of Pentium
processor-based products contained the corrected Pentium microprocessors.
Although the Company previously shipped products which included Pentium
microprocessors that exhibited the inaccuracy, the Company believes that the
costs associated with the replacement of such microprocessors will not have a
material adverse effect on the Company's results of
11
13
operations or financial condition. Further, the Company has recently seen a
sharp decline in requests for replacement chips for affected Pentium
microprocessors and expects this replacement activity to reach a minimal level
in the very near future.
Operating Expenses
Over the last year, the Company has strengthened its management team and
increased staffing worldwide to meet the demands of its growth, resulting in
increased compensation-related expenses. Additional resources were also
expended relating to the Company's investment in global information systems.
These infrastructure expenditures resulted in an increase in selling, general
and administrative expenses of 44% to $147.3 million in the second quarter of
1996 from $102.7 million in the second quarter of the prior year and an
increase of 39% to $275.0 million in the first six months of 1996 from $197.5
million in the first six months of 1995. However, selling, general and
administrative expenses as a percentage of consolidated net sales decreased to
12.2% in the second quarter of 1996 from 13.0% in the second quarter of 1995
and to 11.7% in the first half of 1996 from 12.7% in the comparable period of
the prior year. The 12.2% for the second quarter of 1996 represented an
increase from the 11.3% reported for the first quarter of 1996. The Company
also increased headcount to support increased product development activities
and improved quality and time-to-market of its products. Furthermore, the
Company incurred additional development costs in conjunction with the
development of new notebook computer products. These expenditures resulted in
an increase in research, development and engineering expenses of 55% to $24.7
million in the second quarter of 1996 from $15.9 million in the second quarter
of 1995 and of 47% to $45.5 million in the first six months of 1996 from $30.9
million in the first six months of the prior year.
The Company believes that its ability to manage operating costs is an
important factor in its ability to remain price competitive. However, the
Company will invest in key global information systems through fiscal 1999 to
manage and support its growth. No assurance can be given that the Company's
efforts to manage future operating expenses will be successful.
Financing and Other Income (Expense), net
Financing and other income (expense), net was $1.0 million for the second
quarter of 1996 compared with ($9.7) million for the second quarter of 1995 and
was $0.2 million for the first six months of 1996 compared with ($42.2) million
for the comparable period in the prior year. The table below sets forth for
the periods indicated the components of financing and other income (expense),
net (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------------
JULY 30, JULY 31, JULY 30, JULY 31,
1995 1994 1995 1994
---------- --------- ---------- ----------
Financing and other income (expense), net:
Investment income (loss), net:
Short-term investments . . . . . . . . . $ 5,538 $ (5,323) $ 11,150 $ (16,073)
Investment derivatives . . . . . . . . . -- (1,341) -- (23,948)
Interest expense . . . . . . . . . . . . . (3,819) (2,388) (7,838) (4,558)
Foreign currency transactions . . . . . . . (756) 64 (2,087) 2,604
Other . . . . . . . . . . . . . . . . . . . 25 (683) (1,006) (227)
---------- --------- ---------- ----------
$ 988 $ (9,671) $ 219 $ (42,202)
========== ========= ========== ==========
Short-term investment income (loss) was $5.5 million in the second quarter
of 1996 compared with ($5.3) million in the second quarter of 1995 and was
$11.1 million in the first half of 1996 compared with ($16.1) million in the
first half of the prior year. The investment losses for the second quarter and
the first six months of 1995 were primarily due to recognized losses of $7.6
million and $23.1 million, respectively, on certain of the Company's short-term
investments as a result of interest rate increases in the United States,
Canadian, Japanese and European interest rate markets. The Company accounts
for highly liquid investments with maturities of three months or less at date
of acquisition as short-term investments and reflects the related cash flows as
investing cash flows. As a result, significant portions of the Company's gross
investment maturities and purchases disclosed as investing cash flows are
related to highly liquid investments.
12
14
Realized and unrealized net losses on interest rate derivatives recognized
in income were $1.3 million and $23.9 million in the second quarter and first
six months of 1995, respectively. The losses were primarily a result of
interest rate increases in the United States, Canadian, Japanese and European
interest rate markets. The Company closed all remaining investment derivatives
during the second quarter of fiscal 1995. Consequently, no gains or losses
associated with investment derivatives have been recognized in 1996. The
Company intends to use derivative financial instruments only to manage its
exposure to fluctuations in foreign currency exchange rates and to manage
market risk on components of its debt and equity.
All of the Company's foreign exchange and interest rate derivative
instruments involve elements of market and credit risk in excess of the amounts
recognized in the financial statements. The counterparties to financial
instruments consist of a number of major financial institutions. In addition
to limiting the amount of agreements and contracts it enters into with any one
party, the Company regularly monitors the credit quality of the financial
institutions that are counterparties to these financial instruments. The
Company does not anticipate nonperformance by the counterparties.
Interest expense increased in the second quarter of 1996 to $3.8 million
from $2.4 million in the second quarter of 1995 and increased in the first six
months of 1996 to $7.8 million from $4.6 million in the comparable period of
the prior year. The increase in interest expense in 1996 over 1995 was
primarily due to higher borrowings and higher interest rates in the second
quarter and first half of 1996. Concurrently with the issuance of the 11%
Senior Notes Due August 15, 2000 (the "Notes") in the third quarter of 1994,
the Company entered into interest rate swap agreements to manage the interest
costs associated with the Notes. The swap agreements effectively changed the
Company's interest rate exposure from a fixed-rate to a floating-rate basis.
However, in response to increasing interest rates, in August 1994, the Company
entered into offsetting swap agreements to effectively change its interest rate
exposure back to a fixed-rate basis. The interest rate swap agreements mature
on August 15, 1998, the first available redemption date of the Notes. At the
end of the second quarter of 1996, the Company had outstanding receive
fixed/pay floating interest rate swaps with an aggregate notional amount of
$100 million offset by receive floating/pay fixed interest rate swaps with an
aggregate notional amount of $100 million. The weighted average interest rate
on the Notes, adjusted by the swaps, was 13.8% for the second quarter and the
first six months of 1996 compared with 10.8% and 10.1% for the second quarter
and first six months of 1995, respectively.
Income Tax
The Company's effective tax rate was 29.0% for the second quarter and the
first six months of 1996 compared with 31.0% for the second quarter and first
six months of 1995. The change in the effective tax rate resulted from changes
in the geographical distribution of income and losses.
Fluctuations in Operating Results
The Company's operating results may fluctuate from period to period and
will depend on numerous factors, including customer demand and market
acceptance of the Company's products, new product introductions, product
obsolescence, component supply, component price fluctuations, varying product
mix, foreign currency exchange rates, foreign currency and interest rate
hedging and other factors. Net sales in a given quarter are primarily
dependent on customer orders received in that quarter, and operating
expenditures are primarily based on forecasts of customer demand. As a result,
if demand does not meet the Company's expectations in any given period, the
sales shortfall may result in an increased adverse effect on operating results
due to the Company's inability to adjust operating expenditures quickly enough
to compensate for the shortfall. The Company's business is sensitive to the
spending patterns of its customers, which in turn are subject to prevailing
economic conditions and other factors beyond the Company's control. Changes in
economic conditions or customer spending patterns for personal computer
products could have a material adverse effect on the Company's results of
operations.
13
15
HEDGING ACTIVITIES
The results of the Company's international operations are affected by
changes in exchange rates between certain foreign currencies and the United
States dollar. The financial statements of the Company's international sales
subsidiaries have generally been measured using the local currency as the
functional currency. An increase in the value of the United States dollar
increases costs incurred by the Company's international operations because many
of its component purchases are denominated in the United States dollar.
Changes in exchange rates may negatively affect the Company's consolidated net
sales (as expressed in United States dollars) and gross margins from
international operations. Effective January 30, 1995, most of the Company's
European sales are made from a U.S. dollar functional currency entity.
The purpose of the Company's hedging program is to reduce the Company's
exposure to the risk that the dollar-value equivalent of anticipated cash flows
will be adversely affected by changes in foreign currency exchange rates. The
Company attempts to reduce its exposure to currency fluctuations involving
anticipated, but not firmly committed, transactions and involving transactions
with firm foreign currency commitments through the use of purchased foreign
currency option contracts and forward contracts.
Realized and unrealized gains or losses and premiums on foreign currency
purchased option contracts that are designated and effective as hedges of
probable anticipated, but not firmly committed, foreign currency transactions
are deferred and recognized in income in the same period as the hedged
transaction. The risk of loss associated with purchased options is limited to
premium amounts paid for the option contracts, which could be significant.
Forward contracts designated as hedges of anticipated transactions are
accounted for on a mark-to-market basis and included in income as a component
of net sales or cost of sales, depending upon which transaction is hedged.
Transaction exposures representing firm foreign currency commitments are
generally hedged using foreign exchange forward contracts. Forward contracts
related to transaction exposures are accounted for on a mark-to-market basis
with realized and unrealized gains or losses included in financing and other
income (expense) as an offset to the underlying hedged transaction. The risk
of loss associated with forward contracts is limited to the exchange rate
differential from the time the contract is made until the time it is settled.
The Company enters into foreign currency purchased options and, to a lesser
extent, forward contracts to hedge a portion of its anticipated, but not firmly
committed, transactions including sales by international subsidiaries, which
includes international sales by a U.S. dollar functional currency entity and
intercompany shipments to certain international subsidiaries, and foreign
currency denominated purchases of certain components. Foreign currency
purchased options generally expire in twelve months or less and forward
contracts generally mature in three months or less. The principal hedge
currencies are the German mark, the British pound and the Japanese yen. At
July 30, 1995, the Company held purchased option contracts that were designated
and effective as hedges of anticipated sales by international subsidiaries with
a total notional amount of $644.9 million and a combined net realized and
unrealized loss of $7.7 million. At July 30, 1995, the Company held purchased
options that were designated and effective as hedges of foreign currency
denominated purchases with a total notional amount of $84.2 million and a
combined net realized and unrealized gain of $8.6 million. Forward contracts
with maturity dates of less than three months designated to hedge foreign
currency transaction exposures of $143.9 million were outstanding at July 30,
1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operating activities for the first six months
of 1996 was $75.6 million and represented the Company's primary source of cash
during the six-month period, along with $28.9 million from the issuance of
common stock under employee plans. Working capital totaled $850.8 million at
July 30, 1995 compared with $719.0 million at January 29, 1995. Days in
accounts receivable at the end of the second quarter of 1996 increased to 50
days from 47 days at the end of 1995. Days in accounts payable decreased
slightly to 43 days at the end of the second quarter of 1996 from 44 days at
the end of 1995. Inventory levels increased to 36 days of supply at the end of
the second quarter of 1996 from 32 days at the end of 1995. Maintaining a low
inventory level is dependent upon the Company's ability to achieve targeted
revenue and product mix, to further minimize complexities in its product line
and to maximize commonality of parts. There can be no assurance that the
Company will be able to maintain low inventory levels in future periods.
14
16
The Company used $45.8 million of cash during the first six months of 1996
to construct facilities and to acquire information systems and personal
computer office equipment. Capital expenditures for the second half of 1996
are expected to be approximately $75 million, primarily related to the
construction of manufacturing and administrative facilities, the acquisition
and development of an integrated management information system and the
acquisition of computer equipment for internal use. The Company believes that
its cash and short-term investments and its cash flow from operating activities
will be adequate to fund its capital expenditures planned for the remainder of
1996.
The Company has entered into a series of line of credit facilities, each
effective as of June 8, 1995. Each of the lines of credit bears interest at a
defined Base Rate or Eurocurrency Rate and has a covenant based on quarterly
maintenance of net worth. Maximum aggregate amounts available under the new
credit facilities are limited to $150 million less the aggregate of outstanding
letters of credit under these facilities. During the commitment period, the
Company is obligated to pay a fee on the unused portion of the credit
facilities. No borrowings or letters of credit were outstanding under these
credit facilities as of July 30, 1995, and the maximum available totaled $150
million.
The Company's subsidiary, Dell Receivables Corporation, has a Receivables
Purchase Agreement that expires June 22, 1996, pursuant to which the Company
may raise up to $100 million through the sale of interests in certain of its
accounts receivable. The Company is obligated to pay a commitment fee on the
unused portion of the amount available under the Receivables Purchase
Agreement. As of July 30, 1995, this facility was unused.
On July 21, 1995, the Company's stockholders approved a proposed amendment
to the Company's Certificate of Incorporation to increase the number of shares
of common stock, par value $.01 per share, that the Company is authorized to
issue from 100 million to 300 million. The additional authorized shares can be
used for any proper purpose approved by the Company's Board of Directors and
will provide the Company with the flexibility it may need in the future to
raise capital, negotiate acquisitions, restructure debt, issue stock dividends,
consummate stock splits or for other corporate purposes.
On February 21, 1995, the Company offered to pay a cash premium of $8.25
for each outstanding share of its Preferred Stock that was converted to common
stock. The offer of premium upon conversion was available to holders of the
Preferred Stock through the closing of the special conversion period on March
22, 1995. The Company also offered to register the resale of the shares of
common stock issued upon conversion of the Preferred Stock with the Securities
and Exchange Commission for a 50-day period, which ended June 15, 1995.
Holders of 1,190,000 shares of Preferred Stock elected to convert and, as a
result, received an aggregate of approximately 5.0 million shares of common
stock and $9.8 million in cash during the first quarter of 1996. The $9.8
million conversion premium and $0.5 million of expenses of the conversion offer
were treated as an additional dividend on the Preferred Stock for financial
reporting purposes.
During the first half of 1996, the Company granted approximately 260,000
shares of restricted stock to employees pursuant to its long-term incentive
plan. Due to the granting of these additional shares, the unearned
compensation associated with restricted stock grants has increased from $4.4
million at January 29, 1995 to $15.2 million at July 30, 1995. Such unearned
compensation is being amortized to expense over the vesting period of the
underlying restricted stock.
Repayment of the Company's $100 million in Notes, repayment of a loan in
the original amount of $14 million secured by one of its facilities in Round
Rock, Texas and payment of its operating lease commitments constitute the
Company's long-term commitments to use cash.
Management believes that sufficient resources will be available to meet the
Company's cash requirements through at least the next twelve months. Cash
requirements for periods beyond the next twelve months depend on the Company's
profitability, its ability to manage working capital requirements and its rate
of growth.
15
17
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has been named as a defendant in 30 repetitive stress injury
lawsuits, most of which are in New York state courts or United States District
Courts for the New York City area. Several are in state courts in New Jersey.
One is in the Federal District Court for the Eastern District of Pennsylvania,
and one is in Federal District Court in Kansas. The allegations in all of
these lawsuits are similar. Each plaintiff alleges that he or she suffers from
symptoms generally known as "repetitive stress injury," which allegedly were
caused by the design or manufacture of the keyboard supplied with the computer
the plaintiff used. The Company has denied or is in the process of denying the
claims and intends to vigorously defend the suits. The suits naming the
Company are just a few of many lawsuits of this type that have been filed,
often naming Apple, Atex, Compaq, IBM, Keytronic and other major suppliers of
keyboard products. The Company currently is not able to predict the outcome of
these suits. It is possible that the Company may be named in additional suits.
Ultimate resolution of the litigation against the Company may depend on
progress in resolving this type of litigation overall. However, the Company
does not believe that the outcome of these matters will have a material adverse
effect on the Company's financial condition or results of operations.
In March 1995, the Company was named along with twelve other personal
computer or computer monitor manufacturers in a complaint filed by the District
Attorney for Merced County, California. The complaint alleges that each of the
defendants has engaged in false or misleading advertising with regard to the
size of computer monitor screens and seeks unspecified damages and injunctive
relief. In May 1995, several other district attorneys in other California
counties joined this lawsuit as co-plaintiffs. The Company is vigorously
contesting the allegations of the complaint and does not believe that the
litigation of the complaint or its outcome will have a material adverse effect
on the Company's financial condition or results of operations.
In May 1995, the Company was named, along with two other personal computer
manufacturers and one computer monitor vendor, in a class action complaint
filed in the California Superior Court for Marin County. This case has been
transferred to Orange County, California. A second class action complaint,
naming the Company and 47 other manufacturers or vendors of personal
computer monitors, was filed in Santa Clara County, California and was served
on the Company in August 1995. The complaints allege that each of the
defendants has engaged in false or misleading advertising with regard to
the size of computer monitor screens. The plaintiffs seek restitution in
the form of refunds or product exchange, damages, punitive damages and
attorneys' fees. The Company plans to vigorously contest the allegations
of the complaints. This litigation is currently at a preliminary stage, and
no discovery has occurred to date. As such, it is too early for the Company
to adequately evaluate the likelihood of the plaintiffs prevailing on their
claims. There can be no assurance that an adverse determination in this
litigation would not have a material adverse effect on the Company's financial
condition or results of operations. Two other similar class action complaints
naming the Company and others as defendants have been filed in Orange County,
California; but as of September 11, 1995, the Company has not been served with
summons or any other notice of these additional actions.
For additional information about a Federal Trade Commission inquiry and a
State of California Attorney General investigation into the Company's
advertising and marketing claims regarding monitor screen sizes, see Item 3 of
the Company's Annual Report on Form 10-K for the fiscal year ended January 29,
1995.
On June 9, 1995, the Company was served with a class action complaint filed
in State District Court in Travis County, Texas. The complaint alleges that
the Company has included "used parts" in its "new" computer systems and has
failed to adequately inform its customers and prospective customers of that
practice. According to the complaint, these facts constitute fraud, negligent
misrepresentation, breach of contract and breach of warranty. The plaintiffs
seek refund of the purchase price for computer systems purchased from the
Company, damages in an unspecified amount, injunctive relief, interest and
attorneys' fees. The Company plans to vigorously contest the allegations of
the complaint. This litigation is currently at a preliminary stage, and no
discovery has occurred to date. As such, it is too early for the Company to
adequately evaluate the likelihood of the plaintiffs prevailing on their
claims. There can be no assurance that an adverse determination in this
litigation would not have a material adverse effect on the Company's financial
condition or results of operations.
16
18
ITEM 2. CHANGES IN SECURITIES
On July 21, 1995, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to increase the number of shares of
common stock, par value $.01 per share, that the Company is authorized to issue
from 100 million to 300 million. The amendment was filed in the office of the
Secretary of State of the State of Delaware on August 3, 1995. In accordance
with the provisions of the Delaware General Corporation Law, such amendment
became effective upon filing.
The additional authorized shares can be used for any proper purpose
approved by the Company's Board of Directors. The Company's Board of Directors
believes that the availability of additional shares of authorized common stock
will provide the Company with the flexibility it may need in the future to
raise capital, negotiate acquisitions, restructure debt, issue stock dividends,
consummate stock splits or for other corporate purposes. The additional shares
of common stock will allow shares to be issued without the expense and delay of
a special stockholders' meeting. The Company's Board of Directors does not
currently intend to seek further stockholder approval to issue any such shares,
except as may be required by applicable law or the rules of any stock exchange
or automated quotation system on which the Company's securities may be listed
or traded. The issuance by the Company of additional shares of common stock
may, depending on the context in which they are issued, dilute the stock
ownership of the Company's existing stockholders. The Company's stockholders
do not have any preemptive or similar rights to subscribe for or purchase any
additional shares of common stock that may be issued in the future. Also, the
issuance of additional shares could make it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company, thereby
delaying, deferring or preventing a change in control of the Company.
On May 18, 1995, the Company's Board of Directors approved two amendments
to the Company's Bylaws. The first amendment specifies that directors are
elected by plurality of votes of the shares present in person or represented by
proxy at stockholder meetings (rather than a majority of the voting power of
such shares) and effects certain other clarifying changes to the provision
dealing with quorum, adjournment and the vote required at stockholder meetings.
The second amendment eliminates the requirement that the annual stockholder
meeting be held within 13 months after the last annual stockholder meeting and
provides that the meeting may be held at such time as shall be designated by
the Board of Directors. Such amendment also effects certain clarifying changes
to the provision dealing with the calling of the annual stockholder meeting.
The Company does not believe that either of these amendments to the Bylaws has
a material effect on the rights of the Company's stockholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the Company's stockholders was held on July 21, 1995.
At that meeting, five separate proposals were submitted to a vote of the
Company's stockholders. Proposal 1 was a proposal to elect three Class I
directors (with Donald J. Carty, Paul O. Hirschbiel, Jr. and Thomas W. Luce III
being the nominees), one Class II director (with Klaus S. Luft being the
nominee) and one Class III director (with Michael A. Miles being the nominee).
Proposal 2 was a proposal to amend the Company's Certificate of Incorporation
to increase the number of authorized shares of common stock from 100 million to
300 million. Proposal 3 was a proposal to approve the Company's Executive
Incentive Bonus Plan. Proposal 4 was a proposal to approve an amendment to the
Dell Computer Corporation Incentive Plan to (a) increase the number of shares
of common stock that may be issued or transferred pursuant to awards thereunder
by 4 million shares (from 4,500,923 to 8,500,923) and (b) increase the minimum
exercise price for "nonstatutory" stock options and stock appreciation rights
issued thereunder to 75% (from 50%) of the fair market value of the common
stock on the date of grant, and to approve such plan as amended. Proposal 5
was a proposal to ratify the selection of Price Waterhouse LLP as the Company's
independent accountants for fiscal 1996.
At the close of business on the record date for the meeting (which was June
1, 1995), there were 45,243,441 shares of common stock issued and outstanding
and entitled to vote at the meeting. Holders of 41,388,957 shares of common
stock (representing a like number of votes) were present at the meeting, either
in
17
19
person or by proxy. The following table sets forth the results of the voting
on each of the five proposals (including, in the case of Proposal 1, the
results of the voting with respect to each nominee):
NUMBER OF VOTES
--------------------------------------------------------------------
BROKER
FOR AGAINST (A) ABSTAIN NON-VOTE
----------------- --------------- ------------- ------------
Proposal 1 -- Election of Directors:
Donald J. Carty . . . . . . . . . . 41,348,174 40,783 -- --
Paul O. Hirschbiel, Jr. . . . . . . 41,348,233 40,724 -- --
Thomas W. Luce III . . . . . . . . . 41,347,874 41,083 -- --
Klaus S. Luft . . . . . . . . . . . 41,347,704 41,253 -- --
Michael A. Miles . . . . . . . . . . 41,348,003 40,954 -- --
Proposal 2 -- Amendment to
Certificate of Incorporation . . . . 29,024,748 12,201,935 162,274 --
Proposal 3 -- Approval of Executive
Incentive Bonus Plan . . . . . . . . 38,586,196 1,346,204 201,728 1,254,829
Proposal 4 -- Approval of Amendment
to Incentive Plan . . . . . . . . . 25,150,428 9,185,168 210,465 6,842,896
Proposal 5 -- Ratification of Selection
of Independent Accountants . . . . . 41,256,040 34,188 98,729 --
__________
(a) In the case of Proposal 1 -- Election of Directors, constitutes number
of votes cast to withhold authority to vote in favor of the nominees.
Consequently, all of the proposals were passed by the stockholders. For
additional discussion concerning Proposal 2 -- Amendment to Certificate of
Incorporation, see "Item 2 -- Changes in Securities" above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed as a part of this Report:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
3.1 Certificate of Incorporation, dated October 21, 1987 and filed October 22, 1987
3.2 Certificate of Amendment to the Certificate of Incorporation, dated May 6, 1988 and filed
May 9, 1988
3.3 Certificate of Amendment to the Certificate of Incorporation, dated June 19, 1991 and filed
June 21, 1991
3.4 Certificate of Amendment to the Certificate of Incorporation, dated June 19, 1992 and filed
July 10, 1992
3.5 Certificate of Designation of Series A Convertible Preferred Stock, dated August 24, 1993
and filed August 25, 1993
3.6 Certificate of Correction Filed to Correct Certain Errors in the Certificate of Amendment of
Certificate of Incorporation Filed in the Office of the Secretary of State of Delaware on
May 9, 1988, and in the Certificate of Amendment of Certificate of Incorporation Filed in
the Office of the Secretary of State of Delaware on July 10, 1992, dated April 27, 1994 and
filed May 5, 1994
3.7 Certificate of Amendment to Certificate of Incorporation, dated July 31, 1995 and filed
August 3, 1995
3.8 Bylaws, dated October 22, 1987
3.9 Amendments to the Bylaws, adopted June 19, 1991
3.10 Amendments to the Bylaws, adopted May 18, 1995
18
20
10.1 Committed Credit Line Agreement, dated as of June 8, 1995, between NationsBank of Texas,
N.A. and the Company and certain of its subsidiaries, along with schedule identifying
substantially identical agreements and material differences between such other agreements
and the agreement filed
10.2 Severance Agreement, dated June 15, 1995, between the Company and Thomas L. Thomas
10.3 First Amendment to Dell Computer Corporation Incentive Plan, dated as of July 21, 1995
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
On June 2, 1995, the Company filed a Current Report on Form 8-K dated
May 2, 1995, which reported under Item 5 recent developments in certain legal
proceedings that are described under Item 1 of Part II of this Report.
19
21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DELL COMPUTER CORPORATION
September 12, 1995 /s/ Thomas J. Meredith
-----------------------------------
Thomas J. Meredith
Senior Vice President
(On behalf of the registrant and as
principal financial officer)
20
22
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3.1 -- Certificate of Incorporation, dated October 21, 1987 and filed October 22, 1987
3.2 -- Certificate of Amendment to the Certificate of Incorporation, dated May 6, 1988 and filed
May 9, 1988
3.3 -- Certificate of Amendment to the Certificate of Incorporation, dated June 19, 1991 and filed
June 21, 1991
3.4 -- Certificate of Amendment to the Certificate of Incorporation, dated June 19, 1992 and filed
July 10, 1992
3.5 -- Certificate of Designation of Series A Convertible Preferred Stock, dated August 24, 1993
and filed August 25, 1993
3.6 -- Certificate of Correction Filed to Correct Certain Errors in the Certificate of Amendment
of Certificate of Incorporation Filed in the Office of the Secretary of State of Delaware
on May 9, 1988, and in the Certificate of Amendment of Certificate of Incorporation Filed
in the Office of the Secretary of State of Delaware on July 10, 1992, dated April 27, 1994
and filed May 5, 1994
3.7 -- Certificate of Amendment to Certificate of Incorporation, dated July 31, 1995 and filed
August 3, 1995
3.8 -- Bylaws, dated October 22, 1987
3.9 -- Amendments to the Bylaws, adopted June 19, 1991
3.10 -- Amendments to the Bylaws, adopted May 18, 1995
10.1 -- Committed Credit Line Agreement, dated as of June 8, 1995, between NationsBank of Texas,
N.A. and the Company and certain of its subsidiaries, along with schedule identifying
substantially identical agreements and material differences between such other agreements
and the agreement filed
10.2 -- Severance Agreement, dated June 15, 1995, between the Company and Thomas L. Thomas
10.3 -- First Amendment to Dell Computer Corporation Incentive Plan, dated as of July 21, 1995
11 -- Statement Re Computation of Per Share Earnings
27 -- Financial Data Schedule
EX-3.1
2
CERTIFICATE OF INCORPORATION
1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
DELL COMPUTER CORPORATION
FIRST: The name of the corporation is DELL COMPUTER CORPORATION.
SECOND: The address of the registered office of the corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of the registered agent of the corporation at such
address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the corporation is to engage in any lawful business, act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of capital stock of the corporation
shall be thirty million (30,000,000), which shall consist of five million
(5,000,000) shares of Preferred Stock, of the par value of $.01 per share, and
twenty five million (25,000,000) shares of Common Stock, of the par value of
$.01 per share.
The following is a statement fixing certain of the designations and
powers, voting powers, preferences, and relative, participating, optional or
other rights of the Preferred Stock and the Common Stock of the corporation,
and the qualifications, limitations or restrictions thereof, and the authority
with respect thereto expressly granted to the Board of Directors of the
corporation to fix any such provisions not fixed by this Certificate:
I. Preferred Stock
The Board of Directors is hereby expressly vested with the authority to
adopt a resolution or resolutions providing for the issue of authorized but
unissued shares of Preferred Stock, which shares may be issued from time to
time in one or more series and in such amounts as may be determined by the
Board of Directors in such resolution or resolutions. The powers, voting
powers, designations, preferences, and relative, participating, optional or
other rights, if any, of each series of Preferred Stock and the qualifications,
2
limitations or restrictions, if any, of such preferences and/or rights
(collectively the "Series Terms"), shall be such as are stated and expressed in
a resolution or resolutions providing for the creation or revision of such
Series Terms (a "Preferred Stock Series Resolution") adopted by the Board of
Directors or a committee of the Board of Directors to which such responsibility
is specifically and lawfully delegated. The powers of the Board with respect
to the Series Terms of a particular series (any of which powers, other than
voting powers, may by resolution of the Board of Directors be specifically
delegated to one or more of its committees, except as prohibited by law) shall
include, but not be limited to, determination of the following:
(1) The number of shares constituting that series and the
distinctive designation of that series, or any increase or decrease
(but not below the number of shares thereof then outstanding) in such
number;
(2) The dividend rate on the shares of that series,
whether such dividends, if any, shall be cumulative, and, if so, the
date or dates from which dividends payable on such shares shall
accumulate, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(3) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of
such voting rights;
(4) Whether that series shall have conversion privileges
with respect to shares of any other class or classes of stock or of any
other series of any class of stock, and, if so, the terms and
conditions of such conversion, including provision for adjustment of
the conversion rate upon occurrence of such events as the Board of
Directors shall determine;
(5) Whether the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including
their relative rights of priority, if any, of redemption, the date or
dates upon or after which they shall be
-2-
3
redeemable, provisions regarding redemption notices, and the amount per
share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(6) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(7) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of
the corporation, and the relative rights of priority, if any, of
payment of shares of that series;
(8) The conditions or restrictions upon the creation of
indebtedness of the corporation or upon the issuance of additional
Preferred Stock or other capital stock ranking on a parity therewith,
or senior thereto, with respect to dividends or distribution of assets
upon liquidation;
(9) The conditions or restrictions with respect to the
issuance of, payment of dividends upon, or the making of other
distributions to, or the acquisition or redemption of, shares ranking
junior to the Preferred Stock or to any series thereof with respect to
dividends or distribution of assets upon liquidation; and
(10) Any other designations, powers, preferences, and
rights, including, without limitation any qualifications, limitations,
or restrictions thereof.
Any of the Series Terms, including voting rights, of any series may be
made dependent upon facts ascertainable outside the Certificate of
Incorporation and the Preferred Stock Series Resolution, provided that the
manner in which such facts shall operate upon such Series Terms is clearly and
expressly set forth in the Certificate of Incorporation or in the Preferred
Stock Series Resolution.
Subject to the provisions of this Article Fourth, shares of one or more
series of Preferred Stock may be
-3-
4
authorized or issued from time to time as shall be determined by and for such
consideration as shall be fixed by the Board of Directors or a designated
committee thereof, in an aggregate amount not exceeding the total number of
shares of Preferred Stock authorized by this Certificate of Incorporation.
Except in respect of series particulars fixed by the Board of Directors or its
committee as permitted hereby, all shares of Preferred Stock shall be of equal
rank and shall be identical. All shares of any one series of Preferred Stock
so designated by the Board of Directors shall be alike in every particular,
except that shares of any one series issued at different times may differ as to
the dates from which dividends thereon shall be cumulative.
II. Common Stock
1. Dividends. Subject to the provisions of any Preferred Stock
Series Resolution, the Board of Directors may, in its discretion, out of funds
legally available for the payment of dividends and at such times and in such
manner as determined by the Board of Directors, declare and pay dividends on
the Common Stock of the corporation.
No dividend (other than a dividend in capital stock ranking on a parity
with the Common Stock or cash in lieu of fractional shares with respect to such
stock dividend) shall be declared or paid on any share or shares of any class
of stock or series thereof ranking on a parity with the Common Stock in respect
of payment of dividends for any dividend period unless there shall have been
declared, for the same dividend period, like proportionate dividends on all
shares of Common Stock then outstanding.
2. Liquidation. In the event of any liquidation, dissolution or
winding up of the corporation, whether voluntary or involuntary, after payment
or provision for payment of the debts and other liabilities of the corporation
and payment or setting aside for payment of any preferential amount due to the
holders of any other class or series of stock, the holders of the Common Stock
shall be entitled to receive ratably any or all assets remaining to be paid or
distributed.
3. Voting Rights. Subject to any special voting rights set forth
in any Preferred Stock Series Resolution, the holders of the Common Stock of
the corporation shall be
-4-
5
entitled at all meetings of stockholders to one vote for each share of such
stock held by them.
III. Senior, Parity or Junior Stock
Whenever reference is made in this Article Fourth to shares "ranking
senior to" another class of stock or "on a parity with" another class of stock,
such reference shall mean and include all other shares of the corporation in
respect of which the rights of the holders thereof as to the payment of
dividends or as to distributions in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the corporation are
given preference over, or rank on an equality with, as the case may be, the
rights of the holders of such other class of stock. Whenever reference is made
to shares "ranking junior to" another class of stock, such reference shall mean
and include all shares of the corporation in respect of which the rights of the
holders thereof as to the payment of dividends and as to distributions in the
event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the corporation are junior and subordinate to the rights of the
holders of such class of stock.
Except as otherwise provided herein or in any Preferred Stock Series
Resolution, each series of Preferred Stock ranks on a parity with each other
and each ranks senior to the Common Stock. Common Stock ranks junior to the
Preferred Stock.
IV. Liquidation Notices
Written notice of any voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the corporation, stating a payment date and the
place where the distributable amounts shall be payable, shall be given by mail,
postage prepaid, not less than thirty (30) days prior to the payment date
stated therein, to the holders of record of the Preferred Stock, if any, at
their respective addresses as the same shall appear on the books of the
corporation.
V. Reservation and Retirement of Shares
The corporation shall at all times reserve and keep available, out of
its authorized but unissued shares of Common Stock or out of shares of Common
Stock held in its treasury, the full number of shares of Common Stock into
-5-
6
which all shares of any series of Preferred Stock having conversion privileges
from time to time outstanding are convertible.
Unless otherwise provided in a Preferred Stock Series Resolution with
respect to a particular series of Preferred Stock, all shares of Preferred
Stock redeemed or acquired (as a result of conversion or otherwise) shall be
retired and restored to the status of authorized but unissued shares.
VI. No Preemptive Rights
Subject to the provisions of any Preferred Stock Series Resolution, no
holder of shares of stock of the corporation shall have any preemptive or other
right, except as such rights are expressly provided by contract, to purchase or
subscribe for or receive any shares of any class, or series thereof, of stock
of the corporation, whether now or hereafter authorized, or any warrants,
options, bonds, debentures or other securities convertible into, exchangeable
for or carrying any right to purchase any shares of any class, or series
thereof, of stock; but subject to the provisions of any Preferred Stock Series
Resolution, such additional shares of stock and such warrants, options, bonds,
debentures or other securities convertible into, exchangeable for or carrying
any right to purchase any shares of any class, or series thereof, of stock may
be issued or disposed of by the Board of Directors to such persons, and on such
terms and for such lawful consideration, as in its discretion it shall deem
advisable or as to which the corporation shall have by binding contract agreed.
FIFTH: The incorporator of the corporation is Michael S. Dell, 1611
Headway Circle, Building Three, Austin, Texas 78754.
SIXTH: The name and mailing address of the person who is to serve as
the director of the corporation until the appropriate annual meeting of
stockholders or until his successor is elected and qualified is as follows:
Name Mailing Address
---- ---------------
Michael S. Dell 1611 Headway Circle,
Building Three
Austin, Texas 78754
-6-
7
The number of directors of the corporation shall be fixed as specified or
provided for in the by-laws of the corporation. Election of directors need not
be by written ballot unless the by-laws shall so provide. No holders of
Preferred Stock or Common Stock of the corporation shall have any right to
cumulate votes in the election of directors.
SEVENTH: Except as otherwise provided by statute, any action that
might have been taken at a meeting of stockholders by a vote of the
stockholders may be taken with the written consent of stockholders owning (and
by such written consent, voting) in the aggregate not less than the minimum
percentage of the total number of shares that by statute, this Certificate of
Incorporation or the by-laws are required to be voted with respect to such
proposed corporate action, provided, however, that the written consent of a
stockholder who would not have been entitled to vote upon the action if a
meeting were held shall not be counted; and further provided, that prompt
notice shall be given to all stockholders of the taking of such corporate
action without a meeting if less than unanimous written consent of all
stockholders who would have been entitled to vote on the action if a meeting
were held is obtained.
EIGHTH: In furtherance of, and not in limitation of, the powers
conferred by statute, the Board of Directors is expressly authorized to adopt,
amend or repeal the by-laws of the corporation or adopt new by-laws, without
any action on the part of the stockholders; provided, however, that no such
adoption, amendment, or repeal shall be valid with respect to by-law provisions
which have been adopted, amended, or repealed by the stockholders; and further
provided, that by-laws adopted or amended by the Directors and any powers
thereby conferred may be amended, altered, or repealed by the stockholders.
NINTH: A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for such liability as is expressly not
subject to limitation under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended to further limit or
eliminate such liability. Moreover, the corporation shall, to the fullest
extent permitted by law, indemnify any and all officers and directors of the
corporation, and may, to the fullest extent permitted by law or to such lesser
extent as is determined in the discretion of the
-7-
8
Board of Directors, indemnify any and all other persons whom it shall have
power to indemnify, from and against all expenses, liabilities or other matters
arising out of their status as such or their acts, omissions or services
rendered in such capacities. The corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability.
TENTH: The corporation shall have the right, subject to any express
provisions or restrictions contained in the Certificate of Incorporation or
by-laws of the corporation, from time to time, to amend the Certificate of
incorporation or any provision thereof in any manner now or hereafter provided
by law, and all rights and powers of any kind conferred upon a director or
stockholder of the corporation by the Certificate of Incorporation or any
amendment thereof are conferred subject to such right.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 21st
day of October, 1987.
/s/ MICHAEL S. DELL
-------------------------------
Michael S. Dell
-8-
EX-3.2
3
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORP.
1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
DELL COMPUTER CORPORATION
Dell Computer Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), does
hereby certify:
The amendment to the Company's Certificate of Incorporation set forth
in the following resolution was approved by the Board of Directors and
consented to in writing by the holders of a majority of the Common Stock and
Series A and Series B Preferred Stock of the Company, and was duly adopted in
accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware:
RESOLVED, that Michael S. Dell, E. Lee Walker or any
Vice-President of the Company be, and each of them hereby is,
authorized, empowered and directed in the name and on behalf of the
Company, to prepare and execute an amendment to the Certificate
of Incorporation of the Company to increase the number of authorized
shares of Common Stock which the Company has authority to issue from
25,000,000 shares to 50,000,000 shares, and take all action necessary
and proper to file such amendment with the Secretary of State of the
State of Delaware, and take all further actions necessary and proper
to obtain the approval of the holders of capital stock of the Company
necessary to adopt such amendment.
Article Fourth of the Certificate of Incorporation as amended shall
read in its entirety as follows:
"FOURTH: The total number of shares of capital stock of the
Corporation shall be fifty-five million (55,000,000), which
shall consist of five million (5,000,000) shares of Preferred
Stock, of the par value of $0.01 per share, and fifty million
(50,000,000) shares of Common Stock, of the par, value of
$0.01 per share."
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed and attested by its duly authorized officers this 6th day of May, 1988.
DELL COMPUTER CORPORATION
By: /s/ DONALD D. COLLIS
------------------------------------
Donald D. Collis, Vice President
ATTEST:
By: /s/ WILLIAM FOREMAN
-------------------------------------
William Foreman, Assistant Secretary
EX-3.3
4
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORP.
1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
DELL COMPUTER CORPORATION
Dell Computer Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The Board of Directors of the Corporation, acting at a meeting duly
called and held on April 16, 1991, did duly consent to, approve and
adopt the following resolution:
NOW THEREFORE BE IT RESOLVED that, the following amendments to the
Corporation's Certificate of Incorporation shall be put to a vote
of the stockholders of the Corporation and if approved by the vote
of a majority of the outstanding shares of the stock of the
Corporation, the Certificate of Incorporation shall be so amended:
1. Present Article Seventh shall be deleted in its entirety
and replaced with the following:
SEVENTH: The directors shall be classified, with respect
to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, as
shall be provided in the manner specified in the bylaws of
the Corporation, one class to be originally elected for a
term expiring on the annual meeting of stockholders to be
held in 1992, another class to be originally elected for a
term expiring at the annual meeting of stockholders to be
held in 1993, and another class to be originally elected
for a term expiring at the annual meeting of stockholders
to be held in 1994, with each class to hold office until
its successor is elected and qualified. At each annual
meeting of the stockholders of the Corporation, the
successors of the class of directors whose term expires at
that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the
third year following the year of their election.
Any director may be removed from office, but only for
cause, by a vote of the holders of a majority of the
shares then issued and outstanding. Cause shall mean
willful and gross misconduct by the director that is
materially adverse to the best interests of the
Corporation, as determined con-
1
2
clusively by a majority of the disinterested directors of
the Corporation.
Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be
filled by a majority of the directors then in office,
although less than a quorum, or the sole remaining
director, and shall not be filled by the stockholders; any
director so chosen shall hold office until the next
election of the class for which such director shall have
been chosen, and until his successor shall be duly elected
and shall qualify, unless sooner displaced.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the
holders of at least 66 2/3 % of the shares of the
Corporation's voting stock issued and outstanding shall be
required to alter, amend, adopt any provision inconsistent
with or repeal this Article Seventh.
2. Present Article Eighth shall be deleted and replaced in
its entirety with the following:
EIGHTH: Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a
duly called annual or special meeting of such holders and
may not be effected by any consent in writing by such
holders. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 66 2/3 % of
the shares of the Corporation's stock issued and out
standing shall be required to alter, amend, adopt any
provision inconsistent with or repeal this Article Eighth.
3. Present Article Ninth shall be renumbered as Article
Tenth, present Article Tenth renumbered as Article
Eleventh and the following Article Ninth added:
NINTH: The Board of Directors is hereby expressly
authorized to adopt, amend or repeal the by-laws of the
Corporation or adopt new by-laws, without any action on
the part of the stockholders, by the vote of a majority of
the directors; provided, however, that no such adoption,
amendment, or repeal shall be valid with respect to by-law
provisions which have been adopted, amended, or repealed
by the stockholders; and further provided, that by-laws
adopted or amended by the Directors
2
3
and any powers thereby conferred may be amended, altered,
or repealed by the stockholders. Notwithstanding the
foregoing and anything in this Certificate of
Incorporation to the contrary, Article II Section 1,
Article II Section 4, Article II Section 12, Article III
Section 6, Article III Section 7, Article III Section 12
and Article IX of the by-laws shall not be amended,
repealed, altered or added to by the stockholders, and no
provision inconsistent therewith shall be adopted by the
stockholders without the affirmative vote of the holders
of at least 66 2/3% of the Corporation's voting stock
issued and outstanding. Not withstanding anything
contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least
66 2/3% of the Corporation's voting stock issued and
outstanding shall be required to alter, amend, adopt any
provision inconsistent with or repeal this Article Ninth.
SECOND: The stockholders of the Corporation, acting at the Corporation's
Annual Meeting of Stockholders duly called and held on June 19,
1991, did duly consent to, approve and adopt the aforesaid
amendments to the Certificate of Incorporation of the Corporation.
THIRD: The aforesaid amendments have been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed on
its behalf by Michael S. Dell, the Chairman of its Board of Directors and its
Chief Executive Officer, and attested to by Richard E. Salwen, its Secretary,
this 19th day of June, 1991.
Dell Computer Corporation
By: /s/ MICHAEL S. DELL
-------------------------------------
Michael S. Dell, Chairman of the Board
and Chief Executive Officer
Attest:
/s/ RICHARD E. SALWEN
-----------------------------
Richard E. Salwen, Secretary
3
EX-3.4
5
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORP.
1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
DELL COMPUTER CORPORATION
Dell Computer Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The Board of Directors of the Corporation (the "Board"), acting at
a meeting duly called and held on April 30, 1992, did duly consent
to, approve and adopt the following resolution:
RESOLVED, that the Board recommends to the Shareholders an
increase in the number of shares of Common Stock (par
value $.01) which the Company has authority to issue from
fifty million shares to one hundred million shares.
SECOND: The stockholders of the Corporation, acting at the Corporation's
Annual Meeting of Stockholders duly called and held on June 18,
1992, did duly consent to, approve and adopt the aforementioned
amendment to the Certificate of Incorporation of the Corporation in
the following form:
Article Fourth of the Certificate of Incorporation as
amended shall read in its entirety as follows:
"FOURTH: The total number of shares of capital
stock of the Corporation shall be one hundred five
million (105,000,000), which shall consist of five
million (5,000,000) shares of Preferred Stock, of
the par value of $0.01 per share, and one hundred
million (100,000,000) shares of Common Stock, of
the par value of $0.01 per share."
THIRD: The aforesaid amendment has been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
1
2
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed on
its behalf by Michael S. Dell, the Chairman of its Board of Directors and its
Chief Executive Officer, and attested to by Richard E. Salwen, its Secretary,
this 19th day of June, 1992.
Dell Computer Corporation
By: /s/ MICHAEL S. DELL
-------------------------------------
Michael S. Dell, Chairman of the Board
and Chief Executive Officer
Attest:
/s/ RICHARD E. SALWEN
-----------------------------
Richard E. Salwen, Secretary
2
EX-3.5
6
CERTIFICATE OF DESIGNATION
1
Exhbit 3.5
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
DELL COMPUTER CORPORATION
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED, Michael S. Dell, Chairman of the Board and Chief
Executive Officer, and Richard E. Salwen, General Counsel and Corporate
Secretary, of DELL COMPUTER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), in accordance with the provisions of Section 103 thereof,
HEREBY CERTIFY:
FIRST: That, pursuant to the authority conferred upon the Board of
Directors in accordance with the provisions of Article Fourth of the
Certificate of Incorporation, as amended, of the Corporation, the Board of
Directors of the Corporation on August 24, 1993, adopted the following
resolution creating a series of 1,250,000 shares of Preferred Stock of the
Corporation designated as "Series A Convertible Preferred Stock":
RESOLVED, that, pursuant to the authority vested in
this Board of Directors in accordance with the
provisions of Article Fourth of this Company's
Certificate ofIncorporation, as amended, a
series of 1,250,000 shares of Preferred Stock, par
value $.01 per share, of the Company is hereby
created and authorized, and the designation,
amount and stated value of such series of Preferred
Stock and the voting powers, preferences and
relative, participating, optional and other
special rights of the shares of such series, and
the qualifications, limitations or restrictions
thereon, are as set forth in Exhibit A to these
resolutions which, for all purposes, shall be
deemed to be a part hereof.
SECOND: That the following is a true and correct copy of the provisions
set forth in Exhibit A to the foregoing resolution:
1. Designation and Amount. The shares of this series of
Preferred Stock shall be designated as Series A Convertible Preferred Stock
("Convertible Preferred Stock") and the number of shares constituting such
series shall be 1,250,000.
2. Rank. All shares of Convertible Preferred Stock shall rank
prior, both as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, to all of the Corporation's now or hereafter issued Common Stock
(the "Common Stock") and to all of the Corporation's hereafter issued capital
stock
2
ranking junior to the Convertible Preferred Stock both as to the payment of
dividends and as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, when and if
issued (the Common Stock and any such other capital stock being herein referred
to as "Junior Stock").
3. Dividends. The holders of Convertible Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds at the time legally available therefor, cash dividends
at the rate of $7.00 per annum per share, and no more, which shall be fully
cumulative, shall accrue without interest from the date of initial issuance of
such shares of Convertible Preferred Stock (on a daily basis whether or not
such amounts would be available at that time for distribution to holders of
shares of Convertible Preferred Stock) and shall be payable in cash quarterly
in arrears on February 15, May 15, August 15 and November 15 of each year
commencing November 15, 1993 (with respect to the period from such date of
initial issuance to November 15, 1993) (except that if any such date is a
Saturday, Sunday or legal holiday, then such dividend shall be payable on the
next day that is not a Saturday, Sunday or legal holiday) to holders of record
as they appear upon the stock transfer books of the Corporation on such record
dates, not more than sixty days nor less than ten days preceding the payment
dates for such dividends, as are fixed by the Board of Directors (or, to the
extent permitted by applicable law, a duly authorized committee thereof). For
purposes hereof, the term "legal holiday" shall mean any day on which banking
institutions are authorized to close in the City of New York, New York, or in
the State of Delaware. Subject to the next paragraph of this Section 3,
dividends on account of arrears for any past dividend period may be declared
and paid at any time, without reference to any regular dividend payment date.
The amount of dividends payable per share of Convertible Preferred Stock for
each quarterly dividend period shall be computed by dividing the annual
dividend amount by four. The amount of dividends payable for the initial
dividend period and any period shorter than a full quarterly period shall be
computed on the basis of a 360-day year of twelve 30-day months. No interest
shall be payable in respect of any dividend payment on the Convertible
Preferred Stock which may be in arrears.
No dividends or other distributions, other than dividends payable
solely in shares of Junior Stock, shall be declared, paid or set apart for
payment on shares of Junior Stock or any other capital stock of the Corporation
ranking junior as to dividends to the Convertible Preferred Stock (the Junior
Stock and any such other class or series of the Corporations's capital stock
being herein referred to as "Junior Dividend Stock"), unless and until all
accrued and unpaid dividends on the Convertible Preferred Stock for all
dividend payment periods ending on or before the payment date of such dividends
or other distributions on Junior Dividend Stock shall have been paid or
declared and set apart for payment.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Junior Dividend Stock or any other class or
series of the Corporation's capital stock ranking junior to the Convertible
Preferred Stock as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (the Junior
Stock and any other class or series of the Corporation's capital stock ranking
junior to the Convertible Preferred Stock as to such distributions being herein
referred to as "Junior Liquidation Stock") shall be made unless and until all
accrued and unpaid dividends on he Convertible Preferred Stock for all dividend
payment periods ending on or before such payment for such Junior Dividend Stock
or Junior Liquidation Stock shall have been paid or declared and set apart for
payment; provided, however, that the restrictions set forth in this sentence
shall not apply to the purchase or other acquisition of Junior Dividend Stock
or Junior Liquidation Stock either (A) pursuant to any employee or director
incentive or benefit plan or
2
3
arrangement (including any employment, severance or consulting agreement) of
the Corporation or any subsidiary of the Corporation heretofore or hereafter
adopted or (B) in exchange solely for Junior Stock.
No full dividends shall be declared, paid or set apart for payment
on shares of any class or series of the Corporation's capital stock hereafter
issued ranking, as to dividends, on a parity with the Convertible Preferred
Stock (any such class or series of the Corporation's capital stock being herein
referred to as "Parity Dividend Stock") for any period unless full cumulative
dividends have been, or contemporaneously are, paid or declared and set apart
for such payment on the Convertible Preferred Stock for all dividend payment
periods ending on or before the payment date of such dividends on Parity
Dividend Stock. No dividends may be paid on Parity Dividend Stock except on
dates on which dividends are paid on the Convertible Preferred Stock. All
dividends paid or declared and set apart for payment on the Convertible
Preferred Stock and the Parity Dividend Stock shall be paid or declared and set
apart for payment pro rata so that the amount of dividends paid or declared and
set apart for payment per share on the Convertible Preferred Stock and the
Parity Dividend Stock on any date shall in all cases bear to each other the
same ratio that accrued and unpaid dividends to the date of payment on the
Convertible Preferred Stock and the Parity Dividend Stock bear to each other.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Parity Dividend Stock or any class or series of
the Corporation's capital stock ranking on a parity with the Convertible
Preferred Stock as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (any such class
or series of the Corporation's capital stock being herein referred to as
"Parity Liquidation Stock") shall be made, and, other than dividends to the
extent permitted by the preceding paragraph, no distributions shall be
declared, paid or set apart for payment on shares of Parity Dividend Stock or
Parity Liquidation Stock, unless and until all accrued and unpaid dividends on
the Convertible Preferred Stock for all dividend payment periods ending on or
before such payment for, or the payment date of such distributions on, such
Parity Dividend Stock or Parity Liquidation Stock shall have been paid or
declared and set apart for payment; provided, however, that the restrictions
set forth in this sentence shall not apply to the purchase or other acquisition
of Parity Dividend Stock or Parity Liquidation Stock either (A) pursuant to any
employee or director incentive or benefit plan or arrangement (including any
employment, severance or consulting agreement) of the Corporation or any
subsidiary of the Corporation hereafter adopted or (B) in exchange solely for
Junior Stock.
Any reference to "distribution" contained in this Section 3 shall
not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
4. Liquidation Preference. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of shares of Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution to
stockholders an amount equal to the dividends accrued and unpaid on such shares
on the date of final distribution to such holders, whether or not declared,
without interest, plus a sum equal to $100.00 per share, and no more, before
any payment shall be made or any assets distributed to the holders of shares of
any Junior Liquidation Stock; provided, however, that such rights shall accrue
to the holders of shares of Convertible Preferred Stock only with respect to
assets (if any) remaining after the Corporation's payments with respect to the
liquidation preferences of the shares of any class or series of the
Corporation's capital stock hereafter issued ranking prior to the Convertible
Preferred Stock as to distributions of assets upon such liquidation,
dissolution or winding up ("Senior Liquidation Stock") are
3
4
fully met. The entire assets of the Corporation available for distribution to
stockholders after the liquidation preferences of the shares of Senior
Liquidation Stock are fully met shall be distributed ratably among the holders
of the Convertible Preferred Stock and any Parity Liquidation Stock in
proportion to the respective preferential amounts to which each is entitled
(but only to the extent of such preferential amounts). After payment in full
of the liquidation preferences of the shares of the Convertible Preferred
Stock, the holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. Neither a
consolidation or merger of the Corporation with or into any other corporation
nor a merger of any other corporation with or into the Corporation, nor a sale
or transfer of all or any part of the Corporation's assets for cash, securities
or other property, will be considered a liquidation, dissolution or winding up
of the Corporation.
5. Redemption at Option of the Corporation. The Convertible
Preferred Stock may not be redeemed by the Corporation prior to August 25,
1996. On and after such date, the Convertible Preferred Stock may be redeemed
by the Corporation, at its option on any date set by the Board of Directors, in
whole or in part at any time, subject to the limitations, if any, imposed by
the General Corporation Law of the State of Delaware, for an amount in cash
equal to the applicable price per share set forth for the date fixed for
redemption in the following table:
Date Fixed for Redemption Price
------------------------- ---------
On or after August 25, 1996, and on or before August 15, 1997 $104.67
After August 15, 1987, and on or before August 15, 1998 103.89
After August 15, 1998, and on or before August 15, 1999 103.11
After August 15, 1999, and on or before August 15, 2000 102.33
After August 15, 2000, and on or before August 15, 2001 101.56
After August 15, 2001, and on or before August 15, 2002 100.78
Any date after August 15, 2002 100.00
plus, in each case, an amount in cash equal to all per share dividends on the
Convertible Preferred Stock accrued and unpaid thereon, whether or not
declared, to but excluding the date fixed for redemption, such sum being
hereinafter referred to as the "Redemption Price."
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in such
other manner as the Board of Directors may determine to be fair, the shares to
be redeemed, or shall effect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the Convertible
Preferred Stock at any time outstanding until all dividends accrued and in
arrears upon all Convertible Preferred Stock then outstanding shall have been
paid in full for all past dividend periods.
Not more than sixty nor less than twenty days prior to the date
fixed for redemption by the Board of Directors, notice thereof by first class
mail, postage prepaid, shall be given to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, addressed to such holders at their
last address as shown upon the stock transfer books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption, the
Redemption Price, the place or places of payment, that
4
5
payment will be made upon presentation and surrender of the shares of
Convertible Preferred Stock, that on and after the date fixed for redemption
dividends will cease to accrue on such shares, the then-effective conversion
price pursuant to Section 6, and that the right of holders to convert shares of
Convertible Preferred Stock shall terminate at the close of business on the
fifth business day prior to the date fixed for redemption (unless the
Corporation defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares of
Convertible Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Convertible Preferred Stock. On or after
the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. If less than
all the shares evidenced by any such surrendered certificate are redeemed, a
new certificate shall be issued evidencing the unredeemed shares.
No fractional shares of Convertible Preferred Stock shall be issued
upon redemption of less than all Convertible Preferred Stock. If more than one
certificate evidencing shares of Convertible Preferred Stock shall be held at
one time by the same holder, the number of full shares issuable upon redemption
of less than all of such shares of Convertible Preferred Stock shall be
computed on the basis of the aggregate number of shares of Convertible
Preferred Stock so held. Instead of any fractional share of Convertible
Preferred Stock that would otherwise be issuable to a holder upon redemption of
less than all shares of Convertible Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional share in an amount equal to the
same fraction of the fair value per share of Convertible Preferred Stock (as
determined in good faith by the Board of Directors or in any manner prescribed
by the Board of Directors) at the close of business on the date fixed for
redemption.
Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Convertible Preferred Stock, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not have been surrendered,
dividends with respect to the shares so called shall cease to accrue on and
after the date fixed for redemption, such shares shall no longer be deemed
outstanding, the holders thereof shall cease to be stockholders of the
Corporation, and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall
terminate. If funds legally available for such purpose are not sufficient for
redemption of the shares of Convertible Preferred Stock which were to be
redeemed, then Section 9 shall apply and the certificates evidencing shares not
redeemed pursuant to Section 9 shall be deemed not to be surrendered, such
shares shall remain outstanding, the right of the holder to receive payment of
the Redemption Price for such shares shall terminate, and the right of holders
of shares of Convertible Preferred Stock thereafter shall continue to be only
those of a holder of shares of the Convertible Preferred Stock.
The shares of Convertible Preferred Stock shall not be subject to
the operation of any mandatory purchase, retirement or sinking fund.
5
6
6. Conversion Privilege.
(a) Right of Conversion. After the initial issuance of
the Convertible Preferred Stock, each share of Convertible Preferred Stock
shall be convertible at the option of the holder thereof, at any time prior to
the close of business on the fifth business day prior to the date fixed for
redemption of such shares as herein provided, into fully paid and nonassessable
shares of Common Stock, at the rate of that number of shares of Common Stock
for each full share of Convertible Preferred Stock that is equal to $100.00
divided by the conversion price applicable per share of Common Stock, or into
such additional or other securities, cash or property and at such other rates
as required in accordance with the provisions of this Section 6. For purposes
of this resolution, the "conversion price" applicable per share of Common Stock
shall initially be equal to $23.75 and shall be adjusted from time to time in
accordance with the provisions of this Section 6.
(b) Conversion Procedures. Any holder of shares of
Convertible Preferred Stock desiring to convert such shares into Common Stock
shall surrender the certificate or certificates evidencing such shares of
Convertible Preferred Stock at the office of the transfer agent for the
Convertible Preferred Stock, which certificate or certificates, if the
Corporation shall so require, shall be duly endorsed to the Corporation or in
blank, or accompanied by proper instruments of transfer to the Corporation or
in blank, accompanied by irrevocable written notice to the Corporation that the
holder elects so to convert such shares of Convertible Preferred Stock and
specifying the name or names (with address or addresses) in which a certificate
or certificates evidencing shares of Common Stock are to be issued.
Subject to Section 6(c) hereof, no payments or adjustments in
respect of dividends on shares of Convertible Preferred Stock surrendered for
conversion or on account of any dividend on the Common Stock issued upon
conversion shall be made upon the conversion of any shares of Convertible
Preferred Stock.
The Corporation shall, as soon as practicable after such
deposit of certificates evidencing shares of Convertible Preferred stock
accompanied by the written notice and compliance with any other conditions
herein contained, deliver at such office of such transfer agent to the person
for whose account such shares of Convertible Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person shall
be entitled as aforesaid, together with a cash adjustment in respect of any
fraction of a share of Common Stock as provided in Section 6(d). Such
conversion shall be deemed to have been made as of the date of such surrender
of the shares of Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the Common Stock deliverable upon conversion of
such Convertible Preferred Stock shall be treated for all purposes as the
record holder or holders of such Common Stock on such date.
(c) Adjustment of Conversion Price. The conversion price
at which a share of Convertible Preferred Stock is convertible into Common
Stock shall be subject to adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock exclusively in Common Stock
or shall pay or make a dividend or other distribution on any other class or
series of capital stock of the Corporation which dividend or distribution
includes Common Stock, the conversion price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution or to
6
7
exchange such Rights shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution or exchange,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this subparagraph (i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Corporation.
The Corporation shall not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock consisting exclusively of,
or shall otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share
(determined as provided in subparagraph (vii) of this Section 6(c)) of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights or warrants, the conversion price in effect at the
opening of business on the day following the date fixed for such determination
shall be reduced by multiplying such conversion price by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase would
purchase at such current market price and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this subparagraph (ii), the number
of shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation. The Corporation shall not issue any rights
or warrants in respect of shares of Common Stock held in the treasury of the
Corporation. In case any rights or warrants referred to in this subparagraph
(ii) in respect of which an adjustment shall have been made shall expire
unexercised within 45 days after the same shall have been distributed or issued
by the Corporation, the conversion price shall be readjusted at the time of
such expiration to the conversion price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iii) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the conversion
price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) Subject to the last sentence of this
subparagraph (iv), in case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness,
shares of any class or series of capital stock, cash or assets (including
securities, but excluding any rights or warrants referred to in subparagraph
(ii) of this Section 6(c), any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in subparagraph (i) of
7
8
this Section 6(c)), the conversion price shall be reduced so that the same
shall equal the price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (iv) by a fraction of which the numerator
shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 6(c)) of the Common Stock on the date fixed
for the payment of such distribution (the "Reference Date") less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day following the
Reference Date. If the Board of Directors determines the fair market value of
any distribution for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the current market price per share of Common
Stock pursuant to subparagraph (vii) of this Section 6(c). For purposes of
this subparagraph (iv), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of
Common Stock shall be deemed instead to be (1) a dividend or distribution of
the evidences of indebtedness, cash, assets or shares of capital stock other
than such shares of Common Stock or such rights or warrants (making any
conversion price reduction required by this subparagraph (iv)) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price reduction required
by subparagraph (i) or (ii) of this Section 6(c), except (A) the Reference Date
of such dividend or distribution as defined in this subparagraph (iv) shall be
substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution or to exchange such Rights,"
"the date fixed for the determination of stockholders entitled to receive such
rights or warrants" and "the date fixed for such determination" within the
meaning of subparagraphs (i) and (ii) of this Section 6(c) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of subparagraph (i) of this Section 6(c)).
(v) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock exclusively in cash
(excluding, in the case of any quarterly cash dividend on the Common Stock, the
portion thereof that does not exceed the per share amount of the next preceding
quarterly cash dividend on the Common Stock (as adjusted to appropriately
reflect any of the events referred to in subparagraphs (i), (ii), (iii), (iv),
(v) and (vi) of this Section 6(c)), or all of such quarterly cash dividend if
the amount thereof per share of Common Stock multiplied by four does not exceed
15% of the current market price per share (determined as provided in
subparagraph (vii) of this Section 6(c)) of the Common Stock on the Trading Day
(as defined in Section 6(i)) next preceding the date of declaration of such
dividend), the conversion price shall be reduced so that the same shall equal
the price determined by multiplying the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction contemplated by
this subparagraph (v) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (vii) of this
Section 6(c)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded as
provided above applicable to one share of Common Stock and the denominator
shall be such current market price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for the payment of such distribution.
8
9
(vi) In case a tender or exchange offer made by
the Corporation or any subsidiary of the Corporation for all or any portion of
the Corporation's Common Stock shall expire and such tender or exchange offer
shall involve the payment by the Corporation or such subsidiary of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) at the
last time (the "Expiration Time") tenders or exchanges may be made pursuant to
such tender or exchange offer (as it shall have been amended) that exceeds the
current market price per share (determined as provided in subparagraph (vii) of
this Section 6(c)) of the Common Stock on the Trading Day (as defined in
Section 6(i)) next succeeding the Expiration Time, the conversion price shall
be reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (vi) by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
multiplied by the current market price per share (determined as provided in
subparagraph (vii) of this Section 6(c)) of the Common Stock on the Trading Day
next succeeding the Expiration Time and the denominator shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the current market price per
share (determined as provided in subparagraph (vii) of this Section 6(c)) of
the Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(vii) For the purpose of any computation under
subparagraph (ii), (iv) and (v) of this Section 6(c), the current market price
per share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices (as defined in Section 6(i)) for the five
consecutive Trading Days prior to and including the date in question; provided,
however, that (1) if the "ex" date (as hereinafter defined) for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the conversion price pursuant to subparagraph (i),
(ii), (iii), (iv), (v) or (vi) above ("Other Event") occurs after the fifth
Trading Day prior to the day in question and prior to the "ex" date for the
issuance or distribution requiring such computation (the "Current Event"), the
Closing Price for each Trading Day prior to the "ex" date for such Other Event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the conversion price is so required to be adjusted as a result of such
Other Event, (2) if the "ex" date for any Other Event occurs after the "ex"
date for the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other Event
shall be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the conversion rice is so required to be adjusted as a result
of such Other Event, (3) if the "ex" date of any Other Event occurs on the "ex"
date for the Current Event, one of those events shall be deemed for purposes of
clauses (1) and (2) of this proviso to have an "ex" date occurring prior to the
"ex" date for the other event, and (4) if the "ex" date for the Current Event
is on or prior to the date in question, after taking into account any
adjustment required pursuant to clause (2) of this proviso, the Closing Price
for each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date in
question (as determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (iv)
or (v) of this Section 6(c), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the portion of the
rights, warrants, evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock.
9
10
For the purpose of any computation under subparagraph (vi) of this Section
6(c), the current market price per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing Prices for such
date in question and the next two succeeding Trading Days; provided, however,
that if the "ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the conversion price
pursuant to subparagraph (i), (ii), (iii), (iv), (v) or (vi) above occurs after
the Expiration Time for the tender or exchange offer requiring such computation
and or prior to the second Trading Day following the date in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the conversion price is so required to be adjusted as a
result of such other event. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender or exchange offer means
the first date on which the Common Stock trades regular way on such exchange or
in such market after the Expiration Time of such offer.
(viii) The Corporation may make such reductions in
the conversion price, in addition to those required by subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of this Section 6(c), as it considers to be advisable
to avoid or diminish an income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. The Corporation from time to time may reduce the conversion price by
any amount for any period of time if the period is at least twenty days, the
reduction is irrevocable during the period, and the Board of Directors of the
Corporation shall have made a determination that such reduction would be in the
best interest of the Corporation, which determination shall be conclusive.
Whenever the conversion price is reduced pursuant to the preceding sentence,
the Corporation shall mail to holders of record of the Convertible Preferred
Stock a notice of the reduction at least fifteen days prior to the date the
reduced conversion price takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price shall
be required unless such adjustment would require an increase or decrease of at
least 1% in the conversion price; provided, however, that any adjustments which
by reason of this subparagraph (ix) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(x) Whenever the conversion price is adjusted as
herein provided:
(1) The Corporation shall compute the
adjusted conversion price and shall prepare a certificate signed by the
Treasurer of the Corporation setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the transfer agent for the
Convertible Preferred Stock; and
(2) a notice stating the conversion price
has been adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is required such
notice shall be mailed by the Corporation to all record holders of shares of
Convertible Preferred Stock at their last addresses as they shall appear upon
the stock transfer books of the Corporation.
10
11
(d) No Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of Convertible Preferred Stock. If more
than one certificate evidencing shares of Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Convertible Preferred Stock so surrendered.
Instead of any fractional share of Common Stock that would otherwise be
issuable to a holder upon conversion of any shares of Convertible Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such
fractional share in an amount equal to the same fraction of the market price
per share of Common Stock (as determined by the Board of Directors or in any
manner prescribed by the Board of Directors, which, so long as the Common Stock
is quoted on the National Association of Securities Dealers, Inc. ("NASDAQ")
National Market System, shall be the reported last sale price regular way on
the NASDAQ National Market System) at the close of business on the day of
conversion.
(e) Reclassification, Consolidation, Merger or Sale of
Assets. In the event that the Corporation shall be a party to any transaction
(including without limitation any recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), any consolidation of the Corporation with, or
merger of the Corporation into, any other person, any merger of another person
into the Corporation (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Corporation), any sale or transfer of all of substantially
all of the assets of the Corporation or any compulsory share exchange) pursuant
to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provisions shall be made as
part of the terms of such transaction whereby the holder of each share of
Convertible Preferred Stock then outstanding shall have the right thereafter,
to convert such share only into (i) in the case of any such transaction other
than a Common Stock Fundamental Change and subject to funds being legally
available for such purpose under applicable law at the time of such conversion,
the kind and amount of securities, cash and other property receivable upon such
transaction by a holder of the number of shares of Common Stock of the
Corporation into which such share of Convertible Preferred Stock could have
been converted immediately prior to such transaction, after giving effect, in
the case of any Non-Stock Fundamental Change, to any adjustment in the
conversion price required by the provisions of Section 6(h), and (ii) in the
case of a Common Stock Fundamental Change, common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental Change in
an amount determined pursuant to the provisions of Section 6(h). The
Corporation or the person formed by such consolidation or resulting from such
merger or which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 6. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(f) Reservation of Shares; Etc. The Corporation shall at
all times reserve and keep available, free from preemptive rights out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of shares of its
Common Stock as shall from time to time be sufficient to effect the conversion
of all shares of Convertible Preferred Stock from time to time outstanding.
The Corporation shall from time to time, in accordance with the laws of the
State of Delaware, increase the authorized number of shares of Common Stock if
at any time
11
12
the number of shares of authorized and unissued Common Stock shall not be
sufficient to permit the conversion of all the then-outstanding shares of
Convertible Preferred Stock.
If any shares of Common Stock required to be reserved for
purposes of conversion of the Convertible Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal
or State law before such shares may be issued upon conversion, and an exemption
under Section 3(a)(9) of the Securities Act or similar exemption is not
available, the Corporation will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered or approved as the case may
be. If the Common Stock is quoted on the NASDAQ National Market System or any
other U.S. national securities exchange, the Corporation will, if permitted by
the rules of such exchange, list and keep listed on such exchange, upon
official notice of issuance, all shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock. The second sentence of this
paragraph shall apply only when the Convertible Preferred Stock shall have
become freely transferable pursuant to Rule 144(k) under the Securities Act or
if the shares of Common Stock issuable upon conversion are exempt from the
registration requirements of the Securities Act by operation of an exemption
referred to in the first sentence of this paragraph.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any
dividend (or any other distribution) on its Common Stock, other than (A) a
dividend payable in shares of Common Stock or (B) a dividend payable in cash
out of its retained earnings other than any special or nonrecurring or other
extraordinary dividend or (2) declare or authorize a redemption or repurchase
of in excess of 10% of the then-outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting
to all holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other rights or
warrants; or
(iii) of any reclassification of Common Stock
(other than a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the Corporation shall be
required, or of the sale or transfer of all or substantially all of the assets
of the Corporation or of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Convertible Preferred Stock, and shall cause to be mailed to the holders of
record of the Convertible Preferred Stock, at their last addresses as they
shall appear upon the stock transfer books of the Corporation, at lest fifteen
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase, rights or
warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is
12
13
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the
validity of the corporate action required to be specified in such notice).
(h) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Section 6 to the contrary, if any Fundamental Change
(as defined in Section 6(i)) occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change (as defined in
Section 6(i)), each share of Convertible Preferred Stock shall be convertible
solely into common stock of the kind and amount received by holders of Common
Stock as the result of such Common Stock Fundamental Change as more
specifically provided in the following clauses (h)(i) and (h)(ii).
For purposes of calculating any adjustment to be made pursuant to
this Section 6(h) in the event of a Fundamental Change, immediately after such
Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change
(as defined in Section 6(i)), the conversion price of the Convertible Preferred
Stock shall thereupon become the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental Change, but after giving effect
to any other prior adjustments effected pursuant to this Section 6, and (B) the
result obtained by multiplying the greater of the Applicable Price (as defined
in Section 6(i)) or the then applicable Reference Market Price (as defined in
Section 6(i)) by a fraction of which the numerator shall be $100.00 and the
denominator shall be (x) the then-current Redemption Price per share of
Convertible Preferred Stock or (y) for any Non-Stock Fundamental Change that
occurs before the Convertible Preferred Stock becomes redeemable by the
Corporation pursuant to Section 5, the applicable price per share set forth for
the date of such Non-Stock Fundamental Change in the following table:
Date of Non-Stock Fundamental Change Price
------------------------------------ ---------
After date of original issuance of Convertible $107.79
Preferred Stock and on or before August 15, 1994
After August 15, 1994, and on or before August 15, 1995 107.01
After August 15, 1995, and on or before August 15, 1996 106.23
After August 15, 1995, and on or before August 24, 1996 105.45
plus, in any case referred to in this clause (y), an amount equal to all per
share dividends on the Convertible Preferred Stock accrued and unpaid thereon,
whether or not declared, to but excluding the date of such Non-Stock
Fundamental Change; and
13
14
(ii) in the case of a Common Stock Fundamental
Change, the conversion price of the Convertible Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to this Section 6,
shall thereupon be adjusted by multiplying such conversion price by a fraction
of which the numerator shall be the Purchaser Stock Price (as defined in
Section 6(i)) and the denominator shall be the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which (A)
100% by value of the consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party (and cash, if any,
is paid with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common Stock
shall have been exchanged for, converted into or acquired for common stock (and
cash with respect to fractional interests) of the successor, acquiror or other
third party, the conversion price of the Convertible Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change shall thereupon be
adjusted by multiplying such conversion price by a fraction of which the
numerator shall be one (1) and the denominator shall be the number of shares of
common stock of the successor, acquiror, or other third party received by a
stockholder for one share of Common Stock as a result of such Common Stock
Fundamental Change.
(i) Definitions. The following definitions shall apply to
terms used in this Section 6:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock receive
only cash, the amount of cash received by a stockholder for one share of Common
Stock and (ii) in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the daily Closing Prices of the
Common Stock for the ten consecutive Trading Days prior to and including the
record date for the determination of the holders of Common Stock entitled to
receive securities, cash or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change, or, if there is no such
record date, the date upon which the holders of the Common Stock shall have the
right to receive such securities, cash or other property, in each case, as
adjusted in good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of Section 6(c).
(2) "Closing Price" of any common stock on any day shall
mean the last reported sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices regular way of the common stock in each case on the NASDAQ National
Market System, or, if the common stock is not quoted or admitted to trading on
such quotation system, on the principal national securities exchange or
quotation system on which the common stock is listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of the common stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting services, or, if not so available in
such manner, as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors of the Corporation for that purpose
or, if not so available in such manner, as otherwise determined in good faith
by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as determined in good faith
by the Board of Directors of the Corporation) of the consideration received by
holders of Common Stock consists of common stock that for each of the ten
consecutive Trading Days referred to with respect to such Fundamental Change in
14
15
Section 6(i)(1) above has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or quoted on
the NASDAQ National Market System; provided, however, that a Fundamental Change
shall not be a Common Stock Fundamental Change unless either (i) the
Corporation continues to exist after the occurrence of such Fundamental Change
and the outstanding shares of Convertible Preferred Stock continue to exist as
outstanding shares of Convertible Preferred Stock, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Corporation,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions, substantially similar to those of the Convertible Preferred
Stock.
(4) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted into,
acquired for or constitute solely the right to receive securities, cash or
other property (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification, recapitalization
or otherwise); provided, however, in the case of a plan involving more than
one such transaction or event, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Corporation shall be exchanged
for, converted into, or acquired for or constitute solely the right to receive
cash, securities, property or other assets, but the adjustment shall be based
upon the highest weighted average of consideration per share which a holder of
Common Stock could have received in such transactions or events as a result of
which more than 50% of the Common Stock of the Corporation shall have been
exchanged for, converted into, or acquired for or constitute solely the right
to receive cash, securities, property or other assets.
(5) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the average of the daily Closing Prices of
the common stock received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive such common
stock, or, if there is no such record date, the date upon which the holders of
the Common Stock shall have the right to receive such common stock, in each
case, as adjusted in good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv), (v) and (vi) of Section 6(c); provided, however, if no such
Closing Prices of the common stock for such Trading Days exist, then the
Purchaser Stock Price shall be set at a price determined in good faith by the
Board of Directors of the Corporation.
(7) "Reference Market Price" shall initially mean $12.75
(which is an amount equal to 66-2/3% of the reported last sale price for the
Common Stock on the NASDAQ National Market System on August 19, 1993), and in
the event of any adjustment to the conversion price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be adjusted
so that the ratio of the Reference Market Price to the conversion price after
giving effect to any such adjustment shall always be the same as the ratio of
$12.75 to the initial conversion price per share set forth in the last sentence
of Section 6(a).
15
16
(8) "Trading Day" shall mean a day on which securities
traded on the national securities exchange or quotation system or in the
over-the-counter market used to determined the Closing Price.
(j) Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of the Corporation
or pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Convertible Preferred Stock
was first designated, shall not be deemed to constitute an issuance of Common
Stock or exercisable, exchangeable or convertible securities by the Corporation
to which any of the adjustment provisions described above applies. There shall
also be no adjustment of the conversion price in case of the issuance of any
stock (or securities convertible into or exchangeable for stock) of the
Corporation except as specifically described in this Section 6. If any action
would require adjustment of the conversion price pursuant to more than one of
the provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value to holders of Convertible Preferred Stock.
(k) Certain Additional Rights. In case the Corporation
shall, by dividend or otherwise, declare or make a distribution on its Common
Stock referred to in Section 6(c)(iv) or 6(c)(v) (including, without
limitation, dividends or distributions referred to in the last sentence of
Section 6(c)(iv)), the holder of each share of Convertible Preferred Stock,
upon the conversion thereof subsequent to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which such share of Convertible Preferred Stock is
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that,
at the election of the Corporation (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all holders so
converting, the Corporation may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities of the
Corporation, pay such holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of a share of Convertible Preferred Stock
described in the immediately preceding sentence occurs prior to the payment
date for a distribution to holders of Common Stock which the holder of the
share of Convertible Preferred Stock so converted is entitled to receive in
accordance with the immediately preceding sentence, the Corporation may elect
(such election to be evidenced by a resolution of the Board of Directors) to
distribute to such holder a due bill for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets to
which such holder is so entitled, provided that such due bill (i) meets any
applicable requirements of the principal national securities exchange or other
market on which the Common Stock is then traded and (ii) requires payment or
delivery of such shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the date of
payment or delivery thereof to holders of shares of Common Stock receiving such
distribution.
16
17
7. Voting Rights.
(a) General. The holders of shares of Convertible
Preferred Stock will not have any voting rights except as set forth below or as
otherwise from time to time required by law. In connection with any right to
vote, each holder of a share of Convertible Preferred Stock will have one vote
for each share held. Any shares of Convertible Preferred Stock held by the
Corporation or any entity controlled by the Corporation shall not have voting
rights hereunder and shall not be counted in determining the presence of a
quorum.
(b) Default Voting Rights. Whenever dividends on the
Convertible Preferred Stock or any other class or series of Parity Dividend
Stock shall be in arrears in an aggregate amount equal to at least six
quarterly dividends (whether or not consecutive), (i) the number of members of
the Board of Directors of the Corporation shall be increased by two, effective
as of the time of election of such directors as hereinafter provided and (ii)
the holders of shares of Convertible Preferred Stock (voting separately as a
class with all the affected classes or series of Parity Dividend Stock upon
which like voting rights have been conferred and are exercisable) will have the
exclusive right to vote for and elect such two additional directors of the
Corporation at any meeting of stockholders of the Corporation at which
directors are to be elected held during the period such dividends remain in
arrears. The right of the holders of shares of Convertible Preferred Stock to
vote for such two additional directors shall terminate when all accrued and
unpaid dividends on the Convertible Preferred Stock and all other affected
classes or series of Parity Dividend Stock have been declared and paid or set
apart for payment. The term of office of all directors so elected shall
terminate immediately upon the termination of the right of the holders of
shares of Convertible Preferred Stock and such Parity Dividend Stock to vote
for such two additional directors, and the number of directors of the Board of
Directors of the Corporation shall immediately thereafter be reduced by two.
The foregoing right of the holders of shares of Convertible
Preferred Stock with respect to the election of two directors may be exercised
at any annual meeting of stockholders or at any special meeting of stockholders
held for such purpose. If the right to elect directors shall have accrued to
the holders of shares of Convertible Preferred Stock more than ninety days
preceding the date established for the next annual meeting of stockholders, the
President of the Corporation shall, within twenty days after the delivery to
the Corporation at its principal office of a written request for a special
meeting signed by the holders of at least 10% of all outstanding shares of
Convertible Preferred Stock call a special meeting of the holders of
Convertible Preferred Stock to be held within sixty days after the delivery of
such request for the purpose of electing such additional directors.
The holders of shares of Convertible Preferred Stock and any
Parity Dividend Stock referred to above voting as a class shall have the right
to remove without cause at any time and replace any directors such holders shall
have elected pursuant to this Section 7.
(c) Class Voting Rights. So long as the Convertible
Preferred Stock is outstanding, the Corporation shall 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 Convertible Preferred Stock voting separately as a class, (i) amend, alter
or repeal any provision of the Certificate of Incorporation or the By-Laws of
the Corporation, as amended, so as to affect adversely the relative rights,
preferences, qualifications, limitations or restrictions of the Convertible
Preferred Stock, (ii) create, authorize or issue, or reclassify any authorized
stock of the Corporation into, or increase the authorized amount of, any class
or series of the Corporation's capital stock ranking prior to the
17
18
Convertible Preferred Stock as to dividends or as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary of involuntary, or any security convertible into shares of such a
class or series, (iii) enter into a share exchange pursuant to which the
Convertible Preferred Stock would be exchanged for any other securities, or
(iv) merge or consolidate with or into any other Person or permit any other
Person to merge or consolidate with or into the Corporation, unless in the case
of clause (iii) or clause (iv) each share of Convertible Preferred Stock shall
remain outstanding and unaffected or shall be converted into or exchanged for
convertible preferred stock of the surviving entity having powers, preferences
and relative participating, optional and other rights, and qualifications,
limitations and restrictions thereof identical to a share of Convertible
Preferred Stock, except for changes that do not affect the holders of the
Convertible Preferred Stock adversely. A class vote on the part of the
Convertible Preferred Stock shall, without limitation, specifically not be
deemed to be required (except as otherwise required by law or resolution of the
Corporation's Board of Directors) in connection with (a) the authorization,
issuance or increase in the authorized amount of any shares of Junior Stock or
any class or series of the Corporation's capital stock that is both Parity
Dividend Stock and Parity Liquidation Stock; or (b) the authorization, issuance
or increase in the amount of any bonds, mortgages, debentures or other
obligations of the Corporation (other than those that may be covered by clause
(ii) of the preceding sentence).
8. Outstanding Shares. For purposes of this Certificate
of Designation, all shares of Convertible Preferred Stock issued by the
Corporation shall be deemed outstanding except (i) from the date fixed for
redemption pursuant to Section 5 hereof, all shares of Convertible Preferred
Stock that have been so called for redemption under Section 5, to the extent
provided thereunder; (ii) from the date of surrender of certificates evidencing
shares of Convertible Preferred Stock, all shares of Convertible Preferred
Stock converted into Common Stock; and (iii) from the date of registration of
transfer, all shares of Convertible Preferred Stock held of record by the
Corporation or any majority-owned subsidiary of the Corporation.
9. Partial Payments. Upon an optional redemption by the
Corporation, if at any time the Corporation does not pay amounts sufficient to
redeem all Convertible Preferred Stock, then such funds which are paid shall be
applied to redeem such shares of Convertible Preferred Stock as the Corporation
may designate by lot or in such other manner as the Board of Directors may
determine to be fair, or such redemption shall be effected pro rata.
10. Transfer Restrictions.
(a) Legends on Convertible Preferred Stock and Common
Stock.
(i) The certificates evidencing shares of
Convertible Preferred Stock shall, until the third anniversary of the date of
original issuance of Convertible Preferred Stock, unless otherwise agreed by
the Corporation and the holders of any such certificates, bear a legend
substantially to the following effect (with such changes therein as the
Corporation may specify in light of the nature of the holder of the certificate
and requirements of applicable securities laws):
This Security has not been and will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered, sold, pledged or otherwise transferred
except (A) by the initial investor (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
18
19
Rule 144A or to Dell Computer Corporation, (2) in an offshore
transaction in accordance with Rule 903 or Rule 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.
This Security and any related documentation may be amended or
supplemented from time to time to modify the restrictions on
and procedures for resales and other transfers of this
Security to reflect any change in applicable law or regulation
(or the interpretation thereof) or in practices relating to
the resale or transfer of restricted securities generally.
The holder of this Security shall be deemed, by the acceptance
of this Security, to have agreed to any such amendment or
supplement.
Until the third anniversary of the date of original issuance of the Convertible
Preferred Stock, certificates representing the shares of Common Stock issued
upon conversion of Convertible Preferred Stock shall bear a comparable legend.
The shares of Convertible Preferred Stock, and the shares of Common Stock
issued upon conversion thereof, shall be subject to the restrictions on
transfer set forth in the legends referred to above until the third anniversary
of the date of original issuance of the Convertible Preferred Stock or such
longer period as the Corporation determines to be required or appropriate under
applicable securities laws.
(ii) The certificates evidencing shares of
Convertible Preferred Stock (and shares of Common Stock issued upon conversion
thereof) initially issued to any "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3), or (7) under the Securities Act that is not a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act shall, until such time as the Corporation and the transfer agent
for the Convertible Preferred Stock or Common Stock, as the case may be, shall
have received evidence satisfactory to each of them that the transfer of such
shares of Convertible Preferred Stock or Common Stock has been effected in
accordance with the limitations on transfer set forth in paragraph (a)(i)
above, bear the following additional legend:
In connection with any transfer, the holder will deliver to
the registrar and transfer agent such certificates and other
information as it may reasonably require to confirm that the
transfer complies with the foregoing restrictions.
(b) Transfer Agent Requirements. The transfer agent for
the Convertible Preferred Stock and the transfer agent and registrar for the
Common Stock shall not be required to accept for registration of transfer any
Convertible Preferred Stock or Common Stock bearing the legend contained in
paragraph (a)(ii) above, except upon presentation of satisfactory evidence that
the restrictions on transfer of the Convertible Preferred Stock or Common Stock
referred to in the legend in paragraph (a)(i) have been complied with, all in
accordance with such reasonable regulations as the Corporation may from time to
time agree with the transfer agent for the Convertible Preferred Stock and the
transfer agent and registrar for the Common Stock.
19
20
(c) Delivery of Certain Information. At any time when the
Corporation is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a holder of shares of
Convertible Preferred Stock or shares of Common stock issued upon conversion
of Convertible Preferred Stock, the Corporation will promptly furnish or cause
to be furnished Rule 144A Information (as defined below) to such holder or to a
prospective purchaser of such shares designated by such holder, as the case may
be, in order to permit compliance by such holder with Rule 144A under the
Securities Act in connection with the resale of such shares by such holder
unless the provision of such information is no longer required by law to effect
resales of such Convertible Preferred Stock or such Common Stock under Rule
144A under the Securities Act; provided, however, the Corporation shall not be
required to furnish such information in connection with any request made on or
after the date which is three years from the later of (i) the date such shares
were acquired from the Corporation or (ii) the date such shares were last
acquired from an "affiliate" of the Corporation within the meaning of Rule 144
under the Securities Act; and provided further, however, the Corporation shall
not be required to furnish such information at any time to a prospective
purchaser located outside the United States who is not a "U.S. person" within
the meaning of Regulation S under the Securities Act if such shares of
Convertible Preferred Stock may then be sold to such prospective purchaser in
accordance with Rule 904 under the Securities Act (or any successor provision
thereto). "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities act (or any successor
provision thereto).
11. Status of Acquired Shares. Shares of Convertible
Preferred Stock redeemed by the Corporation or received upon conversion
pursuant to Section 6 or otherwise acquired by the Corporation, 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
shares of Convertible Preferred Stock.
12. Preemptive Rights. The Convertible Preferred Stock is
not entitled to any preemptive or subscription rights in respect of any
securities of the Corporation.
13. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid
under applicable law.
14. Miscellaneous. (a) The Corporation shall pay any
and all stock transfer and documentary stamp taxes that may be payable in
respect of any issuance or delivery of shares of Convertible Preferred Stock or
shares of Common Stock or other securities issued on account of Convertible
Preferred Stock pursuant hereto or certificates or instruments evidencing such
shares of securities. The Corporation shall not, however, be required to pay
any such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of Convertible Preferred Stock or Common Stock
or other securities in a name other than that in which the shares of
Convertible Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any
payment to any person with respect to any such shares or securities other than
a payment to the registered holder thereof, and shall not be required to make
any such issuance, delivery or payment unless and until the person otherwise
entitled to such issuance, delivery or payment
20
21
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid or is not
payable.
(b) In the event that a holder of shares of Convertible Preferred
Stock shall not by written notice designate the name in which shares of Common
Stock to be issued upon conversion or exchange of such shares should be
registered or to whom payment upon redemption of shares of Convertible
Preferred Stock should be made or the address to which the certificates or
instruments evidencing such shares, or such payment, should be sent, the
Corporation shall be entitled to register such shares, and make such payment,
in the name of the holder of such Convertible Preferred Stock as shown on the
records of the Corporation and to send the certificates of instruments
evidencing such shares, or such payment, to the address of such holder shown on
the records of the Corporation.
IN WITNESS WHEREOF, this Certificate of Designations, Series A
Convertible Preferred Stock has been executed as of August 24, 1993, on behalf
of Dell Computer Corporation by the Chairman of the Board and Chief Executive
Officer of the Corporation and attested by the General Counsel and Corporate
Secretary of the Corporation, who do hereby affirm, under penalties of perjury,
that the foregoing Certificate is the act and deed of the Corporation and that
the facts stated therein are true.
Dell Computer Corporation
By: /s/ MICHAEL S. DELL
-------------------------------------
Michael S. Dell, Chairman of the Board
and Chief Executive Officer
Attest:
/s/ RICHARD E. SALWEN
-----------------------------
Richard E. Salwen,
General Counsel and
Corporate Secretary
21
EX-3.6
7
CERTIFICATE OF CORRECTION
1
EXHIBIT 3.6
CERTIFICATE OF CORRECTION
FILED TO CORRECT CERTAIN ERRORS IN THE
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE
ON MAY 9,1988, AND IN THE
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE
ON JULY 10, 1992
Dell Computer Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That in the Certificate of Amendment filed with the Secretary of State
of Delaware on May 9, 1988 (the: "1988 Certificate of Amendment"), it was
incorrectly stated that:
"Article Fourth of the Certificate of Incorporation as amended shall
read in its entirety as follows:"
That such sentence in the 1988 Certificate of Amendment in its
corrected form is as follows:
"The first paragraph of Article Fourth of the Certificate of
incorporation as amended shall read in its entirety as follows:"
That in the second sentence of Paragraph SECOND of the Certificate of
Amendment filed with the Secretary of State of Delaware on July 10, 1992 (the
"1992 Certificate of Amendment"), it was incorrectly stated that:
"Article Fourth of the Certificate of Incorporation as amended shall
read in its entirety as follows:"
That the second sentence of Paragraph SECOND of the 1992 Certificate of
Amendment in its corrected form is as follows:
"The first paragraph of Article Four of the Certificate of
Incorporation as amended shall read in its entirety as follows:"
2
IN WITNESS WHEREOF, Dell Computer Corporation has caused its corporate
seal to be hereunto affixed, and this Certificate to be signed by Michael S.
Dell, its Chairman of the Board and Chief Executive Officer, and attested by
Roger Bailey, its Assistant Secretary this 27th day of April, 1994.
Dell Computer Corporation
By: /s/ MICHAEL S. DELL
-------------------------------------
Michael S. Dell
Chairman of the Board
Chief Executive Officer
Attest:
By: /s/ ROGER BAILEY
------------------------
Roger Bailey
Assistant Secretary
2
EX-3.7
8
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORP.
1
EXHIBIT 3.7
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
DELL COMPUTER CORPORATION
Dell Computer Corporation (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify as follows:
FIRST: The Board of Directors of the Company (the "Board"), acting at
a meeting duly called and held on May 18, 1995 in accordance with the
applicable provisions of the DGCL and the Company's Bylaws, did duly adopt
resolutions (a) approving the amendment to the Company's Certificate of
Incorporation described herein, (b) directing that such amendment be submitted
to the stockholders of the Company for consideration at the Company's Annual
Meeting of Stockholders held on July 21, 1995 and (c) directing that, upon
approval and adoption of such amendment by the stockholders of the Company,
this Certificate of Amendment be executed and filed with the Secretary of State
of the State of Delaware.
SECOND: The stockholders of the Company, acting at the Company's
Annual Meeting of Stockholders duly called and held on July 21, 1995 in
accordance with the applicable provisions of the DGCL and the Company's Bylaws,
did duly consent to, approve and adopt such amendment to the Company's
Certificate of Incorporation.
THIRD: The first paragraph of Article Fourth of the Company's
Certificate of Incorporation is hereby amended to read in its entirety as
follows:
"FOURTH: The total number of shares of capital stock
of the Corporation shall be three hundred and five million
(305,000,000), which shall consist of five million (5,000,000)
shares of Preferred Stock, of the par value of $.01 per share,
and three hundred million (300,000,000) shares of Common Stock,
of the par value of $.01 per share."
Such amendment having been duly adopted in accordance with the
provisions of Section 242 of the DGCL and the applicable provisions of the
Company's Certificate of Incorporation and Bylaws, the Company has caused this
Certificate of Amendment to be executed and attested by its duly authorized
officers on July 31, 1995.
Dell Computer Corporation
By: /s/ MICHAEL S. DELL
-------------------------------------
Michael S. Dell, Chairman of the Board
and Chief Executive Officer
Attest:
/s/ THOMAS H. WELCH, JR.
--------------------------
Thomas H. Welch, Jr.,
Assistant Secretary
EX-3.8
9
BYLAWS DATED OCTOBER 22, 1987
1
EXHIBIT 3.8
BYLAWS
OF
DELL COMPUTER CORPORATION
A DELAWARE CORPORATION
Date of Adoption:
October 22, 1987
2
BYLAWS
TABLE OF CONTENTS
Article I. Offices
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article II. Stockholders
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Quorum; Adjournment of Meetings . . . . . . . . . . . . . . . . . . . 1
Section 3. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Stock List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 8. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 9. Voting; Elections; Inspectors . . . . . . . . . . . . . . . . . . . . 5
Section 10. Conduct of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 11. Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 12. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . 6
Article III. Board of Directors
Section 1. Power; Number; Term of Office . . . . . . . . . . . . . . . . . . . . 7
Section 2. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3. Place of Meetings; Order of Business . . . . . . . . . . . . . . . . 7
Section 4. First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8. Vacancies; Increases in the Number of Directors . . . . . . . . . . . 8
Section 9. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Action Without a Meeting; Telephone Conference
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-i-
3
Article IV. Committees
Section 1. Designation; Powers . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Procedure; Meetings; Quorum . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Substitution of Members . . . . . . . . . . . . . . . . . . . . . . . 11
Article V. Officers
Section 1. Number, Titles and Term of Office . . . . . . . . . . . . . . . . . . 11
Section 2. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. Powers and Duties of the Chief Executive Officer . . . . . . . . . . 12
Section 6. Powers and Duties of the Chairman of the Board . . . . . . . . . . . 12
Section 7. Powers and Duties of the President . . . . . . . . . . . . . . . . . 12
Section 8. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 10. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 13. Action with Respect to Securities of
Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 14
Article VI. Indemnification of Directors, Officers, Employees and Agents
Section 1. Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . 14
Section 2. Indemnification of Employees and Agents . . . . . . . . . . . . . . . 15
Section 3. Right of Claimant to Bring Suit . . . . . . . . . . . . . . . . . . . 15
Section 4. Nonexclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . 16
Section 5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6. Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article VII. Capital Stock
Section 1. Certificates of Stock . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3. Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4. Regulations Regarding Certificates . . . . . . . . . . . . . . . . . 18
Section 5. Lost or Destroyed Certificates . . . . . . . . . . . . . . . . . . . 18
-ii-
4
Article VIII. Miscellaneous Provisions
Section 1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3. Notice and Waiver of Notice . . . . . . . . . . . . . . . . . . . . . 19
Section 4. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5. Facsimile Signatures . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6. Reliance upon Books, Reports and Records . . . . . . . . . . . . . . 20
Article IX. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-iii-
5
DELAWARE BYLAWS
OF
DELL COMPUTER CORPORATION
Article I
Offices
Section 1. Registered Office. The registered office of the
Corporation required by the General Corporation Law of the State of Delaware to
be maintained in the State of Delaware, shall be the registered office named in
the original Certificate of Incorporation of the Corporation, or such other
office as may be designated from time to time by the Board of Directors in the
manner provided by law. Should the Corporation maintain a principal office
within the State of Delaware such registered office need not be identical to
such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
Article II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall
be held at the principal office of the Corporation, or at such other place
within or without the State of Delaware as shall be specified or fixed in the
notices or waivers of notice thereof.
Section 2. Quorum; Adjournment of Meetings. Unless otherwise
required by law or provided in the Certificate of Incorporation or these
bylaws, the holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders for the transaction of
business and the act of a majority of such stock so represented at any meeting
of stockholders at which a quorum is present shall constitute the act of the
meeting of stockholders. The stockholders present at a duly
6
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at such meeting. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 3. Annual Meetings. An annual meeting of the stockholders,
for the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the State of Delaware, on such
date, and at such time as the Board of Directors shall fix and set forth in the
notice of the meeting, which date shall be within thirteen (13) months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), or by a majority of the Board of Directors, and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent
(10%) of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing
-2-
7
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors of the Corporation may fix, in
advance, a date as the record date for any such determination of stockholders,
which date shall not be more than sixty (60) days nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action.
If the Board of Directors does not fix a record date for any meeting
of the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
day next preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If,
in accordance with Section 12 of this Article II, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or at the direction
of the Chairman of the Board (if any) or the President, the Secretary or the
other person(s) calling the meeting to each stockholder entitled to vote
thereat not less than ten (10) nor more than sixty (60) days before the date of
the meeting. Such notice may be delivered either personally or by mail. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the
-3-
8
stockholder at his address as it appears on the records of the Corporation.
Section 7. Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in the name of such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The stock list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to a corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy. Proxies for use at any meeting of stockholders shall be filed
with the Secretary, or such other officer as the Board of Directors may from
time to time determine by resolution, before or at the time of the meeting.
All proxies shall be received and taken charge of and all ballots shall be
received and canvassed by the secretary of the meeting who shall decide all
questions touching upon the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless
the proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all the powers of voting or giving consents thereby conferred,
or if only one be present, then such
-4-
9
powers may be exercised by that one; or, if an even number attend and a
majority do not agree on any particular issue, each proxy so attending shall be
entitled to exercise such powers in respect of the same portion of the shares
as he is of the proxies representing such shares.
Section 9. Voting; Elections; Inspectors. Unless otherwise required
by law or provided in the Certificate of Incorporation, each stockholder shall
have one vote for each share of stock entitled to vote which is registered in
his name on the record date for the meeting. Shares registered in the name of
another corporation, domestic or foreign, may be voted by such officer, agent
or proxy as the bylaw (or comparable instrument) of such corporation may
prescribe, or in the absence of such provision, as the Board of Directors (or
comparable body) of such corporation may determine. Shares registered in the
name of a deceased person may be voted by his executor or administrator, either
in person or by proxy.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however,
that upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting a stock vote
shall be taken. Every stock vote shall be taken by written ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of
the meeting may appoint one or more inspectors, each of whom shall subscribe an
oath or affirmation to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of his ability.
Such inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
-5-
10
Section 10. Conduct of Meetings. The meetings of the stockholders
shall be presided over by the Chairman of the Board (if any) , or if he is not
present, by a chairman elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then a secretary shall be appointed by the
chairman of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussion as seem
to him in order. Unless the chairman of the meeting of stockholders shall
otherwise determine, the order of business shall be as follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting
called for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
Section 11. Treasury Stock. The Corporation shall not vote, directly
or indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking
-6-
11
of the corporate action without a meeting by less than a unanimous written
consent shall be given by the Secretary to those stockholders who have not
consented in writing.
Article III
Board Of Directors
Section 1. Power; Number; Term of Office. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
The number of directors which shall constitute the whole Board of
Directors, shall be determined from time to time by resolution of the Board of
Directors (provided that no decrease in the number of directors which would
have the effect of shortening the term of an incumbent director may be made by
the Board of Directors). If the Board of Directors makes no such
determination, the number of directors shall be the number set forth in the
Certificate of Incorporation. Each director shall hold office for the term for
which he is elected, and until his successor shall have been elected and
qualified or until his earlier death, resignation or removal.
Unless otherwise provided in the Certificate of Incorporation,
directors need not be stockholders nor residents of the State of Delaware.
Section 2. Quorum. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 3. Place of Meeting; Order of Business. The directors may
hold their meetings and may have an office and keep the books of the
Corporation, except as otherwise provided by law, in such place or places,
within or without the State of Delaware, as the Board of Directors may from
time to time determine by resolution. At all meetings of the Board of
Directors business shall be transacted in such order as shall from time to time
be determined by the
-7-
12
Chairman of the Board (if any) , or by resolution of the Board of Directors.
Section 4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which
a quorum shall be present, held next after the annual meeting of stockholders,
the Board of Directors shall proceed to the election of the officers of the
Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), or, on the
written request of any two directors, by the Secretary, in each case on at
least twenty-four (24) hours personal, written, telegraphic, cable or wireless
notice to each director. Such notice, or any waiver thereof pursuant to
Article VIII, Section 3 hereof, need not state the purpose or purposes of such
meeting, except as may otherwise be required by law or provided for in the
Certificate of Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided that, if the
Certificate of Incorporation expressly grants to stockholders the right to
cumulate votes for the election of directors and if less than the entire board
is to be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which such director is a
part.
Section 8. Vacancies; Increases in the Number of Directors. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
-8-
13
directors may be filled by a majority of the directors then in office, although
less than a quorum, or a sole remaining director; and any director so chosen
shall hold office until the next annual election and until his successor shall
be duly elected and shall qualify, unless sooner displaced.
If the directors of the Corporation are divided into classes, any
directors elected to fill vacancies or newly created directorships shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be duly elected and shall
qualify.
Section 9. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority
to fix the compensation of directors.
Section 10. Action Without a Meeting; Telephone Conference Meeting.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or ritings are filed with the
minutes of proceedings of the Board of Directors or committee. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors,
may participate in a meeting of such Board of Directors or committee, as the
case may be, by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 11. Approval or Ratification of Acts or Contract by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or
-9-
14
ratification at any annual meeting of the stockholders, or at any special
meeting of the stockholders called for the purpose of considering any such act
or contract, and any act or contract that shall be approved or be ratified by
the vote of the stockholders holding a majority of the issued and outstanding
shares of stock of the Corporation entitled to vote and present in person or by
proxy at such meeting (provided that a quorum is present) , shall be as valid
and as binding upon the Corporation and upon all the stockholders as if it has
been approved or ratified by every stockholder of the Corporation. In
addition, any such act or contract may be approved or ratified by the written
consent of stockholders holding a majority of the issued and outstanding shares
of capital stock of the Corporation entitled to vote and such consent shall be
as valid and as binding upon the Corporation and upon all the stockholders as
if it had been approved or ratified by every stockholder of the Corporation.
Article IV
Committees
Section 1. Designation; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation
and the Board of Directors shall designate the chairman of such committee. Any
such designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that
no such committee shall have the power or authority of the Board of Directors
in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution of the Corporation, or amending,
altering or repealing the bylaws or adopting new bylaws for the Corporation
and, unless such resolution or the Certificate of Incorporation expressly so
provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock. Any such designated committee
may authorize the seal of the Corporation to be affixed to all papers which may
require
-10-
15
it. In addition to the above such committee or committees shall have such
other powers and limitations of authority as may be determined from time to
time by resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings; Quorum. Any committee designated
pursuant to Section 1 of this Article shall keep regular minutes of its
proceedings and report the same to the Board of Directors when requested, shall
fix its own rules or procedures, and shall meet at such times and at such place
or places as may be provided by such rules, or by resolution of the such
committee or resolution of the Board of Directors. At every meeting of any
such committee, the presence of a majority of all the members thereof shall
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the adoption by it of any resolution.
Section 3. Substitution of Members. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a Chief Executive Officer, President, one or more Vice
Presidents (any one or more of whom may be designated Executive Vice President
or Senior Vice President), a Treasurer, a Secretary and, if the Board of
Directors so elects, a Chairman of the Board and such other officers as the
Board of Directors may from time to time elect or appoint. Each officer shall
hold office until his successor shall be duly elected and shall qualify or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Any number of offices may he held by the same
person, unless the Certificate of Incorporation provides otherwise. Except for
the Chairman of the Board, if any, no officer need be a director.
-11-
16
Section 2. Salaries. The salaries or other compensation of the
officers and agents of the Corporation shall be fixed from time to time by the
Board of Directors.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer. The
Chairman of the Board shall be the chief executive officer of the Corporation
unless the Board of Directors designates the President as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any) , the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of
the Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 6. Powers and Duties of the Chairman of the Board. If
elected, the Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors; and he shall have such other powers
and duties as designated in these bylaws and as from time to time may be
assigned to him by the Board of Directors.
Section 7. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
-12-
17
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board and
the Chief Executive Officer or if there be no Chairman of the Board or Chief
Executive Officer, preside at all meetings of the stockholders and (should he
be a director) of the Board of Directors; and he shall have such other powers
and duties as designated in accordance with these bylaws and as from time to
time may be assigned to him by the Board of Directors.
Section 8. Vice Presidents. The Vice Presidents shall perform such
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 9. Treasurer. The Treasurer shall have responsibility for
the custody and control of all the funds and securities of the Corporation,
and he shall have such other powers and duties as designated in these bylaws
and as from time to time may be assigned to him by the Board of Directors. He
shall perform all acts incident to the position of Treasurer, subject to the
control of the chief executive officer and the Board of Directors; and he
shall, if required by the Board of Directors, give such bond for the faithful
discharge of his duties in such form as the Board of Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer shall
have the usual powers and duties pertaining to his office, together with such
other powers and duties as designated in these bylaws and as from time to time
may be assigned to him by the chief executive officer or the Board of
Directors.
Section 11. Secretary. The Secretary shall keep the minutes of
all-meetings or the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the
seal of the Corporation to all contracts of the Corporation and attest the
affixation of the seal of the Corporation thereto; he may sign with the other
appointed officers all certificates for shares of capital stock of the
Corporation; he shall have charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors may
direct, all of which shall at all reasonable times be open to inspection of any
director upon application at the office of the Corporation during business
hours; he shall have such other powers and duties
-13-
18
as designated in these bylaws and as from time to time may be assigned to him
by the Board of Directors; and he shall in general perform all acts incident to
the office of Secretary, subject to the control of the chief executive officer
and the Board of Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary shall
have the usual powers and duties pertaining to his office, together with such
other powers and duties as designated in these bylaws and as from time to time
may be assigned to him by the chief executive officer or the Board of
Directors. The Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the chief executive
officer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders of or
with respect to any action of security holders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and
all rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
Article VI
Indemnification Of Directors, Officers, Employees And Agents
Section 1. Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding") , by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was or has agreed
to become a director or officer of the Corporation or is or was serving or has
agreed to serve at the request of the Corporation as a director or officer of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or having agreed to
serve as a director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law,
-14-
19
as the same exists or may hereafter be amended, (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment) against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve in the
capacity which initially entitled such person to indemnity hereunder and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnification conferred
in this Article VI shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
current, former or proposed director or officer in his or her capacity as a
director or officer or proposed director or officer (and not in any other
capacity in which service was or is or has been agreed to be rendered by such
person while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnified person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified person is not entitled to be
indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in
this Article.
Section 3. Right of Claimant to Bring Suit. If a written claim
received by the Corporation from or on behalf of an indemnified party under
this Article VI is not paid in full by the Corporation within ninety days after
such
-15-
20
receipt, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 4. Nonexclusivity of Rights. The right to indemnification
and the advancement and payment of expenses conferred in this Article VI shall
not be exclusive of any other right which any person may have or hereafter
acquire under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was Serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
-16-
21
Section 6. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director
and officer of the Corporation as to costs, charges and expenses (including
attorneys' fees) , judgments, fines, and amounts paid in settlement with
respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Article VI that shall not have been invalidated and to the
fullest extent permitted by applicable law.
Article VII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the
Chairman of the Board (if any) , President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
certifying the number of shares (and, if the stock of the Corporation shall be
divided into classes or series, the class and series of such shares) owned by
such stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures
shall have been placed upon any such certificate or certificates shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued by the Corporation, such certificate may nevertheless be issued by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The stock certificates shall
be consecutively numbered and shall be entered in the books of
-17-
22
the Corporation as they are issued and shall exhibit the holder's name and
number of shares.
Section 2. Transfer of Shares. The shares of stock of the
corporation shall be transferable only on the books of the Corporation by the
holders thereof in person or by their duly authorized attorneys or legal
representatives upon surrender and cancellation of certificates for a like
number of shares. Upon surrender to the Corporation or a transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 4. Regulations Regarding Certificates. The Board of
Directors shall have the power and authority to make all such rules and
regulations as they may deem expedient concerning the issue, transfer and
registration or the replacement of certificates for shares of capital stock of
the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors
may determine the conditions upon which a new certificate of stock may be
issued in place of a certificate which is alleged to have been lost, stolen or
destroyed; and may, in their discretion, require the owner of such certificate
or his legal representative to give bond, with sufficient surety, to indemnify
the Corporation and each transfer agent and registrar against any and all
losses or claims which may arise by reason of the issue of a new certificate in
the place of the one so lost, stolen or destroyed.
-18-
23
Article VIII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall
have charge of the seal (if any). If and when so directed by the Board of
Directors or a committee thereof, duplicates of the seal may be kept and used
by the Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice is
required to be given by law, the Certificate of Incorporation or under the
provisions of these bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of
the same in a post office box in a sealed prepaid wrapper addressed to the
person entitled thereto at his post office address, as it appears on the
records of the Corporation, and such notice shall be deemed to have been given
on the day of such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or the bylaws.
Section 4. Resignations. Any director, member of a committee or
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time be specified, at
the time of its receipt by the chief executive officer or
-19-
24
secretary. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
Section 5. Facsimile Signatures. In addition to the provisions for
the use of facsimile signatures elsewhere specifically authorized in these
bylaws, facsimile signatures of any officer or officers of the Corporation may
be used whenever and as authorized by the Board of Directors.
Section 6. Reliance upon Books, Reports and Records. Each director
and each member of any committee designated by the Board of Directors shall, in
the performance of his duties, be fully protected in relying in good faith upon
the books of account or reports made to the Corporation by any of its officers,
or by, an independent certified public accountant, or by an appraiser selected
with reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
Article IX
Amendments
If provided in the Certificate of Incorporation of the Corporation,
the Board of Directors shall have the power to adopt, amend and repeal from
time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to amend or repeal such
bylaws as adopted or amended by the Board of Directors.
-20-
EX-3.9
10
AMENDMENT TO BYLAWS - JUNE 19, 1991
1
EXHIBIT 3.9
DELL COMPUTER CORPORATION
AMENDMENTS TO THE BYLAWS
Approved by the Board of Directors of Dell Computer Corporation (the
"Corporation") and effective on the ratification by the Stockholders of the
Corporation of associated amendments to the Corporation's Certificate of
Incorporation at the Annual Meeting of Stockholders held June 19, 1991.
Article II: Stockholders
1. Article II Section 1 of the Bylaws shall be deleted and replaced in
its entirety with the following:
Section 1. Place of Meetings. All meetings of the
stockholders shall be held the principal office of the Corporation,
or, if the meeting is called by the Chairman of the Board, or by a
majority of the Board of Directors, at the principal office of the
Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notices or waivers of
notice thereof.
2. Article II Section 4 of the Bylaws shall be deleted and replaced in
its entirety with the following:
Section 4. Special Meetings. Unless otherwise provided in
the Certificate of Incorporation, special meetings of the stockholders
for any purpose or purposes may be called at any time by the Chairman
of the Board (if any), or by a majority of the Board of Directors, and
shall be called by the Chief Executive Officer, the President or the
Secretary upon the written request therefor, stating the purpose or
purposes of the meeting, delivered to such officer, signed by the
holders of at least fifty percent (50%) of the issued and outstanding
stock entitled to vote at such meeting.
3. Article II Section 12 of the Bylaws shall be deleted and replaced in
its entirety with the following:
Section 12. Action Without Meeting. Any action required or
permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders
and may not be effected by any consent in writing by such holders.
1
2
Article III: Board of Directors
4. Article III Section 6 of the Bylaws shall be deleted and replaced in
its entirety with the following:
Section 6. Special Meetings. Special Meetings of the Board
of Directors may be called by the Chairman of the Board (if any), or,
on the written request of any two directors, by the Secretary, in each
case upon the giving of personal, written, telephone, telegraphic, or
facsimile notice to each director. Such notice, or any waiver thereof
pursuant to Article VIII, Section 3 hereof, need not state the purpose
or purposes of such meeting, except as may otherwise be required by
law or provided for in the Certificate of Incorporation or these
bylaws.
5. Article III Section 7 of the Bylaws shall be deleted and replaced in
its entirety with the following:
Section 7. Removal. Any director or the entire Board of
Directors may be removed, but only for cause, by a vote of the holders
of a majority of the shares then issued and outstanding. Cause shall
mean willful and gross misconduct by the director that is materially
adverse to the best interests of the Corporation, as determined
conclusively by a majority of the disinterested directors of the
Corporation.
6. Article III of the Bylaws shall be amended by adding Section 12 as
follows:
Section 12. Nomination of Directors; Stockholder Business at
Annual Meetings. Subject to the rights of holders of any class or
series of stock having a preference over the Common Stock as to
dividends or upon liquidation, nominations for the election of
Directors may be made by the Board of Directors or any Nominating
Committee appointed by the Board of Directors or by any stockholder
entitled to vote in the election of Directors generally. However, any
stockholder generally entitled to vote in the election of Directors
may nominate one or more persons for election as Directors at a
meeting only if written notice of such stockholder's intent to make
such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary
of the Corporation not later than (i) with respect to an election to
be held at an annual meeting of stockholders, 60 days in advance of
such meeting, and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of Directors, the
close of business on the seventh day following the date on which
notice of such meeting is first given to stockholders. Each such
notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder, each
nominee or any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such
2
3
other information regarding each nominee proposed by such stockholder
as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission,
had the nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a
Director of the Corporation if so elected. At the request of the
Board of Directors any person nominated by the Board of Directors for
election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a Director of the Corporation
unless nominated in accordance with the procedures set forth herein.
A majority of the Board of Directors may reject any nomination by a
stockholder not timely made or otherwise not in accordance with the
terms of this Section 12. If a majority of the Board of Directors
reasonably determines that the information provided in a stockholder's
notice does not satisfy the informational requirements of this Section
12 in any material respect, the Secretary of the Corporation shall
promptly notify such stockholder of the deficiency in writing. The
stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within such period
of time, not to exceed ten days from the date such deficiency notice
is given to the stockholder, as a majority of the Board of Directors
shall reasonably determine. If the deficiency is not cured within such
period, or if a majority of the Board of Directors reasonably
determines that the additional information provided by the
stockholder, together with the information previously provided, does
not satisfy the requirements of this Section 12 in any material
respect, then a majority of the Board of Directors may reject such
stockholder's nomination. The Secretary of the Corporation shall
notify a stockholder in writing whether the stockholder's nomination
has been made in accordance with the time and information requirements
of this Section 12.
At an annual meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting (a)
by or at the direction of the chairman of the meeting or (b) by any
stockholder of the Corporation who complies with the notice procedures
set forth in this Section 12. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the
Corporation not less than 60 days prior to the meeting; provided,
however that in the event that less than 70 days notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the
earlier of the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a)
a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c)
the class and number of shares of the
3
4
Corporation which are beneficially owned by the stockholder and (d)
any material direct or indirect interest, financial or otherwise of
the stockholder or its affiliates or associates in such business.
The Board of Directors may reject any stockholder proposal not timely
made in accordance with this Section 12. If the Board of Directors
determines that the information provided in a stockholder's notice
does not satisfy the informational requirements hereof, the Secretary
of the Corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall then have an
opportunity to cure the deficiency by providing additional information
to the Secretary within such period of time, not to exceed ten days
from the date such deficiency notice is given to the stockholder, as
the Board of Directors shall determine. If the deficiency is not
cured within such period, or if the Board of Directors determines that
the additional information provided by the stockholder, together with
the information previously provided, does not satisfy the requirements
of this Section 12, then the Board of Directors may reject such
stockholder's proposal. The Secretary of the Corporation shall notify
a stockholder in writing whether the stockholder's proposal has been
made in accordance with the time and information requirements hereof.
This provision shall not prevent the consideration and
approval or disapproval at an annual meeting of reports of officers,
directors and committees of the Board of Directors, but in connection
therewith no new business shall be acted upon at any such meeting
unless stated, filed and received as herein provided. Notwithstanding
anything in these bylaws to the contrary, no business shall be
conducted at an annual meeting except in accordance with procedures
set forth in this Section 12.
7. Article IX of the Bylaws shall be deleted and replaced in its entirety
with the following:
Article IX
Amendments
The Board of Directors is hereby expressly authorized to
adopt, amend or repeal the bylaws of the Corporation or adopt new
bylaws, without any action on the part of the stockholders, by the
vote of a majority of the directors; provided, however, that no such
adoption, amendment, or repeal shall be valid with respect to bylaw
provisions which have been adopted, amended, or repealed by the
stockholders; and further provided, that bylaws adopted or amended by
the Directors and any powers thereby conferred may be amended,
altered, or repealed by the stockholders. Notwithstanding the
foregoing and anything in these bylaws to the contrary, Article II
Section 1, Article II Section 4, Article II Section 12, Article III
Section 6, Article III Section 7, Article III Section 12 and Article
IX of these bylaws shall not be amended, repealed, altered or added to
by the stockholders, and no provision inconsistent therewith shall be
adopted by the stockholders without the affirmative vote of the
holders of at least 66 2/3 % of the Corporation's voting stock issued
and outstanding.
4
EX-3.10
11
AMENDMENT TO BYLAWS - MAY 18, 1995
1
EXHIBIT 3.10
DELL COMPUTER CORPORATION
AMENDMENTS TO BYLAWS
WHEREAS, the Board of Directors of the Company deems it advisable and in the
best interests of the Company to amend the Bylaws of the Company (as heretofore
amended, the "Bylaws") in certain respects; and
WHEREAS, in accordance with Article IX of the Bylaws, the Board of Directors is
(subject to certain exceptions specified therein) authorized to amend the
Bylaws, without any action by the stockholders, by the vote of a majority of
the directors;
NOW, THEREFORE, BE IT RESOLVED, that the Bylaws are hereby amended as follows:
a. Article II, Section 2 of the Bylaws is hereby
amended by deleting such provision in its entirety and
substituting the following in lieu thereof:
"Section 2. Quorum; Adjournment; Vote Required.
Unless otherwise required by law or provided in the
Certificate of Incorporation or these bylaws, the presence, in
person or represented by proxy, of the holders of a majority
of the voting power of the shares of capital stock of the
Corporation entitled to vote on any matter shall constitute a
quorum for the purpose of considering such matter at a meeting
of the stockholders.
If a meeting of stockholders cannot be organized
because a quorum has not attended, the stockholders entitled
to vote thereat, present in person or represented by proxy,
shall have the power to adjourn such meeting from time to
time, without notice other than announcement at the meeting at
which the adjournment is taken of the time and place of the
adjourned meeting, until a quorum shall be present and
represented. Furthermore, after a meeting has been duly
organized, the chairman of the meeting or the holders of a
majority of the voting power of the shares of capital stock of
the Corporation present in person or represented by proxy at
the meeting shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting at which the adjournment is taken of the time and
place of the adjourned meeting. When a meeting is adjourned
to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken. If the
adjournment is for more than thirty (30) days, or if after
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
At any adjourned meeting at which a quorum shall be present or
represented, the Corporation may transact any business which
might have been transacted at the original meeting. The
2
stockholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the
withdrawal from the meeting of a sufficient number of
stockholders such that the number of stockholders that
continue to be present or represented by proxy at the meeting
is less than a quorum.
Unless otherwise required by law or provided in the
Certificate of Incorporation or these bylaws, in all matters
other than the election of directors, the affirmative vote of
the holders of a majority of the voting power of the shares of
capital stock of the Corporation present in person or
represented by proxy at the meeting and entitled to vote on
the subject matter shall be the act of the stockholders.
Directors of the Corporation shall be elected by a plurality
of votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of
directors."
b. Article II, Section 3 of the Bylaws is hereby amended
by deleting such provision in its entirety and substituting
the following in lieu thereof:
"Section 3. Annual Meetings. An annual meeting of
stockholders shall be held for the election of directors
on such date in each year and at such time as shall be
designated by the Board of Directors. An annual meeting shall
be held at such place, within or without the State of
Delaware, as shall be determined by the Board of Directors.
At each annual meeting, the stockholders shall elect by a
plurality vote the successors of the directors whose terms
expire at such meeting, and shall transact such other business
as may be properly brought before the meeting. A failure to
hold the annual meeting at the designated time or to elect a
sufficient number of directors to conduct the business of the
Corporation shall not affect otherwise valid corporate acts or
work a forfeiture or dissolution of the Corporation, except as
otherwise required by law."
EX-10.1
12
COMMITTED CREDIT LINE AGREEMENT
1
EXHIBIT 10.1
COMMITTED CREDIT LINE AGREEMENT
This Committed Credit Line Agreement (the "Agreement") is entered into
as of June 8, 1995, by and between NATIONSBANK OF TEXAS, N.A., a national
banking association, (the "Bank"), DELL COMPUTER CORPORATION, a Delaware
corporation (the "Company"), THE SUBSIDIARIES OF THE COMPANY WHICH ARE
SIGNATORIES HERETO OR WHICH MAY BECOME A PARTY HERETO FROM TIME TO TIME (such
Subsidiaries and the Company being hereinafter collectively referred to as
"Borrowers" and individually as a "Borrower"), and this Agreement establishes a
committed line of credit for Borrowers with Bank in the maximum aggregate
principal amount of Twenty-Five Million Dollars ($25,000,000.00).
Bank agrees that the line of credit evidenced and governed hereby may
be utilized by Borrowers from time to time upon the terms more fully set forth
herein for general corporate purposes, including issuance of standby and
documentary or commercial letters of credit for the account of any Borrower.
1. Definitions. As used in this Agreement, in addition to any
other definitions herein contained, the following words and terms shall have
the meanings provided below unless the context otherwise requires.
Annual Audited Financial Statements shall mean the annual
consolidated financial statements of the Company, including all notes thereto,
which statements shall include a balance sheet as of the end of such fiscal
year and an income statement, a retained earnings statement and a statement of
cash flows for such fiscal year, all setting forth in comparative form the
corresponding figures from the previous fiscal year, all prepared in conformity
with generally accepted accounting principles and accompanied by an unqualified
report and opinion of independent certified public accountants with an
accounting firm of national standing and reputation, which shall state that
such financial statements, in the opinion of such accountants, present fairly,
in all material respects, the consolidated financial position of the Company
and its Subsidiaries as of the date thereof and the results of its operations
and cash flows for the period covered thereby in conformity with generally
accepted accounting principles.
Applications shall mean all applications and agreements for
Letters of Credit, or similar instruments or agreements, in a form acceptable
to Bank, now or hereafter executed by any Borrower in connection with any
Letter of Credit now or hereafter issued or to be issued under the terms
hereof.
Commitment shall mean the obligation of Bank to make advances
of funds hereunder and incur liability for the Letter of Credit Exposure Amount
in an aggregate principal amount at any one time outstanding up to, but not
exceeding, $25,000,000.00.
Consequential Loss shall mean, with respect to (a) any
Borrower's payment of principal of a Eurodollar Rate Borrowing on a day other
than the last day of the applicable Eurodollar Interest Period, (b) any
Borrower's failure to borrow a Eurodollar Rate Borrowing on the date specified
by Borrowers for any reason, (c) any Borrower's failure to make any prepayment
of the Loans (other than
2
Base Rate Borrowings) on the date specified by such Borrower, or (d) any
cessation of the Eurodollar Rate to apply to the Loans or any part thereof
pursuant to Section 13(b) hereof, in each case whether voluntary or
involuntary, any loss, expense, penalty, premium or liability incurred by Bank,
including any interest paid by Bank to lenders of funds borrowed by it to make
or carry the Loans. And Consequential Loss shall mean, with respect to the
termination or cancellation of any Eurodollar Rate Borrowing pursuant to
Section 13(b) hereof, in each case whether voluntary or involuntary, any loss,
expense, penalty, premium or liability incurred by Bank on account of any
reduction resulting from such premature termination or cancellation of such
borrowing in Bank's margins or spreads between its cost of funds and the
interest earned on the principal of the borrowing so terminated or canceled,
including an amount equal to the excess (if any) of (x) interest that would
have accrued on any such borrowing during the remainder of the applicable
Eurodollar Interest Period had such borrowing not been terminated or canceled
early, over (y) interest that would have accrued and been earned by Bank for
the remainder of such Eurodollar Interest Period if the principal amount of the
terminated or canceled borrowing had been reinvested by Bank on the Business
Day following such termination or cancellation date in obligations of the
United States Treasury having a face amount equal or comparable to the
principal amount of the terminated or canceled borrowing and having a maturity
date ending on or as close as possible to the end of such Eurodollar Interest
Period.
Consolidated Tangible Net Worth shall be determined in
accordance with generally accepted accounting principles and shall mean the
amount of total assets (less applicable reserves and other properly deductible
items) less (a) the amount of total liabilities and (b) all goodwill, trade
names, trademarks, patents and other intangibles, all as set forth on the most
recent consolidated balance sheet of the Company and its Subsidiaries.
Final Availability Date shall have the meaning ascribed to
such term in Section 12 of this Agreement.
Indebtedness shall mean at any time all indebtedness for
borrowed money or for the deferred purchase price of property or services,
whether direct or indirect, absolute or contingent, due or to become due,
matured or unmatured, and however evidenced, specifically including any
borrowing hereunder and all extensions, renewals and other obligations arising
out of or related hereto.
Joinder Agreement shall mean any agreement, in form acceptable
to Bank, executed by a Subsidiary from time to time, pursuant to which such
Subsidiary joins in the execution and delivery of this Agreement and the Note.
Letter of Credit Advances shall mean all sums which may from
time to time be paid by Bank pursuant to the Letters of Credit, or any of them.
Letter of Credit Exposure Amount shall mean at any time the
sum of (i) the aggregate undrawn amount of all Letters of Credit outstanding at
such time plus (ii) the aggregate amount of all Letter of Credit Advances for
which Bank has not been reimbursed and which remain unpaid at such time.
2
3
Letters of Credit shall mean all irrevocable commercial or
documentary letters of credit and all standby letters of credit issued by Bank
pursuant to the terms set forth in this Agreement.
Lien shall mean, with respect to any property or asset (a) any
mortgage, claim, hold, lien, pledge, charge, security interest, collateral
assignment or other encumbrance or restriction of any kind in respect of such
property or assets or (b) the interest of a vendor or lessor arising out of the
acquisition or agreement to acquire such property or asset under any
conditional sale agreement, lease purchase agreement, sale and leaseback
arrangement, or other similar title retention agreement.
Loans shall mean any advance of funds pursuant to the terms of
Section 2 of this Agreement. Loan shall mean any one of the Loans.
Note shall mean the promissory note of Borrowers in
substantially the form of Exhibit B attached hereto, together with any and all
renewals, extensions and modifications thereof and substitutions therefor now
or hereafter permitted by Bank.
Quarterly Unaudited Financial Statements shall mean the
quarterly consolidated financial statements of the Company, including all notes
thereto, which statements shall include a balance sheet as of the end of such
fiscal quarter, an income statement for such fiscal quarter, and for the fiscal
year to date, subject to normal year-end adjustments, all setting forth in
comparative form the corresponding figures for the corresponding fiscal quarter
of the preceding year, and a statement of cash flows for the fiscal year to
date, subject to normal year-end adjustments, setting forth in comparative form
the corresponding figures in the corresponding period of the preceding year
(except for the last fiscal quarter, for which no such quarterly balance sheet,
income statement and statement of cash flows is required to be delivered. All
of the Quarterly Unaudited Financial Statements are to be prepared in
accordance with generally accepted accounting principles and certified as true
and correct by the chief executive officer, president, chief operating officer,
chief financial officer, treasurer or any other officer of the Company
acceptable to Bank.
Subsidiary shall mean any corporation, partnership, joint
venture or any other type of business entity of which more than fifty percent
(50%) of the issued and outstanding capital stock, partnership interests or
other indicia of equity rights issued by such business entity is owned or
controlled, directly or indirectly, by the Company.
3
4
2. Borrowings; Letters of Credit.
a. Subject to the terms and conditions hereof, Bank
agrees to make the Loans hereunder to any Borrower from time to time before the
Final Availability Date, in an aggregate principal amount at any one time
outstanding (including Borrowers' liability for the Letter of Credit Exposure
Amount at such time) up to, but not exceeding, the $25,000,000.00 amount of the
Commitment. When any Borrower desires to utilize the line of credit governed
hereby, an authorized officer of the applicable Borrower (as identified or
defined in the resolutions adopted by the Board of Directors of the Company and
of each corporate general partner of all other Borrowers authorizing each
Borrower to enter into revolving and other lines of credit of the type
evidenced and governed hereby) shall advise Bank in writing in substantially
the form of Exhibit A hereto (a "Borrowing Certificate"), which may be sent via
facsimile to Bank and confirmed by mailing the original Borrowing Certificate
to Bank. In such case, Bank is authorized to credit to the account of the
applicable Borrower the amount of the Loan as specified therein and requested
by the applicable Borrower (subject to the Commitment limitation stated above)
or, at the option and request of the applicable Borrower, to transfer such
sum(s) in immediately available funds to a designated bank for credit to the
account at such bank of the applicable Borrower. Borrowers shall be jointly
and severally liable for all amounts owing to Bank in respect of the Loans and
all other obligations under this Agreement. During the term hereof and subject
to the terms and conditions of this Agreement, Borrowers may borrow, repay and
reborrow under the line of credit evidenced and governed hereby and, pursuant
to Article 15.10(b) of Chapter 15 ("Chapter 15") of Title 79, Texas Revised
Civil Statutes, 1925, as amended, Borrowers and Bank expressly agree that
Chapter 15 shall not apply to this Agreement or to any Loan and that neither
this Agreement nor any Loan shall be covered by or subject to Chapter 15 in any
manner whatsoever. All borrowings and repayments shall be made upon a day on
which Bank is open for business at its offices in Dallas, Texas (each a
"Business Day"), as herein stated, and with respect to a borrowing at the
Eurodollar Rate, on a Eurodollar Business Day. Each Borrowing Certificate
submitted by any Borrower hereunder shall be deemed to be a statement by
Borrowers that all representations and warranties set forth herein are true and
correct, except as otherwise notified in writing to Bank and that the
representation in Section 9(b) hereof shall be deemed given only as to the most
recent Annual Audited Financial Statements that have then been provided to
Bank, and that no default has occurred or will occur under Section 14 of this
Agreement as a result of the requested borrowing.
b. Subject to the terms and conditions contained herein,
any Borrower shall have the right to utilize the Commitment from time to time
prior to the Final Availability Date, by obtaining from Bank one or more
Letters of Credit for the account of any Borrower in such amounts and in favor
of such beneficiaries as any Borrower from time to time shall request;
provided, that in no event shall Bank have any obligation to issue any Letter
of Credit if (i) the Letter of Credit Exposure Amount after the issuance of
such requested Letter of Credit plus the aggregate principal amount of all
Loans outstanding at such time would exceed the $25,000,000.00 amount of the
Commitment, (ii) such Letter of Credit would have an expiry date beyond the
earlier to occur of (1) the Final Availability Date or (2) 120 days after the
issuance date of such Letter of Credit, (iii) either such Letter of Credit is
not in a form satisfactory to Bank in its sole and absolute discretion or the
applicable Borrower has not executed and delivered such Application relating to
such Letter of Credit as Bank shall have requested or (iv) an event has
occurred and is continuing which constitutes a default as provided in Section
14 of
4
5
this Agreement. Borrowers jointly and severally promise to pay to the order of
Bank the amount of all Letter of Credit Advances, and to effect repayment of
any such Letter of Credit Advance, it shall be deemed that Borrowers have
requested a Base Rate Borrowing under the Note to be made to satisfy such
Letter of Credit Advance, with Bank automatically satisfying such Letter of
Credit Advance by (subject to the terms and conditions hereof) making a Base
Rate Borrowing under the Note, if such Letter of Credit Advance is (and such
Loan is to be) made prior to the Final Availability Date. If any Borrower
desires to cause the issuance of a Letter of Credit hereunder, such Borrower
shall execute and deliver to Bank the requisite Application for the requested
Letter of Credit signed by an officer of such Borrower authorized to submit
Borrowing Certificates for Loans hereunder at least two (2) Business Days prior
to the proposed date of issuance of such Letter of Credit, together with
payment of the issuance fee required by separate letter agreement between Bank
and Borrower. In the event that any restriction or limitation is imposed upon
or determined or held to be applicable to Bank or any or all Borrowers by,
under or pursuant to any legal requirement now or hereafter in effect or by
reason of any interpretation thereof by any governmental authority, which in
the sole judgment of Bank would prevent Bank from legally incurring liability
under a Letter of Credit issued or proposed to be issued hereunder, then Bank
shall give prompt written notice thereof to Borrowers, whereupon Bank shall
have no obligation to issue any additional Letters of Credit then or at any
time thereafter, until the circumstances giving rise to such inability no
longer exist.
3. Interest and Interest Periods. Each Loan shall bear interest
at one of the following interest rate options (subject to the other provisions
hereof, and provided at no time shall any interest rate, regardless of the
option selected, be charged to Borrowers to the extent that the same would
exceed the Maximum Rate of Interest then applicable) at any Borrower's request
given as indicated below. Any Loan may bear interest for any applicable
Interest Period (as defined below) at the Base Lending Rate (each such Loan
being hereinafter referred to as a "Base Rate Borrowing") upon notification
from any Borrower received by Bank by 2:00 p.m. (Dallas, Texas time) on the
first day of such applicable Interest Period. Any Loan in a principal amount
of $1,000,000.00 or any larger multiple of $100,000.00 may bear interest for
any Interest Period at the Eurodollar Rate for such Interest Period (each of
such Loans being hereinafter referred to as a "Eurodollar Rate Borrowing"),
upon notification from any Borrower received by Bank from any Borrower by 11:00
a.m. Dallas, Texas time), three (3) Eurodollar Business Days prior to the first
day of such Interest Period. For purposes of this Agreement, the following
definitions shall apply with respect to the above-described interest rate
options:
Adjusted Eurodollar Interbank Rate shall mean, with respect to
each Eurodollar Interest Period, a rate per annum equal to the quotient
(converted to a percentage) of (a) the Eurodollar Interbank Rate with respect
to such Eurodollar Interest Period divided by (b) 1 minus the Eurodollar
Reserve Requirement in effect on the first day of such Eurodollar Interest
Period.
5
6
Base Lending Rate shall mean a rate per annum (rounded upwards
to the nearest 1/16 of 1%) equal to the lesser of (a) the higher of (i) the
rate of interest per annum announced by Bank from time to time as its base or
prime rate (which rate is not necessarily its most favorable rate), or (ii) the
Federal Funds Rate plus one-half of one percent (1/2%) per annum or (b) the
Maximum Rate of Interest. The Base Lending Rate shall change on the effective
date of any changes in such base or prime rate or the Federal Funds Rate. If
for any reason Bank shall have determined (which determination shall be
conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Rate for any reason, the Base Lending Rate shall be the
lesser of (a) the rate of interest announced by Bank from time to time as its
base or prime rate or (b) the Maximum Rate of Interest, until the circumstances
giving rise to such inability no longer exists.
Eurodollar Business Day shall mean a Business Day on which
transactions in United States Dollar deposits between banks may be carried on
in the eurodollar interbank dollar market selected by Bank in accordance
herewith.
Eurodollar Interbank Rate shall mean, for each Eurodollar
Interest Period, the rate of interest per annum, rounded, if necessary, to the
next highest whole multiple of one-eighth percent (1/8%), determined by Bank
based upon rates quoted at or before 10:00 a.m. in such Eurodollar interbank
market (or as soon thereafter as practicable), on the date two (2) Eurodollar
Business Days prior to the first day of such Eurodollar Interest Period, for
the offering to Bank by leading dealers in whatever eurodollar interbank market
may be selected by Bank in its sole discretion, acting in good faith, at the
time of determination and in accordance with the then existing practice in such
market, of deposits in United States dollars for delivery on the first day of
such Eurodollar Interest Period and having a maturity equal to the length of
such Eurodollar Interest Period and in an amount equal (or as nearly equal as
may be) to the Eurodollar Rate Borrowing to which such Eurodollar Interest
Period relates. Each determination by Bank of the Eurodollar Interbank Rate
shall be conclusive and binding, absent manifest error, and may be computed
using any reasonable averaging and attribution method.
Eurodollar Rate shall mean a rate per annum equal to the
lesser of (a) the Adjusted Eurodollar Interbank Rate in effect on the first day
of such Eurodollar Interest Period plus five-eighths of one percent (5/8%) or
(b) the Maximum Rate of Interest.
Federal Funds Rate shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Bank from three Federal funds
brokers of recognized standing selected by it.
Interest Payment Dates shall mean (a) for Base Rate
Borrowings, (1) at all times while the Note is outstanding, the last day of
each August, November, February and May, and (2) the Final Availability Date,
and (b) for Eurodollar Rate Borrowings, the end of each Eurodollar Interest
Period.
6
7
Interest Periods shall mean as follows: (a) in the case of
each Base Rate Borrowing, a period commencing on the date of such Base Rate
Borrowing and ending on the following Interest Payment Date for such Base Rate
Borrowing, and (b) in the case of each Eurodollar Rate Borrowing, a period
commencing (i) on the date of such Eurodollar Rate Borrowing or (ii) on the
last day of the immediately preceding Eurodollar Interest Period in the case of
a rollover to a successive Eurodollar Interest Period, and ending on the
numerically corresponding day, one, two or three (1, 2 or 3) months thereafter
as selected by the applicable Borrower or Borrowers in accordance with the
provisions of this Agreement; provided, (a) any Eurodollar Interest Period
which would otherwise end on a day which is not a Eurodollar Business Day shall
be extended to the next succeeding Eurodollar Business Day, unless such
Eurodollar Business Day falls in another calendar month, in which case such
Eurodollar Interest Period shall end on the next preceding Eurodollar Business
Day; (b) any Eurodollar Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Eurodollar Interest
Period) shall end on the last Eurodollar Business Day of the appropriate
calendar month; (c) no Eurodollar Interest Period shall ever extend beyond the
Final Availability Date; and (d) Eurodollar Interest Periods shall be selected
by the applicable Borrower or Borrowers in such a manner that the Eurodollar
Interest Period with respect to any portion of the Loans which shall become due
shall not extend beyond such due date. If the applicable Borrower or Borrowers
fail to select an interest rate option as provided in this Section 3 prior to
the last day of any Interest Period for any Loan, Borrowers shall be deemed to
have renewed such Loan as a Base Rate Borrowing. Interest shall be calculated
on the basis of actual calendar days elapsed and a 360 day year, except that
interest based on clause (a) (i) of the definition of the Base Lending Rate
shall be calculated on the basis of actual calendar days elapsed and a 365 day
year. Any amount of principal and interest which is not paid when due
hereunder shall thereafter bear interest until paid in full at the Past Due
Rate.
Maximum Rate of Interest shall mean the maximum nonusurious
rate of interest permitted to be charged by applicable federal or Texas law
(whichever shall permit the higher lawful rate) from time to time in effect.
At all times, if any, as Chapter One of the Texas Credit Code ("Chapter One")
shall establish the Maximum Rate of Interest, the Maximum Rate of Interest
shall be the "indicated rate ceiling" (as defined in Chapter One) from time to
time in effect. If the obligation is an open-end account, Bank may from time
to time, as to then-current and future balances, implement any other ceiling
under Chapter One and/or revise the index, formula or provision of law used to
compute the rate on such obligation, if and to the extent permitted by, and in
the manner provided in, Chapter One.
Past Due Rate shall mean a rate per annum equal to the lesser
of (a) the Base Lending Rate plus two percent (2%) or (b) the Maximum Rate of
Interest. All interest accruing at the Past Due Rate on any amounts otherwise
due and payable hereunder shall be due and payable on demand.
4. Conditions to Borrowing and Letter of Credit Issuance. The
obligation of Bank to make any Loan or issue any Letter of Credit hereunder is
subject to (a) accuracy of all representations and warranties of Borrowers set
forth herein on the date of such Loan or issuance of such Letter of Credit
(except for those changes in such representations and warranties for which Bank
has been notified in writing and has acknowledged as acceptable and except that
the representation in Section 9(b) hereof shall be deemed given only to as the
most recent Annual Audited Financial
7
8
Statements that have then been provided to Bank), (b) the performance by
Borrowers of their obligations hereunder and (c) the satisfaction of the
following further conditions: (i) prior to the making of such Loan or the
issuance of such Letter of Credit, there shall have occurred no material
adverse change in the financial condition of Borrowers on a consolidated basis
(as shown in the most recent set of financial statements delivered in
accordance with Section 10(a) below) since the date of this Agreement (as shown
in the financial statements described in Section 9(b) below); and (ii) no
default shall have occurred and be continuing in accordance with the provisions
of Section 14 below. In addition to the matters described in the immediately
preceding sentence, the obligation of Bank to make the initial Loan or issue
the first Letter of Credit hereunder is subject to receipt by Bank of each of
the following (in a form acceptable to Bank in its discretion): (a) the Note,
executed by each Borrower; (b) a current certificate executed by (i) the
secretary or assistant secretary of each corporate Borrower and (ii) by the
secretary or assistant secretary of the corporate general partner of each
partnership Borrower, containing a certificate of incumbency and certifying
that resolutions satisfactory to Bank in all respects have been adopted by the
respective Board of Directors of such corporations so as to authorize
Borrowers' entering into this Agreement with Bank and obtaining from Bank the
line of credit evidenced and governed hereby; (c) copies of the current
partnership agreements and certificates of limited partnership of each
partnership Borrower, together with such additional partnership consents or
authorizations from the partners of such Borrowers which Bank reasonably
requires to confirm that each partnership Borrower is authorized to enter into
this Agreement and obtain the line of credit evidenced and governed hereby; (d)
with respect to each Borrower, certificates from the appropriate public
officials of the state of incorporation or formation of each Borrower and from
those jurisdictions where the nature of each Borrower's business makes it
necessary to be qualified to do business as a foreign entity, as to the
existence, good standing and qualification of the applicable Borrower(s) in
such jurisdictions; (e) an opinion of counsel substantially in the form of
Exhibit C attached hereto; and (f) payment from Borrowers of (i) all legal fees
and expenses of Bank with respect to the execution and negotiation of this
Agreement and all other related documents and (ii) other fees and amounts which
are then due and owing by Borrowers to Bank under the terms of this Agreement.
5. Lending Office. The Lending Office for Bank shall be: (901
Main Street, Dallas, Texas, 75283; or (ii) the office of Bank subsequently
specified in writing by Bank to Borrowers.
6. Prepayment. If at any time the aggregate principal amount of
all Loans outstanding at such time plus the Letter of Credit Exposure Amount at
such time would exceed the $25,000,000.00 amount of the Commitment, Bank shall
notify Borrowers in writing of such excess amount, and within three (3)
Business Days after the giving of such notice, Borrowers shall make a
prepayment on the Note or cause one or more Letters of Credit to be canceled
and surrendered in an aggregate amount of not less than such excess amount.
Additionally, Base Rate Loans may be prepaid, together with accrued interest on
the amount prepaid, in whole or in part without penalty at any time prior to
the last day of the Interest Period therefor. Loans that bear interest at the
Eurodollar Rate may not be prepaid, whether voluntarily or by acceleration or
by other reason, prior to the end of the then applicable Interest Period,
except upon not less than five (5) Business Days prior notice if accompanied by
accrued interest on the amount prepaid and the Consequential Loss as a result
of such prepayment (with the Consequential Loss being based on a statement of
Bank that, absent manifest error, will be binding on Borrowers).
8
9
7. Facility Fee. Borrowers hereby jointly and severally agree to
pay to Bank a Facility Fee of one-eighth of one percent (1/8%) per annum (based
on a 365 day year) of the $25,000,000.00 amount of the Commitment. Said
Facility Fee shall be payable quarterly in advance on the last day of each May,
August, November and February, commencing upon execution of this Agreement and
continuing until the Final Availability Date. All past due Facility Fees shall
accrue interest until paid at the Past Due Rate.
8. Repayment. Each Loan hereunder is to be evidenced by the
Note. Borrowers hereby jointly and severally promise to pay to Bank the unpaid
principal balance of the Loans on or before the Final Availability Date in
accordance with the other provisions of this Agreement, regardless of whether
the Loans have been requested by, and advanced to, less than all of Borrowers.
Borrowers also hereby jointly and severally promise to pay to Bank accrued
interest on the unpaid balance of the Loans on the Interest Payment Dates,
commencing with the first of such dates to occur after the date of this
Agreement. All payments not received by Bank on or by 12:00 p.m. Dallas, Texas
time and on a Business Day shall be deemed to be made on the following Business
Day, provided that if any amount hereunder shall be due on a day that is not a
Business Day, the time for payment shall be the first Business Day following
such date, unless such following Business Day would be the first Business Day
of a month and such payment is in respect of principal of or interest on a
Eurodollar Rate Borrowing, in which case the time for payment shall be the next
preceding Business Day. All payments shall be made to Bank at its Lending
Office.
9. Warranties and Representations. Each of Borrowers jointly and
severally represent and warrant to Bank that:
a. Each of Borrowers is duly organized, validly existing
and in good standing under the laws of the state of its incorporation or
formation; has all power and authority to conduct its business as presently
conducted; is duly qualified to do business and in good standing in the state
of its existence and in each other jurisdiction where the failure to qualify
would have a material adverse effect on the consolidated business of Borrowers
taken as a whole; and will take such actions as are required to so remain.
b. The Annual Audited Financial Statements of the
Company as of and for the year ending January 29, 1995, present fairly, in
accordance with generally accepted accounting principles, the consolidated
financial position of the Company and its Subsidiaries as of January 29, 1995,
and the results of its operations for the year then ended, and there has been
no material adverse change in the consolidated financial condition of the
Company and its Subsidiaries since such date.
c. The execution, delivery and performance of this
Agreement and all other related documents have been duly authorized by all
requisite corporate or partnership action of Borrowers, and upon due execution
and delivery, will constitute legal, valid and binding obligations of
Borrowers, enforceable against Borrowers in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and subject to
the qualification that general equitable principles may limit the availability
of equitable remedies, including without limitation, the remedy of specific
performance.
9
10
d. Neither the execution, delivery or performance of
this Agreement or the other agreements contemplated hereby nor the consummation
of the transaction contemplated hereby or thereby will (i) conflict with, or
result in a violation or breach of the terms, conditions or provisions of, or
constitute a default under the respective organizational documents of any
Borrower or any material agreement, indenture or other instrument under which
any Borrower is bound in connection with or in respect of any Indebtedness, or
(ii) violate or conflict with any material judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory
agency or body having jurisdiction over any Borrower.
e. No authorization, consent, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance by any
Borrower of the Agreement or the other documents and agreements contemplated
hereby.
f. No portion of any Loans under this Agreement shall be
used by any Borrower in violation of Regulation G, Regulation U, Regulation T,
or Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board or to violate the Securities Exchange Act of
1934, as amended, in each case as in effect in the date or dates of such
borrowing and such use of proceeds.
g. There are no suits, proceedings, claims or disputes
pending or threatened against or affecting any Borrower, the adverse
determination of which individually or in the aggregate would have a material
adverse affect on the consolidated financial condition of Borrowers or their
ability to perform their obligations hereunder.
10. Covenants and Agreements. Each of Borrowers covenants and
agrees with Bank that prior to the termination of this Agreement:
a. Borrowers will, prior to the Final Availability Date
and until all Indebtedness hereunder is fully repaid, cause to be provided to
Bank (i) the Company's Annual Audited Financial Statements within 120 days
after the end of its fiscal year, and (ii) the Company's Quarterly Unaudited
Financial Statements within 45 days after the end of each of its fiscal
quarters.
b. Within a reasonable time after they are filed with
the Securities Exchange Commission, Borrowers will cause to be provided to Bank
copies of the following documents filed by the Company during the term hereof:
(i) Annual Reports on Form 10-K; (ii) Quarterly Reports on Form 10-Q; (iii)
Current Reports on Form 8-K; (iv) definitive proxy statements; and (v)
Registration Statements on Form S-1, S-2, S-3 or S-4.
c. Each Borrower will not, nor shall it permit any
Subsidiary, to create, incur, suffer or permit to exist, or assume or
guarantee, directly or indirectly, or remain or become liable with respect to
any Indebtedness, whether direct, indirect, absolute, contingent or otherwise,
except that the foregoing restrictions shall not apply to:
10
11
i. Indebtedness to Bank pursuant hereto;
ii. Indebtedness existing on the date of this
Agreement and which is described in Schedule II attached hereto;
iii. Current accounts payable and unsecured
current liabilities, not the result of borrowings, to vendors,
suppliers and persons providing services and for expenditures on
ordinary trade terms for goods and services normally required by any
Borrower or any of its Subsidiaries in the ordinary course of its
business;
iv. Indebtedness of any Subsidiary to any
Borrower, Indebtedness of any Borrower to another Borrower or to any
Subsidiary or Indebtedness of one Subsidiary to another Subsidiary;
v. Revolving credit Indebtedness for general
corporate purposes in an aggregate principal amount not to exceed
$125,000,000.00 which is owing to other financial institutions or
other lenders;
vi. Trade receivable asset securitization
Indebtedness in an aggregate principal amount not to exceed
$150,000,000.00;
vii. Indebtedness in an aggregate principal amount
of up to, but not exceeding, $25,000,000.00 for the purpose of
financing the acquisition and construction of the Round Rock,
Williamson County, Texas and Malaysia physical plants and facilities;
viii. In addition to any of the Indebtedness
described in subsections (i) through (vii) above, Indebtedness which
does not, in the aggregate, exceed fifteen percent (15%) of the
Consolidated Tangible Net Worth of the Company; and
ix. Any extension, renewal or replacement, or
successive extensions, renewals or replacements, in whole or in part
of any Indebtedness referred to in the foregoing clauses (i), (ii),
(iv), (v), (vi), (vii) and (viii), provided that the amount of such
Indebtedness is not increased.
d. Each Borrower will not, nor shall it permit any
Subsidiary to, suffer to be created or incurred or to exist, any Lien of any
kind on any of their respective properties or assets, except that the foregoing
restrictions shall not apply to:
i. Liens in favor of any Borrower or any
Subsidiary;
ii. Mechanics', suppliers', carriers',
warehousemen's, tax and other like Liens arising in the ordinary
course of business securing obligations that are not overdue or are
being contested in good faith by appropriate legal proceedings
diligently conducted, provided that the person sets aside on its books
such reserves or other appropriate provisions, if any, as shall be
required by generally accepted accounting principles;
11
12
iii. Liens existing on the date of this Agreement
and which are described in Schedule III attached hereto;
iv. Any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising in connection
with court proceedings, so long as the execution or other enforcement
thereof is effectively stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings, and adequate
provision has been made for the discharge thereof if adversely
determined;
v. Liens securing Indebtedness described in
Section 10(c)(viii) above;
vi. Liens on the Round Rock, Williamson County,
Texas and Malaysia facilities and physical plants securing
Indebtedness described in Section 10(c)(vii) above;
vii. (1) Pledges or deposits in connection with
workers' compensation, unemployment insurance and other social
security legislation, (2) deposits securing liability to insurance
carriers under insurance or self-insurance arrangements and (3) bank
offset rights;
viii. Deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
ix. Easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of
business, which in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary
conduct of the business of any Borrower or any Subsidiary;
x. Liens of landlords in connection with leases;
xi. Liens in favor of any person or entity on all
documents of title arising out of any Letters of Credit issued
hereunder or any other letters of credit otherwise permitted under the
terms of this Agreement;
xii. Liens on accounts receivable and other
related assets securing Indebtedness described in Section 10(c)(vi)
above; and
xiii. Any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part,
of any Lien referred to in the foregoing clauses (i), (iii), (v),
(vi), (vii), (viii), (x), (xi) and (xii) provided that the amount of
Indebtedness secured thereby is not increased.
e. Borrowers will cause the Company at all times to
maintain a Consolidated Tangible Net Worth of at least $500,000,000.00.
12
13
f. Borrowers will not and will not permit any other
Subsidiary to:
i. Enter into any indenture, agreement or other
instrument under which any Indebtedness allowed by the provisions of
Section 10(c)(v) above is issued (a "Restricted Agreement"); or
ii. Agree to any amendment, waiver, consent,
modification, refunding, refinancing or replacement of any Restricted
Agreement, in either case with terms the effect of which is to
(1) include a default or event of
default (however denominated), an affirmative covenant or a
negative covenant which is not contained in this Agreement, or
(2) revise or alter any default or event
of default (however denominated), affirmative covenant or
negative covenant contained therein, the effect of which is to
increase or expand the events of default, restrictions or
affirmative obligations on any Borrower or any other
Subsidiary,
unless Borrowers concurrently incorporate herein such additional,
altered or revised default or event of default, affirmative covenant
or negative covenant. The incorporation of each such additional
default or event of default, affirmative covenant or negative covenant
is hereby deemed to occur automatically and concurrently by reason of
the execution of this Agreement without any further action or the
execution of any additional document by any of the parties to this
Agreement. Without limiting the foregoing, any Borrower or any other
Subsidiary (or any affiliate of any such parties) will not offer,
directly or indirectly, any economic inducement (including without
limitation, any collateral) to any creditor, lender or other party
under any Restricted Agreement for the purpose of inducing such
lender, creditor or other party to enter into any waiver of any
default, event of default or potential default under such Restricted
Agreement, unless the same such economic inducement has been
concurrently offered and paid to Bank (it being understood and agreed
that the offering of such economic inducement to Bank shall not be
deemed or construed to obligate Bank to enter into any waiver of any
default or potential default hereunder).
g. Borrowers shall cause any domestic Subsidiary which
is not yet a Borrower hereunder to execute and deliver to Bank a Joinder
Agreement promptly after such domestic Subsidiary satisfies either of the
following:
i. The total assets of such domestic Subsidiary
constitute 5% or more of the total consolidated assets of the Company
and its Subsidiaries; or
ii. The net income of such domestic Subsidiary
for any fiscal year constitutes 5% or more of the total consolidated
net income of the Company and its Subsidiaries for such fiscal year.
13
14
For purposes hereof, the above-described total asset and net income thresholds
shall be determined in accordance with generally accepted accounting
principles, consistently applied.
h. Each Borrower will not merge or consolidate or be
merged or consolidated with another entity, or sell, transfer or otherwise
dispose of, in any one transaction or series of related transactions, all or
substantially all of the assets of any Borrower to any person, except that the
foregoing restrictions shall not apply to:
i. Sales or transfers of all or substantially
all of the assets of any Borrower to (1) another Borrower or (2) any
other Subsidiary, if such Subsidiary executes and delivers a Joinder
Agreement to Bank contemporaneously with the applicable sale or
transfer;
ii. Sales or transfers of inventory of any
Borrower in the ordinary course of business;
iii. Sales or transfers of any receivables or
other related assets of any Borrowers, whether such sales or transfers
are to any Subsidiary or any entity not affiliated with any Borrower
or any other Subsidiary, which are reasonably required in connection
with any asset securitization transaction described in Section
10(c)(vi) above; and
iv. Mergers or consolidations of any Borrower
with (1) any other Borrower or Borrowers or (2) any other Subsidiary
or Subsidiaries (so long as such other Subsidiaries (a) are
Subsidiaries as of the effective date of this Agreement or are
Subsidiaries newly formed and created by any Borrower or any other
Subsidiary after the effective date of this Agreement and (b) have not
merged or consolidated, in a single transaction or series of related
transactions, with any entity after the effective date of this
Agreement which is not currently affiliated with any Borrower or any
other Subsidiary), provided that if the surviving Subsidiary after any
such merger or consolidation is not a Borrower hereunder at the time
of such merger or consolidation, such surviving Subsidiary shall,
contemporaneously with such merger or consolidation, execute and
deliver to Bank a Joinder Agreement.
11. Costs. Borrowers shall jointly and severally reimburse Bank
upon demand for the amount of any taxes (other than taxes on income or other
similar taxes) or duties incurred by Bank in connection herewith and the amount
of any expenses incurred by Bank in connection with the preparation,
administration of actions undertaken at the direct request of any Borrower,
modification, or enforcement of this Agreement, including the expenses and fees
of legal counsel to Bank and all court costs and expenses of collection of the
Note, including reasonable attorneys' fees and disbursements therefor.
12. Cancellation, Final Availability Date and Extension Thereof.
The line of credit provided by this Agreement is effective on June 8, 1995, and
expires at the close of business on June 6, 1996, which date shall be the
"Final Availability Date". Either Borrowers or Bank may cancel the Commitment
of Bank under this Agreement with or without cause prior to the Final
Availability Date by providing ninety (90) days prior written notice to the
other specifying the effective date of
14
15
cancellation. If this Agreement is so canceled prior to the Final Availability
Date, (a) all outstanding Loans and other Indebtedness owing by Borrowers
hereunder shall be prepaid in full and satisfied and all issued Letters of
Credit must be canceled or returned to Bank (or be cash secured in an amount
equal to 100% of the undrawn amount of the applicable Letter(s) of Credit by
one or more Borrowers pursuant to documents reasonably acceptable to Bank on or
before the effective date of such cancellation) and (b) the Facility Fee will
be prorated through the effective date of such cancellation. If all
outstanding Loans and other Indebtedness owing by Borrowers hereunder shall be
prepaid in full and satisfied prior to the effective date of such cancellation,
and if all issued Letters of Credit are canceled or returned to Bank or are
cash secured in accordance with the above-described terms, prior to the
effective date of such cancellation, Borrowers shall thereafter have no further
obligation to fully comply with the terms and provisions of Section 10 hereof
if all Borrowers have notified Bank in writing that they have irrevocably
elected to waive any further right to request and receive from Bank any
additional Loans or cause Bank to issue any additional Letters of Credit
hereunder prior to the effective date of such cancellation.
13. Changes in Law.
a. If the effect of any change in any applicable law,
regulation, or requirement, or in the interpretation or administration thereof
by any central bank or other governmental agency charged with the
administration thereof (other than an increase in the rate of a tax on net
income or other similar taxes) is: to increase the cost to Bank of honoring its
commitment to lend hereunder or of making or maintaining any Loan hereunder; to
reduce Bank's return hereunder or on its capital, or to reduce the principal,
interest, or other sums received or receivable by Bank hereunder by virtue of
any Loan hereunder or otherwise; to require the inclusion of any commitment or
Loan hereunder, in whole or in part, in calculations related to Bank's
capitalization or to change the requirements of such calculation or to increase
Bank's capital requirements thereby, as a result of any of which the
profitability to Bank of this Agreement or any Loan hereunder is adversely
affected, Borrowers jointly and severally agree to pay to Bank such additional
amount as shall compensate Bank for any of the foregoing additional costs or
reductions. Such additional amounts shall be payable on the next Interest
Period ending date following the event causing the additional cost to Bank, or
the date following thirty (30) days after written notice from Bank (which
notice, and the additional amount or amounts determined by Bank set forth
therein shall be conclusive and binding on Borrowers except in the case of
manifest error), whichever in any of the foregoing cases is the shorter period.
b. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for Bank to make,
maintain or fund its Eurodollar Rate Borrowings and Bank shall so notify
Borrowers, whereupon until Bank notifies Borrowers that the circumstances
giving rise to such suspension no longer exist, the obligation of Bank to make
Eurodollar Rate Borrowings shall be suspended. If Bank shall determine that it
may not lawfully continue to maintain and fund any of its outstanding
Eurodollar Rate Borrowings to maturity and shall so specify in any such notice,
Borrowers shall immediately prepay in full the then outstanding principal
amount of each such Eurodollar Rate
15
16
Borrowings, together with accrued interest thereon. Concurrently with
prepaying each such Eurodollar Rate Borrowings, Borrowers shall borrow a Base
Rate Loan in an equal principal amount from Bank (on which interest and
principal shall be payable contemporaneously with any related Eurodollar Rate
Borrowings of other banks), and Bank shall make such a Base Rate Loan.
14. Default. The occurrence of any of the following shall
constitute a default hereunder:
a. Any amounts due hereunder are not paid (i) with
respect to principal when due, (ii) with respect to interest within three (3)
days after due, or (iii) with respect to other amounts within ten (10) days
after due; or
b. Any Borrower shall continue in breach or default of
any obligation or covenant hereunder, except as provided in Sections 14(a) or
14(c)-(g) hereof, after 45 days notice thereof by Bank; or
c. Any Borrower shall fail to pay when due, whether at
maturity, by acceleration or otherwise, any other Indebtedness in excess (in
the aggregate) of $25,000,000 or any other default shall occur under any
agreement or instrument evidencing, securing or relating to any Indebtedness in
excess (in the aggregate) of $25,000,000 after any applicable period of grace
or notice such that in either case such Indebtedness is accelerated; or
d. Any representation or warranty made or deemed made by
any Borrower herein or in any certificate or document furnished or executed
pursuant hereto or thereto proves untrue in any material respect when made or
deemed made; or
e. Any Borrower shall generally not, or shall be unable
to, or shall admit in writing its inability to pay its debts as such debts
become due or otherwise becomes insolvent or bankrupt, or makes an assignment
for the benefit of creditors, or a trustee or receiver is appointed for any
Borrower or for any material part of its properties with its consent, or if
appointed without its consent, such trustee or receiver is not discharged
within 45 days; or bankruptcy, reorganization, liquidation or similar
proceedings are instituted by or against any Borrower, and if instituted
against it are consented to by it or remain undismissed for 45 days; or a writ
or warrant of attachment or similar process shall be issued against a
substantial part of the property of any Borrower and shall not be released or
bonded within 45 days after levy; or
f. This Agreement or any other instrument or agreement
contemplated hereunder shall at any time and for any reason be declared to be
null and void, or a proceeding shall be commenced by any Borrower, or by any
governmental authority having jurisdiction over any Borrower, seeking to
establish the invalidity or unenforceability hereof or thereof, or any Borrower
shall deny that it has any liability or obligation for the payment of any
principal, interest or fees created under this Agreement or any instrument or
agreement contemplated hereunder; or
g. A final, nonappealable judgment or order for the
payment of money in excess of $1,000,000 shall be rendered against any Borrower
and such judgement or order shall continue unsatisfied and unstayed for a
period of thirty (30) days; or
16
17
h. Any Borrower shall be prevented or relieved by any
governmental authority from performing or observing any monetary payment or
repayment obligations evidenced by this Agreement or any other related
documents.
If any of the foregoing defaults shall occur, then Bank may do any or all of
the following: (1) terminate Bank's Commitment hereunder, whereupon the
obligation of Bank to permit any additional borrowing hereunder shall terminate
without further demand or notice of any kind whatsoever (other than any notice
expressly required by other provisions of this Agreement); (2) declare the Note
and all Indebtedness hereunder to be immediately due and payable; and (3)
exercise any and all other rights pursuant to this Agreement and all other
related documents or available under applicable law. In addition, if any
default of the type specified in subparagraph (e) above shall occur, Bank's
Commitment hereunder shall automatically terminate and the Note and all
Indebtedness hereunder shall be immediately due and payable without giving
notice of any kind and the obligation of Bank to permit any additional
borrowing hereunder shall terminate without demand, notice or acceleration of
any kind whatsoever (with Borrowers and any and all other co-makers, endorsers,
guarantors and sureties severally waiving any and all notices, including
without limitation, notice of intent to accelerate, notice of acceleration,
notice of protest, notice of dishonor, demand, presentation for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability).
In addition, upon the occurrence of any of the foregoing defaults and for so
long as any Letter of Credit shall remain outstanding, any amounts received by
Bank pursuant to the preceding paragraph with respect to the amounts available
for drawing under such Letters of Credit shall be held in a collateral account
maintained by Borrowers with Bank ("Collateral Account"), which account (and
all investments held therein) shall be held in the name of and subject to the
dominion and control of Bank, as cash collateral for the reimbursement
obligations of Borrowers in the event of any drawing under any such Letter of
Credit. Upon any drawing under any such letter of credit, Bank shall apply
such amounts held in Collateral Account to such reimbursement obligations.
Borrowers hereby grant to Bank a security interest in and right of set-off
against any and all of the funds held in the Collateral Account from time to
time and any instruments evidencing the foregoing to secure the obligations of
Borrowers hereunder in respect of such Letters of Credit issued pursuant
hereto, any and all other reimbursement obligations arising in connection
therewith, and all other obligations of Borrowers hereunder. Bank shall have
the rights, powers and remedies of a secured party under the Uniform Commercial
Code in effect in the State of Texas with respect to the funds held in the
Collateral Account from time to time. Borrowers shall take such actions from
time to time as Bank may reasonably request to perfect and preserve the
security interests provided for in this paragraph.
Upon the latter to occur of (i) the satisfaction and payment in full of all
obligations of Borrowers hereunder, or (ii) the termination or expiration of
all Letters of Credit issued pursuant hereto of each such letter of Credit to
Bank, Bank shall release all funds held in the Collateral Account to or upon
the order of Borrowers (or as a court of competent jurisdiction may otherwise
direct).
15. Remedies, Other Matters.
17
18
a. No failure or delay on the part of Bank in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
rights, power or privilege. The rights and remedies herein expressly provided
are cumulative and are not exclusive of any rights or remedies that Bank or any
subsequent holder(s) of the Note would otherwise have.
b. Upon the acceleration of the Indebtedness hereunder,
Bank is hereby authorized at any time or from time to time thereafter, without
notice to Borrowers, any such notice being hereby expressly waived, to setoff
and to appropriate and to apply any and all deposits (general or special) and
any other Indebtedness at any time held or owing by Bank to or for the credit
or the account of any Borrower against and on account of any Indebtedness of
Borrowers to Bank hereunder.
c. The descriptive headings of the several articles,
sections and subsections of this Agreement are inserted for convenience only
and shall not be deemed to affect the meaning or construction of any provisions
hereof.
d. THIS AGREEMENT OR ANY PROVISION HEREOF OR DOCUMENT
REFERRED TO HEREIN MAY BE CHANGED, WAIVED DISCHARGED OR TERMINATED ONLY BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT OF THE
CHANGE, WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.
e. This Agreement will be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns, and, in particular, will inure to the benefit of the
holders from time to time of the Promissory Note; provided, however, that
Borrowers may not assign or transfer their rights or obligations hereunder
without the prior written consent of Bank. Bank shall have the right to sell
participations in its interest hereunder to one or more financial institutions
or other entities, and in the event of any such sale by Bank of any
participating interest to any participant, Bank's obligations hereunder to the
other parties to this Agreement shall remain unchanged, Bank shall remain
solely responsible for the performance thereof, and Borrowers shall continue to
deal solely and directly with Bank in connection with Bank's rights and
obligations under this Agreement and all other related documents. Bank shall
also have the right to assign all or any portion of its interest hereunder to
one or more financial institutions with the consent of Borrowers, which consent
shall not be unreasonably withheld. Upon any such assignment, the assignee(s)
shall be a party hereto and have the rights and obligations of Bank hereunder,
and in the event of a sale of all of its interest hereunder, Bank shall be
released from all further obligations under this Agreement. Each Borrower
authorizes Bank to disclose to any prospective participant or assignee any and
all financial information in Bank's possession concerning Borrowers and their
Subsidiaries which has been delivered to Bank pursuant to this Agreement or in
connection with Bank's credit evaluation of Borrowers and their Subsidiaries
prior to the execution and delivery of this Agreement; provided, that such
potential participants or assignees agree not to disclose any confidential,
nonpublic information delivered to any of them, except to the extent required
by applicable law.
18
19
f. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all of which together constitute one and the same instrument.
g. BORROWERS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY,
HOLD HARMLESS AND DEFEND BANK AGAINST ANY CLAIM, DEMAND, ACTION, SUIT, LOSS OR
LIABILITY ARISING IN ANY MANNER, WHETHER OR NOT FROM THE NEGLIGENCE (BUT NOT
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF BANK, FROM THIS AGREEMENT OR THE
NOTE OR FROM ANY ACTION, INACTION OR OMISSION OF BANK IN CONNECTION HEREWITH OR
WITH ANY RELATED DOCUMENTS OR PROPERTY OR OTHERWISE HEREUNDER, AND BORROWERS
AGREE THAT BANK SHALL NOT BE LIABLE TO BORROWERS FOR ANY SUCH ACTION, INACTION
OR OMISSION UNLESS CONSTITUTING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
BANK.
h. THIS AGREEMENT SHALL BE DELIVERED TO BANK IN DALLAS,
TEXAS (THE PLACE OF PERFORMANCE HEREUNDER), AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
i. All notices under this Agreement or any other related
document shall be in writing and either (a) hand delivered against receipt
therefor, (b) mailed by registered or certified mail, return receipt requested
or (c) sent by telecopy or telegram, in each case to the intended recipient at
the "Address for Notice" specified adjacent to its name on the signature pages
hereof, or to such other address as a party hereto may designate to all other
parties hereto in writing at least ten (10) days prior to the effective date of
such change of address. Notices shall be deemed to have been given on the date
of receipt if hand delivered, two (2) Business Days after the date of deposit
of the same into the U.S. mail if mailed, or upon receipt if sent by telecopy
or telegram.
19
20
THIS AGREEMENT AND ALL OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES TO IT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
BORROWERS: DELL COMPUTER CORPORATION, a Delaware
corporation
By: /s/ DALTON W. KAYE
Name: Dalton W. Kaye
Address for Notices: Title: Vice President/ Treasurer
2214 W. Braker Lane
Suite D
Austin, Texas 78758-4063
Attention: Dalton W. Kaye
DELL PRODUCTS L.P., a Texas limited
partnership
By: Dell Gen. P. Corp.
a Delaware corporation
General Partner
By: /s/ DALTON W. KAYE
Name: Dalton W. Kaye
Address for Notices: Title: Vice President/Treasurer
2214 W. Braker Lane
Suite D
Austin, Texas 78758-4063
Attention: Dalton W. Kaye
20
21
DELL USA L.P., a Texas limited partnership
By: Dell Gen. P. Corp.
a Delaware corporation
General Partner
By: /s/ DALTON W. KAYE
Name: Dalton W. Kaye
Address for Notices: Title: Vice President/Treasurer
2214 W. Braker Lane
Suite D
Austin, Texas 78758-4063
Attention: Dalton W. Kaye
DELL MARKETING L.P., a Texas limited
partnership
By: Dell Gen. P. Corp.
a Delaware corporation
General Partner
By: /s/ DALTON W. KAYE
Name: Dalton W. Kaye
Address for Notices: Title: Vice President/Treasurer
2214 W. Braker Lane
Suite D
Austin, Texas 78758-4063
Attention: Dalton W. Kaye
DELL DIRECT SALES L.P., a Texas limited
partnership
By: Dell Gen. P. Corp.
a Delaware corporation
General Partner
By: /s/ DALTON W. KAYE
Name: Dalton W. Kaye
Address for Notices: Title: Vice President/Treasurer
2214 W. Braker Lane
Suite D
Austin, Texas 78758-4063
Attention: Dalton W. Kaye
21
22
BANK: NATIONSBANK OF TEXAS, N.A.
By: /s/ WILLIAM C. COLLINS
Name: William C. Collins
Address for Notices: Title: Senior Vice President
Nationsbank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75283
Attention: Ms. Karen Puente
Telephone: (214) 508-0519
Telecopy: (214) 508-0944
22
23
Exhibit A
SAMPLE BORROWING CERTIFICATE
____________________
NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75283
We confirm the borrowing information as indicated below:
Date of Principal Maturity No. Days Interest Interest Amt. Due
------- --------- -------- -------- -------- -------- --------
Loan Amt. Loan Date Borrow Basis Rate at Maturity
---- --------- ---- ------ ----- ---- -----------
Type of Borrowing:
Settlement Instructions:
Credit Proceeds in Federal Funds to:
ABA No.
Bank Name:
City, State:
Account No.:
Reference:
By making the request to borrow hereunder, Borrower represents that
all representations and warranties made by it in Section 9 of the related
Committed Credit Line Agreement are true and correct, except that the
representation in Section 9(b) shall be deemed given only as to the most recent
audited financial statement of Borrower that has been provided to Bank, and
that no default pursuant to Section 14 thereof has occurred or will occur as a
result of such borrowing.
Sincerely,
_____________________________________
Title: _____________________________
24
Exhibit B
PROMISSORY NOTE
For value received, the undersigned entities (collectively the
"Borrowers" and individually a "Borrower") jointly and severally promise to pay
to the order of Nationsbank of Texas, N.A. ("Bank"), the principal amount of
$25,000,000.00, or if less, the aggregate unpaid principal amount of all Loans
made by Bank to any Borrower pursuant to the U.S. $25,000,000.00 Committed
Credit Line Agreement (the "Agreement") referred to below, together with
interest thereon from the date of such borrowing(s) at the rate or rates
specified in the Agreement and Borrowing Certificate thereto, and on the
date(s) provided therein. All such payments of principal and interest shall be
made in lawful money of the United States in immediately available funds at
Bank's address as set forth in the Agreement.
Each Loan made by Bank to any Borrower, the maturity thereof, interest
rate basis and rate, and amounts due at maturity, shall be recorded by Bank in
its books and records, and prior to any transfer hereof, endorsed on a schedule
that may be attached hereto as a part of this Promissory Note, provided that
the failure of Bank to make any such recordation or endorsement shall not limit
or otherwise affect the obligations of Borrowers hereunder or under the
Agreement.
Except for any notice expressly provided for and required by the terms
of the Agreement, Borrowers hereby waive notice of acceleration, notice of
intent to accelerate, demand, presentment, notice of dishonor, protest and
diligence in collecting sums due hereunder. Borrowers jointly and severally
agree to reimburse Bank for its expense, including reasonable attorney's fees,
in connection with collection of any sums due to Bank hereunder.
This Promissory Note is a Promissory Note referred to in the Committed
Credit Line Agreement dated as of June 8, 1995, between Borrowers and Bank, and
terms defined in such Agreement are used herein with the same meanings.
Reference is made to the Agreement for provisions for the payment and
prepayment hereof.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS
DELL COMPUTER CORPORATION,
a Delaware corporation
By: ____________________________________
Name: _________________________
Title: _________________________
25
DELL PRODUCTS L.P., a Texas limited partnership
By: Dell Gen. P. Corp,
a Delaware corporation,
General Partner
By: ____________________________________
Name: _________________________
Title: _________________________
DELL USA L.P., a Texas limited partnership
By: Dell Gen. P. Corp,
a Delaware corporation,
General Partner
By: ____________________________________
Name: _________________________
Title: _________________________
DELL MARKETING L.P., a Texas limited partnership
By: Dell Gen. P. Corp,
a Delaware corporation,
General Partner
By: ____________________________________
Name: _________________________
Title: _________________________
DELL DIRECT SALES L.P., a Texas limited
partnership
By: Dell Gen. P. Corp,
a Delaware corporation,
General Partner
By: ____________________________________
Name: _________________________
Title: _________________________
26
Exhibit C
_______________, 1995
NationsBank of Texas, N.A.
901 Main Street
P. O. Box 831000
Dallas, Texas 75283-1000
Ladies and Gentlemen:
I am the General Corporate Counsel of Dell Computer Corporation
("Dell"), a Delaware corporation. This letter is being furnished to you in
connection with that certain Committed Credit Line Agreement, dated as of June
8, 1995 (the "Credit Agreement") between Dell, Dell Products L.P. ("Dell
Products"), a Texas limited partnership, Dell USA L.P. ("Dell USA"), a Texas
limited partnership, Dell Marketing L.P. ("Dell Marketing"), a Texas limited
partnership, Dell Direct Sales L.P. ("Dell Direct"), a Texas limited
partnership, and you. Dell Products, Dell USA, Dell Marketing and Dell Direct
are referred to herein collectively as the "Partnership Borrowers," and Dell
and the Partnership Borrowers are referred to herein collectively as the
"Borrowers." The general partner of each of the Partnership Borrowers is Dell
Gen. P. Corp ("Dell GP"), a Delaware corporation that is a wholly-owned
subsidiary of Dell.
I have participated in the review of each of the following documents
executed and delivered in connection with the Credit Agreement (collectively
the "Loan Documents"):
(a) The Credit Agreement;
(b) The Promissory Note in the original principal amount of
$25,000,000.00, executed by the Borrowers, payable to your
order;
(c) The Contribution Agreement executed by the Borrowers; and
(d) The Notice of Entire Agreement and DTPA Waiver executed by the
Borrowers and you.
I am familiar with the terms of the Loan Documents and have consulted
with such officers of Dell and such officers of Dell GP as I deem necessary
concerning the Loan Documents. I also have examined or am familiar with such
other documents, instruments and corporate and partnership records as I have
deemed necessary or appropriate for the purposes of rendering the opinions set
forth below.
27
NationsBank of Texas, N.A.
_______________, 1995
Page 2
Based on the foregoing and subject to the qualifications and matters
set forth below, I am of the following opinions:
A. Dell is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with corporate power
to own and operate its properties and to conduct its business as presently
conducted and to execute and perform the Credit Agreement. Dell is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction where it is required to be qualified, except
where the failure to be so qualified or in good standing would not reasonably
be expected to have a material adverse effect on the consolidated business of
the Borrowers.
B. Dell GP is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware with corporate
power to own and operate its properties and to conduct its business as
presently conducted. Dell GP is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction where
it is required to be qualified, except where the failure to be so qualified or
in good standing would not reasonably be expected to have a material adverse
effect on the consolidated business of the Borrowers. Dell GP is the sole
general partner of each of the Partnership Borrowers and, in such capacity, has
all requisite power and authority under the respective partnership agreements
of the Partnership Borrowers and the Texas Revised Limited Partnership Act to
execute the Credit Agreement on behalf of each of the Partnership Borrowers.
C. Each of the Partnership Borrowers is a limited partnership
duly organized and validly existing under the laws of the State of Texas with
all requisite partnership power and authority to own and operate its properties
and to conduct its business as presently conducted and to execute and perform
the Loan Documents to which it is a party. Each of the Partnership Borrowers
is duly qualified to do business as a foreign partnership under the laws of
each jurisdiction where it is required to be qualified, except where the
failure to be so qualified would not reasonably be expected to have a material
adverse effect on the consolidated business of the Borrowers.
D. The execution and delivery of the Loan Documents has been duly
authorized by all necessary corporate or partnership action of each Borrower,
and (assuming that the Loan Documents are enforceable against you) the Loan
Documents constitute (or, to the extent any portion thereof has not been
executed, when so executed and delivered will constitute) legal, valid and
binding obligations of the Borrowers enforceable against them in accordance
with their respective terms (except
28
NationsBank of Texas, N.A.
_______________, 1995
Page 3
as enforcement may be subject to any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting the
enforcement of creditors' rights generally or general principles of equity).
E. The execution, delivery and performance by the Borrowers of
the Loan Documents will not (1) conflict with or result in the breach of or
accelerate the performance required by any of the terms, conditions or
provisions of (a) the Certificate of Incorporation or Bylaws of Dell or the
partnership agreement or certificate of limited partnership of any of the
Partnership Borrowers or (b) any covenant, agreement or instrument known to me
to which any of the Borrowers is bound in connection with or in respect of any
obligation for borrowed money or (2) violate or conflict with any order,
ruling, decree, judgment, arbitration award, stipulation, statute, rule or
regulation known to me to which any of the Borrowers is subject, except for any
conflict, breach, acceleration or violation referred to in clause (1)(a) above
or clause (2) above that would not reasonably be expected to have a material
adverse effect on the consolidated business of the Borrowers or the
enforceability of the Loan Documents.
F. To the best of my knowledge, after due inquiry, no approval,
consent, exemption or action by, or notice to or filing with, any governmental
authority is necessary in connection with the execution, delivery or
performance by the Borrowers of the Credit Agreement or any other Loan
Document, other than routine filings after the date hereof with the Securities
and Exchange Commission.
G. To the best of my knowledge, after due inquiry, there are no
suits, proceedings, claims or disputes pending (nor, to my knowledge, after due
inquiry, are any actions, suits or proceedings threatened) against or affecting
any of the Borrowers that, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on the consolidated financial
condition of the Borrowers or on their ability to perform their obligations
under the Loan Documents.
I am admitted to practice law only in the State of Texas, and I
express no opinion as to the laws of any other jurisdiction other than the
General Corporation Law of the State of Delaware.
29
NationsBank of Texas, N.A.
_______________, 1995
Page 4
This opinion is being furnished to you solely for your benefit in
connection with the Credit Agreement and is not to be used, circulated, quoted
or otherwise referred to for any other purpose without the express written
permission of Dell.
Sincerely,
_____________________________
Thomas H. Welch, Jr.,
General Corporate Counsel
30
SCHEDULES
The following is a list of the schedules accompanying the foregoing Committed
Credit Line Agreement, which have been omitted from this filing:
Schedule II -- Existing Indebtedness
Schedule III -- Liens
The Company hereby undertakes to furnish supplementally a copy of any of
such schedules to the Commission upon request.
31
SCHEDULE OF SIMILAR AGREEMENTS
The following is a schedule of other Committed Credit Line Agreements
entered into by the Company, each of which agreement is substantially identical
to the foregoing Committed Credit Line Agreement, except as to the identity of
the Bank that is a party thereto (which is indicated below):
Name of Agreement Identity of Bank
----------------- ----------------
Committed Credit Line Agreement,
dated as of June 8, 1995 . . . . . . . . . . . . . . . . Barclays Bank, PLC
Committed Credit Line Agreement,
dated as of June 8, 1995 . . . . . . . . . . . . . . . . Chemical Bank
Committed Credit Line Agreement,
dated as of June 8, 1995 . . . . . . . . . . . . . . . . Credit Lyonnais New York Branch
Committed Credit Line Agreement,
dated as of June 8, 1995 . . . . . . . . . . . . . . . . First Interstate Bank of Texas, N.A.
Committed Credit Line Agreement,
dated as of June 8, 1995 . . . . . . . . . . . . . . . . Royal Bank of Canada
EX-10.2
13
SEVERANCE AGREEMENT DATED JUNE 15, 1995
1
EXHIBIT 10.2
[DELL LOGO]
June 15, 1995
Mr. Thomas L. Thomas
7100 Valburn Drive
Austin, Texas 78731
Dear Tom:
This letter sets forth the mutual agreement (the "Agreement") between Dell
Computer Corporation for itself and its subsidiaries (collectively, the
"Company") and you regarding your voluntary election to terminate your
employment by the Company.
1. You and Dell agree that this Agreement is entered into in connection
with the amicable termination of your employment by Dell, and that your
employment will be terminated effective 11:59 p.m. local time in Austin, Texas
on July 1, 1995 (the "Termination Effective Date"). The Company agrees to pay
to you in full all of your salary and every other type of benefit due and owing
to you or accrued to you (including any accrued right to present or future
deferred compensation) through and including the Termination Effective Date.
Disability insurance benefits will be discontinued on the Termination Effective
Date.
2. You agree that you are not entitled to receive from Dell, or from any
of its officers, managers, directors, employees, agents or representatives, any
form of consideration or the payment of any amount other than what is
expressly set forth in this Agreement. You agree that you are not entitled to
receive from Dell any payment or distribution of any other type of property,
except as expressly set forth in this Agreement. You further agree that as of
June 15, 1995 (the "Execution Date") you do not own and do not hold any rights
to outstanding vested and unexercised stock options to purchase shares of
Dell's Common Stock from the Company with the exception of the following shares
at the indicated exercise prices: 10,000 shares at $36.31 per share; 3,333
shares at $22.50 per share; and, 2,500 shares at $.01 per share. As provided
in the option agreements, the period for you to exercise all of such options
will expire and terminate automatically without further notice 30 days after
the Termination Effective Date. In addition, as provided in the option
agreements, if you fail to exercise any or all of the options listed in this
paragraph prior to the expiration of this 30 day period, you will lose the
right to acquire the shares subject to any of such options which remain
unexercised at that time, and all of such unexercised options shall become null
and void and of no further force or effect without
2
Mr. Thomas L. Thomas
June 15, 1995
Page 2
any further action or notice of any kind. In the exercise of such options, as
well as in connection with any other transactions involving Dell's securities,
you understand and agree that you are and will be subject to all the
requirements of applicable laws, rules and regulations.
3. Dell agrees to continue to pay your current salary in the gross amount
of $22,750.00 per month through December 31, 1995. Payment shall be made by
checks, mailed to you at your address above twice per month, on the 15th
business day of each month and on the final business day of each month, for
which salary continuance is applicable. Each payment will be subject to all
deductions required by law to include withholding tax, payroll tax, FICA,
and/or other amounts. Notwithstanding the foregoing, the salary continuation
payment set forth above shall automatically terminate and expire as of the date
that you enter into a full-time employment relationship with any third party,
and you agree to notify Dell in writing promptly upon agreeing with any third
party to enter into a full-time employment relationship, and to return to Dell
the pro rata portion of any salary payments covering any period during which
you are so employed by any third party. Subject to the other provisions of
this agreement, non-payroll based temporary consulting projects shall not cause
the termination of these salary continuation payments. In addition, Dell
agrees to provide you with up to six (6) months of executive outplacement
services with Reedie-York & Associates, Inc., commencing upon July 1, 1995.
4. You agree that the consideration and promises set forth in this
Agreement constitute full and adequate consideration to support this Agreement
and each provision hereof. In addition to the other consideration granted to
you in this Agreement, the Company agrees to allow you to retain, as your sole
property, the Dell 466L Desktop Computer (asset tag number 111804) used in your
home and the Dell Latitude XP 433 notebook computer (asset tag number 112162)
currently in your possession. You shall have access to these items and to your
personal office during regular office hours until 5:00 p.m. local time on
Saturday, July 1, 1995 as necessary to remove these items and your personal
belongings.
5. Your vested balance in Dell's 401(k) Plan Trust (if any) and Dell's
Deferred Compensation Plan will be available for you to withdraw or roll over
in accordance with the provisions of the Plan after the Termination Effective
Date, subject to applicable laws and regulations. Any balance you may have in
Dell's Employee Stock Purchase Plan will also be used to purchase stock prior
to the Termination Effective Date as provided in the Plan or available for you
to withdraw in accordance with the provisions of the Plan.
6. As of the Execution Date, you resigned from all positions as a
corporate officer or director of Dell Computer Corporation and its subsidiaries
and affiliates, without prejudice to your rights to compensation through the
Termination Effective Date. You agree that upon reasonable request from Dell's
General Counsel, you will separately confirm such resignations in writing.
From and after the Termination Effective Date, you will have no duties,
obligations or responsibilities to perform any work or services for or on
behalf of the Company except as expressly provided in this Agreement. You will
be free to undertake other employment after the Termination Effective Date so
long as your employment and services do not contravene any other provision of
this Agreement.
3
Mr. Thomas L. Thomas
June 15, 1995
Page 3
7. The Company is immediately entitled to receive and recover from you
any of the profits received by you from the stock options with accelerated
vesting, as further described in Paragraph 17, in the event, and only in the
event, and to the extent, and only to the extent, of any loss or expense
incurred by the Company due to your breach of any provision of this Agreement,
including any provision requiring future compliance with the Federal Securities
Laws, to the extent that such loss or expense would otherwise be recoverable in
an action for breach of the Agreement.
8. You agree that by execution of this Agreement you fully, finally,
completely and generally release the Company and each of its officers,
managers, directors, control persons, employees, agents and representatives,
individually and separately, from any and all claims, actions, liabilities,
obligations, demands, and/or causes of action, of whatever kind or character,
whether known or unknown, arising from, relating to, or in any way connected
with (i) any of the foregoing persons, (ii) your employment, resignation or
termination of employment with the Company, (iii) your decision to move to or
from or accept employment in Austin, Texas, (iv) your severance of employment
with your former employer prior to accepting employment with the Company, and
(v) any act or omission that has occurred on or before the Execution Date in
connection with any activity related to any of the foregoing persons or to any
activity, statements, controversy or dispute related to your employment,
resignation or termination of employment with the Company. The foregoing
release does not cover any claim, demand, or cause of action to the extent that
it arises out of any breach of or default under this Agreement or any other act
or omission after the Execution Date.
9. The release set forth in Paragraph 8 above shall be construed as
broadly as possible and shall include without limitation: (1) any tort,
contractual or other claim you may have; (2) any claim arising out of or in
connection with the initiation, termination or existence of your employment
relationship with the Company, or any act, service or omission performed or not
performed by or on behalf of the Company; (3) any claim arising under the
Federal Age Discrimination in Employment Act, the Civil Rights Act of 1964, or
any applicable Texas statute or regulation; and (4) except as to rights under
the plans described in Paragraph 5 above and the stock options described in
Paragraph 2 above and Paragraph 17 below, any claim regarding accrued vacation,
bonuses, deferred compensation or any other form of tangible or intangible
benefit from or attributable to the Company or any of the persons described in
Paragraph 8. You represent that you have not assigned to any other person any
of the claims and causes of action described in this Paragraph and in Paragraph
8 and that you have the full right to grant the release set forth in this
Agreement.
10. The Company hereby fully, finally, completely and generally releases
you from any and all claims, actions, demands and/or causes of action, of
whatever kind or character, whether known or unknown, arising from, relating
to, or in any way connected with any act or omission by you that has occurred
on or before the Execution Date in connection with your employment by the
Company; provided, however, that such release shall not be applicable to any
acts or omissions by you which constitute willful or intentional misconduct, or
willful or intentional wrongdoing. The foregoing release does not cover any
claim, demand, or cause of action to the
4
Mr. Thomas L. Thomas
June 15, 1995
Page 4
extent that it arises out of any breach of or default under this Agreement or
any other act or omission after the Execution Date.
11. The release set forth in Paragraph 10 above shall be construed as
broadly as possible and shall include without limitation: (1) any tort,
contractual or other claim the Company may have; (2) any claim arising out of
or in connection with the initiation, termination or existence of your
employment relationship with the Company; and (3) any claim arising out of any
act, service or omission performed or not performed by you; but shall not
include any act or omission by you which constitutes willful or intentional
misconduct, or willful or intentional wrongdoing. The Company represents that
it has not assigned to any other person any of the claims and causes of action
described in this Paragraph and in Paragraph 10 and that it has the full right
to grant the release set forth in this Agreement.
12. You represent that you do not have in your possession or under your
control any correspondence, any memoranda, or any other documents or tangible
media of any kind (whether duplicated, copies or originals) which contain any
information belonging to the Company or related in any manner whatsoever to its
business. You agree that you will not take any such documents or media as
described above from the control or premises of the Company, and that if you
should find yourself in the possession of any of the same, you will return all
of the same (and any duplications and copies thereof) to the Company
immediately. You will have the right to review the Company's records at any
reasonable time upon reasonable notice, and to make copies or extracts thereof,
as necessary to respond to any third party claim, demand, or inquiry into the
propriety of your conduct while employed by the Company, provided that the
Company may take any measures deemed by it to be necessary (including denial of
access by you) to protect its trade secrets or Confidential and Proprietary
Information as herein defined.
13. For the duration of the "Restriction Period" (which for purposes of
this Agreement shall be defined to mean the period from the Execution Date,
through and including December 31, 1995), except as permitted under Paragraph 4
above, as incidental to the negotiation and documentation of this agreement, or
as otherwise requested or permitted by the Company, you will not return to the
place of business where you were employed by the Company, you will not travel
to or visit any of the Company's business locations, and you will not call or
visit any of the Company's employees during working hours or in any way or at
any time disrupt or undertake any activity that would have a tendency to
disrupt the business endeavors of the Company or its employees. Upon the
Company's prior request or permission, you may visit the Company for the
purpose of establishing and maintaining a business relationship between your
new employer, or any person for whom you may be consulting, and the Company.
14. You acknowledge that the Company conducts business in all fifty states
of the United States and in numerous foreign nations including but not limited
to the countries of the U.K., Ireland, France, Germany, Spain, Italy,
Switzerland, Finland, Norway, Sweden, Canada, Mexico, Australia, Japan,
Malaysia, Hong Kong, the Czech Republic and Poland. You further acknowledge
and agree that in your position with the Company you have since March 1993
represented the Company throughout the world; that you have received from the
Company unique and special knowledge and training which was not previously
available to you before
5
Mr. Thomas L. Thomas
June 15, 1995
Page 5
your employment with the Company; that the Company possesses and utilizes at
the Execution Date trade secrets not known or used by the Company's
competitors, which trade secrets give the Company an advantage over its
competitors; that during your employment with the Company you have received
knowledge of and confidential information about the Company's trade secrets
including but not limited to those relating to its production, research,
marketing, service, support, pricing and sales practices and policies; that at
the Execution Date the Company's manufacturing, administrative and other
premises are restricted by security procedures put in place by the Company
and that Company-hired security guards are on duty at all times to monitor and
protect the Company's premises and information; that it would take any person
or entity a significant amount of time to enter any of the Company's markets
and to achieve substantial commercial success in such markets because the
necessary understanding of any technical data and information relating to such
markets (and to their customers, pricing, product offerings and service
delivery methods) would be difficult and costly to develop; that you were
involved in organizing the Company's information systems and had access to the
Company's sales data; and that unauthorized use by you of the knowledge,
information, data and trade secrets of the Company described above would
seriously damage the Company and hinder its ability to do business worldwide.
The character of any knowledge or information as a trade secret will be
determined from time to time according to the facts then prevailing and
applicable law. Nothing in this Paragraph 14 will cause any knowledge or
information which is not in fact a trade secret to be treated as such.
15. Non-Competition. For the duration of the Restriction Period, you agree
that, without the prior written approval of the Company's Vice President of
Human Resources, you will not manage, operate, join, control or participate in,
directly or indirectly, consult on behalf of or for the benefit of, or derive
any benefit whatsoever from or be an officer, director, employee, partner,
agent, or consultant of, any business or activity of any of the following
companies, or of any parent, subsidiary or affiliate of any of the following
companies: Compaq Computer Corporation, Gateway 2000, Inc., International
Business Machines, Inc., Apple Computer, Inc. (the "Competitors"). You will
not be in violation of this Paragraph 15 merely because you own publicly traded
securities issued by a Competitor as long as you own less than 5% of any class
of such securities then outstanding. The prohibition of this Paragraph 15
will cease to apply if and when there is a final judicial determination by a
court of competent jurisdiction that the Company has committed a substantial
breach or default in the performance of any of its material obligations under
this Agreement.
16. You agree that the non-competition provision set forth in Paragraph 15
is ancillary to this Agreement, that this Agreement is an otherwise enforceable
agreement, and that the non-competition provision is therefore ancillary to an
otherwise enforceable agreement. You further agree that the non-competition
provision contains reasonable limitations as to the time, geographical area and
scope of activity for which you are to be restrained; that the limitations of
this Agreement and your covenant not to compete with the Company do not impose
a greater restraint than is necessary to protect the goodwill or other business
interests of the Company; and that the primary purpose of this Agreement does
not obligate you to render personal services to the Company.
6
Mr. Thomas L. Thomas
June 15, 1995
Page 6
17. As separate consideration for the non-competition provision set forth
in Paragraph 15, the Company and you hereby amend the stock option grant
agreements relating to stock options previously granted to you, but currently
unvested, so as to accelerate the vesting dates for the following currently
unvested options which you hold to purchase shares of Dell's Common Stock at
the indicated exercise prices per share: 5,000 shares at $.01 per share; and,
3,333 shares at $22.50 per share. The vesting dates for each of such options
are hereby accelerated so as to cause 100% of each such option to vest on the
Termination Effective Date. Further, you may exercise, after June 29, 1995,
any rights to outstanding vested and unexercised stock options to purchase
2,600 shares of Dell's Common Stock at $26.00 per share presently scheduled to
vest on June 29, 1995. The period for you to exercise all of the above options
will expire and terminate automatically without further notice thirty (30) days
after the Termination Effective Date. You understand and agree that you will
have no right to exercise options or purchase Dell's Common Stock from the
Company except as set forth in this letter Agreement, and you and the Company
further agree that the stock option agreements between you and the Company
which relate to the options described in this Paragraph 17 are amended to the
extent necessary (and only to the extent necessary) to accelerate the vesting
dates for the options described in this Paragraph 17. You also understand and
agree that your right to exercise options and purchase Dell's Common Stock in
accordance with this Agreement is further conditioned upon your compliance with
the provisions of the stock option agreements (as amended hereby) in effect
between you and the Company, and upon your full and complete compliance with
the remaining provisions of this Paragraph 17.
In addition to your other holdings of the Company's stock, on the Termination
Effective Date you will own 1,500 shares of the Company's Common Stock which
were issued to you as of March 10, 1994 upon your exercise of an option under
the Special and Nonstatutory Stock Option Agreement under Dell Computer
Corporation 1989 Stock Option Plan dated November 16, 1992 (the "1992 Option
Agreement") and which are subject to restrictions on transfer (the "Two Year
Restriction") for a period of two years. These 1,500 shares are currently held
by the Company, in accordance with the paragraph of the 1992 Option Agreement
entitled "Limitations on Ownership of Common Stock received on Exercise." In
addition, 60% of the 2,500 shares (which amount is 1,500 shares) at $.01 per
share referred to in Paragraph 2 will also be subject to the Two Year
Restriction upon your exercise of those options, in accordance with the 1992
Option Agreement.
Finally, 60% of the 5,000 shares at $.01 per share referred to in the first
full sentence of this Paragraph 17 will also be subject to the Two Year
Restriction. The Company hereby waives the Two Year Restriction as to the 60%
of these 5,000 shares, as to the 1,500 shares that are described above that are
currently held by Dell, and as to the 60% of the 2,500 shares described in
Paragraph 2, it being the intent of this waiver that those shares not be
subject after the Termination Effective Date to any restriction on transfer
imposed by the 1992 Option Agreement. At your request any time after July 1,
1995, the Company will take appropriate steps to remove from any certificate
representing the 1,500 shares, the 5,000 shares, or the other 1,500 shares, any
legend reflecting the Two Year Restriction.
7
Mr. Thomas L. Thomas
June 15, 1995
Page 7
You acknowledge and agree that the rights granted to you by the provisions of
this Paragraph 17 were not otherwise available to you and constitute
substantial independent consideration for your agreement not to compete set
forth in Paragraph 15.
18. You agree that it shall be your sole responsibility to comply with all
applicable laws related to the exercise of the options described in Paragraphs
2 and 17 of this Agreement, and sale of such shares, and the use and
disposition of all proceeds therefrom, and to pay all applicable taxes, fees
and other charges related thereto.
19. As further separate consideration for the non-competition provision
set forth in Paragraph 16, the Company agrees (i) to be responsible for the
payments to continue health insurance provided under Dell's group policy
pursuant to the conditions of COBRA for so long as the salary continuation
payments set forth in Paragraph 3 above continue; (ii) to pay reasonable
attorney's fees incurred by you with respect to the negotiation and preparation
of this Agreement; and (iii) to pay for all services provided to you by Price,
Waterhouse & Company through the preparation of your tax return for 1995 in
accordance with your present entitlements to Price, Waterhouse Tax Preparation
Services. The Company further agrees to pay you in calendar year 1996 a pro
rata bonus amount under Dell's FY 1996 Executive Bonus Plan (the "Bonus Plan")
in the amount of $56,875.00, but if and only if any other member of Dell's
Executive Staff receives a bonus under the Bonus Plan for FY 1996. Any amounts
payable to you under the Bonus Plan will be paid at the time of the regular
payment of bonuses for other Dell executives.
20. Non-Solicitation. You agree that you will not, during the Restriction
Period, alone or with others, directly or indirectly, solicit or recruit for
your benefit, or for the benefit of any person or entity, the employment or
other services of any person who is an employee of the Company or who within
the six month period preceding such solicitation or recruitment has been an
employee of the Company. You agree that you will not, during the Restriction
Period, cause or facilitate (by providing information or otherwise) the
solicitation or the recruitment of such employment or other services by or for
the benefit of any person or organization with which you may be associated.
21. In addition to the other agreements contained herein, you agree that
you will not use, publish, misappropriate or disclose in any manner, directly
or indirectly, for yourself or for the benefit of any other person or entity,
any Confidential and Proprietary Information. "Confidential and Proprietary
Information" means, without limitation, any information that you have learned
or originated during your employment with the Company, to the extent that such
information is related to the products, marketing plans, sales plans, operating
procedures, properties, or financial condition, prospects, or results of
operations of the Company, which information is commercially valuable and is
not publicly available to or readily ascertainable by third parties through
proper means, and any information disclosed by third parties in confidence to
the Company. Confidential and Proprietary Information specifically includes,
without limitation, all such information of the kinds described in
subparagraphs A through G below:
8
Mr. Thomas L. Thomas
June 15, 1995
Page 8
A. Manufacturing and research processes currently in use, planned
or under development, including design rules, device characteristics,
process flow, manufacturing capabilities and yields.
B. Computer product, process and device strategies planned or
under development, including device specifications, system
architectures, logic designs, circuit implementations and long-range
plans.
C. Software products in use, planned or under development,
including operating system adaptations or enhancements, language
compilers, interpreters and translators, system design and evaluation
tools, and application and diagnostic programs.
D. Information relating to Company employees; actual and
anticipated relationships between the Company and other companies or
persons; sales levels, profit levels, pricing and other unpublished
financial data; and budget, staffing compensation, equipment and
related plans.
E. Information relating to the Company's customer, supplier and
vendor relationships. This includes performance requirements,
development and delivery schedules, device and product pricing and
quantities, and other information communicated to the Company by its
customers, suppliers or vendors.
F. Information relating to the compensation, skills, and work
histories of the Company's employees.
G. Any Intellectual Property defined below and any copyrightable
works described below, except as publicly disclosed in patents and
other publicly available documents.
22. You agree that all discoveries, ideas, improvements or inventions you
have created, conceived, developed or discovered, alone or with others, during
your employment with the Company which relate to the Company's business or
which result from the use of the Company's equipment, supplies, facilities or
information, and which are protectable under applicable patent or copyright
laws (collectively, the "Intellectual Property"), in whatever form, is the
Company's sole and exclusive property. You hereby assign to the Company all
of your rights in any Intellectual Property. You agree that you will assist
the Company at the Company's expense in all ways in the future, including
giving evidence and executing any documents deemed helpful or necessary by the
Company, to establish, perfect and register worldwide, at the Company's
expense, the Company's title and exclusive ownership in the Intellectual
Property. You agree that you will not do anything in conflict with the
Company's rights in the Intellectual Property and that you will cooperate fully
to protect the Intellectual Property against misappropriation or infringement.
23. You agree that the Company is the copyright owner in all copyrightable
works of every kind and description created or developed by you, solely or
jointly with others, during the time of your employment with the Company. If
so requested at any time, and for no additional
9
Mr. Thomas L. Thomas
June 15, 1995
Page 9
consideration, you will execute in writing any acknowledgments or assignments
of copyright ownership of such works as may be appropriate in the opinion of
the Company for preservation of the worldwide ownership in the Company of such
copyrights.
24. You agree that your obligations pursuant to Paragraphs 21 and 22 with
respect to the Intellectual Property will survive the satisfaction or
completion of any other term of this Agreement and will continue for the
duration of the Restriction Period as to Paragraph 21 and in perpetuity as to
Paragraph 22 except as otherwise specified herein. You and the Company
acknowledge that you have entered into previous agreements with the Company
from time to time, including the "Special Nonstatutory Stock Option Agreement
under Dell Computer Corporation 1989 Stock Option Plan" dated November 1992, in
respect of Confidential and Proprietary Information and Intellectual Property,
covenants not to compete, non-solicitation and non-hire provisions, and
provisions concerning non contravention of your employment agreement; and you
and the Company agree that all such agreements are merged into and superseded
by the provisions of this Agreement, the intent being that your only
obligations with respect to Confidential and Proprietary Information and
Intellectual Property, covenants not to compete, non-solicitation and non-hire
provisions, and provisions concerning non-contravention of your employment
agreement, shall be as provided herein.
25. You acknowledge that your breach of any of the non-competition,
non-solicitation, non-disclosure or non-use provisions set forth above will
cause irreparable harm to the Company, for which there may be no adequate
remedy at law and for which the ascertainment of damages would be difficult.
You therefore agree that in the event of your breach of any such provision, in
addition to and without having to prove the inadequacy of other remedies at
law, the Company shall be entitled to receive specific performance by you of
any such provision that you have breached, and the Company will furthermore be
entitled to the issuance of a court order directing full and immediate
injunctive relief against you without the Company being required to post any
bond or other security therefore. However, the provisions of this paragraph
should not be interpreted in any way as a limitation on the Company's right to
obtain money damages against you in the event of a breach of any of the
provisions set forth above.
26. You and the Company agree to maintain in confidence the terms of this
Agreement and not to disclose the same publicly or to any third parties except
as may be required in compliance with the requirements of applicable law or
this Agreement. Except as provided in the next sentences, neither you nor any
representative of the Company will make further comment, on or off the record,
for attribution or otherwise with regard to the circumstances of your departure
except as authorized in writing in advance by the party about whom the comment
is made. In addition, you will make no comment, on or off the record, for
attribution or otherwise, during the Restriction Period, about your employment
with the Company, or about the Company or any aspect of its business or
operations, without the express prior written agreement of the Company, except
as you may be required to do so under oath in response to a subpoena. You also
agree that in the event you breach this covenant of confidentiality and the
Company is damaged as a result of such breach, you shall be personally liable
for all damages arising from such breach, including reasonable attorneys' fees
and costs incurred by the Company in pursuing such claim against you. Neither
the Company nor any person acting on behalf of the Company
10
Mr. Thomas L. Thomas
June 15, 1995
Page 10
shall make any disparaging remark to any person concerning your employment,
your performance or conduct as an employee of the Company, or the termination
of your employment with the Company.
27. You agree that all time periods which commence with the termination of
your employment with the Company begin to run as of the Termination Effective
Date.
28. This Agreement shall be governed in all respects by the internal laws
of the State of Texas, excluding its rules regarding conflicts of laws, and all
venue hereunder shall be solely in Travis County, Texas.
29. In the event of litigation or other proceeding (through and including,
without limitation, any appeals process) to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees and costs of such litigation or other proceeding from the
non-prevailing party.
30. You agree that you have had sufficient opportunity to thoroughly
discuss the implications of this Agreement with independent legal counsel of
your choice and that you have retained legal counsel of your choice to review
this Agreement and to advise you regarding same prior to your signing and
delivering this agreement to the Company. In signing the Agreement, you agree
that you have not relied on or been induced to execute this Agreement by any
statement, representations or agreements made by any person other than what is
expressly set forth in this Agreement.
31. This Agreement constitutes the entire agreement of the parties and,
except as otherwise provided herein, supersedes any and all prior and/or
contemporaneous oral or written agreements with the Company concerning the
subject matter hereof. This Agreement may not be modified except by a written
instrument executed by you and by an authorized officer of the Company.
32. Any waiver of any term or condition of this Agreement shall be
effective only if set forth in a written document signed by an authorized
officer of the Company. A waiver of any breach or any failure to enforce any
of the terms or conditions of this Agreement shall not in any way affect, limit
or waive a party's rights under this Agreement at any time to enforce strict
compliance thereafter with each and every term or condition of this Agreement.
Any decision by the Company to enforce its rights or withhold the performance
of its obligations under this Agreement will be made by a majority of the Board
of Directors of Dell Computer Corporation.
33. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law effective during the term
hereof, such provision shall be fully severable. In such event, this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof and the remaining portions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this
11
Mr. Thomas L. Thomas
June 15, 1995
Page 11
Agreement a new provision or a reformed provision as similar in terms and
effect to such illegal, invalid or unenforceable provision as may be legal and
enforceable.
34. Any notice required or permitted under this Agreement shall be given
by certified mail, receipted overnight courier service, or completed telecopy
transmission to the party entitled thereto, addressed as follows:
If to you: Thomas L. Thomas
7100 Valburn Drive
Austin, Texas 78731
With copy to: Clark, Thomas & Winters,
a Professional Corporation
700 Lavaca Street, 12th Floor
Austin, Texas 78701
Attn: C. Joseph Cain
Telecopy: (512) 474-1129
If to the Company: Dell Computer Corporation
2214 W. Braker Lane, Suite D
Austin, Texas 78758
Attn: General Counsel
Telecopy: (512) 728-3773
Either party may change its notice address by written notice to the other
party. Notice shall be deemed to have been received on the earlier of actual
receipt or the fourth day after dispatch.
35. For purposes of this Agreement, the term "Company" shall be deemed to
include any organization, partnership, corporation, trust or entity controlled
by or under common control with the Company. For this purpose, the concept of
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of another, whether
through the ownership of voting securities, by contract, or otherwise.
36. This Agreement is binding upon and shall inure to the benefit of the
parties and their respective heirs, representatives, successors and assigns.
If this letter accurately sets forth your agreement with respect to
the matters set forth herein, please so signify by signing this letter where
indicated below and then delivering to the
12
Mr. Thomas L. Thomas
June 15, 1995
Page 12
Company your executed original of this Agreement. "Execution" of this
Agreement means that you will sign it in the presence of a notary public. You
have twenty-one (21) days to consider this Agreement. You have a period of
seven (7) days following your execution of the Agreement within which to revoke
it. This Agreement shall not become effective or enforceable until the
revocation period has expired. If you choose to revoke this Agreement, all
payments and benefits to you will immediately cease. If you do not revoke the
Agreement within seven (7) days from the date you sign it, its provisions
become final. If Dell has not received an executed copy of this Agreement,
signed by you and notarized, within the twenty-one (21) days after your receipt
hereof, this offer will automatically terminate and expire without further
notice from Dell.
DELL COMPUTER CORPORATION
By: /s/ JULIE A. SACKETT
Dated: 27 June 1995
Sworn to and subscribed before me this 27th day of June, 1995.
/s/ JUDY M. PITHA
Notary Public in and for
The State of Texas
Printed Name: Judy M. Pitha
My Commission Expires: 04-04-98
13
Mr. Thomas L. Thomas
June 15, 1995
Page 13
I have carefully read the foregoing Agreement. On behalf of myself, my
executor, heirs, successors and assigns, I agree to, and agree to be bound by,
each and all of the terms of the Agreement. I acknowledge receipt of a copy of
the Agreement, and I agree to the sufficiency of the consideration and payments
recited in the Agreement.
/s/ THOMAS L. THOMAS
Thomas L. Thomas
Dated: 6/22/95
Sworn to and subscribed before me this 22nd day of June, 1995.
/s/ RUTH BARR
Notary Public in and for
The State of Texas
Printed Name: Ruth Barr
My Commission Expires: 6/30/96
14
Mr. Thomas L. Thomas
June 15, 1995
Page 14
As the spouse of Thomas L. Thomas, I have carefully read the foregoing letter
agreement. On behalf of myself, my executor, heirs, successors and assigns, I
agree to all of its terms, and to be bound by all of its terms, and I
understand that the term "you" as used in the letter shall also be deemed to
include me. I acknowledge receipt of a copy of it and the sufficiency of the
consideration and payments recited in it.
By: /s/ SANDRA THOMAS
Sandra Thomas
Dated: 6-22-95
Sworn to and subscribed before me
this 22nd day of June, 1995.
/s/ RUTH BARR
Notary Public, State of Texas
Ruth Barr
Typed or Printed Name of Notary
EX-10.3
14
1ST AMENDMENT TO DELL COMPUTER CORP INCENTIVE PLAN
1
EXHIBIT 10.3
FIRST AMENDMENT
TO
DELL COMPUTER CORPORATION
INCENTIVE PLAN
Dell Computer Corporation (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), hereby adopts an amendment to the Dell Computer
Corporation Incentive Plan (the "Incentive Plan"), as specified below.
RECITALS
A. The Incentive Plan was submitted to, and approved by, the
stockholders of the Company at the Company's Annual Meeting of Stockholders
held on June 22, 1994. Following such approval, the Incentive Plan was adopted
by the Company effective June 22, 1994.
B. The Board of Directors of the Company (the "Board"), acting at
a meeting duly called and held on May 18, 1995 in accordance with the
applicable provisions of the DGCL and the Company's Bylaws, did duly adopt
resolutions (1) approving the amendment to the Incentive Plan described herein
(subject to the approval of such amendment by the stockholders of the Company),
(2) directing that such amendment be submitted to the stockholders of the
Company for consideration at the Company's Annual Meeting of Stockholders held
on July 21, 1995 and (3) directing that, upon approval and adoption of such
amendment by the stockholders of the Company, the Incentive Plan be amended as
described herein.
C. The stockholders of the Company, acting at the Company's
Annual Meeting of Stockholders duly called and held on July 21, 1995 in
accordance with the applicable provisions of the DGCL and the Company's Bylaws,
did duly consent to, approve and adopt the amendment to the Incentive Plan
described herein and approved the Incentive Plan, as so amended.
Now, therefore, the Company hereby adopts the following amendment to
the Incentive Plan:
1. Increase In Number Of Authorized Shares. Section 2.1 of the
Incentive Plan is hereby amended by replacing the number "4,500,923" in such
provision with the number "8,500,923."
2. Increase In Minimum Exercise Price Of Nonstatutory Options And
SARS.
(a) Section 1.43 of the Incentive Plan is hereby amended
by replacing the words "fifty percent" in such provision with the words
"seventy-five percent."
(b) Section 6.4 of the Incentive Plan is hereby amended
by replacing the words "fifty percent" in the last sentence of such provision
with the words "seventy-five percent."
2
3. No Effect On Other Provisions. Except as described in
Paragraphs 1 and 2 above, the terms, conditions and provisions of the Incentive
Plan shall remain in full force and effect and shall be unaffected by this
amendment.
4. Effective Date Of Amendment. This amendment, and the changes
to the provisions of the Incentive Plan effected hereby, shall be effective as
of July 21, 1995.
In witness whereof, the Company, acting by and through its duly
authorized officer, has executed this instrument to be effective as of the date
specified in Paragraph 4 above.
DELL COMPUTER CORPORATION
By: /s/ MICHAEL S. DELL
Michael S. Dell,
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ THOMAS H. WELCH, JR.
Thomas H. Welch, Jr.,
Assistant Secretary
2
EX-11
15
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
1
EXHIBIT 11
DELL COMPUTER CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JULY 30, 1995 JULY 31, 1994 JULY 30, 1995 JULY 31, 1994
------------- ------------- ------------- -------------
Primary earnings per common share:
Calculation of weighted average shares:
Weighted average shares of common stock
outstanding 45,407 38,338 43,681 38,224
Weighted average shares of common stock
equivalents, utilizing the treasury stock method 3,714 2,282 3,628 2,309
------- ------- -------- -------
Weighted average shares outstanding
49,121 40,620 47,309 40,533
======= ======= ======== =======
Earnings:
Net income available to common stockholders $64,970 $26,371 $115,030 $43,157
======= ======= ======== =======
Earnings per common share $1.32 $0.65 $2.43 $1.06
======= ======= ======== =======
Fully diluted earnings per common share:
Calculation of weighted average shares:
Weighted average shares of common stock
outstanding 45,407 38,338 43,681 38,224
Weighted average shares of common stock
equivalents, utilizing the treasury stock method 3,950 2,446 4,065 2,569
Assumed conversion of preferred stock 253(a) 5,263 1,684(a) 5,263
------- ------- -------- -------
Weighted average shares outstanding 49,610 46,047 49,430 46,056
======= ======= ======== =======
Earnings:
Net income available to common stockholders $64,970 $26,371 $115,030 $43,157
Add: preferred dividends 105 2,188 1,397(b) 4,375
------- ------- -------- -------
Adjusted net income available to common
stockholders $65,075 $28,559 $116,427 $47,532
======= ======= ======== =======
Earnings per common share $1.31 $0.62 $2.36 $1.03
======= ======= ======== =======
____________
(a) Assumes conversion of the 60,000 shares of outstanding Preferred Stock
at the beginning of the second quarter and the six-month period and
assumes conversion of the remaining Preferred Stock (those shares
which were converted in March 1995) from the beginning of the
six-month period to the actual conversion date.
(b) Preferred dividends are exclusive of the conversion premium and
expenses of the conversion offer.
EX-27
16
FINANCIAL DATA SCHEDULE
5
1,000
6-MOS
JAN-28-1996
JUL-30-1995
66,563
503,271
671,767
0
381,962
1,728,363
145,185
0
1,885,286
877,530
0
458
0
1
802,396
1,885,286
2,341,526
2,341,526
1,842,732
1,842,732
0
0
7,838
178,549
51,776
126,773
0
0
0
126,773
2.43
2.36