<PAGE> 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 31, 1994
COMMISSION FILE NUMBER:0-17017
DELL COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
9505 ARBORETUM BOULEVARD
AUSTIN, TEXAS 78759-7299
(512) 338-4400
(Address, zip code and telephone number of registrant's
principal executive offices)
A DELAWARE CORPORATION IRS EMPLOYER ID NO. 74-2487834
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 7, 1994, 38,585,820 SHARES OF THE REGISTRANT'S COMMON
STOCK, PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.
================================================================================
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELL COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JULY 31, JANUARY 30,
1994 1994
-------------- --------------
<S> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,401 $ 3,355
Short-term investments . . . . . . . . . . . . . . . . . . 297,882 333,667
Accounts receivable, net . . . . . . . . . . . . . . . . . 435,165 410,774
Inventories, net . . . . . . . . . . . . . . . . . . . . . 238,906 220,265
Other current assets . . . . . . . . . . . . . . . . . . . 123,555 80,323
-------------- --------------
Total current assets . . . . . . . . . . . . . . . . 1,130,909 1,048,384
Property and equipment, net . . . . . . . . . . . . . . . . . 104,661 86,892
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 4,995 5,204
-------------- --------------
$ 1,240,565 $ 1,140,480
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . $ 302,191 $ 282,708
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 247,827 237,651
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 22,207 17,628
-------------- --------------
Total current liabilities . . . . . . . . . . . . . 572,225 537,987
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 100,000 100,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . 42,193 31,385
Commitments and contingencies
Stockholders' equity:
Preferred stock: $.01 par value; shares authorized: 5,000,000;
shares issued and outstanding: 1,250,000 . . . . . . . . 13 13
Common stock: $.01 par value; shares authorized:
100,000,000; shares issued and outstanding: 385 379
38,516,013 and 37,929,031, respectively . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . 332,849 320,041
Unrealized gain (loss) on short-term investments . . . . . . (2,787) 3,230
Retained earnings . . . . . . . . . . . . . . . . . . . . . 213,947 170,790
Cumulative translation adjustment . . . . . . . . . . . . . (18,260) (23,345)
-------------- --------------
Total stockholders' equity . . . . . . . . . . . . . 526,147 471,108
-------------- --------------
$ 1,240,565 $ 1,140,480
============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE> 3
DELL COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -------------------------
JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1994 1993 1994 1993
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $ 791,496 $ 700,569 $1,558,128 $1,372,933
Cost of sales . . . . . . . . . . . . . . . . . 621,859 654,795 1,218,659 1,214,035
---------- ---------- ---------- ----------
Gross profit . . . . . . . . . . . . . . . . 169,637 45,774 339,469 158,898
Operating expenses:
Selling, general and administrative . . . . 102,646 131,966 197,523 219,500
Research, development and engineering . . . 15,930 11,926 30,900 23,367
---------- ---------- ---------- ----------
Total operating expenses . . . . . . . . . 118,576 143,892 228,423 242,867
---------- ---------- ---------- ----------
Operating income (loss) . . . . . . . . . . . . 51,061 (98,118) 111,046 (83,969)
Financing and other income (expense), net . . . (9,671) (2,830) (42,202) (2,002)
---------- ---------- ---------- ----------
Income before income taxes (benefit) . . . 41,390 (100,948) 68,844 (85,971)
Provision for income taxes (benefit). . . . . . 12,831 (25,240) 21,312 (20,448)
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . 28,559 (75,708) 47,532 (65,523)
Preferred stock dividends . . . . . . . . . . . 2,188 -- 4,375 --
---------- ---------- ---------- ----------
Net income (loss) applicable to common
stockholders . . . . . . . . . . . . . . . . $ 26,371 $ (75,708) $ 43,157 $ (65,523)
========== ========== ========== ==========
Primary earnings (loss) per common share . . . $ 0.65 $ (2.03) $ 1.06 $ (1.76)
========== ========== ========== ==========
Fully diluted earnings per common share . . . . $ 0.62 $ -- $ 1.03 $ --
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 4
DELL COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, AUGUST 1,
1994 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ 47,532 $ (65,523)
Charges to income not requiring cash outlays:
Depreciation and amortization . . . . . . . . . . . . . 15,354 14,097
Loss on short-term investments . . . . . . . . . . . . . 21,218 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . 996 94
Changes in:
Operating working capital . . . . . . . . . . . . . . . (44,929) (27,347)
Non-current assets and liabilities . . . . . . . . . . . 10,198 10,334
-------------- -------------
Net cash provided by (used in) operating activities
before sale of receivables . . . . . . . . . . . . 50,369 (68,345)
Sale of receivables . . . . . . . . . . . . . . . . . -- 74,766
-------------- -------------
Net cash provided by operating activities . . . . . . 50,369 6,421
Cash flows from investing activities:
Short-term investments:
Purchases . . . . . . . . . . . . . . . . . . . . . . . (1,925,730) (872,555)
Maturities and other redemptions . . . . . . . . . . . . 1,824,635 840,468
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 106,406 36,260
Capital expenditures . . . . . . . . . . . . . . . . . . . (32,535) (30,165)
-------------- -------------
Net cash used in investing activities . . . . . . . . (27,224) (25,992)
Cash flows from financing activities:
Net (payments for) proceeds from short-term borrowings . . (503) 71,051
Borrowings (repayments) from long-term debt . . . . . . . . (48,847)
Preferred stock dividends paid . . . . . . . . . . . . . . (4,375)
Issuance of common stock under employee plans . . . . . . . 12,006 12,738
-------------- -------------
Net cash provided by financing activities . . . . . 7,128 34,942
Effect of exchange rate changes on cash . . . . . . . . . . . 1,773 (753)
-------------- -------------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . 32,046 14,618
Cash at beginning of period . . . . . . . . . . . . . . . . . 3,355 14,948
-------------- -------------
Cash at end of period . . . . . . . . . . . . . . . . . . . . $ 35,401 $ 29,566
============== =============
</TABLE>
See Note 6 for Supplemental Statement of Cash Flow information.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
DELL COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements should be read in context of
the consolidated financial statements and notes thereto filed with the
Commission in the Company's fiscal 1994 Annual Report on Form 10-K. In the
opinion of management, the accompanying 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 31, 1994, and January 30,
1994, and the results of operations for the three-month and six-month periods
ended July 31, 1994, and August 1, 1993. Operating results for the three-month
and six-month periods ended July 31, 1994, are not necessarily indicative of
the results that may be expected for the year ending January 29, 1995. Certain
prior-period amounts have been reclassified for comparative purposes.
Unless otherwise indicated, all references to years in connection with
financial information refer to the Company's fiscal years and all references to
quarters in connection with financial information refer to the Company's fiscal
quarters.
NOTE 2 - SHORT TERM INVESTMENTS
The Company recognized investment losses of $7.6 million during the second
quarter of 1995 and $23.1 million for the first six months of 1995 on certain
of the Company's short-term investments. Additionally, other unrealized
losses on short-term investments in the amount of $4.3 million ($2.8 million
net of tax) at July 31, 1994, were assessed to be temporary and recorded as a
separate component of stockholders' equity. The investment losses are
primarily a result of interest rate increases in the United States, Canadian,
Japanese, and European interest rate markets.
NOTE 3 - INVESTMENT DERIVATIVES
The Company recognized net losses on interest rate derivatives of $1.3 million
in the second quarter of 1995 and $23.9 million for the first six months of
1995. The losses recognized in the first half of 1995 primarily resulted from
increases in the United States, Canadian, Japanese, and European interest rate
markets.
NOTE 4 - WITHDRAWAL FROM THE CONSUMER RETAILER CHANNEL
In July, 1994, the Company adopted a plan to discontinue traditional sales
through consumer retailers. Accordingly, the Company has recorded a $3.0
million charge for estimated losses and operating expenses that were a direct
result of the decision to exit this market. Revenue from consumer retailers
represented 3% and 5% of consolidated net sales in the second quarter and the
first six months of 1995, respectively, compared with 9% and 10% for the
comparable prior-year periods.
NOTE 5 - EARNINGS (LOSS) PER COMMON SHARE
Earnings or loss per common share are computed by dividing net income available
to common stockholders by the weighted average number of common shares and
common share equivalents outstanding (if dilutive) during each period. Common
share equivalents include stock options. The Series A Convertible Preferred
Stock is not a common share equivalent for purposes of computing earnings or
loss per common share. The number of common equivalent shares outstanding
relating to stock options is computed using the treasury stock method for the
primary and fully diluted earnings per share. Shares used in the fully diluted
earnings per share have been adjusted for the assumed conversion of the
Company's Series A Convertible Preferred Stock.
4
<PAGE> 6
NOTE 6 - SUPPLEMENTAL FINANCIAL INFORMATION (IN THOUSANDS)
Supplemental Statement of Financial Position Information:
<TABLE>
<CAPTION>
JULY 31, JANUARY 30,
1994 1994
--------------- --------------
<S> <C> <C>
Inventories:
Production materials . . . . . . . . . . . . . . . . . . . . $ 213,509 $ 195,744
Work-in-process and finished goods . . . . . . . . . . . . . 25,397 24,521
-------------- -------------
$ 238,906 $ 220,265
============== =============
</TABLE>
Supplemental Statement of Operations Information:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- -----------------------------
JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1994 1993 1994 1993
------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
Financing and other income (expense):
Investment income:
Short-term investment income, net . . . . . $ (5,323) $ 530 $ (16,073) $ 3,179
Interest rate derivatives . . . . . . . . . (1,341) 1,104 (23,948) 1,777
----------- ----------- ---------- ----------
Total investment income . . . . . . . . . (6,664) 1,634 (40,021) 4,956
Interest expense. . . . . . . . . . . . . . . (2,388) (2,047) (4,558) (3,466)
Foreign currency transaction gains. . . . . . 64 (211) 2,604 57
Other . . . . . . . . . . . . . . . . . . . . (683) (2,206) (227) (3,549)
----------- ----------- --------- ----------
$ (9,671) $ (2,830) $ (42,202) $ (2,002)
=========== =========== ========= ==========
Weighted average shares used to compute
earnings per share:
Primary . . . . . . . . . . . . . . . . . . 40,620 37,229 40,533 37,136
=========== =========== ========= ==========
Fully diluted . . . . . . . . . . . . . . . 46,047 -- 46,056 --
=========== =========== ========= ==========
</TABLE>
Supplemental Statement of Cash Flows Information:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
JULY 31, AUGUST 1,
1994 1993
-------------- --------------
<S> <C> <C>
Changes in operating working capital accounts:
Accounts receivable, net . . . . . . . . . . . . . . . . . $ (17,356) $ (46,698)
Inventories, net . . . . . . . . . . . . . . . . . . . . . (18,199) 5,109
Accounts payable . . . . . . . . . . . . . . . . . . . . . 15,751 20,509
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 10,925 41,653
Other current assets . . . . . . . . . . . . . . . . . . . (39,961) (21,346)
Income taxes payable . . . . . . . . . . . . . . . . . . . 3,911 (26,574)
------------- -------------
$ (44,929) $ (27,347)
============= =============
Changes in non-current assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . $ 231 $ 700
Other liabilities . . . . . . . . . . . . . . . . . . . . . 9,967 9,634
------------- -------------
$ 10,198 $ 10,334
============= =============
</TABLE>
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Unless otherwise indicated, all references to years in connection with
financial information refer to the Company's fiscal years and all references to
quarters in connection with financial information refer to the Company's fiscal
quarters.
RESULTS OF OPERATIONS
The Company reported net income for the second quarter of 1995 of
$28.6 million or $.65 per common share compared with a net loss of $75.7
million or $2.03 per common share for the comparable period in 1994. Net income
for the first six months of 1995 was $47.5 million or $1.06 per common share
for the first six months of 1995 compared with a net loss of $65.5 million or
$1.76 per common share for the first six months of 1994. Net income was
adversely affected by after-tax losses on certain investment derivatives and
short-term investments aggregating $6.2 million for the second quarter of 1995
and $32.5 million for the first six months of 1995.
The following table sets forth for the periods indicated the
percentage of consolidated net sales represented by certain items in the
Company's consolidated statements of income.
<TABLE>
<CAPTION>
PERCENTAGE OF CONSOLIDATED NET SALES
------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -------------------------
JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1994 1993 1994 1993
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net sales:
North America (U.S. and Canada) . . . . 67.6% 67.7% 66.1% 67.7%
Europe . . . . . . . . . . . . . . . . 27.0 27.1 28.7 27.9
Other international . . . . . . . . . . 5.4 5.2 5.2 4.4
------ ------ ------ ------
Consolidated net sales . . . . . . . 100.0 100.0 100.0 100.0
Cost of sales . . . . . . . . . . . . . 78.6 93.5 78.2 88.4
------ ------ ------ ------
Gross profit . . . . . . . . . . . . 21.4 6.5 21.8 11.6
Operating expenses:
Selling, general and administrative. . . 13.0 18.8 12.7 16.0
Research, development and engineering. . 2.0 1.7 2.0 1.7
------ ------ ------ ------
Total operating expenses . . . . . . 15.0 20.5 14.7 17.7
------ ------ ------ ------
Operating income . . . . . . . . 6.4 (14.0) 7.1 (6.1)
Financing and other income (expense),
net . . . . . . . . . . . . . . . . . . (1.2) (0.4) (2.7) (0.2)
------ ------ ------ ------
Income before income taxes . . . . . . 5.2 (14.4) 4.4 (6.3)
Provision for income taxes. . . . . . . . 1.6 (3.6) 1.4 (1.5)
------ ------ ------ ------
Net income . . . . . . . . . . . . . . 3.6 (10.8) 3.0 (4.8)
Preferred stock dividends . . . . . . . . .3 -- .3 --
------ ------ ------ ------
Net income applicable to common
stockholders . . . . . . . . . . . . . 3.3% (10.8%) 2.7% (4.8%)
====== ====== ====== ======
</TABLE>
Net Sales
Consolidated net sales increased 13% to $791.5 million for the second
quarter of 1995 and increased 13% to $1.56 billion for the first six months of
1995. In July 1994, the Company adopted a plan to discontinue traditional sales
through consumer retailers. Revenue to consumer retailers was 3% and 5% of
consolidated net sales in the second quarter and the first six months of 1995,
respectively, and 9% and 10% for the comparable prior-year periods. Revenue
from this channel declined sequentially from $61.4 million in the first quarter
of 1995 to $22.7 million in the second quarter of 1995. Excluding consumer
retailer sales, worldwide sales increased 19% for the first six months of 1995
over the comparable prior-year period.
6
<PAGE> 8
Average revenue per unit increased 12% for the second quarter of 1995
and 11% for the first six months of 1995 over average revenue per unit for the
comparable periods of 1994. Unit volumes for the second quarter and the first
six months of 1995 increased less than 2% from the comparable periods of 1994.
The increase in average revenue per unit was primarily due to increased sales
of higher priced products such as Pentium-based systems.
The Company's consolidated net sales (expressed in United States
dollars) were reduced by .9% in the second quarter of 1995 and .8% for the
first six months of 1995 by fluctuations in the average value of the United
States dollar relative to its average value in the comparable periods of the
prior year, particularly because of the strengthening of the U.S. dollar.
Based in part on this information, the Company believes that the increase in
consolidated net sales was primarily driven by an increase in average revenue
per unit which was partially offset by changes in foreign currency exchange
rates.
Consolidated net sales from the Company's Pentium-based products,
which were initially introduced in May 1993, continued to increase and
represented 21% and 15% of consolidated net sales in the second quarter and the
first six months of 1995, respectively. Sales of the Company's 486-based
desktop systems reflected the shift in demand toward Pentium systems and
decreased to 67% and 72% of consolidated net sales for the second quarter and
the first six months of 1995, respectively, compared with 80% and 78% of
consolidated net sales for the second quarter and the first six months of 1994,
respectively.
The Company's mid-size and small-chassis desktop systems represented
69% and 70% of consolidated net sales for the second quarter and the first six
months of 1995, respectively, compared with 71% of consolidated net sales for
each of the comparable periods in 1994. Sales of servers and workstations
accounted for 15% of consolidated net revenue for the second quarter of 1995
and 14% for the first six months of 1995, respectively, compared with 13% for
each of the second quarter and the first six months of 1994. Sales of notebook
computers were 4% and 3% of consolidated net sales in the second quarter and
the first six months of 1995, respectively, compared with 3% and 4% of
consolidated net sales for the respective prior year periods.
The Company believes that the absence of a full notebook computer
product line during the last half of 1994 and in the first half of 1995 was a
contributing factor to the Company's decreased sales growth and that the
Company's re-entry into the notebook market represents a significant growth
opportunity. Since January 30, 1994, the Company has introduced the Latitude
(TM) and Latitude XP (TM) notebook computer product lines and the PowerEdge (TM)
server product line. The Latitude product line and the PowerEdge server line
were introduced in February 1994. In August 1994, the Dell-designed Latitude XP
product line and an enhanced Dell-designed Latitude product line were
introduced. There can be no assurance that the Company's notebook, server, or
other 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.
Despite the decline in consumer retailer revenue, North American sales
increased 13% to $534.7 million for the second quarter of 1995 and increased
11% to $1.03 billion for the first six months of 1995. Although the Company
experienced a seasonal decline in European government sales, net revenue from
the Company's European operations increased 13% to $214.2 million for the
second quarter of 1995 and increased 17% to $447.1 million for first six months
of 1995. Other international sales increased 18% to $42.6 million for the
second quarter of 1995 and increased 35% to $81.0 million for the first six
months of 1995.
Consolidated net sales to major corporate, government and education
accounts increased 29% to $445.8 million for the second quarter of 1995 and
increased 24% to $829.9 million for the first six months of 1995. Sales to
medium- and small-sized businesses and individuals decreased 2% to $245.2
million for the second quarter of 1995 and decreased 2% to $521.4 million for
the first six months of 1995, primarily as a result of declining sales to
consumer retailers.
The Company does not believe that backlog is a meaningful indicator of
sales that can be expected for any period. Although the Company will continue
efforts to minimize the time between customer order and product delivery, the
Company expects backlog to increase at the end of the third quarter of 1995 as
the Company attempts
7
<PAGE> 9
to balance the cost of maintaining minimal levels of backlog while controlling
manufacturing costs. Backlog represented approximately $29.4 million at July
31, 1994. Consistent with the Company's unconditional return policy, customers
may cancel or reschedule orders without penalty prior to commencement of
manufacturing.
Gross Profit
The Company's gross profit as a percentage of consolidated net sales
increased to 21.4% for the second quarter of 1995 from 6.5% for the second
quarter of 1994 and increased to 21.8% for the first six months of 1995 from
11.6% for the comparable period a year ago. Gross profit would have been 13.6%
for the second quarter of 1994 and 16.7% for the first six months of 1994, but
was reduced by pre-tax charges of over $50 million for the second quarter and
$71 million for the first six months of 1994 for charges related to notebook
computers and other costs, consisting mostly of inventory writedowns and
related costs. The increase in gross profit from 13.6% to 21.4% for the
second quarters of 1994 and 1995, respectively, and from 16.7% to 21.8% for the
first six months of 1994 and 1995, respectively, is primarily due to
improvements in component costs and quality due to the Company's vendor
certification and vendor consolidation programs, as well as improved sales mix
toward higher margin products driven by changes in the Company's sales
incentive programs and pricing strategies, offset in part by $3.0 million of
costs accrued relating to the decision to exit the traditional consumer
retailer channel.
Late in the first quarter of 1995 and throughout the second quarter of
1995, the Company took pricing actions in the U.S. to stimulate demand on
selected products. The Company broadened its pricing actions to Europe and
other international regions late in the second quarter of 1995. Additional
pricing actions will occur as the Company attempts to stimulate demand and
maintain a competitive mix of price, performance and customer support services.
The Company attempts to mitigate the effect of its pricing actions through
improvements in the product mix, reduced component costs, manufacturing
efficiencies and operating expense controls. There can be no assurance that
further pricing actions 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.
Dell's manufacturing process requires a high volume of quality
components. Several microprocessors used in the Company's products are
currently available only from Intel Corporation. In addition, the Company has
certain single supplier relationships that are considered advantageous for
reasons including performance, quality, support, delivery and price
considerations. Reliance on those vendors, as well as industry supply
conditions, generally involves several risks, including the possibility of a
shortage of components, increases in component costs and reduced control over
delivery schedules, which could adversely affect the Company's financial
results. The Company occasionally experiences delays in receiving certain
components, which can cause delays in the shipment of some products to
customers. For example, if sales of the recently introduced Latitude XP
notebook computer exceed forecasted sales, the Company may experience supply
constraints for its sole-sourced active-matrix color screens. There can be no
assurance that the Company will be able to continue to obtain additional
supplies in a timely or cost-effective manner.
The results of the Company's international operations are subject to
currency fluctuations. However, the Company attempts to reduce its exposure to
currency fluctuations through the use of foreign currency option contracts for
periods not exceeding twelve months and, to a lesser extent, through the use of
forward contracts, generally for periods not exceeding three months, which
hedge certain anticipated intercompany shipments to foreign subsidiaries.
Forward contracts entered into to hedge anticipated intercompany shipments,
none of which were outstanding at the end of the second quarter of 1995, are
accounted for on a mark-to-market basis. The Company has purchased options to
hedge a portion of its anticipated, but not firmly committed, intercompany
sales for 1995 and may enter into additional hedging transactions as management
considers appropriate. Based upon foreign currency exchange rates at the end
of the second quarter of 1995, option contracts that hedge anticipated
shipments to international subsidiaries for the last six months of 1995 had a
combined net realized and unrealized deferred loss of $7.9 million.
8
<PAGE> 10
Operating Expenses
Operating expenses for the second quarter of 1995 decreased 18% to
$118.6 million for the second quarter of 1995 and decreased 6% to $228.4
million for the first six months of 1995. Operating expenses as a percentage
of sales decreased to 15.0% for the second quarter of 1995 from 20.5% for the
second quarter of 1994 and decreased to 14.7% for the first six months of 1995
from 17.7% for the first six months of 1994. Operating expenses for the second
quarter of 1994 included $21 million of restructuring charges for consolidating
operations, write-offs of certain assets and employee severance payments. The
Company believes that its ability to manage operating costs is an important
factor in its ability to remain price competitive. No assurance can be given
that the Company's efforts to manage operating expenses will be successful.
Net Financing and Other Income (Expense)
Net financing and other income (expense) was $(9.7) million in the
second quarter of 1995 compared with ($2.8) million for the second quarter of
1994 and was ($42.2) million for the first six months of 1995 compared with
($2.0) million for the first six months of 1994.
Short-term investment income (loss) was ($5.3) million in the second
quarter of 1995 compared with $.5 million in the second quarter of 1994 and was
($16.1) million for the first six months of 1995 compared with $3.2 million for
the first six months of 1994. Investment losses were primarily due to
recognized losses of $7.6 million for the second quarter of 1995 and $23.1 for
the first six months of 1995 on certain of the Company's short-term
investments. Additionally, other unrealized losses on short-term investments
in the amount of $4.3 million ($2.8 million net of tax) at July 31, 1994, were
assessed to be temporary and recorded as a separate component of stockholders'
equity. The investment losses are primarily a result of interest rate
increases in the United States, Canadian, Japanese, and European interest rate
markets.
In the normal course of business, the Company has historically
employed a variety of interest rate derivative instruments to more efficiently
manage its principal, market and credit risks as well as to enhance its
investment yield. Derivative instruments utilized included interest rate
swaps, written and purchased interest rate options and swaptions (options to
enter into interest rate swaps). The Company structured derivative instruments
in interest rate markets where it has foreign operations. Interest rate
derivatives generally involve exchanges of interest payments based upon fixed
and floating interest rates without exchanges of underlying notional amounts.
Realized and unrealized net gains (losses) on interest rate derivatives
recognized in income were ($1.3) million in the second quarter of 1995 compared
with $1.1 million in the second quarter of 1994 and ($23.9) million for the
first six months of 1995 compared with $1.8 million for the first six months of
1994. The losses recognized in the first half of 1995 primarily resulted from
increases in the United States, Canadian, Japanese, and European interest rate
markets. During the second quarter, the Company closed all remaining
investment derivatives. In the future, the Company intends to use derivative
contracts only to manage components of its capital structure.
Interest expense in the second quarter of 1995 increased to $2.4
million from $2.0 million in the second quarter of 1994 and to $4.6 million for
the first six months of 1995 compared with $3.5 million for the first six
months of 1994. The increase in interest expense in 1995 was primarily due to
higher effective borrowing rates associated with the 11% Senior Notes (the
"Notes") issued in the third quarter of 1994 relative to the borrowings
outstanding during the second quarter of 1994. Concurrently with the issuance
of the Notes, the Company entered into interest rate swap agreements to manage
the interest costs associated with the Notes. The swap agreements effectively
changed the Company's interest rate exposure from a fixed-rate to a
floating-rate basis and resulted in a weighted average interest rate of 10.81%
and 10.06% on the Notes for the second quarter and the first six months of
1995. In August 1994, the Company entered into swap agreements to effectively
change its interest rate exposure from a floating-rate basis to a fixed-rate
basis with a one-time reset on December 19, 1994. As a result of the swap
agreements, the Company is currently paying a net interest cost of 13.21% on
the Notes. Pursuant to the terms of the swap agreements, the counterparties
may reset the swap rate differential up to a maximum net interest cost of
13.81% on the Notes if market rates have increased on the reset date or, if
interest rates have decreased, the Company may proportionately reduce the net
interest cost on an unlimited basis.
9
<PAGE> 11
Financing fees and other income (expense) were ($.7) million in the
second quarter of 1995 compared with ($2.2) million in the second quarter of
1994 and ($.2) million for the first six months of 1995 compared with ($3.5)
million for the first six months of 1994. The improvement in financing fees
and other costs for the second quarter and the first six months of 1995 were
primarily due to higher financing-related expenses incurred in 1994 in
connection with refinancing of debt and credit facilities during the second
quarter of 1994.
Income Tax
The Company's effective tax rate was 31.0% for the second quarter and
first six months of 1995 compared with 25.0% and 23.8% for the same periods in
1994. The effective tax rate in the prior year periods were lower as a result
of the reduction in tax benefit resulting from the geographical distribution of
prior year losses.
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 Company's exposure to currency fluctuations has increased
as a result of the expansion of its international operations. The functional
currency for most of the Company's international subsidiaries is the local
currency of the subsidiary. An increase in the value of the United States
dollar increases costs incurred by the Company's international operations
because many of its international subsidiaries' 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 profit margins from international operations. The
Company monitors this exposure and attempts to mitigate the exposure through
hedging transactions.
Because of the significant growth in the Company's international
operations in recent years, the Company has attempted through various means to
mitigate the effects of currency fluctuations. The purpose of the Company's
hedging program is to protect the Company from the risk that the
dollar-equivalent price of anticipated cash flows resulting from sale of
products from its manufacturing subsidiaries to its international sales
subsidiaries will be adversely affected by changes in foreign currency exchange
rates. The Company's hedging activities consist primarily of hedging
anticipated intercompany sales to its international subsidiaries and resulting
intercompany balances through the use of purchased options for periods not
exceeding twelve months and, to a lesser extent, forward contracts, generally
for periods not exceeding three months. The risk of loss associated with
purchased options is limited to the amount of premiums paid for the option
contracts, which could be significant. The premium amounts paid on purchased
options are amortized over the period of the hedged transaction. Gains and
losses incurred on purchased option contracts are deferred until occurrence of
the hedged transaction and recognized as a component of the cost of the hedged
transaction. Gains and losses incurred on forward contracts designated as
hedging contracts of anticipated intercompany shipments are marked-to-market
and recognized as a component of cost of sales in the current period.
On November 30, 1992, the SEC's Division of Enforcement notified the
Company that it was beginning an informal inquiry, which is continuing,
regarding the Company's accounting practices for foreign currency hedging and
trading activities and the completeness of the Company's public disclosure
about those activities. The Company and its independent accountants are
voluntarily cooperating with the SEC in this informal inquiry. The SEC's
Division of Corporation Finance has also indicated it has concerns about the
deferred accounting treatment the Company afforded gains and losses on forward
and option contracts entered into to hedge anticipated transactions and has not
expressed its definitive views about whether the Company's accounting for these
forward and option contracts complies with generally accepted accounting
principles in all material respects.
The table below shows the effect on income before income taxes, net
income and earnings per common share for the second quarters and the first six
months of 1995 and 1994, if gains and losses on hedging contracts had been
accounted for on a mark-to-market basis.
10
<PAGE> 12
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- ---------------------------
JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1994 1993 1994 1993
----------- ----------- ---------- -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
EFFECT ON INCOME BEFORE INCOME TAXES:
Forward contracts . . . . . . . . . . . . . $ -- $ -- $ -- $ --
Synthetic forward contracts . . . . . . . . -- -- -- --
Other option contracts. . . . . . . . . . . (8.2) 5.3 (10.2) 5.0
--------- -------- --------- --------
Total effect on income before income
taxes . . . . . . . . . . . . . . . . . . $ (8.2) $ 5.3 $ (10.2) $ 5.0
========= ======== ========= ========
DEFERRED REALIZED AND UNREALIZED GAIN
(LOSS) . . . . . . . . . . . . . . . . . $ (7.9) $ 7.0 $ (7.9) $ 7.0
========= ======== ========= ========
EFFECT ON NET INCOME AND EARNINGS PER
SHARE:
Net income on a mark-to-market basis. . . . $ 22.9 $ (71.8) $ 40.5 $ (61.7)
Net income as reported. . . . . . . . . . . $ 28.6 $ (75.8) $ 47.5 $ (65.5)
Primary earnings per share on a
mark-to-market basis. . . . . . . . . . . $ .51 $ (1.93) $ .89 $ (1.66)
Primary earnings per share as reported. . . $ .65 $ (2.03) $ 1.06 $ (1.76)
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operating activities for the first six
months of 1995 was $50.4 million, which represented the Company's primary
source of cash. The Company experienced a decrease in days in accounts
receivable to 49 days at the end of the second quarter of 1995 from 50 days at
the end of 1994. Inventory levels increased slightly to 35 days of supply at
the end of the second quarter of 1995 from 33 days at the end of 1994. Days in
accounts payable increased to 44 days at the end of the second quarter of 1995
from 42 days at the end of 1994. Although the Company made significant
progress in reducing inventory levels during the past twelve months,
maintaining this inventory level is dependent upon the Company's ability to
achieve targeted revenue and product mix, to further reduce complexities in its
product line, and to increase commonality of parts. There can be no assurance
that the Company will be able to maintain these low inventory levels in future
periods.
Approximately $32.5 million of cash was used for capital expenditures
during the first six months of 1995 to construct facilities and to acquire
information systems and personal computer office equipment. Capital
expenditures for the last half of 1995 are expected to be approximately $35
million.
Effective June 10, 1994, the Company entered into a new line of credit
facility which bears interest at a defined Base Rate or Eurocurrency Rate with
covenants based on quarterly income, maintenance of net worth, a maximum ratio
of total liabilities to tangible net worth, and a maximum inventory level.
Maximum amounts available under the credit facility are limited to $90 million
less the aggregate of outstanding letters of credit. During the commitment
period, the Company is obligated to pay a fee on the unused portion of the
credit facility. No amounts are outstanding under this credit facility, and the
maximum available totaled $83.5 million as of July 31, 1994.
The Company's subsidiary, Dell Receivables Corporation, has a
Receivables Purchase Agreement, which was renewed effective May 24, 1994,
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 based on the unused portion of the amount available under
the Receivable Purchase Agreement. As of July 31, 1994, this facility was
unused.
11
<PAGE> 13
Repayment of the Company's $100 million in 11% Senior Notes due August
15, 2000, together with operating lease commitments, constitute the Company's
long-term commitments to use cash.
The Company is a defendant in several consolidated lawsuits brought by
certain of its stockholders. An unfavorable outcome in these lawsuits could
have a material adverse effect on the Company's financial condition and results
of operations. See "Legal Proceedings."
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.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its Chairman, Michael S. Dell, are defendants in
nineteen lawsuits filed between May and November 1993, in the United States
District Court for the Western District of Texas, Austin Division. The suits
have been consolidated, an amended and consolidated complaint has been filed,
and the plaintiffs have requested class certification for a class of persons
who purchased or held the Company's common stock between February 24, 1993, and
July 14, 1993. In general, the plaintiffs have alleged that the Company made
overly optimistic forecasts about the Company's prospects without a reasonable
basis and failed to disclose adverse material information about the Company's
business (particularly with regard to problems in its notebook business) on a
timely basis, thereby inducing the plaintiffs to buy Company common stock at
artificially high prices. The plaintiffs also have alleged that Mr. Dell sold
securities of the Company while in the possession of material, non-public
information about the Company. The consolidated complaint asserts that these
actions or omissions violated various provisions of the federal securities
laws, particularly Section 10(b) of the Exchange Act and Rule 10b-5; that Mr.
Dell's trades violated Section 20A of the Exchange Act; and that the defendants
violated provisions of Texas statutes and common law principles against
negligent misrepresentation and deceit. The complaint seeks unspecified
damages. The Company is vigorously defending itself and Mr. Dell. It is the
Company's policy to make accruals for potential liability or settlement of
litigated matters as appropriate. The Company believes that its current
accruals in connection with this matter are adequate.
Since August 1992, the Company has been named as a defendant in
seventeen repetitive stress injury lawsuits, fifteen of which are in New York
state courts or United States District Courts for the New York City area. One
is in the Federal District Court for the State of Pennsylvania and one is in
the Federal District Court for the State of Tennessee. 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 which have been
filed, often naming IBM, Atex, 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, but it
is impossible to predict how many may be filed. Ultimate resolution of the
litigation against the Company may depend on progress in resolving this type of
litigation overall.
For information about a pending Securities and Exchange Commission
informal inquiry relating to foreign currency hedging and trading activities,
see "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Hedging Activities." By letter dated July 21, 1993, the
Commission notified the Company that it was extending the informal inquiry to
the circumstances and events surrounding the public announcement on
12
<PAGE> 14
July 14, 1993, about the Company's expected losses for its second quarter of
1994 and into the Company's procedures for estimating sales. The Company and
its independent accountants are voluntarily cooperating with the Commission in
its informal inquiry.
On August 11, 1993, the Company received a subpoena from the United
States Department of Commerce, Office of Export Enforcement of the Bureau of
Export Administration, requiring the Company to provide all documents relative
to any and all exports of 486/66 personal computers or related components to
Russia, Ireland, Iran or Iraq during the period from January 1992 through
August 1993 in connection with an investigation to enforce regulations under
the Export Administration Act of 1979, as amended. If the Office of Export
Enforcement's investigators determine that the Company has violated applicable
regulations, the government could potentially file civil or criminal charges.
The Company is cooperating in the investigation. The Company does not believe
this investigation or its outcome will have a material adverse effect on the
Company's financial condition or results of operations.
The Company has received a request from the Federal Trade Commission
("FTC") dated January 5, 1994, to provide documents and other information in
connection with the FTC's inquiry into the computer industry to determine
whether the Company's advertising and marketing claims regarding cathode ray
tube ("CRT") monitor screen sizes are in violation of the Federal Trade
Commission Act. In general, the inquiry focuses on differences between
advertising and marketing claims as to the size of CRT monitor screen sizes,
and the size of the display area actually viewable by the consumer. The
Company is cooperating with the FTC in this inquiry. The Company does not
believe that the inquiry or its outcome will have a material adverse effect on
the Company's financial condition or results of operations.
In April 1994 the California Attorney General notified Dell and 12
other PC manufacturers that certain of their advertisements with regard to
monitor screen sizes were believed to be deceptive and misleading, based on the
same concepts expressed by the FTC. The Company is responding to this
investigation in coordination with other companies in the industry. The
Company does not believe that the inquiry or its outcome will have a material
adverse effect on the Company's financial condition or results of operations.
The Company has received a subpoena from the FTC dated July 18, 1994,
in connection with an inquiry with respect to whether the Company may have
misrepresented or improperly failed to disclose patent rights that would
conflict with open use of a local high-speed personal computer bus standard
promulgated by the Video Electronics Standards Association (VESA). The Company
is cooperating in this inquiry. The Company does not believe that the inquiry
or its outcome will have a material adverse effect on the Company's financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The Company held its Annual Meeting of Stockholders on June 22, 1994.
Approximately 37,265,213 shares, or 97.3% of the Common Stock issued and
outstanding as of the record date, were represented at the meeting in person or
by proxy. Set forth below is a brief description of each matter voted upon at
the meeting and the voting results with respect to each matter.
1. A proposal to elect the following persons to serve as Class III
members of the Company's Board of Directors for three-year terms:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
George Kozmetsky 37,086,244 178,969
Claudine Malone 37,087,734 177,479
</TABLE>
13
<PAGE> 15
2. A proposal to approve the selection of Price Waterhouse as the
Company's independent auditors for fiscal 1995:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
--- ------- ------- ----------------
<S> <C> <C> <C>
37,024,027 143,694 97,492 --
</TABLE>
3. A proposal to approve the Company's Incentive Plan, reserve
4,490,207 shares (subject to adjustment) of Common Stock of the
Company for issuance under it, and to cancel the reservation of
the same number of shares reserved for issuance under the Company's
1989 and 1993 Stock Incentive Plans:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
--- ------- ------- ----------------
<S> <C> <C> <C>
20,152,705 6,035,372 222,163 10,854,973
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- - ------- ----------------------
<S> <C>
10.1* $90,000,000 Credit Agreement among Dell Computer Corporation and its Wholly-Owned
Subsidiaries, as borrowers, the Banks Parties Thereto, and Citibank, N.A., as Agent,
Dated as of June 10, 1994
10.2* Amendment No. 1 to the Dell Computer Corporation Deferred Compensation Plan dated April 29,
1994
10.3* Amendment No. 3 to the Dell Computer Corporation 401(k) Plan dated February 24, 1993
10.4* Dell Computer Corporation Deferred Compensation Plan for Non-Employee Directors dated May
20, 1994
10.5* Agreement dated June 1, 1994, between Dell Computer Corporation and Morton Topfer
10.6* Dell Computer Corporation Employment Agreement dated July 21, 1994, between Dell Computer
Corporation and Thomas B. Green
10.7 Dell Computer Corporation Incentive Plan dated June 22, 1994 (incorporated by reference to
Exhibit 4.6 of the Company's Registration Statement on Form S-8 as filed with the
Securities and Exchange Commission on July 14, 1994, Registration No. 33-54577)
27* Financial Data Schedule
</TABLE>
_____________________
* Filed herewith.
(b) Reports on Form 8-K
None
14
<PAGE> 16
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, 1994 /s/ THOMAS J. MEREDITH
-----------------------------
Thomas J. Meredith
Chief Financial Officer
15
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- - ------- ----------------------
<S> <C>
10.1* $90,000,000 Credit Agreement among Dell Computer Corporation and its Wholly-Owned
Subsidiaries, as borrowers, the Banks Parties Thereto, and Citibank, N.A., as Agent,
Dated as of June 10, 1994
10.2* Amendment No. 1 to the Dell Computer Corporation Deferred Compensation Plan dated April 29,
1994
10.3* Amendment No. 3 to the Dell Computer Corporation 401(k) Plan dated February 24, 1993
10.4* Dell Computer Corporation Deferred Compensation Plan for Non-Employee Directors dated May
20, 1994
10.5* Agreement dated June 1, 1994, between Dell Computer Corporation and Morton Topfer
10.6* Dell Computer Corporation Employment Agreement dated July 21, 1994, between Dell Computer
Corporation and Thomas B. Green
10.7 Dell Computer Corporation Incentive Plan dated June 22, 1994 (incorporated by reference to
Exhibit 4.6 of the Company's Registration Statement on Form S-8 as filed with the
Securities and Exchange Commission on July 14, 1994, Registration No. 33-54577)
27* Financial Data Schedule
</TABLE>
_____________________
* Filed herewith.
16
<PAGE> 1
EXHIBIT 10.1
$90,000,000
CREDIT AGREEMENT
among
DELL COMPUTER CORPORATION
AND ITS WHOLLY-OWNED
SUBSIDIARIES, as Borrowers
THE BANKS PARTIES HERETO
and
CITIBANK, N.A.,
as Agent
Dated as of June 10, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . 17
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . 17
2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Procedure for Borrowing Loans . . . . . . . . . . . . . . 18
SECTION 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . 19
3.1 Issuance of Letters of Credit. . . . . . . . . . . . . . . 19
3.2 Participating Interests in
Letters of Credit . . . . . . . . . . . . . . . . . . 20
3.3 Procedure for Opening Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Payments in Respect of Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5 Letter of Credit Fees . . . . . . . . . . . . . . . . . . 21
3.6 Further Assurances . . . . . . . . . . . . . . . . . . . . 21
3.7 Obligations Absolute . . . . . . . . . . . . . . . . . . . 22
3.8 Participations . . . . . . . . . . . . . . . . . . . . . . 22
3.9 Letters of Credit Outstanding on the
Termination Date . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 23
4.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Termination or Permanent Reduction
of Commitments. . . . . . . . . . . . . . . . . . . . . 24
4.3 Optional Prepayments . . . . . . . . . . . . . . . . . . . 24
4.4 Commitments Exceeded; Mandatory Payments . . . . . . . . . 25
4.5 Conversion and Continuation Options . . . . . . . . . . . 25
4.6 Minimum Amounts of Eurodollar Loans . . . . . . . . . . . 26
4.7 Interest Rates and Payment Dates . . . . . . . . . . . . . 26
4.8 Computation of Interest and Fees . . . . . . . . . . . . . 27
4.9 Inability to Determine Interest Rate . . . . . . . . . . . 27
4.10 Pro Rata Treatment and Payments . . . . . . . . . . . . . 28
4.11 Illegality . . . . . . . . . . . . . . . . . . . . . . . . 30
4.12 Requirements of Law; Letter of Credit
Reserves . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.14 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 34
4.15 Currency Indemnity . . . . . . . . . . . . . . . . . . . . 35
4.16 Avoidance; Certifications of Amounts Due;
Replacement of Banks . . . . . . . . . . . . . . . . . 36
4.17 Assignments . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 37
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . 37
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3 Corporate or Partnership Existence; Compliance
with Law . . . . . . . . . . . . . . . . . . . . . . . 38
5.4 Corporate or Partnership Power; Authorization;
Enforceable Obligations . . . . . . . . . . . . . . . . . 38
5.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . 39
5.6 No Material Litigation . . . . . . . . . . . . . . . . . . 39
5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . 39
5.8 Ownership of Property; Liens . . . . . . . . . . . . . . . 39
5.9 Intellectual Property . . . . . . . . . . . . . . . . . . 39
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.11 Federal Regulations . . . . . . . . . . . . . . . . . . . 40
5.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.13 Investment Company Act; Other Regulations . . . . . . . . 41
5.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 41
5.15 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . 41
5.16 Environmental Matters . . . . . . . . . . . . . . . . . . 41
SECTION 6. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 42
6.1 Conditions to Effectiveness of this
Agreement . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Conditions to Each Loan and Issuance
of Each Letter of Credit . . . . . . . . . . . . . . . . 44
6.3 Additional Borrowers . . . . . . . . . . . . . . . . . . . 45
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 45
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . 45
7.2 Certificates; Other Information . . . . . . . . . . . . . 46
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . 47
7.4 Conduct of Business and Maintenance of
Existence . . . . . . . . . . . . . . . . . . . . . . . 47
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . 48
7.6 Inspection of Property; Books and Records;
Discussions; Independent Audits . . . . . . . . . . . . 48
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . 49
7.9 Guarantees. . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 50
8.1 Financial Covenants . . . . . . . . . . . . . . . . . . . 50
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . 51
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . 53
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . 55
8.5 Limitations on Fundamental Changes . . . . . . . . . . . . 55
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . 56
8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . 57
8.8 Limitation on Investments, Loans and
Advances . . . . . . . . . . . . . . . . . . . . . . . 58
8.9 Limitation on Optional Payments and
Modifications of Debt Instruments . . . . . . . . . . 59
8.10 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . 59
8.11 Changes in Significant Credit Policy or
Significant Collection Policy . . . . . . . . . . . . 60
8.12 Capital Expenditures . . . . . . . . . . . . . . . . . . . 60
8.13 Transactions with Affiliates. . . . . . . . . . . . . . . 60
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 60
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . 64
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . 65
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . 65
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . 65
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . 66
10.6 Non-Reliance on Agent and Other Banks . . . . . . . . . . 66
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . 67
10.8 Agent in Its Individual Capacity . . . . . . . . . . . . . 68
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11. THE ISSUING BANK . . . . . . . . . . . . . . . . . . . . . 68
11.1 The Issuing Banks . . . . . . . . . . . . . . . . . . . . 68
11.2 Issuing Bank in Its Individual Capacity . . . . . . . . . 70
SECTION 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 70
12.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . 70
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 72
12.4 Survival of Representations and Warranties . . . . . . . . 72
12.5 Payment of Expenses and Taxes; Liability of
the Banks . . . . . . . . . . . . . . . . . . . . . . 72
12.6 Successors and Assigns; Participations;
Purchasing Banks; Additional Lenders . . . . . . . . . 73
12.7 Adjustments; Set-off. . . . . . . . . . . . . . . . . . . 77
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 77
12.9 Severability . . . . . . . . . . . . . . . . . . . . . . . 78
12.10 Integration . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12.11 Applicability of Covenants . . . . . . . . . . . . . . . . 78
12.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 78
12.13 Submission To Jurisdiction; Waivers . . . . . . . . . . . 78
12.14 Acknowledgements . . . . . . . . . . . . . . . . . . . . . 79
12.15 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . 79
12.16 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
SCHEDULES
SCHEDULE I Banks, Lending Offices and Commitments
SCHEDULE II Subsidiaries of Dell Computer Corporation
SCHEDULE III Legal Proceedings
SCHEDULE IV Indebtedness
SCHEDULE V Asset Securitization Program
EXHIBITS
EXHIBIT A Form of Credit Agreement Supplement (Borrower)
EXHIBIT B Form of Note
EXHIBIT C-1 Form of Company Guarantee
EXHIBIT C-2 Form of Subsidiaries Guarantee
EXHIBIT D Form of Opinion of Counsel
EXHIBIT E Form of Commitment Transfer Supplement
EXHIBIT F Events Subsequent to January 30, 1994
- iv -
<PAGE> 6
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of June 10, 1994, among DELL COMPUTER
CORPORATION, a Delaware corporation (the "Company"), each Wholly-Owned
Subsidiary that becomes a party to this Agreement by executing a copy hereof on
the Closing Date or, at any time thereafter, by executing and delivering to the
Agent a supplement hereto in the form of Exhibit A (together with the Company,
the "Borrowers"; each individually, a "Borrower"), the several banks and other
financial institutions from time to time parties to this Agreement (the
"Banks"), and Citibank, N.A., a national banking association, as agent for the
Banks hereunder (in such capacity, the "Agent"). In consideration of the
mutual covenants and agreements contained herein, the Borrowers, the Banks and
the Agent hereby agree as set forth herein:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accounts": all "accounts" as such term is defined in the
Uniform Commercial Code as in effect from time to time in the State of
New York.
"Affiliate": with respect to any Person (a) any Person (other
than a Subsidiary of the Company or the Company) which, directly or
indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or
executive officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the power,
direct or indirect, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person, or
(ii) to direct or cause the direction of the management and policies of
such Person by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Available Commitment": as to any Bank at any time, an amount
equal to the excess, if any, of (a) the amount of such Bank's Commitment
over (b) such Bank's Commitment Percentage of the aggregate outstanding
amount of all Extensions of Credit.
"Base Rate": at all times, a fluctuating rate per annum equal
to the highest of:
1
<PAGE> 7
(i) the rate of interest announced publicly by
Citibank, N.A. in New York, New York, from time to time, as its
base rate; or
(ii) the sum of (A) 1/2 of one percent per annum
plus (B) the rate obtained by dividing (x) the latest three-week
moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major
United States money market banks (such three-week moving average
being determined weekly by Citibank, N.A. on the basis of such
rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, N.A., in either
case adjusted to the nearest 1/4 of one percent or, if there is
no nearest 1/4 of one percent, to the next higher 1/4 of one
percent), by (y) a percentage equal to 100% minus the average of
the daily percentages specified during such three-week period by
the Federal Reserve Board for determining the maximum reserve
requirement (including, but not limited to, any marginal reserve
requirements for Citibank, N.A. in respect of liabilities
consisting of or including (among other liabilities) three-month
nonpersonal time deposits of at least $100,000, plus (C) the
average during such three-week period of the daily net annual
assessment rates estimated by Citibank, N.A. for determining the
current annual assessment payable by it to the Federal Deposit
Insurance Corporation for insuring three-month time deposits in
the United States; or
(iii) one-half of one percent per annum above the
Federal Funds Rate for such day.
"Base Rate Loans": Loans, the rate of interest applicable to
which is based upon the Base Rate.
"Borrower" or "Borrowers": as defined in the introductory
paragraph to this Agreement.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Dallas, Texas are
authorized or required by law to close.
"Capital Expenditure": any payment made directly or indirectly
for the purpose of acquiring or constructing fixed assets, real property
or equipment which in accordance with GAAP would be added as a debit to
the
2
<PAGE> 8
fixed asset account of such Person making such expenditure, including,
without limitation, amounts paid or payable for such purpose under any
conditional sale or other title retention agreement or under any
Financing Lease.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Cash Equivalents": (a) securities issued by the United States
Government or by any agency or instrumentality thereof and directly and
fully guaranteed or insured by the United States Government, having
maturities of not more than 12 months from the date of acquisition, (b)
time deposits, banker's acceptances and certificates of deposit having
maturities of not more than 12 months from the date of acquisition of
(i) any Bank or (ii) any domestic or foreign commercial bank having
capital and surplus in excess of $500,000,000, which has, or the holding
company of which has, a commercial paper rating meeting the requirements
specified in clause (d) below, (c) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described
in clauses (a), (b) and (d) entered into with any bank meeting the
qualifications specified in clause (b) (i) or (b) (ii) above, (d) any
securities, bonds, notes, commercial paper, debentures, investments or
other forms of Indebtedness of any Person rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within 270 days after the date of acquisition, and (e) shares
of any mutual fund registered under the Investment Company Act of 1940,
as amended, which invests solely in underlying securities of the types
described in clauses (a) through (d) above.
"Change In Control": the acquisition by any Person, or two or
more Persons acting in concert (other than Michael Dell and other
members of management as of the Closing Date), of beneficial ownership
(within the meaning of Rule 13d-3, promulgated by the Securities and
Exchange Commission and now in effect under the Securities Exchange Act
of 1934, as amended) of 50% or more of the issued and outstanding shares
of voting stock of the Company.
"Closing Date": the date on which this Agreement shall have
been executed by the parties hereto.
3
<PAGE> 9
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment": as to any Bank, the obligation of such Bank to
make Extensions of Credit to the Borrowers hereunder in an aggregate
outstanding amount at any one time not to exceed the amount set forth
opposite such Bank's name under the heading "Commitment" on Schedule I.
"Commitment Percentage": as to any Bank at any time, the
percentage of the aggregate Commitments then constituted by such Bank's
Commitment.
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date on
which the Commitments shall terminate as provided herein.
"Commitment Transfer Supplement": a commitment transfer
supplement substantially in the form of Exhibit E hereto.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes
the Company and which is treated as a single employer under Section 414
of the Code.
"Company Guarantee": the Company Guarantee of the Obligations
made by the Company in favor of the Banks, substantially in the form of
Exhibit C-1, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Consolidated Funded Debt": at any time, the sum of (a)
indebtedness for borrowed money (including the current portion thereof)
plus (b) the portion of all Financing Leases included on a balance sheet
as indebtedness plus (c) all Off-Balance Sheet Financings, plus (d) the
undrawn face amount of all letters of credit outstanding except (i) to
the extent such letters of credit support obligations counted in clauses
(a), (b) and (c) above, or (ii) Trade Letters of Credit issued for the
account of the Company or its Subsidiaries in the ordinary course of
business and having an expiry date occurring not later than 180 days
after the date of issuance minus (e) the amount of any such indebtedness
to the extent secured by cash, Cash Equivalents or (Near Cash
Equivalents), all determined for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP.
4
<PAGE> 10
"Consolidated Intangibles": at a particular date, all assets of
the Company and its Subsidiaries, determined on a consolidated basis at
such date, that would be classified as intangible assets in accordance
with GAAP, but in any event including, without limitation, unamortized
debt discount and expense, unamortized organization and reorganization
expense, intellectual property rights, patents, trade or service marks,
franchises, trade names, and goodwill.
"Consolidated Net Income": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "net
income or loss" (or any like caption) on a consolidated income statement
of the Company and its Subsidiaries for such period; provided that there
shall be excluded from Consolidated Net Income all items that would be
classified under GAAP as "extraordinary gains".
"Consolidated Net Worth": at a particular date, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date.
"Consolidated Tangible Net Worth": at a particular date,
Consolidated Net Worth less Consolidated Intangibles as of such date.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Default": any of the events specified in Section 9, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Accounts": Accounts owing from obligors who are
residents of the United States of America.
"Domestic Lending Office": with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in an Assignment or such other office of
such Bank as such Bank may from time to time specify to the Borrower and
the Agent.
5
<PAGE> 11
"Domestic Receivables Securitization": as defined in Section
8.6(e).
"Domestic Subsidiary": any Subsidiary of the Company
incorporated or formed in the United States of America.
"Eligible Assignee": (a) a commercial bank or an affiliate
thereof organized under the laws of the United States, or any State
thereof, and having total assets in excess of $3,000,000,000 and a
combined capital and surplus of at least $150,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having total assets
in excess of $3,000,000,000 and a combined capital and surplus of at
least $150,000,000, provided that such bank is acting through a branch
or agency located in the country in which it is organized or another
country which is also a member of the OECD; and (c) the central bank of
any country which is a member of the OECD.
"Environmental Laws": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including without limitation,
Hazardous Materials, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Liabilities": has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office": with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in an Assignment (or, if no
such office is specified, its Domestic Lending Office) or such other
office of such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"Eurodollar Loan": a Loan which bears interest as provided in
Section 4.7(a).
"Eurodollar Margin": .95%, subject to adjustment in accordance
with Section 4.7(d).
6
<PAGE> 12
"Eurodollar Rate": for the Interest Period for each Eurodollar
Loan comprising part of the same Loan, an interest rate per annum equal
to the rate per annum at which deposits in U.S. dollars are offered by
the principal office of the Agent in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount
substantially equal to the amount of the Eurodollar Loan of the Agent
comprising part of such Loan to be outstanding during such Interest
Period and for a period equal to such Interest Period. The Eurodollar
Rate for the Interest Period for each Eurodollar Loan shall be
determined by the Agent on the basis of applicable rates furnished to
and received by the Agent two Business Days before the first day of such
Interest Period.
"Eurodollar Rate Reserve Percentage": of any Bank for the
Interest Period for any Eurodollar Loan, the reserve percentage
applicable during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages
for those days in such Interest Period during which any such percentage
shall be so applicable) under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for such Bank with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal
to such Interest Period.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Exposure": as defined in Section 12.7.
"Extension of Credit": the making of, or participation in, any
Loan by any Bank and the issuance of, or participation in, any Letter of
Credit by an Issuing Bank or any Bank; the "aggregate outstanding amount
of all Extensions of Credit" means, at any time of determination
thereof, the sum of (a) the unpaid principal amount of all Loans at such
time, (b) the aggregate amount available to be drawn under all Letters
of Credit outstanding at such time and (c) the aggregate unreimbursed
amount at such time of all drawings under Letters of Credit.
7
<PAGE> 13
"Federal Funds Rate": for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal 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 transactions
received by Citibank, N.A. from three Federal funds brokers of
recognized standing selected by it.
"Financial L/C": a letter of credit under which an Issuing Bank
agrees to make payments for the account of a Borrower, which letter of
credit serves as a financial guarantee for such Borrower.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary of the Company which is
organized under the laws of any jurisdiction outside the United States
of America.
"GAAP": has the meaning specified in Section 1.2.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain
8
<PAGE> 14
the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to
assure or hold harmless the owner of any such primary obligation against
loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business and continuing obligations
of the Company and its Subsidiaries under government contracts entered
into in the ordinary course of business.
"Guarantees": the collective reference to the Company Guarantee
and the Subsidiaries Guarantee.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances, petroleum
products (including crude oil or any fraction thereof), defined or
regulated as such in or under any Environmental Law.
"Immaterial Subsidiary": at any date, any Subsidiary of the
Company (i) whose total assets have a current fair market value of less
than $500,000, and (ii) whose net income for the immediately preceding
12 months is less than $500,000.
"Indebtedness": of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases,
(c) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (d) all liabilities secured by
any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof, and
(e) reimbursement obligations owing in respect of letters of credit and,
without duplication, the undrawn face amount of all stand-by letters of
credit. Indebtedness shall not include Guarantee Obligations or
continuing obligations of the Company and its Subsidiaries under
government contracts entered into in the ordinary course of business.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.
9
<PAGE> 15
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
day of each March, June, September and December to occur while such Base
Rate Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period
longer than three months (i) each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and (ii)
the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by a Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by a Borrower by notice to the Agent not
less than three Working Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Working Day, such Interest Period shall be extended to the next
succeeding Working Day unless the result of such extension would
be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Working Day;
(B) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date;
and
(C) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Working Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the calendar
10
<PAGE> 16
month at the end of such Interest Period) shall end on the last
Working Day of a calendar month.
"Interest Rate Contracts": interest rate exchange, collar, cap
or similar agreements providing interest rate protection, entered into
by any Borrower.
"International Accounts": Accounts owing from obligors who are
not residents of the United States of America.
"International Receivables Securitization": as defined in
Section 8.6(f).
"International Rights": the rights to use the trade names and
trademarks of the Company and its Subsidiaries and to merchandise their
proprietary goods outside the United States of America and any franchise
or similar rights with respect thereto.
"Investments": as defined in Section 8.8(b).
"Issuing Bank": Citibank, N.A., and one of the other Banks
designated by the Company from time to time, with the consent of such
Bank.
"L/C Application": as defined in Section 3.1.
"L/C Obligations": the obligations of the Borrowers to
reimburse an Issuing Bank for any payments made by such Issuing Bank
under any Letter of Credit.
"L/C Participating Interest": an undivided participating
interest in the face amount of each issued and outstanding Letter of
Credit and the L/C Application relating thereto.
"Letters of Credit": the collective reference to Non-Financial
L/Cs and Financial L/Cs issued pursuant to Section 3.1; individually, a
"Letter of Credit".
"Lien": any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Financing Lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
11
<PAGE> 17
"Loan": loans made by the Banks on a pro rata basis according
to their respective Commitment Percentages pursuant to Section 2.1.
"Loan Documents": this Agreement, the Notes, any L/C
Applications and the Guaranties.
"Loan Parties": the collective reference to the Borrowers and
any other party (other than the Agent, the Issuing Bank or any Bank)
from time to time party to this Agreement or the Subsidiaries Guarantee
or the Security Agreement.
"Marketable Securities": (a) securities issued by the United
States Government or by any agency or instrumentality thereof, (b) any
securities, bonds, notes, debentures, investments or other forms of
Indebtedness of any Person rated at least BBB or the equivalent thereof
by Standard & Poor's Corporation or Baa or the equivalent thereof by
Moody's Investors Service, Inc. and in either case maturing within 3
years after the date of acquisition and (c) any mutual fund registered
under the Investment Company Act of 1940, as amended, which invests
solely in underlying securities of the types described in clauses (a)
and (b) above.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, (b) the ability of
the Company or any other Borrower to perform its respective obligations
under the Loan Documents, or (c) the validity or enforceability of any
of the Loan Documents or the rights or remedies of the Agent or the
Banks thereunder.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a) (3) of ERISA.
"Near Cash Equivalents": (a) time deposits, banker's
acceptances and certificates of deposit having maturities of not more
than 12 months from the date of acquisition of any domestic or foreign
commercial bank having capital and surplus in excess of $500,000,000,
which has, or the holding company of which has, a commercial paper
rating meeting the requirements specified in clause (c) below, (b)
repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (a) and (c)
entered into with any bank meeting the qualifications specified in
clause (a) above, (c) any securities, bonds, notes, commercial paper,
debentures, investments or other forms of Indebtedness of any Person
rated A-2 or the
12
<PAGE> 18
equivalent thereof by Standard & Poor's Corporation and P-2 or the
equivalent thereof by Moody's Investors Service, Inc., or, if rated only
by one such rating agency, rated A-2 or the equivalent thereof by
Standard and Poor's Corporation or rated P-2 or the equivalent thereof
by Moody's Investors Service, Inc., and in either case maturing within
270 days after the date of acquisition, and (d) any money market fund
registered under the Investment Company Act of 1940, as amended, which
invests solely in underlying securities of the types described in
clauses (a) through (c) above. Near Cash Equivalents shall not include
Cash Equivalents.
"Non-Financial L/C": a letter of credit under which the Issuing
Bank agrees to make payments for the account of a Borrower, which letter
of credit is not a Financial L/C.
"Notes": as defined in Section 2.2.
"Obligations": the unpaid principal of and interest on the
Loans, all unpaid drawings under the Letters of Credit and all interest
thereon and all other obligations and liabilities of each of the Loan
Parties to the Agent, the Issuing Bank or the Banks, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection
with, any Loan Document, or any other documents given in connection
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including without
limitation, all reasonable fees and disbursements of counsel to the
Agent, the Issuing Bank or any Bank) or otherwise.
"Off-Balance Sheet Financing": any lease or transaction,
financial in nature, not required in accordance with GAAP to be
capitalized on a balance sheet of the Person receiving the proceeds
thereof.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Participant": as defined in Section 12.6(b).
"Participating Bank": with respect to any Letter of Credit, any
Bank (other than the Issuing Bank of such Letter of Credit) with respect
to its L/C Participating Interest in such Letter of Credit.
"Payment Sharing Notice": a written notice from any Bank
informing the Agent that an Event of Default has occurred and is
continuing and directing the Agent to
13
<PAGE> 19
allocate payments thereafter received from the Borrowers in accordance
with Section 4.10(d).
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Preferred Stock": the shares of the Series A Convertible
Preferred Capital Stock of the Company issued on August 26, 1993.
"Primary Subsidiaries": the collective reference to Dell
International Incorporated, Dell USA Corporation, Dell Direct Sales
Corporation, Dell Marketing Corporation, Dell Products Corporation, Dell
Products L.P., Dell USA L.P., Dell Direct Sales L.P., Dell Marketing
L.P., Dell Gen. P. Corp., and any other Wholly-Owned Subsidiary from
time to time whose assets constitute at least 5% of the total assets of
the Company and its Subsidiaries taken as a whole.
"Prior Credit Agreement: that certain Credit Agreement, dated
as of June 18, 1993, by and among the Borrowers, the several banks and
financial institutions parties thereto, and Citibank, N.A., as agent.
"Purchasing Banks": as defined in Section 12.6(c).
"Receivables Securitization": the collective reference to the
Domestic Receivables Securitization and the International Receivables
Securitization.
"Receivables Securitization Termination Event": with respect to
the Receivables Securitization or any other securitization of the
Accounts of the Company or its Subsidiaries, the occurrence of any
event, and the passage of any period of grace related thereto, which
causes the purchaser of Accounts pursuant thereto, to terminate the
Receivables Securitization or such other securitization.
"Register": as defined in Section 12.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System.
14
<PAGE> 20
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under Sections .13, .14, .16, .18, .19 or .20 of
PBGC Reg. Section 2615.
"Required Banks": at any time when the Commitments are in
effect, Banks whose Commitment Percentages aggregate at least 66-2/3%.
At any time after the Commitments are terminated, Banks holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or the partnership agreement or other
organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer": with respect to any matter, the Chief
Executive Officer, Chief Financial Officer or Treasurer of the Company
or, with respect to financial matters only, the Chief Financial Officer
or Treasurer of the Company.
"Senior Unsecured Notes": the Company's 11% Senior Notes Due
August 15, 2000, in the aggregate principal amount of $100,000,000.
"Significant Collection Policy": the then current policies,
practices and procedures of the Company and its Subsidiaries as of the
Closing Date governing the billing, subsequent attempt to collect, and
write-off of Accounts that could reasonably be expected to have an
effect on the amount of collections of Accounts or the timing of the
receipt of such collections.
"Significant Credit Policy": the then current policies,
practices and procedures governing the initial and ongoing extension of
credit by the Company and its Subsidiaries as of the Closing Date to
their customers, the determination of maximum credit limits for its
customers, the terms of payment of such credit extensions and all other
matters relating to credit policy which could reasonably be expected to
have an effect on the collectibility or the time of collection of
Accounts.
15
<PAGE> 21
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt": any unsecured indebtedness of the Company
with a maturity beyond the Termination Date subordinated to the prior
payment in full of the principal of and interest (including
post-petition interest) on the Loans, the L/C Obligations and all other
obligations and liabilities of the Company to the Agent, the Issuing
Banks and the Banks hereunder on terms and conditions first approved in
writing by the Agent.
"Subsidiaries Guarantee": the Subsidiaries Guarantee in the
form of Exhibit C-2 to be executed on or before the Closing Date by each
of the Primary Subsidiaries that is a Domestic Subsidiary and each
Subsidiary of the Company which is a Borrower, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Taxes": as defined in Section 4.13(a).
"Termination Date": June 8, 1995.
"Trade Letters of Credit": a letter of credit under which an
issuer agrees to make payments for the account of a Borrower, which
letter of credit does not serve as a financial guarantee for such
Borrower.
"Transferee": as defined in Section 12.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Commercial Code": the Uniform Commercial Code as in
effect from time to time in the relevant jurisdiction.
16
<PAGE> 22
"Wholly-Owned Subsidiary": any Subsidiary of the Company, the
Capital Stock of which is 100% owned beneficially, directly or
indirectly, by the Company.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Company and its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
consistently applied with those applied in the preparation of the financial
statements delivered pursuant to Section 7.1 ("GAAP"). The Agent and each
Borrower agree that if GAAP changes after the Closing Date in a manner which
materially affects the substantive provisions of the financial covenants set
forth in Section 8.1 but which does not cause or identify a Material Adverse
Effect, the Agent and each Borrower shall negotiate in good faith to amend or
otherwise modify such covenants, with the consent of the Required Banks, so
that the substantive provisions of such covenants under GAAP as then in effect
shall be as nearly equivalent as possible to the substantive provisions of such
covenants under GAAP as of the Closing Date.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions
hereof, each Bank severally agrees to make Loans
17
<PAGE> 23
("Loans") to each of the Borrowers from time to time during the Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed the amount of such Bank's Commitment. During the Commitment Period each
Borrower may use the Commitments by borrowing, prepaying the Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions
hereof; provided that, after giving effect to any Loans, in no event shall the
aggregate outstanding amount of all Extensions of Credit exceed the aggregate
amount of the Commitments.
(b) The Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans, or (iii) a combination thereof, as determined by a
Borrower and notified to the Agent in accordance with Sections 2.3 and 4.5;
provided that, no Loan shall be made as a Eurodollar Loan after the day that is
one month prior to the Termination Date.
(c) The Loans shall mature and shall be due and payable on
the Termination Date.
2.2 Notes. The Loans made by each Bank shall be evidenced
by a single promissory note executed and delivered by each of the Borrowers,
substantially in the form of Exhibit B hereto with appropriate insertions as to
payee, date and principal amount (a "Note"), payable to the order of such Bank
and in a principal amount equal to the lesser of (a) the amount of the initial
Commitment of such Bank and (b) the aggregate unpaid principal amount of all
Loans made by such Bank. Each Bank is hereby authorized to record the
Borrower, date, Type and amount of each Loan made by such Bank, each
continuation thereof, each conversion of all or a portion thereof to another
Type, the date and amount of each payment or prepayment of principal thereof
and, in the case of Eurodollar Loans the length of each Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded absent manifest error. The Note shall
(x) be dated the Closing Date, (y) be stated to mature on the Termination Date
and (z) provide for the payment of interest in accordance with Section 4.7.
2.3 Procedure for Borrowing Loans. Each Borrower may
borrow under the Commitments during the Commitment Period on any Working Day,
if all or any part of the requested Loans are to be initially Eurodollar Loans,
or on any Business Day, otherwise, provided that such Borrower shall give the
Agent notice (which notice must be received by the Agent prior to 12:00 Noon,
New York City time), (a) three Working Days prior to the requested borrowing
date, if all or any part of the requested Loans are to be initially Eurodollar
Loans, or (b) on a Business Day for Base Rate Loans to be made on that day,
18
<PAGE> 24
specifying (i) the Borrower, (ii) the amount to be borrowed, (iii) the
requested borrowing date, (iv) whether the borrowing is to be of Eurodollar
Loans, Base Rate Loans, or a combination thereof and (v) if the borrowing is to
be entirely or partly of Eurodollar Loans, the respective amounts of each such
Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Commitments shall be in an amount equal to
$2,000,000, or any whole multiple of $100,000 in excess thereof (or, if the
then Available Commitments are less than $2,000,000, such lesser amount). Upon
receipt of any such notice from a Borrower, the Agent shall promptly, but in
any event not later than the end of business on the date the Agent receives
such notice from the Borrower, notify each Bank thereof. Each Bank will make
the amount of its pro rata share of each borrowing available to the Agent for
the account of such Borrower at the office of the Agent specified in Section
12.2 prior to 1:00 P.M., New York City time, on the borrowing date requested by
such Borrower in funds immediately available to the Agent; provided that, in
the case of borrowings of Base Rate Loans (including, without limitation, any
borrowing pursuant to Section 3.4(a)), each Bank shall make the amount of its
pro rata share of such borrowing available to the Agent prior to 3:00 P.M., New
York City time in funds immediately available to the Agent. Such borrowing
will then be made available to such Borrower by the Agent crediting the account
of such Borrower on the books of such office with the aggregate of the amounts
made available to the Agent by the Banks and in like funds as received by the
Agent.
SECTION 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit. (a) Each Borrower may
from time to time request an Issuing Bank to issue a Letter of Credit for the
account of such Borrower by delivering to such Issuing Bank, with a copy to the
Agent at its address specified in Section 12.2, a letter of credit application
in such Issuing Bank's then customary form (an "L/C Application") completed to
the satisfaction of such Issuing Bank and the Agent, together with the proposed
form of such Letter of Credit (which shall comply with the applicable
requirements of paragraph (b) below) and such other certificates, documents and
other papers and information as such Issuing Bank may reasonably request;
provided, however, that the L/C Application shall be revised to eliminate all
provisions inconsistent with this Agreement.
(b) Each Letter of Credit issued hereunder shall, among
other things, (i) be in such form requested by a Borrower from an Issuing Bank
as shall be acceptable to such Issuing Bank (and the Agent, if such form has
not been previously reviewed by the Agent) in its reasonable discretion
19
<PAGE> 25
and (ii) in the case of each Letter of Credit, have an expiry date occurring
not later than the earlier of (y) 364 days after the date of issuance of such
Letter of Credit and (z) 180 days after the Termination Date, provided, that
after giving effect to the issuance of any Letter of Credit, (i) in no event
shall the aggregate undrawn amount of all Letters of Credit exceed the lesser
of (a) $35,000,000, and (b) (1) the aggregate amount of the Commitments , less
(2) the aggregate unpaid amount of all Loans, and (ii) in no event shall the
aggregate amount of all Extensions of Credit exceed the aggregate amount of the
Commitments.
(c) On the date agreed for a Letter of Credit to be issued
or amended, the Issuing Bank thereof shall forward a copy thereof via telecopy,
with the related L/C Application, to the Agent.
3.2 Participating Interests in Letters of Credit.
Effective in the case of each Financial L/C and Non-Financial L/C as of the
date of the opening thereof, each Issuing Bank agrees to allot and does allot,
to itself and each other Bank, and each Bank severally and irrevocably agrees
to take and does take in such Letter of Credit and the related L/C Application,
an L/C Participating Interest in a percentage equal to such Bank's Commitment
Percentage.
3.3 Procedure for Opening Letters of Credit. The Agent
will notify each Bank after the end of each calendar month of any L/C
Applications received by the Issuing Banks (and copied to the Agent) during
such month. Upon receipt of any L/C Application from a Borrower, the relevant
Issuing Bank will process such L/C Application, and the other certificates,
documents and other papers delivered to it in connection therewith, in
accordance with its customary procedures and, subject to the terms and
conditions hereof, shall promptly open such Letter of Credit by issuing the
original of such Letter of Credit to the beneficiary thereof and by furnishing
a copy thereof to the relevant Borrower, the Agent, and, after the end of the
calendar month in which such Letter of Credit was opened, to the other Banks,
provided that no such Letter of Credit shall be issued if the proviso to
Section 2.1(a) would be violated thereby.
3.4 Payments in Respect of Letters of Credit. (a) Each
Borrower agrees forthwith upon demand by the relevant Issuing Bank and
otherwise in accordance with the terms of the L/C Application executed by such
Borrower relating thereto, to reimburse such Issuing Bank for any payment made
by such Issuing Bank under any Letter of Credit issued for such Borrower's
account. If at any time such Borrower fails immediately to reimburse such
Issuing Bank for such payment made under such Letter of Credit, then the
Company shall be deemed to have requested a Loan which is a Base Rate Loan on
20
<PAGE> 26
the date of the aforementioned payment and the Banks (in accordance with their
respective Commitment Percentages) shall be required to make such Base Rate
Loan in an aggregate amount equal to such Borrower's reimbursement obligation.
(b) In the event that any Issuing Bank makes a payment
under any Letter of Credit and is not reimbursed in full therefor forthwith
upon demand of such Issuing Bank, and otherwise in accordance with the terms
hereof and of the L/C Application relating to such Letter of Credit, such
Issuing Bank will promptly notify each other Bank. Forthwith upon its receipt
of any such notice, each other Bank will transfer to such Issuing Bank, in
immediately available funds, an amount equal to such other Bank's Commitment
Percentage of the L/C Obligation arising from such unreimbursed payment. If a
Bank does not make available to such Issuing Bank such Bank's pro rata share of
such L/C Obligation as provided in the foregoing sentence, such Bank shall be
required to pay interest to such Issuing Bank on its pro rata share of such L/C
Obligation at the Federal Funds Rate from the date such Bank's payment is due
until the date it is received by such Issuing Bank.
3.5 Letter of Credit Fees. (a) In lieu of any letter of
credit commissions and fees provided for in any L/C Application relating to
Letters of Credit (other than standard amendment and negotiation fees), each
Borrower agrees to pay to the Agent, (i) for the account of the Banks with
respect to each Financial L/C, a fee of 3/4 of 1% per annum based on the
undrawn face amount thereof determined on a daily basis, such fee to be payable
quarterly in arrears, on the last day of March, June, September and December,
(ii) for the account of the Banks with respect to each Non-Financial L/C, a fee
of 5/8 of 1% per annum based on the undrawn face amount thereof determined on a
daily basis, such fee to be payable quarterly in arrears, on the last day of
March, June, September and December, and (iii) for the account of each Issuing
Bank in respect thereof, a fee of 1/8 of 1% per annum based on the undrawn face
amount thereof determined on a daily basis, each such fee to be payable
quarterly in arrears, on the last day of March, June, September and December.
(b) For purposes of any payment of fees required pursuant
to this Section 3.5, the Agent agrees to provide to the Company a statement of
any such fees to be so paid by each Borrower; provided that the failure by the
Agent to provide the Company with any such invoice shall not relieve any
Borrower of its obligation to pay such fees; provided, further, that payment of
such fees shall not be considered overdue prior to such invoice being provided.
3.6 Further Assurances. Each Borrower hereby agrees, from
time to time, to do and perform any and all acts and to execute any and all
further instruments reasonably
21
<PAGE> 27
requested by any Issuing Bank more fully to effect the purposes of this
Agreement and the issuance of Letters of Credit hereunder.
3.7 Obligations Absolute. The payment obligations of the
Borrowers under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(a) the existence of any claim, set-off, defense or other
right which any Borrower or any of its Subsidiaries may have at any time
against any beneficiary, or any transferee, of any Letter of Credit (or
any Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Bank in respect thereof, the Agent or any Bank, or
any other Person, whether in connection with this Agreement, the Loan
Documents, the transactions contemplated herein, or any unrelated
transaction;
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent or invalid or any
statement therein being untrue or inaccurate in any respect, except to
the extent the payment by the relevant Issuing Bank under such Letter of
Credit notwithstanding such statement or document constitutes gross
negligence or willful misconduct on the part of such Issuing Bank;
(c) payment by an Issuing Bank under any Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit or is insufficient in any
respect, except where such payment constitutes gross negligence or
willful misconduct on the part of such Issuing Bank; or
(d) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing, except for any such
circumstances or happening constituting gross negligence or willful
misconduct on the part of an Issuing Bank.
3.8 Participations. Each Bank's obligation to purchase
participating interests pursuant to Section 3.2 shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Bank may have against any Issuing Bank, any Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of any
Default or Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of any Borrower; (iv) any breach of this Agreement by
any
22
<PAGE> 28
Borrower or any other Bank; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
3.9 Letters of Credit Outstanding on the Termination Date.
Each Borrower shall use all reasonable efforts to deliver to the Agent on or
prior to the Termination Date all outstanding Letters of Credit with an expiry
date later than the Termination Date for cancellation by the Agent. If any
Borrower is not able to have all such Letters of Credit delivered to the Agent
on or prior to the Termination Date, such Borrower shall, prior to 11:00 A.M.
(New York City time) on the Termination Date, deposit with the Agent (in
addition to all other amounts of principal, interest charges, fees and expenses
then owing to the Agent, the relevant Issuing Bank or any Bank hereunder or
under any other Loan Document), and grant to the relevant Issuing Bank a first
priority perfected Lien in, an amount of cash and/or irrevocable letters of
credit (naming the relevant Issuing Bank as beneficiary, issued by financial
institutions reasonably satisfactory to such Issuing Bank and otherwise in form
and substance reasonably satisfactory to such Issuing Bank) equal to 102% of
the amount necessary to pay in full the maximum amount of such Borrower's
reimbursement obligations in respect of all such outstanding Letters of Credit
(the determination of such maximum amount to assume compliance with all
conditions for drawing), any such cash to be deposited in an interest-bearing
account. The Agent shall be entitled to use any funds so deposited or obtained
pursuant to draws on any letter of credit so delivered to satisfy such
Borrower's reimbursement obligations hereunder in respect of any drawing on
such outstanding Letters of Credit and any other amounts payable by such
Borrower hereunder. After the last such outstanding Letter of Credit shall
have either been drawn on in full (and all reimbursement obligations in respect
thereof been paid in full) or expired by its terms without being drawn on in
full or part, the Agent shall make the funds, and all accrued interest thereon,
and/or letters of credit deposited and remaining with the Agent pursuant to
this Section 3.9 available to such Borrower. Each Borrower hereby acknowledges
that any obligation of the Agent, the Issuing Banks or any Bank hereunder to
terminate any Lien in favor of the Agent, the Issuing Banks and the Banks shall
not become effective unless and until the Borrowers shall have, in addition to
performing all of its other obligations hereunder and under any other Loan
Document, performed its obligations under this Section 3.9 in full.
SECTION 4. GENERAL PROVISIONS
4.1 Fees. (a) The Borrowers jointly and severally agree to
pay to the Agent for the account of each Bank a
23
<PAGE> 29
commitment fee for the period from and including the first day of the
Commitment Period to the Termination Date, computed at the rate of .3125% per
annum on the average daily amount of such Bank's Commitment Percentage of the
amount by which (i) the aggregate Commitments during the period for which
payment is made exceeds (ii) the aggregate outstanding principal amount of all
Loans plus the aggregate amount available to be drawn under all Letters of
Credit, payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date or such earlier date as the
Commitments shall terminate as provided herein, commencing on the first of such
dates to occur after the date hereof.
(b) The Borrowers jointly and severally agree to pay to the
Agent for the account of each Bank a usage fee for the period from and
including the first day of the Commitment Period to the Termination Date,
computed at the rate of .25% per annum on such Bank's Commitment Percentage of
the daily average of the aggregate outstanding principal amount of all Loans
plus the aggregate amount available to be drawn under all Letters of Credit for
each day that the aggregate outstanding principal amount of all Loans plus the
aggregate amount available to be drawn under all Letters of Credit exceed fifty
percent (50%) of the aggregate Commitments. Such usage fees shall be payable
quarterly in arrears on the last day of each March, June, September and
December and on the Termination Date or such earlier date as the Commitments
shall terminate as provided herein, commencing on the first of such dates to
occur after the date hereof.
(c) On the Closing Date the Company shall pay to the Agent
its fee for originating, structuring, processing, administering, approving and
closing the transactions contemplated hereby.
4.2 Termination or Permanent Reduction of Commitments. The
Company shall have the right, upon not less than five (5) Business Days' notice
to the Agent, to terminate the Commitments or, from time to time, to reduce
permanently the amount of such Commitments, provided that no such termination
or permanent reduction shall be permitted if, after giving effect thereto and
to any payments or prepayments of the Loans made on the effective date thereof,
the aggregate amount of Extensions of Credit outstanding would exceed the
Commitments then in effect. Any such reduction pursuant to this subsection 4.2
shall be in an amount equal to $5,000,000 or $1,000,000 increments in excess
thereof and shall reduce permanently the Commitments then in effect.
4.3 Optional Prepayments. Each Borrower may at any time
and from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon at least one Business Day's notice, in the case of Base Rate
Loans, and three
24
<PAGE> 30
Business Days' notice, in the case of Eurodollar Loans, to the Agent,
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, Base Rate Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Agent shall promptly notify each Bank thereof. If any such notice
is given, the amount specified in such notice shall be due and payable on the
date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount
of $1,000,000 or $100,000 increments in excess thereof and may only be made if,
after giving effect thereto, Section 4.6 is not contravened. All prepayments
shall be accompanied by the amounts due and owing to each Bank under Section
4.14 as a result of such prepayment.
4.4 Commitments Exceeded: Mandatory Payments.
(a) If at any time the aggregate outstanding Extensions of
Credit exceed the aggregate Commitments, the Borrowers shall immediately pay or
prepay the Loans, without premium or penalty (except as provided in Section
4.14), in an aggregate amount equal to such excess, together with interest
thereon accrued to the date of such payment or prepayment and any amounts
payable pursuant to paragraph (b) below. Payments made under this Section
4.4(a) shall be applied first to the outstanding Base Rate Loans, second to the
outstanding Eurodollar Loans, and third to cash collateralize the Letters of
Credit (on terms satisfactory to the Required Banks).
(b) All prepayments shall be accompanied by the amounts due
and owing to each Bank under Section 4.14 as a result of such prepayment.
4.5 Conversion and Continuation Options. (a) Each Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate Loans,
and/or to convert Base Rate Loans to Eurodollar Loans by giving the Agent at
least three Business Days' prior notice received prior to 12:00 noon (New York
City time) of such election. Any such notice of conversion to Eurodollar Loans
shall specify the length of the Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Agent shall promptly notify each Bank
thereof. All or any part of outstanding Eurodollar Loans and Base Rate Loans
may be converted as provided herein, provided that (i) no Loan may be converted
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Agent or the Required Banks have determined that such a conversion is
not appropriate, (ii) any such conversion may only be made if, after giving
effect thereto, Section 4.6 shall not have been contravened and (iii) no Base
Rate Loan may be converted into a Eurodollar Loan after the date that is one
month or 30 days, respectively, prior to the Termination Date.
25
<PAGE> 31
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
relevant Borrower giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the
length of the next Interest Period to be applicable to such Loans provided that
no Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Agent or the Required Banks have determined
that such a continuation is not appropriate, (ii) if, after giving effect
thereto, Section 4.6 or the proviso to Section 2.1(a) would be contravened or
(iii) after the date that is one month or 30 days prior to, the Termination
Date; provided, further, that (x) if such relevant Borrower shall fail to give
any required notice as described above in this paragraph, such Loan shall be
automatically continued on the same terms and (y) if such continuation is not
permitted pursuant to the preceding proviso such Loan shall be automatically
converted to a Base Rate Loan on the last day of such then expiring Interest
Period.
4.6 Minimum Amounts of Eurodollar Loans. All conversions
and continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of such Loans
comprising Eurodollar Loans the Interest Periods with respect to which begin on
the same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day) shall be equal to $2,000,000 or a
whole multiple of $100,000 in excess thereof.
4.7 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Loan for such Interest Period plus the relevant Eurodollar Margin.
(b) Each Base Rate Loan shall bear interest for each day
outstanding at a rate per annum equal to the Base Rate, subject to adjustment
in accordance with Paragraph (d) of this Section 4.7.
(c) If all or a portion of (i) the principal amount of any
Loan or (ii) any interest payable thereon or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum which
is (x) in the case of overdue principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 4.7
plus 2% or (y) in the case of overdue interest or other amounts, the rate
described in paragraph (b) of this Section 4.7 plus 2%, in each case from
26
<PAGE> 32
the fifth Business Day after the date of such non-payment until such amount is
paid in full (after as well as before judgment).
(d) At any time that the senior unsecured long-term
Indebtedness of the Company is (i) unrated by Standard & Poors Corporation or
by Moody's Investors Service, Inc., or (ii) not rated at least BB- or the
equivalent thereof by Standard & Poor's Corporation or Ba3 or the equivalent
thereof by Moody's Investors Service, Inc., then during such period the
Eurodollar Margin shall be 1.70% and each Base Rate Loan shall bear interest
for each day outstanding at a rate per annum equal to the Base Rate plus .75%
per annum.
4.8 Computation of Interest and Fees. (a) Interest on Base
Rate Loans shall be calculated on the basis of a 365-(or 366-, as the case may
be) day year for the actual days elapsed. Interest on Eurodollar Loans and
fees shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Borrowers and the
Banks of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate shall become effective
as of the opening of business on the day on which such change in the Base Rate
is announced. The Agent shall as soon as practicable notify the Borrowers and
the Banks of the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers and the Banks in the absence of manifest error. The Agent shall,
at the request of any Borrower, deliver to such Borrower a statement showing
the quotations used by the Agent in determining any interest rate pursuant to
Section 4.7(a).
4.9 Inability to Determine Interest Rate. In the event
that prior to the first day of any Interest Period:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrowers absent manifest
error) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Required
Banks that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Banks (as conclusively certified by such Banks) of making or maintaining
their affected Loans during such Interest Period,
27
<PAGE> 33
the Agent shall give telex, telecopy or telephonic notice thereof to the
relevant Borrower(s) and the Banks as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be converted to or continued as Base Rate Loans and (z)
any outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrowers have the right to convert Loans to Eurodollar Loans.
4.10 Pro Rata Treatment and Payments. (a) Each borrowing
(including, without limitation, each borrowing pursuant to Section 3.4(a)) from
the Banks hereunder, each payment on account of any of the fees set forth in
Sections 4.1(a) and 4.1(b) and any reduction of the Commitments of the Banks
shall be made pro rata according to the applicable respective Commitment
Percentages of the Banks. Each payment (including each prepayment) on account
of principal of and interest on the Loans shall be made pro rata according to
the respective outstanding principal amounts of the Loans then held by the
Banks. All payments (including prepayments) to be made by the Borrowers
hereunder and under the Notes, whether on account of principal, interest,
unpaid drawings under Letters of Credit, fees or otherwise shall be made
without set off or counterclaim and shall be made prior to 1:00 P.M., New York
City time, on the due date thereof to the Agent, for the account of the Bank(s)
or Issuing Bank(s) entitled thereto, at the Agent's office specified in Section
12.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Bank(s) and Issuing Bank entitled thereto
promptly upon receipt in like funds as received. If any payment hereunder
(other than payments on any Eurodollar Loans) becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Working Day, the maturity thereof shall be extended to the next succeeding
Working Day which is a Business Day unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Working Day which is a
Business Day.
(b) Unless the Agent shall have been notified in writing by
any Bank prior to a borrowing date for Loans, that such Bank will not make the
amount that would constitute its applicable Commitment Percentage of such
borrowing (including, without limitation, a borrowing pursuant to Section
3.4(a))
28
<PAGE> 34
available to the Agent, the Agent may assume that such Bank has made such
amount available to the Agent on such borrowing date, and the Agent may, in
reliance upon such assumption, make available to the relevant Borrower a
corresponding amount. If such amount is made available to the Agent (or to the
relevant Issuing Bank in respect of borrowings of Base Rate Loans pursuant to
Section 3.4(a)) on a date after such borrowing date, such Bank shall pay to the
Agent on demand an amount equal to the product of (i) the daily average Federal
Funds Rate during such period, times (ii) the amount of such Bank's Commitment
Percentage of such borrowing, times (iii) a fraction the numerator of which is
the number of days that elapse from and including such borrowing date to the
date on which such Bank's Commitment Percentage of such borrowing shall have
become immediately available to the Agent (or the relevant Issuing Bank, in
case of borrowings pursuant to Section 3.4(a)) and the denominator of which is
360. A certificate of the Agent (or the relevant Issuing Bank, in case of
borrowings pursuant to Section 3.4(a)) submitted to any Bank with respect to
any amounts owing under this Section 4.10 shall be conclusive in the absence of
manifest error. If such Bank's Commitment Percentage of such borrowing is not
in fact made available to the Agent (or the relevant Issuing Bank, in case of
borrowings pursuant to Section 3.4(a)) by such Bank within three Business Days
of such borrowing date, the Agent (or the Issuing Bank, in case of borrowings
pursuant to Section 3.4(a)) shall be entitled to recover such amount with
interest thereon at the rate applicable to such Loans on such borrowing date,
on demand, from the relevant Borrower.
(c) Whenever any payment received by the Agent under this
Agreement is insufficient to pay in full all amounts then due and payable to
the Agent, the Issuing Bank and the Banks under this Agreement and the Notes,
and the Agent has not received a Payment Sharing Notice (or if the Agent has
received a Payment Sharing Notice but the Event of Default specified in such
Payment Sharing Notice has been cured or waived), such payment shall be
distributed and applied by the Agent and the Banks in the following order:
first, to the payment of fees and expenses due and payable to the Agent under
and in connection with this Agreement; second, to the payment of all expenses
due and payable under Section 12.5, ratably among the Banks in accordance with
the aggregate amount of such payments owed to each such Bank; third, to the
payment of fees due and payable to the Issuing Banks ratably in accordance with
the aggregate amount of fees owed to each such Issuing Bank; fourth, to the
payment of fees due and payable under Sections 3.5(a), 4.1(a) and (b) ratably
among the Banks in accordance with their applicable Commitment Percentages;
fifth, to the payment of interest then due and payable on account of the Loans
ratably among the Banks in accordance with the aggregate amount of such
interest owed to each such Bank; and sixth, to the payment of the principal
29
<PAGE> 35
amount of the Loans, ratably among the Banks in accordance with the aggregate
principal amount owed to each such Bank.
(d) After the Agent has received a Payment Sharing Notice
which remains in effect, all payments received by the Agent under this
Agreement or any Note shall be distributed and applied by the Agent and the
Banks in the following order: first, to the payment of all amounts described in
clauses first through fourth of the foregoing paragraph (c), in the order set
forth therein; and second, to the payment of the interest accrued on and the
principal amount of all of the Notes and the interest accrued on and all
reimbursement Obligations in respect of all of the Letters of Credit,
regardless of whether any such amount is then due and payable, ratably among
the Banks in accordance with the aggregate accrued interest plus the aggregate
principal amount owed to such Bank.
4.11 Illegality. Notwithstanding any other provision
herein, if any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Bank's outstanding Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion or prepayment of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the applicable Borrower or Borrowers
shall pay to such Bank such amounts, if any, as may be required pursuant to
Section 4.14.
4.12 Requirements of Law; Letter of Credit Reserves. (a) In
the event that any change in any Requirement of Law or in the interpretation or
application thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Bank in respect thereof (except for taxes covered by Section 4.13 and
changes in the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any reserve
(including without limitation any Eurodollar Rate Reserve Percentage),
special deposit, compulsory loan or
30
<PAGE> 36
similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any
office of such Bank which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect thereof then, in any such case, the
applicable Borrower or Borrowers shall promptly pay such Bank, upon its demand,
any additional amounts necessary to compensate such Bank for such increased
cost or reduced amount receivable. If any Bank becomes entitled to claim any
additional amounts pursuant to this Section 4.12, it shall promptly notify the
Borrowers, through the Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section 4.12 submitted by such Bank, through the Agent, to the Borrowers shall
be conclusive in the absence of manifest error and the amounts set forth
therein shall be payable quarterly on each Interest Payment Date for Base Rate
Loans. This covenant shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder.
(b) In the event that any Bank shall have determined that
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount reasonably deemed by such Bank to be
material, then from time to time, after submission by such Bank to the Company
(with a copy to the Agent) of a written request therefor, the applicable
Borrower or Borrowers shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
(c) If any change in any law or regulation or in the
interpretation or application thereof by any court or other Governmental
Authority charged with the administration
31
<PAGE> 37
thereof shall either (i) impose, modify, deem or make applicable any reserve,
special deposit, assessment or similar requirement against Letters of Credit
issued by any Issuing Bank or (ii) impose on such Issuing Bank any other
condition regarding this Agreement or any such Letter of Credit, and the result
of any event referred to in clause (i) or (ii) above shall be to increase the
cost to such Issuing Bank of issuing or maintaining any such Letter of Credit
(which increase in cost shall be the result of such Issuing Bank's reasonable
allocation of the aggregate of such cost increases resulting from such events),
then, upon demand by such Issuing Bank, the relevant Borrower(s) shall
immediately pay to such Issuing Bank, from time to time as specified by such
Issuing Bank, additional amounts which shall be sufficient to compensate such
Issuing Bank for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the Base Rate. A certificate, setting forth in reasonable detail the
calculation of the amounts involved, submitted by such Issuing Bank to the
relevant Borrower(s) concurrently with any such demand by such Issuing Bank,
shall be conclusive, absent manifest error, as to the amount thereof.
(d) In the event that any change in any law or regulation
or in the interpretation or application thereof by any court or other
Governmental Authority charged with the administration thereof shall at any
time, in the opinion of an Issuing Bank, require that any obligation under any
Letter of Credit issued by an Issuing Bank be treated as an asset or otherwise
be included for purposes of calculating the appropriate amount of capital to be
maintained by such Issuing Bank or any corporation controlling such Issuing
Bank, and such change in law shall have the effect of reducing the rate of
return on such Issuing Bank's or such corporation's capital, as the case may
be, as a consequence of such Issuing Bank's obligations under such Letter of
Credit to a level below that which such Issuing Bank or such corporation, as
the case may be, could have achieved but for such change (taking into account
such Issuing Bank's or such corporation's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by such Issuing Bank to be
material, then from time to time following notice by such Issuing Bank to the
relevant Borrower(s) of such change, within 15 days after demand by such
Issuing Bank, such Borrower(s) shall pay to such Issuing Bank such additional
amount or amounts as will compensate such Issuing Bank or such corporation, as
the case may be, for such reduction. If such Issuing Bank becomes entitled to
claim any additional amounts pursuant to this Section 4.12(d), it shall
promptly notify the relevant Borrower(s) of the event by reason of which it has
become so entitled. A certificate, in reasonable detail setting forth the
calculation of the amounts involved, submitted by such Issuing Bank to the such
Borrowers
32
<PAGE> 38
concurrently with any such demand by such Issuing Bank, shall be conclusive,
absent manifest error, as to the amount thereof.
(e) Each Borrower agrees that the provisions of the
foregoing paragraphs (c) and (d) and the provisions of each L/C Application
providing for reimbursement or payment to an Issuing Bank in the event of the
imposition or implementation of, or increase in, any reserve, special deposit,
capital adequacy or similar requirement in respect of the Letter of Credit
relating thereto shall apply equally to each Bank in respect of its
participating interest in such Letter of Credit, as if the references in such
paragraphs and provisions referred to, were applicable to such Bank or any
corporation controlling such Bank.
4.13 Taxes. (a) All payments made by each Borrower under
this Agreement and the Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Agent and each
Bank, net income taxes and franchise taxes imposed on the Agent or such Bank,
as the case may be, as a result of a present, former or future connection
between the jurisdiction of the government or taxing authority imposing such
tax and the Agent or such Bank (excluding a connection arising solely from the
Agent or such Bank having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or the Notes) or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required to
be withheld by such Borrower from any amounts payable to the Agent or any Bank
hereunder or under the Notes, the amounts so payable to the Agent or such Bank
shall be increased to the extent necessary to yield to the Agent or such Bank
(after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes.
(b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other similar charges or levies or
excise or property taxes of the United States or any state or political
subdivision thereof or any applicable foreign jurisdiction which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or the Notes (hereinafter called
"Other Taxes").
(c) Whenever any Taxes or Other Taxes are payable by a
Borrower, as promptly as possible thereafter such
33
<PAGE> 39
Borrower shall send to the Agent for its own account or for the account of such
Bank, as the case may be, a certified copy of an original official receipt
received by such Borrower showing payment thereof. If such Borrower fails to
pay any Taxes or Other Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required receipts or other required documentary
evidence, the applicable Borrower or Borrowers shall indemnify the Agent and
the Banks for any incremental taxes, interest or penalties that may become
payable by the Agent or any Bank as a result of any such failure. The
agreements in this Section 4.13 shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(d) Each Bank that is not incorporated under the laws of
the United States of America or a state thereof agrees that it will deliver to
the Borrowers who are U.S. taxpayers and the Agent (i) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form. Each such Bank also agrees to deliver
to such Borrowers and the Agent upon request of a Borrower two further copies
of the said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms or other manner of certification, as the case may be, on or before the
date that any such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Borrowers, and such extensions or renewals thereof as may reasonably be
requested by such Borrowers or the Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank so advises the Borrowers and the Agent. Such Bank shall certify (i)
in the case of a Form 1001 or 4224, that it is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax.
Notwithstanding any provision of subsection 4.13 (a) to the contrary, no
Borrower shall have any obligation to pay any Taxes (except to the extent
required by Law) pursuant to subsection 4.13(a) to the extent that such Taxes
would not have been imposed but for the failure of the Bank incurring such
Taxes to comply with this Section 4.13(d).
4.14 Indemnity. Each Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by such Borrower in payment
when due of the
34
<PAGE> 40
principal amount of or interest on any Eurodollar Loan, (b) default by such
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after such Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (c) default by such Borrower
in making any prepayment after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (d) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto, including, without limitation, in each
case, any such loss or expense arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds were
obtained. This covenant shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder.
4.15 Currency Indemnity. (a) The obligation of each
Borrower under this Agreement and the Notes to make payments in Dollars (the
"Obligation Currency") shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than the Obligation Currency, except to the extent to which such tender
or recovery shall result in the effective receipt by the Banks of the full
amount of the Obligation Currency expressed to be payable under this Agreement
or the Notes. If for the purpose of obtaining or enforcing judgment against
any Borrower in any court or in any jurisdiction, it becomes necessary to
convert into any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount
due in the Obligation Currency under the Notes or in respect of any L/C
Obligations, the conversion shall be made, at the option of the Agent, at the
rate of exchange prevailing on the Business Day immediately preceding the day
on which the judgment is given (such Business Day as the case may be, being
hereinafter in this Section 4.15 referred to as the "Judgment Currency
Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, each Borrower covenants and agrees to pay such additional
amounts as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date.
(c) Any amount due from the Company under the foregoing
subparagraph will be due as a separate debt and shall not be affected by
judgment being obtained for any other
35
<PAGE> 41
sums due under or in respect of the Loans, the L/C Obligations or otherwise
hereunder.
4.16 Avoidance: Certifications of Amounts Due: Replacement
of Banks. (a) In the event that any of the circumstances described in Sections
4.11 or 4.12 hereof shall arise, the affected Bank or Banks shall designate a
different lending office or make any other mechanical change in funding Loans
or issuing Letters of Credit hereunder if the consequence of such designation
or change will avoid the need for the Borrowers taking the actions specified in
such Sections or will make such actions less burdensome to the Borrowers and
will not, in the reasonable judgment of such Bank, be otherwise materially
disadvantageous to such Bank. In addition, such Bank or Banks will use
reasonable efforts to designate a different lending office or make any other
such mechanical change that will avoid the need for, or reduce the amount of,
any Taxes or other amounts payable pursuant to provisions of said Sections;
provided that such designation or change will not, in the reasonable judgment
of such Bank, be otherwise materially disadvantageous to such Bank.
(b) In the event that any amount is determined by any Bank
to be due from any Borrower in accordance with any of the provisions of
Sections 4.12, 4.13, 4.14 or 4.15 hereof, the Bank claiming such amount shall
provide to the relevant Borrower and the Company a certificate identifying the
cause of such claim, the amount that such Bank has reasonably determined will
compensate it for any such claim, and the way in which such amount has been
calculated. Such certificate shall be delivered to the relevant Borrower and
the Company through the Agent as promptly as practical after the Bank obtains
knowledge of such claim, but in any event within thirty days after such Bank
obtains such knowledge.
(c) In the event that any Borrower becomes obligated to pay
additional amounts to any Bank pursuant to Sections 4.12, 4.13, 4.15 or this
Section 4.16 as a result of any condition described in any such Sections, then,
unless such Bank has theretofore taken steps to remove or cure, and has removed
or cured, the conditions creating the cause for such obligation to pay such
additional amounts, the Company may designate another Bank which is an Eligible
Assignee and is reasonably acceptable to the Agent (such Bank being herein
called a "Replacement Bank") to purchase the Obligation of such Bank and such
Bank's rights hereunder, without recourse to or warranty by, or expense to,
such Bank for a purchase price equal to the outstanding principal amount of the
Loans payable to such Bank plus any accrued but unpaid interest on such Loans
and any other amounts accrued but unpaid in respect of that Bank's Commitment,
and upon such purchase, such Bank shall no longer be a party hereto or have any
rights hereunder, and the Replacement Bank shall succeed to the rights of such
Bank hereunder.
36
<PAGE> 42
4.17 Assignments. No Participating Bank's participation in
any Letter of Credit or any of its rights or duties hereunder shall be
subdivided, assigned or transferred (other than in connection with a transfer
of part or all of such Bank's Commitment in accordance with Section 12.6)
without the prior written consent of the relevant Issuing Bank and Agent (which
consents shall not be unreasonably withheld). Such consent may be given or
withheld without the consent or agreement of any other Participating Bank or
Bank. Notwithstanding the foregoing, a Participating Bank may subparticipate
its L/C Participating Interest without obtaining the prior written consent of
the relevant Issuing Bank.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make
Extensions of Credit hereunder, the Company and each other Borrower hereby
represent and warrant to the Agent and each Bank that:
5.1 Financial Condition. The consolidated balance sheets
of the Company and its consolidated Subsidiaries as at January 30, 1994 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, audited by Price Waterhouse, copies of which have
heretofore been furnished to each Bank that requested the same, are complete
and correct in all material respects and present fairly the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. The preliminary unaudited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
at May 1, 1994 and the related unaudited consolidated statements of income for
the fiscal quarter ended on such date, certified by a Responsible Officer,
copies of which have heretofore been furnished to each Bank that requested the
same, are complete and correct in all material respects and present fairly the
consolidated financial condition of the Company and its consolidated
Subsidiaries as at such dates, and the consolidated results of their operations
for the fiscal quarter then ended (subject to normal year-end adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except for normal year-end adjustments and
except as approved by such accountants, and as disclosed therein and, with
respect to any unaudited statements, except the notes with respect thereto).
During the period from January 30, 1994 to and including the date hereof there
has been no sale, transfer or other disposition by the Company or any of its
consolidated
37
<PAGE> 43
Subsidiaries of any part of its business or property, and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person), material in relation to the consolidated financial condition of
the Company and its consolidated Subsidiaries at January 30, 1994.
5.2 No Change. Since January 30, 1994, except as disclosed
on Exhibit F attached hereto, there has been no development or event, that has
had or could reasonably be expected to have a Material Adverse Effect, and
except as permitted under Section 8.7 and except for open market purchases by
the Company of its common stock for employee benefit plans in the ordinary
course of business since January 30, 1994, no dividends or other distributions
have been declared, paid or made upon the Capital Stock of the Company nor has
any of the Capital Stock of the Company been redeemed, retired, purchased or
otherwise acquired for value by the Company or any of its Subsidiaries.
5.3 Corporate or Partnership Existence: Compliance with
Law. Each of the Company and its Subsidiaries (a) is duly organized or formed,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or partnership power and authority, as the
case may be, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation or a foreign
business, as the case may be, and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect,
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.4 Corporate or Partnership Power: Authorization:
Enforceable Obligations. Each of the Loan Parties has the power and authority
and the legal right, to execute, deliver and perform the Loan Documents to
which it is a party and each Borrower has the power and authority and the legal
right, to issue, deliver and perform the Notes and to borrow hereunder, and all
necessary corporate or partnership action has been taken, as appropriate, by
each Loan Party to authorize the borrowings on the terms and conditions of this
Agreement and the Notes and the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or any other
Person (other than the Banks) is required in connection with the borrowings
hereunder or with the execution, delivery, performance,
38
<PAGE> 44
validity or enforceability of any of the Loan Documents except those required
to be delivered or made and actually delivered or made pursuant to the Loan
Documents. The Loan Documents have been duly executed and delivered on behalf
of each Loan Party thereto. Each of the Loan Documents constitutes a legal,
valid and binding obligation of each Loan Party thereto, enforceable against
each such Loan Party in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
5.5 No Legal Bar. The execution, delivery and performance
of the Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law applicable to, or Contractual
Obligation of, the Company or of any of its Subsidiaries and will not result
in, or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
5.6 No Material Litigation. Except as set forth on
Schedule III, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Company, threatened by or against the Company or any of its Subsidiaries or
against any of its or their respective properties or revenues (a) with respect
to this Agreement or the Notes or any of the transactions contemplated hereby,
or (b) which has or could reasonably be expected to have a Material Adverse
Effect.
5.7 No Default. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
5.8 Ownership of Property: Liens. Each of the Company and
its Subsidiaries has good record and defensible title to, or a valid, leasehold
interest in, all its real property, and good title to all its other property,
and none of such property is subject to any Lien except as permitted by Section
8.3.
5.9 Intellectual Property. Except as set forth on Schedule
III, the Company and each of its Subsidiaries owns, or is licensed to use, all
trademarks, trade names, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted (including
without limitation International Rights) except for those
39
<PAGE> 45
which the failure to own or license could not reasonably be expected to have a
Material Adverse Effect (the "Intellectual Property"). No claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Borrower know of any valid basis for any
such claim, except for such claims that, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Company and its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate, do
not have a Material Adverse Effect.
5.10 Taxes. Each of the Company and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Company, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of the Company or its Subsidiaries, as the case may be); no tax
Lien has been filed, and to the knowledge of the Company, no claim is being
asserted, with respect to any such tax, fee or other charge, except for such
Liens or claims, that in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
5.11 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying", any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Bank or the Agent,
the Borrowers will furnish to the Agent and each Bank a statement to the
foregoing effect in conformity with the requirements of FR Form U-l referred to
in said Regulation U.
5.12 ERISA. No Reportable Event has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. The
present value of all accrued benefits under each Single Employer Plan
maintained by the Company or any Commonly Controlled Entity (based on those
assumptions used to fund the Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the
40
<PAGE> 46
value of the assets of such Plan allocable to such accrued benefits. Neither
the Company nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and neither the Company nor any
Commonly Controlled Entity would become subject to any liability under ERISA if
the Company or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Company and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA)
does not, in the aggregate, exceed the assets under all such Plans allocable to
such benefits.
5.13 Investment Company Act; Other Regulations. Neither the
Company nor any Borrower is an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended. Neither the Company nor any Borrower is subject to regulation
under any Federal or State statute or regulation which limits its ability to
incur Indebtedness.
5.14 Subsidiaries. Schedule II hereto sets forth an
accurate description of all of the Subsidiaries of the Company, the
jurisdiction of incorporation or formation of each of them and the ownership of
the Capital Stock of each of them as of the Closing Date.
5.15 Purpose of Loans. The proceeds of the Loans shall be
used by the Borrowers only for (a) refinancing existing Indebtedness of such
Borrowers, (b) general corporate or partnership purposes, including
international expansion and (c) working capital purposes in the ordinary course
of business, and shall not be used to purchase, redeem or otherwise acquire
shares of the Company's common stock pursuant to any one or more of the
Company's corporate stock repurchase programs.
5.16 Environmental Matters. Each of the representations and
warranties set forth in paragraphs (a) through (e) of this Section is true and
correct with respect to each parcel of real property owned or operated by the
Company and its Domestic Subsidiaries (the "Properties"), except to the extent
that the facts and circumstances giving rise to any such failure to be so true
and correct could not reasonably be expected to have a Material Adverse Effect:
41
<PAGE> 47
(a) To the best of its knowledge, the Properties do not
contain, and have not previously contained, in, on, or under, including,
without limitation, the soil and groundwater thereunder, any Hazardous
Materials in concentrations which violate Environmental Laws.
(b) The Properties and all operations and facilities at the
Properties are in compliance with all Environmental Laws, and there is
no Hazardous Materials contamination or violation of any Environmental
Law which could reasonably be expected to interfere with the continued
operation of any of the Properties or impair the fair saleable value of
any thereof.
(c) Neither the Company nor any of its Domestic
Subsidiaries has received any complaint, notice of violation, alleged
violation, investigation or advisory action or of potential liability or
of potential responsibility regarding environmental protection matters
or permit compliance with regard to the Properties, nor is the Company
aware that any Governmental Authority is contemplating delivering to the
Company or any of its Domestic Subsidiaries any such notice.
(d) There are no governmental, administrative actions or
judicial proceedings pending or contemplated under any Environmental
Laws to which the Company or any of its Domestic Subsidiaries is or will
be named as a party with respect to the Properties, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to any of the
Properties.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Effectiveness of this Agreement. The
effectiveness of this Agreement is subject to the satisfaction of the following
conditions precedent:
(a) Execution of Agreement. The Agent shall have received
a counterpart of this Agreement, executed and delivered by the Loan
Parties hereto and by the Banks.
(b) Corporate or Partnership Proceedings of the Loan
Parties. The Agent shall have received, with a counterpart for each
Bank, a copy of the resolutions, in form and substance satisfactory to
the Agent, of the Board of Directors of each Loan Party which is a
corporation or an evidence of partnership proceedings, if any, of each
Loan Party which is a partnership, in form and substance satisfactory to
the Agent, authorizing the
42
<PAGE> 48
execution, delivery and performance of the Loan Documents to which it is
a party, certified by the Secretary or an Assistant Secretary, or the
Secretary or an Assistant Secretary of the general partner, as the case
may be, of such Loan Party as of the Closing Date, which certificate
shall state that the resolutions or proceedings thereby certified have
not been amended, modified, revoked or rescinded and shall be in form
and substance satisfactory to the Agent.
(c) Corporate/Partnership Documents. The Agent shall have
received, with a counterpart for each Bank, true and complete copies of
(i) the certificate of incorporation and by-laws of the Company and each
of other Borrowers which is a corporation, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of such Borrower and (ii) the partnership agreement
of each Borrower which is a partnership, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of the general partner of such Borrower.
(d) Incumbency Certificates. The Agent shall have
received, with a counterpart for each Bank, a certificate of the
Company, dated the Closing Date, as to the incumbency and signatures of
the officers of the Company executing any Loan Document which
certificate shall be satisfactory in form and substance to the Agent and
shall be executed by the President or Vice President and the Secretary
or any Assistant Secretary of the Company.
(e) No Violation. The consummation of the transactions
contemplated hereby shall not contravene, violate or conflict with, nor
involve the Agent or any Bank or the Issuing Bank in any violation of,
any Requirement of Law.
(f) Fees. The Agent shall have received the fees to be
received on or prior to the Closing Date referred to in Section 4.1.
(g) Legal Opinions. The Agent shall have received, with a
counterpart for each Bank, (i) the executed legal opinion of the
Company's corporate counsel substantially in the form of Exhibit D
hereto and (ii) in the event that any Foreign Subsidiary requests to be
a Borrower hereunder, the executed legal opinion of local counsel to
such Foreign Subsidiary acceptable to the Agent, covering such matters
concerning the Loan Documents as the Agent may reasonably require. Each
such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require.
43
<PAGE> 49
(h) No Market Changes. There shall have occurred no
introduction of or change in or in the interpretation of any law or
regulation that would make it unlawful or unduly burdensome for an
Issuing Bank to issue a Letter of Credit, no suspension of or material
limitation on trading on the New York Stock Exchange or any other
national securities exchange, no declaration of a general banking
moratorium by United States, New York or United Kingdom banking
authorities, and no establishment of any new restrictions on
transactions in securities or on banks materially affecting the free
market for securities or the extension of credit by banks.
(i) Notes. The Agent shall have received, for the account
of each Bank, a Note, conforming to the requirements hereof and duly
executed by the Company.
(j) Guarantees. The Agent shall have received the Company
Guarantee and the Subsidiaries Guarantee, executed and delivered by each
of the parties thereto.
(k) Releases. The Agent shall have received evidence
satisfactory to it, in its sole discretion, that all Liens against the
Accounts of the Company and its Subsidiaries have been released by the
Persons holding such Liens.
(l) Termination of Prior Credit Agreement. The Prior
Credit Agreement shall have been terminated, and Agent shall have
received such documents and instruments as it deems necessary to
evidence the termination of the Prior Credit Agreement.
6.2 Conditions to Each Loan and Issuance of Each Letter of
Credit. The agreement of each Bank to make any Loan requested to be made by it
or of the Issuing Bank to issue any Letter of Credit on any date (including,
without limitation, the Closing Date) is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties (including those made in Section 5.2
hereof) made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extensions of Credit requested to be made on such date.
The acceptance by any Borrower of any Loan or Letter
44
<PAGE> 50
of Credit shall constitute a representation and warranty by such Borrower as of
the date of such Loan or Letter of Credit that the conditions contained in this
Section 6.2 have been satisfied.
6.3 Additional Borrowers. In order to become a Borrower
hereunder, any Subsidiary of the Company that has not previously done so shall
deliver to the Agent the Loan Documents (or appropriate supplements thereto so
as to become a party thereto) and the documents specified in Sections 6.1(b),
6.1(c), 6.1(d) and 6.1(g) hereof, and shall otherwise be in compliance with all
provisions of this Agreement.
SECTION 7. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments
remain in effect, any Loan remains outstanding and unpaid or any Letter of
Credit remains outstanding or any other amount is owing to any Bank, any
Issuing Bank or the Agent hereunder, the Company shall and (except in the case
of delivery of financial information, reports and notices) shall cause each of
its Subsidiaries to:
7.1 Financial Statements. Furnish to the Agent:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year,
reported on without a qualification or exception, or qualification
arising out of the scope of the audit, by Price Waterhouse or other
independent certified public accountants of nationally recognized
standing not unacceptable to the Required Banks;
(b) as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly periods of
each fiscal year of the Company, the unaudited consolidated balance
sheet of the Company and its consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of income
and of cash flows of the Company and its consolidated Subsidiaries for
such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer of the Company as
being to the best of his knowledge fairly stated in all material
respects when considered in relation to the consolidated financial
45
<PAGE> 51
statements of the Company and its consolidated Subsidiaries (subject to
normal year-end adjustments); and
(c) as soon as available, but in any event not later than
90 days after the end of each fiscal year of each Foreign Subsidiary
that has requested a Loan hereunder, the unaudited balance sheet of such
Foreign Subsidiary as at the end of such fiscal year and the related
statements of income and of cash flows of such Foreign Subsidiary for
such fiscal year, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer of the
Company as being to the best of his knowledge fairly stated in all
material respects when considered in relation to the financial
statements of such Foreign Subsidiary (subject to normal year-end
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except for normal year-end adjustments and except as approved by such
accountants or officer, as the case may be, and disclosed therein and, with
respect to any unaudited statements, except the notes with respect thereto).
7.2 Certificates: Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in Section 7.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in Sections 7.1(a), 7.1(b) and 7.1(c), a
certificate of a Responsible Officer of the Company stating that, to the
best of such officer's knowledge, the Company and each of its
Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in the Loan Documents to which it is a party to be observed, performed
or satisfied by it, and that such officer has no knowledge of any
Default or Event of Default except as specified in such certificate and
showing calculations in respect of Section 8.1, and that each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents is true and correct in all material respects on and
as of the last day of such period as if made on and as of such
46
<PAGE> 52
date (other than changes not prohibited by this Agreement);
(c) within five Business Days after the same are sent,
copies of all financial statements and reports which the Company sends
to its stockholders, and within five days after the same are filed,
copies of all financial statements and reports which the Company may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and
(d) promptly, such additional financial and other
information as any Bank may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Company or its Subsidiaries, as the case may be, and except
where the failure to so pay is due to a good faith error or omission or
customary business practices.
7.4 Conduct of Business and Maintenance of Existence.
Other than Immaterial Subsidiaries, continue to engage in business of the same
general type as now conducted by it and preserve, renew and keep in full force
and effect its corporate or partnership existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
Section 8.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each of
Dell Products Corporation, Dell USA Corporation, Dell Direct Sales Corporation,
Dell Marketing Corporation and Dell Gen. P. Corp. shall not engage in any
business or activity other than owning the partnership interests of Dell
Products L.P., Dell USA L.P., Dell Direct Sales L.P., Dell Marketing L.P. owned
by it on the date hereof except that (i) Dell Gen. P. Corp. may own technology
and intellectual property rights and interests and receive income from such
rights and interests, (ii) Dell Marketing Corporation may continue to provide
services to General Services Administration under the existing computer
services contracts, (iii) Dell USA Corporation may be or own a captive
insurance company, and (iv) each of such entities may engage in activities
incidental to the foregoing and other activities reasonably acceptable to Agent
that are described in notices sent to the Banks.
47
<PAGE> 53
7.5 Maintenance of Property; Insurance. Other than
Immaterial Subsidiaries, keep all property useful and necessary in its business
in good working order and condition, normal wear and tear excepted; maintain
with financially sound and reputable insurance companies customary insurance on
its property and insurance against public liability and product liability, and
if reasonably requested by the Required Banks any additional property and/or
liability insurance; and furnish to each Bank, upon written request, full
information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions;
Independent Audits. Other than Immaterial Subsidiaries, keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities; and permit representatives of any
Bank, upon reasonable notice to the Company, to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants. Each Bank
agrees that such Bank and its designees shall not disclose any confidential
information obtained in connection with this Section 7.6 to any Person (other
than Persons in a confidential relationship with such Bank) unless such Person
has agreed in writing to maintain such information as confidential; provided,
however, that nothing herein shall be deemed to prevent the disclosure of any
confidential information if such disclosure is (i) required to be made in a
judicial, administrative or governmental proceeding, (ii) required by any
applicable law or regulation, (iii) made to any governmental agency or
regulatory body having or claiming authority over any aspect of such Bank's or
its Affiliates' businesses in connection with the exercise of such authority or
claimed authority, (iv) subject to subpoena, or (v) made on a confidential
basis to representatives of and/or counsel to a bank or financial institution
in connection with the transfer of all or any portion of such Bank's interest
under this Agreement pursuant to Section 12.6.
7.7 Notices. Promptly give notice to the Agent and each
Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of the Company or any of its
48
<PAGE> 54
Subsidiaries or (ii) litigation, investigation or proceeding which may
exist at any time between the Company or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, would have a Material Adverse
Effect;
(c) except for the litigation set forth on Schedule III,
any litigation or proceeding affecting the Company or any of its
Subsidiaries in which the amount involved is $1,000,000 or more and not
covered by insurance (other than normal deductibles) or in which
injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after the Company knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or any withdrawal from, or the
termination, Reorganization or Insolvency of any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Company or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and
(e) a development or event in the business, operations,
property or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole which could reasonably be expected to have
a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company or any of its Subsidiaries proposes to take
with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use best
efforts to insure compliance by all tenants and subtenants, if any, with, all
Environmental Laws and obtain and comply with and maintain, and use best
efforts to insure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, registrations or permits required by
Environmental Laws except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws applicable to it and promptly comply with all lawful
orders and directives of all Governmental Authorities respecting Environmental
Laws,
49
<PAGE> 55
except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not
reasonably be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the
Banks, and their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with any Environmental Laws applicable to the
real property owned or operated by the Company or any of its Subsidiaries, or
any orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, attorney's and consultant's fees,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor.
7.9 Guarantees. If at any time after the Closing Date any
Subsidiary shall become a Primary Subsidiary that is a Domestic Subsidiary by
virtue of the definitions thereof and such Subsidiary is not a party to a
Guarantee, the Company agrees to, and agrees to cause each relevant Subsidiary
to, promptly execute and deliver to Agent, for the benefit of the Banks, the
Subsidiaries Guarantee.
SECTION 8. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments
remain in effect, any Loan remains outstanding and unpaid or any Letter of
Credit remains outstanding or any other amount is owing to any Bank, any
Issuing Bank or the Agent hereunder, the Company shall not, and (except with
respect to Sections 8.1 and 8.7) shall not permit any of its Subsidiaries to,
directly or indirectly:
8.1 Financial Covenants.
(a) Maintenance of Consolidated Net Income. Permit for any
two consecutive fiscal quarters Consolidated Net Income for each such quarter
to be less than $0.00.
(b) Maximum Leverage Ratio. Permit the ratio of (i)
Consolidated Funded Debt, to (ii) Consolidated Tangible Net Worth to be greater
than .40 to 1.00.
(c) Minimum Tangible Net Worth. Permit Consolidated
Tangible Net Worth to be less than $430,000,000.
50
<PAGE> 56
(d) Maximum Inventory Days. Permit the Inventory Days,
determined as of the last day of each fiscal quarter to exceed 60 days for such
fiscal quarter. For purposes of this paragraph (d), "Inventory Days" shall
mean the product of (a) the quotient of (i) the inventory of the Company and
its consolidated Subsidiaries on the last day of such fiscal quarter, divided
by (ii) the cost of goods sold by the Company and its consolidated Subsidiaries
for such quarter, multiplied by (b) the number of days in such quarter.
8.2 Limitation on Indebtedness. (i) Create, incur, assume
or suffer to exist (after the Closing Date) any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the
Letters of Credit, and other obligations under this Agreement;
(b) Indebtedness of the Company to any Subsidiary and of
any Subsidiary to the Company or any other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and other
Indebtedness listed on Schedule IV;
(d) Indebtedness of the Company and its Subsidiaries
incurred after the Closing Date for industrial revenue bonds, for
Financing Lease obligations, purchase money Indebtedness for tangible
assets, and Indebtedness for the deferred purchase price of newly
acquired property of the Company and its Subsidiaries, incurred to
finance the acquisition of fixed or capital assets and the intangibles
associated with such assets;
(e) Subordinated Debt;
(f) Indebtedness of a corporation which becomes a
Subsidiary after the date hereof, provided that (i) such indebtedness
existed at the time such corporation became a Subsidiary and was not
created in anticipation thereof and (ii) immediately after giving effect
to the acquisition of such corporation by the Company or a Subsidiary
thereof, no Default or Event of Default shall have occurred and be
continuing;
(g) short-term Indebtedness of the Company and any of its
Subsidiaries secured by cash; provided that, the amount of such cash
collateral shall not exceed the total amount of such Indebtedness;
(h) Indebtedness in respect of Interest Rate Contracts and
foreign exchange contracts;
51
<PAGE> 57
(i) Indebtedness in respect of letters of credit issued for
the account of Foreign Subsidiaries;
(j) other Indebtedness of the Company and its Subsidiaries
(including obligations in respect of sale-leaseback transactions
referred to in Section 8.10) not in excess in the aggregate of
$20,000,000 at any one time outstanding;
(k) Receivables Securitization; and
(l) extensions, renewals and refinancing of any of the
Indebtedness specified in paragraphs (a) - (k) above so long as the
principal amount of such Indebtedness is not thereby increased, other
than by the amount of interest accrued thereon and related costs of
refinancing; or
(ii) Create, incur, assume or suffer to exist (after the
Closing Date) any Indebtedness owing by any Subsidiary or all the Subsidiaries
in excess of $50,000,000, in the aggregate for all Subsidiaries, excluding:
(a) Indebtedness in respect of the Loans, the Notes, the
Letters of Credit, and other obligations under this Agreement;
(b) Indebtedness of any Subsidiary to the Company or any
other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and other
Indebtedness listed on Schedule IV;
(d) Indebtedness of any Subsidiary incurred for industrial
revenue bonds, for Financing Lease obligations, purchase money
Indebtedness for tangible assets, and Indebtedness for the deferred
purchase price of newly acquired property of such Subsidiary, incurred
to finance the acquisition of fixed or capital assets and the
intangibles associated with such assets;
(e) Indebtedness of a corporation which becomes a
Subsidiary after the date hereof, provided that (i) such Indebtedness
existed at the time such corporation became a Subsidiary and was not
created in anticipation thereof and (ii) immediately after giving effect
to the acquisition of such corporation by a Subsidiary, no Default or
Event of Default shall have occurred and be continuing;
(f) Indebtedness in respect of Interest Rate Contracts and
foreign exchange contracts;
52
<PAGE> 58
(g) Receivables Securitization; and
(h) extensions, renewals and refinancing of any of the
Indebtedness specified in paragraphs (a) through (g) so long as the
principal amount of such Indebtedness is not thereby increased, other
than by the amount of interest accrued thereon and related costs of
refinancing.
8.3 Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of
the Company or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) 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;
(e) 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 the
Company or such Subsidiary;
(f) attachment or judgment Liens not to exceed $1,000,000
at any time;
(g) Liens of landlords in connection with leases and of
lessors in connection with Financing Leases;
(h) Liens in existence on the Closing Date listed on
Schedule IV, securing Indebtedness permitted by Section 8.2(i)(c) and
8.2(ii)(c), provided that no such
53
<PAGE> 59
Lien is spread to cover any additional property after the Closing Date
and that the principal amount of Indebtedness secured thereby is not
increased;
(i) Liens securing Indebtedness of the Company and its
Subsidiaries permitted by Section 8.2(i)(d) incurred to finance the
acquisition, construction or improvement of fixed or capital assets and
the intangibles associated with such assets, provided that (i) such
Liens shall be created substantially simultaneously with the acquisition
or construction of such fixed or capital assets or intangibles and
Accounts associated with such assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (iii) the principal amount of Indebtedness secured thereby
is not increased except in connection with further improvements and
additions to such assets and (iv) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed the fair market value
of such property, intangibles and Accounts at the time it was acquired
or constructed;
(j) Liens in favor of the Agent, for the ratable benefit of
the Banks;
(k) Liens on cash securing Indebtedness permitted by
Section 8.2(i)(g);
(l) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Indebtedness
permitted by Section 8.2(i)(f) provided that (i) such Liens existed at
the time such corporation became a Subsidiary and were not created in
anticipation thereof, (ii) any such Lien is not spread to cover any
property or assets of such corporation after the time such corporation
becomes a Subsidiary (except by Indebtedness otherwise permitted under
Section 8.2), and (iii) the principal amount of Indebtedness secured
thereby is not increased (except by Indebtedness otherwise permitted
under Section 8.2);
(m) other Liens on assets of the Company and its
Subsidiaries incurred in the ordinary course of business securing
obligations other than indebtedness for borrowed money or Financing
Lease obligations which Liens do not attach to any property or assets of
the Company and its Subsidiaries that either singly or in the aggregate
are material to the conduct of the business of the Company and its
Subsidiaries;
(n) Liens in favor of any Person on all documents of title
arising out of letters of credit issued for the account of the Company
or any of its Subsidiaries, which letters of credit are permitted under
this Agreement;
54
<PAGE> 60
(o) Liens on cash and Investments in favor of financial
institutions securing Indebtedness permitted by Section 8.2(i)(h)
provided that the amount of cash and Investments subject to such Lien
shall not exceed $10,000,000 in the aggregate;
(p) Liens securing Indebtedness permitted under Section
8.2(i)(j), provided that the fair market value of all the collateral
subject to such Liens at the time of the creation of such Liens does not
exceed $20,000,000; and
(q) Liens on assets of the Company's Subsidiaries incurred
in connection with the Receivables Securitization.
8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) the Guarantees;
(b) guarantees made by, or letters of credit or surety
bonds issued for the account of the Company or any Subsidiary, in each
case in the ordinary course of its business and supporting the
obligations of the Company or any Wholly-Owned Subsidiaries, which
obligations are otherwise not prohibited under this Agreement; and
(c) guarantees by the Company or any Subsidiary of loans
incurred by senior officers of the Company or any Subsidiary, provided
that the obligations of the Company and its Subsidiaries under all such
guarantees shall not exceed $2,000,000 in the aggregate.
8.5 Limitations on Fundamental Changes. Other than
Immaterial Subsidiaries, enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, or the Capital
Stock of any Subsidiary, or make any material change in its present method of
conducting business, except:
(a) any Subsidiary of the Company may be merged or
consolidated with or into the Company (provided that the Company shall
be the continuing or surviving corporation) or with or into any one or
more Wholly-Owned Subsidiaries (provided that the Wholly-Owned
Subsidiary or Subsidiaries shall be the continuing or surviving
corporation(s)); and
55
<PAGE> 61
(b) any Wholly-Owned Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any other Wholly-Owned
Subsidiary of the Company or to any Person who currently therewith
becomes a Wholly-Owned Subsidiary.
8.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, Accounts and leasehold interests),
whether now owned or hereafter acquired, except:
(a) property (including inventory) disposed of in the
ordinary course of business;
(b) obsolete, replaced, worn out or discontinued property
(including inventory);
(c) equipment which is replaced with other equipment of
comparable value and quality within 90 days of such sale or disposition;
(d) the sale or other disposition of any property not in
the ordinary course of business in an aggregate amount in any one fiscal
year not to exceed $5,000,000;
(e) the sale of Domestic Accounts to facilitate or
effectuate the securitization of Borrowers' Domestic Accounts pursuant
to a securitization program more fully and accurately described in
Schedule V hereto (hereinafter called the "Domestic Receivables
Securitization"); provided, however, that in no event after giving
effect to each such sale, shall the original amount paid by a Person who
is not an Affiliate of the Company or its Subsidiaries to the Company or
its Subsidiaries for the portion of such Domestic Accounts sold at the
time of its acquisition, reduced from time to time by collections
thereon, exceed at any time $100,000,000;
(f) the sale of International Accounts to facilitate or
effectuate the securitization of Borrowers' International Accounts
pursuant to a securitization program substantially similar to that
described on Schedule V hereto (hereinafter called the "International
Receivables Securitization"); provided, however, that in no event after
giving effect to each such sale, shall the original amount paid by a
Person who is not an Affiliate of the Company or its Subsidiaries to the
Company or its Subsidiaries for the portion of such International
Accounts sold at the time of its acquisition, reduced from time to time
by collections thereon, exceed at any time $75,000,000;
56
<PAGE> 62
(g) the sale or discount without recourse of Accounts in
the ordinary course of business in connection with the compromise or
collection thereof;
(h) upon thirty days' prior written notice to the Agent,
the sale of accounts receivable to third parties for their fair market
value in connection with accounts receivable financing transactions,
provided, that (i) such receivables are not subject to, or required to
be subject to, a Lien in favor of the Banks and (ii) unless the Banks
agree otherwise, the Commitments are simultaneously reduced by the
amount of proceeds of any such sale of receivables, and, if the
aggregate amount of Extensions of Credit then outstanding would exceed
the Commitments then in effect, the Company shall be required to
immediately pay or prepay the Loans, in an aggregate amount equal to
such excess, together with interest thereon accrued to the date of such
payment or prepayment and any amounts payable pursuant to Section 4.14;
provided, further, that in no event after giving effect to each such
sale, shall the outstanding amount which remains owing from the
respective trade debtors under all such accounts receivable sold,
together with the Accounts sold pursuant to the Receivables
Securitization, exceed at any time $250,000,000;
(i) as permitted by Section 8.5(b); and
(j) as permitted by Section 8.10.
8.7 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Company) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Company or any
warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasance, retirements, acquisitions and distributions being
herein called "Restricted Payments"), except that (i) nothing contained in this
Section 8.7 shall prohibit (A) any Wholly-Owned Subsidiary from making any
Restricted Payment to the Company or any other Wholly-Owned Subsidiary, (B) the
Company from paying cash dividends in lieu of fractional shares in an amount
not to exceed $500,000 for any fiscal year of the Company, or (C) the Company
from redeeming shares owned by former officers, directors and employees in an
amount for each fiscal year of the Company not to exceed the lesser of
$1,000,000 and 10% of Consolidated Net Income for such fiscal
57
<PAGE> 63
year of the Company, (ii) the Company may declare or pay cash dividends on the
Preferred Stock and, in addition thereto, the Company may declare or pay cash
dividends to its other stockholders solely out of 5.0% of Consolidated Net
Income arising after the Closing Date and computed on a cumulative basis, and
(iii) the Company may purchase, redeem or otherwise acquire shares of its
common stock pursuant to one or more corporate stock repurchase programs
authorized by its Board of Directors provided that the purchase price for all
such shares of common stock so acquired shall not exceed $30,000,000; provided
that, no Event of Default or Default has occurred and is continuing or after
giving effect to any such proposed action set forth in clauses (i), (ii) and
(iii) above, no Event of Default or Default would result therefrom.
8.8 Limitation on Investments, Loans and Advances. Make
any advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of, or any assets
constituting a business unit of, or make any other investment in, any Person or
in any commodities futures or other such speculations, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents, Near Cash Equivalents,
Marketable Securities and shares of preferred stock issued by any Person
having a preferred stock rating of at least "A" or the equivalent
thereof by Standard & Poor's Corporation or Moody's Investors Service,
Inc. (collectively, "Investments"); provided that in no event shall the
aggregate amount of Investments made by the Company in the securities of
any single issuer or obligor exceed the greater of (i) 15% of all
Investments at any one time and (ii) $10,000,000 in the aggregate and
provided further, for the purposes of this paragraph (b), the foregoing
proviso shall not apply to (i) any Investment issued by the United
States Government or an agency thereof or (ii) any Investment consisting
of shares in a mutual fund so long as investments made by such mutual
fund comply with the requirements set forth in the foregoing proviso;
(c) loans and advances to employees of the Company or its
Subsidiaries in the ordinary course of business in an aggregate amount
for the Company and its Subsidiaries not to exceed $5,000,000 at any one
time outstanding;
(d) loans, advances and investments by the Company to or in
its Subsidiaries and loans, advances and investments by such
Subsidiaries to or in the Company and in other Subsidiaries;
58
<PAGE> 64
(e) investments by the Company and its Subsidiaries in new
Subsidiaries, provided that no Default or Event of Default has occurred
and is continuing or would result therefrom;
(f) prepayments of Indebtedness (excluding Subordinated
Debt), provided that no Default or Event of Default has occurred and is
continuing or would result therefrom;
(g) investments by the Company or any of its Subsidiaries
in joint ventures or minority interests in corporations in an aggregate
amount of $10,000,000 in any fiscal year, provided that no Default or
Event of Default has occurred and is continuing or would result
therefrom;
(h) investments arising out of the compromise or settlement
of claims of the Company or any of its Subsidiaries against third
parties or arising out of judicial proceedings (including bankruptcy or
insolvency proceedings) affecting such claims; and
(i) as permitted by Section 8.5.
8.9 Limitation on Optional Payments and Modifications of
Debt Instruments. (a) Make any optional payment or prepayment on or redemption
of any Subordinated Debt, (b) amend, modify or change, or consent or agree to
any amendment, modification or change to any of the terms relating to the
payment or prepayment of principal of or interest on, any Subordinated Debt
(other than any such amendment, modification or change which would extend the
maturity or reduce the amount of any payment of principal thereof or which
would reduce the rate or extend the date for payment of interest thereon), or
(c) amend, modify or change the final maturity date of the Senior Unsecured
Notes to a date prior to the Termination Date; provided, however, that the
Company may, at its option, redeem up to $33,333,334 of the principal amount of
the Senior Unsecured Notes to the extent permitted by Section 1101 of that
certain Trust Indenture, dated August 15, 1993, executed by the Company with
First National Bank of Boston, Trustee, with respect to the Senior Unsecured
Notes.
8.10 Sale and Leaseback. Enter into any arrangement with
any Person providing for the leasing by the Company or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary, except that the
Company and its Subsidiaries may enter into sale-leaseback transactions of the
type described in this subsection so long as (i) such transactions are in the
59
<PAGE> 65
ordinary course of business and (ii) at any time the sum of (a) the aggregate
amount of the principal components of all then due and unpaid and future rental
obligations under such leases at such time and (b) the aggregate principal
amount of Indebtedness permitted under Section 8.2(i)(j) shall not exceed
$20,000,000.
8.11 Changes in Significant Credit Policy or Significant
Collection Policy. Implement a change in Significant Credit Policy or
Significant Collection Policy which, in the reasonable business judgment of the
Company (or, if applicable with respect to changes in Significant Collection
Policy, such other Person engaged by the Company, as the case may be, to
perform collection functions with respect to the Accounts of the Company and
its Subsidiaries) which, either by itself or when considered together with
other such changes made subsequent to the Closing Date, would materially
increase the risk of nonpayment of such Accounts.
8.12 Capital Expenditures. Make or commit to make any
Capital Expenditure except for Capital Expenditures in the ordinary course of
business.
8.13 Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is not otherwise prohibited under this Agreement, is in the
ordinary course of the Company's or such Subsidiary's business and is upon fair
and reasonable terms no less favorable to the Company or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person not an Affiliate.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any
Loan or the amount of any drawing under a Letter of Credit when due; or
any Borrower shall fail to pay any interest on any Loan or on the
unreimbursed amount of any drawing under any Letter of Credit, or any
Borrower shall fail to pay any other amount payable hereunder, within
five Business Days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by
any Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished at any
60
<PAGE> 66
time under or in connection with this Agreement shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Company (or any Subsidiary) shall default in the
observance or performance of any agreement contained in Section 8,
Section 7.7(a), or Section 7.7(e); or
(d) The Company (or any Subsidiary) shall default in the
observance or performance of any other agreement contained in this
Agreement (other than as provided in paragraphs (a) through (c) of this
Section) or in any other Loan Document, and such default shall continue
unremedied for a period of 30 days after the occurrence thereof, except
that with respect to defaults in the observance or performance of any
agreement contained in Sections 7.3, 7.5, 7.6 and 7.8 of this Agreement,
such default shall continue unremedied for a period of 30 days after the
Company or such Subsidiary has knowledge of any such default; or
(e) The Company or any of its Subsidiaries shall (i)
default in any payment of principal of or interest on any Indebtedness
whether at stated maturity or otherwise (other than the Loans or in
respect of Letters of Credit) in an aggregate outstanding principal
amount of $10,000,000 or more or in the payment of any Guarantee
Obligation in an amount of $10,000,000 or more, beyond the period of
grace (not to exceed 5 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition
is to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a trustee
or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; or (iii) default in the payment
of any monetary obligation in an aggregate outstanding principal amount
of $10,000,000 or more contained in any Interest Rate Contract or
currency hedging agreement beyond the period of grace (not to exceed 30
days), if any, provided in such Interest Rate Contract or currency
hedging agreement; or
61
<PAGE> 67
(f) (i) The Company or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or the
Company or any of its Subsidiaries shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against
the Company or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against the Company or any of
its Subsidiaries any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Company or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Company or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Banks, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of
62
<PAGE> 68
the Required Banks is likely to, incur any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or financial
or other condition of the Company and its Subsidiaries taken as a whole;
or
(h) One or more judgments or decrees shall be entered
against the Company or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$1,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(i) Any of the Guarantees shall cease, for any reason other
than by its terms, to be in full force and effect, or any Loan Party
shall so assert; or
(j) If at any time the Company or any of its Subsidiaries
shall become liable for (w) environmental removal or remediation
expenses, (x) costs of response with respect to any Environmental Law,
(y) damages for injury to, destruction of or loss of natural resources,
or (z) assessed environmental fines, penalties or other such charges
which, as to (w), (x), (y) and (z) above in the aggregate, are in excess
of $1,000,000 above such amounts which are covered by insurance or
indemnities and the liability of the Company or such Subsidiaries
continues unremedied for a period of thirty days after the Company or
any such Subsidiary has knowledge of the events giving rise to such
liability; or
(k) Any Change In Control shall occur;
then, and in any such event:
(A) if such event is an Event of Default specified in
clause (i) or (ii) of paragraph (f) above with respect to the Company or
any Borrower, automatically (i) the Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the Notes shall
immediately become due and payable, (ii) all obligations of the
Borrowers in respect of the Letters of Credit, although contingent and
unmatured, shall become immediately due and payable and the obligations
of the
63
<PAGE> 69
Issuing Banks to issue Letters of Credit shall immediately terminate; and
(B) if such event is any other Event of Default, with the
consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall take all or any of the following
actions:
(i) by notice to the Company and the Borrowers,
declare the Commitments to be terminated forthwith whereupon the
same shall immediately so terminate,
(ii) by notice to the Company and the Borrowers,
declare the obligations of the Issuing Banks to issue Letters of
Credit to be terminated, whereupon the same shall immediately so
terminate; and/or
(iii) by notice to the Company and the Borrowers (1)
declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and
payable forthwith, whereupon the same shall immediately become
due and payable, (2) declare all or a portion of the obligations
of the Borrowers in respect of the Letters of Credit although
contingent and unmatured, to be due and payable forthwith,
whereupon the same shall immediately become due and payable
and/or demand that the Borrowers discharge any or all of the
obligations supported by such Letters of Credit by paying or
prepaying any amount due or to become due in respect of such
obligations.
All payments under this Section 9 on account of undrawn Letters of Credit shall
be made by the Borrowers directly to a cash collateral account established by
the Agent for such purpose for application to the Borrowers' reimbursement
obligations with respect to such Letters of Credit as drafts are presented
under such Letters of Credit, with the balance, if any, to be applied to the
Borrowers' obligations under this Agreement and the Notes as the Agent shall
determine with the approval of the Required Banks. Except as expressly
provided above in this Section 9, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Bank hereby irrevocably designates
and appoints Citibank, N.A. as the Agent of such Bank under this Agreement and
the other Loan Documents, and each such Bank irrevocably authorizes Citibank,
N.A., as the
64
<PAGE> 70
Agent for such Bank, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by any Borrower or the
Company or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Notes or
any other Loan Document or for any failure of any Borrower or the Company to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Borrower or the Company.
10.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons
65
<PAGE> 71
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Company or any Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems
appropriate or it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes and the other Loan Documents in accordance with a
request of the Required Banks (or, if such action requires the consent of any
Bank or all of the Banks under Section 12.1, in accordance with a request made
by such Bank or Banks), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks and all future holders of
the Notes.
10.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank or the Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Banks. The
Agent shall take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Required Banks; provided that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Banks.
10.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Company, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to make its Loans and
enter
66
<PAGE> 72
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company or any Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the
Company or any Borrower which may come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Banks agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), each ratably
according to the aggregate unpaid principal amount of the Loans held by each
such Bank, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, the Loan Documents to the extent that the
Agent is not reimbursed for such expenses by the Borrowers. The agreements in
this Section shall survive the payment of the Notes and all other amounts
payable hereunder.
67
<PAGE> 73
10.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company and the Borrowers as though the Agent were
not the Agent hereunder and under the other Loan Documents. With respect to
its Loans made or renewed by it and any Note issued to it, the Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon 10
days' notice to the Banks. The Agent may be removed at any time, with or
without cause, by the Required Banks. If the Agent shall resign or be removed
as Agent under this Agreement and the other Loan Documents, then the Company
shall appoint from among the Banks a successor agent for the Banks, which
successor agent shall be approved by the Required Banks. If no successor Agent
shall have been so appointed by the Company with such approval, and shall have
accepted such appointment, within 10 days after the retiring Agent's giving of
notice of resignation or the Agent's removal, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank which is
a commercial bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$150,000,000. Upon the acceptance of any appointment as Agent under this
Agreement by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent and shall function as the Agent under this Agreement, and the
retiring Agent shall be discharged from its duties and obligations as Agent
under this Agreement. After any retiring Agent's resignation as Agent, the
provisions of this Section shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
SECTION 11. THE ISSUING BANK
11.1 The Issuing Banks. (a) Appointment. Each Bank hereby
irrevocably designates and appoints (i) Citibank, N.A. and each other Issuing
Bank as an Issuing Bank under this Agreement and (ii) each such Bank hereby
irrevocably authorizes Citibank, N.A. and each other Issuing Bank as an
Issuing Bank, to take such action under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly delegated to an
Issuing Bank by the terms of this Agreement, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, none of the Issuing Banks shall have any
duties or responsibilities,
68
<PAGE> 74
except those expressly set forth herein, or any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against such Issuing Bank; provided that nothing contained in this Section 11
shall be deemed to limit or impair the rights and obligations of any Issuing
Bank under a relevant Letter of Credit.
(b) Exculpatory Provisions. None of the Issuing Banks and
their officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for such
Person's own gross negligence or willful misconduct), or (ii) responsible in
any manner to any of the Banks for any recitals, statements, representations or
warranties made by the Company or any officer hereof contained in this
Agreement or in any certificate, report, statement or other document referred
to or provided for in, or received by such Issuing Bank under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any of the Loan Documents or
for any failure of the Company to perform its obligations hereunder or
thereunder. Except as otherwise expressly stated herein, none of the Issuing
Banks shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records
of the Company.
(c) Reliance by Issuing Banks. Each Issuing Bank shall be entitled
to rely, and shall be fully protected in relying, upon any agreement (including
this Agreement), note (including any Note), writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document or telephone
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company),
independent accountants and other experts selected by such Issuing Bank.
Except for the issuance of any Letter of Credit in accordance with the terms of
this Agreement and the payment of drawings thereunder, an Issuing Bank shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first receive such advice or concurrence of the Required Banks
as such Issuing Bank deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Issuing Bank shall in all cases be fully protected in acting, or in
refraining
69
<PAGE> 75
from acting, under this Agreement in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks.
(d) Indemnification. The Banks agree to indemnify each
Issuing Bank in its capacity as such (to the extent not reimbursed by the
Company and without limiting the obligation of the Company to do so), each
ratably according to its Commitment Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against such Issuing Bank in any
way relating to or arising out of this Agreement, or any documents contemplated
by or referred to herein or the transactions contemplated hereby or any action
taken or omitted by such Issuing Bank under or in connection with any of the
foregoing; provided that no Bank shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Issuing Bank's gross negligence or willful misconduct and, provided further,
that no Bank shall be liable for the failure of any other Bank to pay to such
Issuing Bank such other Bank's pro rata share of the amount of any L/C
Obligations in accordance with the terms of this Agreement.
11.2 Issuing Bank in Its Individual Capacity. Each Issuing
Bank and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Company and its Subsidiaries as though
such Issuing Bank were not an Issuing Bank hereunder. With respect to Loans
made or renewed by an Issuing Bank and any Note issued to such Issuing Bank,
such Issuing Bank shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not an Issuing Bank, and
the terms "Bank" and "Banks" shall include such Issuing Bank in its individual
capacity.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement, any
Note, any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. With the written consent of the Required Banks, the Agent and the
relevant Loan Parties may, from time to time, enter into written amendments,
supplements or modifications hereto and to the Notes and the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
Notes or the other Loan Documents or changing in any manner the rights of
70
<PAGE> 76
the Banks or of the Loan Parties hereunder or thereunder or waiving, on such
terms and conditions as the Agent may specify in such instrument, any of the
requirements of this Agreement or the Notes or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (a) reduce
the amount or extend the maturity of any Note or any installment of principal
thereof, or extend the expiration date of any Letter of Credit beyond the
Termination Date (except as expressly permitted hereunder), or reduce the rate
or extend the time of payment of interest thereon, or reduce any fee or extend
the time of payment thereof payable to any Bank hereunder, or change the amount
of any Bank's Commitment or Commitment Percentage, in each case without the
consent of the Bank affected thereby, or (b) extend the Termination Date or
amend, modify or waive any provision of this Section, or reduce the percentage
specified in the definition of Required Banks, or consent to the assignment or
transfer by the Company or any Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, or (c) amend, modify or
waive any provision of Section 10 without the written consent of the then Agent
or (d) amend, modify or waive any provision of Section 11 without the written
consent of each Issuing Bank or (e) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Banks. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Banks and shall be binding upon the Company, the Borrowers, the Banks,
the Agent and all future holders of the Notes. In the case of any waiver, the
Company, the Borrowers, the Banks and the Agent shall be restored to their
former position and rights hereunder and under the outstanding Notes and any
other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
12.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or 5
Business Days after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when received, or, in the case of telex notice, when
sent, answerback received, addressed as follows in the case of the Company, the
other Borrowers and the Agent, and as set forth in Schedule I in the case of
the other parties hereto, or to such other address as may be hereafter notified
by the respective parties hereto and any future holders of the Notes:
71
<PAGE> 77
The Company: Dell Computer Corporation
9505 Arboretum Blvd.
Austin, Texas 78759
Attention: Chief Financial Officer
Telephone: 512-338-4400
Telecopy: 512-728-5986
Borrowers: c/o Dell Computer Corporation (as
above)
The Agent: Citibank, N.A.
c/o Citicorp North America, Inc.
1400 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Frank Garrott
Telephone: 214-953-3800
Telecopy: 214-953-3888
with copy to: Citicorp North America, Inc.
27th Floor
One Sansome Street
San Francisco, CA 94104
Attention: Kevin Nater
Telephone: 415-627-6331
Telecopy: 415-433-0307
provided that any notice, request or demand to or upon the Agent pursuant to
Section 2.3, 3.3, 4.3 or 4.5 shall not be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes.
12.5 Payment of Expenses and Taxes; Liability of the Banks.
The Company and each other Borrower jointly and severally agree (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation, execution and
72
<PAGE> 78
delivery of, and any amendment, supplement or modification to, this Agreement,
the Notes and the other Loan Documents, and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent (b) to pay or reimburse each
Bank, each Issuing Bank and the Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under or
arising out of this Agreement, the Notes, the other Loan Documents and any such
other documents, or incurred with respect to any challenge to any Letter of
Credit, including, without limitation, fees and disbursements of counsel to the
Agent, the Issuing Bank and to the several Banks, (c) to pay, indemnify, and
hold each Bank, each Issuing Bank and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the Letters of
Credit, the other Loan Documents and any such other documents, and (d) to pay,
indemnify, and hold each Issuing Bank, each Bank and the Agent harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Notes, the Letters of
Credit, the other Loan Documents and any such other documents or instrument
relating thereto (all the foregoing, collectively, the "indemnified
liabilities"), provided, that the Borrowers shall have no obligation hereunder
to the Agent or any Bank with respect to indemnified liabilities arising from
(i) the gross negligence or willful misconduct of the Agent or any such Bank
(ii) legal proceedings commenced against the Agent or any such Bank by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such,
or (iii) legal proceedings commenced against the Agent or any such Bank by any
other Bank or by any Transferee (as defined in Section 12.6). The agreements
in this Section shall survive repayment of the Obligations and all other
amounts payable hereunder.
12.6 Successors and Assigns; Participations; Purchasing
Banks; Additional Lenders. (a) This Agreement shall be binding upon and inure
to the benefit of the Borrowers, the Issuing Banks, the Banks, the Agent, all
future holders of the Notes and their respective successors and assigns, except
that the Borrowers may not assign or transfer any of their respective rights or
obligations under this Agreement without the prior written consent of each
Bank.
73
<PAGE> 79
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Letter of Credit
participated in by such Bank, any Commitment of such Bank or any other interest
of such Bank hereunder and under the other Loan Documents. In the event of any
such sale by a Bank of participating interests to a Participant, such Bank's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement and the other Loan Documents, and the Borrowers, the
Issuing Banks and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement and the other Loan Documents. Each Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement or any Note, provided
that such Participant shall only be entitled to such right of setoff if it
shall have agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Banks the proceeds thereof as provided
in Section 12.7. The Company also agrees that each Participant shall be
entitled to the benefits of Sections 4.11, 4.12, 4.13, 4.14 and 12.5 with
respect to its participation in the Commitments and the Loans outstanding from
time to time; provided, that no Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Bank would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Bank to such Participant had no such transfer
occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Bank and, with the consent of the Company, the Agent and each Issuing Bank,
which consent shall not be unreasonably withheld, to one or more Eligible
Assignees ("Purchasing Banks") all or any part of its rights and obligations
under this Agreement and the Notes pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Bank, such transferor Bank (and, in the
case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by
the Company and the Agent) and delivered to the Agent for its acceptance and
recording in the Register. Upon such execution, delivery, acceptance and
recording, from and after
74
<PAGE> 80
the Transfer Closing Date determined pursuant to such Commitment Transfer
Supplement, (x) the Purchasing Bank thereunder shall be a party hereto and, to
the extent provided in such Commitment Transfer Supplement, have the rights and
obligations of a Bank hereunder with a Commitment as set forth therein, and (y)
the transferor Bank thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement
(and, in the case of a Commitment Transfer Supplement covering all or the
remaining portion of a transferor Bank's rights and obligations under this
Agreement, such transferor Bank shall cease to be a party hereto). Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Bank and the resulting adjustment of Commitment Percentages arising
from the purchase by such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this Agreement and the Notes. On or
prior to the Transfer Closing Date determined pursuant to such Commitment
Transfer Supplement, the Company and each Borrower at the transferor's expense,
shall execute and deliver to the Agent in exchange for the surrendered Note a
new Note to the order of such Purchasing Bank in an amount equal to the
Commitment assumed by it pursuant to such Commitment Transfer Supplement and,
if the transferor Bank has retained a Commitment hereunder, a new Note to the
order of the transferor Bank in an amount equal to the Commitment retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Notes replaced thereby. The Notes surrendered
by the transferor Bank shall be returned by the Agent to the relevant Borrower
marked "canceled".
(d) The Agent shall maintain at its address referred to in
Section 12.2 a copy of each Commitment Transfer Supplement delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Banks and the Commitment of, and principal amount of the Loans owing to,
the amount of and L/C Participating Interests of each Bank from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and each Borrower, the Agent, each Issuing Bank and the Banks may treat
each Person whose name is recorded in the Register as the owner of the Loan
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company, each Borrower, or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Bank and Purchasing Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company
and the Agent) together with payment by the Purchasing Bank to the Agent of a
75
<PAGE> 81
registration and processing fee of $2,500, the Agent shall (i) promptly accept
such Commitment Transfer Supplement and (ii) on the Transfer Closing Date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks, the
Issuing Banks and the Borrowers.
(f) Each Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's possession
concerning the Company and its affiliates which has been delivered to such Bank
by or on behalf of the Company pursuant to this Agreement or which has been
delivered to such Bank by or on behalf of the Company in connection with such
Bank's credit evaluation of the Company and its affiliates prior to becoming a
party to this Agreement; provided that such Transferee agrees not to disclose
any confidential, nonpublic information delivered to it, except to the extent
required by applicable law.
(g) If, pursuant to this Section, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the transferor Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for
the benefit of the transferor Bank, the Agent and the Borrowers) that under
applicable law and treaties no taxes will be required to be withheld by the
Agent, the Company or the transferor Bank with respect to any payments to be
made to such Transferee in respect of the Loans, (ii) to furnish to the
transferor Bank (and, in the case of any Purchasing Bank registered in the
Register, the Agent, the Borrowers and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Bank, the Agent, the Borrowers and the Company) to
provide the transferor Bank (and, in the case of any Purchasing Bank registered
in the Register, the Agent and the Company) a new Form 4224 or Form 1001 upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
76
<PAGE> 82
12.7 Adjustments; Set-off. (a) If any Bank shall at any
time receive any payment of all or part of its Loans or of all or part of its
L/C Participating Interest in any Letter of Credit (as to each Bank, its
"Exposure"), or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 9(f), or otherwise) (a
"Benefitted Bank"), in a greater proportion than any such payment to or
collateral received by any other Bank, if any, in respect of such other Bank's
Exposure or interest thereon, such Benefitted Bank shall purchase for cash from
the other Banks such portion of each such other Bank's Exposure, or shall
provide such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Bank to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Company and each
Borrower agree that each Bank so purchasing a portion of another Bank's
Exposure may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Bank were
the direct holder of such portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to any
Borrower, any such notice being expressly waived by each Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by a
Borrower hereunder or under the Notes (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Bank to or for the
credit or the account of such Borrower. Each Bank agrees promptly to notify
the Company, the relevant Borrower(s) and the Agent after any such set-off and
application made by such Bank, provided, that the failure to give such notice
shall not affect the validity of such set-off and application.
12.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Company and the Agent.
77
<PAGE> 83
12.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 Integration. This Agreement represents the agreement
of the Company, the Borrowers, the Agent and the Banks with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Agent or any Bank relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
12.11 Applicability of Covenants. The parties hereto
acknowledge that the provisions of Section 7 and Section 8 hereof shall be of
no force and effect upon the date (i) the Borrowers shall have cash
collateralized all outstanding Letters of Credit (in the case of Letters of
Credit, on terms satisfactory to the Required Banks), (ii) no Loans are
outstanding, (iii) no other amounts are owing to any Bank or Issuing Bank or
the Agent hereunder or under any other Loan Document and (iv) the Commitments
are terminated.
12.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
12.13 Submission To Jurisdiction; Waivers. Each of the
Agent, the Issuing Banks, the Banks, the Company and the Borrowers hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
78
<PAGE> 84
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to its address set forth in Section 12.2 or at such other
address of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary, punitive
or consequential damages.
12.14 Acknowledgements. Each Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other
Loan Documents;
(b) neither the Agent, nor any Issuing Bank nor any Bank
has any fiduciary relationship to such Borrower, and the relationship
between the Agent, the Issuing Banks and the Banks, on one hand, and the
Borrowers, on the other hand, is solely that of debtor and creditor; and
(c) no joint venture exists among the Agent, the Issuing
Banks and the Banks or any of them or among the Borrowers and the Banks.
12.15 WAIVERS OF JURY TRIAL. THE BORROWERS, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER
LOAN DOCUMENT OR TO ANY COUNTERCLAIM THEREIN.
12.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE
CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
79
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
DELL COMPUTER CORPORATION
By: /s/ THOMAS J. MEREDITH
---------------------------
Title: CEO
DELL PRODUCTS L. P.
By: Dell Gen. P. Corp., its
general partner
By: /s/ THOMAS J. MEREDITH
----------------------
Title: CEO
DELL USA L.P.
By: Dell Gen. P. Corp., its
general partner
By: /s/ THOMAS J. MEREDITH
----------------------
Title: CEO
DELL MARKETING L.P.
By: Dell Gen. P. Corp., its
general partner
By: /s/ THOMAS J. MEREDITH
----------------------
Title: CEO
DELL DIRECT SALES L.P.
By: Dell Gen. P. Corp., its
general partner
By: /s/ THOMAS J. MEREDITH
----------------------
Title: CEO
80
<PAGE> 86
CITIBANK, N.A.
as Agent, as an Issuing Bank
and as a Bank
By: /s/ Edward Lettieri
----------------------------
Title:
BARCLAYS BANK PLC
By: /s/ Richard Lane
----------------------------
Title: Associate Director
CHEMICAL BANK
By: /s/ Edward de Forest
----------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Rovert Ivosevich
----------------------------
Title: Senior Vice President
FIRST INTERSTATE BANK OF
TEXAS, N.A.
By: /s/ Scott J. Feigelson
----------------------------
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Michael A. Cole
----------------------------
Title: Manager
81
<PAGE> 87
EXHIBIT A
CREDIT AGREEMENT SUPPLEMENT - ADDITIONAL BORROWER
This CREDIT AGREEMENT SUPPLEMENT (Borrower), dated as of
______________, is by and among __________________, a ___________________
(corporation) (limited partnership) (the "New Borrower"), the several banks and
other financial institutions parties to the Credit Agreement (the "Banks"), and
Citibank, N.A., as the agent for the benefit of the Banks (the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Credit Agreement, dated as of June
10, 1994, (as amended, modified or supplemented from time to time, the "Credit
Agreement") among Dell Computer Corporation, a Delaware corporation (the
"Company"), its Wholly Owned Subsidiaries parties thereto (together with the
Company, the "Borrowers" and individually, a "Borrower"), the Banks, and the
Agent, the Banks have agreed to make Extensions of Credit to, and for the
benefit of, the Borrowers;
WHEREAS, the Credit Agreement provides that any Wholly-Owned
Subsidiary may become a party to, and a Borrower under, the Credit Agreement by
executing and delivering this Supplement and satisfying certain conditions
specified below;
WHEREAS, the Agent and the Banks are willing to permit the New
Borrower to become a party to the Credit Agreement on the terms and conditions
set forth below;
WHEREAS, terms not otherwise defined herein shall have the respective
meanings assigned thereto in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Party to Credit Agreement. Upon the date the New Borrower
satisfies the conditions precedent contained in paragraph 3 below, the parties
hereto acknowledge that the New Borrower shall become a party to, and a
Borrower under, the Credit Agreement as if it were an original party thereto.
2. Representations and Warranties. In order to induce the Agent
and the Banks to enter into this Supplement, the New Borrower represents and
warrants to the Agent and the Banks that each of the representations and
warranties set forth in Section 5 of the Credit
-1-
<PAGE> 88
Agreement is true and correct with respect to itself, the provisions of such
Section 5 being incorporated by reference in this Supplement as if set forth in
full herein.
3 . Conditions. The agreement of the Agent and the Banks to
permit the New Borrower to become a party to the Credit Agreement is subject to
the following conditions precedent:
(a) No Event of Default or Default shall have occurred
and be continuing.
(b) The Agent shall have received, with a counterpart for
each Bank, (endorsements to the Notes, if applicable, and) supplements
to the Subsidiaries Guarantee duly executed and delivered by the New
Borrower.
(c) The Agent shall have received from the New Borrower,
with a counterpart for each Bank, the documents and other information
specified in Subsections6.1(b), 6.1(c), 6.1(d) and 6.1(g) of the
Credit Agreement.
4. Compliance with Credit Agreement. The New Borrower agrees to
comply with all provisions of the Credit Agreement applicable to it as if it
were an original party thereto.
5. Limited Effect. This Supplement shall not constitute an
amendment or supplement of any other provision of the Credit Agreement for any
purpose except as expressly set forth herein.
6. Counterparts. This Supplement may be executed by one or more
parties hereto on any number of counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
7. Governing Law. This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and delivered in New York, New York by their duly authorized
officers as of the date and year first above written.
(Name of New Borrower)
By: __________________________________
Title:____________________________
-2-
<PAGE> 89
CITIBANK, N.A., as Agent, and a Bank
By: __________________________________
Title:____________________________
(Name of other Banks)
By: __________________________________
Title:____________________________
-3-
<PAGE> 90
EXHIBIT B
FORM OF NOTE
$____________ New York, New York
___________, 1994
FOR VALUE RECEIVED, each of the undersigned (collectively, the
"Borrowers"; individually, a "Borrower") hereby promise to pay to the order of
________________ (the "Bank") at the office of Citibank, N.A., located at 399
Park Avenue, New York, New York 10043, on the Termination Date in lawful money
of the United States of America and in immediately available funds, the
principal amount of the lesser of (a) __________________ ($___________) and (b)
the aggregate unpaid principal amount of all Loans made by the Bank to the
Borrower pursuant to subsection 2.1 of the Credit Agreement referred to below.
Each Borrower further agrees to pay interest in like money on the unpaid
principal amount hereof and interest thereon from time to time from the date
hereof at the office, on the dates, at the rates and for the periods specified
in Sections 2 and 4 of the Credit Agreement.
The holder of this Note is authorized to record the relevant Borrower,
date, Type and amount of each Loan made by the Bank, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and
amount of each payment or prepayment of principal thereof and the length of
each Interest Period with respect thereto, on the schedules annexed hereto and
made a part hereof, or on a continuation thereof which shall be attached hereto
and made a part hereof, which recordation shall constitute prima facie evidence
of the accuracy of the information recorded absent manifest error; provided,
however, that failure by any holder to make any such recordation on such
schedules or continuation thereof shall not in any manner affect any of the
obligations of the Borrower to make payments of principal and interest in
accordance with the terms of this Note and the Credit Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, that certain Credit Agreement dated as of June 10, 1994 (as
amended, modified or supplemented from time to time, the "Credit Agreement";
capitalized terms not otherwise defined in this Note shall have the meanings
assigned to them in the Credit Agreement) among the Borrowers, the Bank, the
other financial institutions parties thereto and Citibank, N.A., as Agent.
The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for optional and mandatory prepayments on account of principal hereof
prior to the maturity hereof on the terms and conditions therein specified.
-1-
<PAGE> 91
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
DELL COMPUTER CORPORATION
By: __________________________________
Title:____________________________
DELL PRODUCTS L.P.
By: Dell Gen. P. Corp., its
general partner
By: _____________________________
Title: ______________________
DELL USA L.P.
By: Dell Gen. P. Corp., its
general partner
By: _____________________________
Title:_______________________
DELL MARKETING L.P.
By: Dell Gen. P. Corp., its
general partner
By: _____________________________
Title:_______________________
-2-
<PAGE> 92
DELL DIRECT SALES L.P.
By: Dell Gen. P. Corp., its
general partner
By: _____________________________
Title:_______________________
-3-
<PAGE> 93
Schedule I to
the Note
BASE RATE LOANS AND CONVERSIONS
AND REPAYMENTS OF PRINCIPAL
Borrower: __________________________
<TABLE>
<CAPTION>
Amount of
Base Rate Amount of
Loans Euro-dollar
Converted Loans
Amount of into Euro- Converted Amount of Unpaid
Interest Base Rate dollar into Base Principal Principal Notation
Date Period Loan Loans Rate Loans Repaid Balance Made By
- - ------------- -------------- --------------- ------------------ ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 94
Schedule II to
the Note
EURODOLLAR LOANS AND CONVERSIONS
AND REPAYMENTS OF PRINCIPAL
Borrower: _____________________________
<TABLE>
<CAPTION>
Amount of
Base Rate Amount of
Loans Euro-dollar
Amount of Converted Loans
Euro- into Euro- Converted Amount of Unpaid
dollar Interest dollar into Base Principal Principal Notation
Date Loan Period Loans Rate Loans Repaid Balance Made By
- - ------------- -------------- --------------- ------------------ ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 95
EXHIBIT C-1
COMPANY GUARANTEE
This COMPANY GUARANTEE, dated as of June 10, 1994, is made by DELL
COMPUTER CORPORATION, a Delaware corporation (the "Guarantor"), in favor of
Citibank, N.A., as agent (in such capacity, the "Agent") for the several banks
and financial institutions (individually, a "Bank" and collectively, the
"Banks"; as used herein, the terms "Bank" or "Banks" shall include the "Issuing
Banks", as defined in the Credit Agreement referred to below) from time to time
parties to the Credit Agreement dated as of June 10, 1994 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Guarantor, the Borrowers (as therein defined) from time to time
parties thereto, the Banks, and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Banks have severally
agreed to make Extensions of Credit (as defined in the Credit Agreement) to,
and/or for the account of, the Guarantor and the Borrowers upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Guarantor owns beneficially, directly or indirectly, all
of the issued and outstanding stock of, and/or partnership interests in, the
Borrowers;
WHEREAS, it is a condition precedent to the obligation of the Banks to
make their respective Extensions of Credit to, and/or for the account of, the
Guarantor and the Borrowers under the Credit Agreement that the Guarantor shall
have executed and delivered this Guarantee to the Agent for the ratable benefit
of the Banks;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Banks to enter into the Credit Agreement and to induce the Banks
to make their Extensions of Credit to, and/or for the account of, the Guarantor
and the Borrowers under the Credit Agreement, the Guarantor hereby agrees with
the Agent, for the ratable benefit of the Banks, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined. As
used herein, the following terms shall have the following meanings:
-1-
<PAGE> 96
"Guarantee" means this Company Guarantee, as amended, supplemented or
otherwise modified from time to time.
"Obligations" shall mean the unpaid principal of and interest on
(including interest accruing on or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) the Loans and all
unpaid drawings under the Letters of Credit and all other obligations and
liabilities of the Borrowers to the Agent, any of the Issuing Banks or to the
other Banks, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, and the other Loan Documents
and any other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including, without limitation, all fees and
disbursements of counsel to the Agent, any Issuing Bank or to the Banks) or
otherwise, in each case relating to any Loans, any Letter of Credit or any
Extension of Credit.
2. Guarantee. The Guarantor hereby unconditionally and irrevocably
guarantees to the Agent, for the ratable benefit of the Banks, the prompt and
complete payment and performance by the Borrowers when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations. The
Guarantor further agrees to pay any and all expenses (including, without
limitation, all fees and disbursements of counsel) which may be paid or
incurred by the Agent or by the Banks in enforcing, or obtaining advice of
counsel in respect of, any of their rights under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto the Borrowers may be free from any Obligations. The
Guarantor agrees that whenever, at any time, or from time to time, it shall
make any payment to the Agent or any Bank on account of its liability
hereunder, it will notify the Agent and such Bank in writing that such payment
is made under this Guarantee for such purpose, but failure to give such notice
shall not affect such payment. No payment or payments made by any Borrower or
any other Person or received or collected by the Agent or any Bank from any
Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of the Guarantor hereunder
which shall, notwithstanding any such payment or payments, continue until the
Obligations are paid in full and the Commitments are terminated.
3. Right of Set-off. Upon the occurrence of any Event of Default
specified in the Credit Agreement, the Agent and each Bank are hereby
irrevocably authorized, to the extent permitted to do so under applicable law,
at any time and from time to time without notice to the Guarantor, any such
notice being hereby waived by the Guarantor, to set off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any
-2-
<PAGE> 97
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Agent or such Bank to or for the
credit or the account of the Guarantor, or any part thereof in such amounts as
the Agent or such Bank may elect, on account of the liabilities of the
Guarantor hereunder and claims of every nature and description of the Agent or
such Bank against the Guarantor, in any currency, whether arising hereunder,
under the Credit Agreement, any Note or otherwise, as the Agent or such Bank
may elect, whether or not the Agent or such Bank has made any demand for
payment and although such liabilities and claims may be contingent or
unmatured. The Agent and each Bank shall notify the Guarantor promptly of any
such set-off made by it and the application made by it of the proceeds thereof,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Agent and each Bank under this
paragraph are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agent or such Bank may have.
4. No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Guarantee, the Guarantor
hereby irrevocably waives all rights which may have arisen in connection with
this Guarantee to be subrogated to any of the rights (whether contractual,
under the Bankruptcy Code, including Section 509 thereof, under common law or
otherwise) of the Agent or any Bank against any Borrower or against the Agent
or any Bank for the payment of the Obligations. The Guarantor hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against any Borrower or any other Person which may have arisen in
connection with this Guarantee. So long as the Obligations remain outstanding,
if any amount shall be paid by or on behalf of any Borrower to the Guarantor on
account of any of the rights waived in this paragraph, such amount shall be
held by the Guarantor in trust, segregated from other funds of such Guarantor,
and shall, forthwith upon receipt by such Guarantor, be turned over to the
Agent in the exact form received by the Guarantor (duly indorsed by the
Guarantor to the Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Agent may determine. The
provisions of this paragraph 4 shall survive the term of this Guarantee and the
payment in full of the Obligations and the termination of the Commitments.
5. Amendments, etc. with respect to the Obligations. The Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against the Guarantor, and without notice to or further assent by the
Guarantor, any demand for payment of any of the Obligations made by the Agent
or any Bank may be rescinded by the Agent or such Bank, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Agent or any Bank, and the Credit
Agreement, any Notes, and other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
-3-
<PAGE> 98
terminated, in whole or in part, as the Agent or the Banks (or the Required
Banks, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the Agent
or any Bank for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Agent nor any Bank shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Obligations or for this Guarantee or any property
subject thereto.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Bank upon
this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred
in reliance upon this Guarantee; and all dealings between any Borrower or the
Guarantor, on the one hand, and the Agent and the Banks, on the other, shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon any Borrower
or the Guarantor with respect to the Obligations. This Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement,
any other Loan Documents, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Agent or any Bank, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Borrower against the Agent or any
Bank, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of any Borrower or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Company for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When the Agent is pursuing its rights and remedies hereunder
against the Guarantor, the Agent or any Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Borrowers or any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto, and any
failure by the Agent or any Bank to pursue such other rights or remedies or to
collect any payments from any Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Agent and the Banks against the Guarantor.
7. Reinstatement. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or
returned by the Agent or any Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any
-4-
<PAGE> 99
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
8. Payments. All payments by the Guarantor hereunder in respect of
any Obligation shall be made without set-off or counterclaim in United States
Dollars at the office of the Agent located at 399 Park Avenue, New York, New
York 10043.
9. Currency Indemnity. (a) The obligation of the Guarantor under this
Guarantee to make payments in Dollars (the "Obligation Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent to which such tender or recovery shall result in the
effective receipt by the Banks of the full amount of the Obligation Currency
expressed to be due hereunder. If for the purpose of obtaining or enforcing
judgment against any Guarantor in any court or in any jurisdiction, it becomes
necessary to convert into any currency other than the Obligation Currency (such
other currency being hereinafter referred to as the "Judgment Currency") an
amount due in the Obligation Currency under this Guarantee, the conversion
shall be made, at the option of the Agent, at the rate of exchange prevailing
on the Business Day immediately preceding the day on which the judgment is
given (such Business Day as the case may be, being hereinafter in this
paragraph referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange
prevailing between the Judgment Currency Conversion Date and the date of actual
payment of the amount due, the Guarantor covenants and agrees to pay such
additional amounts as may be necessary to ensure that the amount paid in the
Judgment Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of the Obligation Currency which could
have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial award at the rate of exchange prevailing on the Judgment
Currency Conversion Date.
(c) Any amount due from the Guarantor under the foregoing
subparagraph will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under or in respect of this
Guarantee.
10. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
-5-
<PAGE> 100
12. No Waiver; Cumulative Remedies. Neither the Agent nor any Bank
shall by any act (except by a written instrument pursuant to paragraph 13
hereof), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Agent or any Bank,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Agent or such Bank would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
13. Waivers and Amendments: Successors and Assigns. None of the
terms or provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantor and
the Agent, provided that any provision of this Guarantee may be waived by the
Agent in a letter or agreement executed by the Agent or by telex or facsimile
transmission from the Agent. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Agent and the Banks and their successors and assigns.
14. Integration. This Guarantee represents the agreement of the
Guarantor with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent or any Bank relative
to the subject matter hereof not expressly set forth or referred to herein or
in the other Loan Documents.
15. GOVERNING LAW. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF
THE GUARANTOR UNDER THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered as of the date first above written.
DELL COMPUTER CORPORATION
By: _________________________________
Title:___________________________
-6-
<PAGE> 101
EXHIBIT C-2
SUBSIDIARIES GUARANTEE
This SUBSIDIARIES GUARANTEE, dated as of June 10, 1994, is by each of
the corporations and partnerships that are signatories hereto and each other
corporation or partnership that becomes a party hereto by executing and
delivering to Citibank, N.A., as the agent (the "Agent") for the ratable
benefit of the several banks and financial institutions that from time to time
are parties to the Credit Agreement referred to below (collectively, the
"Banks", and individually, a "Bank"); as used herein, the term "Banks" shall
include the "Issuing Banks" as defined in the Credit Agreement referred to
below), a supplement hereto in the form of Exhibit A (collectively, the
"Guarantors", and individually, a "Guarantor").
W I T N E S S E T H :
WHEREAS, Dell Computer Corporation, a Delaware corporation (the
"Company") and certain of its present and future Wholly- Owned Subsidiaries,
including Guarantors (collectively, with the Company, the "Borrowers") are
parties to a Credit Agreement, dated as of June 10, 1994 with the Banks and the
Agent (as the same may be amended, modified or supplemented from time to time,
the "Credit Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement and the other
Loan Documents (as defined in the Credit Agreement), the Banks have agreed to
make certain Extensions of Credit (as hereinafter defined) to or for the
benefit of the Borrowers;
WHEREAS, the Company owns directly or indirectly all of the issued and
outstanding stock of, and/or partnership interests in, each Guarantor;
WHEREAS, the proceeds of Extensions of Credit will be used in part to
enable the Borrowers to make Valuable Transfers (as hereinafter defined) to
each Guarantor in connection with the operation of its business; and
WHEREAS, the obligation of the Banks to make the Extensions of Credit
is conditioned upon, among other things, the execution and delivery by the
Guarantors of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to make Extensions of Credit, each
Guarantor hereby agrees with and for the benefit of the Agent and the Banks as
follows:
-1-
<PAGE> 102
1. Defined Terms. As used in this Guarantee, terms defined in the
Credit Agreement are used herein as therein defined, and the following terms
shall have the following meanings:
"Adjusted Net Worth" of any Guarantor shall mean, as of any date of
determination thereof, the excess of (i) the amount of the "present fair
saleable value" of the assets of such Guarantor as of the date of such
determination, over (ii) the amount of all "liabilities of such Guarantor,
contingent or otherwise," as of the date of such determination, as such quoted
terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors.
"Determination Date" shall mean, with respect to any Guarantor, the
earlier of (a) the date of commencement of a case under Title 11 of the United
States Code in which such Guarantor is a debtor and (b) the date enforcement
hereunder is sought with respect to such Guarantor.
"Extension of Credit" shall mean (i) all Loans made to any Borrower
under any Loan Document, (ii) all Letters of Credit issued for the account of
any Borrower under any Loan Document, (iii) all other extensions of credit to
or for the benefit of any Borrower under any Loan Document and (iv) to the
extent not otherwise included in the foregoing, all Obligations.
"Guarantee" means this Subsidiaries Guarantee, as amended, supplemented
or otherwise modified from time to time.
"Guarantee Supplement" shall mean the Guarantee Supplement
substantially in the form of Exhibit A.
"Maximum Guaranteed Amount" for any Guarantor shall mean, as of the
Determination Date for such Guarantor, the sum of (i) an amount equal to the
sum of each Extension of Credit (or portion thereof) the proceeds of which are
used to make a Valuable Transfer to such Guarantor plus interest on such amount
at the rate specified in the Credit Agreement plus (ii) the greater of (I)
ninety-five percent (95%) of the Adjusted Net Worth of such Guarantor at the
date of the execution of this Guarantee before giving effect to any Extensions
of Credit made on such date and (II) ninety-five percent (95%) of the Adjusted
Net Worth of such Guarantor at the Determination Date for such Guarantor. For
purposes hereof, the proceeds of an Extension of Credit (or portion thereof)
are considered to be used to make a Valuable Transfer to a Guarantor if such
proceeds are used to (i) make a loan, advance or capital contribution to such
Guarantor, (ii) acquire from such Guarantor debt securities or other
obligations of such Guarantor, (iii) acquire property, any interest in which is
transferred to such Guarantor (but only to the extent of the economic benefit
to such Guarantor of the interest so transferred), (iv) purchase equity
securities of or partnership interests in, such Guarantor or (v) otherwise
confer,
-2-
<PAGE> 103
directly or indirectly, an economic benefit on such Guarantor (but only to the
extent of such benefit).
"Obligations" shall mean the unpaid principal of and interest on the
Loans and all unpaid drawings under the Letters of Credit and all other
obligations and liabilities of the Borrowers to the Agent, any of the Issuing
Banks or any Bank, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, the other Loan Documents or
any other document made, delivered or given in connection therewith, and each
other obligation and liability, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, of the
Borrowers to the Agent or the Banks, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to the Agent, any
Issuing Bank or any Bank) or otherwise, in each case relating to any Loan, any
Letter of Credit or any Extension of Credit.
2. Guarantee. (a) Each of the Guarantors hereby jointly and
severally, unconditionally and irrevocably, guarantees to the Agent and the
Banks and their respective successors, indorsees, transferees and assigns, the
prompt and complete payment by the Borrowers when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, and each Guarantor
further agrees to pay any and all expenses (including, without limitation, all
fees and disbursements of counsel) which may be paid or incurred by the Agent
or any Bank in enforcing, or obtaining advice of counsel in respect of, any
rights with respect to, or collecting, any or ail of the Obligations and/or
enforcing any rights with respect to, or collecting against, such Guarantor
under this Guarantee; provided, however, that, anything herein or in any other
Loan Document to the contrary notwithstanding, the maximum liability of each
Guarantor hereunder and under the other Loan Documents shall in no event exceed
such Guarantor's Maximum Guaranteed Amount as determined at the Determination
Date for such Guarantor, and provided further, that the Maximum Guaranteed
Amount for each Guarantor hereunder shall in no event exceed the amount which
can be guaranteed by such Guarantor under applicable federal and state laws
relating to insolvency of debtors.
(b) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the Maximum Guaranteed Amount of such Guarantor or of
all of the Guarantors without impairing this Guarantee or affecting the rights
and remedies of the Agent and the Banks hereunder.
(c) No payment or payments made by the Borrowers, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Agent or any Bank from the Borrowers, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release
-3-
<PAGE> 104
or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made by such
Guarantor in respect of the Obligations or payments received or collected from
such Guarantor in respect of the Obligations, remain liable for the Obligations
up to its Maximum Guaranteed Amount until the Obligations are paid in full and
the Commitments are terminated.
(d) Each Guarantor agrees that whenever, at any time, or from time
to time, it shall make any payment to the Agent or any Bank on account of its
liability hereunder, it will notify the Agent in writing that such payment is
made under this Guarantee for such purpose, but failure to give such notice
shall not affect such payment or increase such Guarantor's Maximum Guaranteed
Amount.
3. Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder who has not
paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Paragraph 5
hereof. The provisions of this Paragraph 3 shall in no respect limit the
obligations and liabilities of any Guarantor to the Agent and the Banks, and
each Guarantor shall remain liable to the Agent and the Banks for the full
amount guaranteed by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence of any Event of Default
specified in the Credit Agreement, each Guarantor hereby irrevocably authorizes
the Agent and each Bank at any time and from time to time without notice to
such Guarantor or any other Guarantor, any such notice being expressly waived
by each Guarantor, to set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by the Agent or such Bank to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the Agent or
such Bank may elect, against and on account of the obligations and liabilities
of such Guarantor to the Agent or such Bank hereunder and claims of every
nature and description of the Agent or such Bank against such Guarantor, in any
currency, whether arising hereunder, under the Credit Agreement, the Notes, or
otherwise, as the Agent or such Bank may elect, whether or not the Agent or any
Bank has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Agent and each Bank agrees to
notify such Guarantor promptly of any such set-off and the application made by
the Agent or such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent
and each Bank under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent or
such Bank may have.
-4-
<PAGE> 105
5. No Subrogation. Notwithstanding any payment or payments made by
any of the Guarantors hereunder or any set-off or application of funds of any
of the Guarantors by the Agent or any Bank, no Guarantor shall be entitled to
be subrogated to any of the rights of the Agent or any Bank against any
Borrower or any other Guarantor or any collateral security or guarantee or
right of offset held by the Agent or any Bank for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from any Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder. So long as the
Obligations remain outstanding, if any amount shall be paid by or on behalf of
any Borrower to any of the Guarantors on account of any of the rights waived in
this paragraph, such amount shall be held by such Guarantor in trust,
segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Agent in the exact form
received by that Guarantor (duly indorsed by the Guarantor to the Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Agent may determine. The provisions of this paragraph 5
shall survive the term of this Guarantee and the payment in full of the
Obligations and the termination of the Commitments.
6. Amendments, etc. with respect to the Obligations; Waiver of Rights.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Agent or any Bank may be rescinded by such party and
any of the Obligations continued, and the Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Agent or any
Bank and the Credit Agreement, the Notes and any other collateral security
document or any other guarantee or document in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Agent and/or any Bank may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Agent or any
Bank for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Agent nor any Bank shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against any of the
Guarantors, the Agent or any Bank may, but shall be under no obligation to,
make a similar demand on the Borrowers or any other Guarantor or guarantor, and
any failure by the Agent or any Bank to make any such demand or to collect any
payments from the Borrowers or any such other Guarantor or guarantor or any
release of the Borrowers or such other Guarantor or guarantor shall not relieve
any of the Guarantors in respect of which a demand or collection is not made or
any of the Guarantors not so released of their several obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Agent or any Bank against any
of the Guarantors. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
-5-
<PAGE> 106
7. Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Bank upon
this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between any Borrower or any of the Guarantors and
the Agent or any Bank shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Guarantee. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon any Borrower or any of the Guarantors with respect to the
Obligations. Each Guarantor understands and agrees that this Guarantee shall
be construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Agent or any Bank (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Borrower against the Agent or any
Bank, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of any Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of any Borrower for
the Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in
any other instance. When pursuing its rights and remedies hereunder against
any Guarantor, the Agent and any Bank may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Agent or any Bank to pursue such other rights or remedies or to collect any
payments from any Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or
any release of any Borrower or any such other Person or any such collateral
security guarantee or right of offset, shall not relieve such Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent or any
Bank against such Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon
each Guarantor and the successors and assigns thereof, and shall inure to the
benefit of the Agent and the Banks, and their respective successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of each
Guarantor under this Guarantee shall have been satisfied by payment in full and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrowers may be free from any
Obligations.
8. Reinstatement. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or
returned by the Agent or any Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or
-6-
<PAGE> 107
similar officer for, the Company or any Guarantor or any substantial part of
its property, or otherwise, all as though such payments had not been made.
9. Payments. All payments by each Guarantor hereunder in respect of
any Obligation shall be made without set-off or counterclaim in United States
Dollars at the office of the Agent located at 399 Park Avenue, New York, New
York 10043.
10. Currency Indemnity. (a) The obligation of each Guarantor under
this Guarantee to make payments in Dollars (the "Obligation Currency") shall
not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency, except to the extent to which such tender or recovery shall result in
the effective receipt by the Banks of the full amount of the Obligation
Currency expressed to be due hereunder. If for the purpose of obtaining or
enforcing judgment against any Guarantor in any court or in any jurisdiction,
it becomes necessary to convert into any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the "Judgment
Currency") an amount due in the Obligation Currency under this Guarantee, the
conversion shall be made, at the option of the Agent, at the rate of exchange
prevailing on the Business Day immediately preceding the day on which the
judgment is given (such Business Day as the case may be, being hereinafter in
this paragraph referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, each Guarantor covenants and agrees to pay such additional amounts
as may be necessary to ensure that the amount paid in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) Any amount due from any Guarantor under the foregoing subparagraph
will be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Guarantee.
11. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
-7-
<PAGE> 108
13. No Waiver: Cumulative Remedies. Neither the Agent nor any Bank
shall by any act (except by a written instrument pursuant to paragraph 14
hereof), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Agent or any Bank,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Agent or such Bank would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
14. Waivers and Amendments: Successors and Assigns. None of the terms
or provisions of this Guarantee may be waived, amended or supplemented or
otherwise modified except by a written instrument executed by each Guarantor
and the Agent, provided that any provision of this Guarantee may be waived by
the Agent and the Banks in a letter or agreement executed by the Agent or by
telex or facsimile transmission from the Agent. This Guarantee shall be
binding upon the successors and assigns of each Guarantor and shall inure to
the benefit of the Agent and the Banks and their respective successors and
assigns.
15. Counterparts. This Guarantee may be executed by one or more of
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
16. Integration. This Guarantee represents the agreement of the
Guarantors with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Agent or any Bank
relative to the subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
17. GOVERNING LAW. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF
THE GUARANTORS UNDER THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
-8-
<PAGE> 109
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
DELL PRODUCTS L. P.
By: Dell Gen. P. Corp., its
general partner
By: ___________________________
Title:_____________________
DELL USA L.P.
By: Dell Gen. P. Corp., its
general partner
By: ___________________________
Title:_____________________
DELL MARKETING L.P.
By: Dell Gen. P. Corp., its
general partner
By: ___________________________
Title:_____________________
DELL DIRECT SALES L.P.
By: Dell Gen. P. Corp., its
general partner
By: ___________________________
Title:_____________________
-9-
<PAGE> 110
DELL GEN. P. CORP.
By: ________________________________
Title:__________________________
DELL PRODUCTS CORPORATION
By: ________________________________
Title:__________________________
DELL USA CORPORATION
By: ________________________________
Title:__________________________
DELL MARKETING CORPORATION
By: ________________________________
Title:__________________________
DELL DIRECT SALES CORPORATION
By: ________________________________
Title:__________________________
DELL INTERNATIONAL INCORPORATED
By: ________________________________
Title:__________________________
-10-
<PAGE> 111
EXHIBIT A TO SUBSIDIARIES GUARANTEE
This GUARANTEE SUPPLEMENT, dated as of ___________, is made by
__________, a _______ (corporation) (limited partnership) (the "New
Guarantor"), in favor of Citibank, N.A., as agent for the ratable benefit of
the several banks and other financial institutions from time to time parties to
the Credit Agreement referred to below.
W I T N E S S E T H
WHEREAS, pursuant to the Credit Agreement, dated as of June 10, 1994
(as amended, modified or supplemented from time to time, the "Credit
Agreement") among Dell Computer Corporation, a Delaware corporation (the
"Company"), its Wholly-Owned Subsidiaries parties to the Credit Agreement
(together with the Company, the "Borrowers" and individually,
"Borrower"), the banks and other financial institutions from time to time
parties thereto (the "Banks"; as used herein, the term "Banks" shall include
the "Issuing Banks" as defined in the Credit Agreement) and the Agent, the
Banks have agreed to make Extensions of Credit (as defined in the Subsidiaries
Guarantee) to, and for the benefit of, the Borrowers;
WHEREAS, pursuant to the Subsidiaries Guarantee, the Guarantors named
therein have guaranteed the payment and performance of the obligations of the
Borrowers under the Credit Agreement and the Notes;
WHEREAS, as a condition for the New Guarantor to become a party to,
and a Borrower under, the Credit Agreement, the New Guarantor must execute and
deliver this Guarantee Supplement;
WHEREAS, terms not otherwise defined herein shall have the meanings
assigned thereto in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Banks to permit the New Guarantor to become a party to, and a
Borrower under, the Credit Agreement, the New Guarantor agrees with and for the
benefit of the Agent and the Banks as follows:
1. Guarantor under Subsidiaries Guarantee. Upon the execution and
delivery by the New Guarantor of this Guarantee Supplement, the New Guarantor
shall be deemed to be a Guarantor under the Subsidiary Guarantee as if it were
an original party thereto.
-1-
<PAGE> 112
2. Compliance with Subsidiaries Guarantee. The New Guarantor agrees
to comply with all the provisions of the Subsidiary Guarantee applicable to it
as if it were an original party thereto.
3. Other Information and Documents. The New Guarantor agrees that it
shall deliver to the Agent all information and documents reasonably requested
by the Agent to effectuate the provisions of this Guarantee Supplement,
4. Limited Effect. This Guarantee Supplement shall not constitute an
amendment or supplement of any other provisions of the Subsidiaries Guarantee
for any purpose except as expressly set forth herein.
5. GOVERNING LAW. THIS GUARANTEE SUPPLEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
Supplement to be duly executed and delivered by its duly authorized officer as
of the day and year first above written.
(Name of New Guarantor)
By: ________________________________
Title:__________________________
-2-
<PAGE> 113
EXHIBIT E
FORM OF COMMITMENT TRANSFER SUPPLEMENT
This COMMITMENT TRANSFER SUPPLEMENT dated as of the date set forth in
Item 1 of Schedule I hereto is among the Transferor Bank set forth in Item 2 of
Schedule I hereto (the "Transferor Bank"), each Purchasing Bank set forth in
Item 3 of Schedule I hereto (each, a "Purchasing Bank"), and CITIBANK, N.A., as
agent for the Banks under the Credit Agreement described below (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with subsection 12.6 of the Credit Agreement dated as
of June 10, 1994 among Dell Computer Corporation (the "Company"), each of its
Wholly-Owned Subsidiaries parties thereto (together with the Company, the
"Borrowers"), the Transferor Bank and the other financial institutions parties
thereto (collectively, the "Banks"; individually, a "Bank") and the Agent (as
amended, supplemented or modified from time to time in accordance with the
terms thereof, the "Credit Agreement"; terms defined therein being used herein
as therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank party to
the Credit Agreement) wishes to become a Bank party to the Credit Agreement;
and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit
Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon receipt by the Agent of ____ counterparts of this Commitment
Transfer Supplement to each of which is attached a fully completed Schedule I
and Schedule II, and each of which has been executed by the Transferor Bank,
each Purchasing Bank and any other Person required by the Credit Agreement to
execute this Commitment Transfer Supplement, the Agent will transmit (a) to
each Borrower, the Transferor Bank and each Purchasing Bank a Transfer
Effective Notice, substantially in the form of Schedule III to this Commitment
Transfer Supplement (a "Transfer Effective Notice") and (b) to each Borrower,
an executed copy of this Commitment Transfer Supplement. Such Transfer
Effective Notice shall set forth, inter alia, the date on which the transfer
effected by this Commitment Transfer Supplement shall become effective (the
"Transfer Effective Date"), which date shall be the fifth Business Day
following the date of such Transfer Effective Notice. From and after the
Transfer Effective Date each Purchasing Bank shall be a Bank party to the
Credit Agreement for all purposes thereof.
-1-
<PAGE> 114
2. At or before 12:00 Noon, local time on the Transfer Effective Date
of the Transferor Bank, each Purchasing Bank shall pay to the Transferor Bank,
in immediately available funds, an amount equal to the purchase price, as
agreed between the Transferor Bank and such Purchasing Bank (the "Purchase
Price"), of the portion being purchased by such Purchasing Bank (such
Purchasing Bank's "Purchased Percentage") of the presently outstanding Loans,
L/C Participating Interest and other amounts owing to the Transferor Bank under
the Credit Agreement and the Notes. Effective upon receipt by the Transferor
Bank of the Purchase Price from a Purchasing Bank, the Transferor Bank hereby
irrevocably sells, assigns and transfers to such Purchasing Bank, without
recourse, representation or warranty, and each Purchasing Bank hereby
irrevocably purchases, takes and assumes from the Transferor Bank, such
Purchasing Bank's Purchased Percentage of the Commitments and the presently
outstanding Loans, L/C Participating Interests and other amounts owing to the
Transferor Bank under the Credit Agreement and the Notes together with all
instruments, documents and collateral security pertaining thereto.
3. The Transferor Bank has made arrangements with each Purchasing
Bank with respect to (i) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor Bank to such Purchasing Bank of any fees
heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date and (ii) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the
Credit Agreement from and after the Transfer Effective Date.
4. (a) All principal payments that would otherwise be payable from
and after the Transfer Effective Date to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Notes shall, instead, be payable
to or for the account of the Transferor Bank and the Purchasing Banks, as the
case may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would
otherwise accrue for the account of the Transferor Bank from and after the
Transfer Effective Date pursuant to the Credit Agreement and the Notes shall,
instead, accrue for the account of, and be payable to, the Transferor Bank and
the Purchasing Banks, as the case may be, in accordance with their respective
interests as reflected in this Commitment Transfer Supplement. In the event
that any amount of interest, fees or other amounts accruing prior to the
Transfer Effective Date was included in the Purchase Price paid by any
Purchasing Bank, the Transferor Bank and each Purchasing Bank will make
appropriate arrangements for payment by the Transferor Bank to such Purchasing
Bank of such amount upon receipt thereof from the Borrower(s).
5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Agent its Notes. On or prior to the Transfer Effective
Date, each Borrower will deliver to the Agent the Notes for each Purchasing
Bank and the Transferor Bank in each case in principal
-2-
<PAGE> 115
amounts reflecting, in accordance with the Credit Agreement, its Commitment (as
adjusted pursuant to this Commitment Transfer Supplement). As provided in
subsection 12.6 of the Credit Agreement, each such new Note shall be dated the
Closing Date. Promptly after the Transfer Effective Date, the Agent will send
to each of the Transferor Bank and the Purchasing Banks its new Notes and will
send to each Borrower the superseded Notes of the Transferor Bank, marked
"Canceled".
6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) conformed copies of all documents delivered
to such Transferor Bank on the Closing Date in satisfaction of the conditions
precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time on the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Agent and the Banks as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interests being
assigned hereby free and clear of any adverse claim, the Transferor Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the Notes, the
Letters of Credit, any other Loan Document or any other instrument or document
furnished pursuant thereto; (ii) the Transferor Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under the Credit Agreement, the Notes, any other Loan Document
or any other instrument or document furnished pursuant thereto; (iii) each
Purchasing Bank confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in subsection 5.1
(if requested by such Purchasing Banks), the financial statements delivered
pursuant to subsection 7.1 (if requested by such Purchasing Banks), if any, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Commitment Transfer
Supplement; (iv) each Purchasing Bank will, independently and without reliance
upon the Agent, the Transferor Bank or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (v) each Purchasing Bank appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to such Persons, as the case may be, by the terms
thereof, together with such powers as are reasonably incidental thereto, all in
accordance with Section 10 of the Credit Agreement; (vi) each Purchasing Bank
appoints and
-3-
<PAGE> 116
authorizes each Issuing Bank to take such action as an Issuing Bank on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to such Issuing Bank by the terms thereof, together with such powers as are
reasonably incidental thereto, all in accordance with Section 11 of the Credit
Agreement; and (vii) each Purchasing Bank agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement and the other Loan Documents are required to be performed by
it as a Bank.
9. Each party hereto represents and warrants to and agrees with the
Agent that it is aware of and will comply with the provision of subsection
12.6(g) of the Credit Agreement.
10. Schedule II hereto sets forth the revised Commitments and
Commitment Percentages of the Transferor Bank and each Purchasing Bank as well
as administrative information with respect to each Purchasing Bank.
11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
-4-
<PAGE> 117
SCHEDULE I
TO COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Item 1 Date of Commitment (Insert date of Commitment
Transfer Supplement: Transfer Supplement)
Item 2 Transferor Bank: (Insert name of Transferor
Bank);
Item 3 Purchasing Bank(s): (Insert name(s) of Purchasing
Bank(s))
Item 4 Signatures of Parties
to Commitment Transfer
Supplement:
___________________________
as Transferor Bank
By: ______________________
Title:________________
___________________________
as Purchasing Bank
By: ______________________
Title:________________
___________________________
as Purchasing Bank
By: ______________________
Title:________________
<PAGE> 118
CONSENTED TO AND ACKNOWLEDGED:
DELL COMPUTER CORPORATION
By: _______________________
Title:
CITIBANK, N.A., as Agent
By: _______________________
Title:
(Consents required only when Purchasing Bank is not already a Bank thereof)
<PAGE> 119
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
<TABLE>
<S> <C> <C>
(Name of Transferor
Bank) Revised Commitment: $
------------------ ----------
Revised Commitment %
------------------ ---------
Percentage:
-----------
(Name of Purchasing
Bank) New Commitment: $
--------------- ----------
New Commitment Percentage: %
-------------------------- ---------
</TABLE>
Address for Notices:
___________________________________________________
___________________________________________________
___________________________________________________
Attention:_________________________________________
Telecopier:________________________________________
<PAGE> 120
SCHEDULE III
TO COMMITMENT
TRANSFER
SUPPLEMENT
FORM OF TRANSFER EFFECTIVE NOTICE
To: Dell Computer Corporation
(Name of each of its Wholly-Owned Subsidiaries parties to the Credit
Agreement)
(Name of Transferor Bank)
(Name of each Purchasing Bank)
The undersigned, as Agent under the Credit Agreement dated as of June 10
1994 among Dell Computer Corporation (the "Company"), each of its Wholly-Owned
Subsidiaries parties thereto (together with the Company, the "Borrowers"), the
Banks parties thereto, and Citibank, N.A., as Agent, acknowledges receipt of
________ executed counterparts of a completed Commitment Transfer Supplement,
as described in Schedule I hereto. (Note: Terms defined in the attached copy
of Schedule I from Commitment Transfer Supplement are used herein as therein
defined.)
1. Pursuant to such Commitment Transfer Supplement, you are advised that
the Transfer Effective Date will be __________________, 19__ (Insert fifth
business day following date of Transfer Effective Notice).
2. Pursuant to such Commitment Transfer Supplement, the Transferor Bank
is required to deliver to the Agent on or before the Transfer Effective Date
its Notes.
3. Pursuant to such Commitment Transfer Supplement, the Borrowers are
required to deliver to the Agent on or before the Transfer Effective Date the
following Notes, each dated ____________________, 19__ (Insert Closing Date):
(Describe each new Note for Transferor Bank and Purchasing Bank as to
principal amount, payee and type of Note.)
4. Pursuant to such Commitment Transfer Supplement, each Purchasing Bank
is required to pay its Purchase Price to the Transferor Bank at or before 12:00
Noon on the Transfer Effective Date in immediately available funds.
Very truly yours,
Date: __________________ CITIBANK, N.A., as Agent
By: ___________________________
Title:_____________________
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1 TO THE
DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN
Pursuant to the authority of the Board of Directors of Dell Computer
Corporation, and the provisions of Section 15 thereof, the Dell Computer
Corporation Deferred Compensation Plan is hereby amended effective as of May 1,
1994, in the following respects only:
(1) Section 1, subsection 1.21, is hereby amended to read as
follows:
"1.21 "Valuation Date" means each day of the Plan Year."
(2) Section 2 is hereby amended to read as follows:
"Section 2
ELIGIBILITY
Participation in the Plan shall be made available to those
individuals providing services to a Plan Sponsor in key positions of
management and responsibility, and such individuals may elect to
participate hereunder by executing a participation agreement in such
form and at such time as the Plan Administrator shall require,
provided that each participation agreement shall be executed no later
than the last day of December immediately preceding the calendar year
for which an individual elects to make contributions to the Plan in
accordance with the provisions of Section 3 hereof. Notwithstanding
the foregoing, in the first year in which an individual becomes
eligible to participate in the Plan, he may elect to participate in
the Plan by executing a participation agreement, in such form as the
Plan Administrator shall require, within thirty (30) days of the date
on which he is notified by the Plan Administrator of his eligibility
to participate in the Plan. In such event, his election to
participate in the Plan shall become effective as of the first full
payroll period beginning in the calendar month immediately following
the Plan Administrator's receipt of his participation agreement. The
determination as to the eligibility of any individual to participate
in the Plan shall be in the sole and absolute discretion of the Plan
Administrator, whose decision in that regard shall be conclusive and
binding for all purposes hereunder."
(3) Section 3.4 is hereby amended to read as follows:
"3.4 A Member may change the amount or percentage of
contributions under Sections 3.1 and 3.3 once during each calendar
month by written notice to the Plan Administrator, on a form
prescribed by the Plan Administrator, which
<PAGE> 2
change shall be effective beginning with the Member's first full
payroll period beginning in the calendar month immediately following
the Plan Administrator's receipt of such written notice."
(4) Section 3.5, subsection (b), is hereby amended to read as
follows:
"(b)1. A Member who has suspended his contributions
pursuant to Section 3.5(a) above and who applies to the Plan
Administrator in a timely manner shall be entitled to resume his
contributions in accordance with Section 3.3 on the first day of any
calendar month following the expiration of at least six (6) months
from the date on which the suspension became effective. Any
application shall be made in writing to the Plan Administrator, on a
form prescribed by the Plan Administrator, at least thirty (30) days
prior to the first day of the applicable calendar month."
(5) Section 4.1 is hereby amended to read as follows:
4.1 A Member may at any time, on a form prescribed by the
Plan Administrator, request a withdrawal of all or any portion of his
Nondeductible Voluntary Contribution Bookkeeping Account, excluding
any portion of such Account which represents income, gains or other
credits attributable to such Member's Nondeductible Voluntary
Contributions. Such request for a withdrawal from the Member's
Nondeductible Voluntary Contribution Account shall designate a
specific dollar amount to be withdrawn therefrom; provided, however,
that no withdrawal request shall be made for a withdrawal which is
less than $500.00, unless such withdrawal is of the entire balance of
the Member's Nondeductible Voluntary Contribution Bookkeeping Account,
excluding any portion of such Account which represents income, gains
or other credits attributable to such Member's Nondeductible Voluntary
Contributions. Upon approval of the Plan Administrator, any amount
payable under this Section 4.1 shall be paid as soon as
administratively practicable after the Valuation Date each month
designated by the Plan Administrator for the purpose of valuing
distributions, which immediately follows the Plan Administrator's
receipt of a withdrawal request. No Member shall make more than one
withdrawal under this Section 4.1 in any calendar quarter."
(6) Section 4.2 is hereby amended to read as follows:
"4.2 In the event of severe financial hardship, and only
after a Member has withdrawn all amounts available to him under
Section 4.1 hereof, a Member may make a written request to the Plan
Administrator for a hardship withdrawal from his Employee Deferred
Bookkeeping Account. For purposes of this Section,
-2-
<PAGE> 3
the term "severe financial hardship" shall mean any extraordinary or
unforeseeable need for funds arising from an emergency beyond the
Member's control such as a sudden and unexpected illness or accident
of the Member or any dependent of the Member (as defined in Section
152 of the Code), loss of the Member's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of the Member. The need to send
a Member's child to college or the desire to purchase a home shall not
be considered a severe financial hardship. A withdrawal on account of
severe financial hardship shall not be permitted to the extent that
such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Member's
assets (to the extent the liquidation of such assets would not itself
cause severe financial hardship), or by cessation of contributions
under this Plan. The amount of a hardship withdrawal may not exceed
the amount required to meet the Member's financial hardship. Any
determination of the existence of financial hardship and the amount to
be withdrawn on account thereof shall be made by the Plan
Administrator. However, notwithstanding the foregoing, an individual
who is a member of the compensation committee of the Board of
Directors shall not vote or decide upon any matter relating to the
determination of the existence of his own financial hardship or the
amount to be withdrawn by him on account thereof. Furthermore,
notwithstanding the foregoing, no hardship withdrawal shall be made
which is less than $500.00, unless the distribution is of the entire
value of the Member's Employee Deferred Bookkeeping Account."
(7) Section 5.3 is hereby amended to read as follows:
"5.3 Each Member, upon becoming a Member of the Plan,
may, on a form prescribed by the Plan Administrator, designate the
manner in which his Bookkeeping Account would have been invested had
it been held in the 401(k) Plan. Such designation may be changed as
of any Valuation Date, with respect to future contributions and
transfers among investment funds, by filing an election with the Plan
Administrator, on a form prescribed by the Plan Administrator, within
the time period prior to such Valuation Date established by the Plan
Administrator. The Member must designate, in such minimum percentages
or amounts as may be prescribed by the Plan Administrator, that
portion of his Bookkeeping Account which the Member would have
invested in the various investment funds under the 401(k) Plan had his
Bookkeeping Account been held in the 401(k) Plan. The designation
will continue until changed by the timely submission of a new form,
which change will be effective as of the next succeeding Valuation
Date. The Plan Administrator shall, prior to each applicable Valuation
Date, forward the designation forms to the Trustee, who shall invest
-3-
<PAGE> 4
each Member's Bookkeeping Account in accordance with such designation.
In the absence of any such designation, the Trustee shall invest and
reinvest a Member's Bookkeeping Account in such property as the
Trustee, in its sole and absolute discretion, shall determine,
pursuant to the provisions of the Trust. In no event may a Member
designate the investment of his Bookkeeping Account in stock or other
securities of a Plan Sponsor."
(8) Section 7.4 is hereby amended to read as follows:
"7.4 Any benefit payable under this Section 7 shall be paid
in accordance with Section 8 of the Plan, after receipt by the Trustee
from the Plan Administrator of notice of the death of the Member."
(9) Section 8.1 is hereby amended to read as follows:
"8.1 Upon the Retirement or death of a Member, the
Bookkeeping Account of such Member shall be determined as of the
Valuation Date each month designated by the Plan Administrator for the
purpose of valuing distributions which coincides with or next follows
the Member's retirement date or date of death. Payment to a Member,
or to the Beneficiary of a deceased Member, shall be made soon as
practicable following such Valuation Date, but in no event later than
sixty (60) days after the last day of the Plan Year in which the
retirement date or the death of the Member occurs."
(10) Section 9.3 is hereby amended to read as follows:
"9.3 That portion of the terminated Member's benefits in
which he is vested shall be:
1.(a) the value of his Employee Deferred
Bookkeeping Account and Nondeductible Voluntary Contribution
Bookkeeping Account as of the Valuation Date each month
designated by the Plan Administrator for the purpose of
valuing distributions which coincides with or immediately
follows the date of his termination of service; and
2.(b) that portion of the value of his Company
Contribution Bookkeeping Account as of the Valuation Date each
month designated by the Plan Administrator for the purpose of
valuing distributions which coincides with or immediately
follows the date of his termination of service, computed
according to the following vesting schedule:
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Full Years of Percentage
Vesting Service Vested
--------------- ------
<S> <C>
Fewer than Four Years 0%
Four Years or more 100%"
</TABLE>
(11) Section 10.1 is hereby amended to read as follows:
"10.1 The Corporation shall enter into a trust agreement with
the Trustee, which Trust shall form a part of this Plan and is hereby
incorporated herein by reference. The Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plan as an
unfunded plan for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended."
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising Amendment No. 1 to the Dell Computer
Corporation Deferred Compensation Plan, the Company has caused its corporate
seal to be affixed hereto and these presents to be duly executed in its name
and behalf by its proper officers thereunto duly authorized this 29th day of
April, 1994.
DELL COMPUTER CORPORATION
By:/s/ M.S. DELL
----------------------
ATTEST:
/s/ ROGER BAILEY
- - -------------------------
(Title)
Asst. Secretary
-5-
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NO. 3 TO THE
DELL COMPUTER CORPORATION 401(k) PLAN
Pursuant to the authority of the Board of Directors of Dell Computer
Corporation, and the provisions of Article XVI thereof, the Dell Computer
Corporation 401(k) Plan is hereby amended, effective as of the dates specified
herein, in the following respects only:
(1) Article II, Section II.1, subsection (ww), is hereby amended,
effective as of January 1, 1993, to read as follows:
"(ww) "Rollover Contribution" shall mean a transfer or
contribution to the Plan of all or a portion of an eligible rollover
distribution (within the meaning of section 402(c)(4) of the Code)
from an Employee's trust described in section 401(a) of the Code that
is exempt from tax under section 501(a) thereof or an annuity plan
described in section 403(a) of the Code and any earnings thereon
(whether such contribution is paid directly by the Employee, from such
trust or annuity plan, or from an individual retirement account,
individual retirement annuity, or retirement bond) in a manner which
would constitute either an eligible rollover distribution within the
meaning of section 402(c)(4) of the Code, a rollover contribution
within the meaning of Section 402(c)(5) or 408(d)(3)(A)(ii) of the
Code, or a rollover amount within the meaning of Section 403(a)(4) of
the Code, or would constitute a direct trustee-to-trustee transfer,
including a direct transfer within the meaning of Section 401(a)(31)
of the Code. Notwithstanding the foregoing provisions of this
Section, except as may be expressly authorized by the Administration
Committee, no transfer to this Plan of an amount described in the
immediately preceding sentence shall be permitted in the form of a
direct trustee-to-trustee transfer if such amount is attributable,
directly or indirectly, to a transfer from a defined benefit plan
(within the meaning of section 414(j) of the Code), a defined
contribution plan (within the meaning of section 414(i) of the Code)
subject to the minimum funding standards of section 412 of the Code,
or a defined contribution plan that is otherwise subject to Code
sections 401(a)(11) and 417."
(2) Article XI is hereby amended in its entirety, effective as of
January 1, 1993, to read as follows:
"ARTICLE XI
LOANS
XI.1 Loans to Participants: Basic Terms and Limits. Within
the following limits, and if and when the Administration Committee
decides to permit
<PAGE> 2
Plan loans, the Administration Committee may authorize the Trustee to
make a loan from the Plan to any Participant or Former Participant
(for purposes of this Article XI only, collectively referred to as
"Participant") who is either an Eligible Employee on the date on which
the loan is made, or a 'party in interest', as such term is defined in
Section 3(14) of the Act ("Party in Interest"), such loan, when added
to the outstanding balance (as of the day before the date of such
loan) of all other such loans to the Participant, not to exceed the
lesser of:
(a) Fifty Thousand Dollars ($50,000), reduced by
the excess, if any, of (i) the highest outstanding balance of loans to
such Participant from the Plan during the twelve (12) consecutive
month period ending on the day before the date such loan is made, over
(ii) the outstanding balance of loans to such Participant from the
Plan on the day before the date such loan is made, or
(b) one-half (1/2) of the value of the
Participant's Vested Accrued Benefit.
The limitation on the loans that may be made from this Plan
shall be calculated to take into account the Participant's
nonforfeitable benefits and loans under all plans of any entity with
which the Employer must be aggregated for purposes of sections 414(b),
(c), (m) or (o) of the Code, with all such plans to be treated as a
single plan. For purposes of this Section 11.1, the value of a
Participant's Vested Accrued Benefit shall be determined as of the
Valuation Date coincident with or immediately preceding the date on
which the loan is made.
Except as provided in the next sentence, each loan to a
Participant shall by its terms require repayment within five (5) years
from the date on which it is made. There need be, however, no five
(5) year limit to any loan that is used to acquire any dwelling unit
which within a reasonable time is to be used as a principal residence
of the Participant. The reasonableness of the time specified in the
preceding sentence shall be determined as of the date the loan is
made, and loans to be used to acquire a dwelling unit as provided
above shall in all events require repayment within a reasonable time.
Notwithstanding the above, all loans, other than a loan outstanding to
a Party in Interest, shall be accelerated and immediately due in full
upon a Participant's termination of Service. All loans shall be made
at interest rates then currently prevalent for loans from a commercial
lending institution for a purpose similar to the purpose for which the
loan is being made and shall be adequately secured. Except as may be
allowed under regulations promulgated by the Secretary of the Treasury
and uniformly applied by the Administration Committee, all loans shall
be made on the basis of substantially level amortization over the term
of the loan, with payments due not less frequently
-2-
<PAGE> 3
than quarterly. Loans, if made hereunder, shall be made available on
a uniform and nondiscriminatory basis to all Participants who are
either Eligible Employees on the date on which a loan is made, or
Parties in Interest.
XI.2. Instruments and Security for Loans. Each loan
hereunder shall be evidenced by a promissory note and secured by a
security agreement, mortgage, deed of trust, or such other security
instruments as the Administration Committee may require. All such
instruments shall contain, in addition to the provisions specifically
required by this Article XI, such repayment, default, and remedial
terms as may be determined by the Administration Committee. Security
for loans hereunder shall be provided by the pledge of all or a
portion of a Participant's Vested Accrued Benefit and the pledge of
such additional collateral, including a Participant's entire Vested
Accrued Benefit, as the Administration Committee may require. Further,
if because of a decrease in the value of a Participant's Vested
Accrued Benefit, the Administration Committee believes a loan to be
inadequately secured, it shall either require the Participant to post
security in addition to the value of his Vested Accrued Benefit or
demand accelerated, including immediate, payment of the loan. An
assignment for security of a Participant's Vested Accrued Benefit
shall be limited as provided in Section 14.6 hereof. The default
provisions of the instruments relating to a loan shall provide that
upon default a loan may be set off against the Participant's Accounts
at the earliest time at which a distribution from the Plan is
permitted. Solely for purposes of setting off account balances upon
default of a Plan loan, pursuant to this Section 11.2, Employee
Contributions (but not earnings thereon) and Rollover Contributions
are deemed to be distributable at any time, and Employer Profit
Sharing Contributions, Employer Matching Contributions, and earnings
on Employee Contributions, Employer Profit Sharing Contributions and
Employer Matching Contributions are deemed to be distributable when
such funds have been allocated to the Participant's Account for at
least two (2) years.
The Administration Committee shall provide for the repayment
of the loan through payroll deduction over the term of the loan, and,
if applicable, by payment by a Party in Interest to the Trust
following such Participant's termination of Service.
Each promissory note and security instrument shall be
delivered to the Trustee for the benefit of the Trust Fund. The
amount borrowed by a Participant shall be considered an investment of
the Trust Fund and shall be made by the Trustee from such Investment
Fund or Funds or such combination thereof as is deemed appropriate by
the Administration Committee, in its sole and absolute discretion.
The interest on the loan shall be allocated to the appropriate
-3-
<PAGE> 4
Investment Fund or Funds and any losses incurred as a result of the
making of the loan shall also be allocated to such Investment Fund or
Funds. For purposes of allocating Trust earnings and losses pursuant
to Section 6.3 or 6.4, the borrowing Participant's Account or Accounts
shall not be decreased by the amount of the loan made to the
Participant.
XI.3. Payment of Expenses. If a Participant's application
for a loan is approved, the Participant shall be required to pay all
reasonable and necessary expenses incurred in the making and
administration of the loan, including, but not limited to, attorney's
fees. The amount to be paid shall be determined by the Administration
Committee and shall be paid at the time and in the form prescribed
thereby."
(3) Article VIII, Section VIII.5, is hereby amended, effective as
of January 1, 1993, to read as follows:
"VIII.5. Lump Sum Cashout and Special Limitation on
Involuntary Payment of Benefits. Notwithstanding the foregoing
provisions of this Article VIII, upon termination of a Participant's
Service (regardless of the reason for such termination), the
Administration Committee shall direct the Trustee to distribute the
Participant's Vested Accrued Benefit (provided that such Vested
Accrued Benefits does not exceed $3,500), including a deemed
distribution of $0, to the Participant or the Participant's
Beneficiary in a lump sum as soon as is administratively feasible
after the Valuation Date next following the Participant's termination
of Service, but in no event earlier than the Valuation Date next
following the Administration Committee's receipt of such Participant's
election of a direct rollover, as provided in Section 8.12 hereof or,
if no election is timely made, after lapse of the waiting period set
forth in Section 1.402(c)-2T, Q&A-13 of the Treasury Regulations. If
upon termination of a Participant's Service for any reason other than
death the then value of the Participant's Vested Accrued Benefit
exceeds $3,500, no distribution of the Participant's Vested Accrued
Benefit to the Participant may occur prior to the Participant's
attainment of age sixty-five (65) unless the Participant files with
the Administration Committee, within the time period and in the manner
prescribed by the Administration Committee, a written request for the
payment of his Vested Accrued Benefit, such request expressly to
consent to the payment. If the Participant timely files such a
request, the Committee shall direct the Trustee to pay such amount to
the Participant as soon as administratively feasible after the
Valuation Date next following the Administration Committee's receipt
of such request. Upon the Participant's death after termination of
Service, payment of the Participant's Accrued Benefit shall be made in
accordance with Section 8.1(c)."
-4-
<PAGE> 5
(4) Article VIII shall be amended, effective as of January 1,
1993, to add Article VIII.12, to read as follows:
"VIII.12. Direct Rollover of Eligible Rollover Distributions:
An individual who is entitled to a benefit hereunder, the distribution
of which would qualify as an eligible rollover distribution (as
defined in Section 401(a)(31)(C) of the Code) may, in lieu of
receiving any payment or payments from the Plan, direct the Trustee to
transfer all of such payment or payments (or any portion thereof in
excess of $500) directly to the trustee of an eligible retirement plan
(as defined in Section 401(a)(31)(D) of the Code). Such election must
be made on a form provided by the Administration Committee for that
purpose and received by the Administration Committee no later than ten
(10) business days prior to the Valuation Date immediately preceding
the date of distribution. An election which is made hereunder with
respect to one payment in a series of periodic payments shall apply to
all subsequent payments in that series, unless the distributee revokes
such election. Any election made pursuant to this Section 8.12 may be
revoked at any time prior to the date which is ten (10) business days
prior to the Valuation Date immediately preceding the date of
distribution. If an individual who is so entitled has not elected a
direct rollover within the time and in the manner set forth above,
such distributee shall be deemed to have affirmatively waived a direct
rollover. A distributee who wishes to elect a direct rollover shall
provide to the Administration Committee, within the time and in the
manner prescribed by the Administration Committee, such information as
the Administration Committee shall reasonably request regarding the
eligible retirement plan to which the payment or payments are to be
transferred. The Administration Committee shall be entitled to rely
on the information so provided, and shall not be required to
independently verify such information. The Administration Committee
shall be entitled to delay the transfer of any payment or payments
pursuant to this Section 8.12 until it has received all of the
information which it has requested in accordance with this Section
8.12. The provisions of this Section 8.12 shall not apply to any
distribution in an amount which the Administration Committee
reasonably anticipates to total less than $200 during a calendar
year."
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising Amendment No. 3 to the Dell Computer
Corporation 401(k) Plan, the Company has caused its corporate seal to be
affixed hereto and these presents to be duly
-5-
<PAGE> 6
executed in its name and behalf by its proper officers thereunto duly
authorized this 24th day of February, 1993.
DELL COMPUTER CORPORATION
By:/s/ Sid Ferrales
----------------------
ATTEST:
_________________________
(Title)
-6-
<PAGE> 7
STATE OF TEXAS )
)
COUNTY OF TRAVIS )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this 24th day of February, 1993, personally appeared Sid Ferrales, to
me known to be the identical person who subscribed the name of DELL COMPUTER
CORPORATION, as its Vice President, to the foregoing instrument and
acknowledged to me that he executed the same as his free and voluntary act and
deed and as the free and voluntary act and deed of such organization for the
uses and purposes therein set forth.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, the day and year last above
written.
/s/ Lisa Bay Rossa
--------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
March 29, 1996
(Notary Seal)
-7-
<PAGE> 1
EXHIBIT 10.4
DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
<PAGE> 2
DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 - ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3 - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4 - WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 5 - CREDITING OF CONTRIBUTIONS AND INCOME . . . . . . . . . . . . 4
Section 6 - DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7 - BENEFITS UPON TERMINATION OF SERVICE . . . . . . . . . . . . 5
Section 8 - DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . 6
Section 9 - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . 6
Section 10 - CLAIM REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . 7
Section 11 - LIMITATION OF RIGHTS . . . . . . . . . . . . . . . . . . . . 9
Section 12 - LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS . . . . . . . 9
Section 13 - AMENDMENT TO OR TERMINATION OF THE PLAN AND TRUST . . . . . 9
Section 14 - STATUS OF MEMBER AS UNSECURED CREDITOR . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
DELL COMPUTER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
PREAMBLE
WHEREAS, DELL COMPUTER CORPORATION, a corporation organized and
existing under the laws of the State of Delaware (the "Corporation") wishes to
adopt this deferred compensation plan (the "Plan") for the benefit of its
non-employee directors, in recognition of their services rendered to the
Corporation;
WHEREAS, the Board of Directors of the Corporation has approved the
Plan as embodied herein;
NOW, THEREFORE, in consideration of the premises and to carry out the
purposes and intent as set forth above, the Corporation does hereby adopt the
Plan for the benefit of those members of its Board of Directors who are not
employed by the Corporation, effective as of May 20, 1994.
The terms and conditions of this Plan are as follows:
Section 1
DEFINITIONS
1.1 "Account" means the account maintained by the Plan
Administrator to reflect the interest of a Member under the Plan, consisting of
amounts deferred by a Member pursuant to Section 3.1 hereof, as adjusted to
reflect income, gains, losses and other credits or charges attributable
thereto.
1.2 "Annual Compensation" means the annual retainer payable by the
Corporation to a Member in August of each year.
1.3 "Beneficiary" means only the person or trust that a Member,
in his most recent written designation filed with the Plan Administrator, shall
have designated to receive his benefit under the Plan in the event of his
death; provided that, if the Member has failed to make a designation or if no
person designated shall be alive or if no trust shall have been established by
the Member, and no successor Beneficiary shall have been designated and be
alive, any death benefit payable hereunder on behalf of such Member shall be
paid to the legal representative of such deceased Member's estate. Changes in
designations of Beneficiaries may be made upon written notice to the Plan
Administrator in any form as the Plan Administrator may prescribe and the Plan
Administrator shall immediately notify the Trustee, in writing, of any
designation or change in designation.
-1-
<PAGE> 4
1.4 "Board of Directors" means the Board of Directors of the
Corporation.
1.5 "Code" means the Internal Revenue Code of 1986, as heretofore
and hereafter amended.
1.6 "Deferral Amount" means a contribution by a Member pursuant to
Section 3.1 of this Plan.
1.7 "Effective Date" means May 20, 1994.
1.8 "Member" means any non-employee director of the Corporation
who has become a Member in the Plan for as long as his benefit under the Plan
has not been fully distributed pursuant to the provisions of the Plan.
1.9 "Normal Retirement Age" means age 65.
1.10 "Plan Administrator" means the compensation committee of the
Board of Directors.
1.11 "Plan Year" means the calendar year.
1.12 "Retirement" means termination of a Member's service with the
Corporation on or after attaining Normal Retirement Age.
1.13 "Retirement Date" means the first day of the month subsequent
to a Member's Normal Retirement Age on which he actually terminates service
with the Corporation.
1.14 "Trust" means that certain trust agreement established
pursuant to the Plan between the Corporation and the Trustee or any trust
agreement hereafter established, the provisions of which are incorporated
herein by reference.
1.15 "Trustee" means the Trustee under the Trust.
1.16 "Trust Fund" means all assets of whatsoever kind or nature
held from time to time by the Trustee pursuant to the Trust and forming a part
of this Plan, without distinction as to income and principal and without regard
to source, i.e., contributions or earnings.
1.17 "Valuation Date" means each day of the Plan Year.
-2-
<PAGE> 5
Section 2
ELIGIBILITY
Participation in the Plan shall be made available to all non-employee
directors of the Corporation, and such individuals may elect to participate
hereunder by executing a participation agreement in such form and at such time
as the Plan Administrator shall require, provided that each participation
agreement shall be executed no later than the last day of June immediately
preceding payment of the Annual Compensation for any year in which an
individual elects to make contributions to the Plan in accordance with the
provisions of Section 3 hereof.
Section 3
CONTRIBUTIONS
3.1 For any Plan Year, a Member may elect to defer a portion of
the Annual Compensation otherwise payable to him. Any such deferrals shall be
in whole percentages or a specific dollar amount of the Member's Annual
Compensation, as specified in the Member's participation agreement.
Contributions of amounts deferred shall be made by the Corporation directly to
the Trust.
3.2 A Member may change the amount or percentage of
contributions under Section 3.1 once during each calendar year by written
notice to the Plan Administrator, on a form prescribed by the Plan
Administrator, which change shall be effective beginning with the Member's
first full payroll period beginning in the calendar month immediately following
the Plan Administrator's receipt of such written notice.
Section 4
WITHDRAWALS
4.1 In the event of severe financial hardship, a Member may make
a written request to the Plan Administrator for a hardship withdrawal from his
Account. For purposes of this Section, the term "severe financial hardship"
shall mean any extraordinary or unforeseeable need for funds arising from an
emergency beyond the Member's control such as a sudden and unexpected illness
or accident of the Member or any dependent of the Member (as defined in Section
152 of the Code), loss of the Member's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Member. The need to send a Member's child to
college or the desire to purchase a home shall not be considered a severe
financial hardship. A withdrawal on account of severe financial
-3-
<PAGE> 6
hardship shall not be permitted to the extent that such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Member's assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship), or by cessation of
deferrals under this Plan. The amount of a hardship withdrawal may not exceed
the amount required to meet the Member's financial hardship. Any determination
of the existence of financial hardship and the amount to be withdrawn on
account thereof shall be made by the Plan Administrator. However,
notwithstanding the foregoing, an individual who is a member of the
compensation committee of the Board of Directors shall not vote or decide upon
any matter relating to the determination of the existence of his own financial
hardship or the amount to be withdrawn by him on account thereof. Furthermore,
notwithstanding the foregoing, no hardship withdrawal shall be made which is
less than $500.00, unless the distribution is of the entire value of the
Member's Account.
4.2 Withdrawals and other distributions shall be charged pro
rata to the individual investment funds in which the Account of the Member is
invested, pursuant to his designation under Section 5.3 hereof.
Section 5
CREDITING OF CONTRIBUTIONS AND INCOME
5.1 All Deferral Amounts shall be transmitted to the Trustee by
the Corporation as soon as reasonably practicable and shall be credited to the
Account of the Member immediately upon receipt. All payments from an Account
between Valuation Dates shall be charged against the Account as of the
preceding Valuation Date.
5.2 Except as otherwise provided in the Plan and Trust, as of
each Valuation Date, the Trustee shall credit to each Member's Account the
income, gains, losses, and other credits or charges attributable thereto.
5.3 Each Member, upon becoming a Member of the Plan, may, on a
form prescribed by the Plan Administrator, designate the manner in which his
Account is to be invested, among the funds designated by the Plan Administrator
for that purpose. Such designation may be changed as of any Valuation Date,
with respect to future contributions and transfers among investment funds, by
filing an election with the Plan Administrator, on a form prescribed by the
Plan Administrator, within the time period prior to such Valuation Date
established by the Plan Administrator. The Member must designate, in such
minimum percentages or amounts as may be prescribed by the Plan Administrator,
that portion of his Account which the Member wishes to invest in the various
investment funds. The designation will continue until changed by the timely
submission of a new form, which change will be effective as of the next
succeeding Valuation Date. The Plan Administrator shall, prior to each
applicable Valuation Date, forward
-4-
<PAGE> 7
the designation form to the Trustee, who shall invest each Member's Account in
accordance with such designation. In the absence of any such designation, the
Trustee shall invest and reinvest a Member's Account in such property as the
Trustee, in its sole and absolute discretion, shall determine, pursuant to the
provisions of the Trust. In no event may a Member designate the investment of
his Account in stock or other securities of the Corporation.
Section 6
DEATH BENEFITS
6.1 Upon the death of a Member prior to the termination of his
service with the Corporation, the Beneficiary of such Member shall be entitled
to the entire value of his Account.
6.2 Upon the death of a Member who, at the time of his death,
had terminated his service with the Corporation, the Beneficiary of such Member
shall be entitled to the entire value of his Account.
6.3 If subsequent to the death of a Member, the Member's
Beneficiary dies while entitled to receive benefits under this Plan, the
successor Beneficiary of the Member, if any, shall be entitled to receive
benefits of the Member under this Plan. However, if no successor Beneficiary
shall have been designated and shall be alive, the benefits shall be paid to
the legal representative of the deceased Beneficiary's estate to be paid
according to the deceased Beneficiary's will, or if the deceased Beneficiary
has no will, by the laws of intestacy of the state in which the deceased
Beneficiary resided at the date of the deceased Beneficiary's death.
6.4 Any benefit payable under this Section 6 shall be paid in
accordance with Section 8 hereof, after receipt by the Trustee from the Plan
Administrator of notice of the death of the Member.
Section 7
BENEFITS UPON TERMINATION OF SERVICE
7.1 In the event of the termination of service of a Member for
reasons other than death, the Member shall be entitled to the entire value of
his Account.
7.2 Any benefit payable under this Section 7 shall be paid in
accordance with Section 8 hereof.
-5-
<PAGE> 8
Section 8
DISTRIBUTION OF BENEFITS
8.1 Payment of a terminated Member's benefit shall be made from
the Trust in an amount equal to the entire value of his Account, which shall be
determined as of the monthly Valuation Date designated by the Plan
Administrator for the purpose of valuing distributions coinciding with or next
following the Member's termination of service. Payment shall be made either in
a lump sum in cash, or in cash payments in annual, quarterly or monthly
installments over a period certain not exceeding ten (10) years, such method of
payment to be elected by the Member on his participation agreement. If
installment payments are made, the unpaid balance shall be segregated from the
remainder of the Trust, and shall, as of each Valuation Date, be credited with
the actual net income, gain or loss attributable to such segregated account, as
determined under the Plan and Trust during that period for which the
installments are paid. Payment shall commence or be made as soon as
practicable after the Member's date of termination of service, but in no event
later than one year following that date.
Section 9
ADMINISTRATION OF THE PLAN
9.1 The Corporation shall enter into a trust agreement with the
Trustee, which Trust shall form a part of this Plan and is hereby incorporated
herein by reference. The Trust shall constitute an unfunded arrangement and
shall not affect the status of the Plan as an unfunded plan for tax purposes
and for purposes of Title I of the Employee Retirement Income Security Act of
1974, as and if applicable.
9.2 The Plan Administrator shall perform any act which the Plan
authorizes expressed by a vote at a meeting or in a writing signed by a
majority without a meeting. The Plan Administrator may, by a writing signed by
a majority, designate any person constituting the Plan Administrator as the
person entitled to give notices on behalf of the Plan Administrator, and the
Trustee is entitled to rely upon any such writing until amended or superseded
by a subsequent similar writing. Any person constituting the Plan
Administrator shall not vote or decide upon any matter relating solely to
himself or vote in any case in which his individual right or claim to any
benefit under the Plan is particularly involved. If, in any matter or case in
which a person is so disqualified to act, the remaining persons constituting
the Plan Administrator cannot resolve such matter or case, the Board of
Directors will appoint a temporary substitute to exercise all the powers of the
disqualified person concerning the matter or case in which he is disqualified.
9.3 (a) The Plan Administrator may designate in writing
other persons to carry out its responsibilities under the Plan. The Plan
Administrator may remove any person designated
-6-
<PAGE> 9
to carry out its responsibilities under the Plan by notice in writing to that
person.
(b) The Plan Administrator may employ persons to render
advice with regard to any of its responsibilities. Charges for all services
rendered shall be directly paid by the Corporation but until paid shall
constitute a charge against the Trust.
(c) The Corporation shall indemnify and hold harmless
each person constituting the Plan Administrator from and against any and all
claims and expenses (including, without limitation, attorney's fees and related
costs), in connection with the performance by the person of his duties in that
capacity, other than any of the foregoing arising in connection with the
willful neglect or willful misconduct of the person so acting.
9.4 (a) The Plan Administrator shall advise the Trustee with
respect to all payments under the terms of the Plan and shall direct the
Trustee in writing to make payments from the Trust.
(b) The Plan Administrator shall establish rules, not
contrary to the provisions of the Plan and the Trust, for the administration of
the Plan and the transaction of its business. The Plan Administrator shall
interpret the Plan in its sole and absolute discretion, and shall determine all
questions arising in the administration, interpretation and application of the
Plan. All determinations of the Plan Administrator shall be conclusive and
binding on all employees, Members and Beneficiaries, subject to the provisions
of this Plan, the Trust and applicable law.
9.5 Any action to be taken by the Corporation shall be taken by
resolution adopted by the Board of Directors or an executive committee thereof;
provided, however, that by resolution, the Board of Directors or an executive
committee thereof may delegate to any officer of the Corporation the authority
to take any actions hereunder, other than the power to amend or terminate the
Plan or the Trust or to determine the basis of contributions.
Section 10
CLAIM REVIEW PROCEDURE
10.1 In the event that a Member or Beneficiary is denied a claim
for benefits under this Plan (the "claimant"), the Plan Administrator shall
provide to the claimant written notice of the denial which shall set forth:
(a) the specific reason or reasons for the denial;
(b) specific references to pertinent Plan provisions on
which the Plan Administrator based its denial;
-7-
<PAGE> 10
(c) a description of any additional material or
information needed for the claimant to perfect the claim and an
explanation of why the material or information is needed;
(d) a statement that the claimant may:
(i) Request a review upon written application
to the Plan Administrator;
(ii) Review pertinent Plan documents; and
(iii) Submit issues and comments in writing; and
(e) That any appeal the claimant wishes to make of the
adverse determination must be in writing to the Plan Administrator
within sixty (60) days after receipt of the Plan Administrator's notice
of denial of benefits. The Plan Administrator's notice must further
advise the claimant that his failure to appeal the action to the Plan
Administrator in writing within the sixty (60) day period will render
the Plan Administrator's determination final, binding, and conclusive.
10.2 (a) If the claimant should appeal to the Plan
Administrator, he, or his duly authorized representative, may submit, in
writing, whatever issues and comments he, or his duly authorized
representative, feels are pertinent. The Plan Administrator shall re-examine
all facts related to the appeal and make a final determination as to whether
the denial of benefits is justified under the circumstances. The Plan
Administrator shall advise the claimant in writing of its decision on his
appeal, the specific reasons for the decision, and the specific Plan provisions
on which the decision is based. The notice of the decision shall be given
within sixty (60) days of the claimant's written request for review, unless
special circumstances (such as a hearing) would make the rendering of a
decision within the sixty (60) day period infeasible, but in no event shall the
Plan Administrator render a decision regarding the denial of a claim for
benefits later than 120 days after its receipt of a request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the claimant prior to the
date the extension period commences.
(b) If, upon appeal, the Plan Administrator shall grant
the relief requested by the claimant, then, in addition, the Plan Administrator
shall award to the claimant reasonable fees and expenses of counsel, or any
other duly authorized representative of claimant, which shall be payable from
the Trust Fund.
10.3 The Plan Administrator's notice of denial of benefits shall
identify the address to which the claimant may forward his appeal.
-8-
<PAGE> 11
Section 11
LIMITATION OF RIGHTS
Neither this Plan, the Trust nor membership in the Plan shall give any
person any right except to the extent that the right is specifically fixed
under the terms of the Plan. The establishment of the Plan shall not be
construed to give any individual a right to be continued in the service of the
Corporation or as interfering with the right of the Corporation to terminate
the service of any individual at any time.
Section 12
LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
12.1 No benefit which shall be payable under the Plan to any
person shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of the same shall be void. No benefit shall in any manner be
subject to the debts, contracts, liabilities, engagements or torts of any
person, nor shall it be subject to attachment or legal process for or against
any person, except to the extent as may be required by law.
12.2 Whenever any benefit which shall be payable under the Plan
is to be paid to or for the benefit of any person who is then a minor or
determined by the Plan Administrator to be incompetent by qualified medical
advice, the Plan Administrator need not require the appointment of a guardian
or custodian, but shall be authorized to cause the same to be paid over to the
person having custody of the minor or incompetent, or to cause the same to be
paid to the minor or incompetent without the intervention of a guardian or
custodian, or to cause the same to be paid to a legal guardian or custodian of
the minor or incompetent if one has been appointed or to cause the same to be
used for the benefit of the minor or incompetent.
Section 13
AMENDMENT TO OR TERMINATION OF THE PLAN AND TRUST
Except as otherwise expressly provided in the Trust, the Corporation
reserves the right at any time to amend or terminate the Plan or Trust in whole
or in part; provided, however, that the duties or liabilities of the Trustee
shall not be increased without its written consent. No amendments shall have
the effect of retroactively changing or depriving Members or
-9-
<PAGE> 12
Beneficiaries of rights already accrued under the Plan. In the event that the
Corporation shall change its name, the Plan shall be deemed to be amended to
reflect the name change without further action of the Corporation, and the
language of the Plan shall be changed accordingly.
Section 14
STATUS OF MEMBER AS UNSECURED CREDITOR
All benefits under the Plan shall be the unsecured obligation of the
Corporation and, except for those assets which will be placed in the Trust
established in connection with this Plan, no assets will be placed in trust or
otherwise segregated from the general assets of the Corporation for the
payment of obligations hereunder. To the extent that any person acquires a
right to receive payments hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
IN WITNESS WHEREOF, Dell Computer Corporation, the Corporation, has
caused its corporate seal to be affixed hereto and these presents to be duly
executed in its name and behalf by its proper officers thereunto duly
authorized this 20th day of May, 1994.
CORPORATION:
DELL COMPUTER CORPORATION
By:/s/ M.S. Dell
----------------------
ATTEST:
/s/ Roger Bailey
- - --------------------------
(Title)
Asst. Secretary
(CORPORATE SEAL)
-10-
<PAGE> 1
EXHIBIT 10.5
AGREEMENT
This AGREEMENT dated June 1, 1994, by and between Dell Computer Corporation,
acting for itself and all of its majority-owned subsidiaries (hereinafter
collectively referred to as "DELL"), and Morton Topfer ("MT").
WHEREAS, MT will enter a relationship with DELL as an employee and officer,
effective on or about June 1, 1994; and
WHEREAS, MT will leave a secure relationship with a former employer to join
DELL; and
WHEREAS, both parties desire to provide for the unlikely, but possible, event
that, through no fault of either party, the relationship between MT and DELL
may not be successful;
NOW, THEREFORE, MT and DELL agree as follows:
1. If MT's employment with DELL terminates on or before June 1, 1996, for any
reason other than (a) termination "for cause" as determined in writing by
DELL's CEO or Board of Directors, or (b) voluntary resignation by MT, then DELL
shall pay to MT the gross amount of $37,500.00 per month as a continuation of
MT's salary, for a period of 12 months from the date that MT's employment with
DELL so terminates. Payment shall be made by checks, mailed to MT at his home
address as shown on DELL's records (or at another address of which MT shall
notify DELL in writing) on the 15th day and the final business day of each
month for which salary continuance is applicable. Each payment will be subject
to all reductions required by law to include withholding tax, payroll tax, FICA
and other legally required amounts.
2. Notwithstanding the previous paragraph, the salary continuation payments
set forth above shall automatically terminate and expire as of the date that MT
enters into a permanent employment relationship with any third party; and MT
agrees to notify DELL in writing promptly upon agreeing with any third party to
enter into such a relationship, and to return to DELL the pro rata portion of
any such payments covering any period during which MT is so employed by any
third party. Non-payroll based temporary consulting projects shall not cause
the termination of such salary continuation payments.
3. MT agrees to execute and comply with the provisions of the "DELL COMPUTER
CORPORATION EMPLOYMENT AGREEMENT", a copy of which is attached hereto as
Exhibit A and incorporated as part of this Agreement as fully as if set forth
herein verbatim. In the event MT becomes entitled to salary continuation
payments pursuant to Section 1 above, such payments shall continue only so long
as MT continues to be in compliance with Exhibit A.
1
<PAGE> 2
4. This Agreement constitutes the complete and final agreement of the parties
with respect to its subject matter and supersedes any and all prior negotiations
and agreements, written or oral, of the parties with respect to its subject
matter.
5. No waiver of any provision of this Agreement is effective unless made in
writing. No waiver of any breach of any provision of this Agreement may be
deemed a waiver of any subsequent breach of the same provision or of a breach
of any other provision of this Agreement.
6. This Agreement may be modified only by a written agreement executed by both
parties.
7. This Agreement is governed by the laws of the State of Texas and the venue
for resolving any dispute hereunder shall be only in Travis County, Texas.
8. If any provision of this Agreement is held to be invalid, then the
provision is deemed to be null and void to the extent that it is held invalid,
but without invalidating the remaining provisions.
DELL COMPUTER CORPORATION MORTON TOPFER (MT)
By: /s/ SID FERRALES /s/ MORTON L. TOPFER
-------------------------- -------------------------
Title: V.P. - HR
--------------------------
2
<PAGE> 3
EXHIBIT A
DELL COMPUTER CORPORATION EMPLOYMENT AGREEMENT
I agree to the following terms regarding my employment or continued employment
by Dell Computer Corporation or a subsidiary (Dell Computer Corporation and its
subsidiaries are referred to separately or together as "Dell"). I enter into
this agreement in consideration of the salary, wages or benefits paid to me by
Dell. I understand that Dell agrees to employ me only on the condition that I
agree to honor and to be bound by the provisions of this Agreement.
1. I will devote my best efforts to performing well all duties that Dell may
assign to me from time to time. While I am a Dell employee, I will not work or
consult for a competitor of Dell.
2. My employment at Dell is not for any specified period of time. Either I or
Dell may terminate my employment at any time for any reason, with or without
cause. If I terminate my employment, to the extent I can, I will give Dell
sufficient notice to allow for an orderly transfer of my duties.
3. While I am a Dell employee, I will promptly disclose all Intellectual
Property to Dell. Intellectual Property includes each discovery, idea,
improvement or invention I create, conceive, develop or discover, alone or with
others, which relates to Dell's business or results from the use of Dell's
equipment, supplies, facilities or information. All Intellectual Property, in
whatever form, is Dell's property. I assign to Dell, without additional
compensation, all of my rights in Intellectual Property. I will assist Dell in
all ways in the future, including giving evidence and executing any documents
deemed helpful or necessary by Dell, to establish, perfect and register world
wide, at Dell's expense, Dell's title and exclusive ownership in Intellectual
Property, I will not do anything in conflict with Dell's rights in Intellectual
Property and will cooperate fully to protect Intellectual Property against
misappropriation or infringement.
4. I agree that Dell will be the copyright owner in all copyrightable works of
every kind and description created or developed by me, solely or jointly with
others, in connection with any employment with Dell. If requested to, and at
no further expense to Dell, I will execute in writing any acknowledgments or
assignments of copyright ownership of such works as may be appropriate for
preservation of the worldwide ownership in Dell of such copyrights.
5. I will not use, publish, misappropriate or disclose any Confidential
Information, during or after my employment, except as required in the
performance of my duties for Dell or a authorized in writing by Dell.
Confidential Information includes information I learn or originate during my
employment, including Intellectual Property, which is not publicly available or
readily ascertainable by proper means, and includes such information disclosed
by others in confidence to Dell. If I have doubts concerning whether
particular information is Confidential Information, I will promptly consult my
supervisor or Dell's Legal Department for guidance in advance.
1
<PAGE> 4
Confidential Information includes, but is not limited to, the information
described in sub-paragraphs A through D below.
A. Manufacturing and research processes currently in use, planned or under
development, including design rules, device characteristics, process flows,
manufacturing capabilities and yields; and computer product, process and
device strategies planned or under development, including device
specifications, system architectures, logic designs, circuit
implementations and long-range plans.
B. 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 applications programs.
C. Information relating to Dell employees; actual and anticipated
relationships between Dell and other companies; sales levels, profit
levels, pricing and other unpublished financial data; and budget, staffing,
compensation, equipment and related plans.
D. Information relating to Dell's customer and vendor relationships. This
includes performance requirements, development and delivery schedules,
device and product pricing and quantities, and other information
communicated to Dell by customers or vendors.
6. I will not use in my work or disclose to Dell any confidential or
proprietary information of a third party unless Dell first receives written
authorization from the third party allowing the use or disclosure of such
information on terms acceptable to Dell. I will abide by restrictions imposed
on the disclosure and use of such third party information.
7. I further agree that my name, voice, picture and likeness may be used in
Dell's advertising, training aids and other materials without payment of
separate compensation to me.
8. When my employment with Dell ends, I will promptly deliver to a designated
Dell representative all originals and copies of all materials, documents and
property of Dell which are in my possession or control. I also will cooperate
in conducting exit interviews with a designated Dell representative. The
purpose of the exit interviews will be to review Confidential Information known
or possessed by me and to confirm Dell's rights regarding the protection of the
Confidential Information and the disclosre to Dell and its ownership of
Intellectual Property.
9. If I accept new employment within one year of leaving Dell's employ, I will
give written notice to the new employer of my obligations regarding
Confidential Information, including Intellectual Property.
10. After my employment with Dell ends, I will not do anything, or fail to do
something, that would, or might reasonably be expected to, compromise the
confidentiality of Confidential
2
<PAGE> 5
Information. In particular, I will not use Confidential Information for the
benefit or profit of myself, any future employer, or any other party, without
first obtaining Dell's consent in writing from an authorized Dell officer.
11. The laws of the State of Texas govern this agreement and all disputes will
be resolved in Travis County, Texas. This agreement may be changed only by a
written document signed by me and by an authorized Dell officer.
I HAVE CAREFULLY READ THIS AGREEMENT. I UNDERSTAND AND ACCEPT ITS TERMS. I
AGREE THAT I WILL CONTINUE TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT
AFTER MY EMPLOYMENT WITH DELL HAS ENDED.
EMPLOYEE SIGNATURE FOR DELL COMPUTER CORPORATION
___________________________ __________________________________
Michael S. Dell
___________________________
Print Employee Name
___________________________ __________________________________
Employee No. Witness for Dell Computer Corporation
___________________________ __________________________________
Date Date
3
<PAGE> 1
EXHIBIT 10.6
DELL COMPUTER CORPORATION EMPLOYMENT AGREEMENT
I agree to the following terms regarding my employment or continued employment
by a subsidiary of Dell Computer Corporation (Dell Computer Corporation and its
subsidiaries are referred to separately or together as "Dell"). I enter into
this agreement in consideration of the salary, wages or benefits paid to me by
Dell. I understand that Dell agrees to employ me only on the condition that I
agree to honor and to be bound by the provisions of this Agreement.
1. I will devote my best efforts to performing well all duties that Dell may
assign to me from time to time. While I am a Dell employee, I will not work or
consult for a competitor of Dell.
2. My employment at Dell is not for any specified period of time. Either I or
Dell may terminate my employment at any time for any reason, with or without
cause. If I terminate my employment, to the extent I can, I will give Dell
sufficient notice to allow for an orderly transfer of my duties. Should Dell
terminate my employment, unless for cause, it may do so effective after two
weeks notice, or effective immediately if Dell pays severance compensation
equal to two weeks of my basic salary or wages. Termination for cause may be
effective immediately without payment of any compensation.
3. While I am a Dell employee, I will promptly disclose all Intellectual
Property to Dell. Intellectual Property includes each discovery, idea,
improvement or invention I create, conceive, develop or discover, alone or with
others, which relates to Dell's business or results from the use of Dell's
equipment, supplies, facilities or information. All Intellectual Property, in
whatever form, is Dell's property. I assign to Dell, without additional
compensation, all of my rights in Intellectual Property. I will assist Dell in
all ways in the future, including giving evidence and executing any documents
deemed helpful or necessary by Dell, to establish, perfect and register world
wide, at Dell's expense, Dell's title and exclusive ownership in Intellectual
Property. I will not do anything in conflict with Dell's rights in
Intellectual Property and will cooperate fully to protect Intellectual Property
against misappropriation or infringement.
4. I agree that Dell will be the copyright owner in all copyrightable works of
every kind and description created or developed by me, solely or jointly with
others, in connection with any employment with Dell. If requested to, and at
no further expense to Dell, I will execute in writing any acknowledgments or
assignments of copyright ownership of such works as may be appropriate for
preservation of the worldwide ownership in Dell of such copyrights.
5. If Schedule A is attached to this Agreement, I have chosen to exclude from
the operation of this Agreement those items listed in Schedule A and more fully
described in disclosure statements submitted to Dell. Under Schedule A, I have
listed the titles of all my ideas, inventions, improvements, works of
authorship, and discoveries, patented or unpatented, copyrighted or not
copyrighted, that have been completed or are in progress at the date of this
Agreement. As a matter of establishing a record, these ideas, inventions,
improvements, works of authorship and discoveries are fully described in the
disclosure statements I have attached to the Schedule A.
6. I will not use, publish, misappropriate or disclose any Confidential or
Proprietary Information, during or after my employment, except as required in
the performance of my duties for Dell or as authorized in writing by Dell.
Confidential and Proprietary Information includes information I learn or
originate during my employment which is not publicly available or readily
ascertainable by proper means, and includes such information disclosed by
others in confidence to Dell. If I have doubts concerning whether particular
information is Confidential or Proprietary, I will promptly consult my
supervisor or Dell's Legal Department for guidance in advance. Confidential
and Proprietary Information includes, but is not necessarily limited to, the
information described in subparagraphs A through D below.
A. Manufacturing and research processes currently in use, planned or under
development, including design rules, device characteristics, process flows,
manufacturing capabilities and yields; and computer product, process and
device strategies planned or under development, including device
specifications, system architectures, logic designs, circuit implementations
and long-range plans.
B. 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 programs.
1
<PAGE> 2
C. Information relating to Dell employees; actual and anticipated
relationships between Dell and other companies; sales levels, profit
levels, pricing and other unpublished financial data; and budget, staffing,
compensation, equipment and related plans.
D. Information relating to Dell's customer and vendor relationships. This
includes performance requirements, development and delivery schedules,
device and product pricing and quantities, and other information
communicated to Dell by customers or vendors.
7. I will not use in my work or disclose to Dell any confidential or
proprietary information of a third party unless Dell first receives written
authorization from the third party allowing the use or disclosure of such
information and unless Dell agrees in writing to receive such information on
terms acceptable to Dell. I will abide by restrictions imposed on the
disclosure and use of such third party information. I further agree that my
name, voice, picture and likeness may be used in Dell's advertising, training
aids and other materials without payment of separate compensation to me.
8. When my employment with Dell ends, I will promptly deliver to a designated
Dell representative all originals and copies of all materials, documents and
property of Dell which are in my possession or control. I also will cooperate
in conducting exit interviews with a designated Dell representative. The
purpose of the exit interviews will be to review Confidential and Proprietary
Information known or possessed by me and to confirm Dell's rights regarding the
protection of the Confidential and Proprietary Information and the disclosure
to Dell and its ownership of Intellectual Property.
9. If I accept new employment within one year of leaving Dell's employ, I
will give written notice to the new employer of my obligations regarding
Intellectual Property and Confidential and Proprietary Information.
10. This agreement, together with the attached offer letter regarding my
employement with Dell, which has been signed by me and a Dell representative,
constitutes my entire agreement with Dell concerning the topics covered. It
replaces completely any earlier or contemporaneous communication or agreement
with Dell about these topics. The laws of the State of Texas govern this
agreement and all disputes will be resolved in Travis County, Texas. This
agreement may be changed only by a written document signed by me and by a duly
authorized officer of Dell.
I HAVE CAREFULLY READ THIS AGREEMENT. I UNDERSTAND AND ACCEPT ITS TERMS. I
AGREE THAT I WILL CONTINUE TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT AFTER
MY EMPLOYMENT WITH DELL HAS ENDED.
For Dell Computer Corporation
/s/ THOMAS B. GREEN
__________________________________ _________________________________
Employee's Signature
Thomas B. Green
__________________________________ _________________________________
Print Employee Name
7-21-94
__________________________________ _________________________________
Date Date
NOTE: SCHEDULE A AND DISCLOSURE STATEMENTS ARE NOT A PART OF THIS AGREEMENT OR
ACCEPTED BY DELL IF THE SCHEDULE HAS NOT BEEN INITIALLED BY A MEMBER OF DELL'S
LEGAL DEPARTMENT. YOU MUST PROVIDE THE SCHEDULE AND STATEMENTS BEFORE YOU SIGN
THIS AGREEMENT. DELL WILL NOT ACCEPT A SCHEDULE, STATEMENTS OR ANY CHANGES TO
THEM AFTER THIS AGREEMENT HAS BEEN SIGNED.
2
<PAGE> 3
SCHEDULE A
TO
DELL COMPUTER CORPORATION EMPLOYMENT AGREEMENT
Employee Name:_______________________________. Employee Number:____________.
(List previous inventions and improvements and continue on attached sheet if
necessary.)
Number of pages of disclosure statements attached (write "None" if none): None.
Employee Initials: TBG Approved by Dell Legal:____________.
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DELL
COMPUTER CORPORATION FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD
ENDED JULY 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-1995
<PERIOD-END> JUL-31-1994
<CASH> 35,401
<SECURITIES> 297,882
<RECEIVABLES> 435,165
<ALLOWANCES> 0
<INVENTORY> 238,906
<CURRENT-ASSETS> 1,130,909
<PP&E> 104,661
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,240,565
<CURRENT-LIABILITIES> 572,225
<BONDS> 0
0
13
<COMMON> 385
<OTHER-SE> 525,749
<TOTAL-LIABILITY-AND-EQUITY> 1,240,565
<SALES> 1,558,128
<TOTAL-REVENUES> 1,558,128
<CGS> 1,218,659
<TOTAL-COSTS> 1,218,659
<OTHER-EXPENSES> 228,423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,558
<INCOME-PRETAX> 68,844
<INCOME-TAX> 21,312
<INCOME-CONTINUING> 47,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,532
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.03
</TABLE>
