<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Check the appropriate box:
( ) Preliminary Proxy Statement
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( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Sections 240.14a-11(c) or Sections
240.14a-12
Dell Computer Corporation
(Name of Registrant as Specified In Its Charter)
Dell Computer Corporation
(Name of Persons(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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( ) $500 per each party to the controversy pursuant to Exchange Act Rule
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( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
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pursuant to Exchange Act Rule 0-11:(1)
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state how it was determined.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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<PAGE> 2
________________________________________________________________________________
1 9 9 4
________________________________________________________________________________
Notice of
Annual Meeting
and Proxy
Statement
________________________________
(DELL LOGO)
Dell Computer Corporation
9505 Arboretum Blvd.
Austin, Texas 78759-7299
<PAGE> 3
(DELL LOGO)
DELL COMPUTER CORPORATION
9505 ARBORETUM BOULEVARD
AUSTIN, TEXAS 78759-7299
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
You are cordially invited to attend Dell Computer Corporation's 1994 Annual
Meeting of Stockholders, to be held on WEDNESDAY, JUNE 22, 1994, at 10:00 A.M.
at the STOUFFER AUSTIN HOTEL, 9721 ARBORETUM BOULEVARD, AUSTIN, TEXAS.
The meeting will be held for these purposes:
1. To elect two Class III directors, each for a term of three years.
2. To ratify the selection of Price Waterhouse as Dell Computer
Corporation's independent accountants for fiscal 1995.
3. To approve the Dell Computer Corporation Incentive Plan, to reserve
4,490,207 shares of Common Stock for issuance under that plan, and to
cancel the reservation of the same number of shares under Dell
Computer Corporation's 1989 and 1993 stock option plans.
4. To transact any other business that may properly come before the
meeting.
Stockholders of record at the close of business on May 13, 1994, are entitled
to notice of and to vote at the Annual Meeting of Stockholders and any
adjournment thereof. A complete list of these stockholders will be available
for examination at the offices of Dell Computer Corporation in Austin, Texas,
during normal business hours for ten days before the meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. YOU
MAY REVOKE YOUR PROXY AT ANY TIME BEFORE THE SHARES TO WHICH IT RELATES ARE
VOTED AT THE MEETING.
By Order of the Board of Directors
Richard E. Salwen
Secretary
Austin, Texas
May 24, 1994
<PAGE> 4
(DELL LOGO)
DELL COMPUTER CORPORATION
9505 ARBORETUM BOULEVARD
AUSTIN, TEXAS 78759-7299
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors of Dell Computer Corporation requests your Proxy for the
Annual Meeting of Stockholders to be held on June 22, 1994, at 10:00 a.m. at
the Stouffer Austin Hotel, 9721 Arboretum Boulevard, Austin, Texas. By executing
and returning the enclosed Proxy, you authorize the persons named on the Proxy
to represent you and vote your shares at the Annual Meeting. The approximate
date of mailing of this Proxy Statement and associated Proxy is May 24, 1994.
If you attend the meeting, you may vote in person. If you are not present,
your shares can be voted only if you have returned a properly executed Proxy or
are represented by another proxy. You may revoke the Proxy in writing at any
time before it is exercised at the Annual Meeting by giving Dell written notice
of the revocation or by executing and delivering to Dell a later-dated Proxy.
Attendance at the Annual Meeting will not be effective to revoke the Proxy
unless written notice of revocation also has been given to the Secretary of the
Annual Meeting before the Proxy is exercised.
VOTING AND QUORUM
The only outstanding voting security of Dell is its Common Stock, par value
$.01 per share. On May 13, 1994, the record date for the Annual Meeting, there
were 38,288,947 shares of Common Stock outstanding and entitled to be voted at
the Annual Meeting.
Each outstanding share of Common Stock is entitled to one vote. The presence,
in person or by proxy, of the holders of a majority of the outstanding shares
of Common Stock entitled to vote is necessary to constitute a quorum for the
Annual Meeting. If a quorum is not present, the stockholders entitled to vote
who are present in person or represented by proxy at the Annual Meeting have
the power to adjourn the Annual Meeting from time to time, without notice other
than an announcement at the Annual Meeting, until a quorum is present or
represented. At any adjourned Annual Meeting at which a quorum is present, any
business may be transacted that might have been transacted at the Annual
Meeting as originally notified.
The directors will be elected by a plurality of the shares of Common Stock
represented and entitled to vote at the Annual Meeting. The ratification of
the selection of Dell's independent accountants and the approval of the Dell
Computer Corporation Incentive Plan require the affirmative vote of the
majority of the shares of Common Stock represented and entitled to vote at the
Annual Meeting. An automated system administered by Dell's transfer agent
tabulates the votes. Abstentions and broker non-votes are each counted to
determine the number of shares present and voting on the election of directors
and the ratification of the selection of accountants. Each is tabulated
separately, with abstentions being counted in tabulations of the votes cast on
those proposals and broker non-votes not being counted as a vote cast. Thus,
abstentions and broker non-votes are counted in establishing a quorum on the
two proposals, have a neutral effect on the election of directors, and have the
effect of votes against the proposal to ratify the
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<PAGE> 5
selection of independent accountants. With respect to the proposal to approve
the Dell Computer Corporation Incentive Plan, abstentions are counted in
determining the number of shares voted and have the effect of a vote against
the proposal, while broker non-votes are not counted for any purpose.
Proxies in the accompanying form that are properly executed and returned will
be voted at the Annual Meeting in accordance with the instructions on the
Proxy. Any properly executed Proxy on which no different instructions are
indicated about a specified proposal will be voted as follows for the specified
proposal: FOR the election of the two persons named in this Proxy Statement as
the Board of Directors' nominees for election to the Board of Directors; FOR
the ratification of the selection of Price Waterhouse as Dell's independent
accountants; FOR the approval of the Dell Computer Corporation Incentive Plan;
and in accordance with the discretion of the holders of the Proxy on any other
business that properly comes before the stockholders at the Annual Meeting.
The Board of Directors knows of no matters, other than those previously
mentioned, to be presented for consideration at the Annual Meeting. The
persons named in the Proxy may also, at their discretion, vote the Proxy to
adjourn the Annual Meeting from time to time.
ELECTION OF DIRECTORS
The Board of Directors has designated the following nominees for election as
Class III directors of Dell with their terms to expire at the annual meeting in
1997 when their successors are elected and qualified:
George Kozmetsky
Claudine B. Malone
Each nominee is currently a director of Dell. For information about each
nominee, see "Directors and Executive Officers."
If a nominee becomes unable or unwilling to accept nomination or election, your
Proxy will be voted for the election of a substitute nominee recommended by the
current Board of Directors, or the number of Dell's directors will be reduced.
The Board of Directors has no reason to believe that any of its nominees will
be unable or unwilling to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
THE NOMINEES.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse as Dell's independent
accountants for fiscal 1995. Price Waterhouse has been Dell's independent
accountants for each fiscal year beginning with fiscal 1987. Dell expects that
representatives of Price Waterhouse will be present at the Annual Meeting to
respond to appropriate questions and will have an opportunity to make a
statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE.
2
<PAGE> 6
APPROVAL OF INCENTIVE PLAN
The Board of Directors proposes that the stockholders approve the Dell Computer
Corporation Incentive Plan (the "Incentive Plan") and reserve 4,490,207 shares
of Common Stock for issuance pursuant to stock options, stock appreciation
rights, and other stock awards to be granted under the Incentive Plan to
directors, executive officers, and employees of Dell and certain other persons
who provide substantial advice or other assistance or services to Dell. If the
Incentive Plan is approved, no new stock options will be awarded under Dell's
1993 Stock Option Plan or Dell's 1989 Stock Option Plan. The number of shares
of Common Stock to be reserved for the Incentive Plan equals the remaining
number of shares of Common Stock authorized for issuance under the 1993 and
1989 Stock Option Plans. Consequently, approval of the Incentive Plan will not
increase the total number of shares that Dell may issue under Dell's
stockholder-approved stock plans. The Incentive Plan, the persons eligible for
participation in the Incentive Plan, and the tax effects of the Incentive Plan
are summarized in "Incentive Plan."
As discussed in "Compensation Committee Report on Executive Compensation,"
stock-based incentives are a major component of Dell's incentive compensation
program. The Board of Directors believes that stock-based compensation, when
properly structured, provides incentives for management and key employees to
maximize stockholder value over time. The Incentive Plan is intended to
consolidate Dell's stock option plans while giving greater flexibility for the
attraction and retention of the talent necessary for Dell's success. The Board
of Directors' intention is for the Incentive Plan to be Dell's primary
stock-based incentive compensation plan to be used to grant awards for key
employees, including officers, both at initial hire and from time to time
thereafter. The Incentive Plan also provides for the automatic grant of
options to non-employee directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF
THE INCENTIVE PLAN AND THE RESERVATION OF SHARES FOR ISSUANCE PURSUANT TO
AWARDS UNDER THE INCENTIVE PLAN.
3
<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of Dell consists of one person who is an employee of
Dell and six persons who are outside directors. The executive officers and
directors of Dell, and their ages as of March 31, 1994, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - - - ------------------------- --- -------------------------------------------------
<S> <C> <C>
Michael S. Dell 29 Chairman of the Board,
Chief Executive Officer, and Director
L. Scott Flaig 49 Senior Vice President, Worldwide Operations
Eric Harslem 48 Senior Vice President, Product Group
Joel J. Kocher 37 Senior Vice President
Thomas J. Meredith 43 Chief Financial Officer
Thomas L. Thomas 44 Chief Information Officer
Savino R. Ferrales 43 Vice President of Human Resources
Richard E. Salwen 51 Vice President, General Counsel and Secretary
Donald J. Carty 47 Director
Paul O. Hirschbiel, Jr 41 Director
Michael H. Jordan 57 Director
George Kozmetsky 76 Director
Thomas W. Luce III 53 Director
Claudine B. Malone 58 Director
</TABLE>
Dell has classified its board of directors into three classes. Directors in
each class are elected to serve for three-year terms and until their successors
are elected and qualified. Each year, the directors of one class stand for
election as their terms of office expire. Messrs. Carty, Hirschbiel, and Luce
are designated as Class I directors, and their terms of office expire at the
annual meeting of stockholders in 1995. Messrs. Dell and Jordan are designated
as Class II directors, and their terms of office expire at the annual meeting
of stockholders in 1996. Mr. Kozmetsky and Ms. Malone are designated as Class
III directors, and their terms of office expire at the annual meeting in 1994.
Executive officers serve at the discretion of the Board of Directors.
Set forth below are descriptions of the principal occupations of Dell's
executive officers and directors.
Michael S. Dell is Dell's founder and has been Chairman of the Board,
Chief Executive Officer and a director of Dell since May 1984.
L. Scott Flaig joined Dell in December 1992 as Senior Vice President,
Worldwide Operations. From April 1989 through November 1992, Mr. Flaig was a
partner with the accounting firm Ernst & Young, serving as National Director
for manufacturing services starting in June 1990. Before joining Ernst &
Young, Mr. Flaig was a member of Digital Equipment Corporation's manufacturing
management.
Eric Harslem joined Dell in June 1993 as Senior Vice President,
Product Group. Before joining Dell, he was Vice President of the Macintosh
Desktop Division of Apple Computer Corporation.
Joel J. Kocher joined Dell in December 1987 as Vice President and
General Manager of Dell Field Sales Corporation, a subsidiary of Dell. In
November 1988 he was given management responsibility for all of Dell's sales
operations in the United States. In March 1990 he was elected Senior Vice
President. Mr. Kocher serves as President, Worldwide Sales, Marketing and
Services for Dell USA, L.P., a subsidiary of
4
<PAGE> 8
Dell, a position he has held since May 1993. Mr. Kocher served as President,
USA Sales, Marketing and Services for Dell USA , L.P. from November 1992 to May
1993.
Thomas J. Meredith joined Dell in November 1992 as Chief Financial
Officer. He also served as Treasurer of Dell from November 1992 until March
1994. From April 1990 to November 1992, he was Vice President and Treasurer of
Sun Microsystems, Inc. Before joining Sun, Mr. Meredith held financial
positions with Amdahl Corporation, most recently as President of Amdahl Capital
Corporation.
Thomas L. Thomas joined Dell in March 1993 as Chief Information
Officer. From March 1987 through February 1993, Mr. Thomas was Vice President
and Chief Information Officer of Kraft Commercial Products, a division of
Philip Morris Companies, Inc.
Savino R. Ferrales joined Dell in January 1989 as Vice President of
Human Resources. From July 1978 to December 1988, Mr. Ferrales held various
personnel management positions with Motorola, Inc., including Director of
Personnel, Corporate Offices - Schaumburg, Illinois, from May 1988 to December
1988, and Director of Personnel, Communications Sector - Florida from September
1983 through April 1988.
Richard E. Salwen joined Dell in June 1989 as Vice President, General
Counsel and Secretary. Before joining Dell, Mr. Salwen served as Associate
General Counsel of Electronic Data Systems Corporation from July 1988 to June
1989. From January 1987 through June 1988, Mr. Salwen was a partner of and
General Counsel to The Perot Group.
Donald J. Carty was elected to the Board of Directors of Dell by the
other directors in December 1992. Mr. Carty is Executive Vice President and
Chief Financial Officer of AMR Corporation and is Executive Vice President,
Finance & Planning for American Airlines, Inc., a subsidiary of AMR
Corporation. He has held senior vice presidential positions with American
Airlines, Inc. since 1988.
Paul O. Hirschbiel, Jr. has been a director of Dell since October
1987. Mr. Hirschbiel became a director of Dell pursuant to the terms of the
Stock Purchase Agreement dated October 26, 1987, that was entered into between
Dell and the purchasers of Dell preferred stock. Mr. Hirschbiel has been a
vice president or director of Prudential Equity Investors, Inc. (formerly
Prudential Venture Capital Management, Inc.) since September 1983.
Michael H. Jordan was elected to the Board of Directors of Dell by the
other directors in December 1992. Since July 1993 he has been Chairman and
Chief Executive Officer of Westinghouse Electric Corporation. From September
1992 through June 1993, he was a principal with the investment firm of Clayton,
Dubilier and Rice. From December 1990 through July 1992, he was Chairman of
Pepsico International. From December 1986 to December 1990, he was Chairman of
Pepsico World-Wide Foods. He is a member of the boards of directors of Aetna
Life & Casualty Co., Melville Corp. and Rhone-Poulenc Rorer Inc.
George Kozmetsky has been a director of Dell since March 1987. Since
1982, Mr. Kozmetsky has been Executive Associate for Economic Affairs of the
University of Texas System and Director of the IC(2) Institute of The University
of Texas at Austin. Mr. Kozmetsky is a member of the boards of directors of La
Quinta Motor Inns, Inc. and Teledyne, Inc.
Thomas W. Luce III was elected to the Board of Directors of Dell by
the other directors in November 1991. Mr. Luce is a partner of the law firm
Hughes & Luce, L.L.P., in Dallas, Texas, and has been affiliated with the firm
since 1973. From October 1991 through April 1992, Mr. Luce was Chairman
5
<PAGE> 9
of the Board and Chief Executive Officer of First Southwest Company, a
Dallas-based investment firm that is a member of the National Association of
Securities Dealers, Inc.
Claudine B. Malone was elected to the Board of Directors of Dell by
the other directors in February 1993. Ms. Malone is president of Financial &
Management Consulting, Inc., a firm she founded in 1982. She also teaches at
the business schools of the University of Virginia and Georgetown University.
Ms. Malone is a member of the boards of directors of Dart Group Corp.,
Hannaford Brothers Co., Hasbro, Inc., Houghton Mifflin Corp., The Limited,
Inc., Scott Paper Company and Union Pacific Corporation.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors of Dell held seven meetings during fiscal 1994. No
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which that director served.
Dell's Board of Directors has four standing committees: the Audit Committee,
the Compensation Committee, the Finance Committee, and the Nominating
Committee.
The Audit Committee is responsible for approving the scope of the annual audit
and for making recommendations to the Board of Directors concerning the
selection of Dell's independent accountants. The Audit Committee also reports
to the Board of Directors concerning Dell's internal accounting controls,
factors that may affect the integrity of Dell's financial reports, compliance
by Dell management and employees with Dell policies, and other matters. During
fiscal 1994, the members of the Audit Committee were Bobby R. Inman, Chairman,
Mr. Carty and Mr. Luce. Since Mr. Inman's resignation as a director on
December 16, 1993, Mr. Carty, Chairman, and Mr. Luce have constituted the Audit
Committee. This committee met four times during fiscal 1994.
The Compensation Committee is responsible for determining the compensation for
Dell's senior management and establishing compensation policies for Dell
employees generally. The Compensation Committee also administers Dell's option
plans and employee stock purchase plan and will administer the Incentive Plan.
The members of this committee are Mr. Kozmetsky, Chairman, Mr. Hirschbiel and
Mr. Jordan. The Compensation Committee held six meetings during fiscal 1994.
The Finance Committee is responsible for considering and recommending to the
full Board of Directors proposed strategies, policies and actions related to
finance and economics. The members of the Finance Committee are Mr.
Hirschbiel, Chairman, Mr. Carty and Ms. Malone. This committee met four times
during fiscal 1994.
The Nominating Committee is responsible for recruiting and recommending for
membership on the Board of Directors candidates to fill vacancies that may
occur. Beginning in fiscal 1995, the Nominating Committee will also be
responsible for recommending to the Chairman of the Board the structure and
membership of the committees of the Board of Directors. The members of the
Nominating Committee are Mr. Kozmetsky, Chairman, and Mr. Dell. From time to
time, the full Board of Directors fulfills the functions of the Nominating
Committee, as it did in fiscal 1994. Accordingly, the Nominating Committee did
not hold any meeting separate from meetings of the full Board of Directors in
fiscal 1994. In recommending candidates to the Board of Directors, the
Nominating Committee seeks persons of proven judgment and experience.
Stockholders who wish to suggest qualified candidates may write to General
Counsel and Secretary, Dell Computer Corporation, 9505 Arboretum Boulevard,
Austin, Texas 78759-7299, stating in detail the qualifications of the persons
they recommend.
6
<PAGE> 10
MANAGEMENT COMPENSATION
COMPENSATION OF DIRECTORS
Directors of Dell who are not employees of Dell are compensated for their
services. In fiscal 1994, each outside director received an annual retainer of
$11,000 plus $750 for each meeting of the Board of Directors attended in
person. The outside directors are also entitled to initial and annual grants
of options to buy 15,000 and 4,500 shares of Common Stock, respectively. In
fiscal 1995, each outside director will receive an annual retainer of $25,000
plus $1,000 for each meeting of the Board of Directors attended in person.
Dell will also provide its outside directors with the ability to defer receipt
of all or a portion of the annual cash retainer. If the Incentive Plan is
approved, outside directors will be able to elect to receive annual grants of
stock options in lieu of all or a portion of the annual cash retainer and will
be entitled to initial and annual grants of options to buy 15,000 and 6,000
shares of Common Stock, respectively. See "Incentive Plan." Dell also
reimburses directors for their reasonable expenses associated with attending
Board of Directors meetings and provides its directors with liability
insurance.
The following table sets forth the cash payments and option grants that were
made to Dell's outside directors during fiscal 1994.
<TABLE>
<CAPTION>
CASH OPTIONS
NAME PAYMENTS GRANTED
- - - - ------------------------------------------------------------ -------------------- -------------------
<S> <C> <C>
Mr. Carty ................................................. $14,000 4,500 Shares(1)
Mr. Hirschbiel ............................................ $14,000 4,500 Shares(1)
Mr. Inman(2) .............................................. $14,000 4,500 Shares(1)
Mr. Jordan ................................................ $14,000 19,500 Shares(3)
Mr. Kozmetsky ............................................. $14,000 4,500 Shares(1)
Mr. Luce .................................................. $14,000 4,500 Shares(1)
Ms. Malone ................................................ $13,250 19,500 Shares(4)
- - - - ---------------------
</TABLE>
(1) These options were granted on August 24, 1993, with an exercise price
of $18.69 per share. The options become exercisable on the fifth
anniversary of the date of grant if the person has been a director of
Dell continuously through that date. The options expire on the tenth
anniversary of the date of grant.
(2) Mr. Inman resigned as a director on December 16, 1993.
(3) Options for 4,500 shares were granted on August 24, 1993, with an
exercise price of $18.69 per share. Those options become exercisable
on the fifth anniversary of the date of grant if the person has been a
director of Dell continuously through that date. The options expire
on the tenth anniversary of the date of grant. Options for 15,000
shares were granted on February 24, 1993, with an exercise price of
$30.69 per share. Twenty percent of these options become exercisable
on the anniversary of the date of grant in each of the first five
years if the person has been a director of Dell continuously through
that anniversary date, and all options expire on the tenth anniversary
of the date of grant.
(4) Options for 4,500 shares were granted on August 24, 1993, with an
exercise price of $18.69 per share. Those options become exercisable
on the fifth anniversary of the date of grant if the person has been a
director of Dell continuously through that date. The options expire
on the tenth anniversary of the date of grant. Options for 15,000
shares were granted on May 25, 1993, with an exercise price of $23.69
per share. Twenty percent of these options become exercisable on the
anniversary of the date of grant in each of the first five years if
the person has been a director of Dell continuously through that
anniversary date, and all options expire on the tenth anniversary of
the date of grant.
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<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table summarizes the
compensation paid during the last three fiscal years to Dell's Chief Executive
Officer, Dell's four most highly compensated executive officers other than the
Chief Executive Officer, and two other individuals who left their positions as
executive officers of Dell during fiscal 1994 but who otherwise would have been
among the four most highly compensated executive officers in addition to the
Chief Executive Officer.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
SECURITIES
ANNUAL COMPENSATION($)(1) SUBJECT TO
------------------------------------- STOCK
NAME AND FISCAL OTHER ANNUAL OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS (#)(2) COMPENSATION(3)(4)
- - - - -------------------------------- -------- ---------- --------- -------------- --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Michael S. Dell 1994 $358,994 $ $ 33,844 0 $ 13,614
Chairman of the Board, 1993 337,019 198,668 3,696 0 11,600
Chief Executive Officer 1992 327,250 178,200 0 0 --
Joel J. Kocher 1994 316,979 0 6,171 34,000 14,851
Senior Vice President 1993 260,469 183,266 5,284 172,500 9,150
1992 249,450 182,250 0 166,500 --
L. Scott Flaig 1994 300,000 0 224,522 32,000 1,873
Senior Vice President, 1993 51,359 29,325 148,000 100,000 0
Worldwide Operations 1992 -- -- -- -- --
Thomas J. Meredith 1994 265,000 0 178,457 31,433 9,744
Chief Financial Officer 1993 55,208 139,284 10,000 125,000 0
1992 -- -- -- -- --
Thomas L. Thomas 1994 215,278 0 299,995 51,667(5) 4,497
Chief Information Officer 1993 -- -- -- -- --
1992 -- -- -- -- --
G. Glenn Henry 1994 288,059 0 8,173 11,702 9,163
Former Senior Vice 1993 294,350 89,915 1,751 47,500 9,910
President, Product Group 1992 311,333 140,940 0 132,000 --
Andrew R. Harris 1994 222,679(6) 0 14,409 12,000 22,522(7)
Former Senior Vice 1993 278,888 164,565 11,293 172,500 9,170
President 1992 288,630 164,025 0 166,500 --
- - - - --------------------------------
</TABLE>
(1) Includes deferred compensation. Amounts in Other Annual Compensation
include reimbursement for personal financial counselling services paid
for each executive as well as relocation expenses for Messrs. Flaig,
Meredith and Thomas in connection with their hiring.
(2) Dell did not grant any SARs in fiscal 1992-1994.
(3) Information with respect to years before fiscal 1993 has been omitted
pursuant to transition phase-in rules of the SEC.
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<PAGE> 12
(4) These amounts represent Dell's matching contributions under Dell's
401(k) plan and deferred compensation plan.
(5) Options for 25,000 shares are structured to be the equivalent of
restricted stock: the exercise price is nominal ($.01 per share), a
portion of the options must be exercised each year, 60% of the
underlying stock will be held by Dell for two years, and gains on the
options and the stock received on exercise may be forfeited if Mr.
Thomas leaves Dell and competes against Dell within two years
thereafter.
(6) Includes $150,912 of salary continuation during a leave of absence in
anticipation of termination of employment. See "Management
Compensation - Employment, Other Compensation, and Change in Control
Arrangements."
(7) Includes $15,885 of salary continuation payments related to the fiscal
1995 portion of a leave of absense in anticipation of termination of
employment. See "Management Compensation - Employment, Other
Compensation, and Change in Control Arrangements."
Option/SAR Grants in Last Fiscal Year. Dell has two stock option
plans: the 1989 Stock Option Plan, under which up to 7,250,000 shares may be
issued; and the 1993 Stock Option Plan, under which up to 4,000,000 shares of
Common Stock may be issued. The plans authorize the grant of incentive stock
options with exercise prices no lower than the fair market value of the
underlying stock on the date of grant, and also nonqualified stock options at
exercise prices no lower than par value for the 1989 plan or 50% of fair market
value for the 1993 plan. At January 30, 1994, 4,279,450 shares of Common Stock
remained available for issuance pursuant to awards to be granted under the
option plans. The following table sets forth information regarding the stock
option grants Dell made to the named executive officers during fiscal 1994.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES EXERCISE MARKET GRANT DATE
GRANT SARS IN FISCAL PRICE PRICE ON EXPIRATION PRESENT
NAME DATE GRANTED (1) YEAR ($/SH) GRANT DATE DATE VALUE(2)
- - - - ------------------ --------- ----------- ----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael S. Dell 0 n/a n/a n/a n/a n/a
Joel J. Kocher 2/24/93 12,000(3) 0.57% $30.69 $30.69 2/24/03 $213,240
11/22/93 22,000(4) 1.04% 22.50 22.50 11/22/03 284,460
L. Scott Flaig 2/24/93 12,000(3) 0.57% 30.69 30.69 2/24/03 213,240
11/22/93 20,000(4) 0.95% 22.50 22.50 11/22/03 258,600
Thomas J. Meredith 2/24/93 12,000(3) 0.57% 30.69 30.69 2/24/03 213,240
11/22/93 19,433(4) 0.92% 22.50 22.50 11/22/03 251,269
Thomas L. Thomas 3/10/93 25,000(5) 1.18% 0.01 36.31 3/10/03 907,500
3/10/93 10,000(4) 0.47% 36.31 36.31 3/10/03 211,600
11/22/93 16,667(4) 0.79% 22.50 22.50 11/22/03 215,504
G. Glenn Henry 2/24/93 5,000(3) 0.24% 30.69 30.69 2/24/03 88,850
11/22/93 6,702(4) 0.32% 22.50 22.50 11/22/03 86,657
Andrew R. Harris 2/24/93 12,000(4) 0.57% 30.69 30.69 2/24/03 213,240
- - - - --------------------------------
</TABLE>
(1) Dell did not grant any SARs in fiscal 1994.
9
<PAGE> 13
(2) The estimated grant date present value is determined using the
Black-Scholes Model. The material assumptions and adjustments
incorporated in the Black-Scholes Model in estimating the values of
the options reflected in the table include the following: (a) an
interest rate that represents the interest rate as of January 30,
1994, on a U.S. Treasury security with a maturity date corresponding
to that of the option term as of the date of grant; (b) volatility
calculated using daily stock prices for the one-year period prior to
the grant date; (c) dividends at the rate of $0 per share (any
dividends paid would reduce the value of the options); (d) an option
term of 10 years; and (e) a 25% reduction to reflect the probability
of a shortened option term for the stock options with exercise prices
equal to fair market value at the date of grant because of termination
of employment before the option expiration date. The ultimate values
of the options will depend on the future market prices of Common
Stock, which cannot be forecast with reasonable accuracy. The actual
value, if any, an optionee will recognize upon exercise of an option
will depend on the excess of the market value of the Common Stock over
the exercise price on the date the option is exercised.
(3) These options vest 20% each year for five years on the anniversary of
the date of grant or, if earlier, 100% on the date when the price of
Common Stock exceeds $32.69 for 30 consecutive trading days.
(4) These options vest 20% each year for five years on the anniversary of
the date of grant.
(5) These options are structured to be the equivalent of restricted stock:
the exercise price is nominal ($.01 per share), a portion of the
options must be exercised each year, 60% of the underlying stock will
be held by Dell for two years, and gains on the options and the stock
received on exercise may be forfeited if Mr. Thomas leaves Dell and
competes against Dell within two years thereafter.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values. The following table provides information about the
options exercised by the named executive officers during fiscal 1994 and about
unexercised stock options held by the named executive officers on January 30,
1994.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END (#) FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE(1) UNEXERCISABLE(1)
- - - - ----------------------------- ------------- ------------ ---------------- -------------------
<S> <C> <C> <C> <C>
Michael S. Dell 0 $ 0 0 / $ 0 /
0 0
Joel J. Kocher 15,000 283,950 90,870 / 1,068,050 /
303,130 4,305,138
L. Scott Flaig 25,000 624,750 0 / 0 /
107,000 1,639,875
Thomas J. Meredith 30,000 749,700 5,000 / 0 /
121,433 1,530,550
Thomas L. Thomas 0 0 0 / 0 /
51,667 546,625
G. Glenn Henry 49,825 675,516 0 / 0 /
0 0
Andrew R. Harris 0 0 138,907 / 1,409,107 /
0 0
</TABLE>
10
<PAGE> 14
- - - - ---------------------------------
(1) Dell did not have any outstanding SARs during fiscal 1994. The value of
the options is calculated based on $21-7/8, which was the average sales
price per share for Common Stock on January 28, 1994.
EMPLOYMENT, OTHER COMPENSATION, AND CHANGE-IN-CONTROL ARRANGEMENTS
Each of the named executive officers has signed an employment agreement with
Dell. The employment agreement requires Dell to give the executive officer
either two weeks notice of termination or severance pay equal to two weeks'
compensation, unless the termination is for cause. Dell's stock option plans
provide that outstanding options may become vested and exercisable immediately
before any person acquires 50% or more of the Common Stock. Awards under the
Incentive Plan may also provide for acceleration of vesting and exercisability
immediately before certain events that constitute a change of control. See
"Incentive Plan."
On May 3, 1993, Dell entered into an agreement with Andrew R. Harris regarding
the termination of Mr. Harris's employment and providing for severance
arrangements. Under the agreement, Mr. Harris began a leave of absence
effective April 15, 1993, through October 31, 1993, at which time his
employment was to terminate. During that period, Mr. Harris received full
salary and benefits other than disability insurance. In addition, Dell
accelerated the vesting and exercisability of options for 18,000 shares having
an exercise price of $23.66 per share and options for 116,407 shares having an
exercise price of $9.77 per share. Mr. Harris was given until November 30,
1993, to exercise these options. Mr. Harris and Dell also agreed that Mr.
Harris could retain up to 83,507 of the shares (or proceeds of sale) related to
such options, but that the remaining 51,000 shares (or proceeds) would be
placed in an escrow subject to release in three annual installments of 17,000
shares subject to Mr. Harris's compliance with certain noncompetition covenants
(or earlier release to the extent shares were needed to pay federal income tax
obligations related to the exercise of the options). Dell and Mr. Harris also
agreed a vested option for 4,500 shares with an exercise price of $23.66 per
share would expire if not exercised by November 30, 1993. On September 27,
1993, Dell and Mr. Harris amended the May 3 agreement to extend the employment
termination date to March 31, 1994. Dell agreed to pay Mr. Harris a monthly
salary of $9,531.25 from August 1993 through the termination date, but not to
provide any benefits after October 31, 1993. The amendment also extended the
period in which Mr. Harris's options could be exercised to April 30, 1994.
Dell has an Employee Stock Purchase Plan that permits substantially all
employees to acquire Common Stock at a purchase price of 85% of the lower of
the fair market value at the beginning or end of the participation period.
Participation periods are for one-half year each, beginning on January 1 and
July 1 of each year. Employees may designate up to 10% of their base
compensation for the purchase of Common Stock. The Compensation Committee
administers the Employee Stock Purchase Plan.
Dell has a defined contribution retirement plan intended to comply with Section
401(k) of the Internal Revenue Code. Employees may contribute up to 6% of
compensation, and the 401(k) plan provides for Dell to make matching
contributions of 50% of an employee's voluntary contributions. Dell makes its
contributions using Common Stock valued at fair market value on the date of
contribution. Employees may also contribute amounts in excess of the 6% up to
15% of compensation, but no matching contributions are made for the excess
contributions.
Dell has a deferred compensation plan for executive officers and highly
compensated employees that allows the participants to defer a portion of their
compensation. Employees may contribute up to 6% of compensation and receive
matching contributions in cash of 50% of the voluntary contributions.
11
<PAGE> 15
Employees may contribute amounts in excess of the 6%, but no matching
contributions are made for the excess contributions. Both deferred
compensation and matching contributions are not segregated from Dell's assets
and are therefore subject to Dell's being able to pay the amounts when due.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Dell's mission is to become the leader in the personal computer industry by
providing products and services of the highest value to its customers. To
accomplish this objective, Dell has developed a comprehensive business strategy
that emphasizes maximizing long-term stockholder value, corporate cash flow,
earnings, and customer and employee satisfaction.
COMPENSATION PHILOSOPHY
The Compensation Committee is committed to implementing a compensation program
that furthers Dell's mission. We therefore adhere to the following
compensation policies, which are intended to facilitate the achievement of
Dell's business strategies:
. Executives' total compensation programs should strengthen the
relationship between pay and performance by emphasizing variable,
at-risk compensation that is dependent upon the level of success in
meeting specified corporate, business unit, and individual performance
goals.
. A significant amount of pay for senior executives should be comprised
of long-term, at-risk pay to focus management on the long-term
interests of stockholders.
. The at-risk components of pay offered should be comprised primarily of
equity-based pay opportunities. Encouraging a personal proprietary
interest provides executives with a close identification with Dell and
aligns executives' interests with those of the stockholders. This
promotes a continuing focus on building profitability and stockholder
value.
. Compensation opportunities should enhance Dell's ability to attract,
retain, and encourage the development of exceptionally knowledgeable
and experienced executives upon whom, in large part, the successful
operation and management of Dell depends.
. Each program element should target compensation opportunities at the
median of compensation paid to executives of similar high-tech
companies. However, if Dell's performance exceeds that of its peers,
compensation should be above the median. Likewise, if Dell's
performance falls below the performance of its peers, the compensation
paid to the senior executives should be below the median compensation
paid by the peer group.
The Compensation Committee compares total compensation levels for Dell's senior
executives to the compensation paid to executives of a peer group of similar
high-tech companies. Each year, management selects the peer group based on
similar sales volumes, market capitalization, employment levels, and lines of
business. The Compensation Committee reviews and approves the selection of
companies used in the peer group for compensation comparison purposes. For
fiscal 1994, the peer group consisted of approximately 20 high-tech companies
with similar sales volumes, market capitalization, employment levels, and lines
of business. This group is not the same group used for the industry comparison
in the performance graph found in "Performance Graph."
12
<PAGE> 16
COMPONENTS OF COMPENSATION
The key elements of Dell's executive compensation program are base salary,
short-term (annual) incentive, and long-term incentive compensation. These
elements are addressed separately.
The Compensation Committee does not exclusively use quantitative methods or
mathematical formulas in setting any element of compensation. In determining
each component of compensation, the Compensation Committee considers all
elements of an executive's total compensation package, including insurance and
other benefits.
BASE SALARIES
Base salaries are targeted at median levels for the peer group of companies and
are adjusted by the Compensation Committee to recognize varying levels of
responsibility, individual performance, business unit performance, internal
equity issues, as well as external pay practices. The Compensation Committee
reviews each executive's base salary annually.
Overall, executive salaries were increased in fiscal 1994 at rates comparable
to the increases provided in the peer group of high-tech companies, and the
salaries are near median levels for that peer group.
SHORT-TERM INCENTIVES
The Incentive Bonus Plan promotes Dell's pay-for-performance philosophy by
providing executives with direct financial incentives in the form of annual
cash bonuses to achieve corporate, business unit, and individual performance
goals.
Each year, the Compensation Committee establishes these corporate and business
unit specific goals relating to each executive's bonus opportunity. For fiscal
1994, Dell's performance and business unit performance were based on financial
measures such as revenue and return on sales, and on non-financial measures
such as quality, systems infrastructure, and process enhancements. A
subjective evaluation of individual performance can also result in an upward or
downward adjustment of the award.
Fiscal 1994 target bonus awards for each of the executives were set slightly
above market levels, but required above-average performance from each of the
executives to be achievable. For Dell's executive officers, the targets ranged
from 40% to 60% of base salaries. The actual percentage to be paid was subject
to adjustment above or below the target based on Dell's performance. Because
Dell's performance in fiscal 1994 did not meet minimum performance levels as
specified in the plan, no bonuses were paid to any of its executive officers.
LONG-TERM INCENTIVES
In keeping with Dell's philosophy to provide a total compensation package that
favors at-risk components of pay, long-term incentives comprise an important
component of an executive's total compensation package. These incentives are
designed to motivate and reward executives for maximizing stockholder value and
encourage the long-term employment of key employees. Long-term incentives are
provided pursuant to Dell's 1989 and 1993 Stock Option Plans and will be
provided pursuant to the Incentive Plan, if approved. See "Incentive Plan."
When awarding long-term incentives, the Compensation Committee considers
executives' levels of responsibility, prior experience, individual performance
criteria, previous stock option grants, and
13
<PAGE> 17
compensation practices at the peer group of companies used to evaluate total
compensation. The Compensation Committee's objective is to provide executives
with long-term incentive award opportunities that approximate the market
median.
The size of stock option grants is based primarily on the dollar value of the
award granted. As a result, the number of shares underlying stock option
awards varies and is dependent on the stock price on the date of grant. The
size of the award can also be adjusted based on individual factors.
Two primary sets of option grants were made to the named executives in fiscal
1994: one in February 1993 and one in November 1993. First, in February 1993
performance options with exercise prices set at fair market value were granted
primarily as a reward for fiscal 1993 performance and also as an incentive for
improvements in future stock price. In reviewing fiscal 1993 performance, the
Compensation Committee considered and gave equal weight to the significant
increases in Dell's consolidated net sales and the increases in Dell's
profitability during fiscal 1993. These performance options vest on
anniversaries of the grant date over a five-year period (at 20% of the grant
each year), or all options vest immediately when the price of Dell's common
stock exceeds $32.69 for 30 consecutive trading days, whichever occurs first.
Second, in November 1993 stock options with an exercise price set at fair
market value were granted for fiscal 1994 as part of Dell's regular annual
grant of stock options. The size of each award was determined based on the
criteria for awarding long-term incentives stated in the preceding two
paragraphs. These nonqualified options vest on the anniversaries of the grant
date over a five-year period (at 20% of the grant each year). Because both
sets of grants were made at option prices equal to the fair market value of
Dell's common stock on the dates of grant, the stock options have value only if
the stock price appreciates from the value on the date the options were
granted. This design is intended to focus executives on the enhancement of
stockholder value over the long-term and to encourage equity ownership in Dell.
The Compensation Committee also approved a grant of discounted stock options to
Thomas L. Thomas, Dell's Chief Information Officer, who joined Dell during
fiscal 1994. The discounted options were required to attract Mr. Thomas to
Dell and were intended to replace the long-term incentives Mr. Thomas forfeited
when he left his previous employer. These discounted stock options are
structured to be the equivalent of restricted stock: the exercise price is
nominal (one cent per share), a portion of the options must be exercised each
year, and 60% of the underlying stock is held by Dell for two years. There are
also provisions requiring forfeiture of gains on these options and the stock
received on exercise if Mr. Thomas leaves Dell and competes against Dell within
two years thereafter.
During the second quarter of fiscal 1994, the Compensation Committee afforded
Joel Kocher the opportunity to accelerate vesting of previously granted options
for up to 30,000 shares based on improvements in Dell's operations under his
supervision. This incentive arrangement was offered to Mr. Kocher primarily
because he bore the direct responsibility to implement Dell's sales, marketing
and service restructuring during the last half of fiscal 1994. In March 1994,
the Compensation Committee accelerated the vesting of options for 20,000 of the
30,000 shares in recognition primarily of Kocher's management of Dell's
increase in consolidated net sales and the implementation of cost reduction
measures during the last half of fiscal 1994. The accelerated options
otherwise would have vested in 2001 and 2002.
The Compensation Committee does not anticipate that adoption of the Dell
Computer Corporation Incentive Plan will change Dell's policies with respect to
grants of long-term incentives. Rather, the Incentive Plan is intended to
provide Dell with more flexibility to adapt its long-term incentives to changes
in tax laws, accounting treatment, and competitive compensation arrangements in
other high-tech companies.
14
<PAGE> 18
SEVERANCE ARRANGEMENTS
In fiscal 1994, Dell provided salary continuation, vesting of options, and
other benefits to Andrew R. Harris, formerly a Senior Vice President of Dell,
in connection with the termination of his employment. See "Management
Compensation Employment, Other Compensation, and Change-in- Control
Arrangements." The terms of the severance arrangements were the result of
negotiation with Mr. Harris in order to secure his availability to provide a
smooth transition of his responsibilities to other Dell employees, facilitate
the completion of certain projects, and secure a covenant not to compete
against Dell for three years.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee recognizes that Michael S. Dell is Dell's founder
and its largest stockholder. In fiscal 1994, Mr. Dell's base salary earnings
were $358,994, which is substantially below base salary earnings for Chief
Executive Officers of the peer group of corporations.
Mr. Dell received no payment under the Incentive Bonus Plan because Dell's
performance in fiscal 1994 did not meet minimum performance levels as specified
in the plan. Mr. Dell does not participate in Dell's long-term incentive
program because of his significant stock ownership.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Recently enacted Section 162(m) of the Internal Revenue Code (the "Code")
generally limits the U.S. corporate income tax deduction for compensation paid
to executive officers named in the summary compensation table in the proxy
statement of a public company to $1 million, unless certain requirements are
met. The Compensation Committee has carefully considered the effect of this
new tax code provision. For fiscal 1994, the limitation imposed by Section
162(m) did not apply to the compensation paid any executive officers.
Dell's fiscal 1995 incentive plans were finalized before the enactment of
Section 162(m), but the Compensation Committee will consider modifying new
compensation programs for the executive officers subject to the deduction limit
so the corporate tax deduction is preserved on compensation paid to executives.
The Compensation Committee believes it can modify new programs in fiscal 1996
without undermining Dell's compensation philosophy and current compensation
plans.
CONCLUSION
The Compensation Committee believes these executive compensation policies and
programs serve the interests of stockholders and Dell effectively. The various
pay vehicles offered are appropriately balanced to provide increased motivation
for executives to contribute to Dell's overall future success, thereby
enhancing the value of Dell for the stockholders' benefit.
THE COMPENSATION COMMITTEE
GEORGE KOZMETSKY, CHAIRMAN
PAUL O. HIRSCHBIEL, JR.
MICHAEL H. JORDAN
15
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the cumulative total return of Dell Computer
Corporation, the S&P 500 Index and the S&P Computer Systems Index. The graph
assumes $100 was invested in the stock or the index on January 27, 1989, and
also assumes reinvestment of dividends.
________________________________________________________________________________
|------------------------------------------------------------------------------|
| |
| COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN |
| |
| (GRAPH) |
| |
| |
| |
|------------------------------------------------------------------------------|
Date
-------------------------------------------------
1/27/89 2/2/90 2/3/91 2/2/92 1/31/93 1/30/94
------- ------ ------ ------ ------- -------
S&P 500 $100 $113 $117 $139 $149 $163
S&P Computer Systems Index(1) 100 80 97 75 54 54
DELL COMPUTER CORPORATION 100 57 305 580 1,261 590
________________________________________________________________________________
(1) The S&P Computer Systems Index currently consists of Amdahl
Corporation, Apple Computer, Inc., Compaq Computer Corporation, Cray
Research, Inc., Data General Corporation, Digital Equipment
Corporation, Intergraph Corporation, International Business Machines
Corporation, Sun Microsystems, Inc., Tandem Computers Inc. and Unysis
Corporation.
16
<PAGE> 20
INCENTIVE PLAN
The Board of Directors proposes that stockholders approve the Dell Computer
Corporation Incentive Plan (the "Incentive Plan") and reserve 4,490,207 shares
of Common Stock for issuance thereunder. If the Incentive Plan is approved,
the reservation of 1,800,463 shares of Common Stock remaining for issuance
under the Dell Computer Corporation 1993 Stock Option Plan and the reservation
of 2,689,744 shares of Common Stock remaining for issuance under the Dell
Computer Corporation 1989 Stock Option Plan (the "Current Plans") will be
cancelled. If any additional awards are granted under the Current Plans before
the Annual Meeting or if existing awards expire without exercise, the number of
shares reserved for the Incentive Plan will be correspondingly adjusted.
The Incentive Plan is intended to consolidate Dell's two existing discretionary
option plans while giving greater flexibility for the attraction and retention
of the talent necessary for Dell's success. The proposal does not provide for
additional shares of the Common Stock to be reserved for issuance under the
Incentive Plan, but rather the same number of shares available for grant under
the Current Plans will be available under the Incentive Plan. Upon approval of
this proposal, no new grants will be made under the Current Plans. The
Incentive Plan will become effective upon stockholder approval.
GENERAL
The Incentive Plan provides for the granting of incentive awards in the form of
stock options, stock appreciation rights ("SARs"), stock and cash to executive
officers and employees of Dell and its subsidiaries and certain other persons
who are not employees but who from time to time provide substantial advice or
other assistance or services to Dell. The Incentive Plan also provides for the
automatic grant of options to non-employee directors. As of May 1, 1994, Dell
and its subsidiaries had approximately 5,900 full-time employees and six
non-employee directors. Except when a participant's employment terminates as a
result of death, disability or retirement under an approved retirement plan or
following a change in control in certain circumstances, an award generally may
be exercised (or the restrictions thereon may lapse) only if the participant is
an officer, employee or director of Dell or a subsidiary at the time of
exercise or lapse. However, the Compensation Committee has discretion to
permit awards that may be exercised within a period after the participant
ceases to be an officer or employee of Dell or a subsidiary. The Incentive
Plan permits nonqualified stock options to be transferred to a trust
established for the benefit of one or more of the children, grandchildren or
spouse of the participant.
Shares Subject to Awards
The maximum number of shares of Common Stock that may be issued pursuant to
awards granted under the Incentive Plan is 4,490,207 (subject to adjustment),
and the shares may be newly issued or from treasury. The number of shares
reserved for issuance under the Incentive Plan and the number of shares subject
to outstanding awards are subject to adjustment in the event of stock splits,
stock dividends, recapitalizations and other changes in Dell's capitalization
or in the event of mergers or other similar transactions involving Dell. The
Incentive Plan includes provisions governing the effects on awards of a
dissolution, liquidation, merger, consolidation or other reorganization of
Dell, including a provision that permits Dell to allow for the preservation of
the rights of the holders of awards in the event of such reorganization or
providing for the acceleration of vesting and exercisability of awards. No
awards for more than 200,000 shares may be granted to any one employee in a
calendar year. In addition, the aggregate fair market value (determined at the
date of grant) of Common Stock that a participant becomes eligible to purchase
by exercising incentive stock options may not exceed $100,000 in any calendar
year.
17
<PAGE> 21
Administration
The Incentive Plan will be administered by the Compensation Committee, which
will be composed entirely of directors who are both disinterested directors as
defined in applicable SEC regulations and outside directors as defined in the
laws and regulations under Section 162(m) of the Code unless the Board of
Directors determines that the Incentive Plan should not comply with those
provisions. Except for certain automatic awards to non-employee directors, the
Compensation Committee has discretion to select the employees to be granted
awards, to determine the type and size of awards, to determine when awards will
be granted, to grant any kind of award in combination with other kinds of
awards, and to prescribe and amend the terms of the agreements governing the
awards.
Stock Options
Options that may be awarded under the Incentive Plan are incentive stock
options ("ISOs") meeting the requirements of Section 422 of the Code and
nonqualified stock options ("NQSOs") that do not meet those requirements.
Options are rights to purchase a specified number of shares of Common Stock at
a price fixed when the option is granted. ISOs must have an exercise price of
at least the fair market value of the shares on the date of grant, while NQSOs
may have any exercise price that is equal to or greater than 50% of fair market
value of the applicable shares on the date of grant. Options are exercisable
when and on the terms set by the Compensation Committee, but may not be
exercised more than ten years after the date of grant. Payment of the exercise
price may be made in cash, with other shares of Common Stock, or a combination
of both. Pyramiding of stock option exercises may be permitted, which could
allow a participant to exercise the options without paying any significant
amount of cash.
Stock Appreciation Rights
SARs are rights to receive a payment, in cash or shares of Common Stock or
both, based on the value of Common Stock. SARs not granted in connection with
another award under the Incentive Plan must have an exercise price based on the
fair market value of a share of Common Stock on the date of grant. SARs
granted in connection with another award generally will have the same exercise
price and other terms as the related award. However, exercise of the tandem
SAR will terminate the related award, and exercise of the related award will
similarly terminate the tandem SAR.
Other Awards
The Incentive Plan also permits stock awards and cash awards. A stock award is
an award of shares of Common Stock or that is denominated in shares of Common
Stock. The award may be subject to restrictions against transfer, satisfaction
of specified conditions, repurchase options exercisable by Dell, or other
limitations or may be made without any limitations. The participant may be
given the right to vote the shares and receive dividends on the shares subject
to the award, whether before or after such shares have been earned. No more
than 25% of the total shares reserved for issuance under the Incentive Plan may
be issued pursuant to restricted stock, stock bonus, or similar stock awards
(this limitation does not apply to restricted stock or other stock issued upon
exercise of an option or SAR or in payment of performance-based compensation
awards). Cash awards are generally based on the extent to which
pre-established performance goals are achieved over a pre- established period,
but may also include individual bonuses paid for previous performance.
The Compensation Committee may select any performance measure or combination of
measures as conditions for cash or stock payments under the Incentive Plan,
except that the performance measure(s) for executive officers must be chosen
from among the following choices: (a) total stockholder return (stock
18
<PAGE> 22
price appreciation plus dividends); (b) net income; (c) earnings per share; (d)
return on sales; (e) return on equity; (f) return on assets; (g) increase in
the market price of Common Stock or other securities; (h) the performance of
Dell in any of the items mentioned in clause (a) through (g) in comparison to
the average performance of the companies included in the S&P Computer Systems
Index; and (i) the performance of Dell in any of the items mentioned in clause
(a) through (g) in comparison to the average performance of the companies used
in a peer group established by the Compensation Committee before the beginning
of the performance period. Nevertheless, the Compensation Committee may choose
different performance measures for executive officers if the stockholders
approve otherwise, if tax laws or regulations change so as not to require
stockholder approval of different measures in order to deduct the related cash
or stock payment for federal income tax purposes, or if the Compensation
Committee determines that it is in Dell's best interest to grant awards not
satisfying the requirements of Section 162(m) or any successor law.
Automatic Grants of Options to Non-employee Directors
The Incentive Plan provides that each non-employee director of Dell will be
automatically granted nonqualified stock options for 15,000 shares on the day
after the first meeting of the Board of Directors that the non-employee
director attends following the director's initial election or appointment to
the Board of Directors. Accordingly, none of Dell's current directors will be
eligible for this automatic award. The exercise price of the options will be
the fair market value of the Common Stock on the date of grant, and the options
will vest in annual amounts of 3,000 shares on each of the first five
anniversaries of the date of grant so long as the non-employee director is a
director of Dell at all times after the date of grant and including the vesting
date. In addition, each non-employee director who is a member of the Board of
Directors both before and after the annual meeting of stockholders of Dell each
year beginning with 1994 will automatically be granted nonqualified stock
options to acquire 6,000 shares of Common Stock on the date of the first
meeting of the Board of Directors following that annual meeting of
stockholders. The exercise price of the options will be the fair market value
of the Common Stock on the date of grant, and the options will vest in annual
amounts of 1,200 shares on each of the first five anniversaries of the date of
grant so long as the non- employee director is a director of Dell at all times
after the date of grant and including the vesting date. Both the initial
options and the annual options terminate on the earlier of (a) ten years from
the date of grant, (b) immediately when the holder ceases to be a director if
the Board of Directors demanded the holder's resignation, (c) 90 days after the
holder ceases to be a director because of other resignation or failure to stand
for re-election, and (d) one year after death or permanent disability.
Deferral and Substitution of Awards
The Compensation Committee may permit a participant to defer receipt of the
payment of cash or the delivery of shares that the participant would otherwise
be due under any award pursuant to the Incentive Plan. Non-employee directors
of Dell may elect to receive non-qualified options in lieu of all or a portion
of their annual fee. The exercise price of the options will be the fair market
value of the date of grant (which will be the date the fee otherwise would have
been paid), the option will vest in annual amounts of 20% on each of the first
five anniversaries of the date of grant, and the option will expire on the
tenth anniversary of the date of grant. The number of options issued will be
calculated by dividing the amount of the annual fee foregone by the value of
such an option for one share of Common Stock on the date of grant (calculated
using the Black-Scholes Model based on the applicable assumptions used in
calculating option values in the most recent annual meeting proxy statement of
Dell).
Tax Withholding
The Incentive Plan allows for the satisfaction of a participant's tax
withholding with respect to an award by the withholding of shares of Common
Stock issuable pursuant to the award or the delivery of previously
19
<PAGE> 23
owned shares of Common Stock, in either case based upon the fair market value
of the applicable shares and subject to any limitations or conditions the
Compensation Committee adopts.
New Plan Benefits Table
The following table sets forth, to the extent determinable, the benefits or
amounts that would have been granted in fiscal 1994 to the following persons if
the Incentive Plan had been effective during fiscal 1994: (i) the named
executive officers; (ii) the current executive officers as a group, (iii) the
current directors who are not executive officers as a group; and (iv) all
employees, including all current officers who are not executive officers, as a
group. The number of options that each non-employee director would have
received under the Incentive Plan is 1,500 shares greater than the number of
options the non-employee director received under the Current Plans. See
"Management Compensation Compensation of Directors." The table also sets forth
the total number of shares that may be issued pursuant to awards under the
Incentive Plan to all executive officers, non-employee directors, eligible
employees of Dell and its subsidiaries, and certain other persons who are not
employees but who from time to time provide substantial advice or other
assistance or services to Dell.
NEW PLAN BENEFITS
Dell Computer Corporation Incentive Plan
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME AND PRINCIPAL POSITION UNDERLYING AWARDS
- - - - ------------------------------------------------------------ ------------------------------
<S> <C>
Michael S. Dell 0
Chairman of the Board,
Chief Executive Officer
Joel J. Kocher 0 (1)
Senior Vice President.
L. Scott Flaig 0 (1)
Senior Vice President,
Worldwide Operations
Thomas J. Meredith 0 (1)
Chief Financial Officer
Thomas L. Thomas 0 (1)
Chief Information Officer
Executive Group (8 persons) 0 (1)
Non-Executive Director Group (6 persons) 66,000
Non-Executive Officer Employee Group 0 (1)
Total Shares Available for Awards to All Directors,
Executive Officers and Other Eligible Persons 4,490,207
- - - - --------------------------------
</TABLE>
(1) Not determinable because all awards to such persons are discretionary.
20
<PAGE> 24
CHANGE IN CONTROL
Any awards granted under the Incentive Plan may provide that, on the occurrence
of a change in control of Dell, (a) the options and SARs represented by the
award will become immediately exercisable; (b) all restriction periods and
restrictions imposed on restricted stock subject to the award will lapse; and
(c) the target payout opportunity attainable under the award will be deemed to
have been fully earned for the entire performance periods as of the effective
date of the change in control, the vesting of the awards denominated in shares
will be accelerated as of the effective date of the change in control, and the
holder of the award will be paid in cash within thirty days following the
change in control a pro rata portion of all targeted cash payout opportunities
associated with outstanding cash-based awards (based on the number of complete
and partial calendar months within the performance period that had elapsed as
of the change in control). The award may also provide that the award will
remain exercisable for its original term whether or not employment is
terminated following a change in control. The provisions of the preceding
clause (c) will not apply to awards that were granted fewer than six months
before the change in control. In addition, the Compensation Committee may make
any modifications to the awards other than those for which a stockholder vote
is required or that would cancel the awards. In general, the Incentive Plan
defines a change of control as any person (other than Mr. Dell) acquiring 30%
or more of Dell's voting securities, a change in the majority of the members of
the Board of Directors during any two year period if the change was not
approved by the vote of at least two-thirds of the directors previously in
office, and certain liquidations, sales of assets, and mergers involving Dell.
AMENDMENT, MODIFICATION AND TERMINATION
The Board of Directors may at any time and from time to time, alter, amend,
suspend or terminate the Incentive Plan in whole or in part; except that under
current law no amendment that materially increases the number of shares of
Common Stock subject to the Incentive Plan, materially increases the benefits
to participants in the Incentive Plan, or materially modifies the requirements
for eligibility to participate in the Incentive Plan may be made without
stockholder approval if the Incentive Plan is to receive certain securities law
exemptions for Dell's executive officers. No awards may be granted under the
Incentive Plan after June 22, 2004. No stockholder approval will be sought for
amendments to the Incentive Plan except as required by law or the rules of any
national securities exchange or inter-dealer quotation system on which the
Common Stock is then listed or quoted.
FEDERAL INCOME TAX CONSEQUENCES
Participants in the Incentive Plan who receive an ISO will not recognize income
for federal income tax purposes as a result of the receipt or exercise of the
ISO. However, exercise of the ISO will increase the optionee's alternative
minimum taxable income for purposes of the alternative minimum tax in an amount
equal to the excess of the fair market value of the Common Stock received over
the exercise price. Dell and its participating subsidiaries will not be
entitled to a deduction with respect to the grant or exercise of an ISO.
Provided the shares are held as a capital asset, gain recognized on the
disposition of Common Stock acquired by exercise of an ISO ("incentive stock")
will be treated as long-term capital gain if (a) the incentive stock has been
held by the optionee more than two years after the date the ISO was granted and
more than one year after the date the ISO was exercised (the "Statutory Holding
Period") and (b) certain other requirements of the Code are satisfied by the
holder of the incentive stock. Gain recognized on disposition of incentive
stock held by the optionee for less than the Statutory Holding Period (a
"disqualifying disposition") generally will be compensation income to the
optionee to the extent of the
21
<PAGE> 25
excess of the fair market value of the incentive stock when received (or, if
less, the amount realized on disposition of the incentive stock) over the
applicable exercise price. However, if upon receipt the incentive stock is
subject to a substantial risk of forfeiture within the meaning of Section 83(c)
of the Code, then special rules apply concerning the date when the fair market
value of the incentive stock is determined. Any gain recognized in excess of
the amount taxed as compensation generally will be characterized as capital
gain. If an optionee pays the exercise price of an ISO solely with cash, the
optionee's initial tax basis of the incentive stock received is equal to the
amount of cash paid. An optionee who pays all or a portion of the exercise
price of an ISO with shares of Common Stock will be subject to detailed rules
as provided in regulations concerning recognition of income or gain and the
determination of basis in the shares received. In the event of a disqualifying
disposition, Dell or a participating subsidiary of Dell will be entitled to a
corresponding deduction for federal income tax purposes equal to the amount of
compensation income includible by the optionee (provided the optionee's total
compensation for that year is otherwise deductible and the applicable
withholding requirements are satisfied).
The grant of a NQSO should neither result in recognition of taxable income by
the optionee nor give rise to a deduction by Dell and its participating
subsidiaries. However, an optionee who exercises a NQSO must generally, as of
the exercise date, recognize as compensation the income equal to the excess (if
any) of the then fair market value of the Common Stock received over the
exercise price of the option. If the Common Stock received upon exercise of a
NQSO is subject to a substantial risk of forfeiture within the meaning of
Section 83(c) of the Code, then, unless the optionee makes an election pursuant
to Section 83(b) of the Code to be taxed currently on the excess of the fair
market value of the shares over the price paid, the excess would not be
includible as compensation income unless and until the substantial risk of
forfeiture has lapsed. Any gain or loss on the subsequent sale or exchange of
Common Stock received on exercise of a NQSO will be treated as capital gain or
loss, provided the stock is held as a capital asset. If an optionee pays the
exercise price of a NQSO solely with cash, the tax basis of the Common Stock
received will equal the sum of the cash paid plus the amount of compensation
income includible by the optionee resulting from the exercise. An optionee who
pays all or a portion of the exercise price of a NQSO with shares of Common
Stock is subject to detailed rules as provided in regulations concerning
recognition of income or gain and the determination of basis in the shares
received. The amount of compensation income includible in gross income by an
optionee is deductible by Dell during Dell's taxable year in which the income
is includible by the optionee (provided the optionee's total compensation for
that year is otherwise deductible and the applicable withholding requirements
are satisfied).
A participant generally will not recognize taxable income upon the grant under
the Incentive Plan of either a stock appreciation right or other
performance-based award. Upon the exercise of a stock appreciation right or
the payment of other performance-based awards, the participant will recognize
ordinary income in an amount equal to the cash and fair market value of other
property received, including Common Stock. The value of the shares will be
determined (1) on the date received, if the shares are substantially vested as
of that date or (2) the first date on which the shares become substantially
vested. Delivery of shares of Common Stock previously owned by the participant
to Dell (or its subsidiary) to satisfy any tax withholding obligations of Dell
(or its subsidiary) will be a taxable event to the participant with respect to
the surrendered shares. Dell and its participating subsidiaries will be
entitled to a deduction in the amount and at the time that the participant
recognizes ordinary income in connection with the exercise of a stock
appreciation right or the payment of a performance unit, provided that the
participant's compensation is otherwise deductible and Dell withholds the
applicable federal income taxes (if required to do so). If the stock
appreciation right or other performance-based award is paid, in whole or in
part, in shares of Common Stock, the amount recognized by the participant as
ordinary income with respect to such shares becomes the participant's basis in
the shares of Common Stock for purposes of determining any gain or loss on the
subsequent sale of those shares.
22
<PAGE> 26
A participant who receives a restricted stock award will recognize ordinary
income equal to the fair market value of the restricted Common Stock received
at the time the restrictions lapse, unless the participant makes an election
under Section 83(b) of the Code to report the fair market value of the
restricted Common Stock as ordinary income at the time of receipt. At the time
the participant is required to include such ordinary income in gross income,
Dell and its participating subsidiaries may deduct a corresponding amount,
provided the participant's compensation is reasonable and Dell withholds the
applicable federal income taxes (if required to do so). During the period in
which a participant holds restricted Common Stock, before the lapse of the
restrictions, if dividends are declared but not distributed to the participant
until the restrictions lapse, the dividends will be treated for tax purposes by
the participant and Dell in the following manner: (1) if the participant makes
an election under Section 83(b) of the Code to recognize income at the time of
receipt of the restricted Common Stock, the dividends will be taxed as dividend
income to the participant when the restrictions lapse and Dell will not be
entitled to a deduction and will not be required to withhold income tax, and
(2) if no election is made under Section 83(b) by the participant, the
dividends will be taxed as compensation to the participant at the time the
restrictions lapse and will be deductible by Dell and subject to any required
income tax withholding at that time.
In each case, Dell's ability to deduct amounts with respect to any awards for
U.S. federal income tax purposes will be subject to compliance with the
conditions or limitations of Section 162(m) of the Code.
23
<PAGE> 27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No director or executive officer of Dell owns any shares of Dell Series A
Convertible Preferred Stock.
The following table provides information about the beneficial ownership of
Common Stock as of May 1, 1994, (i) by each person who is known by Dell to own
beneficially more than five percent of the outstanding shares of Common Stock;
(ii) by each director including Michael S. Dell, Dell's Chairman of the Board
and Chief Executive Officer; (iii) by the other executive officers named in the
Summary Compensation Table in "Management Compensation"; and (iv) by all
directors and executive officers as a group. To Dell's knowledge, each person
has sole investment and voting power over the shares indicated, except as
otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- - - - ------------------------------------------------------------ -------------------------- -----------------
<S> <C> <C>
Michael S. Dell ............................................ 10,382,051(1) 27.1%
9505 Arboretum Boulevard
Austin, Texas 78759
FMR Corp. .................................................. 4,307,400(2) 11.3
82 Devonshire Street
Boston, Massachusetts 02109
Donald J. Carty. ........................................... 4,000(3) *
Paul O. Hirschbiel, Jr. .................................... 1,864(4) *
Michael H. Jordan .......................................... 8,000(3) *
George Kozmetsky ........................................... 228,780(5) *
Thomas W. Luce III ......................................... 8,500(6) *
Claudine B. Malone ......................................... 3,000(7) *
Joel J. Kocher ............................................. 107,450(8) *
L. Scott Flaig ............................................. 26,496(9) *
Thomas J. Meredith ......................................... 59,557(10) *
Thomas L. Thomas ........................................... 4,500(7) *
All Directors and Executive Officers as a Group
(14 persons) ............................................ 10,950,297(11) 28.4
Andrew Harris .............................................. 36,407 *
G. Glenn Henry ............................................. 20,954 *
- - - - -------------------
</TABLE>
* Represents less than 1% of the 38,249,741 shares of Common Stock issued
and outstanding at May 1, 1994.
(1) Includes 174,316 shares of Common Stock held in a trust of which Mr.
Dell is the grantor. Does not include 169,528 shares of Common Stock
held in a trust of which Mr. Dell's wife is the grantor or 763,009
shares of Common Stock held by Mr. Dell's wife, and Mr. Dell disclaims
any beneficial ownership in all of such shares.
(2) Includes 336,800 shares of Common Stock issuable upon conversion of Dell
Series A Convertible Preferred Stock. Also includes 2,737,100 shares of
Common Stock owned by Fidelity Magellan Fund, which is an investment
company for which the investment advisor is Fidelity Management &
Research Company, a wholly-owned subsidiary of FMR Corp. Edward C.
Johnson 3d owns 34.0% of the outstanding voting stock of FMR Corp. and,
with other family members and trusts, is part of a controlling group
with respect to FMR Corp.
24
<PAGE> 28
(3) Includes 3,000 shares subject to options that are currently exercisable
or exercisable within 60 days of May 1, 1994.
(4) Includes 60 shares held in trusts for two of Mr. Hirschbiel's children.
Mr. Hirschbiel is the trustee under these trusts.
(5) Includes 34,884 shares held by the KOZ Fund, Ltd., an affiliate of Mr.
Kozmetsky.
(6) Includes 6,000 shares subject to options which are currently exercisable
or exercisable within 60 days of May 1, 1994. The other 2,500 shares
are owned by the Hughes & Luce Retirement Plan for the benefit of Mr.
Luce.
(7) All shares are subject to options that are currently exercisable or
exercisable within 60 days of May 1, 1994.
(8) Includes 97,770 shares subject to options that are currently exercisable
or exercisable within 60 days of May 1, 1994.
(9) Includes 10,736 shares subject to options that are currently exercisable
or exercisable within 60 days of May 1, 1994.
(10) Includes 27,400 shares subject to options that are currently exercisable
or exercisable within 60 days of May 1, 1994.
(11) Includes 257,056 shares subject to options that are currently
exercisable or exercisable within 60 days of May 1, 1994.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The executive officers and members of Dell's Board of Directors are required to
file reports with the Securities and Exchange Commission disclosing the amount
and nature of their beneficial ownership in Common Stock, as well as changes in
that ownership. During fiscal 1994, Savino R. Ferrales filed one report late
reporting five transactions; Eric F. Harslem filed one report late reporting
his initial beneficial ownership; G. Glenn Henry filed one report late
reporting three transactions; Paul O. Hirschbiel, Jr., filed one report late
reporting one transaction; and Bobby R. Inman filed one report late reporting
two transactions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 17, 1993, Dell loaned $224,940 to Thomas J. Meredith, Dell's Chief
Financial Officer, to pay the exercise price of a share stock option and the
related federal income tax obligation. The loan is unsecured, has a term of
one year, and bears interest at the rate of 6% per annum. As of May 1, 1994,
the amount outstanding under the loan, including interest, was $230,199.
25
<PAGE> 29
Thomas W. Luce III is a partner of the law firm Hughes & Luce, L.L.P., in
Dallas, Texas. Dell retained that firm during fiscal 1994 to provide various
legal services, and the dollar amount of fees that Dell paid to that firm did
not exceed five percent of that firm's gross revenues for the year.
ADDITIONAL INFORMATION
SOLICITATION
This solicitation of proxies is made on behalf of the Board of Directors and
may be made by mail, personal interview, telephone and telegraph by officers,
directors, and employees of Dell. Dell may also request banking institutions,
brokerage firms, custodians, nominees and fiduciaries to forward solicitation
material to the beneficial owners of the Common Stock that those companies or
persons hold of record. Dell will pay all costs of the solicitation and will
reimburse the forwarding expenses.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for action at the Annual Meeting
of Stockholders to be held in 1995 must deliver the proposal to the Secretary
of Dell no later than January 24, 1995, unless Dell notifies the stockholders
otherwise. Such proposals must be submitted in writing and addressed to the
attention of the Secretary, at 9505 Arboretum Boulevard, Austin, Texas
78759-7299. Only those proposals that are proper for stockholder action and
otherwise proper may be included in Dell's proxy statement.
ANNUAL REPORT
The Annual Report to Stockholders for Dell's fiscal year ended January 30,
1994, is being mailed to stockholders concurrently with this Proxy Statement
and does not form any part of the proxy solicitation material.
A COPY OF DELL'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE SENT TO ANY STOCKHOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST ADDRESSED TO INVESTOR RELATIONS, DELL COMPUTER CORPORATION, 9505
ARBORETUM BOULEVARD, AUSTIN, TEXAS 78759-7299.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE
PROXY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
By Order of the Board of Directors
Richard E. Salwen
Secretary
Austin, Texas
May 24, 1994
26
<PAGE> 30
DELL COMPUTER CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF DELL COMPUTER CORPORATION
FOR THE JUNE 22, 1994, ANNUAL MEETING
OF STOCKHOLDERS AND ANY ADJOURNMENT(S) THEREOF.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual Meeting
of Stockholders of Dell Computer Corporation ("Dell") to be held on June 22,
1994, and the associated Proxy Statement; (b) appoints Michael S. Dell and Paul
O. Hirschbiel, Jr., as Proxies, or any of them, each with the power to appoint
a substitute; (c) authorizes the Proxies to represent and vote, as designated
below, all the shares of Dell Common Stock held of record by the undersigned on
May 13, 1994, at the Annual Meeting and at any adjournment(s) thereof; and (d)
revokes any proxies previously given.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED AND FOR THE FOLLOWING PROPOSALS:
1. Election of two Class III directors. Nominees: George Kozmetsky and
Claudine B. Malone.
/ / FOR ALL NOMINEES / / WITHHOLD AUTHORITY TO VOTE
FOR ALL NOMINEES
TO VOTE FOR ONE NOMINEE ONLY, PRINT THE NAME OF THE NOMINEE YOU WISH
TO VOTE FOR BELOW:
______________________________________________________________________
2. A Proposal to Ratify the Selection of Price Waterhouse as Dell's
Independent Accountants for Fiscal 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. A Proposal to Approve the Dell Computer Corporation Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s)
thereof.
<PAGE> 31
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTORS AND FOR EACH OTHER PROPOSAL. THE PROXIES
WILL USE THEIR DISCRETION WITH REGARD TO ANY MATTER REFERRED TO IN ITEM 4.
PLEASE SIGN, DATE AND RETURN THIS PROXY
AS PROMPTLY AS POSSIBLE IN THE ENVELOPE
PROVIDED.
Dated: _____________________________, 1994.
__________________________________________
__________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Joint owners should each sign. Signature(s)
should correspond with the name(s) printed
on this Proxy. Attorneys, executors,
administrators and guardians should give
full title.
<PAGE> 32
DELL COMPUTER CORPORATION
INCENTIVE PLAN
SCOPE AND PURPOSE OF PLAN
Dell Computer Corporation, a Delaware corporation (the "Corporation"),
has adopted this Dell Computer Corporation Incentive Plan (the "Plan") to
provide for the granting of:
(a) Incentive Options (hereafter defined) to certain Key
Employees (hereafter defined);
(b) Nonstatutory Options (hereafter defined) to certain Key
Employees and other persons;
(c) Performance Units (hereafter defined) to certain Key
Employees and other persons;
(d) Restricted Stock Awards (hereafter defined) to certain Key
Employees, Non-employee Directors (hereafter defined), and
other persons; and
(e) Stock Appreciation Rights (hereafter defined) to certain Key
Employees and other persons.
The purpose of the Plan is to provide an incentive for Key Employees,
directors, and certain consultants and advisors of the Corporation or its
Subsidiaries (hereafter defined) to remain in the service of the Corporation or
its Subsidiaries, to extend to them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for the
benefit of the Corporation, and to aid the Corporation in attracting able
persons to enter the service of the Corporation and its Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person other than the
Corporation, any of the Corporation's Subsidiaries, any employee benefit plan
of the Corporation or of a Subsidiary of the Corporation or of a corporation
owned directly or indirectly by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or of a Subsidiary of the Corporation
or of a corporation owned directly or indirectly by the stockholders of the
Corporation in substantially the same
<PAGE> 33
proportions as their ownership of stock of the Corporation, or Michael S. Dell.
1.2 "Award" means the grant of any form of Option, Performance
Unit, Reload Option, Restricted Stock Award, or Stock Appreciation Right under
the Plan, whether granted singly, in combination, or in tandem, to a Holder
pursuant to the terms, conditions, and limitations that the Committee may
establish in order to fulfill the objectives of the Plan.
1.3 "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.
1.4 "Board of Directors" means the board of directors of the
Corporation.
1.5 "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
1.6 "Change in Control" means the event that is deemed to have
occurred if:
(a) any Acquiring Person is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing thirty
percent or more of the combined voting power of the then outstanding
Voting Securities of the Corporation; or
(b) over a period of twenty-four months or less, members
of the Incumbent Board cease for any reason to constitute at least a
majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange
offer by any Acquiring Person for fifty percent or more of the
outstanding Voting Securities of the Corporation, and the Board of
Directors approves or fails to oppose that tender or exchange offer in
its statements in Schedule 14D-9 under the Exchange Act; or
(d) the stockholders of the Corporation approve a merger
or consolidation of the Corporation with any other corporation or
partnership (or, if no such approval is required, the consummation of
such a merger or consolidation of the Corporation), other than a
merger or consolidation that would result in the Voting Securities of
the Corporation outstanding immediately before the consummation
thereof continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity or of
2
<PAGE> 34
a parent of the surviving entity) a majority of the combined voting
power of the Voting Securities of the surviving entity (or its parent)
outstanding immediately after that merger or consolidation; or
(e) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale
or disposition by the Corporation of all or substantially all the
Corporation's assets (or, if no such approval is required, the
consummation of such a liquidation, sale, or disposition in one
transaction or series of related transactions) other than a
liquidation, sale or disposition of all or substantially all the
Corporation's assets in one transaction or a series of related
transactions to a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation.
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.8 "Committee" means the committee appointed pursuant to Section
3 by the Board of Directors to administer this Plan.
1.9 "Corporation" means Dell Computer Corporation, a Delaware
corporation.
1.10 "Date of Grant" has the meaning given it in Paragraph 4.3.
1.11 "Disability" has the meaning given it in Paragraph 12.5.
1.12 "Disinterested Person" has the meaning given it in Rule 16b-3.
1.13 "Effective Date" means the date on which the Plan is approved
by the stockholders of the Corporation.
1.14 "Eligible Individuals" means (a) Key Employees, (b)
Non-employee Directors only for purposes of Awards pursuant to Section 5, and
(c) any other Person that the Committee designates as eligible for an Award
(other than for Incentive Options) because the Person performs bona fide
consulting or advisory services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Corporation
or any of its Subsidiaries. Notwithstanding the foregoing provisions of this
Paragraph 1.14, to ensure that the requirements of the fourth sentence of
Paragraph 3.1 are satisfied, the Board of Directors may from time to time
specify individuals who shall not be eligible for the grant of Awards or
options or
3
<PAGE> 35
stock appreciation rights or allocations of stock under any plan of the
Corporation or its affiliates (as those terms are used in subsection (d)(3) of
Rule 16b-3). Nevertheless, the Board of Directors may at any time determine
that an individual who has been so excluded from eligibility shall become
eligible for grants of Awards and grants of such other options or stock
appreciation rights or allocations of stock under any plans of the Corporation
or its affiliates so long as that eligibility will not impair the Plan's
satisfaction of the conditions of Rule 16b-3.
1.15 "Employee" means any employee of the Corporation or of any of
its Subsidiaries, including officers and directors of the Corporation who are
also employees of the Corporation or of any of its Subsidiaries.
1.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.17 "Executive Officer" means an Eligible Individual who, as of
the earlier of the date an Award is vested, the date restrictions with respect
to an Award lapse, or a payment is made pursuant to the terms of the Award
Agreement, is one of the "covered employees" defined in regulations promulgated
under section 162(m) or any successor provision of law.
1.18 "Exercise Notice" has the meaning given it in Paragraph 6.5.
1.19 "Exercise Price" has the meaning given it in Paragraph 6.4.
1.20 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional
securities exchange at the date of determining the Fair Market Value,
then the last reported sale price, regular way, on the composite tape
of that exchange on the last Business Day before the date in question
or, if no such sale takes place on that Business Day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to unlisted trading
privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph
1.19(a) and if sales prices for shares of Stock of the same class in
the over-the-counter market are reported by the National Association
of Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ")
National Market System (or such other system then in use) at the date
of determining
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the Fair Market Value, then the last reported sales price so reported
on the last Business Day before the date in question or, if no such
sale takes place on that Business Day, the average of the high bid and
low asked prices so reported; or
(c) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph
1.20(a) and sales prices for shares of Stock of the same class are not
reported by the NASDAQ National Market System (or a similar system
then in use) as provided in subparagraph 1.20(b), and if bid and asked
prices for shares of Stock of the same class in the over-the-counter
market are reported by NASDAQ (or, if not so reported, by the National
Quotation Bureau Incorporated) at the date of determining the Fair
Market Value, then the average of the high bid and low asked prices on
the last Business Day before the date in question; or
(d) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph
1.20(a) and sales prices or bid and asked prices therefor are not
reported by NASDAQ (or the National Quotation Bureau Incorporated) as
provided in subparagraph 1.20(b) or subparagraph 1.20(c) at the date
of determining the Fair Market Value, then the value determined in
good faith by the Committee, which determination shall be conclusive
for all purposes; or
(e) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges as provided in subparagraph
1.20(a) or sales prices or bid and asked prices therefor are reported
by NASDAQ (or the National Quotation Bureau Incorporated) as provided
in subparagraph 1.20(b) or subparagraph 1.20(c) at the date of
determining the Fair Market Value, but the volume of trading is so low
that the Board of Directors determines in good faith that such prices
are not indicative of the fair value of the Stock, then the value
determined in good faith by the Committee, which determination shall
be conclusive for all purposes notwithstanding the provisions of
subparagraphs 1.20(a), (b), or (c).
For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one that, by its
terms, will never lapse. For purposes of the redemption provided for in clause
11.3(d)(v), Fair Market Value shall have the meaning and shall be determined as
provided above; provided, however, that the Committee, with respect to any such
redemption, shall have the right to determine that the Fair Market Value for
purposes of the redemption should be an amount measured by the value of the
shares of stock, other securities, cash or property otherwise being received by
holders of shares of Stock in
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connection with the Restructure, and upon that determination the Committee
shall have the power and authority to determine Fair Market Value for purposes
of the redemption based upon the value of such shares of stock, other
securities, cash or property. Any such determination by the Committee shall be
conclusive for all purposes.
1.21 "Holder" means an Eligible Individual to whom an Award has
been granted.
1.22 "Incentive Option" means an incentive stock option as defined
under Section 422 of the Code and regulations thereunder.
1.23 "Incumbent Board" means the individuals who, as of the
Effective Date, constitute the Board of Directors and any other individual who
becomes a director of the Corporation after that date and whose election or
appointment by the Board of Directors or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then comprising the Incumbent Board.
1.24 "Key Employee" means any Employee whom the Committee
identifies as having a direct and significant effect on the performance of the
Corporation or any of its Subsidiaries.
1.25 "Non-employee Director" means a director of the Corporation
who while a director is not (and who in the year before becoming a director has
not been) an Employee.
1.26 "Nonstatutory Option" means a stock option that does not
satisfy the requirements of Section 422 of the Code or that is designated at
the Date of Grant or in the applicable Option Agreement to be an option other
than an Incentive Option.
1.27 "Non-Surviving Event" means an event of Restructure as
described in either subparagraph (b) or (c) of Paragraph 1.37
1.28 "Normal Retirement" means the separation of the Holder from
employment with the Corporation and its Subsidiaries on account of retirement
at any time on or after the date on which the Holder reaches age sixty.
1.29 "Option Agreement" means an Award Agreement for an Incentive
Option or a Nonstatutory Option.
1.30 "Option" means either an Incentive Option or a Nonstatutory
Option, or both.
1.31 "Performance Period" means a period of one or more fiscal
years of the Corporation, beginning with the fiscal year in which Performance
Units are granted and over which performance is measured, for the purpose of
determining the payment value of
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Performance Units. A Performance Period shall not exceed ten years.
1.32 "Performance Unit" means a unit representing a contingent
right to receive a specified amount of cash or shares of Stock at the end of a
Performance Period.
1.33 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust or other entity. A Person, together with
that Person's affiliates and associates (as those terms are defined in Rule
12b-2 under the Exchange Act for purposes of this definition only), and any
Persons acting as a partnership, limited partnership, joint venture,
association, syndicate or other group (whether or not formally organized), or
otherwise acting jointly or in concert or in a coordinated or consciously
parallel manner (whether or not pursuant to any express agreement), for the
purpose of acquiring, holding, voting or disposing of securities of the
Corporation with that Person, shall be deemed a single "Person."
1.34 "Plan" means the Dell Computer Corporation Incentive Plan, as
it may be amended from time to time.
1.35 "Reload Option" has the meaning given it in Paragraph 6.10.
1.36 "Restricted Stock Award" means the grant or purchase, on the
terms and conditions that the Committee determines or on the terms and
conditions of Section 8, of Stock that is nontransferable and subject to
substantial risk of forfeiture until specific conditions are met.
1.37 "Restructure" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of
related transactions, with the Corporation remaining the continuing or
surviving entity of that merger or consolidation and the Stock
remaining outstanding and not changed into or exchanged for stock or
other securities of any other Person or of the Corporation, cash, or
other property;
(b) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of
related transactions, with (i) the Corporation not being the
continuing or surviving entity of that merger or consolidation or (ii)
the Corporation remaining the continuing or surviving entity of that
merger or consolidation but all or a part of the outstanding shares of
Stock are changed into or
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exchanged for stock or other securities of any other Person or the
Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or
substantially all of the assets of the Corporation (whether by sale,
merger, consolidation, liquidation or otherwise) to any Person whether
effected as a single transaction or a series of related transactions.
1.38 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, or any successor rule, as it may be amended from time to time.
1.39 "Securities Act" means the Securities Act of 1933, as amended.
1.40 "Stock" means the Corporation's authorized common stock, par
value $.01 per share, as described in the Corporation's Certificate of
Incorporation, or any other securities that are substituted for the Stock as
provided in Section 11.
1.41 "Stock Appreciation Right" means the right to receive an
amount equal to the excess of the Fair Market Value of a share of Stock (as
determined on the date of exercise) over, as appropriate, the Exercise Price of
a related Option or the Fair Market Value of the Stock on the Date of Grant of
the Stock Appreciation Right.
1.42 "Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.
1.43 "Total Shares" has the meaning given it in Paragraph 11.2.
1.44 "Voting Securities" means any securities that are entitled to
vote generally in the election of directors, in the admission of general
partners, or in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Amount of Shares. Subject to the provisions of
Paragraph 2.6 and Section 11 of the Plan, the aggregate number of shares of
Stock that may be issued, transferred or exercised pursuant to Awards under the
Plan shall be 4,840,898 shares of Stock.
2.2 Reduction in Available Shares. In computing the total number
of shares available at a particular time for Awards under the Plan, there shall
be counted against the limitations stated in Paragraph 2.1 the number of shares
of Stock subject to issuance
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upon exercise or settlement of Awards, the number of shares of Stock that equal
the value of Performance Units determined in each case as of the Date of Grant
of each Award (other than Awards designated to be paid only in cash), and the
number of shares of Stock that have been issued upon exercise or settlement of
Awards (except as otherwise provided in Paragraph 2.3).
2.3 Restoration of Unused and Surrendered Shares. If Stock
subject to any Award is not issued or transferred, or ceases to be issuable or
transferable for any reason, including (but not exclusively) because an Award
is forfeited, terminated, expires unexercised, is settled in cash in lieu of
Stock, or is exchanged for other Awards, the shares of Stock that were subject
to that Award shall no longer be charged against the number of available shares
provided for in Paragraph 2.2 and shall again be available for issue, transfer,
or exercise pursuant to Awards under the Plan to the extent of such forfeiture,
termination, expiration, or other cessation of its subjection to an Award.
2.4 Description of Shares. The shares to be delivered under the
Plan shall be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Corporation, or (c) previously issued
shares of Stock reacquired by the Corporation, including shares purchased on
the open market, in each situation as the Board of Directors or the Committee
may determine from time to time at its sole option.
2.5 Registration and Listing of Shares. From time to time, the
Board of Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons
to make shares of Stock available for issuance pursuant to Awards.
2.6 Reduction in Outstanding Shares of Stock. Nothing in this
Section 2 shall impair the right of the Corporation to reduce the number of
outstanding shares of Stock pursuant to repurchases, redemptions, or otherwise;
provided, however, that no reduction in the number of outstanding shares of
Stock shall (a) impair the validity of any outstanding Award, whether or not
that Award is fully exercisable or fully vested or (b) impair the status of any
shares of Stock previously issued pursuant to an Award or thereafter issued
pursuant to a then-outstanding Award as duly authorized, validly issued, fully
paid, and nonassessable shares.
2.7 Limitation on Certain Stock Awards. No more than twenty-five
percent of the aggregate shares of Stock which may be issued under the Plan may
be issued pursuant to Restricted Stock Awards, Stock Bonus Awards or similar
awards which grant Stock; provided, however, that the limitation expressed in
this Section 2.7 shall not apply with respect to shares of Stock issued in
connection with
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the exercise of an Option Award, Stock Appreciation Right Award or Performance
Unit.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Committee shall administer the Plan with
respect to all Eligible Individuals who are subject to Section 16(b) of the
Exchange Act, but shall not have the power to appoint members of the Committee
or to terminate, modify, or amend the Plan. The Board of Directors may
administer the Plan with respect to all other Eligible Individuals or may
delegate all or part of that duty to the Committee or to any other person or
persons. Except for references in Paragraphs 3.1, 3.2, and 3.3 and unless the
context otherwise requires, references herein to the Committee shall also refer
to the Board of Directors as administrator of the Plan for Eligible Individuals
who are not subject to Section 16(b) of the Exchange Act. The Committee shall
be constituted so that, as long as Stock is registered under Section 12 of the
Exchange Act, each member of the Committee shall be a Disinterested Person who
is a member of the Board of Directors and so that the Plan in all other
applicable respects will qualify transactions related to the Plan for the
exemptions from Section 16(b) of the Exchange Act provided by Rule 16b-3, to
the extent exemptions thereunder may be available. No discretion regarding
Awards to Eligible Individuals who are subject to Section 16(b) of the Exchange
Act shall be afforded to a person who is not a Disinterested Person. The
number of persons that shall constitute the Committee shall be determined from
time to time by a majority of all the members of the Board of Directors, and,
unless that majority of the Board of Directors determines otherwise, shall be
no less than two persons. Persons elected to serve on the Committee as
Disinterested Persons shall not be eligible to receive Awards or equity
securities under any plan of the Corporation or its affiliates (as those terms
are used in Rule 16b-3) while they are serving as members of the Committee;
shall not have been eligible to receive Awards or such equity securities under
any plan of the Corporation or its affiliates within one year before their
appointment to the Committee becomes effective; and shall not be eligible to
receive Awards or such equity securities under any plan of the Corporation or
its affiliates for such period following service on the Committee as may be
required by Rule 16b-3 for that person to remain a Disinterested Person, in
each case except for Awards or equity securities pursuant to paragraphs
(c)(2)(i)(A), (B), (C) or (D) of Rule 16b-3.
3.2 Duration, Removal, Etc. The members of the Committee shall
serve at the pleasure of the Board of Directors, which shall have the power, at
any time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three day's written notice
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to the Board of Directors. The Board of Directors, and not the remaining
members of the Committee, shall have the power and authority to fill vacancies
on the Committee, however caused. The Board of Directors shall promptly fill
any vacancy that causes the number of members of the Committee to be below two
or any other number that Rule 16b-3 may require from time to time.
3.3 Meetings and Actions of Committee. The Board of Directors
shall designate which of the Committee members shall be the chairman of the
Committee. If the Board of Directors fails to designate a Committee chairman,
the members of the Committee shall elect one of the Committee members as
chairman, who shall act as chairman until he ceases to be a member of the
Committee or until the Board of Directors elects a new chairman. The Committee
shall hold its meetings at those times and places as the chairman of the
Committee may determine. At all meetings of the Committee, a quorum for the
transaction of business shall be required, and a quorum shall be deemed present
if at least a majority of the members of the Committee are present. At any
meeting of the Committee, each member shall have one vote. All decisions and
determinations of the Committee shall be made by the majority vote or majority
decision of all of its members present at a meeting at which a quorum is
present; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and held.
The Committee may make any rules and regulations for the conduct of its
business that are not inconsistent with the provisions of the Plan, the
Certificate of Incorporation, the by-laws of the Corporation, and Rule 16b-3 so
long as it is applicable, as the Committee may deem advisable.
3.4 Committee's Powers. Subject to the express provisions of the
Plan and Rule 16b-3, the Committee shall have the authority, in its sole and
absolute discretion, (a) to adopt, amend, and rescind administrative and
interpretive rules and regulations relating to the Plan; (b) to determine the
Eligible Individuals to whom, and the time or times at which, Awards shall be
granted; (c) to determine the number of shares of Stock that shall be the
subject of each Award; (d) to determine the terms and provisions of each Award
Agreement (which need not be identical), including provisions defining or
otherwise relating to (i) the term and the period or periods and extent of
exercisability of the Options, (ii) the extent to which the transferability of
shares of Stock issued or transferred pursuant to any Award is restricted,
(iii) the effect of termination of employment on the Award, and (iv) the effect
of approved leaves of absence (consistent with any applicable regulations of
the Internal Revenue Service); (e) to accelerate, pursuant to Section 6, the
time of exercisability of any Option that has been granted; (f) to construe the
respective Award Agreements and the Plan; (g) to make determinations of the
Fair Market Value of the Stock pursuant to the Plan; (h) to delegate its duties
under the Plan to such agents as it may appoint from time to
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time, provided that the Committee may not delegate its duties with respect to
making Awards to Eligible Individuals who are subject to Section 16(b) of the
Exchange Act; and (i) to make all other determinations, perform all other acts,
and exercise all other powers and authority necessary or advisable for
administering the Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate. Subject to Rule 16b-3,
the Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award, or in any Award Agreement in the
manner and to the extent it deems necessary or desirable to carry the Plan into
effect, and the Committee shall be the sole and final judge of that necessity
or desirability. The determinations of the Committee on the matters referred
to in this Paragraph 3.4 shall be final and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant to
the Plan only to persons who are Eligible Individuals at the time of the
grant thereof.
4.2 Grant of Awards. Subject to the express provisions of the
Plan, the Committee shall determine which Eligible Individuals shall be granted
Awards from time to time. In making grants, the Committee shall take into
consideration the contribution the potential Holder has made or may make to the
success of the Corporation or its Subsidiaries and such other considerations as
the Committee may from time to time specify. The Committee shall also
determine the number of shares or cash amounts subject to each of the Awards
and shall authorize and cause the Corporation to grant Awards in accordance
with those determinations.
4.3 Date of Grant. The date on which the Committee completes all
action constituting an offer of an Award to an individual, including the
specification of the number of shares of Stock and the amount of cash to be
subject to the Award, shall be the date on which the Award covered by an Award
Agreement is granted (the "Date of Grant"), even though certain terms of the
Award Agreement may not be determined at that time and even though the Award
Agreement may not be executed until a later time. In no event shall a Holder
gain any rights in addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Award and the
actual execution of the Award Agreement by the Corporation and the Holder.
4.4 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation and the
Eligible Individual to whom the Award is granted and incorporating those terms
that the Committee shall deem necessary or desirable. More than one Award may
be granted under the Plan to the same Eligible Individual and be outstanding
concurrently. In the event an Eligible Individual is granted both
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one or more Incentive Options and one or more Nonstatutory Options, those
grants shall be evidenced by separate Award Agreements, one for each of the
Incentive Option grants and one for each of the Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any
provision contained herein to the contrary, (a) a person shall not be eligible
to receive an Incentive Option unless he is an Employee of the Corporation or a
corporate Subsidiary (but not a partnership Subsidiary), and (b) a person shall
not be eligible to receive an Incentive Option if, immediately before the time
the Option is granted, that person owns (within the meaning of Sections 422 and
425 of the Code) stock possessing more than ten percent of the total combined
voting power or value of all classes of stock of the Corporation or a
Subsidiary. Nevertheless, this subparagraph 4.5(b) shall not apply if, at the
time the Incentive Option is granted, the Exercise Price of the Incentive
Option is at least one hundred and ten percent of Fair Market Value and the
Incentive Option is not, by its terms, exercisable after the expiration of five
years from the Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be
deemed to give any person a right to be granted an Award except pursuant to
Section 5.
4.7 Limitation on Individual Awards. No Eligible Individual
shall, in one calendar year, receive Awards to which more than 200,000 shares
of Stock are subject.
SECTION 5. AWARDS TO NON-EMPLOYEE DIRECTORS
5.1 Ineligibility for Other Awards. Non-employee Directors shall
not be eligible to receive any Awards under the Plan other than the automatic
and deferral Awards specified in this Section 5.
5.2 Automatic Grant of Awards. Awards of Nonstatutory Options
shall be made automatically to Non-employee Directors as follows:
(a) Beginning in 1994, each Non-employee Director who is
a director of the Corporation as of both the day immediately preceding
the annual meeting of the stockholders and the day immediately
following such annual meeting shall automatically be granted a
Nonstatutory Option for the purchase of 6,000 shares of Stock of the
first meeting of the Board of Directors following such annual meeting.
(b) Each non-Employee individual who becomes a
Non-employee Director after the 60th day following the Effective Date
shall, on the day after the first meeting of the Board of Directors at
which the Non-employee Director is in attendance in person or by
telephone as a Non-employee Director,
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automatically be granted a Nonstatutory Stock Option for the purchase
of 15,000 shares of Stock.
5.3 Available Stock. The automatic Awards specified in Paragraph
5.2 shall be made in the amounts specified in Paragraph 5.2 only if the number
of shares of Stock available to be issued, transferred or exercised pursuant to
Awards under the Plan (as calculated in Section 2) is sufficient to make all
automatic grants required to be made by Paragraph 5.2 on the Date of Grant of
those automatic Awards. In the event that a lesser number of shares of Stock
are available to be issued, transferred, or exercised pursuant to Awards under
the Plan on the Date of Grant of the automatic Awards described Paragraph 5.2,
but their number is insufficient to permit the grant of the entire number of
shares specified in the automatic Awards, then the number of available shares
shall be apportioned equally among the automatic Awards made on that date, and
the number of shares apportioned to each automatic Award shall be the amount of
shares automatically subject to that automatic Award.
5.4 Terms and Conditions of Automatic Award. Award Agreements
for Nonstatutory Option Awards to Non-employee Directors shall be in the form
attached as Exhibit A and, except as expressly provided in those Award
Agreements, the automatic Awards to Non-employee Directors shall not be subject
to the provisions of Section 11 or 12. In addition, the following terms and
conditions shall apply to Awards pursuant to this Section 5:
(a) With respect to Nonstatutory Option Awards granted
pursuant to Paragraph 5.2(a), (i) the exercise price for each share of
Stock subject to such Option shall be the Fair Market value of a share
of Stock on the Date of Grant of such Option, (ii) the Option shall
become vested and exercisable with respect to 1,200 shares of Stock on
each of the first five anniversaries of such Date of Grant so long as
the Non-employee Director remains a director of the Corporation after
the Date of Grant through those dates and (iii) such Option shall
terminate on the earliest of (A) ten years from the Date of Grant, (B)
the Holder ceasing to be a director, if the Board demands or requests
the Holder's resignation from the Board, (C) 90 days after the Holder
ceases to be a director for reasons other than the reasons specified
in (B) above or (D) below, or (D) one year after the death or
disability of the Holder.
(b) With respect to Nonstatutory Option Awards granted
pursuant to Paragraph 5.2(b), (i) the exercise price for each share of
Stock subject to such Option shall be the Fair Market value of a share
of Stock on the Date of Grant of such Option, (ii) the Option shall
become vested and exercisable with respect to 3,000 shares of Stock on
each of the first five anniversaries of such Date of Grant so long as
the Non-
<PAGE> 46
employee Director remains a director of the Corporation after
the Date of Grant through those dates and (iii) such Option shall
terminate on the earliest of (A) ten years from the Date of Grant, (B)
the Holder ceasing to be a director, if the Board demands or requests
the Holder's resignation from the Board, (C) 90 days after the Holder
ceases to be a director for reasons other than the reasons specified
in (B) above or (D) below, or (D) one year after the death or
disability of the Holder.
5.5 Non-Employee Director Deferral Awards. A Non-employee
Director may elect to receive a Nonstatutory Option in lieu of all or a portion
of his or her fee for services as a Non-employee Director of the Corporation.
The number of shares subject to such Option shall be determined by dividing the
amount of the fee which the Non-employee Director has elected not to receive by
the value of an option for one share of Common Stock on the Date of Grant
having the terms set forth herein; provided that such value shall be calculated
pursuant to the Black-Scholes Model based on the applicable assumptions used in
calculating option values in the most recent annual meeting proxy Statement of
the Corporation. The Date of Grant of such an Option shall be the date on
which such fee otherwise would have been paid. The exercise price with respect
to a share of Stock subject to such Option shall be the Fair Market Value of a
share of Stock on the Option's Date of Grant. An Option issued pursuant to
this Section 5.5 shall vest with respect to 20 percent of the shares subject to
the Option on each of the first five anniversaries of the Option's Date of
Grant so long as the Non-employee Director remains a director of the
Corporation through such dates, and shall terminate as set forth in Section
5.4(a)(iii) above.
5.6 Tax Withholding. The Corporation shall have the right to
require a Non-employee Director to pay to the Corporation the amount necessary
to satisfy the Corporation's current or future obligation to withhold federal,
state or local income or other taxes that the Non-employee Director incurs by
vesting of an Option Award. Tax withholding obligations in respect of Option
Awards to Non-employee Directors may not be satisfied by the Corporation's
withholding of Stock subject to the Award or by the Non-employee Director's
transfer of Stock to the Corporation.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related
Option Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 6 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth
in Section 11 and Section 12; provided, however, that the Committee may
authorize an Option Agreement that expressly contains terms and provisions that
differ from the terms and provisions set forth in Paragraphs 11.2,
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11.3, and 11.4 and any of the terms and provisions of Section 12 (other than
Paragraph 12.11).
6.1 Number of Shares. Each Option Agreement shall state the total
number of shares of Stock to which it relates.
6.2 Vesting. Each Option Agreement shall state the time
or periods in which the right to exercise the Option or a portion thereof shall
vest and the number of shares of Stock for which the right to exercise the
Option shall vest at each such time or period.
6.3 Expiration of Options. Nonstatutory Options and Incentive
Options may be exercised during the term determined by the Committee and set
forth in the Option Agreement; provided that no Option shall be exercised after
the expiration of a period of ten years commencing on the Date of Grant of the
Incentive Option.
6.4 Exercise Price. Each Option Agreement shall state the
exercise price per share of Stock (the "Exercise Price"). The exercise price
per share of Stock subject to an Incentive Option shall not be less than the
greater of (a) the par value per share of the Stock or (b) 100% of the Fair
Market Value per share of the Stock on the Date of Grant of the Option. The
exercise price per share of Stock subject to a Nonstatutory Option shall not
be less than the greater of (a) the par value per share of the Stock or (b)
fifty percent of the Fair Market Value per share of the Stock on the Date of
Grant of the Option.
6.5 Method of Exercise. The Option shall be exercisable only by
written notice of exercise (the "Exercise Notice") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number of
shares of Stock with respect to which the Option is being exercised, (b) be
signed by the Holder of the Option or, if the Holder is dead, by the person
authorized to exercise the Option pursuant to Paragraph 12.3, (c) be
accompanied by the Exercise Price for all shares of Stock for which the Option
is exercised, and (d) include such other information, instruments, and
documents as may be required to satisfy any other condition to exercise
contained in the Option Agreement. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Paragraph 6.5 have been satisfied.
6.6 Incentive Option Exercises. During the Holder's lifetime,
only the Holder may exercise an Incentive Option.
6.7 Medium and Time of Payment. The Exercise Price of an Option
shall be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or restricted shares already held by the Holder)
and having a Fair
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Market Value at least equal to the aggregate Exercise Price payable in
connection with such exercise, or (c) by any combination of clauses (a) and
(b). If the Committee elects to accept shares of Stock in payment of all or
any portion of the Exercise Price, then (for purposes of payment of the
Exercise Price) those shares of Stock shall be deemed to have a cash value
equal to their aggregate Fair Market Value determined as of the date of the
delivery of the Exercise Notice. If the Committee elects to accept shares of
restricted Stock in payment of all or any portion of the Exercise Price, then
an equal number of shares issued pursuant to the exercise shall be restricted
on the same terms and for the restriction period remaining on the shares used
for payment.
6.8 Payment with Sale Proceeds. In addition, at the request of
the Holder and to the extent permitted by applicable law, the Committee may
(but shall not be required to) approve arrangements with a brokerage firm under
which that brokerage firm, on behalf of the Holder, shall pay to the
Corporation the Exercise Price of the Option being exercised, and the
Corporation shall promptly deliver the exercised shares to the brokerage firm.
To accomplish this transaction, the Holder must deliver to the Corporation an
Exercise Notice containing irrevocable instructions from the Holder to the
Corporation to deliver the stock certificates directly to the broker. Upon
receiving a copy of the Exercise Notice acknowledged by the Corporation, the
broker shall sell that number of shares of Stock or loan the Holder an amount
sufficient to pay the Exercise Price and any withholding obligations due. The
broker shall then deliver to the Corporation that portion of the sale or loan
proceeds necessary to cover the Exercise Price and any withholding obligations
due. The Committee shall not approve any transaction of this nature if the
Committee believes that the transaction would give rise to the Holder's
liability for short-swing profits under Section 16(b) of the Exchange Act.
6.9 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the exercise of an Option, the amount that the Committee deems necessary to
satisfy the Corporation's or its Subsidiary's current or future obligation to
withhold federal, state or local income or other taxes that the Holder incurs
by exercising an Option. Upon the exercise of an Option requiring tax
withholding, a Holder may (a) direct the Corporation to withhold from the
shares of Stock to be issued to the Holder the number of shares necessary to
satisfy the Corporation's obligation to withhold taxes, that determination to
be based on the shares' Fair Market Value as of the date on which tax
withholding is to be made; (b) deliver to the Corporation sufficient shares of
Stock (based upon the Fair Market Value at date of withholding) to satisfy the
Corporation's tax withholding obligations, based on the shares' Fair Market
Value as of the date of exercise; or (c) deliver sufficient cash to the
Corporation to satisfy its tax withholding
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obligations. Holders who elect to use such a stock withholding feature must
make the election at the time and in the manner that the Committee prescribes.
The Committee may, at its sole option, deny any Holder's request to satisfy
withholding obligations through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
6.10 Reload Provisions. Options may contain a provision pursuant
to which a Holder who pays all or a portion of the Exercise Price of an Option
or the tax required to be withheld pursuant to the exercise of an Option by
surrendering shares of Stock shall automatically be granted an Option for the
purchase of the number of shares of Stock equal to the number of shares
surrendered (a "Reload Option"). The Date of Grant of the Reload Option shall
be the date on which the Holder surrenders the shares of Stock in respect of
which the Reload Option is granted. The Reload Option shall have an Exercise
Price equal to the price determined in accordance with Paragraph 6.4 and shall
have a term that is no longer than the original term of the underlying Option.
6.11 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in Paragraph 11.2(b), with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or its Subsidiaries (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time. As used in the
previous sentence, Fair Market Value shall be determined as of the date the
Incentive Option is granted. For purposes of this Paragraph 6.12 "predecessor
corporation" means (a) a corporation that was a party to a transaction
described in Section 424(a) of the Code (or which would be so described if a
substitution or assumption under that Section had been effected) with the
Corporation, (b) a corporation which, at the time the new incentive stock
option (within the meaning of Section 422 of the Code) is granted, is a
Subsidiary of the Corporation or a predecessor corporation of any such
corporations, or (c) a predecessor corporation of any such corporations.
Failure to comply with this provision shall not impair the enforceability or
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exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.
6.12 No Fractional Shares. The Corporation shall not in any case
be required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same
fraction (as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
6.13 Modification, Extension and Renewal of Options. Subject to
the terms and conditions of and within the limitations of the Plan, Rule 16b-3,
and any consent required by the last sentence of this Paragraph 6.14, the
Committee may (a) modify, extend or renew outstanding Options granted under the
Plan, (b) accept the surrender of Options outstanding hereunder (to the extent
not previously exercised) and authorize the granting of new Options in
substitution for outstanding Options (to the extent not previously exercised),
and (c) amend the terms of an Incentive Option at any time to include
provisions that have the effect of changing the Incentive Option to a
Nonstatutory Option. Nevertheless, without the consent of the Holder, the
Committee may not modify any outstanding Options so as to specify a higher or
lower Exercise Price or accept the surrender of outstanding Incentive Options
and authorize the granting of new Options in substitution therefor specifying a
higher or lower Exercise Price. In addition, no modification of an Option
granted hereunder shall, without the consent of the Holder, alter or impair any
rights or obligations under any Option theretofore granted hereunder to such
Holder under the Plan except, with respect to Incentive Options, as may be
necessary to satisfy the requirements of Section 422 of the Code or as
permitted in clause (c) of this Paragraph 6.14.
6.14 Other Agreement Provisions. The Option Agreements authorized
under the Plan shall contain such provisions in addition to those required by
the Plan (including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and the retention or transfer of
shares thereby acquired) as the Committee may deem advisable. Each Option
Agreement shall identify the Option evidenced thereby as an Incentive Option or
Nonstatutory Option, as the case may be, and no Option Agreement shall cover
both an Incentive Option and a Nonstatutory Option. Each Agreement relating to
an Incentive Option granted hereunder shall contain such limitations and
restrictions upon the exercise of the Incentive Option to which it relates as
shall be necessary for the Incentive Option to which such Agreement relates to
constitute an incentive stock option, as defined in Section 422 of the Code.
SECTION 7. STOCK APPRECIATION RIGHTS
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All Stock Appreciation Rights granted under the Plan shall comply
with, and the related Award Agreements shall be deemed to include and be
subject to, the terms and conditions set forth in this Section 7 (to the extent
each term and condition applies to the form of Stock Appreciation Right) and
also the terms and conditions set forth in Section 11 and Section 12; provided,
however, that the Committee may authorize an Award Agreement related to a Stock
Appreciation Right that expressly contains terms and provisions that differ
from the terms and provisions set forth in Paragraphs 11.2, 11.3, and 11.4 and
any of the terms and provisions of Section 12 (other than Paragraph 12.11).
7.1 Form of Right. A Stock Appreciation Right may be granted to
an Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) without relation to
an Option.
7.2 Rights Related to Options. A Stock Appreciation Right
granted pursuant to an Option shall entitle the Holder, upon exercise, to
surrender that Option or any portion thereof, to the extent unexercised, and to
receive payment of an amount computed pursuant to subparagraph 7.2(b). That
Option shall then cease to be exercisable to the extent surrendered. Stock
Appreciation Rights granted in connection with an Option shall be subject to
the terms of the Award Agreement governing the Option, which shall comply with
the following provisions in addition to those applicable to Options:
(a) Exercise and Transfer. Subject to Paragraph 11.10, a
Stock Appreciation Right granted in connection with an Option shall be
exercisable only at such time or times and only to the extent that the
related Option is exercised and shall not be transferable except to
the extent that the related Option is transferable. To the extent
that an Option has been exercised the Stock Appreciation Rights
granted in connection with such Option shall terminate.
(b) Value of Right. Upon the exercise of a Stock
Appreciation Right related to an Option, the Holder shall be entitled
to receive payment from the Corporation of an amount determined by
multiplying:
(i) The difference obtained by subtracting the
Exercise Price of a share of Stock specified in the related
Option from the Fair Market Value of a share of Stock on the
date of exercise of the Stock Appreciation Right, by
(ii) The number of shares as to which that Stock
Appreciation Right has been exercised.
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7.3 Right Without Option. A Stock Appreciation Right granted
without relationship to an Option shall be exercisable as determined by the
Committee and set forth in the Award Agreement governing the Stock Appreciation
Right, which Award Agreement shall comply with the following provisions:
(a) Number of Shares. Each Award Agreement shall state \
the total number of shares of Stock to which the Stock Appreciation
Right relates.
(b) Vesting. Each Award Agreement shall state the
time or periods in which the right to exercise the Stock Appreciation
Right or a portion thereof shall vest and the number of shares of
Stock for which the right to exercise the Stock Appreciation Right
shall vest at each such time or period.
(c) Expiration of Rights. Each Award Agreement shall
state the date at which the Stock Appreciation Rights shall expire if
not previously exercised.
(d) Value of Right. A Stock Appreciation Right granted
without relationship to an Option shall entitle the Holder, upon
exercise of the Stock Appreciation Right, to receive payment of an
amount determined by multiplying:
(i) The difference obtained by subtracting the
Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is granted from the Fair Market Value of a
share of Stock on the date of exercise of that Stock
Appreciation Right, by
(ii) The number of rights as to which the Stock
Appreciation Right has been exercised.
7.4 Limitations on Rights. Notwithstanding subparagraph 7.2(b)
and subparagraph 7.3(d), the Committee may limit the amount payable upon
exercise of a Stock Appreciation Right. Any such limitation must be determined
as of the Date of Grant and be noted on the instrument evidencing the Holder's
Stock Appreciation Right.
7.5 Payment of Rights. Payment of the amount determined under
subparagraph 7.2(b) or subparagraph 7.3(d) and Paragraph 7.4 may be made solely
in whole shares of Stock valued at Fair Market Value on the date of exercise of
the Stock Appreciation Right or, in the sole discretion of the Committee,
solely in cash or a combination of cash and Stock. If the Committee decides to
make full payment in shares of Stock and the amount payable results in a
fractional share, payment for the fractional share shall be made in cash.
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7.6 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the exercise of a Stock Appreciation Right, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or future
obligation to withhold federal, state or local income or other taxes that the
Holder incurs by exercising a Stock Appreciation Right. Upon the exercise of a
Stock Appreciation Right requiring tax withholding, a Holder may (a) direct the
Corporation to withhold from the shares of Stock to be issued to the Holder the
number of shares necessary to satisfy the Corporation's obligation to withhold
taxes, that determination to be based on the shares' Fair Market Value as of
the date on which tax withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at date of
withholding) to satisfy the Corporation's tax withholding obligations, based on
the shares' Fair Market Value as of the date of exercise; or (c) deliver
sufficient cash to the Corporation to satisfy its tax withholding obligations.
Holders who elect to use such a stock withholding feature must make the
election at the time and in the manner that the Committee prescribes. The
Committee may, in its sole discretion, deny any Holder's request to satisfy
withholding obligations through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
7.7 Other Agreement Provisions. The Award Agreements authorized
relating to Stock Appreciation Rights shall contain such provisions in addition
to those required by the Plan (including, without limitation, restrictions or
the removal of restrictions upon the exercise of the Stock Appreciation Right
and the retention or transfer of shares thereby acquired) as the Committee may
deem advisable.
SECTION 8. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan (other than the
automatic Awards to Non-employee Directors pursuant to Section 5) shall comply
with, and the related Award Agreements shall be deemed to include, and be
subject to the terms and conditions set forth in this Section 8 and also to the
terms and conditions set forth in Section 10 and Section 11; provided, however,
that the Committee may authorize an Award Agreement related to a Restricted
Stock Award that expressly contains terms and provisions that differ from the
terms and provisions set forth in Paragraphs 11.2, 11.3, and 11.4 and the terms
and provisions set forth in Section 12 (other than Paragraph 12.11).
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8.1 Restrictions. All shares of Restricted Stock Awards granted
or sold pursuant to the Plan shall be subject to the following conditions:
(a) Transferability. The shares may not be sold,
transferred or otherwise alienated or hypothecated until the
restrictions are removed or expire.
(b) Conditions to Removal of Restrictions. Conditions to
removal or expiration of the restrictions may include, but are not
required to be limited to, continuing employment or service as a
director, officer, consultant, or advisor or achievement of
performance objectives described in the Award Agreement.
(c) Legend. Each certificate representing Restricted
Stock Awards granted pursuant to the Plan shall bear a legend making
appropriate reference to the restrictions imposed.
(d) Possession. The Committee may require the
Corporation to retain physical custody of the certificates
representing Restricted Stock Awards during the restriction period and
may require the Holder of the Award to execute stock powers in blank
for those certificates and deliver those stock powers to the
Corporation, or the Committee may require the Holder to enter into an
escrow agreement providing that the certificates representing
Restricted Stock Awards granted or sold pursuant to the Plan shall
remain in the physical custody of an escrow holder until all
restrictions are removed or expire. The Corporation may issue shares
subject to stop-transfer restrictions or may issue such shares subject
only to the restrictive legend described in subparagraph 8.1(c).
(e) Other Conditions. The Committee may impose other
conditions on any shares granted or sold as Restricted Stock Awards
pursuant to the Plan as it may deem advisable, including, without
limitation, (i) restrictions under the Securities Act or Exchange Act,
(ii) the requirements of any securities exchange upon which the shares
or shares of the same class are then listed, and (iii) any state
securities law applicable to the shares.
8.2 Expiration of Restrictions. The restrictions imposed in
Paragraph 8.1 on Restricted Stock Awards shall lapse as determined by the
Committee and set forth in the applicable Award Agreement, and the Corporation
shall promptly deliver to the Holder of the Restricted Stock Award a
certificate representing the number of shares for which restrictions have
lapsed, free of any restrictive legend relating to the lapsed restrictions.
Each Restricted Stock Award may have a different restriction period, in the
discretion of the Committee. The Committee may, in its discretion,
prospectively reduce the restriction period applicable to a particular
Restricted
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Stock Award. The foregoing notwithstanding, no restriction shall remain in
effect for more than ten years after the date of the Awards.
8.3 Rights as Stockholder. Subject to the provisions of
Paragraphs 8.1 and 12.11, the Committee may, in its discretion, determine what
rights, if any, the Holder shall have with respect to the Restricted Stock
Awards granted or sold, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.
8.4 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation) the amount that
the Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state or local income or
other taxes that the Holder incurs by reason of the Restricted Stock Award.
The Holder may (a) direct the Corporation to withhold from the shares of Stock
to be issued to the Holder the number of shares necessary to satisfy the
Corporation's obligation to withhold taxes, that determination to be based on
the shares' Fair Market Value as of the date on which tax withholding is to be
made; (b) deliver to the Corporation sufficient shares of Stock (based upon the
Fair Market Value at date of withholding) to satisfy the Corporation's tax
withholding obligations, based on the shares' Fair Market Value as of the date
of exercise; or (c) deliver sufficient cash to the Corporation to satisfy its
tax withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash. In
the event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
8.5 Other Agreement Provisions. The Award Agreements relating to
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
8.6 Limitations on Awards of Restricted Stock. No more than
100,000 shares of Stock may be awarded to any Holder in any year.
SECTION 9. CASH AND STOCK BONUS AWARDS
9.1 Cash Bonus. The Committee, in its sole discretion, may award
a cash bonus to an Eligible Individual. The basis for such
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Award may, but need not, be recognition of previous performance by such
Eligible Individual.
9.2 Bonus Stock. The Committee, in its sole discretion, may
award an Eligible Individual shares of stock. Unless the Committee
specifically provides otherwise, shares of Stock awarded pursuant to this
Section 9.2 shall not be subject to vesting or other restrictions hereunder.
The basis for such Award may, but need not, be recognition of previous
performance by such Eligible Individual.
9.3 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the payment of cash or stock in connection with a bonus under this section 9
the amount that the Committee deems necessary to satisfy the Corporation's or
its Subsidiary's current or future obligation to withhold federal, state or
local income or other taxes that the Holder incurs with respect to such
payment. Upon receiving notice that the Holder is required to satisfy tax
withholding, a Holder may (a) if the payment is to be made in Stock, direct the
Corporation to withhold from the shares of Stock to be issued to the Holder the
number of shares necessary to satisfy the Corporation's obligation to withhold
taxes, that determination to be based on the shares' Fair Market Value as of
the date on which tax withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at date of
withholding) to satisfy the Corporation's tax withholding obligations, based on
the shares' Fair Market Value as of the date of exercise; (c) if the payment is
to be made in cash, direct the Corporation to withhold from such payment the
amount of cash required to satisfy the Corporation's obligation to withhold
taxes; or (d) deliver sufficient cash to the Corporation to satisfy its tax
withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, at its sole option, deny any Holder's request
to satisfy withholding obligations through Stock instead of cash. In the event
the Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
SECTION 10. PERFORMANCE UNITS
10.1 Multiple Grants. The Committee may make grants of
Performance Units in such a manner that more than one Performance Period is in
progress simultaneously. At or before the beginning of each Performance
Period, the Committee will establish the
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contingent value of each Performance Unit for that Performance Period, which
may vary depending on the degree to which performance objectives established by
the Committee are met.
10.2 Performance Standards. (a) In General. At or before the
beginning of each Performance Period, the Committee will (i) establish the
beginning and ending dates of the Performance Period, (ii) establish for that
Performance Period specific performance objectives as the Committee believes
are relevant to the Corporation's overall business objectives, (iii) determine
the minimum and maximum value of a Performance Unit and the value of a
Performance Unit based on the degree to which performance objectives are
achieved, exceeded or not achieved, (iv) determine a minimum performance level
below which Performance Units will be assigned a value of zero, and a maximum
performance level above which the value of Performance Units will not increase,
and (v) notify each Holder of a Performance Unit for that Performance Period in
writing of the established performance objectives and minimum, target, and
maximum Performance Unit value for that Performance Period. At the Discretion
of the Committee, the performance standards with respect to a Performance Unit
Award may include one or more objectives relating to total shareholder return,
net income of the Corporation, return on sales, equity or assets, performance
of a division or other defined unit of the Corporation and individual
performance.
(b) Special Rules for Executive Officers. Unless the
Committee determines that an Award of Performance Units to an Executive Officer
is not intended to qualify for the exemption for performance-based compensation
under section 162(m) of the Code, (i) the maximum payment to the Executive
Officer for performance Units granted in one fiscal year shall be 300 percent
of the Executive Officer's base salary on the first day of the fiscal year of
the Corporation in which such Performance Units are granted, (ii) a Performance
Unit Award which will be settled in Stock shall have a base value equal to the
Fair Market Value of a share of Stock on the Date of Grant of such Performance
Unit, and (iii) the period over which the performance standards must be
satisfied shall not be less than six months.
In addition, unless the stockholders approve otherwise or
such approval is not required to obtain a deduction under section 162(m) of the
Code, or the Committee determines that satisfaction of the deduction
requirements of section 162(m) of the Code with respect to a Performance Unit
Awarded is not in the Corporation's best interests, the performance standards
applicable to a Performance Unit Award to an Executive Officer shall be based
on one or more of the following choices: (i) total stockholder return (Stock
price appreciation plus dividends); (ii) net income; (iii) earnings per share;
(iv) return on sales; (v) return on equity; (vi) return on assets; (vii)
increase in the market price of Stock or other securities; (viii) the
performance of the Corporation in
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any of the items mentioned in clause (i) through (vii) in comparison to the
average performance of the companies included in the S&P Computer Systems
Index; and (ix) the performance of the Corporation in any of the items
mentioned in clause (i) through (vii) in comparison to the average performance
of the companies used in a self-constructed peer group established below the
beginning of the performance period.
10.3 Modification of Standards. If the Committee determines in
its sole discretion that the established performance measures or objectives are
no longer suitable to Corporation objectives because of a change in the
Corporation's business, operations, corporate structure, capital structure, or
other conditions the Committee deems to be material, the Committee may modify
the performance measures and objectives as it considers appropriate and
equitable.
10.4 Payment. The basis for payment of Performance Units for a
given Performance Period will be the achievement of those financial performance
objectives determined by the Committee at the beginning of the Performance
Period. If minimum performance is not achieved or exceeded for a Performance
Period, no payment will be made and all contingent rights will cease. If
minimum performance is achieved or exceeded, the value of a Performance Unit
will be based on the degree to which actual performance exceeded the
pre-established minimum performance standards. The amount of payment will be
determined by multiplying the number of Performance Units granted at the
beginning of the Performance Period by the final Performance Unit value.
Payments will be made in cash or Stock as soon as administratively possible
following the close of the applicable Performance Period.
10.5 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the payment of cash or stock in connection with a Performance Unit, the amount
that the Committee deems necessary to satisfy the Corporation's or its
Subsidiary's current or future obligation to withhold federal, state or local
income or other taxes that the Holder incurs with respect to such payment.
Upon receiving notice that the Holder is required to satisfy tax withholding, a
Holder may (a) if the payment is to be made in Stock, direct the Corporation to
withhold from the shares of Stock to be issued to the Holder the number of
shares necessary to satisfy the Corporation's obligation to withhold taxes,
that determination to be based on the shares' Fair Market Value as of the date
on which tax withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at date of
withholding) to satisfy the Corporation's tax withholding obligations, based on
the shares' Fair Market Value as of the date of exercise; (c) if the payment is
to be made in cash, direct the Corporation to withhold from such payment the
amount of cash required to satisfy the Corporation's obligation to withhold
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taxes; or (d) deliver sufficient cash to the Corporation to satisfy its tax
withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, at its sole option, deny any Holder's request
to satisfy withholding obligations through Stock instead of cash. In the event
the Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
10.6 Other Agreement Provisions. The Award Agreements, if any,
authorized relating to Performance Units shall contain such provisions in
addition to those required by the Plan (including, without limitation,
restrictions or the removal of restrictions upon the transfer of shares thereby
acquired) as the Committee may deem advisable.
SECTION 11. ADJUSTMENT PROVISIONS
11.1 Adjustment of Awards and Authorized Stock. The terms of an
Award and the number of shares of Stock authorized pursuant to Paragraph 2.1
for issuance under the Plan shall be subject to adjustment, from time to time,
in accordance with the following provisions:
(a) If at any time or from time to time, the Corporation
shall subdivide as a whole (by reclassification, by a Stock split, by
the issuance of a distribution on Stock payable in Stock or otherwise)
the number of shares of Stock then outstanding into a greater number
of shares of Stock, then (i) the maximum number of shares of Stock
available for the Plan as provided in Paragraph 2.1 shall be increased
proportionately, and the kind of shares or other securities available
for the Plan shall be appropriately adjusted, (ii) the number of
shares of Stock (or other kind of shares or securities) that may be
acquired under any Award shall be increased proportionately, and (iii)
the price (including Exercise Price) for each share of Stock (or other
kind of shares or unit of other securities) subject to then
outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.
(b) If at any time or from time to time, the Corporation
shall consolidate as a whole (by reclassification, reverse Stock
split, or otherwise) the number of shares of Stock then outstanding
into a lesser number of shares of Stock, (i) the maximum number of
shares of Stock available for the Plan as
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provided in Paragraph 2.1 shall be decreased proportionately, and the
kind of shares or other securities available for the Plan shall be
appropriately adjusted, (ii) the number of shares of Stock (or other
kind of shares or securities) that may be acquired under any Award
shall be decreased proportionately, and (iii) the price (including
Exercise Price) for each share of Stock (or other kind of shares or
unit of other securities) subject to then outstanding Awards shall be
increased proportionately, without changing the aggregate purchase
price or value as to which outstanding Awards remain exercisable or
subject to restrictions.
(c) Whenever the number of shares of Stock subject to
outstanding Awards and the price for each share of Stock subject to
outstanding Awards are required to be adjusted as provided in this
Paragraph 11.1, the Committee shall promptly prepare and provide to
each Holder a notice setting forth, in reasonable detail, the event
requiring adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the change in price and the
number of shares of Stock, other securities, cash or property
purchasable subject to each Award after giving effect to the
adjustments.
(d) Adjustments under subparagraph 11.1(a) and (b) shall
be made by the Committee, and its determination as to what adjustments
shall be made and the extent thereof shall be final, binding and
conclusive. No fractional interest shall be issued under the Plan on
account of any such adjustments.
11.2 Changes in Control. Any Award Agreement may provide that,
upon the occurrence of a Change in Control, (a) each Holder of an Option shall
immediately be granted corresponding Stock Appreciation Rights; (b) all
outstanding Stock Appreciation Rights and Options shall immediately become
fully vested and exercisable in full, including that portion of any Stock
Appreciation Award or Option that pursuant to the terms and provisions of the
applicable Award Agreement had not yet become exercisable (the total number of
shares of Stock as to which a Stock Appreciation Right or Option is exercisable
upon the occurrence of a Change in Control is referred to herein as the "Total
Shares"); (c) the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall expire; and (d) the
maximum value of any Performance Unit which has been outstanding for at least
six months as of the effective date of the Change in Control will be deemed to
be earned for all Performance Periods ending on or before such date, and a pro
rata cash distribution shall be made within 30 days following such date. If a
Change in Control involves a Restructure or occurs in connection with a series
of related transactions involving a Restructure and if such Restructure is in
the form of a Non-Surviving Event and as a part of such Restructure shares of
stock, other securities, cash or property shall be issuable or deliverable in
exchange for Stock, then the Holder of an Award
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shall be entitled to purchase or receive (in lieu of the Total Shares that the
Holder would otherwise be entitled to purchase or receive), as appropriate for
the form of Award, the number of shares of stock, other securities, cash or
property to which that number of Total Shares would have been entitled in
connection with such Restructure (and, for Options, at an aggregate exercise
price equal to the Exercise Price that would have been payable if that number
of Total Shares had been purchased on the exercise of the Option immediately
before the consummation of the Restructure). Nothing in this Paragraph 11.2
shall impose on a Holder the obligation to exercise any Award immediately
before or upon the Change of Control, nor shall the Holder forfeit the right to
exercise the Award during the remainder of the original term of the Award
because of a Change in Control or because the Holder's employment is terminated
for any reason following a Change in Control.
11.3 Restructure and No Change in Control. In the event a
Restructure should occur at any time while there is any outstanding Award
hereunder and that Restructure does not occur in connection with a Change in
Control or in connection with a series of related transactions involving a
Change in Control, then:
(a) no Holder of an Option shall automatically be granted
corresponding Stock Appreciation Rights;
(b) neither any outstanding Stock Appreciation Rights nor
any outstanding Options shall immediately become fully vested and
exercisable in full merely because of the occurrence of the
Restructure;
(c) the restriction period of any Restricted Stock Award
shall not immediately be accelerated and the restrictions expire
merely because of the occurrence of the Restructure; and
(d) at the option of the Committee, the Corporation may
(but shall not be required to) take any one or more of the following
actions:
(i) grant each Holder of an Option
corresponding Stock Appreciation Rights;
(ii) accelerate in whole or in part the time of
the vesting and exercisability of any one or more of the
outstanding Stock Appreciation Rights and Options so as to
provide that those Stock Appreciation Rights and Options
shall be exercisable before, upon, or after the consummation
of the Restructure;
(iii) accelerate in whole or in part the
expiration of some or all of the restrictions on any
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Restricted Stock Award so that the Stock subject to that
Awards shall be owned by the Holder without restriction or
risk of forfeiture;
(iv) if the Restructure is in the form of a
Non-Surviving Event, cause the surviving entity to assume in
whole or in part any one or more of the outstanding Awards
upon such terms and provisions as the Committee deems
desirable; or
(v) redeem in whole or in part any one or more
of the outstanding Awards (whether or not then exercisable) in
consideration of a cash payment, as such payment may be
reduced for tax withholding obligations as contemplated in
the Section governing the particular form of Award, in an
amount equal to:
(A) for Options and Stock Appreciation
Rights granted in connection with Options, the excess
of (1) the Fair Market Value, determined as of a date
immediately preceding the consummation of the
Restructure, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed over (2) the Exercise Price for
that number of shares of Stock;
(B) for Stock Appreciation Rights not
granted in connection with an Option, the excess of
(1) the Fair Market Value, determined as of a date
immediately preceding the consummation of the
Restructure, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed over (2) the Fair Market Value of
the number of shares of Stock on the Date of Grant;
(C) for Restricted Stock Awards, the
Fair Market Value, determined as of a date
immediately preceding the consummation of the
Restructure, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed; and
(D) for Performance Units, the amount per
Performance Unit as the Committee in its sole
discretion may determine (which may be zero dollars).
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Paragraph 11.3. In the event of any
election or action taken by the Corporation pursuant to this Paragraph 11.3
that requires the amendment or
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cancellation of any Award Agreement as may be specified in any notice to the
Holder thereof, that Holder shall promptly deliver that Award Agreement to the
Corporation in order for that amendment or cancellation to be implemented by
the Corporation and the Committee. The failure of the Holder to deliver any
such Award Agreement to the Corporation as provided in the preceding sentence
shall not in any manner effect the validity or enforceability of any action
taken by the Corporation and the Committee under this Paragraph 11.3,
including, without limitation, any redemption of an Award as of the
consummation of a Restructure. Any cash payment to be made by the Corporation
pursuant to this Paragraph 11.3 in connection with the redemption of any
outstanding Awards shall be paid to the Holder thereof currently with the
delivery to the Corporation of the Award Agreement evidencing that Award;
provided, however, that any such redemption shall be effective upon the
consummation of the Restructure notwithstanding that the payment of the
redemption price may occur subsequent to the consummation. If all or any
portion of an outstanding Award is to be exercised or accelerated to upon or
after the consummation of a Restructure that is in the form of a Non-Surviving
Event and as a part of that Restructure shares of stock, other securities, cash
or property shall be issuable or deliverable in exchange for Stock, then the
Holder of the Award shall thereafter be entitled to purchase or receive (in
lieu of the number of shares of Stock that the Holder would otherwise be
entitled to purchase or receive) the number of shares of stock, other
securities, cash or property to which such number of shares of Stock would have
been entitled in connection with the Restructure (and, for Options, at an
aggregate exercise price equal to the Exercise Price that would have been
payable if that number of Total Shares had been purchased on the exercise of
the Option immediately before the consummation of the Restructure).
11.4 Notice of Change in Control or Restructure. The Corporation
shall attempt to keep all Holders informed with respect to any Change in
Control or Restructure or of any potential Change in Control or Restructure to
the same extent that the Corporation's stockholders are informed by the
Corporation of any such event or potential event.
SECTION 12. ADDITIONAL PROVISIONS
12.1 Termination of Employment. Subject to the last sentence of
Paragraph 11.2, if a Holder is an Eligible Individual because the Holder is an
Employee and if that employment relationship is terminated for any reason other
than Normal Retirement or that Holder's death or Disability (hereafter
defined), then, unless specified otherwise in the Award Agreement, the
following provisions shall apply to all Awards held by that Holder that were
granted because that Holder was an Employee:
(a) If the termination is by the Holder's employer, then
Performance Share Awards which have not become payable at the
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time of termination shall be null and void and that portion, if any,
of any and all Awards covering Options, Stock Appreciation Rights or
Restricted Stock held by that Holder that are not yet exercisable (or
for which restrictions have not lapsed) and the portion of any Option
which is exercisable but has not been exercised as of the date of the
termination shall become null and void as of the date of the
termination.
(b) If such termination is by the Holder, then
Performance Share Awards which have not become payable at the time of
termination shall be null and void and Awards covering Options, Stock
Appreciation Rights or Restricted Stock held by that Holder shall
become immediately exercisable (and all restrictions thereon shall
lapse) to the extent that such exercisability or lapse is approved by
the Committee, and any Option or Stock Appreciation Right, to the
extent exercisable, shall survive the termination of employment for a
period of the lesser of (i) the remainder of the term of the Award or
(ii) (A) one month in the case of a Nonstatutory Option or Stock
Appreciation Right which is granted in tandem with a Nonstatutory
Option or was not granted in tandem with an Option, and (B) three
months in the case of an Incentive Option and a Stock Appreciation
Right granted in tandem with an Incentive Option.
12.2 Other Loss of Eligibility. If a Holder is an Eligible
Individual because the Holder is serving in a capacity other than as an
Employee and if that capacity is terminated for any reason other than the
Holder's death, then, unless specified otherwise in the Award Agreement, that
portion, if any, of any and all Awards held by the Holder that were granted
because of that capacity which are not yet exercisable (or for which
restrictions have not lapsed) as of the date of the termination shall become
null and void as of the date of the termination; provided, however, that the
portion, if any, of any and all of the Awards held by the Holder that are
exercisable (or for which restrictions have lapsed) as of the date of the
termination shall survive the termination.
12.3 Death. Upon the death of a Holder, then, unless specified
otherwise in the Award Agreement, any and all Awards covering Options, Stock
Appreciation Rights or Restricted Stock held by the Holder shall become
immediately exercisable (and all restrictions shall lapse) and any Option or
Stock Appreciation Right shall be exercisable by that Holder's legal
representatives, legatees or distributees for a period of the lesser of (a) the
remainder of the term of the Award or (b) 12 months following the date of the
Holder's death. Any portion of an Award not exercised upon the expiration of
the periods specified in (a) or (b) shall be null and void. Except as
expressly provided in this Section 12.3, all Awards held by a Holder shall not
be exercisable after the death of that Holder. With respect to any Performance
Unit Award for which the Performance Period has not expired at the time of the
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Holder's death, there shall be a payment calculated by the Committee, in its
sole discretion, to reflect the pro rata portion of the Performance Unit Award
value earned as of the date of death considering the achievement of the
applicable performance standards as of such date. Such payment will be made as
soon as practicable after the date of the Holder's death.
12.4 Retirement. If a Holder is an Eligible Individual because
the Holder is an Employee and if that employment relationship is terminated by
reason of the Holder's Normal Retirement, then, unless specified otherwise in
the Award Agreement, (a) the portion, if any, of any and all Awards covering
Options, Stock Appreciation Rights or Restricted Stock held by the Holder that
are not yet exercisable (or for which restrictions have not lapsed) as of the
date of that retirement shall become null and void as of the date of retirement
except to the extent that the Committee, in its sole discretion, determines
otherwise; provided, however, that the portion, if any, of any and all Awards
held by the Holder that are exercisable as of the date of that retirement shall
survive the retirement for a period of the lesser of (i) the remainder of the
term of the Award or (ii) (A) thirty-six months in the case of a Nonstatutory
Option or a Stock Appreciation Right which is not granted in tandem with an
Incentive Option, and (B) three months in the case of an Incentive Option and
any Stock Appreciation Right granted in tandem with an Incentive Option, and
(b) any Performance Unit Award for which the Performance Period has not expired
at the time of the Holder's retirement shall be payable, at the end of the
original Performance Period, in an amount calculated by the Committee, in its
sole discretion, to reflect the pro rata portion of the Performance Unit value
earned as of the date of retirement considering the achievement of the
applicable performance standards as of such date.
12.5 Disability. If a Holder is an Eligible Individual because
the Holder is an Employee and if that employment relationship is terminated by
reason of the Holder's Disability, then, unless specified otherwise in the
Award Agreement, the portion, if any, of any and all Awards covering Options,
Stock Appreciation Rights or Restricted Stock held by the Holder shall become
exercisable (and all restrictions shall lapse) and any Option or Stock
Appreciation Right shall be exercisable by the Holder, his guardian, or his
legal representative for a period of the lesser of (a) the remainder of the
term of the Award or (b)(i) thirty-six months in the case of a Nonstatutory
Option or a Stock Appreciation Right which is not granted in tandem with an
Incentive Option, and (ii) twelve months in the case of an Incentive Option or
a Stock Appreciation Right granted in tandem with an Incentive Option. With
respect to any Performance Unit Award for which the Performance Period has not
expired at the time of the Holder's Disability, there shall be a payment
calculated by the Committee, in its sole discretion, to reflect the pro rata
portion of the Performance Unit Award value earned as of the date of
Disability.
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Such payment shall be made as soon as practicable after the date of Disability.
"Disability" shall have the meaning given it in the employment agreement of the
Holder; provided, however, that if that Holder has no employment agreement,
"Disability" shall mean a physical or mental impairment of sufficient severity
that, in the opinion of the Corporation, either the Holder is unable to
continue performing the duties he performed before such impairment or the
Holder's condition entitles him to disability benefits under any insurance or
employee benefit plan of the Corporation or its Subsidiaries and that
impairment or condition is cited by the Corporation as the reason for
termination of the Holder's employment.
12.6 Leave of Absence. With respect to an Award, the Committee
may, in its sole discretion, determine that any Holder who is on leave of
absence for any reason will be considered to still be in the employ of the
Corporation, provided that rights to that Award during a leave of absence will
be limited to the extent to which those rights were earned or vested when the
leave of absence began.
12.7 Transferability of Awards. In addition to such other terms
and conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award
requiring exercise shall not be transferrable other than by will or the laws of
descent and distribution. The foregoing notwithstanding, a Nonstatutory Option
may be transferred to a trust established for the benefit of one or more of the
Holders spouse, children or grandchildren. Such transfer shall not be
effective until the Corporation receives written notice of such transfer.
12.8 Forfeiture and Restrictions on Transfer. Each Award
Agreement may contain or otherwise provide for conditions giving rise to the
forfeiture of the Stock acquired pursuant to an Award or otherwise and may also
provide for those restrictions on the transferability of shares of the Stock
acquired pursuant to an Award or otherwise that the Committee in its sole and
absolute discretion may deem proper or advisable. The conditions giving rise
to forfeiture may include, but need not be limited to, the requirement that the
Holder render substantial services to the Corporation or its Subsidiaries for a
specified period of time. The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Award Agreement or a
subsequent holder of the shares of Stock who is bound by that Award Agreement.
12.9 Delivery of Certificates of Stock. Subject to Paragraph
11.10, the Corporation shall promptly issue and deliver a
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certificate representing the number of shares of Stock as to which (a) an
Option has been exercised after the Corporation receives an Exercise Notice and
upon receipt by the Corporation of the Exercise Price and any tax withholding
as may be requested; (b) a Stock Appreciation Right has been exercised and upon
receipt by the Corporation of any tax withholding as may be requested; (c)
restrictions have lapsed with respect to a Restricted Stock Award and upon
receipt by the Corporation of any tax withholding as may be requested; and (d)
performance objectives have been achieved during a Performance Period relating
to a Performance Unit for Stock. The value of the shares of Stock, cash or
notes transferable because of an Award under the Plan shall not bear any
interest owing to the passage of time, except as may be otherwise provided in
an Agreement. If a Holder is entitled to receive certificates representing
Stock received for more than one form of Award under the plan separate Stock
certificates shall be issued with respect to each such Award and for Incentive
Options and Nonstatutory Stock Options separately.
12.10 Conditions to Delivery of Stock. Nothing herein or in any
Award granted hereunder or any Award Agreement shall require the Corporation to
issue any shares with respect to any Award if that issuance would, in the
opinion of counsel for the Corporation, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any other
applicable statute or regulation, or the rules of any applicable securities
exchange or securities association, as then in effect. At the time of any
exercise of an Option or Stock Appreciation Right, or at the time of any grant
of a Restricted Stock Award or Performance Unit, the Corporation may, as a
condition precedent to the exercise of such Option or Stock Appreciation Right
or vesting of any Restricted Stock Award or Performance Unit, require from the
Holder of the Award (or in the event of his death, his legal representatives,
heirs, legatees, or distributees) such written representations, if any,
concerning the Holder's intentions with regard to the retention or disposition
of the shares of Stock being acquired pursuant to the Award and such written
covenants and agreements, if any, as to the manner of disposal of such shares
as, in the opinion of counsel to the Corporation, may be necessary to ensure
that any disposition by that Holder (or in the event of the Holder's death, his
legal representatives, heirs, legatees, or distributees), will not involve a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then
in effect.
12.11 Certain Directors and Officers. With respect to Holders who
are directors or officers of the Corporation or any Subsidiary and who are
subject to Section 16(b) of the Exchange Act, and if Rule 16b-3 requires the
following conditions at the time of the Award, Awards and all rights under the
Plan, contingent
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or otherwise, shall be exercisable during the Holder's lifetime only by the
Holder or the Holder's guardian or legal representative, but not for at least
six months after grant, unless death or Disability of the Holder occurs before
the expiration of the six-month period. In addition, no such officer or
director shall exercise any stock appreciation right or use shares to pay tax
withholding obligations within the first six months of the term of the Award.
No share of stock acquired by such an officer or director pursuant to a
Restricted Stock Award or a Performance Unit may be sold for at least six
months after the Date of Grant, except in the case of death or Disability. Any
election by any such officer or director to have tax withholding obligations
satisfied by the withholding of shares of Stock shall be irrevocable and shall
be communicated to the Committee during the period beginning on the third day
following the date of release of quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such date
(the "Window Period") or within any other periods that the Committee shall
specify from time to time. Any election by such an officer or director to
receive cash in full or partial settlement of a Stock Appreciation Right, as
well as any exercise by such person of a Stock Appreciation Right for such
cash, shall be made during the Window Period or within any other periods that
the Committee shall specify from time to time.
12.12 Securities Act Legend. Certificates for shares of Stock,
when issued, may have the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF
PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION
OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION
WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
12.13 Legend for Restrictions on Transfer. Each certificate
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under this Plan or an Agreement, bear a
legend that complies with applicable law with respect to the restrictions on
transferability contained in this Paragraph 12.12, such as:
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
ENTITLED "DELL COMPUTER CORPORATION INCENTIVE PLAN" AS ADOPTED BY Dell
Computer Corporation (THE "CORPORATION") ON ____________, 1994, AND AN
AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND (HOLDER) DATED
______________________, 199_, AND MAY NOT BE TRANSFERRED, SOLD, OR
OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION
WILL FURNISH A COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE RECORD
HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
12.14 Rights as a Stockholder. A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 11. Nevertheless,
dividends and dividend equivalent rights may be extended to and made part of
any Award denominated in Stock or units of Stock, subject to such terms,
conditions, and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Stock or units of Stock.
12.15 Furnish Information. Each Holder shall furnish to the
Corporation all information requested by the Corporation to enable it to comply
with any reporting or other requirement imposed upon the Corporation by or
under any applicable statute or regulation.
12.16 Obligation to Exercise. The granting of an Award hereunder
shall impose no obligation upon the Holder to exercise the same or any part
thereof.
12.17 Adjustments to Awards. Subject to the general limitations set
forth in Sections 6, 7 and 11, the Committee may make any adjustment in the
exercise price of, the number of shares subject to or the terms of a
Nonstatutory Option or Stock Appreciation Right by cancelling an outstanding
Nonstatutory Option or Stock Appreciation Right and regranting a Nonstatutory
Option or Stock Appreciation Right. Such adjustment shall be made by amending,
substituting or regranting an outstanding Nonstatutory Option or Stock
Appreciation Right. Such amendment, substitution or regrant may result in
terms and conditions that differ from the terms and conditions of the original
Nonstatutory Option or Stock Appreciation Right. The Committee may not,
however, impair the rights of any Holder to previously granted Nonstatutory
Options or Stock Appreciation Rights without that Holder's consent. If such
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action is effected by amendment, the effective date of such amendment shall be
the date of the original grant.
12.18 Remedies. The Corporation shall be entitled to recover from a
Holder reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
12.19 Information Confidential. As partial consideration for the
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to
secure a loan. In the event any breach of this promise comes to the attention
of the Committee, it shall take into consideration that breach in determining
whether to recommend the grant of any future Award to that Holder, as a factor
militating against the advisability of granting any such future Award to that
individual.
12.20 Consideration. No Option or Stock Appreciation Right shall be
exercisable, no restriction on any Restricted Stock Award shall lapse, and no
Performance Unit shall be settled in Stock with respect to a Holder unless and
until the Holder shall have paid cash or property to, or performed services
for, the Corporation or any of its Subsidiaries that the Committee believes is
equal to or greater in value that the par value of the Stock subject to such
Award.
12.21 Deferral of Payment. (a) Deferral Opportunity. The
Committee, in its sole discretion, may permit a Holder to defer receipt of all
or part of a payment of a cash or Stock in connection with an Award. Such
Deferral must satisfy all conditions prescribed by the Committee, including but
not limited to the period during which the Holder must request such deferral.
(b) Measurement of Deferred Payments. Payments deferred
shall be recorded in a bookkeeping account maintained by the
Corporation. The value of such payments shall be adjusted to reflect
the performance of any measurement standard (including the price of
Stock) prescribed by the Committee or, in the discretion of the
Committee, elected by the Participant.
(c) Payment of Deferred Payments. The value of payments
deferred under this Paragraph 12.21 shall be paid to the Holder or his
or her beneficiary in one or more payments made or commencing on the
date specified by the Holder with the
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consent of the Committee; provided, however, that all such payments
shall be subject to the following conditions:
(i) All payments unpaid at the time of a
Holder's death or Disability shall be paid in a single sum as
soon as practicable after the Committee's receipt of notice
of such death or Disability;
(ii) Payments must commence no later than 90 days
after the termination of the Holders' services for the
Corporation; and
(iii) Installment payments shall be made no less
frequently than annually and over a period which does not
exceed 10 years.
(d) Plan Remains Unfunded. Notwithstanding any deferral
under this Paragraph 12.21, the Plan shall remain unfunded, as
described in Paragraph 14.7.
SECTION 13. DURATION AND AMENDMENT OF PLAN
13.1 Duration. No Awards may be granted hereunder after the date
that is ten (10) years from the earlier of (a) the date the Plan is adopted by
the Board of Directors or (b) the Effective Date the Plan is approved by the
stockholders of the Corporation.
13.2 Amendment. The Board of Directors may, insofar as permitted
by law, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, and may amend any provision of the Plan or any Award Agreement to
make the Plan or the Award Agreement, or both, comply with Section 16(b) of the
Exchange Act and the exemptions from that Section in the regulations
thereunder, the Code, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or the regulations promulgated under the Code or ERISA. The
Board of Directors may also amend, modify, suspend or terminate the Plan for
the purpose of meeting or addressing any changes in other legal requirements
applicable to the Corporation or the Plan or for any other purpose permitted by
law. The Plan may not be amended without the consent of the holders of a
majority of the shares of Stock then outstanding to (a) increase materially the
aggregate number of shares of Stock that may be issued under the Plan (except
for adjustments pursuant to Section 11 of the Plan), (b) increase materially
the benefits accruing to Eligible Individuals under the Plan, or (c) modify
materially the requirements about eligibility for participation in the Plan;
provided, however, that such amendments may be made without the consent of
stockholders of the Corporation if changes occur in law or other legal
requirements (including 16b-3) that would permit otherwise. The provisions in
Section 5 shall not be amended more
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than once every six months other than to comport with changes in the Code,
ERISA or the rules under the Code or ERISA.
SECTION 14. GENERAL
14.1 Application of Funds. The proceeds received by the Corporation
from the sale of shares pursuant to Awards shall be used for general corporate
purposes.
14.2 Right of the Corporation and Subsidiaries to Terminate
Employment. Nothing contained in the Plan, or in any Award Agreement, shall
confer upon any Holder the right to continue in the employ of the Corporation
or any Subsidiary, or interfere in any way with the rights of the Corporation
or any Subsidiary to terminate his employment any time.
14.3 No Liability for Good Faith Determinations. Neither the
members of the Board of Directors nor any member of the Committee shall be
liable for any act, omission, or determination taken or made in good faith
with respect to the Plan or any Award granted under it, and members of the
Board of Directors and the Committee shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss, damage, or
expense (including attorneys' fees, the costs of settling any suit, provided
such settlement is approved by independent legal counsel selected by the
Corporation, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect. This right to indemnification
shall be in addition to, and not a limitation on, any other indemnification
rights any member of the Board of Directors or the Committee may have.
14.4 Other Benefits. Participation in the Plan shall not preclude
the Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension,
profit sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
14.5 Exclusion From Pension and Profit-Sharing Compensation. By
acceptance of an Award (whether in Stock or cash), as
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applicable, each Holder shall be deemed to have agreed that the Award is
special incentive compensation that will not be taken into account in any
manner as salary, compensation or bonus in determining the amount of any
payment under any pension, retirement or other employee benefit plan of the
Corporation or any Subsidiary. In addition, each beneficiary of a deceased
Holder shall be deemed to have agreed that the Award will not affect the amount
of any life insurance coverage, if any, provided by the Corporation or a
Subsidiary on the life of the Holder that is payable to the beneficiary under
any life insurance plan covering employees of the Corporation or any
Subsidiary.
14.6 Execution of Receipts and Releases. Any payment of cash or
any issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
14.7 Unfunded Plan. Insofar as it provides for Awards of cash and
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any assets
that may at any time be represented by cash, Stock or rights thereto, nor shall
the Plan be construed as providing for such segregation, nor shall the
Corporation nor the Board of Directors nor the Committee be deemed to be a
trustee of any cash, Stock or rights thereto to be granted under the Plan. Any
liability of the Corporation to any Holder with respect to a grant of cash,
Stock or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Corporation shall be deemed to be secured
by any pledge or other encumbrance on any property of the Corporation. Neither
the Corporation nor the Board of Directors nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
14.8 No Guarantee of Interests. Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.
14.9 Payment of Expenses. All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may recover
any and all damages, fees, expenses,
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and costs arising out of any actions taken by the Corporation to enforce its
right to purchase Stock under this Plan.
14.10 Corporation Records. Records of the Corporation or its
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by
the Committee to be incorrect.
14.11 Information. The Corporation and its Subsidiaries shall,
upon request or as may be specifically required hereunder, furnish or cause to
be furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
14.12 No Liability of Corporation. The Corporation assumes no
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
14.13 Corporation Action. Any action required of the Corporation
shall be by resolution of its Board of Directors or by a person authorized to
act by resolution of the Board of Directors.
14.14 Severability. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein. If any of the terms or
provisions of this Plan conflict with the requirements of Rule 16b-3 (as those
terms or provisions are applied to Eligible Individuals who are subject to
Section 16(b) of the Exchange Act) or Section 422 of the Code (with respect to
Incentive Options), then those conflicting terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3
or Section 422 of the Code. With respect to Incentive Options, if this Plan
does not contain any provision required to be included herein under Section 422
of the Code, that provision shall be deemed to be incorporated herein with the
same force and effect as if that provision had been set out at length herein;
provided, further, that, to the extent any Option that is intended to qualify
as an Incentive Option cannot so qualify, that Option (to that extent) shall be
deemed a Nonstatutory Option for all purposes of the Plan.
14.15 Notices. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third Business Day after it is
deposited in the United States
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mail, certified or registered, postage prepaid, addressed to the person who is
to receive it at the address which such person has theretofore specified by
written notice delivered in accordance herewith. The Corporation or a Holder
may change, at any time and from time to time, by written notice to the other,
the address which it or he had previously specified for receiving notices.
Until changed in accordance herewith, the Corporation and each Holder shall
specify as its and his address for receiving notices the address set forth in
the Agreement pertaining to the shares to which such notice relates.
14.16 Waiver of Notice. Any person entitled to notice hereunder
may waive such notice.
14.17 Successors. The Plan shall be binding upon the Holder, his
legal representatives, heirs, legatees, and distributees, upon the Corporation,
its successors, and assigns, and upon the Committee, and its successors.
14.18 Headings. The titles and headings of Sections and Paragraphs
are included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
14.19 Governing Law. All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Delaware except to the extent Delaware law is preempted by federal
law. Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Agreement, except to the extent Delaware corporate law conflicts with the
contract law of such state, in which event Delaware corporate law shall govern.
The obligation of the Corporation to sell and deliver Stock hereunder is
subject to applicable laws and to the approval of any governmental authority
required in connection with the authorization, issuance, sale, or delivery of
such Stock.
14.20 Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
IN WITNESS WHEREOF, Dell Computer Corporation, acting by and through
its officer hereunto duly authorized, has executed this instrument, this the
______ day of _________________, 1994.
DELL COMPUTER CORPORATION
By:________________________________
Name:___________________________
Title:__________________________
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