lawsuit against dell

8/22/2019 Lawsuit against Dell

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EFHed: Aug 01 2013 01:16P,Transac t i on ID 53359611Ca s e No. 8762-

IN THE COURT OF CHANCERY OF THE STATE OF DELAWAREHIGH RIVER LIMITED PARTNERSHIP,ICAHN PARTNERS, LP, ICAHNPARTNERS MASTER FUND, LP, ICAHNPARTNERS MASTER FUND II, LP, andICAHN PARTNERS MASTER FUND III LP,

Plaintiffs,

DELL INC., MICHAEL DELL, JAMES W.BREYER, DONALD J. CARTY, JANET F.CLARK, LAURA CONIGLIARO,KENNETH M. DUBERSTEIN, WILLIAM H.GRAY, III, GERARD J. KLEISTERLEE,KLAUS S. LUFT, ALEX J. MANDL,SHANTANU NARAYEN, and ROSSPEROT, JR.,

Defendants .

C.A. No.

VER IF IED COMPLA INT

Plaintiffs High River Limited Partnership, Icahn Partners, LP, Icahn PartnersMaster Fund, LP, Icahn Partners Master Fund II, LP, and Icahn Partners Master Fund III,LP (collectively, the "Icahn Parties"), by and through their undersigned counsel, allegeupon knowledge as to themselves and upon information and belief as to all other matters,a s fo llows :


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NATURE OF THE ACTION

1. Dell Inc. ("Dell" or the "Company") is in crisis. The lame-duck board ofdirectors ofDell has been in office for over a year, but the board has repeatedly refused tohold an annual meeting of stockholders to allow them to decide who should run theCompany at this critical time. Instead the directors have been using their waningincumbency to try to ram through a going-private transaction proposal by Michael Delland his associates to acquire the Company (the "Merger"), even though that Merger hasrepeatedly failed to gain the necessary stockholder vote for approval. Moreover, byrefusing to call an annual meeting, the directors are deliberately preventing thestockholders from voting to remove them and electing an alternative and superiorproposal made by Plaintiffs and othersa leveraged recapitalization of the Company.

2. The board has taken further action to help Mr. Dell while still failing to callan annual meeting. It has twice adjourned the special meeting of stockholders called tovote on the Merger (the "Special Meeting"), because each time the stockholders hadvoted to reject the Merger. Then it offered to reset the record date for the meeting inexchange for a 10 cent bump from Mr. Dell and Silver Lake. According to press reports,Mr. Dell and the board have now agreed to change the record date of the Special Meeting.A change in record date would be designed to give Mr. Dell a chance to finally win thevote because the board had previously taken steps that changed the stockholder base after


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the original June3 record dateby chasing away long-term holderswho opposed theMerger and replacing them with arbitrageurs who were farmore likely to accept it.

3. The current record dateJune 3, 2013, which was set in late Mayis farfrom stale, particularly since the Mergerwas approvedby the board in early February.But, a change in record date could be dispositive because from the middle of June onwardthe board andMr. Dell, facedwith massive stockholder resistance to the Merger, engagedin a concerted effort to convince long-term stockholders who oppose the Merger that Dellis facing enormous economic headwinds andthat the market value of the Company'sstock will fall off a cliff if the Merger is voted down. Partof the purpose of thesepresentations was to cause the anti-Merger stockholders to sell their shares with theknowledge that many of those shares would be bought by arbitrageurs who could becounted on to support the Merger if the record date was reset.

4. That campaign has been deeply cynical. Immediately after the Merger isapproved by stockholders, the Company and its investment bankers will be trying tosyndicate the financing necessary to consummate the highly leveraged Merger, and thereis no possibility that the Company will be telling debt investors that the sky is falling.Indeed, the Power Point presentations showing that the Company can easily shoulder thenew acquisition debt of $15.75 billion must already be drafted and resting in the serversand hard drives of both Dell and its investment bankers, where they coexist uneasily with


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the presentations to the stockholders saying that Dell could lose half its value if theMerger is not approved.

5. It takes extraordinary cynicism to tell stockholders that the Company isfalling apart, and therefore theymustvote for theMergeras their onlyway out,while atessentially the same time telling prospective debt holders that everything is fine and thatthe Company will easily handle another $15.75 billion in debt. It takes even morecynicism, though, for fiduciaries to frighten stockholders into selling stock in order to putthe stock in the handsof arbitrageurswho can be counted on to support the Mergerparticularlywhen the board prevents stockholders from considering alternativetransactions.

6. That strategy gave the board a way to force the Merger through if all elsefailed. And al l e lse has now failed since Mr. Dell a nd th e board have never been abl e t o

gain enough votes to approve the Merger. Now, the Special Committee of the boardcharged with supervising the merger has told Mr. Dell that for $0.10 per share (or 73basis points) it will adjourn the meeting yet again and set a new record date. Accordingto press reports, Mr. Dell has accepted that offer.

7. These are manipulations. What makes these manipulations even worse isthat there is an alternative to Mr. Dell's Mergeran alternative that Plaintiffs have beenurging on the board since early March and that the board has done everything in its power

to kill. And that is the recapitalizationa transaction that mirror's Michael Dell's


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Merger, but instead of allowing him to gain control of75% of theCompany(whichwould be his share afterthe Merger) and forcing the public stockholdersout, would allowthose stockholderswho wanted to staywith the Company to remain. The boardhascontinually rejected this approach for avarying listof purported reasons. Plaintiffshaveresponded to each of the board's rationalizations and have now raised $5.2 billion incommitted financing to permita recapitalization. The board, however, hasrepeatedlyrefused to schedulea stockholdermeeting thatwould permit the stockholdersto electnew directors committed to such a transaction, even though the current directors wereelectedon July 13, 2012over twelve months ago. Instead, the boardhasbeen trying toget Mr. Dell's Merger rammed through before August 13, 2013, when Plaintiffs maypetition this Court under 8 Del. C. 211 for an annualmeeting to elect a new board.

8. The directors other than Mr. Dell apparently contend that all of their actionshave been taken not to help Mr. Dell, but to either "protect" the stockholders, or to causeMr. Dell to raise his bid. Just before the second session of the Special Meeting, Mr. Delloffered to increase his bid by ten cents per shareone whole dimefrom $13.65 to$13.75 if the boardamended 3.21 of the Merger Agreementa provision that theMerger Agreement itself says cannot be waivedto require only the approval of amajority of the unaffiliated stockholders who actually vote, rather than a majority of allunaff i l iated shares.


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9. The Special Committee rejected that request, but offered Mr. Dell what hereallywantedanotheradjournmentand a changein the record date. And the $.10pershare fee they agreed to is only payable if Mr. Dell winshe gets his fourth chance towin for free, and risks nothing if the stockholdersstill reject his Merger.

10. What makes this worse is that while they pretend in public to be toughlynegotiatingwith Mr. Dell, the directors are refusingto use their real weapon to get Mr.Dell to pay his real best and final price. And that is setting the date for an an nua lstockholders meeting (and, just as importantly, taking f ir m acti on to p re ve nt M r.Dell from buying stock to win the vote or allowing Plaintiffs who are contractuallybarred by Dell fro m making such purchases to buy stock also).

11. Mr. Dell publicly announced on July 25, 2013 that he is "a t peace" witheither the Merger or a return to the pre-Merger status quo and that he will pay no morethan a bumped price of $13.75 per share. It is doubtful, however, that as the founder,namesake, chairman and CEO ofDell, he is "at peace" with the prospect that thestockholders will throw him and his friends off the board and choose a leveragedrecapitalization in which he plays no part. Thus, a board that was actually attemptingto maximize value for the stockholders and to get Mr. Dell to pay a higher pricewould, faced with th e current situation, immediately se t an annual meeting date tobe held at the same time as any continued Special Meeting. That is the board's big

stick in their "negotiations" with Mr. Dell, but they have repeatedly refused to use it and


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their failure to do so is yet another fact that undermines the presumption that this board isactually independent. Moreover, the directors know that by delaying the annual meetingthey are making the recapitalization less likely since the committed financing obtainedby Plaintiffs expires on September 30, 2013 and there is no assurance that it will able tobe renewed. Thus, if no annual meeting is held soon the opportunity for a leveragedrecapitalization might disappear. There is no rational basis or compelling justification forthe directors allowing that to happen. It is, however, very much in the defendants'interest for that to occur especially if the Merger is voted down because that could greatlyincrease their chances for remaining in control ofDell.

12. By not setting an annual meeting datethe one sure way to pressure Mr.Dell into making his true best and final bid and the only way to allow the stockholders tochoose which alternative they wantby campaigning to drive long-term anti-Mergerstockholders out of the Company and by failing to take action to prevent Mr. Dell frommaking massive market purchases as arbitrageurs sell shares if the merger fails, whilepreventing Plaintiffs from buying material amounts of stock, the board has plainlyrevealed its hand. It is loyal not to the stockholders but to Mr. Dell and/or to thedirectors' own incumbencies and is willing to change the rules to help Mr. Dell force hisMerger through as cheaply as possible or to allow Mr. Dell to re-elect the incumbentboard if the Merger fails. The directors have failed to act in good faith and have failed intheir duty of loyalty.


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13. This is an action to enjoin the lame-duck directors from using their changedrecord date for the Special Meeting or from holding thatmeeting until it can be held atthe same time as the 2013 annual meeting of stockholders

T H E P A RT IE S

14. The Icahn Parties, which are managed by or under the direction ofCarl C.Icahn, own over 150million sharesof Dell stock,or over $2 billion at the Merger price,and considerably more if the Icahn Parties' estimation ofDell's value is correct.Plaintiffs oppose the Merger, have waged a proxy contest against it and have proposed aleveraged recapitalization in its place. If an annual meeting of stockholders is held, theyintend to run a proxy contest to elect a board committed to a recapitalization.

15. DefendantDell is a Delaware corporationwith its principal executiveoffices in Round Rock, Texas. Started by Mr. Dell in 1984, Dell has grown from apersonal computer ("PC") company to become a global information technology companythat offers its customers a broad range of solutions and services delivered directly by Delland through other distribution channels.

16. Dell has elected its directors in late June or early July for decades. In 2012,it held its annual meeting on July 13, 2012. Thus, the current directors have been inoffice for over a year, but they have made no apparent efforts to schedule an annualmeeting at which the stockholders could decide to retain their services. Plaintiffs haverepeatedly urged the board to allow the Merger to be voted on at the same time as an


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election of directors so the stockholders could directly choose whether to elect the Mergeror a slate of directors that supported recapitalization, but the board has refused to do so.

17. Defendant Michael Dell is the Company's founder, CEO and Chairman.As of July 2013, Michael Dell and various affiliatesowned approximately 15%ofDell'scommon stock, making him the Company's largest stockholder.

18. Defendant James W. Breyer has served as a director of the Company sinceApril 2009.

19. Defendant Donald J. Carty ("Carty") has served as a director of theCompany since December 1992. Carty served as Vice Chairman and ChiefFinancialOfficer ofDell from January 2007 until June 2008, for which he received approximately$9.8 million in compensation. Carty was deemed non-independent pursuant to NASDAQStock Market rules as recently as the Company's 2011 Proxy Statement.

20. Defendant Janet F. Clark has served as a director of the Company sinceSeptember 2011.

21. Defendant Laura Conigliaro has served as a director of the Company sinceSeptember 2011.

22. Defendant Kenneth M. Duberstein has served as a director of the Companysince September 2011.

23. Defendant Gerard J. Kleisterlee has served as a director of the Companys in ce Decembe r 2010.


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24. Defendant Klaus S. Luft has served as a directorof the Company sinceMarch 1995.

25. Defendant Alex J. Mandl ("Mandl") has served as a director of theCompany since November 1997, and currently serves as Presiding Director ofDell andChair of the Special Committee of the board that responded to the Merger (the "SpecialCommittee"). Mr. Mandl chaired the two sessions of the Special Meeting to date anddeclared them adjourned on his authority as meeting chairman.

26. Defendant Shantanu Narayen has served as a director of the Company sinceSeptember 2009.

27. Defendant Ross Perot, Jr. has served as a director of the Company sinceDecember 2009, following Dell's acquisition of Perot Systems Corporation ("PerotSystems") for approximately $3.9 billion in November 2009.

BACKGROUND FACTS

The Going Pr iva te Transac tion

28. On February 5, 2013, the Dell board of directors, acting on therecommendation of the Special Committee, unanimously approved the MergerAgreement whereby Mr. Dell and Silver Lake Partners, L.P. ("Silver Lake") would cashout the Company's public stockholders for $13.65 per share. The approximately $25billion Merger would result in Michael Dell owning approximately 75% of the remainingentity and Silver Lake owning approximately 25%.

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Plaintiffs Propose A Recapitalization But The Board Re fuses To Schedule TheAnnual Meeting A t The Same Time As The Special Meeting

29. On March 5, 2013, Plaintiffs proposed that the board adopt a form ofleveraged recapitalization and specifically suggested that the board allow thestockholders to choose which transaction they wanted by holding a special meeting tovote on the Merger at the same time as the annual meeting to elect a new board. In thatletter, Plaintiffs specifically stated that at the annual meeting, "[w]e intend to run a slateof directors that, if elected, will implement our proposal for a leveraged recapitalization."

30. The board did not agree then, or ever, to hold an annual meeting. TheCompany did engage in talks with Plaintiffs and as a part of those talks Plaintiffs signedan agreement forbidding them to make material additional purchases of stock. Critically,Mr. Dell faces no such barrier and accordingly unless the board takes action to prevent it,

Mr. Dell could buy outcome-determinative amounts of stock to try to win a proxy contestat the eventual annual meeting, while Plaintiffs would be prevented from doing so. Thedirectors have a direct interest in allowing Mr. Dell to do so because he would use thenew shares to vote fo r them as wel l as himself.

31. In May, 2013, Plaintiffs outlined a somewhat different recapitalization as asuperior alternative to the Merger. That proposed recapitalization has since beenamended and Plaintiffs believe that it represents a superior alternative to the Merger.

32. In a May 9, 2013 letter to the board, Plaintiffs urged "the Board to put ourproposal before Dell's shareholders, preferably by recognizing it as a Superior Proposal

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and proceedingwith our proposal in lieuof the Going Private Transaction; oralternatively by calling an annual meeting simultaneouslywith the vote of shareholderson the Going Private Transaction."

33. Plaintiffs reiterated in th e letter their intent to run a slate o f d irec to rs a t t he

Company's annual meeting, which, if elected,would implement the recapitalization.Thus, Plaintiffs implored the Dell board to "do everything necessary to create a levelplaying field, including holding the annual meeting and the vote on the Going PrivateTransaction at a single meeting." Plaintiffs have made the same point to the boardrepeatedly since then and have also repeatedly warned it about the issue raised by thestandstill signed by Plaintiffs while Mr. Dell is permitted to buy stock.

34. Compounding the problems created by the directors, during negotiationswith Plaintiffs, the directors took the view that Plaintiffs' recapitalization proposal wasnot sufficiently definite because it did not have committed financing. Plaintiffs thereforeundertook raising, and did raise, $5.2 billion in committed financing. That financing,however is only committed until September 30,2013 and thus if a new board is notelected sufficiently before approximately September 15, to consider and potentiallyapprove the financing and recapitalization, the financing will expire by its terms and thereis no guarantee that it can be extended or replaced. The board is aware of these facts, andthis point has been repeatedly made to it by Plaintiffs. The board, however, is committedto preventing the stockholders frombeing allowed to vote for new directors who are in

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favor of the recapitalization proposal because, amongother things, the current directorsmight lose their seats.

35. The Dell board refused to permit a level playing field. Instead, the directordefendants decided not to hold the annual meeting in July as has been Dell's practice formany years. Instead, they indefinitely deferred the annual meeting and it appears theystill have made no effort to schedule such a meeting. Thus, the director defendants tiltedthe playing field in favor of the Merger and against the recapitalization proposed byPlaintiffs.

36. The e ff ec t o f this was to leave Dell 's stockholders with the choice o f

accepting an immediate cash payment of $13.65 pursuant to the Merger or incurring themarket risk ofwaiting an unknown number ofmonths until Plaintiffs' nominees can beelected and potentially implement the proposed recapitalization if financing is stillavailable. That delay, and the market risk caused by it, was intended to render therecapitalization less attractive than it should be, and to push stockholders into voting forthe Merger. To date that coercive effect has not been sufficient to cause enoughstockholders to vote in favor of the undervalued Merger and if defendants had permitted avote at the Special Meeting on its original date, its adjourned date, or its secondadjourned date the Merger would have been overwhelmingly rejected.

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Defendants' Further Ef for ts T o Rig The Vote37. The Special Meeting was first convened July 18, 2013. On that date, Mr.

Dell had not obtained nearly enoughvotes to approve the Merger. In an effort to procurestockholder approval of the Merger, the chairman of the meeting unilaterally adjournedthe Special Meeting until July 24, 2013. On July 24, the board once more adjourned themeeting. This time, though, not only did Mr. Dell lack the votes to get the Mergerapproved, he had just delivered his latest proposal to the Special Committee.

38. Mr. Dell's proposal was simple. The board would need to "amend"expressly unwaivable 6.1 of the Merger Agreement to provide that an affirmative voteof a majority of the unaffiliated stockholders would no longer be necessary. Instead allthat would be needed to approve the Merger would be the vote of a majority of thoseactually voting. According to Mr. Dell, the current provision is "unfair" to thosestockholders who vote in favor of the Merger, and "[t]here is simply no rational basis forshares that are not voted to count as votes against the merger agreement for purposes ofthe unaff i lia ted s tockholder vote ."

39. Mr. Dell did not explain why he signed an agreement with such an unfairand irrational provision in it. Nor did he explain why he believes that he and the boardhave the power to change the definition of "unaffiliated stockholders" in the MergerAgreement, given that 6.1 specifically states that the provision "shall not be waivable"even by a "writing by [Mr. Dell's acquisition vehicle] and Company." Perhaps Mr. Dell

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contends that fundamentally amending the provision doesnot constitute"waiving" it, but 8.11 of the MergerAgreement answers that. It explicitly equates amendments withwaiversunder the Merger Agreement they are the same thing. Moreover, even if such acontention was correct that would mean that making the unaffiliated stockholdersprovision non-waivable in the first placewas essentially a sham because while it couldnot be "waived" it could always be "amended."

40. The stockholders were given no indication that the provision did not matter,though. Rather, again and again the stockholders were told that they did not need to voteto oppose the Merger. For example, 3.21 of the Merger Agreement provides:

Required Vote of Company Stockholders. The affirmative vote (inperson or by proxy) at the Company Meeting, or any adjournment orpostponement thereof, of (i) the holders of a majority of theoutstanding Shares entitled to vote thereon in favor of the adoptionof this Agreement (the "Stockholder Approval") and (ii) the holdersof a majority of the outstanding Shares entitled to vote thereon notowned, directly or indirectly, by the Parent Parties, the MDInvestors, any other officers and directors of the Company or anyother Person having any equity interest in, or any right to acquireany equity interest in, Merger Sub or any Person of which MergerSub is a direct or indirect Subsidiary, in favor of the adoption of thisAgreement (the "Unaffiliated Stockholder Approval" and, togetherwith the Stockholder Approval, the "Company StockholderApprovals") are the only votes or approvals of the holders of anyclass or series of capital stock of the Company or any of itsSubsidiaries which are necessary to adopt this Agreement andapprove the transactions contemplated herein.41. As set forth in Section 6.1 of the Merger Agreement, Unaffiliated

Stockholder Approval was a non-waivable condition to the Going PrivateTransaction:

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Section 6.1 Conditions to Each Par ty 's Obl igat ion to Effect th eMerger. The respective obligations of each party to effect theMerger and the other transactions contemplated herein shall besubject to the fulfillment (or waive in writing by Parent and theCompany, except with respect to Section 6.1(a). which shall not bewaivable) at or prior to the Effective Time of the followingcondit ions:

(a ) Company Stockholder Approvals:(i) The Stockholder Approval shall have been obtained inaccordance with applicable Law and the certificate of incorporation

and bylaws of the Company.(ii) The Unaffiliated Stockholder Approval shall have been

obta ined . . . .

42. The Company's May 30 proxy statement accurately described the MergerAgreement, stating at page 135 that:

Proposal to Adopt the Merger Agreement

For the Company to consummate the merger, under Delaware lawand under the merger agreement, stockholders holding at least amajority of the shares of Common Stock outstanding at the close ofbusiness on the record date must vote "FOR" the proposal to adoptthe merger agreement. In addition, the merger agreement requires,as a condition to the consummation of the merger, that stockholdersholding at least a majority of the shares of Common Stockoutstanding at the close of business on the record date, other than theParent Parties, the MD Investors, the Gift Trusts, any other officersand directors of the Company or any other person having any equityinterest in, or any right to acquire any equity interest in, Merger Subor any person of which Merger Sub is a direct or indirect subsidiary,vote "FOR" the proposal to adopt the merger agreement.43. The requirement ofUnaffiliated Stockholder Approval as a condition of the

Going Private Transaction was repeated in a June 2013 Dell Special Committee Investor

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Presentation included as part ofDell's Schedule 14A Definitive Additional Materialsfiled June 5, 2013 and again in Schedule 14ADefinitive Additional Materials filed June24, July 5, and July 15. To back up its claim that "favorable rules of engagement" hadbeen established, the board's presentation stated that the "Transaction requires approvalby holders of a majority of the unaffiliated shares." (footnote omitted).

44. Similarly, in Schedule 14A Definitive Addit ional Materials filed June 18,2013, the Company stated that "If you fail to vote or abstain from vot ing on thetransaction, the effect will be the same as a vote against the transaction." (emphasisadded.) Likewise, in a July 8, 2013 letter from the Special Committee to the Company'sstockholders, filed as part of further Schedule 14ADefinitive Additional Materials, theCommittee reiterated that "failing to vote has the same effect as voting against thetransaction." (emphasis in original). Another Schedule 14A Definitive AdditionalMaterials filed just three days later also warned that "If you fail to vote or abstain fromvoting on th e t ransaction , the effect will be th e same as a vote against the transaction."(emphasis in original). The same language appears in a July 22, 2013 Schedule 14ADefinitive Additional Materials and in an FAQ on Voting Process included in acommunication to Dell employees and filed the same day as part of another Schedule14A Definitive Additional Materials, where it was again made clear that "If you fail tovote or abstain from voting on the merger agreement, the effect wil l be the same as a voteagainst the adoption of the merger agreement."

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Thus, the stockholders were repeatedly told that not voting is the same as voting "no."The Special Committee has, at least for now, turned Mr. Dell down on 3.21. But, asdiscussed previously, it has offered him much the same thing by proposing a new recorddate, which he reportedly has now accepted. Neither the Special Committee nor theboard attempted to maximize their negotiating leverage by setting an annual meeting forthe same date and time as the 4th session of the Special Meeting.The Board Causes S to c k To Flow T o T he A rb s

45. Starting in early June 2013, the board caused Dell to begin a series ofpresentations that purported to show that Dell was facing extremely strong economicheadwinds and that, because of those headwinds, the market would likely cause Dell'sstock price to plummet and stay down if the stockholders rejected the Merger. Delldisseminated these projections widely, and they caused large downward movements inthe stock price as longer term stockholders sold their apparently (and suddenly) far-morerisky shares in the market, often to arbitrageurs who saw an opportunity to make a niceprofit if the Merger was approved.

46. The themes of these presentations were that Dell's personal computerbusiness was declining, the Company had been unable to forecast welland thus therosier forecasts upon which Mr. Dell's proposal had been based were suspectthatcompanies in which stockholders voted down transactions underperformed, and that therewere no better alternatives to the Merger. One noteworthy slide, which was used in many

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of the presentations given by Dell andits directors, andwhich has never been changed,indicated that if the Merger were voted down the stock would probablybe worth no morethan the multiples used to value Hewlett-Packard's stock, which implied a range in valuesfrom $5.88 to $8.72 per share for Dell's sharesfar below the Merger priceof $13.65per share.

47. There can be no doubt that this slide was meant to cause great concernamong Dell's shareholders and as the following chart shows, there can be little doubt thatit and the other statements made in the presentations found their markshareholdersdumped their shares immediately following a number of these predictions of reducedvalue, which can be seen from the huge surge in the volume of stock trading. But therecan also be little doubt that these charts were largely an exercise in cynicism. Forexample, take the valuation range of $5.88 to $8.72 per share. According to the Mergerproxy statement and Dell's 10-Q for the first quarterof 2014, Dell currently has 1.755billion shares of common stock outstanding. Multiplying the stock prices by the sharesoutstanding, one finds that Dell is implying that the equity value of the Company i f theMerger is rejected would range from $10.3 to $15.3 billion.

48. In the case of Dell, equity value equals total enterprise value because Dellholds approximately $13.2 billion in cash and investments, while it had onlyapproximately $7.2 billion in short and long-term debt, giving it a negative net debtnumber of approximately $6 billion. Thus, according to the (faulty) logic ofDell's slide

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(which amongother things, ignores thevalueof thatcost), after a vote against theMerger, Dell's total enterprise value would range between the $10-15 billion it predictedfor the equity.

49. What makes those numbers extremely awkward for Dell is the fact that

according to the Merger proxy statement, the Merger will be financed by new borrowingsof up to $2 billion in subordinated debt from Microsoft and an additional $13.75 billionin syndicated debt. That totals $15.75 billion in new debt to fund the Mergeror morethan the implied enterprise value of the entire Company. The syndication of that debtwill start immediately after there is a favorable vote on the Merger. One can safelypresume that none ofDell, Mr. Dell or the members of the board are going to be tellingthe purchasers of the debt that the Company is worth less than they are lending it.Indeed, one can safely presume that at this very minute presentations are prepared thatwill explain how the Company's actual and projected EBITDA will clearly cover the debtcharges, and that any reasonable valuation using the figures in those presentations wouldshow the Company to have an enterprise valuation equal to or above that implied by theMerger price, which is approximately $25 billion.

50. Such conduct cannot be justified. The presentations were designed tofrighten long-term stockholders who opposed the Merger into selling their stock in orderto get the shares into the hands of arbitrageurs, who could be counted on to support the

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Merger. Indeed, upon information and belief, Dell's proxy solicitors expressly kept trackof the amount of stock that was flowing into the hands of the arbitrageurs.

51. The following is a chart showing the trading prices, volumes in Dell's stockand the daily volume compared to normal 2013 volume, from June 1, 2013 until July 25,

2013. As can be seen, trading volume spiked during those days when the board wasattempting to scare Dell stockholders into voting for the Merger:

Date Open High L ow Close Vo l umeAdj.Close Even t

13.36 13.46 13.33 13.45 10,932,200 13.37

Mul t , o f2012Avg.

6/3/2013 0 .66/4/2013 13.43 13.5 13.4 13.42 13,909,900 13.34 0.76/5/2013 13.44 13.46 13.38 13.43 6,908,400 13.35 Special Committee Presentation 0.46/6/2013 13.42 13.5 13.4 13.49 13,827,700 13.41 0.76/7/2013 13.52 13.53 13.46 13.49 11,453,200 13.41 0 .66/10/2013 13.46 13.48 13.4 13.42 7,518,600 13.34 0.46/11/2013 13.4 13.43 13.36 13.37 7,789,900 13.29 0.4

6/12/2013 13.39 13.41 13.36 13.37 13,689,600 13.29 0.76/13/2013 13.38 13.58 13.36 13.45 8,737,200 13.37 0.46/14/2013 13.42 13.5 13.38 13.39 11,630,900 13.31 0 .66/17/2013 13.41 13.43 13.39 13.41 8,444,300 13.33 0.46/18/2013 13.41 13.74 13.4 13.48 98,983,700 13.4 5. 16/19/2013 13.47 13.48 13.4 13.41 13,706,500 13.33 0 .76/20/2013 13.38 13.4 13.33 13.37 17,173,600 13.29 0.96/21/2013 13.38 13.38 13.32 13.35 22,960,500 13.27 Dell Personal Presenta t ion 1. 26/24/2013 13.36 13.37 13.28 13.34 10,615,200 13.26 Special Committee Presentation 0.56/25/2013 13.39 13.45 13.36 13.43 10,213,000 13.35 0. 56/26/2013 13.44 13.48 13.38 13.46 11,711,200 13.38 0.66/27/2013 13.38 13.44 13.34 13.34 8,502,600 13.34 0 .46/28/2013 13.33 13.4 13 .32 13 .33 16,860,700 13.33 0.97/1/2013 13.37 13.39 13.3 13.31 19,970,100 13.31 1. 07/2/2013 13.32 13.39 13.31 13.38 21,957,900 13.38 1. 17/3/2013 13.31 13.37 13.29 13.31 27,334,000 13.31

11. 4

7/5/2013 13.25 13.25 12.7 13.03 | 53,008,200 | 13.03 Special Committee Presentation 2 .721


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7/8/2013 13.36 13.44 13.28 13.44 50,012,300 13.447/9/2013 13.43 13.48 13.36 13.36 26,878,000 13.367/10/2013 13.4 13.4 13 .33 13.33 31,077,100 13.337/11/2013 13.36 13.46 13.34 13.35 24,035,800 13.357/12/2013 13.37 13.39 13.28 13.32 20,144,200 13.327/15/2013 13.29

13 .1913.313.19

13.1412.92

13.1513.02

18,365,100 13.1513.02/16/2013 62,402,700

7/17/2013 12.8 12.99 12 .75 12.88 51,980,000 12.887/18/2013 13.12 13 .22 13.07 13.12 42,562,000 13.12 Meeting Adjourned7/19/2013 13.16 13.17 12.99 13.14 34,726,600 13.147/22/2013 12.97 13.12 12 .95 13.02 36,477,400 13.027/23/2013 13.04 13.05 12.85 12.88 21,616,600 12.887/24/2013 12.83 13.25 12.66 12.92 94,583,700 12.92 Meeting Adjourned7/25/2013 12.85 12 .99 12.84 12.98 15,148,800

2 .6

52. Upon information and belief, the board not only knew that stock wasflowing into arbitrage hands but it was partone of the Company's strategy of turning thetide if necessary. Plaintiffs estimate that over 25% of the float was traded during theperiods in which the Company was actively trying to scare the investors.

53. Now, the board is taking the second stepthe cynical maneuver toenfranchise those arbitrage votes in exchange for a dime per share. Moreover, the boardstill refuses to use the big stick of setting an annualmeeting date. From these actions it isclear that this board's loyalty in the end is to Mr. Dell and themselvesnot the publicstockholders.

54. There is no compelling justification for the director defendants' actionslisted above, nor are the director defendants' actions reasonable in relation to areasonably perceived threat to the Company or its stockholders.

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COUNT I

AGA IN S T THE D IRECTOR DEFENDANTS FORBREACH OF FIDUCIARY DUTY

55. Plaintiffs repeat and reallege the foregoingparagraphs as if fully set forthherein.

56. The director defendants have violated their fiduciary duties to theCompany's stockholders by placing the interests ofMr. Dell above those of the otherstockholders. Among other things, they have (1) delayed the annual meeting and failedto allow the stockholders to vote on both the Merger and new directors at the same time;(2) adjourned the Special Meeting three times in order to allow Mr. Dell's Merger toprevail and have now changed the record date in order to allow him to pick up thearbitrageurs' votes; (3) radically talked down Dell's economic chances, which has hadthe effect of causing long-term stockholders opposed to the Merger to sell their shares,putting stock in the hands of arbitrageurs committed to the Merger; (4) failed to set anannual meeting to force Mr. Dell to make his best bid and (6) failed to take steps toprevent Mr. Dell from buying stock while keeping Plaintiffs from doing so.

57. Plaintiffs have no adequate remedy at law.COUNT II

DECLARA TORY JUDGMENT

58. The director defendants' reported agreement to set a new record date for theSpecial Meeting for a contingent 73 basis points a share, while continuing to defer the

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Company's 2013 annualmeeting, and allowingMr. Dell to purchase shareswhilepreventing Plaintiffs from doing so, constitute breaches of fiduciary duty by the directordefendants.

59. Plaintiffs seek a declaration that t he above described conduct would

constitute a breach of fiduciary duty.WHEREFORE, Plaintiffs respectfully request a final order and judgment:A. Enjoining defendants from holding the 4 session of the Special Meeting

with the new record date;thB. Enjoining defendants from holding the 4 session of the Special Meeting

unless it is held at the same date and time as the annual meeting with the same recorddate;

C. Enjoining Mr. Dell and his affiliates from voting any Dell shares acquiredby market or private purchase after February 5, 2013 at the 2013 annual meeting ofstockholders;

D. Declaring that defendants' actions detailed herein constituted breach ofduty;

E. Enjoining the defendants from changing the voting standard requiring amajority vote of all unaffiliated sharesoutstanding to approve the Merger included in3.21 of the Merger Agreementa provision that the Merger Agreement itself sayscannot be waived;

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F. Awarding Plaintiffs damages for any losses caused byDefendants'breachesof duty and the costs and disbursements of this action, includingreasonableattorneys' fees; and;

G. Granting such other and further relief as this Court deems just and proper.

A SHBY & GEDDES

Dated: August 1,2013

/s / Stephen E. Jenkins (#2152)Stephen E. Jenkins (#2152)Philip Trainer, Jr. (#2788)Marie M.Degnan (#5602)500DelawareAvenue, 8l FloorP.O. Box 1150Wilmington, DE 19899Phone:(302)654-1888Attorneysfor the Icahn Parties

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